PENTON MEDIA INC - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004

FORM 10-K

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

COMMISSION FILE NUMBER 1-14337

PENTON MEDIA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 36-2875386
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(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)

1300 EAST NINTH STREET, CLEVELAND, OHIO 44114
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

216-696-7000
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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COMMON STOCK, $0.01 PAR VALUE OVER-THE-COUNTER BULLETIN BOARD

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

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

The aggregate market value of common stock held by non-affiliates of Penton
Media, Inc., computed by reference to the closing price as of the last business
day of the registrant's most recently completed second fiscal quarter, June 30,
2003, at a closing price of $0.59 per share, was approximately $12,871,068.
Shares of common stock held by each officer and director, their respective
spouses, and by each person who owns or may be deemed to own 10% or more of the
outstanding common stock have been excluded because such persons may be deemed
to be affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.

AS OF MARCH 30, 2004, 33,496,070 SHARES OF PENTON MEDIA, INC. COMMON STOCK WERE
OUTSTANDING.
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PENTON MEDIA, INC.

INDEX TO
ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 2003

PART I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders

PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplemental Data
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
Item 9A. Controls and Procedures

PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Item 13. Certain Relationships and Related Transactions
Item 14. Principal Accounting Fees and Services

PART IV
Item 15. Exhibits, Financial Statement Schedules and Reports on Form
8-K
Signatures
Schedule II -- Valuation and Qualifying Accounts

2

CAUTIONARY STATEMENT

This Annual Report on Form 10-K contains statements relating to Penton
Media, Inc. (including its future results and business trends) that are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, and are subject to the "safe harbor" created by those sections.
Although Penton believes that the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, it can give no assurance that
its expectations will be achieved. Actual results or events may differ
materially from those projected as a result of certain risks and uncertainties.
These risks and uncertainties include, but are not limited to, those set forth
herein under the heading "Risk Factors." For this purpose, any statements
contained herein that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the foregoing, the words
"believes," "anticipates," "plans," "expects," "seeks," "estimates" and similar
expressions are intended to identify forward-looking statements. These
forward-looking statements are made only as of the date hereof, and we undertake
no obligation to update or revise any of them, whether as a result of new
information, future events or otherwise.

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PART I

ITEM 1. BUSINESS

GENERAL

We are a diversified business-to-business ("b-to-b") media company. We
provide media products that deliver proprietary business information to owners,
operators, managers and professionals in the industries we serve. Through these
products, we offer industry suppliers multiple ways to reach their customers and
prospects as part of their sales and marketing efforts. We publish 48
specialized trade magazines, produce 49 trade shows and conferences, and provide
Web sites, electronic newsletters and other online media products. Our products
serve 12 industries, which we group into four segments:

INDUSTRY TECHNOLOGY
Manufacturing Internet Technologies
Design/Engineering Enterprise Information Technology
Mechanical Systems/Construction Electronics
Supply Chain RETAIL
Government/Compliance Food/Retail
Aviation Leisure/Hospitality
LIFESTYLE
Natural Products

We believe we have leading media products in most of the industries we
serve. We are structured along segment and industry lines rather than by product
lines. This enables us to promote our related groups of publications, trade
shows and conferences, and online media products to our customers.

Since our founding in 1892, we have grown from an industrial trade magazine
publishing company into an integrated b-to-b media company serving a wide range
of industrial, technology and retail markets. We became an independent company,
incorporated in the State of Delaware, as a result of our spinoff from Pittway
Corporation in August 1998.

Our principal executive offices are located at The Penton Media Building,
1300 East Ninth Street, Cleveland, Ohio 44114, telephone 216-696-7000.

We maintain a Web site at http://www.penton.com. The information contained
on our Web site is not incorporated by reference in this report, and you should
not consider it a part of this report. Our Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those
reports are available free of charge on our Web site as soon as reasonably
practicable after they are filed, or furnished to, the Securities and Exchange
Commission.

Unless otherwise noted herein, disclosures in this Annual Report on Form
10-K relate only to our continuing operations. Our discontinued operations
consist of Penton Media Australia Pty, Limited ("PM Australia"), which was sold
in December 2002, and Professional Trade Shows ("PTS"), which was sold in
January 2003.

Unless the context otherwise requires, the terms "we," "our," "us,"
"Company," and "Penton" as used herein refer to Penton Media, Inc. and its
subsidiaries.

OUR INDUSTRY

The b-to-b media industry provides information in various formats to
targeted business and professional audiences. B-to-b media include print
products such as magazines and newsletters; in-person media such as trade shows
and conferences; and online media, such as Web sites, online conferences,
electronic newsletters, and electronic books.

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Through b-to-b media, marketers can reach targeted business and
professional audiences whose responsibilities include the buying or specifying
of products and services for their business organizations. Marketing
opportunities include advertising in specialized business magazines, exhibiting
at or sponsoring trade shows and conferences; sponsorship of digital media and
highly customized media products; and the strategic use of products related to
core media products, such as direct marketing mailing and e-mail lists, article
reprints and electronic reuse of content; and exclusive market intelligence and
data.

The b-to-b media industry experienced a challenging year in 2003, as a weak
economy, disappointing corporate profits, and the lingering effects of
geopolitical events pressured companies to reduce costs, including marketing
spending.

Advertising in b-to-b media serving technology and manufacturing-related
markets suffered the greatest during the year. While certain markets saw upticks
in ad spending in 2003 after two years of decline, spending in the computer
market declined 16.9%, the software market declined 9.0%, and the manufacturing
and electronic equipment/components market experienced an ad spending decline of
7.3% compared with 2002, according to the Business Information Network (BIN).
According to BIN, advertising pages in b-to-b magazines overall declined a third
consecutive year in 2003, although more modestly than the double-digit declines
experienced in 2002 and 2001, as the economy showed signs of improvement
throughout the year.

Trade shows, overall, also had lackluster performance in 2003. According to
Tradeshow Week magazine, net square footage of exhibit space declined 0.4%. This
was the third straight year of decline in exhibit space, although it represented
a much more modest rate of decline than that experienced in 2002 and 2001.
Tradeshow Week magazine notes that both the number of exhibiting firms and
professional attendance grew in 2003 by 0.6% and 3.6%, respectively, after two
years of declines.

In response to revenue pressures in 2003, the b-to-b media industry
continued to reduce costs. The industry also focused significant effort on
b-to-b marketers' increasing demand for a greater return on their marketing
investments, particularly in the form of sales improvement and faster generation
of qualified sales leads.

The industry augmented initiatives to sell more fully integrated marketing
solutions to customers, incorporating traditional print and event media
platforms, as well as greater use of online and custom media. These media
products have gained appeal with marketers because of their ability to generate
strong user response and their effectiveness in promoting customers' brands and
services.

According to the July 2003 Veronis Suhler Stevenson ("VSS") Communications
Industry Forecast & Report, continued improvement in economic conditions, a
pickup in corporate spending and new product introductions are all expected to
contribute to acceleration in the growth of U.S. spending in b-to-b media.
Spending in the industry is expected to grow to $24.2 billion by 2007, from
$19.2 billion in 2002, according to VSS. Spending on b-to-b magazines is
forecast by VSS to experience a compound annual growth rate of 4.7% between 2002
and 2007, while spending on trade shows and exhibitions is expected to grow at a
rate of 4.8% for the same period.

THE PENTON APPROACH

Penton's strategic goal is to be the leading provider of integrated media
and marketing solutions in the target markets we serve.

Our business is organized along segment and industry lines, rather than
product lines. This approach to our business allows our staff to develop deeper
market knowledge and experience that benefits our customers through our ability
to develop and produce the most relevant and timely information products, and
our ability to provide marketing counsel and services to marketers that reflect
the most current market conditions, trends and opportunities.

Operating in a market-focused manner also allows us to cross-promote our
related groups of publications, trade shows and conferences, online media, and
custom media solutions to our customers. This enables our customers to utilize
multiple complimentary channels for delivering their marketing message to their
best sales prospects.
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IN PRINT: PUBLICATIONS

We publish specialized trade magazines in the U.S. as well as in the United
Kingdom and Germany. Of our 32 magazines that are audited by a third-party
service, 20 magazines, or 63%, hold the number-one or number-two market share
position in their target markets, based on the number of advertising pages. Our
publications are recognized for the quality of their editorial content; since
1990 our magazines have won nearly 850 editorial awards.

We publish 48 trade magazines with a combined circulation of more than 3.0
million subscribers worldwide. Our magazines generate revenues primarily from
the sale of advertising space and are primarily distributed through controlled
circulation free of charge to qualified subscribers in our target industries.
Subscribers to controlled-circulation publications qualify to receive our trade
magazines by verifying, among other things, their responsibility for specific
job functions, including purchasing authority. We survey our magazine
subscribers annually to verify their continuing qualification.

BPA International, an independent auditor of magazine circulation, audits
circulation information for the majority of our publications each year. These
audits verify that we have accurately identified the number and job
responsibilities of qualified subscribers and that those subscribers are
eligible to receive the relevant publication according to our established
criteria.

Each of our publications has its own advertising sales team and rate
structure. Some advertisers may qualify for discounts based on advertising in
multiple publications. We enable marketers to be more cost efficient in their
advertising purchases by providing a single source for reaching customers and
prospects in multiple but related markets.

In addition, each of our publications has its own editorial staff. To
preserve the editorial integrity of each publication's news reporting and
analysis, we seek to maintain separation between the editorial and sales staffs
of each publication. We believe that our reputation for objective, fair, and
credible editorial content, contributes significantly to our success. Eighteen
of our publications have served their industries for more than 50 years.

Our editorial staffs meet frequently with readers of their publications to
maintain a current understanding of the information needs and interests of those
readers in an effort to serve them more effectively. We devote considerable
resources to the study of trends in our industries and strive to make our
publications the most widely used among our targeted audiences. Many of our
editors and contributors are recognized as experts in their fields and are
regularly contacted by the general press to comment on developments and trends
in their respective markets.

We also publish five industry directories as well as buyers' guides, which
are respected sources of buying information for industry decision makers. Most
of the business directories we publish have limited competition.

IN PERSON: TRADE SHOWS AND CONFERENCES

We produce 49 trade shows and conferences, which attract attendees with
purchasing and specifying responsibility.

Attendees at our trade shows and conferences are professionals and managers
in the industries we serve. Most trade shows include an extensive conference
program, which provides a forum for the exchange and dissemination of
information relevant to the particular event's focus. In addition, most trade
shows have one or more "keynote" sessions with speakers who are known for their
industry knowledge and expertise.

Trade show exhibitors pay a fixed price per square foot for booth space. In
addition, we receive revenues from attendee fees at trade shows and from
exhibitor sponsorships of promotional media.

Our conferences are supported by either attendee registration fees or
marketer sponsorship fees, or a combination of each. The high quality and
unbiased nature of our conference content attracts professional attendees. We
are able to cost-effectively promote to attendees by utilizing related media
products serving the

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same end user audience. For example, potential attendees are the readers of our
magazines and the users of our Web sites and electronic newsletters.

ONLINE: WEB SITES AND ELECTRONIC NEWSLETTERS

We currently maintain dozens of market-specific Web sites serving numerous
markets. Our online portfolio also includes electronic newsletters; online
conferences; sponsored topic-specific microsites; and electronic books. These
products provide timely and focused information to highly targeted
professionals, and typically are sponsored by advertisers interested in
delivering marketing information to our subscribers. We believe we have a
competitive advantage in the online business because of our established customer
relationships in the markets we serve, the industry expertise of our staff, and
the opportunities we have to promote our online media to targeted audiences
through our magazines and trade shows.

ANCILLARY MARKETING SERVICES

We also provide ancillary information services that complement our
principal business media platforms. These services include:

- Marketing Services. We provide a variety of marketing services,
including article reprints, electronic re-use rights to our content,
and database rentals. We use information from our subscription lists
and other available databases to compile detailed mailing lists and
electronic mail address lists for rental by marketers who want to
promote their products and services through direct mail and electronic
marketing programs. We offer these services to our customers to help
them reach their targeted audiences.

- Custom Communications. We produce a range of client-sponsored
communication services, including: topic-specific conferences held
across multiple cities; newsletters; magazines; catalogs; directories;
education and training materials; and other marketing communications.

- Specialized Advertising. We collect and forward reader inquiries to
our advertisers. In addition, classified advertising sections in our
publications and on our Web sites provide a cost-efficient medium for
reaching prospects who are ready to buy specialized products and
services. Also, print and online recruitment advertising provides an
effective way to reach qualified professionals seeking career
opportunities.

OUR BUSINESS SEGMENTS

Our four segments derive their revenues from in-print publications,
in-person trade shows and conferences, and online media to customers in our 12
distinct industries. These segment results are regularly reviewed by the
Company's executive management team to determine how resources will be allocated
to the segment and in assessing its performance.

For information about the revenues from external customers, adjusted
segment EBITDA and total assets of each of our business segments, see Note
18 -- Segment Information, in the notes to consolidated financial statements
included herein. In addition, Item 7 -- "Management's Discussion and Analysis of
Financial Condition and Results of Operations" provides a description of segment
results.

INDUSTRY SEGMENT

Content of our Industry publications, trade shows and conferences, and
online media products is geared to customers in the manufacturing,
design/engineering, mechanical systems/construction, supply chain,
government/compliance, and aviation industries. Our Industry segment generated
39.9%, 39.3% and 31.6% of our total revenues in 2003, 2002 and 2001,
respectively. For the years ended December 31, 2003, 2002 and 2001,
respectively, 92.2%, 90.5% and 90.1% of this segment's revenues were generated
from publications, 5.1%, 7.5% and 7.9% from trade shows and conferences, and
2.7%, 2.0% and 2.0% from online media and ancillary sources.

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Our manufacturing portfolio represented about 15.4% of our revenues in
2003. This portfolio targets executives in manufacturing organizations, managers
of industrial facilities, and management personnel in the machine tool and
metals industries. Our products in this portfolio, which include IndustryWeek,
American Machinist and New Equipment Digest magazines, have a long history and
are leaders in the industry. IndustryWeek, which was first published in 1882,
brings together senior manufacturing executives to explore business issues,
strategies, trends and technologies that can help them succeed in today's
"better, faster, cheaper" global economy. IndustryWeek focuses on providing
well-informed ideas and best practices presented from an authoritative
point-of-view. American Machinist, first published in 1877, focuses on the
metalworking marketplace, which consists of plants in industries primarily
engaged in manufacturing durable goods and other metal products. New Equipment
Digest, first published in 1936, presents concise descriptions and photos of new
and/or improved industrial products, materials, components, equipment and
services that established companies want to sell. Competition in this portfolio
includes the manufacturing demographic editions of both BusinessWeek and Fortune
magazines which compete against IndustryWeek; Manufacturing Engineering which
competes against American Machinist; and Industrial Equipment News which
competes against New Equipment Digest.

The design/engineering portfolio represented about 9.3% of our revenues in
2003. This portfolio serves the information needs of engineers and designers in
the original equipment, medical and biomedical markets, and designers and
engineers of products that incorporate hydraulic and motion systems
technologies. Leading products in this portfolio include Machine Design
magazine, first published in 1929, which holds the greatest share of advertising
pages in its market, and Hydraulics & Pneumatics magazine. Machine Design serves
design engineers in the original equipment market, process and consulting
industries. It provides design engineers with information on new technologies,
industrial developments, research and development activities, products, and
engineering procedures for designing manufactured products. Articles concentrate
on practical applications, new developments and solutions to design problems.
Hydraulics & Pneumatics serves design engineers, manufacturing engineers and
other technical personnel who are involved in buying or specifying fluid power
components, systems, materials, and controls. Competition in this portfolio
includes Design News and Product Design & Development magazines.

The mechanical systems/construction portfolio represented about 6.0% of our
revenues in 2003. This portfolio serves engineers, designers, and contractors in
the mechanical systems (heating/ventilation/air
conditioning/refrigeration/plumbing) markets, as well as professionals in the
architectural and construction trades. Our leading products in this portfolio
have a long history in the industry and a reputation of excellence. They include
Contracting Business magazine, established in 1944, Contractor magazine, first
published in 1954, and HPAC Engineering magazine, first published in 1929.
Contracting Business is dedicated to the residential, commercial and industrial
mechanical systems contracting marketplace. Its editorial coverage includes new
market opportunities, Internet technologies, design and engineering, and the
service and maintenance of HVACR systems. For 50 years, Contractor has been the
newsmagazine for mechanical contracting. Editorial content focuses on industry
news, market trends, business management advice and new product information
exclusively for plumbing, heating and piping contractors. HPAC Engineering
magazine serves the growing mechanical engineered systems market in the areas of
building construction, renovation and retrofit. Editorial content features
articles in the area of systems design and sizing, facility and energy
management controls systems, energy and water efficiency, indoor air quality,
comfort management and deregulation. The main competitors in this portfolio are
ACHR News and Plumbing & Mechanical magazines, both published by Business News
Publishing, as well as Engineered Systems magazine.

The supply chain portfolio represented about 2.7% of our revenues in 2003.
Products in this portfolio target decision makers along the entire supply chain,
including material handling engineers, third-party logistics providers, and
those responsible for carrying, delivering and warehousing goods. Leading
products in this portfolio include Material Handling Management and Logistics
Today magazines. Material Handling Management magazine reaches subscribers
responsible for material handling functions in manufacturing, warehousing and
distribution. Editorial content focuses on material handling applications,
technology and management strategies for increasing productivity, cutting
operating costs, improving safety, supporting effective planning, and
facilitating product/information flow. Logistics Today serves the
transportation,

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warehousing and distribution, technology, and global business markets. Its
content focuses on what is new, what others are doing, and what trends will
impact future work. Competition in this portfolio includes Modern Material
Handling, which competes head to head with Material Handling Management and
Logistics Management magazines, published by Reed Business Information US
("Reed"), and Inbound Logistics, published by Thomas Publishing Company, both of
which compete with Logistics Today.

The government/compliance portfolio represented about 4.5% of our revenues
in 2003. Products in this portfolio target government buyers and professionals
who manage industrial safety, occupational health and environmental compliance.
The leading products in this portfolio are Government Product News, established
in 1962, which ranks number one in advertising market share, and Occupational
Hazards magazine, which was established in 1938. Government Product News is a
product information magazine read by government managers, engineers,
administrators, department heads and procurement professionals who specify, plan
and buy for city, county, state, and federal governments. Editorial content
includes products, services and case histories. Occupational Hazards magazine
serves the occupational safety and industrial hygiene market. Editorial content
provides information to meet OSHA and EPA compliance requirements, improve the
management of safety, industrial hygiene and environmental programs, and to find
products and services that protect employees and property. Government Product
News has three main competitors, including; American City & County, published by
Primedia; Public Works, recently acquired by Hanley Wood; and Governing
Magazine, published monthly by Congressional Quarterly Inc. Occupational Hazards
magazines' main competitors are the Occupational Health & Safety magazine, which
is published by Stevens Publishing, and the Industrial Safety & Hygiene News
magazine, published by Business News Publishing.

The aviation portfolio represented about 2.0% of our revenues in 2003. This
portfolio's products target executives in the worldwide commercial airline
industry. The leading product in this portfolio and in the industry is our Air
Transport World magazine, which was first published in 1964. Editorial content
include topics covering airline operations, information technology, alliances,
distribution, transport aircraft and engine programs, MRO, aero politics, safety
and regulations, finance and leasing, airport development and air cargo. One of
the Company's major competitors in the aviation sector is Airline Business
magazine, which is published by Reed.

TECHNOLOGY SEGMENT

Content of our Technology publications, trade shows and conferences, and
online media products is geared to customers in the electronics, enterprise
information technology and Internet technologies industries. Our Technology
segment generated 32.7%, 38.4% and 54.4% of our total revenues in 2003, 2002 and
2001, respectively. For the years ended December 31, 2003, 2002 and 2001,
respectively, 63.2%, 59.4% and 40.5% of this segments revenues were generated
from publications, 20.1%, 29.0% and 54.6% from trade shows and conferences and
16.7%, 11.6% and 4.9% from online media and ancillary sources.

The electronics portfolio represented about 9.7% of our revenues in 2003.
Products in this portfolio reach electronics engineers and engineering managers
in the OEM, communications systems, microwave systems, wireless applications and
network design markets. Some of our largest magazines in this portfolio include
Electronic Design, first published in 1952; Microwaves & RF, first published in
1962; and EE Product News, first published in 1941. Electronic Design magazine
focuses on new and emerging technologies, and the magazine reaches design
engineers, engineering managers and technical executive managers at the
conceptual design stage, where many product and technology decisions are
initiated. Microwaves & RF magazine serves engineers and engineering managers
involved in high frequency design. Target readers work in both commercial and
military applications at radio frequency and microwave device, component,
software, systems and test levels. EE Product News magazine, serves engineers
and engineering managers involved in prototype design, where concepts take shape
and buying decisions are made. We also produce the Wireless Systems Design
Conference and Expo, held annually. This show targets engineers, engineering
managers and other technically minded professionals working in the wireless
arena. Competition in this portfolio includes EE Times magazine, published by
CMP Media ("CMP"); EDN and ECN magazines, both published by Reed; Electronic
Products, published by Hearst Publishing, Microwave Journal, published by
Horizon House, and RF Design, published by Primedia.

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The enterprise information technology portfolio represented about 20.3% of
our revenues in 2003. Our products in this portfolio serve professionals
involved with the Microsoft Windows NT/2000/XP and SQL, IBM iSeries/AS400 and
Lotus Domino application server environments; information security; graphics
applications; and the emerging market addressing convergence of home office,
controls and entertainment technologies. Leading products in this portfolio
include the Windows & .NET Magazine and online network, the iSeries NEWSmagazine
and online network, Business Finance magazine and SQL Server Magazine. Windows &
..NET Magazine serves Windows IT professionals by providing problem-solving
information about the Windows platform, including Microsoft's .NET Framework,
Windows XP, Windows 2000 and Windows NT. iSeries NEWS magazine helps iSeries and
AS/400 professionals make strategic business decisions, solve programming
problems, improve performance and security, and assess hardware and software
products. Business Finance magazine informs finance executives about the growing
role of finance within organizations from changes in technology, business
strategy and economic trends and the implications of these changes for their
business practices and career development. SQL Server Magazine is the
independent guide to using SQL Server as a business application development
platform. In addition, the enterprise information technology portfolio hosts
numerous road shows throughout the year. A road show is a custom event bringing
buyers and sellers together to introduce products and services and to generate
sales leads for the sponsor. Competition in the Windows arena include Network
World, published by IDG, and Network Computing, published by CMP. Other
competitors in this portfolio include SQL Server Professional magazine, eServer
Magazine and Search400.com.

The Internet technologies portfolio represented about 2.7% of our revenues
in 2003. Media products in this portfolio target service providers and other
professionals who utilize Web technologies and services to achieve their
enterprises' e-business objectives. The leading products in this portfolio
include the Internet World UK and Internet World North trade shows. These trade
shows provide major networking opportunities for every industry and every
discipline that is affected by the Internet.

LIFESTYLE SEGMENT

Content of our Lifestyle publications and trade shows and conferences is
geared to professionals in the natural products industry. Our Lifestyle segment
generated 15.5%, 13.1% and 8.3% of our total revenues in 2003, 2002 and 2001,
respectively. For the years ended December 31, 2003, 2002 and 2001,
respectively, 34.8%, 35.7% and 35.3% of this segment's revenues were generated
from publications, and 65.2%, 64.3% and 64.7% of revenues were from trade shows
and conferences.

The products in this portfolio serve the natural products and
nutraceuticals markets, including producers of raw materials, manufacturers,
distributors and retailers. Leading products in this portfolio include The
Natural Foods Merchandiser and Delicious Living magazines, and the Natural
Products Expo trade shows. The Natural Foods Merchandiser provides information
to companies involved in the development, marketing, sales and distribution of
natural and organic products and dietary supplements. Delicious Living magazine
is purchased by natural products retailers and is distributed to their customers
to educate and inform them about natural products and a healthy lifestyle. It
provides articles on a wide range of topics, including diet and nutrition,
fitness, herbal medicine, homeopathy, natural healing, cooking with natural
foods, personal care and the environment. The Natural Products Expos are held
annually on the West and East Coasts of the United States, in Europe and in
Asia. In addition to the extensive exhibits, the shows offer educational
conferences, entertainment and a host of social events to foster personal and
professional growth. The combined conference and trade show format is designed
to bring the industry together to learn and share information with industry
leaders. Competition in this portfolio includes such magazines as Health
Supplement Retailer, Vitamin Retailer and Health Product Business, which compete
against The Natural Foods Merchandiser, and Better Nutrition, Energy Times,
Let's Live and Vegetarian Times, which compete against Delicious Living. Trade
shows that compete with our Natural Product Expo shows include the Fancy Foods
show, the FMI show and the NNFA show.

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RETAIL SEGMENT

Content of our Retail publications, trade shows and conferences, and online
media products is geared to customers in the food/retail and leisure/hospitality
markets. Our Retail segment generated 11.9%, 9.2% and 5.7% of our total revenues
in 2003, 2002 and 2001, respectively. For the years ended December 31, 2003,
2002 and 2001, respectively, 74.9%, 79.5% and 83.4% of this segment's revenues
were generated from publications, 23.3%, 18.7% and 14.9% from trade shows and
conferences and 1.8%, 1.8% and 1.7% from online media and ancillary sources.

The food/retail portfolio represented about 8.4% of our revenues in 2003.
This portfolio targets full-service restaurant operators, decision makers in
institutional foodservice and retail and large-volume baking operations, and
management staff at convenience store headquarters. Leading magazines in this
portfolio include Restaurant Hospitality, which dedicates 100% of its efforts to
full-service restaurants; Modern Baking magazine, which serves bakeries offering
higher quality bakery foods, including retail, supermarket in-store and
specialty wholesale bakeries, and foodservice operators that bake on premise;
Food Management magazine, which serves the noncommercial foodservice market,
including food operations at colleges and universities, schools, healthcare
providers, the military and airlines; and Convenience Store Decisions magazine,
which focuses on reaching the decision makers in the retail segment of the
convenience store industry. We also provide the bakery-net.com Web site, which
has over 20,000 registered qualified users and includes a bakery buyers guide.
In addition, our National Convenience Store Advisory Group provides event forums
for interaction with top management among retail operators, manufactures and
wholesalers. Competition for our baking magazines primarily includes Baking
Buyer, published by Sosland Publishing Co., Baking & Snack magazine and Snack
Food and Wholesale Baking magazine. Competitors for our restaurant magazines
include Nation's Restaurant News, published by Lebhar-Friedman; Restaurants and
Institutions, published by Reed; and Restaurant Business, published by VNU
Business Publications ("VNU"). Competitors in the convenience store market
include Convenience Store News, published by VNU, and Convenience Store
Petroleum, published by CSP Information Group.

The leisure/hospitality portfolio represented about 3.5% of our revenues in
2003. This portfolio serves professionals managing leisure and recreation
facilities and outdoor sports and grounds facilities in Europe and the
hospitality industry in the United States. The leading products in this
portfolio include our International Leisure Industry Week exhibition held
annually in the United Kingdom and our Lodging Hospitality magazine, which was
first published in 1949. Our Leisure Industry Week ("LIW") trade show was
established in 1989 and is the UK's largest and longest-running trade show and
conference serving the out-of-home leisure and hospitality market. The show is
attended by more than 14,000 operators of theme parks, family entertainment
centers, private and public sector leisure and sports venues, health and fitness
clubs, museum and heritage sites, and leading tourist attractions. These
operators use LIW as a primary sourcing event for soft and outdoor play
equipment; kids and theme park rides; sports, fitness and recreational
equipment; catering and vending options; and facilities management solutions,
including disabled access, ticketing, security, membership systems, and sound
and lighting. LIW has no direct competitors, though there are a number of shows
which cross over with some sections of LIW, including Euro Amusement Show for
the European theme park market, Hospitality Week/Hotel Olympia in the UK, and
FIBO, which targets the European fitness industry and is held in Germany, and
the UK's Professional Beauty show, which targets health center and spa markets.
Our Lodging Hospitality magazine serves the lodging industry, including hotel
owners, operators and developers. It reaches corporate and operations personnel
hoteliers at all levels, corporate and operations, including chain headquarters,
multi-unit owners and independent properties. Competitors include Hotel & Motel
Management magazine, owned by Advanstar Communications, and Hotel Business
magazine, owned by ICD Publications.

RECENT DEVELOPMENTS

See discussion of recent developments and significant 2003 events in
"Significant 2003 Events" section of Management's Discussion and Analysis of
Financial Condition and Results of Operations.

11

ACQUISITIONS AND DIVESTITURES

In January 2003, the Company completed the sale of the assets of its PTS
group, which was part of our Industry segment, to Cygnus Business Media, Inc.
for total consideration of approximately $3.2 million. The cash received from
the sale was used to pay down the Company's outstanding credit facility. A gain
of approximately $1.4 million on the sale was recorded in the first quarter of
2003. The results of PTS are included as a component of discontinued operations
in the accompanying consolidated statements of operations.

In December 2002, the Company completed the sale of the assets of PM
Australia, which was part of our Technology segment, to AJB Publishing Pty
Limited for total consideration of approximately $0.1 million. Approximately
$0.01 million was paid in cash upon closing, with the remaining consideration to
be paid in 12 equal monthly installments starting in July 2003. The cash
received from the sale was used to pay down the Company's outstanding credit
facility. The related loss on the sale was approximately $0.6 million and is
included as a component of discontinued operations in the accompanying
consolidated statements of operations.

In December 2002, the Company disposed of four other properties. Three of
these properties, Streaming Media, Boardwatch and ISPCON, were part of our
Technology segment. The other property, A/E/C, was part of our Industry segment.
The aggregate consideration for these properties was approximately $0.9 million.
The cash received from these sales was used to pay down the Company's
outstanding credit facility. The sale of the properties resulted in a loss of
approximately $0.9 million and is included in operations as loss on sale of
properties in the accompanying consolidated statements of operations as these
properties did not qualify for discontinued operations treatment.

In 2001, Penton acquired nine companies for an aggregate purchase price of
approximately $10.0 million in cash and $3.2 million in promissory notes.

CUSTOMERS

We serve a diverse group of customers worldwide in our 12 industry
portfolios. We market our products directly to customers through our internal
marketing and sales force. None of our customers accounted for more than 1.1% of
our total revenues in 2003. Our top 10 customers accounted for approximately
3.7% of our total revenues in 2003.

COMPETITION

We experience intense competition for our products and services. We compete
with several much larger international companies that operate in many markets
and have broad product offerings in both publishing and trade shows and
conferences. We compete for readers and advertisers in the publishing
marketplace, which is fragmented. According to industry sources, in February
2003, there were about 1,500 publishing companies and 5,200 trade magazine
titles.

We also compete for venues, exhibitors, sponsorships and show attendees in
the trade show and conference marketplace. This market is also highly
fragmented. Approximately 2,500 trade shows were expected to be held in the
United States and Canada in 2003. About 1,500 independent companies and industry
associations are expected to produce these shows, according to industry sources.
Since our trade show business is relatively easy to enter, additional
competitors may enter these markets. In addition, our trade show and conference
business competes with many industry associations, and in several countries, the
trade show and conference hall owner and operator may also be a competitor.

As online media has gained favor for both information delivery and for
marketing purposes, there has been a major influx of new product offerings by
b-to-b media companies and other information providers who represent added
competition.

12

Our publications generally compete on the basis of:

- editorial quality and integrity;

- quantity and quality of circulation;

- the strength of complementary products serving the same niche;

- the effectiveness of sales and customer service; and

- advertising rates.

Our trade shows and conferences generally compete on the basis of:

- the availability of attractive venues and dates;

- the quality and integrity of educational offerings;

- the ability to provide events that meet the needs of particular market
segments;

- the ability to attract qualified attendees; and

- the ability to provide high-quality show services, exhibition space
and attractive marketing and sponsorship opportunities.

Our online media products generally compete on the basis of:

- quality and uniqueness of information content;

- quality and speed of sales lead generation;

- technical quality and the related ease of use for the end user;

- product development speed;

- advertising and sponsorship rates.

OUR BUSINESS STRATEGY

We experienced declines in our revenues as a result of difficult business
conditions across most of our markets and particularly challenging conditions in
our technology and manufacturing-related media portfolios, which constitute our
largest portfolios. Due to these challenges and their impact on our financial
performance, we have shifted our business strategy from accelerating growth
through aggressive acquisitions and internal product development to improving
profitability through cost reduction measures and process improvements.

Reduce Fixed Costs. Penton had built a cost structure to support the
approximate 25% compounded annual revenue growth we experienced between 1996 and
2000. Beginning in 2001, and throughout 2002 and 2003, we implemented a number
of cost reduction initiatives in an effort to align our cost structure with the
sharp downturn in our business. These efforts included reducing net headcount by
96 positions in 2003 (a combined 52.6% net headcount reduction since January
2001); making adjustments to employee benefits, including freezing the Company's
pension plan and introducing a defined contribution plan; reducing capital
spending; outsourcing certain corporate and division functions; and implementing
process improvements that resulted in a permanent reduction in the cost basis of
our business. We expect to continue to reduce our operating costs if market
conditions do not improve.

Grow Revenues Through Aggressive Sales of Integrated Media and Marketing
Solutions. B-to-b marketing has evolved to a model that emphasizes using an
integrated and broad array of media and marketing vehicles. Penton is responding
by continuously adding to and diversifying its product offerings. In particular,
we are focusing on launching online media products to complement our in-print
and in-person portfolio. We are expanding our online media portfolio because
digital media has gained a larger presence in our customers' marketing mix.
Digital media offer benefits of speed of information delivery, rapid sales lead
generation and effective interactivity with end users. Our online media launches
require modest capital

13

investment and typically produce positive adjusted EBITDA, before shared
expenses, within the first year of launch because we often can leverage existing
content and staff resources to develop these products.

Our focus on the sale of integrated solutions also encompasses aggressive
development of custom media solutions for our customers. Single-sponsored
magazines, newsletters and white papers, topic-specific conferences that are
produced in multiple cities and specialized Web microsites are examples of such
products. These creative marketing solutions are typically conceived and
developed by existing staff in our market groups and are sold with selective
pricing that typically produces attractive returns for Penton.

Restructure Product Portfolio. In 2003, we continued to restructure our
portfolio to improve profitability. We canceled certain technology trade shows
and discontinued certain publications due to weak market conditions. We believe
these restructuring efforts will improve the adjusted EBITDA of our product
lines without compromising the strength and integrity of our core media brands
or their usefulness and value to our customers. We continually respond to
opportunities in our current markets to develop new products and we will
continue to make new product introductions.

DOMESTIC AND FOREIGN REVENUES AND ASSETS

Domestic revenues of our products and services constituted 90.2%, 89.1%,
and 86.8% of total revenues for the years ended December 31, 2003, 2002 and
2001, respectively. Foreign revenues totaled 9.8%, 10.9% and 13.2% of our
revenues for the years ended December 31, 2003, 2002 and 2001, respectively. In
2003, 2002 and 2001, 81.0%, 74.9% and 68.7%, respectively, of these foreign
revenues were generated by Penton Media Europe Limited, a subsidiary of Penton
located in the United Kingdom. See Note 18 -- Segment Information, in the notes
to consolidated financial statements included herein, for a description of the
Company's assets located in the United States and in the United Kingdom.

PRODUCTION AND DISTRIBUTION

All of the Company's print products are printed and bound by independent
printers. We have a service contract through 2006 that provides for the printing
of a majority of our 48 specialized trade magazines. If additional printing
capacity is needed, we believe that additional printing services are readily
available at competitive prices.

The principal raw material used in our print publications is paper. We
believe that the existing arrangements providing for the supply of paper are
adequate, and, in any event, alternative sources are available. Paper costs
accounted for about 7.8%, 8.4% and 9.0% of our total editorial, production and
circulation costs for the years ended December 31, 2003, 2002 and 2001,
respectively. Paper prices are affected by a variety of factors, including
demand, capacity, pulp supply, and general economic conditions.

Substantially all of our publications are delivered by the United States
Postal Service within the continental United States. Consequently, postage costs
are subject to postage rate changes. Postage costs represent a significant
expense, accounting for about 14.5%, 14.2% and 12.7% of our total editorial,
production and circulation costs for the years ended December 31, 2003, 2002 and
2001, respectively. Most of the Company's magazines are packaged and delivered
to the United States Postal Service directly by the printer. Postage rates
increased on July 1, 2001 and June 30, 2002. There were no rate increases in
2003 and none are expected in 2004.

TRADEMARKS AND INTELLECTUAL PROPERTY RIGHTS

We regard our copyrights, trademarks, service marks and similar
intellectual property as critical to our success and rely upon copyright and
trademark laws, as well as confidentiality agreements with our employees and
others, to protect our rights. We pursue the registration of our material
trademarks in the United States and, depending upon use, in other countries.
Effective trademark and copyright protection may not be available in every
country in which our publications and services are available.

We may be subject to claims of alleged infringement of our trademarks or
our licenses of trademarks and other intellectual property rights of third
parties from time to time in the ordinary course of business. We do
14

not believe that any legal proceedings or claims are likely to have,
individually or in the aggregate, a material adverse effect on our business,
financial condition or results of operations.

SEASONALITY

We may experience seasonal fluctuations as trade shows and conferences held
in one quarter in the current year may be held in a different quarter in future
years.

EMPLOYEES

On December 31, 2003, we employed about 850 people, primarily in the United
States. None of our employees are represented by a labor union, and we consider
relations with our employees to be good.

RISK FACTORS

The following are factors that may affect our actual operating results and
could cause results to differ materially from those in any forward-looking
statements. In addition to the other information contained in this document, you
should carefully consider the following risk factors.

We are incurring substantial operating losses, we anticipate additional future
losses and we must increase our revenues to become profitable.

We incurred net losses of $87.8 million, $286.3 million and $104.1 million
in 2003, 2002 and 2001, respectively. We face an environment of uncertainty, and
visibility for the Company's business, particularly advertising sales, remains
limited. We expect that we will continue to incur operating losses in the near
term.

In order to return to profitability, we must achieve substantial revenue
growth. Revenue growth will depend on a recovery in marketing spending in
traditional b-to-b media along with continued growth from new online media
offerings. Although we have implemented a number of expense reduction and
restructuring initiatives to more closely align our cost structure with the
current business environment, expense reductions alone, without revenue growth,
will not return us to profitability. We cannot assure you as to whether or when
we will return to profitability or whether we will be able to sustain such
profitability, if achieved.

We depend on advertising revenues, which decrease during economic downturns and
fluctuate from period to period.

For the years ended December 31, 2003, 2002, and 2001 about 61.9%, 59.7%
and 49.0%, respectively, of our revenues came from advertising. Our advertising
revenues fluctuate with general economic cycles, and any material decline in
these revenues could have a material adverse effect on our business, results of
operations and financial condition. Historically, advertising revenues have
increased during economic recoveries and decreased during both general economic
downturns and regional economic recessions. In a general economic downturn or a
recession, advertisers reduce their advertising budgets, intensify their
attempts to negotiate lower advertising rates and pay outstanding invoices more
slowly. We have experienced some of these effects in 2001, 2002 and 2003. Our
advertising revenues decreased by 20.2% from 2001 to 2002 and by 9.0% between
2002 and 2003. If the anticipated recovery in marketing spending in traditional
b-to-b media does not take place, or is significantly delayed, our results of
operations may be adversely affected.

We have a significant amount of debt.

At December 31, 2003, we had total indebtedness of approximately $328.6
million, net of approximately $3.3 million of original-issue discount on our
10 3/8% senior subordinated notes ("Subordinated Notes") and approximately $0.6
million of original-issue discount on our 11 7/8% senior secured notes ("Secured
Notes"). Subject to restrictions in our debt instruments, we had the ability to
incur additional indebtedness of approximately $39.9 million under our credit
facility at December 31, 2003.

15

The level of our indebtedness could have important consequences, including:

- Limiting cash flow available for general corporate purposes, including
capital expenditures, because a substantial portion of our cash flow
from operations must be dedicated to servicing our debt;

- Limiting our ability to obtain additional debt financing in the future
for working capital, capital expenditures or acquisitions;

- Making us more vulnerable in the event of a further downturn in
general economic conditions or in our business; and

- Limiting our flexibility in reacting to competitive and other changes
in our industry.

Our current debt levels have subjected us to the risks described above. If
new debt is added to our current debt levels, these risks could intensify.

We may not be able to service our debt.

Our ability to pay or to refinance our indebtedness will depend upon our
future operating performance, which will be affected by general economic,
financial, competitive, business, and other factors beyond our control.

We cannot assure you that our business will generate sufficient cash flow
from operations, that currently anticipated revenues and cost-saving efforts
will be realized on schedule or at all, or that future borrowings will be
available to us under our credit facility or otherwise in amounts sufficient to
enable us to service our debt obligations, to pay our indebtedness at maturity
or otherwise, or to fund our other liquidity needs. If we are unable to meet our
debt obligations or fund our other liquidity needs, we may need to further
restructure or refinance our indebtedness, sell assets or seek additional equity
capital. We cannot assure you that we will be able to accomplish those actions
on satisfactory terms, if at all, which could cause us to default on our
obligations and impair our liquidity. Our ability to restructure or refinance
will depend on the capital markets and our financial condition at such time. Any
refinancing of our debt could be at higher interest rates and may require us to
comply with more onerous covenants, which could further restrict our business
operations. In addition, the terms of the convertible preferred stock and
warrants to purchase common stock, including the conversion price, dividend and
liquidation preference adjustment provisions, could result in substantial
dilution to stockholders. The redemption price premiums, and board
representation rights, could negatively impact our ability to access the equity
markets in the future.

Because a significant portion of our operations are currently conducted
through our subsidiaries, our ability to pay our indebtedness is also dependent
on the cash flows of our subsidiaries and the distribution of those cash flows
to us, or upon loans or other payments of funds by our subsidiaries to us. The
ability of our subsidiaries to make distributions or other payments to us will
depend upon their operating results, applicable laws and any contractual
restrictions contained in the instruments governing their indebtedness. If money
generated by our subsidiaries is not available to us, our ability to repay our
indebtedness may be adversely affected.

The terms of our debt instruments and preferred stock impose financial and
operating restrictions.

The indentures governing our Subordinated Notes and our Secured Notes, our
credit facility and our convertible preferred stock contain restrictive
covenants that limit our ability to engage in a variety of transactions,
including incurring or guaranteeing additional indebtedness, making investments,
creating liens on our assets, transferring or selling our assets, paying
dividends or engaging in mergers, acquisitions or consolidations. The terms of
our credit facility prohibit us from voluntarily prepaying certain indebtedness.

A breach of any of the covenants or other provisions in our debt
instruments could result in a default thereunder. Upon the occurrence of an
event of default under our debt instruments, the lenders could elect to declare
all amounts outstanding thereunder to be immediately due and payable and,
terminate all commitments to extend further credit, which would adversely affect
our ability to fund our operations. An acceleration
16

of amounts due under our credit facility would cause us to be in default under
the indenture governing our Subordinated Notes and our Secured Notes, resulting
in the acceleration of all outstanding amounts, and vice versa, given certain
thresholds. If we are unable to repay any accelerated amounts under our debt
instruments, the respective lenders/holders could proceed against the collateral
granted to them to secure that indebtedness. If the lenders/holders under our
debt instruments accelerate the repayment of borrowings, we cannot assure you
that we will have sufficient assets to repay all of our indebtedness.

The preferred stockholders have the right to cause the Company to seek a buyer.

Under the preferred stock agreement, since the leverage ratio has exceeded
7.5 for four consecutive quarters, the preferred stockholders have the right to
cause the Company to seek a buyer for all of the assets or issued and
outstanding capital stock of the Company. If a buyer is found, we cannot assure
the common stockholders that there will be enough proceeds from the sale to
payoff all of our outstanding debt, the outstanding amount due the preferred
stockholders, and have funds remaining for the common stockholders. If the
Company would have been sold on the date of this filing, the bondholders would
be entitled to receive $335.8 million and the preferred stockholders would be
entitled to receive $226.6 million before the common stockholders would receive
anything for their common shares.

If the U.S. and European economies worsen, the cost-saving efforts we
implemented may not be sufficient to achieve the benefits we expect.

In 2002 and 2003, we experienced a significant decline in revenue, due
primarily to weak economic conditions, which were exacerbated by the threat of
additional terrorist attacks and the war with Iraq. We cannot predict if or when
the economy or our revenues will improve. We have taken a number of steps
designed to improve our profits and margins despite decreased revenues. We have
sold properties that were underperforming; restructured a number of our
businesses and support departments; and reduced overhead infrastructure by
consolidating and closing several facilities; centralizing enterprise
information technology services and outsourcing certain corporate functions. As
a result, we recorded special charges to our income of $18.8 million in 2001,
$16.4 million in 2002 and $5.7 million in 2003. If the U.S. and European
economies worsen, or if additional terrorist attacks occur, our revenues may
continue to decline. If revenues decline beyond our expectations, the
cost-saving efforts we implemented in 2002 and in 2003 will likely not achieve
the benefits we expect. We may be forced to take additional cost-saving steps
that could result in additional charges and otherwise have a material adverse
affect on our business.

The profitability and success of our trade shows and conferences could be
adversely affected if we are unable to obtain desirable dates and locations.

In 2003, about 21.4% of our revenues came from trade shows and conferences.
We compete for desirable dates and venues for our trade shows and conferences.
If this competition intensifies, we may be unable to schedule important
engagements. If we are unable to obtain desirable dates and venues for events,
the profitability and future success of these events could be adversely
affected. Although we generally reserve venues and dates more than one year in
advance, these reservations are not binding until we sign a contract with a
facility operator. These contracts generally hold venues and dates for only one
year.

A significant portion of our revenues and operating margin is generated from our
Natural Product Expo East and Natural Product Expo West trade shows. A decline
in the performance of these shows would significantly reduce our revenues and
operating income.

For the year ended December 31, 2003, our Natural Product Expo East and
Natural Product Expo West trade shows represented approximately 8.9% of our
total revenue and approximately 28.3% of operating margin. We expect that the
Natural Product Expo East and Natural Product Expo West trade shows will
continue to represent a significant portion of our overall revenue and
contribution in the future. Therefore, a significant decline in the performance
of one or both of the Natural Product Expo East and Natural Product Expo West
trade shows could have a material adverse effect on our financial condition and
results of operations.
17

A terrorist attack or the outbreak of diseases could have a significant effect
on our trade shows.

The events of September 11, 2001 had a material adverse impact on the
Company. The occurrence of another terrorist attack could again have a material
adverse impact on the Company and its operations.

In 2003, there was an outbreak of Severe Acute Respiratory Syndrome (SARS),
which primarily had an adverse impact on the Company's Asia trade show. If there
were another outbreak of a disease (such as SARS) that affected travel behavior,
particularly in the U.S., it could have a material adverse impact on the
Companies trade show operations.

Our trade shows, conferences and publishing revenues vary due to the movement of
annual events or publication mailing dates and the timing of our customers'
product launches.

Our trade shows, conferences and publishing revenues are seasonal, due
primarily to the timing of our large trade shows and conferences and publication
of our large industry directories. Because event revenues are recognized when a
particular event is held, and publication revenues are recognized in the month
publications are mailed, we may also experience fluctuations in quarterly
revenues based on the movement of annual events or mailing dates from one
quarter to another. In 2003, about 26.4% of our total revenues was generated
during the first quarter, about 24.5% during the second, about 26.2% during the
third, and about 22.9% of our revenues was generated during the fourth quarter.

In addition, our trade show and conference revenues may fluctuate from
period to period based on the spending patterns of our customers. Many of our
large customers concentrate their trade show participation around major product
launches. Because we cannot always know or predict when our large customers
intend to launch new products, it is difficult to anticipate any related
fluctuations in our trade shows and conferences revenues.

Loss of key personnel could impair our success.

We benefit from the leadership and experience of our senior management
team, and we depend on its continuing services in order to successfully
implement our business strategy. Although we have entered into employment
agreements with Thomas L. Kemp, Daniel J. Ramella and other executive
management, they and other key personnel may not remain in our employment. The
loss of key personnel could have a material adverse effect on our business,
results of operations and financial condition. We do not maintain "key person"
life insurance with respect to our senior management team. See Recent Events
section of Management's Discussion and Analysis of Financial Condition and
Results of Operations regarding the Chief Executive Officer's departure from the
Company.

Competition may adversely affect our earnings and results of operations.

We experience intense competition for our products and services. If we fail
to compete effectively, our earnings and results of operations could be
adversely affected. We compete for readers and advertisers in the publishing
marketplace and for trade show and conference venues, exhibitors, sponsorships
and show attendees. Because our industry is relatively easy to enter, we
anticipate that additional competitors, some of whom may have greater resources
than we do, may enter these markets and intensify competition.

Our overall operations may be adversely affected by risks associated with
international operations.

We have operations outside the United States. The following risks in
international markets could have a material adverse effect on our future
international operations and, consequently, on our business, results of
operations and financial condition:

- the uncertainty of product acceptance by different cultures;

- difficulties in staffing and managing multinational operations;

- general economic and political uncertainties and potential for social
unrest;

18

- limitations on our ability to enforce legal rights and remedies;

- reduced protection for intellectual property rights in some countries;

- state-imposed restrictions on the repatriation of funds; and

- potentially adverse tax consequences.

New product launches or acquired products may reduce our earnings or generate
losses.

Our future success will depend in part on our ability to continue offering
new products and services that gain market acceptance by addressing the needs of
specific audience groups within our targeted industries. Our efforts to
introduce new or to integrate acquired products may not be successful or
profitable. The process of internally researching and developing, launching,
gaining acceptance and establishing profitability for a new product, or
assimilating and marketing an acquired product, is both risky and costly.

Costs related to the development of new products and services are expensed
as incurred and, accordingly, our profitability from year to year may be
adversely affected by the number, timing, and scope of new product launches.

The infringement or invalidation of our proprietary rights could have an adverse
effect on our business.

We regard our copyrights and trademarks, including our Internet domain
names, service marks and similar intellectual property, as critical to our
success. We rely on copyright and trademark laws in the United States and other
jurisdictions and on confidentiality agreements with some of our employees and
others to protect our proprietary rights. If any of these rights were infringed
or invalidated, our business could be adversely affected. In addition, our
business activities could infringe upon the proprietary rights of others, who
could assert infringement claims against us. If we are forced to defend against
any such claims, whether they are with or without merit or are determined in our
favor, then we may face costly litigation, diversion of technical and management
personnel, or product and service delays. As a result of such a dispute, we may
have to develop non-infringing technology or enter into royalty or licensing
agreements. Such royalty or licensing agreements, if required, may be
unavailable on terms acceptable to us, or at all. If there is a successful claim
of infringement against us and we are unable to develop non-infringing
technology or enter into royalty or licensing agreements on a timely basis, our
business could be adversely affected.

We seek to register our trademarks in the United States and elsewhere.
These registrations could be challenged by others or invalidated through
administrative process or litigation. In addition, our confidentiality
agreements with some of our employees or others may not provide adequate
protection of our proprietary rights in the event of unauthorized use or
disclosure of our proprietary information, or if our proprietary information
otherwise becomes known or is independently developed by competitors.

Reliance on principal vendors could adversely affect our business.

We rely on our principal vendors and their ability or willingness to sell
products to us on favorable price and other terms. Many factors outside our
control may harm these relationships and the ability or willingness of these
vendors to sell these products to us on such terms. Currently, our principal
vendors are paper suppliers, the United States Postal Service and printing
suppliers. If any of our principal vendors discontinues or temporarily
terminates its services and we are unable to find adequate alternatives, we may
experience increased prices, interruptions and delays in services. These factors
could adversely affect our business.

Increases in paper or postage costs could cause our expenses to increase and may
adversely affect our business.

Paper and postage are necessary expenses relating to our print products and
magazine distribution. In 2003, these expenses accounted for approximately 7.8%
and 14.5%, respectively, of our total editorial, production and circulation
costs. Significant increases in paper prices, or in postage prices may have an
adverse effect on our business. We do not use forward contracts, and all of our
paper supply vendor arrangements

19

provide for price adjustments to reflect prevailing market prices. We use the
United States Postal Service for domestic distribution of substantially all of
our magazines and marketing materials.

ITEM 2. PROPERTIES

The Company leases all of its principal properties. The general
characteristics of the leased properties are as follows:

- ---------------

(1) The Company is no longer occupying 57,500 square feet of office space at its
Cleveland, Ohio facility. The Company has sublet 28,766 square feet of this
space.

(2) The Company has sublet these offices for the remainder of their respective
lease terms.

(3) The Company is no longer occupying 13,650 square feet of this space.

(4) The Company is no longer occupying this space.

The Company has other smaller properties, including sales and/or general
offices under leases expiring through 2013, located in cities throughout the
United States, United Kingdom, and Hong Kong. We believe our facilities are
suitable and adequate for our present needs.

ITEM 3. LEGAL PROCEEDINGS

In connection with the acquisition of Mecklermedia Corporation in 1998, a
lawsuit was brought against the Company on December 1, 1998 by Ariff Alidina
(the "Plaintiff"), a former stockholder of Mecklermedia Corporation, in the
United States Federal District Court in the Southern District of New York for an
unspecified amount, as well as other relief. The Plaintiff had claimed that the
Company violated the federal securities laws by selling Mr. Meckler, a
beneficial owner of approximately 26% of the shares of Mecklermedia, an 80.1%
interest in internet.com Corporation (now known as Jupitermedia Corporation) for
what the Plaintiff alleges was a below-market price, thereby providing Mr.
Meckler more consideration for his common stock in Mecklermedia Corporation than
was paid to other stockholders of Mecklermedia Corporation. On May 16, 2001, the
United States District Court for the Southern District of New York granted the
Plaintiff's motion for certification of a class consisting of all former
stockholders of Mecklermedia who tendered their shares in the tender offer. By
letter dated November 3, 2003, plaintiffs' counsel informed the Court that a
settlement had been reached in this case and that a request for preliminary
approval of the settlement will be submitted to the Court once the settlement
papers are finalized. The parties will soon submit papers to the Court and seek
its preliminary approval of the settlement. If approved, the class settlement
will be paid entirely from insurance proceeds.

20

In the normal course of business, Penton is subject to a number of lawsuits
and claims, both actual and potential in nature. While management believes that
resolution of existing claims and lawsuits will not have a material adverse
effect on Penton's financial statements, management is unable to estimate the
magnitude or financial impact of claims and lawsuits that may be filed in the
future.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of 2003.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

In June 2003, the Company was notified by the New York Stock Exchange
("NYSE") that it would begin delisting procedures of the Company's common stock.
The NYSE reached its decision because Penton had been unable to comply with the
NYSE's continued listing criteria, which include minimum levels for stock price,
market capitalization, and stockholders' equity. The NYSE took this action at
this time because Penton was not expected to be able to increase its equity to
the minimum listing requirements within the required time frame. On June 17,
2003, Penton's stock began trading on the Over-the-Counter Bulletin Board under
the symbol PTON.

The following tables set forth, for the periods indicated, the high and low
sales prices for Penton's common stock.

The Company had approximately 981 record holders of its common stock on
February 27, 2004.

Our dividend policy is determined by our Board of Directors. In July 2001,
a decision was made by our Board of Directors to discontinue the payment of
dividends. We paid quarterly dividends for the first half of 2001 in the amount
of $0.03 per share. Any decision to pay dividends in the future will be made by
our Board of Directors based upon the results of our operations and financial
condition and such other matters as our Board of Directors considers relevant.
The terms of our outstanding convertible preferred stock, however, limit the
payment of dividends on the common stock until all accrued dividends have been
paid on the convertible preferred stock. We may not pay accrued dividends on the
convertible preferred stock unless approved by the holders of not less than 75%
of the then outstanding shares of convertible preferred stock. Furthermore, the
Company's ability to pay dividends is restricted by certain covenants in the
bond indentures and credit facility.

21

Redeemable common stock relates to common stock that may be subject to
rescissionary rights. The purchase of common stock by certain employees in the
Company's 401(k) plan from May 2001 through March 2003 was not registered under
the federal securities laws (the "unregistered purchases"). As a result, such
purchasers of our common stock during that period have the right to rescind
their purchases for an amount equal to the purchase price paid for the shares,
plus interest from the date of purchase, unless the employee has released the
Company from such obligation as noted below. Any rescissionary rights will lapse
one year from the date of any such purchase. The Company may also be subject to
civil and other penalties by regulatory authorities. The unregistered purchases
did not cause an event of default under the Subordinated Notes, the Secured
Notes or the senior secured credit facility. However, an event of default could
occur as an indirect result of the unregistered purchases, if for instance, such
unregistered purchases lead to restricted payments under the indentures and/or
the loan agreement. On March 31, 2003, the Company filed a Form S-8 registration
and registered 6.0 million additional shares to be offered under the 401(k)
plan.

In April 2003, the Company offered to reimburse employees who had purchased
Penton common stock through the Company's 401(k) plan between March 25, 2002 and
March 25, 2003. Employees who signed a release were reimbursed the amount by
which the price they paid for the common stock exceeded the closing price of the
stock on the date they executed the release, or if the stock had been sold, the
amount by which the price paid by the employee exceeded the sales price.
Employees who did not sign the release by May 22, 2003 retain any rights they
may have under the Federal securities laws. Over 80% of the employees who were
offered the reimbursement accepted the terms of the release, representing a
liability of approximately $0.6 million, which was deposited into each
individual's 401(k) account in July 2003. This amount is included in
restructuring and other charges in the consolidated statement of operations.

At December 31, 2003, the Company had classified 4,191 shares, related to
the potential rescissionary rights, outside of stockholders' deficit because the
redemption of the stock is not within the control of the Company. All
rescissionary rights expired on March 14, 2004.

ITEM 6. SELECTED FINANCIAL DATA

The following table presents our selected financial data. The operating
data for the three years ended December 31, 2003, 2002 and 2001 and the balance
sheet data as of December 31, 2003 and 2002 have been derived from our audited
consolidated financial statements and related notes, which appear elsewhere in
this Form 10-K. The operating data for the two years ended December 31, 2000 and
1999 and the balance sheet data as of December 31, 1999, 2000 and 2001 have been
derived from our audited consolidated financial statements and related notes
that are not included in this Form 10-K.

You should read the following information together with our audited
consolidated financial statements and related notes and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" appearing
elsewhere herein.

You should also consider the following when reading the statement of
operations data:

- All historical amounts have been restated to reflect the
classification of (i) our former Printing segment, which was sold in
November 1999; (ii) our Direct Mail segment, which was sold in March
2000; (iii) our PM Australia component, which was sold in December
2002; and (iv) our PTS component, which was sold in January 2003, as
discontinued operations.

- Operating expenses include the following charges: (a) impairment of
Internet asset charges of $2.1 million in 2000; (b) impairment of
other asset charges of $45.8 million, $223.4 million, and $59.8
million, in 2003, 2002 and 2001, respectively; (c) restructuring
charges of $5.7 million, $16.4 million, $18.8 million in 2003, 2002
and 2001, respectively (of which $1.0 million is classified with
discontinued operations in 2002); (d) loss on sale of properties of
$0.9 million in 2002; and (e) amortization of goodwill in 1999, 2000
and 2001. See Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" for an overview of
these items that affect comparability of the financial data in this
five-year summary.

22

- In 2002, Penton adopted Statement of Financial Accounting Standard
("SFAS") No. 142 and recorded a transitional one-time, non-cash
goodwill impairment charge of $39.7 million related to two of our
reporting units, which are part of our Technology segment. The
charge was recorded as a cumulative effect of accounting change. See
Note 4 -- Goodwill and Other Intangibles in the notes to the
consolidated financial statements.

- In 2002, the amortization of deemed dividend and accretion of
preferred stock included a $42.1 million, one-time, non-cash charge,
which was the result of stockholder approval on May 31, 2002 to
remove the 10-year mandatory redemption date on our preferred stock.
See Note 7 -- Mandatorily Redeemable Convertible Preferred Stock in
the notes to consolidated financial statements.

- The 2003 and 2002 benefit for income taxes includes a $19.0 million
and $36.2 million charge, respectively, to establish a full
valuation allowance for our net deferred tax assets and net
operating loss carryforwards. See Note 10 -- Income Taxes in the
notes to consolidated financial statements appearing elsewhere
herein.

- Penton sold its stock in Jupitermedia Corporation (formerly known as
INT Media Group, Inc.) and recognized a gain from its sale of $1.5
million, $110.2 million and $5.9 million in 2002, 2000 and 1999,
respectively.

- Included in interest expense in 2003 is approximately $0.9 million
related to the write-off of unamortized financing fees associated
with the commitment reduction of our credit facility revolver in
January 2003 from $40.0 million to $20.1 million. Also included in
interest expense in 2003 is approximately $1.0 million related to
the write-off of unamortized financing fees associated with the
replacement of our senior secured credit facility in August 2003
with a new four-year loan agreement. Included in interest expense in
2002 is approximately $0.7 million related to the write-off of
unamortized finance fees associated with the commitment reduction of
our credit facility revolver from $185.0 million to $40.0 million in
March 2002 and approximately $1.4 million related to hedging
activities.

- The extinguishment of debt of $0.3 million in 2002 consists of a
gain on the purchase of $10.0 million face value of our Subordinated
Notes in March 2002, at prevailing market prices, offset by the
write-off of unamortized deferred finance costs associated with the
payoff of our term loan A and term loan B facilities. In 1999, the
extinguishment of debt of $8.4 million related to the write-off of
unamortized deferred finance costs associated with our former credit
facility and the extinguishment of part of our outstanding former
senior debt.

- Included in cash flows from operations in 2003 and 2002 are tax
refunds of $52.7 million and $12.2 million, respectively.

23

CONSOLIDATED COMPARATIVE SUMMARY OF SELECTED FINANCIAL DATA

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Set forth below is a discussion and analysis of our financial condition and
results of operations. You should read this discussion and analysis in
conjunction with the audited consolidated financial statements of Penton Media,
Inc. included elsewhere in this document. This "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contains
forward-looking statements. See "Cautionary Statement" and "Risk Factors" in
Item 1 of this annual report on Form 10-K for a discussion of the uncertainties,
risks and assumptions associated with these statements.

OVERVIEW

We believe we are a leading, global b-to-b media company. We provide media
products that deliver proprietary business information to owners, operators,
managers and professionals in the industries we serve. Through these products,
we offer industry suppliers multiple ways to reach their customers and prospects
as part of their sales and marketing efforts. We publish specialized trade
magazines, produce trade shows and

25

conferences, and maintain Web businesses, including electronic newsletters. Our
products serve 12 industries, which we group into four segments:

INDUSTRY TECHNOLOGY
Manufacturing Internet Technologies
Design/Engineering Enterprise Information Technology
Mechanical Systems/Construction Electronics
Supply Chain
Government/Compliance RETAIL
Aviation Food/Retail
Leisure/Hospitality
LIFESTYLE
Natural Products

We believe we have leading media products in each of the industries we
serve. We are structured along segment and industry lines rather than by product
lines. This enables us to promote our related groups of products, including
publications, trade shows and conferences, and online media products to our
customers.

The b-to-b media industry experienced sales pressures in 2003 for the third
consecutive year as the weak economy and corporate spending cuts adversely
affected marketing expenditures.

Advertising in b-to-b magazines was most dramatically affected,
particularly titles serving the technology and manufacturing markets. According
to BIN, ad spending in the computer segment fell 16.9%, spending fell by 9.0% in
the software segment, and the manufacturing and electronic equipment/components
segment experienced an ad-spending decline of 7.3% compared with 2002. These
decreases followed significantly steeper declines in 2002 and 2001.

While the trade show industry fared somewhat better, net square footage of
exhibit space declined, although at a slower rate, for the third consecutive
year in 2003, again as a result of cautious corporate spending in a weak
economy. The number of exhibiting companies and professional attendance
experienced a modest uptick after two years of declines. Large, horizontal trade
shows in technology and manufacturing markets were particularly impacted,
causing many producers to cancel or postpone events until market conditions
improve.

Penton's financial performance was significantly impacted by these
marketing spending trends in 2003, as its manufacturing and technology media
portfolios are among the Company's largest.

While a recovery in b-to-b media spending typically has lagged economic
recoveries by 6 to 12 months, management of the Company is uncertain as to the
predictability of such a recovery for Penton. The magnitude and length of the
most recent b-to-b media recession have been unprecedented, making it difficult
to forecast a full recovery of the business, particularly in the Company's core
manufacturing and technology segments.

In addition to trends in declining media spending across most of our market
segments, and particularly in technology and manufacturing, we have witnessed a
trend of our customers migrating from the predominant use of traditional media
to market products and build brand recognition, to marketing strategies
employing a range of integrated media solutions that produces greater return on
investment, as measured by increases in sales and sales lead generation. In
particular, there is much greater interest on the part of our customers in the
creative combination of electronic media solutions, custom media solutions and
"value-added" marketing tools, such as direct marketing mailing/e-mail lists and
editorial reprints.

In response to these developments, in 2003 we focused on development of new
online media products to enhance our approach to selling comprehensive
media/marketing packages focused on customers' specific business needs and
marketing objectives. We continue in 2004 with our efforts to roll out new
digital media products that respond to customer and market needs and with
aggressive sales and marketing efforts.

26

We are focused on applying proper resources to these efforts, even as we
have significantly reduced costs of the business over the past few years, and
recognize the importance of continued cost management to expand profits and
profit margins. Our intention is to center our cost reduction efforts, primarily
on corporate overheads, and to apply optimal staffing and investment resources
to our products, protecting the Company's reputation for high-quality media
brands and excellent customer service.

MANAGEMENT OBJECTIVES

The Company's objective is to conserve cash, grow profitability and build
lasting value for our stockholders. The Company's strategies to accomplish these
objectives are to continue to reduce fixed costs, to drive revenue growth, and
to continue to restructure our portfolio. Our cost reduction efforts include
freezing the Company's defined benefits plan effective January 1, 2004,
continuing to reduce capital spending and implementing process improvements that
add a permanent reduction in the cost basis of our business. We plan to focus on
driving revenues through aggressive, consultative selling of integrated
marketing solutions to our customers and through the introduction of creative
media products, particularly e-media and custom media that address our
customers' need to reach qualified buyers. We continue to restructure our
portfolio of products to improve profitability. We cancel or discontinue trade
shows or publications if market conditions are too weak to support them and
continually respond to opportunities in our markets to develop new products that
respond to market trends and customer needs.

The most important thing we accomplished in 2003 was the aggressive
reduction in the cost basis of the business through reductions in operating and
corporate expenses, process improvements, the greater use of technology for
productivity improvements and portfolio management. Through the combination of
all of these efforts, we reduced the cost basis of the business by $31.0 million
in 2003 from the prior year, adjusting for the sale of properties in December
2002 and January 2003. Since we reduced costs by more than our revenue declined,
we were able to achieve improvement in our operating results in what remained
difficult market conditions for most b-to-b media companies in 2003.

SIGNIFICANT EVENTS

Chairman and Chief Executive Officer to Leave Company

On March 24, 2004, the Company announced that its Chairman and Chief
Executive Officer ("CEO"), Thomas L. Kemp, will be leaving the Company later
this year. To serve the Company's best interest and ensure an orderly
transition, Mr. Kemp will remain Chairman and CEO until his replacement has been
named. A national search, led by a committee of independent directors, will
begin immediately.

New York Stock Exchange Notification

On June 11, 2003, the Company received notice from the NYSE that it would
begin delisting procedures related to the Company's common stock. The NYSE
reached its decision because the Company was unable to comply with the NYSE's
continued listing criteria, which included minimal levels for stock price,
market capitalization, and stockholders' equity. On June 17, 2003, trading of
the Company's common stock was transferred from the NYSE to the Over-the-Counter
Bulletin Board. The Company's common stock is currently traded under the symbol
PTON.

Tax Refund

In January 2003, the Company received a tax refund of $52.7 million.

Financing Activity

In January 2003, the Company amended its senior credit facility. The
amended agreement permitted the Company to sell certain properties in excess of
the $5.0 million aggregate limit required by the original amended agreement. In
return, the banks lending commitment was reduced from $40.0 million to $32.0
million, and at such time as the aggregate sum of the cash and cash equivalents
of Penton equaled or exceeded

27

$40.0 million, an additional one-time reduction of $10.0 million was required.
In addition, upon the sale of PTS in January 2003, the revolving commitment was
further reduced by $1.9 million.

In August 2003, the Company replaced its senior secured credit facility
with a new four-year loan and security agreement. Pursuant to the terms of the
revolving loan and security agreement, the Company can borrow up to the lesser
of (i) $40.0 million; (ii) 2.5x the Company's last 12 months adjusted EBITDA
measured monthly during the first year, 2.25x during the second year and 2.0x
thereafter; (iii) 40% of the Company's last six months of revenues; or (iv) 25%
of the Company's enterprise value, as determined annually by a third party. The
revolving credit facility bears interest at LIBOR plus 5.0% subject to a LIBOR
minimum of 1.5%. The Company must comply with a quarterly financial covenant
limiting the ratio of maximum bank debt to the last twelve months EBITDA to 2.5x
through March 31, 2004, 2.25x from June 30, 2004 through March 31, 2005 and 2.0x
thereafter. The loan agreement permits the Company to sell assets of up to $12.0
million in the aggregate during the term or $5.0 million in any single asset
sale and to complete acquisitions of up to $5.0 million per year. At December
31, 2003 $39.9 million was available under the loan agreement. There were no
amounts outstanding.

Dispositions

In January 2003, the Company completed the sale of the assets of its PTS
group, which was part of our Industry segment, to Cygnus Business Media, Inc.
for total consideration of approximately $3.2 million. The cash received from
the sale was used to pay down the Company's outstanding credit facility. The
Company recognized a gain of approximately $1.4 million on the sale, which was
recorded in the first quarter of 2003. The results of PTS are included as a
component of discontinued operations in the accompanying consolidated statements
of operations.

Preferred Stock Leverage Ratio Event of Non-Compliance

An event of non-compliance continues to exist under our Series B
Convertible Preferred Stock because the Company's leverage ratio of 13.9 at
December 31, 2003 (defined as debt less cash balances in excess of $5.0 million
plus the liquidation value of the preferred stock and unpaid dividends divided
by adjusted EBITDA) exceeds 7.5. When the event of non-compliance initially
occurred on April 1, 2003, the holders of a majority of the preferred stock were
able to nominate two additional members to our Board of Directors. Since the
event of non-compliance was not cured by June 30, 2003, the holders of a
majority of the preferred stock then outstanding had the right to elect one less
than a minimum majority of our Board of Directors. As the holders of the
preferred stock already maintained one less than a minimum majority of our
board, no change was necessary. In addition, upon the occurrence of this event
of non-compliance, the 5% dividend rate on the preferred stock increased by one
percentage point as of April 1, June 30, September 28 and December 27, 2003 and
March 26, 2004 up to the maximum rate of 10%. The conversion price on the
preferred stock decreased by $0.76 as of April 1, June 30, September 28 and
December 27, 2003 and March 26, 2004 to the maximum reduction of $3.80. The
conversion price is currently $3.81 as of the date of this filing. The
conversion price will adjust to what it would have been absent such event, to
the extent of any preferred shares still outstanding, once the leverage ratio is
less than 7.5. Furthermore, the dividend rate will adjust back to 5% as of the
date on which the leverage ratio is less than 7.5. Under the preferred stock
agreement, since the leverage ratio has exceeded 7.5 for four consecutive
quarters, the preferred stockholders have the right to cause the Company to seek
a buyer for all of the assets or issued and outstanding capital stock of the
Company. If the Company would have been sold on December 31, 2003, the
bondholders would be entitled to receive $335.8 million and the preferred
stockholders would be entitled to receive $184.7 million before the common
stockholders would receive anything for their common shares. The leverage ratio
event of non-compliance does not represent an event of default or violation
under any of the Company's outstanding notes or the new credit facility. As
such, there will not be an acceleration of any outstanding indebtedness as a
result of this event. In addition, this event of non-compliance and the
resulting consequences do not result in any cash outflow from the Company.

Under the conversion terms of the preferred stock, each holder has a right
to convert dividends into additional shares of common stock. At December 31,
2003, no dividends had been declared. However, in light
28

of each holder's conversion right and considering the increase in the dividend
rate and the concurrent reduction of the conversion price as noted above, the
Company has recognized a deemed dividend for the beneficial conversion feature
inherent in the accumulated dividend based on the original commitment date(s).
All such accruals have been reported as an increase in the carrying value of the
preferred stock and a charge to capital in excess of par value since the Company
has a stockholder deficit.

RESULTS OF OPERATIONS

Since early 2001, the Company, like many of our customers and competitors,
have been adversely impacted by the broad economic slowdown. The b-to-b media
industry, in particular, has experienced severe declines as companies have
reduced their overall marketing expenditures in response to the global economic
slowdown and the resulting pressure on their businesses.

The overall slowdown in b-to-b media has impacted our margins and operating
income. As a result of sharply reduced revenues across our magazines and trade
shows, we recorded special charges of $59.1 million, $239.7 million and $78.5
million in 2003, 2002 and 2001, respectively, primarily for asset impairments
and restructuring and other costs resulting from our cost reduction initiatives
and the closure of certain facilities.

REVENUES

We recognize advertising revenues from Penton's trade magazines in the
month the publications are mailed. Amounts received in advance of trade shows
and conferences are deferred and recognized in the month the events are held.
Web site revenues, primarily advertising revenues, are recognized on a
straight-line basis over the contract term as services are provided ratably over
the term of the contract.

Our magazines generate revenues primarily from the sale of advertising
space. Our magazines are primarily controlled circulation and are distributed
free of charge to qualified subscribers in our target industries. Subscribers to
controlled-circulation publications qualify to receive our trade magazines by
verifying their responsibility for specific job functions, including purchasing
authority. We survey our magazine subscribers annually to verify their
continuing qualification. Trade show exhibitors pay a fixed price per square
foot of booth space. In addition, we receive revenues from attendee fees at
trade shows and from exhibitor sponsorships of promotional media. Our
conferences are supported by either attendee registration fees or marketer
sponsorship fees, or a combination of each.

The following table summarizes our net revenues:

Our business is beginning to stabilize as we move into 2004 and there seems
to be a stream of increasingly positive news about the U.S. economy. Our 2003
net revenues, however, continued to be impacted by the lack of recovery in our
core technology and manufacturing markets. Business conditions for our customers
in the technology and manufacturing markets have improved from the depressed
levels of 2002, but it remains to be seen how confident marketers are in the
sustainability of this recovery and how that translates into increased marketing
spending.

While there has been some advertising recovery in selected segments such as
consumer PC magazines, networking titles, security, government/defense and
automotive trade magazines, b-to-b advertising has not yet experienced a full
recovery in a broad range of sectors. The lack of recovery in advertising and
the industry as a whole suggests two things: a lag in the recovery of marketing
spending in our end markets; and a secular change in b-to-b marketing in regard
to how our customers are spending their marketing budgets. As our customers
increasingly embrace the Internet, as well as new, customized marketing
channels, traditional advertising pages may lag the recovery in marketing
budgets. We believe that Penton's development of its e-media products and custom
marketing initiatives will be extremely important if Penton expects to share in
any recovery in b-to-b marketing spending.

29

2003 vs. 2002

Total revenues decreased $28.8 million, or 12.3%, from $235.1 million in
2002 to $206.3 million in 2003. The decrease was due primarily to a decrease in
publishing revenues of $17.5 million, or 10.6%, from $165.7 million in 2002 to
$148.2 million in 2003 and a decrease in trade show and conference revenues of
$12.5 million, or 22.0%, from $56.7 million in 2002 to $44.2 million in 2003.
Online media revenues increased $1.2 million, or 9.2%, from $12.7 million in
2002 to $13.9 million in 2003. Included in revenues for 2002 were publishing
revenues of $1.3 million, tradeshow revenues of $5.4 million and online revenues
of $0.8 million associated with properties sold in December 2002, which were not
classified as discontinued operations.

The $17.5 million decrease in publishing revenues was due primarily to a
decrease in our Industry and Technology segments. Our manufacturing and
design/engineering portfolios accounted for $6.2 million of the decrease, while
our Internet technology, electronics and enterprise information technology
portfolios accounted for an additional $11.1 million of the decrease. Overall,
advertising revenues accounted for 9.0% of the 10.6% publishing revenue decrease
as companies remained cautious about their marketing budgets. Subscription
revenues, which represent about 6.5% of our total 2003 publishing revenues,
decreased by approximately $1.7 million when compared with 2002. List rental
revenues and licensing revenues also showed declines in 2003 when compared to
2002.

The $12.5 million decrease in our trade show and conference revenues was
due primarily to a decrease of $12.4 million in our Technology segment, and a
decrease of $2.7 million in our Industry segment. These declines were partially
offset by revenue improvements in our Lifestyle segment of $0.9 million and an
increase in our Retail segment of $1.7 million. Exhibitor revenues, which
represent about 69.0% of 2003 trade show and conference revenues, declined
nearly 24.2%, due primarily to a decrease in booth rentals. Exhibitor
cancellation revenues declined $3.3 million from $4.5 million in 2002 to $1.2
million in 2003. Attendee revenues declined nearly $1.9 million, however
sponsorship revenues more than offset this decrease.

The $1.2 million increase in online media revenues was primarily due to an
increase in our Technology segment of $0.8 million and an increase in our
Industry segment of $0.4 million. Most of the increase in online revenues was
due to increases in electronic newsletters and online events.

2002 vs. 2001

Total revenues decreased $123.8 million, or 34.5%, from $358.9 million in
2001 to $235.1 million in 2002. The decrease was due primarily to a decrease in
trade show and conference revenues of $81.2 million, or 58.9%, from $137.9
million in 2001 to $56.7 million in 2002 and a decrease in publishing revenues
of $43.1 million, or 20.7%, from $208.8 million in 2001 to $165.7 million in
2002. Online media revenues increased $0.6 million, or 4.9%, from $12.1 million
in 2001 to $12.7 million in 2002. Included in total revenues for 2002 and 2001
were revenues of $7.6 million and $27.2 million, respectively, associated with
properties sold in December 2002, which were not classified as discontinued
operations.

The significant decrease in our trade show revenues was primarily due to
weak performance in our global portfolio of Internet technology trade shows held
during the year. Our Internet technology trade shows represented $77.9 million,
or 63.0%, of our total revenue decline. In addition, declines were also
experienced in our electronics and mechanical systems/construction markets,
which accounted for an additional $3.3 million of the total revenue decline.
Exhibitor revenues, which represent about 71.0% and 73.6% of trade show and
conference revenues in 2002 and 2001, respectively, declined nearly 60.3%
between 2001 and 2002. Booth rentals and cancellation revenues accounted for
most of this decrease. Exhibitor cancellation revenues decreased $19.2 million
from $23.7 million in 2001 to $4.5 million in 2002. Attendee revenues,
sponsorship revenues, media sales and license fees all showed sharp declines.

The $43.1 million decrease in publishing revenues was due primarily to a
decrease in our Industry and Technology segments. Our Internet technology,
electronics and enterprise information technology portfolios accounted for $25.6
million of the decrease, while our manufacturing and design/engineering
portfolios accounted for $13.9 million of the decrease. Overall, advertising
revenues accounted for 84.2% of the publishing revenue decrease as companies cut
costs in response to their revenue declines and the slowdown

30

and uncertainty in the economy. Subscription revenues, which represent about
6.8% and 6.4% of our total 2002 and 2001 publishing revenues, respectively,
decreased by approximately $2.1 million when compared with 2001. List rental
revenues also showed declines in 2002 when compared to 2001 by nearly $3.1
million.

The $0.6 million increase in online media revenues was primarily due to an
increase in our Technology segment of $1.0 million offset by a decrease in our
Industry segment of $0.4 million. Most of the increase in online revenues was
due to increases in electronic newsletters and online events.

EDITORIAL, PRODUCTION AND CIRCULATION

Our editorial, production and circulation expenses include personnel costs,
purchased editorial costs, hall rental costs, postage charges, qualification
costs and paper costs. The decrease in editorial, production and circulation
expenses for 2003 compared to 2002 primarily reflects the effects of our expense
reduction initiatives including, lower headcount and personnel-related costs and
the elimination of some unprofitable properties. The decrease also reflects
lower costs due to decreases in volume, as well as the sale of four properties
in December 2002, which were not classified as discontinued operations. These
properties accounted for $3.1 million of the decrease.

The decrease in editorial, production and circulation expenses for 2002
compared to 2001 primarily reflect the effects of our expense reduction
initiatives, including the elimination of unprofitable properties, the reduction
of production costs through process improvements and the selective reduction in
frequency and circulation levels, the outsourcing of various functions in the
organization and the effects of staff reductions made in the second half of 2001
and in 2002.

SELLING, GENERAL AND ADMINISTRATIVE

Our selling, general and administrative ("SG&A") expenses include personnel
costs, independent sales representative commissions, product marketing and
facility costs. Our SG&A expenses also include costs of corporate functions,
including accounting, finance, legal, human resources, information systems, and
communications. The decrease in SG&A expenses for 2003 compared with 2002 was
due primarily to cost savings associated with additional office closings
completed in the second half of 2002 and in 2003 as well as other facility cost
reductions; additional staff reductions done in 2002 and 2003; the continued
cost reductions across all corporate functions; the continued cost reduction of
division overhead; a pension plan curtailment gain of $2.2 million recognized in
2003; reduced marketing expenses; and the sale of properties in December 2002,
which were not classified as discontinued operations. These properties accounted
for $5.1 million of the decrease.

The decrease in SG&A expenses for 2002 compared with 2001 was due primarily
to cost savings associated with the closure of nine offices; significant
reductions in staff costs realized from the restructuring actions taken in the
second half of 2001 and in 2002; a significant decrease in marketing and
marketing related costs; and a significant reduction in all corporate function
costs.

IMPAIRMENT OF ASSETS

31

2003 IMPAIRMENTS

During the third quarter of 2003, we completed our annual impairment test
of goodwill and other intangible assets under the provisions of SFAS No. 142,
"Goodwill and Other Intangible Assets" ("SFAS 142") and recorded a non-cash
charge of $37.6 million related to the reduction of the carrying value of
goodwill in three of our seven identified reporting units. We utilized a
third-party valuation company to determine the fair value of the reporting
units. Two of the reporting units are part of our Technology segment and one of
the reporting units is part of our Retail segment. The fair value of our
reporting units was determined using the income approach, which is similar to
the discounted cash flows approach.

Due to the impairment of goodwill in three of our seven reporting units, as
noted above, we also completed an assessment in accordance with SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144") at
September 30, 2003 and recorded non-cash charges of $8.2 million. These charges
primarily relate to the write-off of trade names and advertiser relationships
for properties in our Technology segment. The fair value of the asset groups was
determined using the income approach.

2002 IMPAIRMENTS

During the third quarter of 2002, we completed our transitional goodwill
impairment test under SFAS 142 for January 1, 2002 and recorded a non-cash
charge of $39.7 million to reduce the carrying value of goodwill for two of our
seven identified reporting units. Penton utilized a third-party valuation
company to determine the fair value of its reporting units. Both of these
reporting units are part of the Company's Technology segment. The charge is
reflected as a cumulative effect of accounting change in the accompanying
consolidated statements of operations.

During the third quarter, a number of events occurred that indicated that a
possible additional impairment of goodwill might exist. These events included
lower-than-expected revenues and adjusted EBITDA results for the year; a letter
from the NYSE indicating that the Company had fallen below minimum listing
standards; a significant decline in the Company's stock price; and the decision
by management to potentially sell or dispose of certain non-core assets. As a
result of these triggering events and circumstances, the Company completed an
additional SFAS 142 impairment review at September 30, 2002. This review
resulted in a non-cash charge of approximately $203.3 million, further reducing
the carrying value of goodwill for these two reporting units in our Technology
segment. The fair value of the reporting units for the initial and interim
impairment test was determined using the income approach.

Because of the events noted above, we also completed an assessment in
accordance with SFAS 144 and recorded a non-cash charge of $20.0 million. This
charge primarily relates to the write-off of mailing/exhibitor lists and sponsor
relationships for properties in our Technology segment. The fair value of the
asset groups was determined using the income approach.

2001 IMPAIRMENTS

In 2001, triggered by the decline in the economy, the deterioration of the
technology markets that we serve and the negative impact of the events of
September 11, 2001, we recorded asset and goodwill impairment charges of $69.6
million (of which $9.8 million was reclassified to discontinued operations in
the 2001 consolidated statements of operations presented herein) in the second
half of 2001. In addition to goodwill writedowns of $66.4 million, the remaining
charge primarily represented the write-off of assets of $1.7 million related to
various Web sites that were shut down and $0.9 million related to abandoned
circulation software costs.

PROVISION FOR LOAN IMPAIRMENT

32

During the second quarter of 2003, the Company determined that certain
executives would probably be unable to repay a significant portion of the
outstanding balance due under their executive loans without a significant
recovery in the Company's stock price. Consequently, the Company recorded a
provision for loan impairment in the amount of $7.6 million, reflecting the
amount by which the carrying value of each individual's loan exceeded the
underlying estimated fair value of the assets available to repay the loan. The
Company will recognize any recoveries of amounts reserved only upon payment of
the loans. The notes are full recourse loans and the Company intends to pursue
collection of all amounts when due. In addition to the factors noted above,
additional considerations in determining whether a reserve was necessary
included the delisting of the Company's stock from the NYSE in the second
quarter and the continued uncertainty of an economic recovery in the markets
served by the Company. The Company continues to monitor the collectibility of
the notes to determine if additional reserves are required.

RESTRUCTURING CHARGES

Due to the effects of an economic slowdown that started in 2001 and
continued through 2003, we implemented a number of expense reduction initiatives
to more closely align our cost structure with the current business environment.
In 2003 and 2002, operating costs were reduced by $39.9 million and $96.7
million, respectively. Specific actions taken are as follows:

- Reduced staffing levels in 2001, 2002 and 2003 by approximately 940
positions through terminations and attrition.

- For 2002, we imposed a companywide hiring freeze, as well as a salary
freeze for higher-paid employees.

- Shut down or consolidated more than 30 facilities worldwide.

- Reduced benefit costs by increasing employee contributions for health
care and suspending the Company match for our defined contribution plan.

- Eliminated unprofitable properties.

- Restructured various under-performing events by either eliminating these
events or by co-locating them with other events and realigning management
structures.

- Sold non-core and non-strategic properties.

- Reduced the production cost of various under-performing magazines through
process improvements, automation of pre-press work, new printing
contracts and selective reduction in frequency and circulation levels.

- Commenced a plan to centralize all information technology and accounting
services.

- Effectively outsourced various corporate and divisional functions.

For facilities that the Company no longer occupies, management makes
assumptions, including the number of years a property will be subleased, square
footage, market trends, property location and the price per square foot based on
discussions with realtors and/or parties that have shown interest in the space
and records estimated sublease income accordingly. The Company is actively
attempting to sublease all vacant premises.

Personnel costs include payments for severance, benefits and outplacement
services.

2003 RESTRUCTURING CHARGES

In order to meet continued revenue challenges in 2003, the Company recorded
restructuring charges of $4.7 million. The following sets forth detail
concerning the principal components of this charge:

- Personnel costs of $2.5 million are associated with the elimination of 85
positions, of which 79 position eliminations and payments of $1.1 million
were completed by year-end 2003. Approximately 91% of

33

the positions eliminated or to be eliminated are in the United States,
with most of the remaining positions in the United Kingdom.

- Office closure costs of $3.8 million relate primarily to the closure of
one floor at the Company's corporate headquarters and the partial closure
of one additional facility. This charge was offset by $2.3 million of
estimated sublease income related to these facilities.

- The charge for other exit costs of $0.7 million relates primarily to
equipment leases at closed facilities, cancellations of certain contracts
and broker commissions.

2002 RESTRUCTURING CHARGES

During 2002, we recorded restructuring charges of $16.4 million ($1.0
million of which is classified as discontinued operations). The following sets
forth additional detail concerning the principal components of this charge:

- Personnel costs of $10.3 million were associated with the elimination of
over 316 positions. At December 31, 2003, the elimination of all
positions and related payments, except for one executive, had been
completed. Approximately 93% of the positions eliminated were in the
United States, with most of the remaining positions in the United
Kingdom.

- Office closure costs of $5.1 million related to the closure of nine
offices primarily in the United States. These amounts were offset by
approximately $1.7 million related to two facilities that were subleased
in 2002. Adjustments of $1.2 million primarily relate to escalation
provisions, which had not been taken into consideration when the original
2002 liability was recorded.

- Other exit costs of $1.6 million include contractual obligations
associated with cancellation of certain trade show venues, hotel
contracts and service agreements.

2001 RESTRUCTURING CHARGES

During 2001, we recorded restructuring charges of $19.8 million. The
following sets forth additional detail concerning the principal components of
this charge:

- Personnel costs of $6.8 million were associated with the elimination of
over 400 positions. The elimination of all positions and related payments
were completed in 2003. Approximately 84% of the positions eliminated
were in the United States, with most of the remaining positions from the
United Kingdom and Germany.

- Office closure costs of $8.7 million related to the closure of more than
20 offices worldwide. These lease obligations continue through 2013.

- Other exit costs of $4.4 million include the write-off of capitalized
software development costs associated with the discontinuance of the
industry exchange component of New Hope Natural Media's Healthwell.com.
In the third quarter of 2001, we determined that some first-quarter
restructuring initiatives would not require the level of spending that
had been originally estimated and approximately $1.0 million was
reversed.

34

SUMMARY OF RESTRUCTURING ACTIVITIES

The following table summarizes the restructuring activity for the years
ended December 31, 2003, 2002 and 2001 (in thousands):

At December 31, 2003, the Company had an accrued restructuring balance of
$11.3 million. We expect to make cash payments in 2004 of approximately $3.7
million, comprised of $1.4 million for employee separation costs, $1.7 million
for lease obligations and $0.6 million for other contractual obligations. The
balance of severance and other exit costs will be paid through 2007 and the
balance of facility costs, primarily long-term leases, is expected to be paid
through the end of the respective lease terms which extend through 2013. Amounts
due within one year of approximately $3.7 million and $8.5 million at December
31, 2003 and 2002, respectively, are classified in other accrued expenses on the
consolidated balance sheets. Amounts due after one year of approximately $7.6
million and $8.4 million at December 31, 2003 and 2002, respectively, are
included in other non-current liabilities on the consolidated balance sheets.

The Company expects to realize, within a one-year period, sufficient
savings from its restructuring efforts to recover the employee termination
costs. Savings from terminations of contracts and lease costs will be realized
over the estimated lives of the contracts or leases.

As a result of the current uncertainty in the economy, the potential for
additional terrorist attacks and the continued decline in our revenues, we
continue to assess the necessity of additional restructuring charges.

LOSS ON SALE OF PROPERTIES

In 2002, we recognized a $0.9 million loss from the sale of four properties
in December 2002, including Streaming Media, Boardwatch and ISPCON, which were
part of our Technology segment, and A/E/C, which was part of our Industry
segment.

DEPRECIATION AND AMORTIZATION

The decrease in depreciation and amortization for 2003 compared to 2002 is
due to lower amortization expense related to intangible assets of properties
sold in December 2002 and January 2003, as well as the

35

write-off of approximately $8.0 million and $20.0 million of intangibles in the
third quarter of 2003 and 2002, respectively.

The decrease in depreciation and amortization for 2002 compared to 2001 is
primarily due to the adoption of FAS 142 on January 1, 2002. FAS 142, requires
that we no longer amortize goodwill into our results of operations.

OTHER INCOME (EXPENSE)

Other income (expense) consist of the following:

Included in interest expense in 2003 is approximately $0.9 million related
to the write-off of unamortized financing fees associated with the commitment
reduction of our credit facility revolver in January 2003 from $40.0 million to
$20.1 million. Also included in interest expense in 2003 is approximately $1.0
million related to the write-off of unamortized financing fees associated with
the replacement of our senior secured credit facility in August 2003 with a new
four-year loan agreement (see Recent Developments and Note 6 -- Debt). Included
in interest expense in 2002 is approximately $0.7 million related to the
write-off of unamortized finance fees associated with the commitment reduction
of our credit facility revolver from $185.0 million to $40.0 million in March
2002 and approximately $1.4 million related to hedging activities. The increase
in interest expense also reflects the higher weighted-average interest rate in
2003 compared with 2002.

Interest expense increased $7.7 million from $30.5 million in 2001 to $38.2
million in 2002. The increase reflects the change in our debt structure from a
mix of bank and bond debt to primarily bond debt. As a result, the
weighted-average interest rates on our debt increased from approximately 8.0% in
2001 to 11.0% in 2002.

Significant items included in other net, are as follows:

- In January 2002, Penton sold its remaining 11.8% ownership interest in
Jupitermedia Corporation (formerly known as INT Media Group, Inc.) for
$5.8 million and recognized a $1.5 million gain from its sale.

- In March 2002, we purchased $10.0 million face value of our Subordinated
Notes at prevailing market prices, resulting in a gain of $1.4 million.
This gain was offset by the write-off of unamortized deferred finance
costs of approximately $1.1 million associated with the payoff of our
term loan A and term loan B facilities, which also occurred in March
2002.

- The 2001 balance primarily consists of various professional fees related
to unsuccessful potential acquisitions that were written off.

EFFECTIVE TAX RATES

The effective tax rates for 2003 and 2002 were 0.1% and 14.3%,
respectively. The lower effective tax rate for 2003 is due to the net operating
loss available for carryforward being offset by a valuation allowance for the
Company's net deferred tax assets and net operating loss carryforwards not
expected to be utilized. The difference in the effective tax rate between the
periods is due to the establishment of the valuation allowance in the
third-quarter of 2002. The tax benefit for 2003 and 2002 in the consolidated
statements of operations relates to state and foreign taxes.

The effective tax rates for 2002 and 2001 were 14.3% and 14.5%,
respectively. The effective tax rates for both years were different from the
statutory income tax rate primarily as a result of non-deductible amortization,
impaired asset write-downs and disposition of assets.

36

DISCONTINUED OPERATIONS

Discontinued operations for all periods presented include the results of PM
Australia, which was sold in December 2002, and the results of PTS, which was
sold in January 2003. PM Australia was part of our Technology segment, and PTS
was part of our Industry segment.

The $0.7 million of income recognized for 2003 was primarily due to a gain
of approximately $1.4 million associated with the sale of PTS, offset by one
month of operations for PTS, and settlement costs for certain pending lawsuits
related to PM Australia.

Loss from discontinued operations decreased $4.9 million from a loss of
$8.2 million in 2001 to a loss of $3.3 million in 2002. Revenues from
discontinued operations decreased from $12.7 million in 2001 to $8.7 million in
2002. The revenue decrease was due primarily to the significant economic
slowdown, which started in 2001, was further exacerbated by the events of
September 11, 2001, and continued through all of 2002. Also, 2001 results
include revenues from PM Australia from the date of its acquisition in May.
Included in the loss from discontinued operations for 2002 was $1.0 million
related to restructuring charges. The 2001 loss included restructuring charges
of $0.09 million and goodwill impairment charges of $9.8 million.

SEGMENTS

We manage our business based on four operating segments: Industry,
Technology, Lifestyle and Retail. The segments derive their revenues from
publications, trade shows and conferences, and online media products.

The executive management team evaluates performance of the segments based
on revenues and adjusted segment EBITDA. As such, in the analysis that follows,
we have used adjusted segment EBITDA, which we define as net income (loss)
before interest, taxes, depreciation and amortization, non-cash compensation,
impairment of assets, restructuring charges, provision for loan impairment,
discontinued operations, general and administrative costs, and other
non-operating items. General and administrative costs include functions such as
finance, accounting, human resources and information systems, which cannot
reasonably be allocated to each segment. Previously, certain general and
administrative costs were allocated to segments. Adjusted segment EBITDA for
2002 and 2001 has been restated to conform to the current year presentation,
which does not allocate these costs. Management believes that this is a more
meaningful presentation. Assets are not allocated to segments and as such have
not been presented. See Note 18 -- Segment Information, for a reconciliation of
total adjusted segment EBITDA to consolidated net income (loss). Financial
information by segment for 2003, 2002 and 2001, adjusted for discontinued
operations, is summarized as follows (in thousands):

INDUSTRY

Our Industry segment, which represented 39.9%, 39.3% and 31.6% of total
Company revenues for 2003, 2002 and 2001, respectively, serves customers in the
manufacturing, design/engineering, mechanical systems/

37

construction, supply chain, government/compliance and aviation industries. For
the years ended December 31, 2003, 2002 and 2001, respectively, 92.2%, 90.5% and
90.1% of this segments revenues were generated from publications, 5.1%, 7.5% and
7.9% from trade shows and conferences, and 2.7%, 2.0% and 2.0% from online media
and ancillary sources.

As part of our product portfolio restructuring initiative in 2002, the
Company completed the sale of its A/E/C trade shows in December 2002 and its PTS
trade shows in January 2003. Both of which were part of our Industry segment.
PTS was included as a component of discontinued operations in the accompanying
consolidated statements of operations, while A/E/C did not qualify for
discontinued operations treatment. We believe these restructuring efforts will
improve the adjusted EBITDA of our Industry products without compromising the
strength and integrity of our core media brands or their usefulness and value to
our customers. We continually respond to opportunities in the Industry markets
we serve to develop new products. We will continue to introduce new products in
2004.

2003 vs. 2002

Revenues for this segment decreased $10.0 million, or 10.8%, from $92.4
million in 2002 to $82.4 million in 2003. The decrease was due primarily to
lower revenues from publications of $7.7 million and lower revenues from trade
shows and conferences of $2.7 million. Online revenues increased $0.4 million
from $1.8 million in 2002 to $2.2 million in 2003. Print advertising in our
supply chain, design/engineering and manufacturing portfolio markets,
contributed most significantly to the declines in publishing revenues in 2003 as
these portfolios accounted for approximately $7.7 million of the decrease. These
markets continue to be challenging. While the manufacturing portfolio has
exhibited some macro-level economic improvements, those improvements have not
yet materialized for b-to-b media. The decrease in trade show and conference
revenues was due primarily to our UK trade shows serving industrial markets as
well as the loss of approximately $1.7 million in revenues as a result of the
sale of our A/E/C trade shows in December 2002.

Adjusted segment EBITDA for our Industry portfolio decreased $0.7 million,
or 4.5%, from $15.9 million in 2002 to $15.2 million in 2003. Industry
publications decreased $2.0 million, while trade shows and conferences decreased
$0.2 million. These decreases were partially offset by an increase of $0.5
million in the segment's online media portfolio, as well as a decrease in
general and administrative and facility costs of $1.0 million as a result of
staff reductions and office closures. The improvement in adjusted segment EBITDA
margins were primarily due to the decline in general and administrative costs
and facility-related costs.

2002 vs. 2001

Revenues for this segment decreased $21.0 million, or 18.5%, from $113.4
million in 2001 to $92.4 million in 2002. The decrease was due primarily to
lower revenues from publications of $18.6 million and lower revenues from trade
shows and conferences of $2.1 million. The decrease in publication revenues was
due primarily to revenue declines in products serving the design/engineering,
supply chain, aviation and manufacturing portfolios, which were impacted by the
downturn in the U.S. economy. These portfolios accounted for approximately $18.8
million of the decrease. Of the decrease in trade show and conference revenues,
approximately $2.2 million was due to revenue declines in products serving our
manufacturing and mechanical systems/construction markets.

Adjusted segment EBITDA for our Industry portfolio decreased $3.7 million,
or 18.8%, from $19.6 million in 2001 to $15.9 million in 2002. Industry
publications decreased $5.5 million, while trade shows and conferences also
decreased $1.3 million. These decreases were partially offset by an increase of
$0.8 million in the segment's online media portfolio, as well as a decrease in
general and administrative and facility costs of $2.3 million as a result of
staff reductions and office closures. The improvement in adjusted segment EBITDA
margin was due primarily to the decline in general and administrative costs and
facility-related costs.

TECHNOLOGY

Our Technology segment, which represented 32.7%, 38.4% and 54.4% of total
Company revenues in 2003, 2002 and 2001, respectively, serves customers in the
Internet technologies, enterprise information technology
38

and electronics markets. For the years ended December 31, 2003, 2002 and 2001,
respectively, 63.2%, 59.4% and 40.5% of this segments revenues were generated
from publications, 20.1%, 29.0% and 54.6% from trade shows and conferences, and
16.7%, 11.6% and 4.9% from online media and ancillary sources.

As part of our product portfolio restructuring initiative in 2002, the
Company completed the sale of three properties in this segment. These properties
include Streaming Media, Boardwatch, ISPCON and PM Australia. PM Australia was
included as a component of discontinued operations in the accompanying
consolidated statements of operations, while Streaming Media, Boardwatch and
ISPCON did not qualify for discontinued operations treatment. The elimination of
these properties improved the adjusted EBITDA of our Technology segment in 2003.
We are continually looking for opportunities in the Technology segment to
develop new products.

2003 vs. 2002

Revenues for this segment decreased $22.8 million, or 25.2%, from $90.3
million in 2002 to $67.5 million in 2003. The decrease was due primarily to
lower revenues from publications of $10.9 million and lower revenues from trade
shows and conferences of $12.6 million. Consistent with most b-to-b technology
media, Penton's products suffered through a third full year of difficult
conditions in 2003. Our print media serving the enterprise information
technology and electronics OEM portfolios, as well as our trade shows for
European technology markets, experienced the greatest market challenges. Online
revenues increased $0.7 million from $10.5 million in 2002 to $11.2 million in
2003 as customers are increasingly seeking new ways to reach their target
markets and generate sales leads.

Adjusted segment EBITDA for our Technology portfolio increased $5.0
million, or 178.1%, from $2.8 million in 2002 to $7.8 million in 2003. Trade
shows and conferences accounted for $3.3 million of the increase, while online
media increased $0.2 million and general and administrative and facility costs
decreased by $1.8 million. These improvements were partially offset by a
decrease in the segment's publications of $0.3 million. The significant adjusted
segment EBITDA increase for trade shows and conferences and the lower general
and administrative and facility costs were due primarily to our restructuring
activities undertaken in 2002 and 2003.

2002 vs. 2001

Revenues for this segment decreased $104.9 million, or 53.7%, from $195.2
million in 2001 to $90.3 million in 2002. The decrease was due primarily to
lower revenues from publications of $25.5 million and lower revenues from trade
shows and conferences of $80.4 million. Publications in our enterprise
information technology and electronics sectors were the most significantly
impacted and accounted for 78.2% of the decrease. Our Internet technologies
sector accounted for $77.9 million of the total decrease in trade show revenues.
Online revenues increased $1.0 million from $9.5 million in 2001 to $10.5
million in 2002.

Adjusted segment EBITDA for our Technology portfolio decreased $36.6
million, or 92.9%, from $39.4 million in 2001 to $2.8 million in 2002. Trade
shows and conferences accounted for $45.7 million of the decrease. The decrease
was partially offset by an increase in the segment's online media portfolio of
$4.1 million, an increase in publications of $0.2 million and lower general and
administrative and facility costs of $4.8 million, as a result of staff
reductions and office closings. The significant adjusted segment EBITDA decline
for trade shows and conferences were due primarily to the decrease in trade
shows revenue as discussed above.

LIFESTYLE

Our Lifestyle segment, which represented 15.5%, 13.1% and 8.3% of total
Company revenues in 2003, 2002 and 2001, respectively, serves customers in our
natural products industry sector. Products in this sector serve the natural
products and nutraceuticals markets, including producers of raw materials,
manufacturers, distributors and retailers. For the years ended December 31,
2003, 2002, and 2001, respectively, 34.8%, 35.7% and 35.3% of this segment's
revenues were generated from publications and 65.2%, 64.3% and 64.7% from trade
shows and conferences.
39

2003 vs. 2002

Revenues for this segment increased $0.9 million in 2003 when compared with
2002. The Natural Products Expo East and the Natural Products Expo West trade
shows accounted for all of this increase as publications in 2003 were flat with
2002.

Adjusted segment EBITDA for the Lifestyle segment increased $0.6 million to
$12.8 million in 2003, from $12.2 million in 2002. Publications for this segment
were flat when compared with 2002. Trade shows and conferences increased $0.5
million, from $11.9 million in 2002 to $12.4 million in 2003. Adjusted segment
EBITDA margins improved from 39.7% in 2002 to 40.3% in 2003, due primarily to
stable revenues and cost reduction measures taken in 2003.

2002 vs. 2001

Revenues for this segment increased $0.9 million in 2002 when compared with
2001. The increase was due primarily to higher revenues from publications of
$0.5 million and higher revenues from trade shows and conferences of $0.4
million when comparing 2002 to 2001.

Adjusted segment EBITDA for the Lifestyle segment increased $0.7 million to
$12.2 million in 2002 compared with $11.5 million in 2001. Trade shows and
conferences for this segment were flat when compared with 2001. Publications
increased $0.5 million, from $1.7 million in 2001 to $2.2 million in 2002.
Online media increased $0.8 million from a loss of $0.9 million in 2001 to a
loss of $0.1 million in 2002. This improvement was due primarily to the shut
down of Healthwell.com in 2001. Adjusted segment EBITDA margins improved from
38.6% in 2001 to 39.7% in 2002, due primarily to stable revenues and cost
reduction measures undertaken in 2002.

RETAIL

Our Retail segment, which represented 11.9%, 9.2% and 5.7% of total Company
revenues for 2003, 2002 and 2001, respectively, serves customers in the
food/retail and leisure/hospitality sectors. Revenues for this segment are
primarily generated from publishing sales, which comprised approximately 74.9%,
79.5% and 83.4% of total 2003, 2002 and 2001 revenues, respectively. Trade shows
and conferences make up a majority of the remaining revenues for this segment,
while online media revenues only generated $0.5 million, $0.4 million and $0.4
million in revenues in 2003, 2002 and 2001, respectively.

2003 vs. 2002

Revenues for this segment increased $3.0 million, or 14.0%, from $21.6
million in 2002, to $24.6 million in 2003. This increase was due primarily to an
increase in trade show and conference revenues of $1.7 million and increase in
publishing revenues of $1.2 million, and an increase in online revenues of $0.1
million.

Adjusted segment EBITDA for the Retail segment increased $1.8 million, or
48.8%, from $3.8 million in 2002 to $5.6 million in 2003. Publications, trade
shows and online media accounted for $0.7 million, $0.4 million and $0.5 million
of the increase, respectively. In addition, general and administrative costs
decreased by $0.2 million, contributing to the overall increase. Improvements
across the board were due to higher revenues and cost reduction measures taken,
including staff reductions, office closings, and process improvements.

2002 vs. 2001

Revenues for this segment increased $1.2 million, or 6.0%, from $20.4
million in 2001 to $21.6 million in 2002. The increase was due primarily to an
increase in publishing revenues of $0.2 million and an increase of $1.0 million
from trade show and conference revenues.

Adjusted segment EBITDA for our Retail portfolio increased $2.2 million, or
141.2%, from $1.6 million in 2001 to $3.8 million in 2002, due primarily to cost
reduction efforts. Cost reduction efforts also improved adjusted segment EBITDA
margins from 7.7% in 2001 to 17.4% in 2002.

40

LIQUIDITY AND CAPITAL RESOURCES

Current Liquidity

At December 31, 2003, our principal sources of liquidity are our existing
cash reserves ($29.6 million at December 31, 2003) and available borrowing
capacity under our credit facility of $39.9 million.

Our primary 2004 cash needs will be for working capital, debt service,
capital expenditures, and our business restructuring charges. Our largest annual
cash requirements are for our debt service costs, which are expected to be
approximately $36.9 million in 2004. We expect capital expenditures in 2004 to
remain at or near 2003 levels of approximately $3.0 million to $3.5 million, as
we continue to restrain our spending as a result of continued economic and
business uncertainties. We expect to make cash payments in 2004 related to our
business restructuring initiatives of approximately $3.7 million, comprising
$1.4 million for employee separation costs, $1.7 million for lease obligations
and $0.6 million for other contractual obligations. Other cash payments expected
to be made in 2004 include contributions of approximately $1.5 million to our
defined benefit pension plan and approximately $1.8 million to the new
Retirement and Savings Plan. Our 2004 liquidity may be impacted by the departure
of the CEO from the Company (See Recent Events.) Under the terms of his
employment agreement, the CEO is entitled to receive severance payments and
other benefits. See Employment Agreements with Messrs. Kemp, Ramella, Nussbaum
and Denny under Item 11 -- Executive Compensation.

We have no principal repayment requirements until maturity of our Secured
Notes in October 2007. In addition, we have no bank debt and no maintenance
covenants on our existing bond debt.

We believe that our existing sources of liquidity, along with revenues
expected to be generated from operations, will be sufficient to fund our
operations, anticipated capital expenditures, working capital, and other
financing requirements through at least December 31, 2004. However, we cannot
assure you that this will be the case, and if we continue to incur operating
losses and negative cash flows in the future, we may need to reduce further our
operating costs or obtain alternate sources of financing, or both, to remain
viable. Our ability to meet cash operating requirements depends upon our future
performance, which is subject to general economic conditions and to financial,
competitive, business, and other factors. The Company's ability to return to
sustained profitability at acceptable levels will depend on a number of risk
factors, many of which are largely beyond the Company's control. Some of the
risk factors that have had and/or may have a negative impact on the Company's
business and financial results are discussed in "Risk Factors" under Item 1, of
this document. If we are unable to meet our debt obligations or fund our other
liquidity needs, particularly if the revenue environment continues to
deteriorate, we may be required to raise additional capital through additional
financing arrangements or the issuance of private or public debt or equity
securities. We cannot assure you that such additional financing will be
available at acceptable terms. In addition, the terms of our convertible
preferred stock and warrants issued, including the conversion price, dividend
and liquidation adjustment provisions could result in substantial dilution to
common stockholders. The redemption price premiums and board representation
rights could negatively impact our ability to access the equity markets in the
future.

The Company has implemented and continues to implement, various
cost-cutting programs and cash conservation plans, which involve the limitation
of capital expenditures and the control of working capital.

Our loan and security agreement contains several provisions, which could
have a significant impact as to the classification as well as the acceleration
of payments for any borrowings outstanding under the agreement, including the
following: (i) the obligation of the lender to provide any advances under the
loan agreement is subject to no material adverse change events; (ii) reserves
may be established against the borrowing base for sums that the Company is
required to pay, such as taxes and assessments and other types of required
payments, and has failed to pay; (iii) in the event of a default under the loan
agreement, the lender has the right to direct all cash that is deposited in the
Company's lock boxes to be sent to the lender to pay down outstanding
borrowings; (iv) the loan agreement establishes cross-defaults to the Company's
other indebtedness (such as the Secured Notes and Subordinated Notes) such that
a default under the loan agreement could

41

cause a default under the notes agreements and vice versa; however, default
triggering thresholds are different in the loan agreement and the notes; (v) if
the Company is in default of any material agreement to which it is a party and
the counter-party to that agreement has the right to terminate such agreement as
a result of the default, this constitutes an event of default under the loan
agreement. Under the loan agreement, the lenders reserve the right to deem the
notes in default, and in those limited circumstances, could accelerate payment
of the outstanding loan balances, should the Company undergo a material adverse
event. Even though the criteria defining a material adverse event are
subjective, the Company does not believe exercise of the lenders' right is
probable nor does it foresee any material adverse events in 2004. In addition,
the Company believes that the note agreements are long-term in nature.
Accordingly, the Company continues to classify its loans as long term. At
December 31, 2003, the Company was in compliance with all of the above
provisions.

Analysis of Cash Flows

Penton's total cash and cash equivalents was $29.6 million at December 31,
2003, compared with $6.8 million at December 31, 2002. Cash provided by
operating activities was $27.7 million for the year ended December 31, 2003,
compared with a cash usage of $16.6 million for the year ended 2002. Operating
cash flows for the year ended December 31, 2003, reflected a net loss of $87.8
million, offset by a net increase in working capital items (primarily due to a
tax refund of $52.7 million) of approximately $42.2 million and non-cash charges
(primarily impairment of asset charges, depreciation and amortization and
provision for loan impairment) of approximately $73.3 million. Operating cash
flows for the year ended December 31, 2002, reflected a net loss of $286.3
million, which was offset by non-cash charges (primarily impairment of asset
charges, cumulative effect of accounting change, restructuring charges and
depreciation and amortization) of approximately $318.5 million. Cash used by
operating activities was $18.2 million for the year ended December 31, 2001.
Operating cash flows for 2001 reflect our net loss of $104.1 million and a net
working capital decrease of approximately $34.5 million, offset by non-cash
charges (primarily depreciation and amortization, non-cash restructuring charges
and asset impairments) of approximately $120.4 million.

The increase in operating cash flows for 2003 compared with 2002, was due
primarily to the tax refund received in January 2003 of approximately $52.7
million, compared with a tax refund of $12.2 million received in February of
2002 and the increase in unearned income due primarily to the timing of
exhibition deposit payments and the timing of when shows are held.

The decrease in cash used in operating activities in 2002 compared to 2001
was due primarily to decreases in working capital items. The most significant
working capital changes in 2002 were attributable to income taxes receivable,
accounts payable and accrued expenses, and unearned income. The change in the
receivable for income taxes reflects the receipt of an income tax refund of
$52.7 million in January 2003 compared with a refund of $12.2 million in
February 2002. The decrease in accounts payable and accrued expenses was due
primarily to the timing of vendor and other payments, which can fluctuate based
on when particular trade shows are held, and the decrease in volume of business
in 2002 compared to 2001. The decrease in unearned income was due primarily to
the decrease in the volume of trade show business and the timing of exhibitor
deposit payments, which were being made closer to their respective show dates
when compared to the prior year.

Investing activities provided $0.6 million of cash in 2003 due primarily to
the proceeds from the sale of PTS in January 2003 of $3.2 million and restricted
cash of $0.7 million. These proceeds were partially offset by capital
expenditures of $3.3 million. Capital expenditures in 2003 were primarily for
desktop computers and management information systems. Investing activities used
$3.3 million of cash in 2002. Capital expenditures of approximately $3.9 million
and earnout payments of approximately $5.5 million were offset by proceeds of
$5.8 million from the sale of approximately 3.0 million shares of Jupitermedia
Corporation common stock, as well as proceeds received from the sale of
properties in December 2002. Investing activities used $27.5 million of cash in
2001, primarily for capital expenditures of $7.6 million, several small
acquisitions completed during the first half of the year, and earnout payments
totaling $19.9 million.

Financing activities used $5.7 million of cash for 2003 primarily for the
repayment of $4.5 million of our senior secured credit facility, the payment of
financing fees of approximately $2.0 million and the payoff of a

42

note payable of $0.4 million. These uses were partially offset by net proceeds
of $1.6 million received on notes receivable and proceeds of approximately $0.3
million from the partial repayment of an officer's loan. Financing activities
provided $6.6 million of cash in 2002, due to the issuance of our Secured Notes,
the sale of 50,000 shares of Series B mandatorily redeemable convertible
preferred stock, amounts drawn under our revolving credit facility, and proceeds
received from the repayment of executive loans. These proceeds were primarily
offset by the paydown of our senior secured credit facility; the purchase of
$10.0 million face value of our Subordinated Notes at prevailing market prices;
the payment of financing fees associated with the amendment to our senior credit
facility and the issuance of our Secured Notes; and the payment of the short-
term portion of our note payable. Financing activities provided $54.2 million in
2001, primarily from the issuance of our Subordinated Notes and amounts drawn
under our revolving credit facility. These proceeds were partially offset by
required quarterly principal payments under our term loans, the paydown of our
revolver balance, an additional $20.0 million paydown on our term loans and the
payment of finance fees and dividends in the first half of the year.

Debt Financing Activities

On September 1, 1999, we entered into a $340.0 million credit agreement
with several banks. The agreement provided for a revolving credit facility of up
to $125.0 million, a term loan A of $140.0 million and a term loan B of $75.0
million. In October 2000, we amended our credit facility to give us the ability
to increase our term loan A facility, term loan B facility and/or revolving
credit facility up to an aggregate of $100.0 million prior to September 30,
2001. At that time, we increased the commitment under the revolving credit
facility by $60.0 million to $185.0 million. The remaining $40.0 million could
not be requested on more than three separate occasions, and any increase had to
take place by September 30, 2001. We did not exercise this option. As described
in the following paragraphs, we amended our credit facility and paid off our
term A and term B loans in the first quarter of 2002 and amended the facility in
January 2003, which reduced the commitment under our revolver. Also, in August
2003, we replaced the credit facility with a new four-year loan and security
agreement.

In June 2001, we issued $185.0 million of 10 3/8% Subordinated Notes due
June 2011. Interest on the notes is payable semiannually, on June 15 and
December 15. The Subordinated Notes are fully and unconditionally, jointly and
severally guaranteed, on a senior subordinated basis, by the assets of our
domestic subsidiaries, which are 100% owned by the Company, and may be redeemed,
in whole or in part, on or after June 15, 2006. In addition, we may redeem up to
35% of the aggregate principal amount of the Subordinated Notes before June 15,
2004 with the proceeds of certain equity offerings. The Subordinated Notes were
offered at a discount of $4.2 million. This discount is being amortized using
the interest method over the term of the Subordinated Notes. Costs representing
underwriting fees and other professional fees of approximately $1.7 million are
being amortized over the term of the Subordinated Notes. The net proceeds of
$180.2 million were used to pay down the $136.0 million outstanding balance of
the revolving credit facility, $12.8 million of the term loan A facility and
$7.2 million of the term loan B facility. The remaining proceeds were used for
general corporate purposes. The Subordinated Notes are our unsecured senior
subordinated obligations, subordinated in right of payment to all existing and
future senior indebtedness, including the loan agreement and the Secured Notes
discussed below.

The Subordinated Notes are jointly and severally irrevocably and
unconditionally guaranteed on a senior subordinated basis by each of our present
and future domestic subsidiaries. The indenture governing the Subordinated Notes
contains covenants that, among other things, restrict our and our subsidiaries'
ability to borrow money; pay dividends on or repurchase capital stock; make
certain investments; enter into agreements that restrict our subsidiaries from
paying dividends or making other distributions, making loans or otherwise
transferring assets to us or to any other subsidiaries; create liens on assets;
engage in transactions with affiliates; sell assets, including capital stock of
our subsidiaries; and merge, consolidate or sell all or substantially all of our
assets and the assets of our subsidiaries. Our ability to obtain dividends from
our subsidiaries is restricted only if we are in default under our loan
agreement or if we have exceeded our limitation of additional indebtedness, as
specified in such agreement.

43

In March 2002, we entered into an agreement with a group of investors to
sell 50,000 shares of Series B Convertible Preferred Stock and warrants to
purchase 1.6 million shares of our common stock for $50.0 million. We received
gross proceeds of $40.0 million from the sale of 40,000 shares of preferred
stock and warrants to purchase 1,280,000 shares of our common stock on March 19,
2002 and gross proceeds of $10.0 million from the sale of 10,000 shares of
preferred stock and warrants to purchase 320,000 shares of our common stock on
March 28, 2002 (see Note 7 -- Mandatorily Redeemable Convertible Preferred
Stock). Net proceeds from the sale of the preferred stock, along with the net
proceeds from the sale of our Jupitermedia Corporation common stock, and cash on
hand from a tax refund were used to repay $48.0 million of amounts outstanding
under our term loans.

In March 2002, Penton issued $157.5 million of 11 7/8% Secured Notes due in
2007. Interest is payable on the Secured Notes semiannually on April 1 and
October 1. The Secured Notes are fully and unconditionally, jointly and
severally guaranteed, on a senior basis, by all of our domestic subsidiaries,
which are 100% owned by the Company, and also the stock of certain subsidiaries.
We may redeem the Secured Notes, in whole or in part, during the periods October
1, 2005 through October 1, 2006 and thereafter at redemption prices of 105.9375%
and 100.0000% of the principal amount, respectively, together with accrued and
unpaid interest to the date of redemption. In addition, at any time prior to
October 1, 2005, upon certain public equity offerings of our common stock, up to
35% of the aggregate principal amount of the Secured Notes may be redeemed at
our option, within 90 days of such public equity offering, with cash proceeds
from the offering at a redemption price equal to 111.875% of the principal
amount, together with accrued and unpaid interest to the date of redemption.

The Secured Notes were offered at a discount of $0.8 million, which is
being amortized, using the interest method, over the term of the Secured Notes.
Costs representing underwriting fees and other professional fees of $6.6 million
are being amortized over the term of the Secured Notes. Net proceeds of $150.1
million were used to pay down $83.6 million of term loan A and $49.0 million of
term loan B, and net proceeds of $8.3 million were used to repurchase $10.0
million of our Subordinated Notes. The remaining net proceeds of $9.2 million
were used for general corporate purposes. The Secured Notes rank senior in right
to all of our senior subordinated indebtedness, including our Subordinated
Notes. The guarantees are senior secured obligations of each of our subsidiary
guarantors and rank senior in right of payment to all subordinated indebtedness
of the subsidiary guarantors, including the guarantees of our Subordinated
Notes, and equal in right of payment with all of our senior indebtedness. The
notes and guarantees are secured by a lien on substantially all of our assets
and those of our subsidiary guarantors, other than specified excluded assets.
Excluded assets consist of, among other things, the capital stock of Duke
Communications International, Inc. and Internet World Media, Inc.; the capital
stock of our foreign subsidiaries directly owned by us or the subsidiary
guarantors which exceed 65% of the outstanding capital stock or equity interest
of such foreign subsidiaries; and all of the capital stock of our other foreign
subsidiaries.

The indenture governing the Secured Notes contain covenants that, among
other things, restrict our and our subsidiaries' ability to borrow money; pay
dividends on or repurchase capital stock; make certain investments; enter into
agreements that restrict our subsidiaries from paying dividends or other
distributions, making loans or otherwise transferring assets to us or to any
other subsidiaries; create liens on assets; engage in transactions with
affiliates; sell assets, including capital stock of our subsidiaries; and merge,
consolidate or sell all or substantially all of our assets and the assets of our
subsidiaries. Our ability to obtain dividends from our subsidiaries is
restricted only if we are in default under our loan agreement or if we have
exceeded our limitation of additional indebtedness, as specified in such
agreement.

In March 2002, we amended and restated our senior secured credit facility
and repaid our term loan A facility and our term loan B facility under our
credit facility from the proceeds received from the sale of preferred stock and
the issuance of the Secured Notes, as noted above. The amended and restated
facility provided for a revolving credit facility of up to a maximum amount of
$40.0 million. Availability under the revolving credit facility was subject to a
borrowing base limited to 80% of eligible receivables. In order to access the
revolver, Penton could not have more than $7.5 million of cash and cash
equivalents available, had to be in compliance with the loan documents and had
to submit a borrowing base certificate immediately prior to each extension of
credit showing compliance with the provisions of the borrowing base. Penton was
required
44

to prepay the revolver in the event that it had loans outstanding in excess of
the borrowing base, or it had more than $7.5 million in cash and cash
equivalents available at the end of any month. The commitment under the amended
and restated credit facility was scheduled to decrease by 15% in 2003, 30% in
2004, 35% in 2005, and 20% in 2006. Restrictions were placed on Penton's ability
to make certain restricted payments, to make capital expenditures in excess of
certain amounts, to incur additional debt and contingent obligations, make
acquisitions and investments, and to sell assets. As noted below, the credit
facility was further amended in January 2003 and replaced in August 2003.

The repayment of the term loans in March 2002 resulted in a non-cash
extraordinary charge of $0.7 million, net of $0.5 million in taxes, relating to
the write-off of unamortized deferred financing costs. In the first quarter of
2003, this extraordinary charge was reclassified to other net, in the
consolidated statements of operations in accordance with the provisions of SFAS
No. 145, "Rescission of SFAS Nos. 4, 44, and 64, Amendment of SFAS 13, and
Technical Corrections as of April 2002."

In January 2003, the Company amended its senior secured credit facility,
which was later replaced in August 2003, as discussed below. The amended
agreement permitted the Company to sell certain properties in excess of the $5.0
million aggregate limit required by the original amended agreement. In return,
the revolving commitment was reduced from $40.0 million to $32.0 million. At the
end of January 2003, when the aggregate sum of Penton's cash and cash
equivalents exceeded $40.0 million, an additional one-time reduction of $10.0
million was required under the amended credit facility. Furthermore, upon the
sale of PTS, the revolving commitment was further reduced by $1.9 million. The
amended facility allowed for additional asset sales, transfers, leases and other
dispositions and the issuance of equity interests by our subsidiaries up to a
maximum of approximately $3.6 million. The amended facility also increased the
maximum commitment fee from 0.50% to 0.75%.

The reduction of the revolver from $40.0 million to $20.1 million in
January 2003, and the reduction of the revolver from $185.0 million to $40.0
million in March 2002, resulted in the write-off of unamortized finance fees
related to the revolver of $0.9 million and $0.7 million, respectively. These
charges have been classified as part of interest expense on the consolidated
statements of operations.

In August 2003, the Company replaced its senior secured credit facility
with a new four-year loan and security agreement. Pursuant to the terms of the
revolving loan and security agreement, the Company can borrow up to the lesser
of (i) $40.0 million; (ii) 2.5x the Company's last twelve months EBITDA measured
monthly during the first year, 2.25x during the second year and 2.0x thereafter;
(iii) 40% of the Company's last six months of revenues; or (iv) 25% of the
Company's enterprise value, as determined annually by a third party. The
revolving credit facility bears interest at LIBOR plus 5.0% subject to a LIBOR
minimum of 1.5%. The Company must comply with a quarterly financial covenant
limiting the ratio of maximum bank debt to the last twelve months EBITDA to 2.5x
through March 31, 2004, 2.25x from June 30, 2004 through March 31, 2005 and 2.0x
thereafter. The loan agreement permits the Company to sell assets of up to $12.0
million in the aggregate during the term or $5.0 million in any single asset
sale; and complete acquisitions of up to $5.0 million per year. Included in the
loan agreement is a stand-by letter of credit of $0.1 million required by one of
the Company's facility leases. The amount of the letter of credit reduces the
availability under the credit facility. As of December 31, 2003, no amounts were
drawn under the stand-by letter of credit. As of December 31, 2003, $39.9
million was available under the loan agreement. There were no amounts
outstanding. Approximately $1.0 million of unamortized financing fees related to
the senior secured credit facility were written off. This charge has been
classified as part of interest expense in the consolidated statements of
operations.

We may from time to time seek to retire our outstanding debt through cash
purchases on the open market, privately negotiated transactions or otherwise.
Such repurchases, if any, will depend on the prevailing market conditions, our
liquidity requirements, contractual restrictions and other factors. The amounts
involved may be material.

At December 31, 2003 and 2002, Neue Medien Ulm Holdings GmbH ("Neue
Medien") owed Penton Media Germany ("PM Germany"), a consolidated subsidiary,
$0.5 million and $2.1 million, respectively. These amounts are classified on the
consolidated balance sheets as notes receivable. Neue Median and Penton
45

jointly own PM Germany. The notes are due on demand and bear interest at the
German Federal rate plus 3%, or 4.22% at December 31, 2003. The Company lends
excess PM Germany funds to Neue Medien because it can earn a higher interest
rate than at prevailing bank rates.

A change in the rating of our debt instruments by the outside rating
agencies would not negatively impact our ability to use our revolver. At
December 31, 2003, Moody's Investors Service had the following ratings regarding
Penton: (i) B3 rating on the Company's $157.5 million Secured Notes, (ii) Ca
rating on the Company's $175.0 million Subordinated Notes, (iii) The Company's
senior implied rating is Caa3, and (iv) The Company's senior unsecured issuer
rating is Ca.

CONTRACTUAL OBLIGATIONS

The following are summaries of our contractual obligations and other
commercial commitments as of December 31, 2003 (in thousands):

- ---------------

(1) The obligation for less than one year represents a required contribution,
while the obligations after one year represent estimated required
contributions.

There are no required debt repayments until October 2007. We lease most of
our facilities and certain equipment under non-cancelable operating leases. The
leases expire at various dates through 2014 and some contain various provisions
for rental adjustments including, in certain cases, adjustments based on
increases in the Consumer Price Index.

Penton did not make any cash contributions to its defined benefit pension
plan in 2003, 2002 or 2001. Future funding requirements are dependent upon
factors such as interest rate levels, changes to pension plan benefits, funded
status, regulatory requirements for funding purposes and the level and timing of
asset returns as compared with the level and timing of expected benefit
disbursements. Based on current estimates the Company expects to make a
contribution of approximately $1.5 million in the third quarter of 2004 for
calendar year 2003. In addition, contributions of $2.2 million, $2.0 million,
and $1.4 million are expected to be paid for 2006, 2007 and 2008, respectively.
No contributions are expected with respect to 2004 or 2005. Due to the presence
of significant variables, actual future contributions may differ materially.

In December 1999, Penton entered into a print agreement with R.R.
Donnelley, which entitles R.R. Donnelley to the exclusive right to print and
produce certain magazines through November 30, 2006. Under the agreement, which
is non-cancelable, Penton is obligated to pay certain minimum amounts. These
minimum amounts will be adjusted annually based on changes in the Consumer Price
Index.

In December 2003, the Company entered into an agreement effective January
1, 2004 with a former employee to provide trade show and conference services to
selected Penton events. Under the agreement, the

46

former employee will receive guaranteed minimum payments of $0.4 million and
$0.7 million in 2004 and 2005, respectively. The Company entered into the
agreement as part of its restructuring initiative to lower its cost basis.

The Company entered into a two-year agreement with Sprint in July 2002. The
agreement provides for annual minimum usage levels by Penton of approximately
$0.8 million each year.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no special purpose entities or off-balance sheet debt,
other than operating leases in the ordinary course of business, which are fully
disclosed in Note 12 -- Commitments and Contingencies of the notes to the
consolidated financial statements.

The Company has a stand-by letter of credit of $0.1 million required by one
of the Company's facility leases. At December 31, 2003, no amounts were drawn
under the stand-by letter of credit. Letters of credit are purchased guarantees
that ensure our performance or payment to third parties in accordance with
specified terms and conditions.

Under certain agreements, indemnification provisions may require the
Company to make payments to third parties. In connection with certain facility
leases, we may be required to indemnify our lessors for certain claims. The
Company has agreed to indemnify the purchasers of several of our properties from
all claims prior to the sale. The Company will also indemnify its directors,
officers, employees and agents to the maximum extent permitted under the laws of
the State of Delaware. The duration of these indemnity provisions under the
terms of each agreement varies. The majority of indemnities do not provide for
any limitation of the maximum potential future payments we could be obligated to
make. We have not recorded any liability for these indemnities in the
accompanying consolidated balance sheets, as the fair values are not material.

FOREIGN CURRENCY

The functional currency of our foreign operations is their local currency.
Accordingly, assets and liabilities of foreign operations are translated to U.S.
dollars at the rates of exchange on the balance sheet date; income and expense
are translated at the average rates of exchange prevailing during the year.
There were no significant foreign currency transaction gains or losses for the
periods presented.

SEASONALITY

We may experience seasonal fluctuations as trade shows and conferences held
in one quarter in the current year may be held in a different quarter in future
years.

INFLATION

The impact of inflation on our results of operations has not been
significant in recent years.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2 -- Summary of Significant Accounting Policies of the notes to
the consolidated financial statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. On an ongoing basis, we evaluate our estimates, including those
related to bad debts, intangible assets, income taxes, restructuring, pension
benefits, contingencies and litigation. We base our estimates on historical
experience and on various other assumptions that are believed

47

to be reasonable under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and liabilities that
are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements.

Collectibility of Accounts Receivable

In order to record our accounts receivable at their net realizable value,
we must assess their collectibility. A considerable amount of judgment is
required in order to make this assessment, including an analysis of historical
bad debts, a review of the aging of our receivables and the current
creditworthiness of our customers. We have recorded allowances for receivables
that we feel are uncollectible, including amounts for the resolution of
potential credit and other collection issues or discrepancies. However,
depending on how such potential issues are resolved, or if the financial
condition of any of our customers were to deteriorate and their ability to make
required payments became impaired, increases in these allowances may be
required.

Our 2003 provision for doubtful accounts charged to expense reflects the
general improvements in the overall economy in 2003. Our customers appear to be
feeling the impact of the upswing as our days-sales-outstanding ratio has
steadily decreased throughout the year.

In 2002, our provision for doubtful accounts charged to expense reflected
the continued effects of the economic slowdown that started in 2001. As in 2001,
this was particularly true for our Internet technologies, enterprise information
technology, telecommunication, and electronics market customers, which continued
to face difficult market conditions.

In 2001, our provision for doubtful accounts charged to expense increased
significantly over 2000 because of the impact of the global economic slowdown in
2001 on our customers. This was particularly true for our Internet technologies,
enterprise information technology and electronics market customers, many of whom
signed contracts and submitted deposits in 2000 for our 2001 trade shows, but
either declared bankruptcy or, following the events of September 11, 2001,
decided not only to cancel their attendance but also refused to fulfill their
obligations under the terms of the contract. We attempt to pursue these
customers via legal means; however, because many of these companies went out of
business or filed for bankruptcy and have little or no assets to liquidate, our
collection efforts were not fully successful.

Impairment of Long-Lived Assets

We continually monitor and review long-lived assets, including fixed
assets, goodwill and intangible assets, for impairment whenever events or
changes in circumstances indicate that the carrying amount of any such asset may
not be recoverable. Factors indicating that an impairment may exist include
permanent declines in cash flows, continued decreases in utilization of a
long-lived asset, or a change in business strategy. The process involves
management determining if the cash flows expected to be generated from the use
of a long-lived asset group and its eventual disposition (undiscounted and
without interest charges) are less than the carrying amount of the asset group.
If the criteria are met, the fair value is determined using appropriate
assumptions. The estimate of cash flows is based upon, among other things,
certain assumptions about expected future operating performance, growth rates
and other factors. Our estimates may differ from actual cash flows due to, among
other things, technological changes, economic conditions, changes to our
business model, or changes in our operating performance. The determination of
impairment requires significant management judgment, including establishing
asset groupings.

Goodwill is tested annually on September 30 of each year for impairment
using the fair value based test prescribed by SFAS 142. The estimates and
assumptions described above (along with other factors such as discount rates)
affect the amount of impairment recognized.

The Company completed its annual SFAS 142 impairment review at September
30, 2003. This review resulted in a non-cash impairment charge of approximately
$37.6 million to reduce the carrying value of

48

goodwill for two reporting units, which are part of our Technology segment and
one reporting unit, which is part of our Retail segment.

During the third quarter of 2002, Penton completed its initial impairment
test under SFAS 142 for January 1, 2002 and recorded a non-cash charge of $39.7
million to reduce the carrying value of goodwill for two of our seven identified
reporting units. In addition, a number of events occurred during the third
quarter, that indicated that an additional impairment of goodwill might exist.
As a result of these triggering events and circumstances, the Company completed
an additional SFAS 142 impairment review at September 30, 2002. This review
resulted in a non-cash impairment charge of approximately $203.3 million to
further reduce the carrying value of goodwill for the two reporting units, which
are part of our Technology segment.

The Company's SFAS 142 evaluations were performed by an independent
valuation firm, utilizing assumptions and projections we believe to be
reasonable and supportable, and that reflect management's best estimate of
projected future cash flows. Considerable judgment was required in selecting
discount rates, developing cash flow projections and developing balance sheets
for each reporting unit. Slight changes in any of these assumptions could create
a material impact on the impairment charge recorded by the Company.

Deferred Tax Asset Valuation

In 2003 and 2002, the Company recorded a $19.0 million and $36.2 million
charge, respectively, to establish a full valuation allowance for its net
deferred tax assets and net operating loss carryforwards. The valuation
allowance was calculated in accordance with the provisions of SFAS No. 109,
"Accounting for Income Taxes" ("SFAS 109"), which places primary importance on
the Company's operating results in the most recent three-year period when
assessing the need for a valuation allowance. Although we believe that our
results for the last three years were heavily affected by impairments and
planned restructuring activities, which were undertaken to right-size our cost
structure, the cumulative losses represented sufficient negative evidence to
require a valuation allowance under the provisions of SFAS 109. We intend to
maintain a valuation allowance until sufficient positive evidence exists to
support its reversal. Until such time, except for minor foreign and state tax
provisions, the Company will have no reported tax provision, net of valuation
allowance adjustments. See Note 10 -- Income Taxes in the notes to consolidated
financial statements of the Company for additional information regarding this
charge.

Restructuring Reserve

Restructuring reserves include estimated costs for severance benefits,
lease termination expenses and other costs. If the future payments of these
costs were to differ from our estimates, we may need to increase or decrease our
reserves. Specifically, for leased premises that the Company no longer occupies,
management makes certain assumptions as to when or if these premises will be
subleased and at what price. Assumptions include the number of years of any
sublease, square footage, market trends, property locations and the price per
square foot. These assumptions involve significant judgments and estimations. We
have based our assumptions on discussions with brokers and/or parties that have
shown interest in the lease.

Divestitures

Pursuant to SFAS 142, reporting unit level goodwill should be allocated to
individual properties that are sold, if these properties qualify as a "business"
under Emerging Issues Task Force ("EITF") Issue No. 98-3, "Determining Whether a
Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business"
("EITF 98-3"). We undertook a detailed analysis of each property sold in 2002
and 2003 to determine if it qualified as a business. Considerable judgment is
required to determine if a transferred set of activities possesses all of the
criteria for a business under EITF 98-3. In addition, further judgment is
required to determine if missing elements (for a business) are major or minor
items.

The allocation of reporting unit goodwill to the individual properties is
further affected by whether a business is considered to be integrated. SFAS 142
states that if a business is not integrated, the initial goodwill that was
generated upon the acquisition of that business will be included in the
computation of the gain or loss on the disposition of that unit. Considerable
judgment is required to determine if a particular property has
49

been integrated. Factors such as length of time since acquisition, common
management, knowledge sharing, synergies between properties and shared services
such as legal and accounting have to be considered carefully in determining
whether a property is integrated. The Company has concluded that all the
properties classified as discontinued operations have been integrated, and as
such, the goodwill has been allocated to each property sold based on its
relative fair value. The difference between the initial goodwill generated upon
acquisition and the amount allocated using relative fair value can be material.

In order for a property to be classified as discontinued operations, it
must meet the definition of a component under SFAS 144. A component is defined
as a reportable segment, a reporting unit, a subsidiary, an asset group or any
group of assets for which there is clearly distinguishable cash flows and such
cash flows will be eliminated upon the sale. This assessment requires
significant judgment.

Pension Plans

Assumptions used in determining the projected benefit obligation and the
fair value of plan assets for our pension plans are determined by us in
consultation with our outside actuary. Changes in assumptions are based upon our
historical data, such as the rate of compensation increase and the long-term
rate of return on plan assets. Assumptions, including the discount rate and the
long-term rate of return on plan assets, are evaluated and updated at least
annually. Based upon our evaluation, we have changed the discount rate from
7.25% at December 31, 2001 to 6.75% at December 31, 2002 and to 6.0% at December
31, 2003. We use a discount rate 1.0% lower for lump-sum distributions. The
discount rate decrease in 2002 and 2003 reflects the decrease in Moody's Aa
corporate bond yields, which were 7.08% at December 31, 2001, 6.52% at December
31, 2002, and 6.01% at December 31, 2003, and the underlying stream of expected
benefit payments. The expected long-term rate of return on plan assets of 9.0%
and the rate of compensation increase of 4.0% have remained unchanged between
2001 and 2003. The salary increase rate is a long-term rate based on current
expectations of future pay increases. We believe that 4.0% is reasonable. In
addition, we believe that the long-term rate of return on plan assets of 9.0% is
still reasonable based on the plan's overall past performance.

Penton is expected to recognize pension income in 2004 of $0.6 million
based on current expectations and assumptions. A decrease of 0.25% in the
discount rate would increase pension expense approximately $0.3 million, while a
decrease of 0.25% in the expected return on asset rate would increase pension
expense by approximately $0.1 million.

Commitments and Contingencies

We are subject to legal proceedings related to employment, intellectual
property, contract disputes and other matters. In order to determine the amount
of reserves required, we assess the likelihood of any adverse judgments or
outcomes to these matters as well as potential ranges of probable losses. A
determination of the amount of reserves required for these contingencies is made
after analysis of each individual issue and discussion with our legal counsel.
The required reserves may change in the future due to new developments in each
matter or changes in approach, such as a change in settlement strategy.

Self Insurance

The Company is self-insured for health and workers' compensation benefits
up to certain stop-loss limits. Such costs are accrued based on known claims and
an estimate of incurred, but not reported ("IBNR") claims. IBNR claims are
estimated using historical claims information and other data provided by claims
administrators. This estimation process is subjective, and to the extent that
future actual results differ from original estimates, adjustments to recorded
accruals may be necessary.

50

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the potential loss arising from adverse changes in market
rates and prices, such as foreign currency exchange rates and interest rates. We
do not enter into financial instruments for trading or speculative purposes. As
of December 31, 2003, the Company was exposed to the following market risks:

INTEREST RATE RISK

Our cash and cash equivalents are not subject to significant interest rate
risk due to the short maturities of these instruments. As of December 31, 2003,
the carrying value of our cash and cash equivalents approximates fair value.

Our notes receivable earn interest at a variable rate and, thus, expose the
Company to interest rate risk. As of December 31, 2003, a hypothetical 10%
decrease of the interest rate would have resulted in an immaterial impact on our
financial results and cash flows.

FAIR VALUE RISK

Our long-term debt consists of senior notes with interest at fixed rates.
Consequently, we do not have significant interest rate risk exposure related to
our long-term debt. However, the fair value of our senior notes fluctuates with
the market, as they are publicly traded. The table below provides information
about the expected cash flows associated with our long-term debt obligations and
their fair value at December 31, 2003 (in thousands):

The Company currently does not manage the fair value risk related to its
senior notes.

FOREIGN CURRENCY EXCHANGE RATE RISK

We maintain assets and operations in the United Kingdom and in various
other countries. As a result, we may be exposed to fluctuations in currency
rates relative to these markets. At December 31, 2003, a hypothetical 10%
strengthening or weakening of the U.S. dollar relative to the currencies of
foreign countries in which we operate would have resulted in an immaterial
impact on our financial results and cash flows.

2002 MARKET RISK

At December 31, 2002, the Subordinated Notes had a carrying amount of
$171.4 million and a fair value of $75.5 million and the Secured Notes had a
carrying amount of $156.8 million and a fair value of $130.9 million. The fair
value of the notes is determined by quotations in the open market.

At December 31, 2002, the Company was exposed to interest rate risk due to
the variable rate debt outstanding under the senior secured credit facility. As
of December 31, 2002, a hypothetical 10% increase in the interest rate would
have resulted in an immaterial impact on our financial results and cash flows.

51

PENTON MEDIA, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

FINANCIAL STATEMENTS:
Report of Independent Auditors.............................. 53
Consolidated Balance Sheets at December 31, 2003 and 2002... 54
Consolidated Statements of Operations for the Years Ended
December 31, 2003, 2002 and 2001.......................... 56
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2003, 2002 and 2001.......................... 57
Consolidated Statements of Stockholders' Equity (Deficit)
and of Comprehensive Loss for the Years Ended December 31,
2003, 2002 and 2001....................................... 58
Notes to Consolidated Financial Statements.................. 59

FINANCIAL STATEMENT SCHEDULE:
Consolidated Financial Statement Schedule II -- Valuation
and Qualifying Accounts................................... 133

All other schedules have been omitted because the required information is
not present or is not present in amounts sufficient to require submission of the
schedule or because the information required is included in the consolidated
financial statements or notes thereto.

52

REPORT OF INDEPENDENT AUDITORS

To the Stockholders and Board of Directors of Penton Media, Inc.:

In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Penton Media, Inc. (the "Company") and its subsidiaries at December
31, 2003 and 2002, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2003, in conformity
with accounting principles generally accepted in the United States of America.
In addition, in our opinion, the financial statement schedule listed in the
accompanying index presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements. These consolidated financial statements and financial
statement schedule are the responsibility of the Company's management; our
responsibility is to express an opinion on these consolidated financial
statements and the financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

As discussed in Note 2 -- Summary of Significant Accounting Policies to the
consolidated financial statements, effective January 1, 2002, the Company
changed its method of accounting for goodwill and other intangible assets to
comply with the provisions of Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets," and adopted Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets."

/s/ PricewaterhouseCoopers LLP

Cleveland, Ohio
February 27, 2004

53

PENTON MEDIA, INC.

CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these consolidated financial
statements.
55

PENTON MEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these consolidated financial
statements.
56

PENTON MEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

The accompanying notes are an integral part of these consolidated financial
statements.
57

PENTON MEDIA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
AND OF COMPREHENSIVE LOSS

The accompanying notes are an integral part of these consolidated financial
statements.
58

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- DESCRIPTION OF BUSINESS

Penton Media, Inc., ("Penton" or the "Company") is a leading diversified
business-to-business media company that produces market-focused magazines, trade
shows and conferences, and online media products. Penton's integrated media
portfolios serve four segments comprising the following markets: Industry --
design/engineering, government/compliance, manufacturing, mechanical
systems/construction, supply chain and aviation; Technology -- Internet
technologies, enterprise information technology and electronics;
Lifestyle -- natural products; and Retail -- food/retail and
leisure/hospitality.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Penton and
its subsidiaries. All significant intercompany accounts and transactions have
been eliminated. All acquisitions have been accounted for under the purchase
method of accounting and are included in the consolidated financial statements
from their respective dates of acquisition. The consolidated financial
statements also include the accounts of all companies where the Company
exercises control.

Investments in companies in which Penton has significant influence, but
less than a controlling voting interest, are accounted for under the equity
method. Investments in companies in which Penton does not have a controlling
interest, or an ownership and voting interest so large as to exert significant
influence, are accounted for at market value if the investments are publicly
traded. Unrealized gains (losses) on investments accounted for at market value
are reported net of tax as a component of accumulated other comprehensive income
(loss) until the investments are sold, at which time the realized gain (loss) is
included in earnings if the Company considers these investments to be available
for sale. If the investment is not publicly traded, then the investment is
accounted for at cost. At December 31, 2003, Penton does not have any equity
investments. Furthermore, our investments classified as available for sale were
sold in the first quarter of 2002 (see Note 5 -- Investments).

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the reported amounts of revenues and
expenses during the reporting period. On an ongoing basis, management reviews
its estimates based upon currently available information. Actual results could
differ from these estimates.

CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH

Cash and cash equivalents include primarily cash on hand and short-term
investments with original maturity of three months or less. At December 31,
2002, the Company had $0.7 million of restricted cash balances, related
primarily to cash received for license fees for a trade show held in 2003 and
amounts held in escrow for the sale of Professional Trade Shows (see Note
3 -- Acquisitions and Disposals). At December 31, 2003 and 2002, the Company had
cash overdrafts of $0.2 million and $0.6 million, respectively.

ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE

The Company establishes its credit policies based on an ongoing evaluation
of its customers' credit worthiness and competitive market conditions, and
establishes its allowance for doubtful accounts based on an assessment of
exposures to credit losses at each balance sheet date. Trade accounts receivable
are considered

59

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

past due after 30 days and delinquent after 90 days. The Company believes its
allowance for doubtful accounts is sufficient based on the credit exposures
outstanding at December 31, 2003.

INVENTORIES

Inventories, which consist primarily of paper stock, are stated at the
lower of cost or market, cost being determined on the basis of the last-in,
first-out ("LIFO") method. The difference between cost determined on a LIFO
basis and a first-in, first-out basis was insignificant at December 31, 2003 and
2002.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. Penton records
depreciation using the straight-line method over the following estimated useful
lives:

Computer equipment and software........... 3-5 years
Web site development costs................ 3 years
Furniture, fixtures and equipment......... 3-10 years
Leasehold improvements.................... Estimated useful lives or lease term, whichever
is shorter

Depreciation expense was $8.0 million, $8.8 million and $9.6 million for
the years ended December 31, 2003, 2002 and 2001, respectively.

Maintenance and repair expenditures are charged to appropriate expense
accounts in the period incurred; replacements, renewals and betterments are
capitalized. Upon sale or other disposition of property, the cost and
accumulated depreciation of such properties are eliminated from the accounts,
and the gains or losses thereon are reflected in operations.

GOODWILL, OTHER INTANGIBLE ASSETS AND LONG-LIVED ASSETS

The Company adopted Statement of Financial Accounting Standards ("SFAS"),
No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"), on January 1,
2002. Under SFAS 142, goodwill and certain other intangible assets having
indefinite lives, which were previously amortized over the periods benefited,
are no longer being amortized to earnings, but instead are subject to periodic
testing for impairment. The Company does not have other intangibles with
indefinite lives. Goodwill is tested for impairment on an annual basis or
between annual tests if events occur or circumstances change that could indicate
a reduction in the fair value of a reporting unit below its carrying amount. If
the carrying amount of the reporting unit's goodwill exceeds the implied fair
value of that goodwill, an impairment loss is recognized in an amount equal to
that excess.

The Company adopted SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS 144") on January 1, 2002. This statement
requires long-lived assets with determinable lives to be grouped with other
assets and liabilities at the lowest level for which there are identifiable cash
flows that are largely independent of the cash flows of other groups of assets
and liabilities. An impairment exists only if the carrying amount of the
long-lived assets, or group, is not recoverable and exceeds its fair value.
Intangible assets determined to have definite lives are amortized over their
remaining useful lives. Intangible and other long-lived assets with determinable
lives are reviewed for impairment whenever events and circumstances indicate
that the carrying amount may not be recoverable pursuant to SFAS 144. In
reviewing for impairment, the Company compares the undiscounted cash flows
generated by such assets to the carrying value of such assets. If the total cash
flows are less than the carrying amount, the Company compares the carrying value
of such assets to the fair value determined using the income approach, which is
similar to the discounted cash flows approach. Impairment is recognized equal to
the difference between the asset's fair value and its carrying amount.

60

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DEFERRED FINANCING COSTS

Costs incurred in obtaining long-term financing are included in other
non-current assets in the accompanying consolidated balance sheets, and are
amortized over the terms of the related indebtedness.

DERIVATIVE FINANCIAL INSTRUMENTS

In January 2001, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 requires
that an entity recognize all derivatives as either assets or liabilities in the
consolidated balance sheets and measure those instruments at fair value. The
accounting for changes in the fair value of a derivative depends on the intended
use of the derivative and its designation as a hedge. Derivatives that are not
hedges must be adjusted to fair value through earnings. If a derivative
qualifies as a hedge under SFAS 133, the change in the fair value of the
derivative either offsets the change in fair value of the hedged assets,
liabilities or firm commitments through earnings or is recognized in accumulated
other comprehensive income (loss) until the hedged item impacts earnings. The
change in a derivative's fair value related to the ineffective portion of a
hedge, if any, is immediately recognized in earnings.

When a designated hedged item matures, is sold or extinguished, is
terminated, or a hedged anticipated transaction is no longer probable, any
amounts deferred in accumulated other comprehensive income (loss) are
reclassified to earnings in the period the Company discontinues hedge
accounting.

The Company does not enter into derivative financial instruments for
speculative or trading purposes.

REVENUE RECOGNITION

Advertising revenues from Penton's trade magazines are recognized in the
month the publications are mailed. Amounts received in advance of trade shows
and conferences are deferred and recognized in the month the events are held.
Web site revenues, which include primarily advertising revenues, are recognized
on a straight-line basis over the contract term as services are provided ratably
over the term of the contract. Licensing revenues are recognized as earned.

From time to time, the Company enters into multiple element arrangements
whereby it may provide a combination of services including print advertising,
trade show booths, customer lists, on-line advertising and other services.
Revenue from each element is recorded when the following conditions exist: (1)
the product or service provided represents a separate earnings process; (2) the
fair value of each element can be determined separately; and (3) the undelivered
elements are not essential to the functionality of a delivered element. If the
conditions for each element described above do not exist, revenue is recognized
as earned using revenue recognition principles applicable to those elements as
if it were a significant arrangement.

ADVERTISING AND PROMOTION EXPENSES

Advertising and promotion costs are expensed as incurred. These costs
amounted to $6.7 million, $11.9 million and $24.5 million in 2003, 2002 and
2001, respectively.

SELF INSURANCE

The Company is self-insured for a portion of its risk on workers'
compensation and employee medical costs. The arrangements provide for stop loss
insurance to manage the Company's risk. Operations are charged with the cost of
claims reported and an estimate of claims incurred but not reported. The Company
does not provide health care benefits to retired employees.

61

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INCOME TAXES

Income taxes are accounted for using the asset and liability method
pursuant to the provisions of SFAS No. 109 "Accounting for Income Taxes" ("SFAS
109"). Deferred tax assets and liabilities are recognized for the expected
future tax consequences attributable to temporary differences between the
financial statement carrying amounts and the tax basis of assets and
liabilities. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

The Company assesses the recoverability of its deferred tax assets in
accordance with the provisions of SFAS 109. In accordance with that standard,
the Company recorded a valuation allowance for its net deferred tax assets and
net operating loss carryforwards of $55.3 million and $36.2 million as of
December 31, 2003 and 2002, respectively. See Note 10 -- Income Taxes for
additional information regarding income taxes.

TRANSLATION OF FOREIGN CURRENCIES

The functional currency of Penton's foreign operations is their local
currency. Accordingly, assets and liabilities of foreign operations are
translated to U.S. dollars at the rates of exchange at year-end; income and
expense are translated at the average rates of exchange prevailing during the
applicable year. There were no significant foreign currency transaction gains or
losses in 2003, 2002 or 2001. The effects of translation are included in
accumulated other comprehensive loss in stockholders' deficit.

STOCK BASED COMPENSATION PLANS

At December 31, 2003, the Company has various stock-based compensation
arrangements (see Note 13 -- Common Stock and Common Stock Award Programs). The
Company accounts for these plans under the recognition and measurement
principles of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB 25"), and related interpretations. For stock option
plans, no compensation is recognized as all grants are issued at market value of
the Company's stock.

The following table illustrates the effects on net loss and earnings per
share as if the Company had applied the fair value recognition provision of SFAS
No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), as amended by
SFAS No. 148, "Accounting for Stock-Based Compensation Transition and
Disclosure" ("SFAS 148"), (in thousands, except per share data):

Pro forma information regarding net loss and earnings per share is required
by SFAS 123 and has been determined as if Penton had accounted for its employee
stock options under SFAS 123. The weighted-average

62

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

fair value of options granted in 2003 and 2001 was $0.32 and $6.32,
respectively. No options were granted in 2002. The fair value of each option
grant was estimated on the date of grant using the Black-Scholes option-pricing
model, under the following assumptions for 2003 and 2001:

EARNINGS PER SHARE

Basic earnings per share are based upon the weighted-average number of
common shares outstanding and the weighted-average number of fully vested
Restricted Stock Units and deferred shares. Diluted earnings per share also
includes the effect of stock options and other common stock equivalents
outstanding during the period, if they are dilutive.

NEW ACCOUNTING STANDARDS

In December 2003, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 132 (revised 2003), "Employers' Disclosures about Pensions and Other
Postretirement Benefits" ("SFAS 132-R"). The provisions of this statement do not
change the measurement and recognition provisions of SFAS No. 87, "Employers'
Accounting for Pensions," SFAS No. 88, "Employers' Accounting for Settlements
and Curtailments of Defined Benefit Pension Plans and for Termination Benefits,"
and SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." SFAS 132-R replaces SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits" and adds additional disclosures.
SFAS 132-R is effective for fiscal years ending after December 15, 2003. The
Company adopted SFAS 132-R and has included all required disclosures in these
consolidated financial statements.

In December 2003, the FASB Staff issued a revised Interpretation No. 46,
"Consolidation of Variable Interest Entities" ("FIN 46-R"). FIN 46-R partially
defers the effective dates, which will be applicable to three different
classifications of enterprises that must evaluate their interests in potential
variable interest entities ("VIEs"), as follows: (1) public entities, (2)
non-public entities and (3) public small business entities. Pursuant to the
above deferrals, Penton must adopt FIN 46-R no later than March 31, 2004.
Certain disclosures about potential VIEs are required at December 31, 2003. In
May 2000, Penton acquired a 50% interest in Penton Media Germany ("PM Germany").
PM Germany may potentially qualify as a VIE under FIN 46. The Company currently
consolidates PM Germany, which produces trade shows, publications and online
media products. Included in Penton's consolidated statements of operations for
the year ended December 31, 2003, are revenues of $3.1 million and a net loss of
$0.2 million related to PM Germany. At December 31, 2003, Penton's consolidated
balance sheets include assets of $4.5 million, liabilities of $5.7 million and
minority interest of $2.5 million related to PM Germany. The Company estimates
that its maximum exposure to loss would be approximately $0.2 million.

In December 2003, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 104, "Revenue Recognition" ("SAB 104"). SAB 104
revises or rescinds certain SAB guidance in order to make this interpretive
guidance consistent with current authoritative accounting and auditing guidance
and SEC rules and regulations relating to revenue recognition. This bulletin is
effective immediately. The Company's current revenue recognition policies comply
with SAB 104.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities" ("SFAS 149"). This statement
amends and clarifies financial account-

63

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ing and reporting for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities under SFAS
133. SFAS 149 is effective for contracts entered into or modified after June 30,
2003. The adoption of SFAS 149 did not have a significant effect on the
Company's results of operations, its financial condition, or cash flows.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity"
("SFAS 150"). SFAS 150 changes the accounting for certain financial instruments
with characteristics of both liabilities and equity and requires that those
instruments be classified as liabilities in the statement of financial position.
Previously, many of those financial instruments were classified as equity. SFAS
150 is effective for financial instruments entered into or modified after May
31, 2003 and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. While the effective date of certain elements of
SFAS 150 have been deferred, the adoption of SFAS 150, when finalized, is not
expected to have a material impact on our financial position, results of
operations or cash flows.

In May 2003, the Emerging Issues Task Force ("EITF") reached a consensus on
EITF Issue 01-8, "Determining Whether an Arrangement is a Lease" ("EITF 01-8").
EITF 01-8 provides guidance on how to determine whether an arrangement contains
a lease that is within the scope of SFAS No. 13, "Accounting For Leases" and is
effective for arrangements entered into or modified after June 30, 2003. The
adoption of EITF 01-8 did not have a significant effect on the Company's results
of operations, its financial condition, or cash flows.

In 2003, the Company adopted EITF 00-21, "Revenue Arrangements with
Multiple Deliverables" ("EITF 00-21"). EITF 00-21 provides guidance on how to
determine whether an arrangement involving multiple deliverables contains more
than one unit of accounting and how arrangement consideration should be measured
and allocated to the separate units of accounting in the arrangement. The
adoption of EITF 00-21 did not have a material impact on our financial position,
results of operations or cash flows.

RECLASSIFICATIONS

Certain reclassifications have been made to the 2002 and 2001 financial
statements to conform to the 2003 presentation.

NOTE 3 -- ACQUISITIONS AND DISPOSALS

ACQUISITIONS

There were no acquisitions in 2003 or 2002.

In 2001, Penton acquired nine companies for an aggregate purchase price of
approximately $10.0 million in cash, including approximately $0.3 million of
contingent consideration paid in 2002 based on the achievement of specified
business targets, and $3.2 million in promissory notes. The excess of the
aggregate purchase price over the fair market value of net assets acquired was
approximately $11.8 million, including the contingent consideration.

At December 31, 2003, Penton had no amounts accrued for contingent
consideration, and Penton paid an immaterial amount for contingent consideration
during 2003. During 2002, total cash payments of $5.5 million were made for
contingent consideration, and the Company issued $1.5 million or 527,951 shares
of common stock. Contingent payments earned are recorded as additional goodwill,
pursuant to the provisions of EITF No. 95-8, "Accounting for Contingent
Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase
Business Combination," and tested for impairment under SFAS 142.

At December 31, 2003, there were no remaining contingent considerations.

64

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DISPOSALS

At December 31, 2002, the net assets of our Professional Trade Shows
("PTS") group were classified as held for sale. The sale was completed in
January 2003 for approximately $3.8 million, including an earnout of $0.6
million based on reaching certain performance objectives in 2003. At December
31, 2003, these performance objectives had not been reached. The sale resulted
in a gain of approximately $1.4 million, which was recorded in the first quarter
of 2003. PTS was part of our Industry segment. The results of PTS are reported
as discontinued operations for all periods presented.

In December 2002, the Company disposed of the net assets of Penton Media
Australia ("PM Australia") for approximately $0.01 million in cash upon closing
and $0.1 million due in 12 equal monthly installments starting in July 2003. The
sale resulted in a loss of approximately $0.6 million. PM Australia was part of
our Technology segment. The results of PM Australia are reported as discontinued
operations for all periods presented.

Operating results for the discontinued components, which include PM
Australia and PTS for 2003, 2002 and 2001, are as follows (in thousands):

In addition to the above components, the Company recognized a $0.9 million
loss included in operating expenses as loss on sale of properties related to the
sale of four properties in December 2002, including Streaming Media, Boardwatch
and ISPCON, which were part of our Technology segment, and AEC, which was part
of our Industry segment. The aggregate consideration for these properties was
approximately $0.9 million in cash.

At December 31, 2002, assets and liabilities related to PTS were classified
separately on the consolidated balance sheets as current assets of discontinued
operations and current liabilities of discontinued operations, respectively. The
carrying amounts of the major classes of assets and liabilities included in
these balances are as follows:

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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4 -- GOODWILL AND OTHER INTANGIBLES

IMPAIRMENT OF GOODWILL

During the third quarter of 2003, Penton completed its annual impairment
test of goodwill under the provisions of SFAS 142 and recorded a non-cash charge
of $37.6 million related to the reduction of the carrying value of goodwill in
three of the seven identified reporting units. Penton utilized a third-party
valuation company to determine the fair value of the reporting units. Two of the
reporting units are part of the Company's Technology segment and one is part of
the Retail segment. The charge is reflected as an impairment of assets in the
accompanying consolidated statements of operations. The fair value of the
reporting units for the impairment test was determined using the income
approach, which is similar to the discounted cash flows approach.

During the third quarter of 2002, Penton completed its initial impairment
test under the provisions of SFAS 142 for January 1, 2002 and recorded a
non-cash charge of $39.7 million to reduce the carrying value of goodwill for
two of our seven identified reporting units. Penton utilized a third-party
valuation company to determine the fair value of the reporting units. Both of
these reporting units are part of the Company's Technology segment. The charge
is reflected as a cumulative effect of accounting change in the accompanying
consolidated statements of operations.

During the third quarter 2002, a number of events occurred that indicated
an additional possible impairment of goodwill might exist. These events included
our determination in July of lower-than-expected revenues and adjusted EBITDA
results for the year; a letter from the New York Stock Exchange indicating that
the Company had fallen below minimum listing standards; a significant decline in
the Company's stock price; and the decision by management to potentially sell or
dispose of certain non-core assets. As a result of these triggering events and
circumstances, the Company completed an additional SFAS 142 impairment review at
September 30, 2002. This review resulted in a non-cash charge of approximately
$203.3 million to further reduce the carrying value of goodwill for these two
reporting units in our Technology segment. This charge is reflected as an
impairment of assets in the accompanying consolidated statements of operations.
The fair value of the reporting units for the initial and interim impairment
test was determined using the income approach, which is similar to the
discounted cash flows approach. The Company has selected September 30 of each
year to perform its annual impairment review.

Triggered by the continued decline in the economy and the negative impact
of the September 11, 2001 catastrophe, Penton recorded goodwill impairment
charges of $66.4 million in the second half of 2001. In 2002, approximately $9.8
million of the 2001 impairment charge was reclassified to discontinued
operations.

A summary of changes in the Company's goodwill during 2003, by business
segment, is as follows (in thousands):

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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of changes in the Company's goodwill during 2002, by business
segment, is as follows (in thousands):

- ---------------

(1) Represents goodwill related to PTS that was reclassified to current assets
of discontinued operations on the consolidated balance sheet.

(2) Consists of acquisition costs reclassified to goodwill and adjustments for
contingent consideration.

A reconciliation of the reported net loss applicable to common stockholders
and net loss applicable to common stockholders per common share to the amounts
adjusted for the exclusion of amortization of goodwill as of December 31, 2003,
2002 and 2001, respectively, had the provisions of SFAS 142 been applied on
January 1, 2001 are as follows (in thousands, except per share data):

IMPAIRMENT OF LONG-LIVED ASSETS

Due to the impairment of goodwill in three of the seven reporting units in
the third quarter of 2003 and because of the events in the third quarter of 2002
as discussed above, the Company also completed an assessment in accordance with
SFAS 144 at September 30, 2003 and 2002, and recorded non-cash charges of $8.2
million and $20.0 million, respectively. These charges are reflected as
impairment of assets in the accompanying consolidated statements of operations
and relate primarily to the write-off of trade names and

67

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

advertiser relationships for properties in our Technology segment. The fair
value of the asset groups was determined using the income approach, which is
similar to the discounted cash flows approach.

Triggered by the continued decline in the economy and the negative impact
of the September 11, 2001 catastrophe, Penton recorded asset impairment charges
of $3.2 million in the second half of 2001. The charge primarily consists of the
write-off of $1.7 million of various Web site costs that were shut down and $0.9
million related to abandoned circulation software costs.

At December 31, 2003, other intangibles recorded in the consolidated
balance sheets are comprised of the following (in thousands):

Other intangibles are being amortized over 3 to 10 years. Total
amortization expense for 2003, 2002 and 2001 were $3.9 million, $8.7 million and
$4.4 million, respectively. Amortization expense estimated for these intangibles
for 2004 through 2008 are as follows (in thousands):

NOTE 5 -- INVESTMENTS

In January 2002, Penton sold its remaining 11.8% ownership interest, or
2,973,383 shares, in Jupitermedia Corporation for approximately $5.8 million in
cash and recognized a gain of approximately $1.5 million, which is classified in
other net, in the consolidated statement of operations.

NOTE 6 -- DEBT

LOAN AND SECURITY AGREEMENT

In August 2003, the Company replaced its senior secured credit facility
with a new four-year loan and security agreement. Pursuant to the terms of the
revolving loan and security agreement, the Company can borrow up to the lesser
of (i) $40.0 million; (ii) 2.5x the Company's last twelve months adjusted EBITDA
measured monthly during the first year, 2.25x during the second year and 2.0x
thereafter; (iii) 40% of the Company's last six months of revenues; or (iv) 25%
of the Company's enterprise value, as determined annually by a third party. The
revolving credit facility bears interest at LIBOR plus 5.0% subject to a LIBOR
minimum of 1.5%. The Company must comply with a quarterly financial covenant
limiting the ratio of maximum bank debt to the last twelve months adjusted
EBITDA to 2.5x through March 31, 2004, 2.25x from June 30, 2004 through March
31, 2005 and 2.0x thereafter. The loan agreement permits the Company to sell

68

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

assets of up to $12.0 million in the aggregate during the term or $5.0 million
in any single asset sale; and complete acquisitions of up to $5.0 million per
year. Included in the loan agreement is a stand-by letter of credit of $0.1
million required by one of the Company's facility leases. The amount of the
letter of credit reduces the availability under the credit facility. As of
December 31, 2003, no amounts were drawn under the stand-by letter of credit.
Costs representing bank fees and other professional fees of $1.8 million are
being amortized over the life of the loan agreement. As of December 31, 2003,
$39.9 million was available under the loan agreement. There were no amounts
outstanding.

The replacement of the senior secured credit facility in August 2003
resulted in the write-off of unamortized financing fees of approximately $1.0
million. This charge has been classified as part of interest expense in the
consolidated statements of operations.

The loan and security agreement contains several provisions, which could
have a significant impact as to the classification as well as the acceleration
of payments for borrowings outstanding under the agreement, including the
following: (i) the obligation of the lender to provide any advances under the
loan agreement is subject to no material adverse change events; (ii) reserves
may be established against the borrowing base for sums that the Company is
required to pay, such as taxes and assessments and other types of required
payments, and has failed to pay; (iii) in the event of a default under the loan
agreement, the lender has the right to direct all cash that is deposited in the
Company's lock boxes to be sent to the lender to pay down outstanding
borrowings; (iv) the loan agreement establishes cross-defaults to the Company's
other indebtedness (such as the Senior Secured Notes and Senior Subordinated
Notes) such that a default under the loan agreement could cause a default under
the note agreements and vice versa; however, default-triggering thresholds are
different in the loan agreement and the notes; (v) if the Company is in default
of any material agreement to which it is a party and the counter-party to that
agreement has the right to terminate such agreement as a result of the default,
this constitutes an event of default under the loan agreement. Under the loan
agreement, the lenders reserve the right to deem the notes in default, and in
those limited circumstances, could accelerate payment of the outstanding loan
balances should the Company undergo a material adverse event. Even though the
criteria defining a material adverse event are subjective, the Company does not
believe exercise of the lenders' right is probable nor does it foresee any
material adverse events in 2004. In addition, the Company believes that the note
agreements are long-term in nature. Accordingly, the Company continues to
classify its loans as long term. At December 31, 2003, the Company was in
compliance with all of the above provisions.

SENIOR SECURED CREDIT FACILITY

In January 2003, the Company amended its senior secured credit facility.
The amended agreement, which was replaced in August 2003, as noted above,
permitted the Company to sell certain properties in excess of the $5.0 million
aggregate limit required by the original amended agreement. In return, the
revolving commitment was reduced from $40.0 million to $32.0 million. At the end
of January 2003, when the aggregate sum of Penton's cash and cash equivalents
exceeded $40.0 million, an additional one-time reduction of $10.0 million was
required under the amended credit facility. Furthermore, upon the sale of PTS
(see Note 3 -- Acquisitions and Disposals), the revolving commitment was further
reduced by 50% of the aggregate gross proceeds, as defined, from this sale, or
approximately $1.9 million. The amended facility also increased the maximum
commitment fee from 0.50% to 0.75%. The commitment under the credit facility was
scheduled to decrease by 15% in 2003, 30% in 2004, 35% in 2005 and 20% in 2006.

The reduction of the revolver from $40.0 million to $20.1 million in
January 2003 and the reduction of the revolver from $185.0 million to $40.0
million in March 2002 resulted in the write-off of unamortized financing fees of
$0.9 million and $0.7 million, respectively. These charges have been classified
as part of interest expense on the consolidated statements of operations.

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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In March 2002, Penton amended and restated its senior secured credit
facility and repaid in full its term loan A and term loan B facilities from the
proceeds received from the sale of preferred shares (see Note 7 -- Mandatorily
Redeemable Convertible Preferred Stock), proceeds received from the sale of
Jupitermedia Corporation common stock (see Note 5 -- Investments), cash on hand
from a tax refund of approximately $12.2 million and the issuance of $157.5
million in 11 7/8% senior secured notes as mentioned below.

The repayment of the credit facility term loan A and term loan B in March
2002 resulted in a non-cash extraordinary charge of $0.7 million, net of $0.5
million in taxes, relating to the write-off of unamortized deferred financing
costs. In 2003, this extraordinary charge was reclassified to gain on
extinguishment of debt in the consolidated statements of operations in
accordance with the provisions of SFAS No. 145, "Rescission of SFAS Nos. 4, 44,
and 64, Amendment of SFAS 13, and Technical Corrections as of April 2002" ("SFAS
145").

SENIOR SECURED NOTES

In March 2002, Penton issued $157.5 million of 11 7/8% senior secured notes
(the "Secured Notes") due in 2007. Interest is payable on the Secured Notes
semiannually on April 1 and October 1. The Secured Notes are fully and
unconditionally, jointly and severally guaranteed on a senior basis by all of
the assets of Penton's domestic subsidiaries, which are 100% owned by the
Company, and also by the stock of certain subsidiaries. Condensed consolidating
financial information is presented in Note 21 -- Guarantor and Non-guarantor
Subsidiaries. Penton may redeem the Secured Notes, in whole or in part, during
the periods October 1, 2005 through October 1, 2006 and thereafter at redemption
prices of 105.9% and 100.0% of the principal amount, respectively, together with
accrued and unpaid interest. In addition, at any time prior to October 1, 2005,
up to 35% of the aggregate principal amount of the Secured Notes may be redeemed
at Penton's option, within 90 days of certain public equity offerings of its
common stock, at a redemption price equal to 111.875% of the principal amount,
together with accrued and unpaid interest.

The Secured Notes were offered at a discount of $0.8 million, which is
being amortized using the interest method, over the term of the Secured Notes.
Amortization of the discount was $0.2 million in 2003. Costs representing
underwriting fees and other professional fees of $6.6 million are being
amortized, using the effective interest method, over the term of the Secured
Notes. Net proceeds of $150.1 million were used to pay down $83.6 million of
Penton's term loan A facility and $49.0 million of its term loan B facility and
to repurchase $10.0 million of the Company's 10 3/8% senior subordinated notes
for $8.3 million, excluding interest. The remaining net proceeds of $9.2 million
were used for general corporate purposes. The Secured Notes rank senior in right
to all of Penton's subordinated indebtedness, including the 10 3/8% senior
subordinated notes due in 2011. The Secured Notes contain covenants that, among
other things, limit the Company's ability to pay dividends, incur additional
debt, sell assets and enter into mergers or consolidations. The Company's
ability to obtain dividends from its subsidiaries is only restricted if Penton
is in default under its debt arrangement or if the Company has exceeded its
limitation of additional indebtedness, as specified in such agreement.

SENIOR SUBORDINATED NOTES

In June 2001, Penton issued $185.0 million of 10 3/8% senior subordinated
notes (the "Subordinated Notes") due in 2011. Interest is payable on the
Subordinated Notes semiannually on June 15 and December 15. The Subordinated
Notes are fully and unconditionally, jointly and severally guaranteed, on a
senior subordinated basis, by the assets of Penton's domestic subsidiaries,
which are 100% owned by the Company. Condensed consolidating financial
information is presented in Note 21 -- Guarantor and Non-guarantor Subsidiaries.
The notes may be redeemed in whole or in part on or after June 15, 2006. In
addition, the Company may redeem up to 35% of the aggregate principal amount of
the Subordinated Notes before June 15, 2004 with the proceeds of certain equity
offerings. The Subordinated Notes were offered at a discount

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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of $4.2 million, which is being amortized using the interest method, over the
term of the Subordinated Notes. Amortization of the discount was $0.6 million in
2003. Costs representing underwriting fees and other professional fees of $1.7
million are being amortized over the term of the Subordinated Notes. Net
proceeds of $180.2 million were used to pay down $136.0 million under the
revolving credit facility, $12.8 million of term loan A and $7.2 million of term
loan B. The remaining net proceeds of $24.2 million were used for general
corporate purposes. The Subordinated Notes are unsecured senior subordinated
obligations of the Company, subordinated in right of payment to all existing and
future senior indebtedness of the Company, including the credit facility. The
Subordinated Notes contain covenants that, among other things, restrict the
Company's ability to borrow money, pay dividends on or repurchase capital stock,
make investments, sell assets and enter into mergers or consolidations. The
Company's ability to obtain dividends from its subsidiaries is only restricted
if Penton is in default under its debt arrangement or if the Company has
exceeded its limitation of additional indebtedness, as specified in such
agreement.

In March 2002, the Company repurchased $10.0 million of its Subordinated
Notes with $8.7 million of the proceeds from the Secured Notes offering
completed in March 2002, resulting in an extraordinary gain of $0.8 million, net
of $0.6 million in taxes. In 2003, this extraordinary charge was reclassified to
other net, in the consolidated statement of operations in accordance with the
provisions of SFAS 145.

HEDGE DISCONTINUATION

In March 2002, the Company discontinued hedge accounting for its cash flow
hedges as the Company paid down its outstanding variable rate debt. As a result
of the hedge discontinuation, the Company included in interest expense a net
deferred loss on cash flow hedges of $1.4 million for the year ended December
31, 2002. Also included in interest expense for the year ended December 31, 2002
is $0.1 million related to net gains and losses on interest rate swaps that did
not qualify as hedges under SFAS 133. See further detail regarding hedging
transactions in Note 9 -- Hedging Activities.

CASH PAID FOR INTEREST

Cash paid for interest for 2003, 2002 and 2001 was $36.9 million, $29.9
million and $16.4 million, respectively.

NOTE PAYABLE

At December 31, 2003, there are no notes payable outstanding. In May 2002,
Loan note A in the amount of $2.8 million was paid in full and in June 2003, the
Loan note B in the amount of $0.4 million was paid in full. These notes related
to the acquisition of Hillgate Communications Ltd. in February 2001.

NOTE 7 -- MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK

PREFERRED STOCK LEVERAGE RATIO EVENT OF NON-COMPLIANCE

At December 31, 2003, an event of non-compliance continues to exist under
our Series B Convertible Preferred Stock (the "preferred stock") because the
Company's leverage ratio of 13.9 (defined as debt less cash balances in excess
of $5.0 million plus the liquidation value of the preferred stock and unpaid
dividends divided by adjusted EBITDA) exceeds 7.5. When the event of
non-compliance initially occurred on April 1, 2003, the holders of a majority of
the preferred stock were able to nominate two additional members to our Board of
Directors. Since the event of non-compliance was not cured by June 30, 2003, the
holders of a majority of the preferred stock then outstanding had the right to
elect one less than a minimum majority of our Board of Directors. As the holders
of the preferred stock already maintained one less than a minimum majority of
our board, no change was necessary. In addition, upon the occurrence of this
event of non-compliance, the 5% per annum dividend rate on the preferred stock
increased by one percentage point as of

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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

April 1, June 30, September 28 and December 27, 2003 and March 26, 2004 to the
maximum rate of 10% per annum. The conversion price of the preferred stock
decreased by $0.76 as of April 1, June 30, September 28 and December 27, 2003
and March 26, 2004 to its maximum reduction of $3.80 per share. The conversion
price is currently $3.81 as of the date of this filing. The conversion price
will adjust to what it would have been absent such event (to the extent of any
preferred shares still outstanding) once the leverage ratio is less than 7.5.
Furthermore, the dividend rate will adjust back to 5% as of the date on which
the leverage ratio is less than 7.5. Under the preferred stock agreement, if the
leverage ratio exceeds 7.5 for four consecutive quarters, the preferred
stockholders will have the right to cause the Company to seek a buyer for all of
the assets or issued and outstanding capital stock of the Company. As of
December 31, 2003, the leverage ratio had exceeded 7.5 for four consecutive
quarters giving the preferred stockholders the right to cause the Company to
seek a buyer. If the Company would have been sold on December 31, 2003, the
bondholders would be entitled to receive $335.8 million and the preferred
stockholders would be entitled to receive $184.7 million before the common
stockholders would receive anything for their common shares. The leverage ratio
event of non-compliance does not represent an event of default or violation
under any of the Company's outstanding notes or the loan agreement. As such,
there is no acceleration of any outstanding indebtedness as a result of this
event. In addition, this event of non-compliance and the resulting consequences
do not result in any cash outflow from the Company.

Under the conversion terms of the preferred stock, each holder has a right
to convert dividends into additional shares of common stock. At December 31,
2003, no dividends have been declared. However, in light of each holder's
conversion right and considering the increase in the dividend rate and the
concurrent reduction of the conversion price as noted above, the Company has
recognized a deemed dividend for the beneficial conversion feature inherent in
the accumulated dividend based on the original commitment date(s). All such
accruals have been reported as an increase in the carrying value of the
preferred stock and a charge to capital in excess of par value in light of the
stockholders' deficit.

ISSUANCE OF MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK AND WARRANTS

On March 19, 2002, the Company issued 40,000 shares of its preferred stock,
par value $0.01 per share and warrants (the "warrants") to purchase 1,280,000
shares of Penton's common stock, par value $0.01 per share, for $40.0 million in
a private placement to institutional investors and affiliated entities. On March
28, 2002, the Company issued an additional 10,000 shares of preferred stock, par
value $0.01 per share, and warrants to purchase an additional 320,000 shares of
Penton's common stock, par value $0.01 per share, for $10.0 million to the same
group of investors. The net proceeds from the sale of the preferred stock and
warrants were used to repay the term loan indebtedness under Penton's senior
credit facility (see Note 6 -- Debt).

The net proceeds of $46.2 million from the issuance of the preferred stock
and warrants, net of issuance costs of $3.8 million, were allocated to the
preferred stock and warrants based on the relative fair values of each security
as of the respective commitment dates noted above. Approximately $4.0 million of
the net proceeds were allocated to the warrants and were recorded in capital in
excess of par value, resulting in a discount to the preferred stock. The fair
value of the warrants was determined using the Black-Scholes pricing model.

The balance of the net proceeds of approximately $42.1 million was
allocated to the preferred stock, which, because of the mandatory redemption
date and other redemption provisions, was classified outside of permanent
equity. Pursuant to the provisions of EITF 98-5, "Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios," and EITF 00-27, "Application of Issue 98-5 to Certain
Convertible Instruments," the entire amount of $42.1 million was initially
recorded as a beneficial conversion feature in capital in excess of par value,
resulting in an additional discount to the preferred stock. The amount of the
beneficial conversion feature was determined pursuant to Issue 2 of

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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

EITF 00-27. As such, the most beneficial "accounting conversion price" at the
issue date of the preferred shares was compared with the closing market price of
the stock on that date, and the intrinsic spread was multiplied by the number of
most beneficial shares into which the preferred shares can be converted. This
beneficial conversion feature was being recognized, using the interest method,
as a deemed dividend to the preferred stockholders and an increase in the
carrying value of the preferred stock from the issuance date to the 10-year
mandatory redemption date.

The preferred stock was also initially being accreted to its maximum
redemption amount possible pursuant to Topic D-98, "Classification and
Measurement of Redeemable Securities," using the interest method from the
issuance date to the 10-year mandatory redemption date.

In April 2002, the Company reached an agreement with the preferred
stockholders to eliminate the scheduled 10-year redemption date of the preferred
stock, and on May 31, 2002, the Company's common stockholders approved an
amendment to remove the scheduled redemption feature. In exchange for removing
the scheduled redemption date, the Company agreed to grant the holders of the
preferred stock the right to require Penton to seek a buyer for substantially
all of its assets or issued and outstanding capital stock beginning on March 19,
2008, if any preferred stock remains outstanding. The Company sought the
amendment to eliminate the requirement to accrete the preferred stock to the
maximum possible redemption amount by such date. However, it did not seek to
eliminate the preferred stockholders' right to require the Company to redeem the
security upon the occurrence of certain contingent events, including a change in
control or liquidation, dissolution or winding up of Penton. To the extent that
redemption of the preferred stock becomes probable in the future pursuant to a
contingent redemption provision of the preferred stock, accretion to the maximum
redemption amount will be required at such time.

Prior to the stockholder approval to remove the scheduled redemption date,
the Company was required to accrete a portion of the maximum redemption amount.
Accordingly, approximately $2.5 million was accreted, using the interest method,
prior to May 31, 2002. In addition, certain features of the preferred stock had
to be accounted for as embedded derivatives, which required mark-to-market
accounting that could have potentially resulted in significant swings in net
income and earnings per share. The preferred shares agreement has a number of
conversion and redemption provisions that represented derivatives under SFAS 133
prior to the elimination of the mandatory redemption date. The Company
determined that certain of these derivatives do not qualify for scope exemption
and are not clearly and closely related to the host contract. As such, these
embedded derivatives were required to be bifurcated and recorded at fair value.
The fair values of these derivatives were calculated using the Black-Scholes
methodology.

As a result of stockholder approval on May 31, 2002, accretion was no
longer required and the $42.1 million of unamortized beneficial conversion
feature was recognized immediately as a charge to capital in excess of par and
as a reduction of income available to common stockholders in the consolidated
statements of operations. In addition, mark-to-market accounting for the
embedded derivatives was no longer required subsequent to May 31, 2002. Pursuant
to SFAS 133, the elimination of the mandatory redemption feature made the
preferred shares agreement more akin to an equity instrument than a debt
instrument. Consequently, the embedded derivatives noted above, which related to
the conversion or redemption options, either qualified for a scope exemption or
did not constitute derivatives pursuant to SFAS 133. Therefore, the elimination
of the mandatory redemption feature also eliminated the requirement to mark to
market these derivatives.

The elimination of the mandatory redemption date does not alter the
mezzanine classification of the preferred shares in the balance sheet because of
the existence of other redemption provisions in the preferred shares agreement,
such as the optional redemption by the holders of the preferred shares in the
event of a change in control. Dividends on the preferred stock will continue to
be accrued and will be reflected as a reduction in earnings per share available
to common stockholders.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SUMMARY OF TERMS OF CONVERTIBLE PREFERRED STOCK

Below is a description of the material terms of the preferred stock and
warrants reflecting the effects of the stockholder approval of the transaction
and the elimination of the mandatory redemption date.

Liquidation Preference

The preferred stock has preferences over the common stock in the event of
liquidation or change in control, dissolution or winding up. Upon the occurrence
of any such event, the preferred stockholders will be entitled to be paid in
cash, subject to the satisfaction of Penton's obligations under the indentures
governing the Company's Subordinated Notes and Secured Notes.

The initial liquidation value of the preferred stock is $1,000 per share.
If the preferred stock is not converted or redeemed prior to March 19, 2008, the
liquidation value will increase to $4,570 per share. The liquidation preference
is the liquidation value plus accrued and unpaid dividends.

Dividends

From the date of issuance until March 19, 2008, the dividends on the
preferred stock accrues daily on the sum of the then-applicable liquidation
preference and the accrued dividends thereon. Initially the annual rate was 5%
per annum. However, upon the occurrence of certain triggering events, the
dividend rate increases by one percentage point, with additional
one-percentage-point increases every ninety days up to a maximum increase of
five percentage points. One of those triggering events is a leverage ratio event
of non-compliance. As noted above, a leverage ratio event of non-compliance
initially occurred on April 1, 2003 and continued to exist as of the date of
this filing. Consequently, the dividend rate is currently 10% as of the date of
this filing. The dividend rate will adjust back to 5% (to the extent of any
preferred shares still outstanding) once the leverage ratio is less than 7.5.

From and after March 19, 2008, the dividends will accrue at a rate of 15%
per annum. Preferred dividends of $5.6 million were accrued at December 31,
2003.

Dividends are payable semiannually in cash only if declared by Penton's
Board of Directors and approved by holders of no less than 75% of the preferred
stock then outstanding. The provisions of Penton's debt instruments limit its
ability to pay dividends in cash, and the Company has no present intention to
either declare or pay cash dividends on the preferred stock.

Conversion Provisions

Each share of preferred stock is convertible at each holder's option and,
subject to certain restrictions, at Penton's option. Preferred stock is
convertible into Penton common stock by multiplying the number of shares of
preferred stock to be converted by the liquidation value plus accrued and unpaid
dividends divided by the conversion price. The conversion price for the
preferred stock initially was $7.61 per share, subject to certain anti-dilution
adjustments. The conversion price was subsequently decreased to the current
price of $3.81 as a result of the Company's leverage ratio event of
non-compliance (see above and further details under Conversion Prices below).
Among others, the restrictions on Penton's right to force conversion include the
market price of the common shares being equal to or greater than the applicable
share minimum noted below.

Company's Redemption Provisions

The Company can redeem the preferred stock at any time, in whole or in
part, at a cash redemption price equal to the product of the number of shares of
common stock into which the preferred shares can be converted and the greater of
the volume weighted-average closing share price of Penton's common stock for

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the preceding 30 trading days or the applicable minimum share price derived from
the following schedule (as may be adjusted for stock splits and similar
transactions):

If being redeemed prior to the third anniversary............ $15.18
If being redeemed after the third, but before the fourth
anniversary............................................... $17.51
If being redeemed after the fourth, but before the fifth
anniversary............................................... $19.31
If being redeemed after the fifth, but before the sixth
anniversary............................................... $23.26

Holders' Redemption Provisions

The preferred stockholders have the right to require the Company to redeem
the security upon the occurrence of certain contingent events, including a
change in control or liquidation, dissolution or winding up of Penton.

Conversion Prices

The initial conversion price was $7.61 per share (subject to certain
anti-dilution adjustments). As a result of the Company's leverage ratio event of
non-compliance, which initially occurred on April 1, 2003 and continues to
exist, the conversion price of the preferred stock was reduced by $0.76 every 90
days to the current conversion price of $3.81 per share as of the date of this
filing. The conversion price will adjust to what it would have been absent such
event (to the extent of any shares of preferred stock are still outstanding)
once the leverage ratio is less than 7.5 to 1.0.

Upon the sixth anniversary of issuance, the price may be adjusted to the
lesser of (a) the conversion price in effect on the sixth anniversary or (b) the
greater of 90% of the market price of the Company's common stock on the
conversion date or $4.50.

If the leverage ratio does decrease to less than 7.5 to 1.0 prior to the
sixth anniversary of issuance, the Company has to comply with certain covenants
in order for the conversion price to remain at $7.61 per share. If Penton fails
to comply with specific covenants contained in the purchase agreement, the
conversion price of the preferred stock will be reduced by $0.76 (adjusted for
stock splits and similar transactions) until such failure is no longer in
existence, and every 90 days thereafter, the conversion price shall be reduced
by an additional $0.76 up to a maximum reduction of $3.80 (adjusted for stock
splits and similar transactions). The conversion price will adjust to what it
would have been absent such breach (to the extent of any shares of preferred
stock still outstanding) once the breach is cured. No such reduction to the
conversion price will be made at any time that representatives of the investors
constitute a majority of the Board of Directors.

Board Representation

The preferred stockholders were initially entitled to three board seats. As
discussed previously, when the leverage ratio event of non-compliance first
occurred on April 1, 2003, the holders of a majority of the preferred stock were
able to nominate two additional members to our Board of Directors. Since the
event of non-compliance was not cured by June 30, 2003, the holders of a
majority of the preferred stock then outstanding had the right to elect one less
than a minimum majority of our Board of Directors. As the holders of the
preferred stock already maintained one less than a minimum majority of our
board, no change was necessary.

At such time as the holders of preferred stock cease to hold shares of
preferred stock having an aggregate liquidation preference of at least $25.0
million, they will lose the right to appoint the director for one of these board
seats. On March 19, 2008, the holders of a majority of the preferred stock then
outstanding, if any, will be entitled to appoint one less than a minimum
majority of the Board of Directors. In addition, if the Company initiates or
consents to proceedings under any applicable bankruptcy, insolvency,
composition, or

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other similar laws, the holders of a majority of the preferred stock may appoint
a minimum majority of Penton's Board of Directors. At such time as the holders
of preferred stock cease to hold shares of preferred stock having an aggregate
liquidation preference of at least $10.0 million, and such holders' beneficial
ownership of Penton's preferred stock and common stock constitutes less than 5%
of the aggregate voting power of the Company's voting securities, the holders of
preferred stock will no longer have the right to appoint any directors to the
Board of Directors.

Penton has also granted the holders of the preferred stock the right to
have representatives attend meetings of the Board of Directors after such time
as they are no longer entitled to appoint any members to the Board of Directors
and until such time as they no longer own any preferred stock, warrants or
shares of common stock issued upon conversion of the preferred stock and
exercise of the warrants.

Voting Rights

The holders of the preferred stock are entitled to vote on all matters
submitted to a vote of Penton's stockholders, voting as a single class with the
common stockholders on an as-converted basis. In addition, Penton may not,
without the affirmative vote of the holders of not less than 75% of the
preferred stock then outstanding, declare and pay dividends, impact the existing
classes of capital stock or increase the size of the board, among other
conditions.

Covenants

The terms of the preferred stock have several financial and non-financial
covenants. As of December 31, 2003, Penton was in compliance with all such
covenants, except the preferred stock leverage ratio, as discussed above.

Sales Rights

The terms of the preferred stock require that Penton maintain a leverage
ratio, as previously defined, of 7.5 to 1.0 for the twelve month period ending
on the last day of December, March, June, and September of each year beginning
with the period ending on December 31, 2002. If Penton is not in compliance with
this covenant for four consecutive fiscal quarters, then the holders of a
majority of the preferred stock have the right to cause the Company to seek a
buyer for all of its assets or all of its issued and outstanding capital stock.
As discussed previously, as of December 31, 2003, the leverage ratio has
exceeded 7.5 for four consecutive quarters and the preferred stockholders have
the right to cause the Company to seek a buyer for all of the assets or issued
and outstanding capital stock of the Company.

In exchange for removing the scheduled redemption date, the Company agreed
to grant the holders of the preferred stock the right to require the Company to
seek a buyer for substantially all of its assets or issued and outstanding
capital stock beginning on March 19, 2008. The holders of the preferred stock
will not have this right if less than 3,500 shares of preferred stock (as
adjusted for stock splits and similar transactions) are then outstanding.

Warrants

The initial exercise price of the warrants was $7.61 per share. The
warrants are subject to anti-dilution and other adjustments that mirror those
applicable to the preferred stock, consequently, the exercise price as of the
date of this filing is $3.81 per share. The warrants are immediately exercisable
and expire 10 years after issuance.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 8 -- FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in
estimating fair value disclosures of financial instruments as of December 31,
2003 and 2002:

CASH AND CASH EQUIVALENTS, RESTRICTED CASH, ACCOUNTS RECEIVABLE, NOTES
RECEIVABLE, ACCOUNTS PAYABLE, ACCRUED EXPENSES AND SENIOR SECURED CREDIT
FACILITY

The carrying amounts reported in the consolidated balance sheets for cash
and cash equivalents, accounts and notes receivable, accounts payable and
accrued expenses approximated fair value because of their short maturities. The
carrying amount of the senior secured credit agreement approximates fair value,
as the effective rates were comparable to market rates at December 31, 2002.

SENIOR SECURED NOTES AND SENIOR SUBORDINATED NOTES

The fair values of the Secured Notes and Subordinated Notes are determined
by reference to quoted market prices. At December 31, 2003 and 2002, the
Company's Secured Notes had fair values of $153.0 million and $130.9 million,
respectively, and carrying amounts of $156.9 million and $156.8 million,
respectively. At December 31, 2003 and 2002, the Company's Subordinated Notes
had fair values of $116.8 million and $75.5 million, respectively, and carrying
amounts of $171.7 million and $171.4 million, respectively.

NOTE 9 -- HEDGING ACTIVITIES

RISK MANAGEMENT

In the ordinary course of business, the Company is exposed to fluctuations
in foreign currency rates. The Company maintains assets and operations in Europe
and Asia and, as a result, may be exposed to fluctuations in currency rates
relative to these markets. Penton, however, does not manage this risk using
derivative instruments.

To the extent that there is an outstanding balance, the Company is also
exposed to interest rate risk due to the variable interest rate of its revolving
facility. At December 31, 2003, there were no amounts outstanding under the
revolving credit facility. Under the loan agreement, the Company is precluded
from entering into interest rate derivatives.

CASH FLOW HEDGES

Prior to 2003, the Company entered into cash flow hedges to reduce the
exposure to interest rate fluctuations under the term loans of the senior
secured credit facility. The Company used interest rate swaps and a cap to
convert a portion of its variable-rate debt to fixed-rate debt. All components
of interest rate swaps were included in the assessment of hedge effectiveness.
With respect to the interest rate cap, the hedge effectiveness assessment
excluded the time value element.

At December 31, 2003 and 2002, the Company had no interest rate swaps or
caps outstanding.

There was no hedge activity in 2003.

In March 2002, the Company discontinued hedge accounting for its cash flow
hedges as the Company paid down the term loans of its senior secured credit
facility. The entire net deferred loss on cash flow hedges of $1.4 million
recorded in other comprehensive loss was reclassified to earnings and reported
as interest expense in the consolidated statements of operations. Subsequently,
the Company recognized changes in the fair value in current period earnings
until the derivatives matured in October and November of 2002. In 2002,

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the Company recognized a net loss of $0.1 million related to such derivative
instruments and reported the loss as interest expense in the consolidated
statements of operations.

In 2002, the Company had the following activity in other comprehensive loss
related to hedging activities:

Net deferred loss on cash flow hedges at December 31,
2001...................................................... $ 1,439
-------
Amount reclassified to earnings due to discontinuance of
hedge accounting....................................... (1,439)
-------
Net deferred loss on cash flow hedges at December 31,
2002...................................................... $ --
=======

In 2001, the Company reclassified $1.2 million from accumulated other
comprehensive loss to current period earnings and recognized a net loss of $0.9
million for the portion of the interest swaps required to be recognized in
results of operations. These amounts are reported as interest expense in the
consolidated statement of operations.

NOTE 10 -- INCOME TAXES

The source of loss from continuing operations before income taxes and
cumulative effect of accounting change for the years ended December 31, 2003,
2002 and 2001, consists of (in thousands):

The provision (benefit) for income taxes on continuing operations in the
consolidated statements of operations for the years ended December 31, 2003,
2002 and 2001, is as follows (in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The consolidated benefit for income taxes for the years ended December 31,
2003, 2002 and 2001, is as follows (in thousands):

The difference between the actual income tax benefit on continuing
operations before income taxes and cumulative effect of accounting change and
the tax benefit computed by applying the statutory federal income tax rate of
35% to income before income taxes and cumulative effect of account change for
the years ended December 31, 2003, 2002 and 2001, are as follows (in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The components of deferred tax assets and liabilities at December 31, 2003,
2002 and 2001 are as follows (in thousands):

At December 31, 2003, the Company had a $55.3 million valuation allowance
for its net deferred tax assets and net operating loss carryforwards. The
valuation allowance was calculated in accordance with the provisions of SFAS
109, which places primary importance on the Company's operating results in the
most recent three-year period when assessing the need for a valuation allowance.
The Company's cumulative loss in the most recent three-year period, represented
negative evidence sufficient to require a full valuation allowance under the
provisions of SFAS 109. The Company intends to maintain a full valuation
allowance for its net deferred tax assets and net operating loss carryforwards
until sufficient positive evidence exists to support reversal, in whole or in
part, of the valuation allowance.

At December 31, 2003, the Company had federal operating loss carryforwards
of $100.8 million for tax purposes, which will begin expiring from 2021 to 2023.
A full valuation has been provided on the federal operating loss carryforward.

At December 31, 2003, the Company had state operating loss carryforwards of
$327.1 million for tax purposes, which will begin expiring from 2006 to 2023. A
full valuation has been provided on the state operating loss carryforwards.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At December 31, 2003, the Company had available foreign tax credit
carryforwards of approximately $1.1 million, which will begin expiring from 2007
to 2008. A full valuation allowance has been provided on the foreign tax credit
carryforwards.

During 2003, the Company received net cash tax refunds of $52.0 million
($54.3 million of tax refunds for prior years less cash paid for taxes in 2003
of $2.3 million). For 2002, net cash tax refunds were $17.6 million, and in 2001
net cash paid for taxes was $3.0 million.

The Company has recorded deferred income taxes on the undistributed
earnings of certain foreign subsidiaries. At December 31, 2003 and 2002, the
undistributed earnings of the foreign subsidiaries amounted to approximately
$4.3 million and $6.8 million, respectively. Upon distribution of these earnings
in the form of dividends or otherwise, the Company may be subject to U.S. income
taxes and foreign withholding taxes. It is not practical, however, to estimate
the amount of taxes that may be payable on the eventual remittance of these
earnings.

NOTE 11 -- EMPLOYEE BENEFIT PLANS

RETIREMENT PLAN

Penton's non-contributory retirement plans cover substantially all current
and former domestic employees. Retirement benefits for employees in foreign
countries generally are provided by national statutory programs. Benefits for
domestic employees are based on years of service and annual compensation as
defined by each plan.

In November 2003, the Company's retirement plan was amended to freeze
benefit accruals effective January 1, 2004. As a result, the Company recorded a
curtailment gain of $2.2 million for the year ended December 31, 2003. This
amount is included in selling, general and administrative expenses in the
consolidated statement of operations. The benefit accruals in the frozen plan
are payable to participating employees when they qualify for retirement.
Replacing the retirement plan is a Retirement and Savings Plan, a new retirement
account in the 401(k) Plan. See further detail under 401(k) Plan below.

In November 2003, Penton's supplemental executive retirement plan ("SERP")
was amended to freeze benefits effective on January 1, 2004. As a result, the
Company recorded a curtailment charge of $0.3 million for the year ended
December 31, 2003. This amount is included in selling, general and
administrative expenses in the consolidated statement of operations. In place of
the SERP, the Company will accrue an amount equal to between 3% and 6% of the
participants eligible salary plus an investment return equal to the Moody's AA
Corporate Bond note. The accrued percentage is based on each executive's age and
years of service.

Restructuring efforts in 2002 triggered a need for a revised valuation of
our defined benefit pension plan at August 31, 2002. Pursuant to this revised
valuation, the Company recorded a curtailment gain of $0.9 million and a
settlement gain of $1.1 million in the third quarter of 2002. Such amounts have
been recorded as part of selling, general and administrative expenses on the
consolidated statements of operations. Due to this revised valuation, the
Company also updated its assumptions and recorded pension expense of $0.7
million for 2002.

Penton's SERP was revalued at August 31, 2002 as a result of the
elimination of four plan participants. Pursuant to this revised valuation, the
Company recorded a curtailment charge of $0.1 million and an immaterial
settlement charge in the third quarter of 2002. The SERP plan is an unfunded,
non-qualified plan and hence has no plan assets.

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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table sets forth the funded status of the plan and amounts
recognized in the consolidated balance sheets (in thousands):

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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes the components of our defined benefit
pension expense for the years ended December 31, 2003, 2002, and 2001 (in
thousands, except for percentages):

- ---------------

* Pursuant to the revised valuation, as discussed above, a discount rate of
7.25% and 6.25% was used from January 1, 2002 to August 31, 2002 (the
valuation date), and a rate of 6.75% and 5.75% was used for the remainder of
the year.

** A discount rate of 6.75% and 5.75% was used from January 1, 2003 to November
15, 2003, and a rate of 6.00% and 5.00% was used for the remainder of the
year.

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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarizes the components of SERP pension expense for
the years ended December 31, 2003, 2002, and 2001 (in thousands, except for
percentages):

- ---------------

* Pursuant to the revised valuation, as discussed above, a discount rate of
7.25% and 6.25% was used from January 1, 2002 to August 31, 2002 (the
valuation date), and a rate of 6.75% and 5.75% was used for the remainder of
the year.

** A discount rate of 6.75% and 5.75% was used from January 1, 2003 to November
15, 2003, and a rate of 6.00% and 5.00% was used for the remainder of the
year.

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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INVESTMENT POLICY:

The investment committee of the Board of Directors has developed and
implemented an investment policy to effectively manage the plan assets in the
context of meeting the plan's obligations. The investment committee periodically
reviews the overall plan performance, the risk level, asset allocation and the
investment manager performance to evaluate the effectiveness of the program.

The current asset allocation consists primarily of listed stocks and
corporate bonds, and Investment Policy decisions and asset allocation strategies
are further refined based on information, analysis and recommendations as
provided by the investment manager. The following table indicates Penton's 2004
targeted asset allocation and breaks down its 2003 and 2002 asset allocation:

The expected long-term rate of return of 9% is based on the actual
historical rates of return of published indices consistent with the plan's
targeted asset allocation. The historical rates are then discounted to consider
fluctuations in the historical rates as well as potential changes in the
investment environment.

The Company expects to contribute $1.5 million to its pension plan and an
immaterial amount to its SERP plan in 2004. These amounts are classified in
other accrued expenses in the consolidated balance sheet.

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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following benefit payments, which reflect expected future service as
appropriate, are expected to be paid:

401(K) PLAN

The Penton Media, Inc. Retirement Savings Plan (the "401(k) Plan") covers
substantially all domestic employees of the Company. The 401(k) Plan permits
participants to defer up to a maximum of 25% of their compensation. Prior to
January 1, 2002, Penton matched 50% of the employee's contributions up to a
maximum of 6% of the employee's eligible annual compensation. The employee's
contribution and any matching contribution vest immediately. Penton's
contribution to the 401(k) Plan in 2001 was $2.2 million.

As noted above, in November 2003, the Company's retirement plan was amended
to freeze benefit accruals effective January 1, 2004. Beginning in 2004, the
Company will provide benefits by contributing to a new retirement account in the
401(k) Plan, which has been renamed the Penton Media, Inc. Retirement and
Savings Plan ("RSP"). Thus, the RSP will include the new retirement account and
the "old" 401(k) savings account. There are no changes to the 401(k) savings
account as a result of this change. Beginning in 2004, the Company will make
monthly contributions to each employee's retirement account equal to between 3%
and 6% of the employee's annual salary, based on age and years of service. The
Company's contributions become fully vested once the employee completes five
years of service. The Company expects to make contributions to the RSP of
approximately $1.8 million in 2004.

NOTE 12 -- COMMITMENTS AND CONTINGENCIES

LEASES

Penton leases certain office space and equipment under non-cancelable
operating leases. Some of the leases contain renewal options and/or rent
escalations, which are charged to expense on a straightlined basis. Certain
equipment leases include options to purchase during or at the end of the lease
term. Following is a schedule of approximate annual future minimum rental
payments required under operating leases that have non-cancelable lease terms in
excess of one year as of December 31, 2003 (in thousands):

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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company does not have any significant capital leases.

For the years ended December 31, 2003, 2002 and 2001, the total rent
expense (including taxes, insurance and maintenance when included in the rent)
incurred by Penton was approximately $5.1 million, $6.7 million and $9.4
million, respectively. Rent expense classified as part of restructuring and
other charges in the consolidated statement of operations were $3.3 million,
$2.3 million and $0.3 million for the years ended 2003, 2002, and 2001,
respectively.

LEGAL PROCEEDINGS

In connection with the acquisition of Mecklermedia Corporation in 1998, a
lawsuit was brought against the Company on December 1, 1998 by Ariff Alidina
(the "Plaintiff"), a former stockholder of Mecklermedia Corporation, in the
United States Federal District Court in the Southern District of New York for an
unspecified amount, as well as other relief. The Plaintiff had claimed that the
Company violated the federal securities laws by selling Mr. Meckler, a
beneficial owner of approximately 26% of the shares of Mecklermedia, an 80.1%
interest in Jupitermedia Corporation for what the Plaintiff alleges was a below-
market price, thereby giving to Mr. Meckler more consideration for his common
stock in Mecklermedia Corporation than was paid to other stockholders of
Mecklermedia Corporation. On May 16, 2001, the United States District Court for
the Southern District of New York granted the Plaintiff's motion for
certification of a class consisting of all former stockholders of Mecklermedia
who tendered their shares in the tender offer. By letter dated November 3, 2003,
plaintiffs' counsel informed the Court that a settlement had been reached in
this case and that a request for preliminary approval of the settlement will be
submitted to the Court once the settlement papers are finalized. The parties
will soon submit papers to the Court and seek its preliminary approval of the
settlement. If approved, the class settlement fund will consist entirely of
insurance proceeds.

As part of the settlement, the Company wrote off $0.8 million in legal
fees, which are not expected to be reimbursed from the insurance carrier. This
amount was classified with restructuring and other expenses in the consolidated
statement of operations.

In the normal course of business, Penton is subject to a number of lawsuits
and claims, both actual and potential in nature. While management believes that
resolution of existing claims and lawsuits will not have a material adverse
effect on Penton's financial statements, management is unable to estimate the
magnitude or financial impact of claims and lawsuits that may be filed in the
future.

CURRENT LIQUIDITY

The Company believe that its existing sources of liquidity, along with
revenues expected to be generated from operations, will be sufficient to fund
operations, anticipated capital expenditures, working capital, and other
financing requirements through at least December 31, 2004. However, if the
Company continues to incur operating losses and negative cash flows in the
future, Penton may need to reduce further its operating costs or obtain
alternate sources of financing, or both, to remain viable. The Company's ability
to meet cash operating requirements depends upon its future performance, which
is subject to general economic conditions and to financial, competitive,
business, and other factors. The Company's ability to return to sustained
profitability at acceptable levels will depend on a number of risk factors, many
of which are largely beyond the Company's control. If the Company is unable to
meet its debt obligations or fund its other liquidity needs, particularly if the
revenue environment continues to deteriorate, Penton may be required to raise
additional capital through additional financing arrangements or the issuance of
private or public debt or equity securities. Such additional financing may not
be available at acceptable terms. In addition, the terms of our convertible
preferred stock and warrants issued, including the conversion price, dividend
and liquidation adjustment provisions could result in substantial dilution to
common stockholders. The redemption price premiums and board representation
rights could negatively impact our ability to access the equity markets in the
future.

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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

OTHER COMMITMENTS

In December 1999, Penton entered into a print agreement with R.R. Donnelley
& Sons Company ("R.R. Donnelley"), which entitles R.R. Donnelley to the
exclusive right to print and produce certain magazines for a period of seven
years beginning December 1, 1999 through November 30, 2006. Under the agreement,
which is non-cancelable, Penton is obligated to pay certain minimum amounts.
These minimum amounts will be adjusted annually based on changes in the Consumer
Price Index.

The following schedule sets forth the minimum liability under the agreement
with R.R. Donnelley (in thousands):

In December 2003, the Company amended its printing contract with R.R.
Donnelley to give the printer the exclusive right to print and produce four
additional magazines beginning after January 1, 2004. In addition, the amendment
rolls the printing and production of three other magazines under a separate
agreement with R.R. Donnelley, which expires on March 31, 2005, into the 1999
agreement after its expiration date. The additional seven titles will count
toward the minimum liability effective November 30, 2003. In consideration for
the above amendment, R.R. Donnelley waived minimum liability shortfalls of
approximately $0.3 million. With the additional magazines, Penton expects to
meet the minimum amounts through the term of the agreement.

In December 2003, the Company entered into an agreement effective January
1, 2004, with a former employee to provide trade show and conference services to
selected Penton events. Under the agreement, the former employee will receive
guaranteed minimum payments of $0.4 million and $0.7 million in 2004 and 2005,
respectively.

The Company entered into a two-year agreement with Sprint in July 2002. The
agreement provides for annual minimum usage levels by Penton of approximately
$0.8 million each year.

NOTE 13 -- COMMON STOCK AND COMMON STOCK AWARD PROGRAMS

In June 2003, the Company was notified by the New York Stock Exchange
("NYSE") that it would begin delisting procedures of the Company's common stock.
The NYSE reached its decision because Penton had been unable to comply with the
NYSE's continued listing criteria, which include minimum levels for stock price,
market capitalization and stockholders' equity. The NYSE took this action at
this time because Penton was not expected to be able to increase its book equity
to the minimum listing requirements within the required time frame. On June 17,
2003, Penton's stock began trading on the Over-the-Counter Bulletin Board under
the symbol PTON.

REDEEMABLE COMMON STOCK

Redeemable common stock relates to common stock that may be subject to
rescissionary rights. The purchase of common stock by certain employees in the
Company's 401(k) plan from May 2001 through March 2003 was not registered under
the federal securities laws (the "unregistered purchases"). As a result, such
purchasers of our common stock during that period have the right to rescind
their purchases for an amount equal to the purchase price paid for the shares,
plus interest from the date of purchase, unless the

88

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

employee has released the Company from such obligation as noted below. Any
rescissionary rights will lapse one year from the date of any such purchase. The
Company may also be subject to civil and other penalties by regulatory
authorities. The unregistered purchases did not cause an event of default under
the Subordinated Notes, the Secured Notes or the senior secured credit facility.
However, an event of default could occur as an indirect result of the
unregistered purchases, if for instance, such unregistered purchases lead to
restricted payments under the indentures and/or the loan agreement. On March 31,
2003, the Company filed a Form S-8 registration and registered 6.0 million
additional shares to be offered under the 401(k) plan.

In April 2003, the Company offered to reimburse employees who had purchased
Penton common stock through the Company's 401(k) plan between March 25, 2002 and
March 25, 2003. Employees who signed a release were reimbursed the amount by
which the price they paid for the common stock exceeded the closing price of the
stock on the date they executed the release, or if the stock had been sold, the
amount by which the price paid by the employee exceeded the sales price.
Employees who did not sign the release by May 22, 2003 retain any rights they
may have under the Federal securities laws. Over 80% of the employees who were
offered the reimbursement accepted the terms of the release, representing a
liability of approximately $0.6 million, which was deposited into each
individual's 401(k) account in July 2003. This amount is included in
restructuring charges and other charges in the consolidated statement of
operations.

At December 31, 2003, the Company had classified 4,191 shares, related to
the potential rescissionary rights, outside of stockholders' deficit because the
redemption of the stock is not within the control of the Company. All
rescissionary rights expired on March 14, 2004.

STOCK OFFERINGS

In May 2002, the stockholders approved an amendment to increase the number
of authorized shares from 60.0 million to 155.0 million.

STOCKHOLDER RIGHTS AGREEMENT

The Company had a Stockholder Rights Agreement (the "Rights Agreement") to
protect stockholder rights in the event of a proposed takeover of the Company.
Under the plan, the rights were initially traded together with the Company's
common stock and were not exercisable. In July 2002, the Rights Agreement was
amended by the Board of Directors to change the expiration date of the rights
under the Rights Agreement to be effective at the close of business at Penton's
2003 annual meeting of stockholders, which took place on June 12, 2003. The
rights were originally scheduled to expire on June 27, 2010.

EMPLOYEE STOCK PURCHASE PLAN

The Company has an Employee Stock Purchase Plan, which allowed employees
the opportunity to purchase shares of Penton common stock at 85% of the lower of
the market price at the beginning or end of each quarter. This plan was deemed
to be non-compensatory. With the purchase of 65,711 shares in the first quarter
of 2003, the maximum number of shares available under the plan of 750,000 shares
was reached. In 2002 and 2001, 542,450 and 113,719 shares, respectively, were
purchased by employees under the plan.

MANAGEMENT STOCK PURCHASE PLAN

The Company has a Management Stock Purchase Plan ("MSPP") for designated
officers and other key employees. Participants in the plan may elect to receive
restricted stock units ("RSUs") in lieu of a designated portion of up to 100% of
their annual incentive bonus. Each RSU represents the right to receive one share
of Penton common stock. RSUs are granted at a 20% discount from fair market
value on the date awarded. RSUs vest two years after the date of grant and are
settled in shares of common stock after a period of deferral (of no less than
two years) selected by the participant, or upon termination of employment. The

89

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

discount is recorded as compensation expense over the minimum vesting period. In
2003 an immaterial amount of expense was recorded. In 2002 and 2001, $0.1
million each year was recognized as expense. In February 2003, a total of 99,876
restricted stock units ("RSUs") were granted at $0.34 per share. At December 31,
2003, 2002 and 2001, 106,392, 56,079 and 35,626 RSUs were outstanding,
respectively. During 2003, 2002 and 2001, 35,850, 17,472 and 361 shares of the
Company's common stock were issued under this plan.

EXECUTIVE LOAN PROGRAM

The Company has an Executive Loan Program, which allowed Penton to issue
shares of Company common stock at fair market value to six key executives, in
exchange for full recourse notes. In December 2001, the loan notes were amended
to cease interest charges as well as to extend the maturity date from the fifth
anniversary of the first loan date to six months following the seventh
anniversary of the first loan date. No payments are required until maturity, at
which time all outstanding amounts are due.

At December 31, 2003 and 2002, the outstanding loan balance under the
Executive Loan Program was approximately $9.5 million and $9.7 million,
respectively. In 2003 and 2002, executive loans of $0.3 million and $1.1 million
were repaid, respectively. The loan balance is classified in the stockholders'
deficit section of the consolidated balance sheets as notes receivable officers.

The Company's ability to collect amounts due from each executive is largely
dependent on the fair market value of assets held by each executive, including
Company stock. Factors such as the length of time before the loans are due; the
value of the executives' assets, including Company stock; the continued
employment of the executives by the Company; and other relevant factors, are
considered in assessing the collectibility of these loans.

During the second quarter of 2003, the Company determined that the
executives would probably be unable to repay a significant portion of the
outstanding balance due under their loans without a significant recovery in the
Company's stock price. Consequently, the Company recorded a provision for loan
impairment in the amount of $7.6 million, reflecting the amount by which the
carrying value of each individual's loan exceeded the underlying estimated fair
value of the assets available to repay the loan. The Company will recognize any
recoveries of amounts reserved only upon payment of the loans. The notes are
full recourse loans, and the Company intends to pursue collection of all amounts
when due. In addition to the factors noted above, additional considerations in
determining whether a reserve was necessary included the continued low price of
the Company's stock, the delisting of the Company's stock from the NYSE in the
second quarter, and the continued uncertainty of an economic recovery in the
markets served by the Company. The Company continues to monitor the
collectibility of the notes to determine if additional reserves are required.

EQUITY AND PERFORMANCE INCENTIVE PLAN

There are 5,500,000 shares of common stock reserved for issuance under the
1998 Equity and Performance Incentive Plan.

Stock Options

The Company has stock option plans under which employees and directors may
be granted options to purchase shares of the Company's common stock.

In July 2002, Penton filed a Tender Offer Statement ("Tender Offer")
related to the exchange by eligible employees of outstanding options to purchase
shares of Penton's common stock issued under the Penton Media, Inc. 1998 Equity
and Performance Incentive Plan (the "Option Plan") with exercise prices greater
than or equal to $16.225 per share for new options to purchase shares of common
stock to be issued under the Option Plan ("New Options"). The offer to exchange
options under the Tender Offer expired on August 22,
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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2002, at which time 860,100 options, out of a total of 917,600 eligible options,
had been cancelled. In February 2003, 334,850 New Options were granted at an
exercise price of $0.37 per share. No compensation expense was recorded by the
Company as a result of the Tender Offer Statement.

In addition, in February 2003, 264,000 options were granted to certain
executives and other eligible employees and 20,000 options were granted to
Penton's Directors under the 1998 Director Stock Option Plan at an exercise
price of $0.37 per share. As of December 31, 2003, a total of 1,911,280 options
were outstanding. No compensation expense was recorded by the Company as a
result of these grants. During 2003 and 2001, 30,249 and 52,164 options were
exercised, respectively. No options were exercised in 2002.

Options granted under the plan generally vest equally over three years from
the date of grant. However, most options granted are not exercisable until the
third anniversary. All options granted pursuant to the plan will expire no later
than 10 years from the date the option was granted.

The following table presents a summary of Penton's stock option activity
and related information for the years ended 2001, 2002 and 2003 (in thousands,
except per share amounts):

The following table summarizes information about stock options outstanding
at December 31, 2003 (in thousands, except number of years and per share
amounts):

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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred Shares

In February 2003, 391,360 deferred shares were granted to certain
executives. At December 31, 2003, 400,056, deferred shares were outstanding. Of
the shares outstanding at December 31, 2003, 391,360 shares vest one-fourth on
each three-month anniversary following the date of grant, and 8,696 shares vest
at the rate of 20% per year over a five-year period from date of grant. During
2003, 372,916 deferred shares were issued for Penton common stock under this
plan, of which, 89,214 deferred shares were returned to the Company by
executives to cover the taxes related to the issuance of these shares.

Compensation expense is being recognized over the related vesting period
based on the fair value of the shares at the date of grant. During 2003, 2002
and 2001, approximately $1.4 million, $4.3 million and $0.4 million,
respectively, were charged to expense under this plan. The board of directors
may authorize the payment of dividend equivalents on such shares on a current,
deferred or contingent basis, either in cash or in additional shares of common
stock. At December 31, 2003, no such authorization had been made.

Performance Shares

At December 31, 2003, 381,250 performance shares were outstanding.
Performance shares are generally not issuable until earned. Compensation expense
related to these shares is recorded over the performance period. For the years
ended December 31, 2003 and 2002, an immaterial amount and $1.4 million,
respectively, was credited to expense. These credits resulted from the decrease
in the Company's stock price. For the year ended December 31, 2001,
approximately $0.5 million was charged to expense for these shares.

In February 2002, the Board of Directors approved a grant of 495,000
performance shares to certain key executives, subject to the attainment of
certain performance goals over a three-year period from January 1, 2002 through
December 31, 2004. Each grantee is eligible to receive between 50% and 150% of
the granted shares. In 2002, the vesting of 50,000 shares under this grant was
accelerated to immediate vesting for one executive and issued as common stock,
and 75,000 shares were forfeited by another executive.

In February 2001, the Board of Directors approved a grant of 101,485
performance shares to certain key executives, subject to the attainment of
certain performance goals over a three-year period from January 1, 2001 through
December 31, 2003. Each grantee is eligible to receive between 50% and 150% of
the granted shares. At December 31, 2003, none of these shared had been earned.

In October 2000, the Board of Directors approved a grant of 15,000
performance shares to a key executive, subject to the attainment of certain
performance goals over a three-year period from January 1, 2001 through December
31, 2003. The grantee is eligible to receive between 17% and 150% of the granted
shares. At December 31, 2003, 11,250 of these shared had been earned.

In February 2000, the Board of Directors approved a grant of 136,054
performance shares to certain key executives, subject to the attainment of
certain performance goals over a three-year period from January 1, 2000 through
December 31, 2002. For 99,000 of the shares, each grantee was eligible to
receive between 50% and 150% of the granted shares. As of December 31, 2002,
30,516 performance shares had been earned. These shares were issued in 2003.

PERFORMANCE UNITS

In the second quarter of 2003, the Company granted 490,155 performance
units to certain key executives. Subject to the attainment of certain
performance goals over a three-year period from January 1, 2003 through December
31, 2005, each grantee can earn a cash award in respect to each performance
unit. For 2003, approximately $0.2 million was recognized as expense related to
these performance units.

92

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

TREASURY STOCK

In 2003, 19,050 shares of treasury stock were issued to employees in the
management stock purchase plan. In addition, 89,214 shares were returned to the
Company by executives to cover taxes for deferred shares issued during the year.

In 2002, three executives returned a total of 115,712 shares or $0.3
million, to the Company to pay down a portion of the executive loan balance and
to cover taxes for shares issued under the Performance Share Agreement.

Treasury stock is carried at cost and is recorded as a net decrease in
capital in excess of par value.

NOTE 14 -- EARNINGS PER SHARE

Earnings per share have been computed pursuant to the provisions of SFAS
No. 128, "Earnings Per Share." Computations of basic and diluted earnings per
share for the years ended December 31, 2003, 2002 and 2001 are as follows (in
thousands, except per share data):

Our preferred stock and RSUs are participating securities, such that in the
event a dividend is declared or paid on the common stock, the Company must
simultaneously declare and pay a dividend on the preferred stock and the RSUs as
if the preferred stock and the RSUs had been converted into common stock. EITF
Topic D-95, "Effect of Participating Convertible Securities on the Computation
of Basic Earnings per Share" requires that the participating securities be
included in the computation of basic earnings per share if the effect of
inclusion is dilutive. Vested RSUs and deferred shares are always included in
the computation of basic earnings per share as they are considered equivalent to
common stock. For participating securities, the Company's accounting policy
requires the use of the two-class method to determine whether the inclusion of
such securities is dilutive. To the extent not included in basic earnings per
share, the redeemable preferred stock and the non-vested RSUs are considered in
the diluted earnings per share calculation under the "if-converted" method and
"treasury stock" method, respectively. At December 31, 2003 and 2002, redeemable
preferred stock and non-vested RSUs were excluded from the calculation of basic
earnings per share as the results were anti-dilutive.

Due to the net loss applicable to common stockholders in 2003, 1,911,280
stock options, 381,250 performance shares, 400,056 deferred shares, 100,696
non-vested RSUs, and 1,600,000 warrants were excluded from the calculation of
diluted earnings per share as the result would have been anti-dilutive. Due to
the net loss applicable to common stockholders in 2002, 1,597,355 stock options,
603,003 performance shares, 263,427 deferred shares, 47,677 non-vested RSUs and
1,600,000 warrants were excluded from the calculation of diluted earnings per
share as the result would have been anti-dilutive. Due to the net loss
applicable to common stockholders in 2001, 2,928,355 stock options, 272,539
performance shares, 397,749 deferred shares

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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and 56,968 non-vested RSUs were excluded from the calculation of diluted
earnings per share as the result would have been anti-dilutive.

NOTE 15 -- COMPREHENSIVE LOSS

Comprehensive loss, which is displayed in the consolidated statements of
stockholders' deficit, represents net loss plus the results of certain
stockholder equity changes not reflected in the consolidated statements of
operations.

The after-tax components of other comprehensive loss for the year ended
December 31, 2003, 2002 and 2001, respectively, are as follows (in thousands):

Accumulated other comprehensive loss as of December 31, 2003 and 2002 are
as follows (in thousands):

NOTE 16 -- BUSINESS RESTRUCTURING CHARGES

In 2001, 2002 and 2003, the Company implemented a number of cost reduction
initiatives to improve its operating cost structure. The cost reduction
initiatives included workforce reductions, the consolidation and closure of over
30 facilities, and the cancellation of various contracts. The costs associated
with restructuring activities are included in restructuring and other charges in
the accompanying consolidated statements of operations.

For facilities that the Company no longer occupies, management makes
assumptions, including the number of years a property will be subleased, square
footage, market trends, property location and the price per square foot based on
discussions with realtors and/or parties that have shown interest in the space.
The Company is actively attempting to sublease all vacant premises.

Personnel costs include payments for severance, benefits and outplacement
services.

2001 RESTRUCTURING PLAN

During 2001, as part of a broad cost reduction initiative, the Company
announced certain expense reduction initiatives, including a reduction in
workforce, which reduced headcount by approximately 400 employees, the closure
of more than 20 offices worldwide and other exit costs primarily related to the
write-off

94

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of computerized software development costs. Adjustments to other exit costs of
approximately $1.0 million in 2001 and $0.4 million in 2002 primarily relate to
the reversal of certain restructuring initiatives that did not require the level
of spending that had originally been estimated.

Activity and liability balances related to the 2001 restructuring plan are
as follows (in thousands):

The Company completed the workforce and other exit cost actions in 2003.
The Company expects to pay the obligations for the non-cancelable leases over
their respective lease terms, which expire at various dates through 2013.

2002 RESTRUCTURING PLAN

In 2002, the Company announced a number of expense reduction and
restructuring initiatives intended to further improve its operating cost
structure. The actions include costs of $5.1 million related to the closure of
nine additional offices worldwide. These amounts were offset in part by
approximately $1.7 million related to our New York, NY and Burlingame, CA
offices that we were able to sublease in 2002. In addition, the Company reduced
the workforce by approximately 316 employees and recorded a liability for other
contractual obligations related primarily to the cancellation of trade show
venues, hotel contracts and service agreements occurred. Adjustments of $1.7
million primarily relate to escalation provisions, which had not been taken into
consideration when the original 2002 liability was recorded. Activity and
liability balances related to the 2002 restructuring plan are as follows (in
thousands):

95

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Of the 316 positions eliminated, 304 employees left the Company in 2002,
and the remainder left in early 2003. The balance of severance costs relate to
an executive who will be paid through 2007. Other exit costs are expected to be
paid in the second half of 2004, and obligations for the non-cancelable leases
will be paid over their respective lease terms, which expire at various dates
through 2010.

In 2002, restructuring charges of $1.0 million were classified as part of
discontinued operations.

2003 RESTRUCTURING PLAN

In order to meet continued revenue challenges in 2003, the Company
implemented a number of additional expense reduction and restructuring
activities. The Company recorded restructuring charges of $4.7 million in 2003.
The following sets forth additional detail concerning the principal components
of the charge:

- Personnel costs of $2.5 million are associated with the elimination of
85 positions, of which 79 position eliminations and payments of $1.1
million were completed by year end 2003. Approximately 91% of the
positions eliminated or to be eliminated are in the United States,
with most of the remaining positions in the United Kingdom.

- Office closure costs of $3.8 million relate primarily to the closure
of one floor at the Company's corporate headquarters and the partial
closure of one additional facility. This charge was offset by $2.3
million of estimated sublease income related to these facilities.

- The charge for other exit costs of $0.7 million relates primarily to
equipment lease payments at closed office facilities, cancellation of
certain contracts and broker commissions.

Activity and liability balances related to the 2003 restructuring plan are
as follows (in thousands):

ESTIMATED FUTURE PAYMENTS AND SUBLEASE INCOME

At December 31, 2003, the Company had an accrued restructuring balance of
$11.3 million. We expect to make cash payments in 2004 of approximately $3.7
million, composed of $1.4 million for employee separation costs, $1.7 million
for lease obligations and $0.6 million for other contractual obligations. The
balance of severance and other exit costs will be paid through 2007, and the
balance of facility costs, primarily long-term leases, is expected to be paid
through the end of the respective lease terms, which extend through 2013.

As part of the Company's restructuring plan, management attempts to
sublease facilities that the Company no longer uses. Following is a schedule of
approximate future minimum lease payments to be received for each of the five
succeeding years as of December 31, 2003.

96

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Restructuring charges, net of adjustments, by segment for the year ended
December 31, 2003, are as follows:

NOTE 17 -- RELATED PARTY TRANSACTIONS

The Company has an Executive Loan Program, which allowed Penton to issue
shares of Company common stock at fair market value to six key executives, in
exchange for full recourse notes. At December 31, 2003 and 2002, the outstanding
loan balance under the Executive Loan Program was approximately $9.5 million and
$9.7 million, respectively. In 2003 and 2002, executive loans of $0.3 million
and $1.1 million were repaid, respectively. The loan balance is classified in
the stockholders' deficit section of the consolidated balance sheets as notes
receivable officers. See Note 13 -- Common Stock and Common Stock Award
Programs.

In December 2003, the Company entered into an agreement with a former
employee to provide trade show and conference services to selected Penton events
in 2004 and 2005. Under the agreement, the former employee will receive
guaranteed minimum payments of $0.4 million and $0.7 million in 2004 and 2005,
respectively. In addition, Penton will provide, for an immaterial charge to the
former employee, office space and related office services, including utilities,
computer and office equipment, telephone service, janitorial services and other
typical office services.

In January 2003, the Company sold its PTS group assets to Cygnus
Expositions, a division of Cygnus Business Media, Inc., a Delaware corporation,
for $3.2 million. Cygnus Business Media, Inc. is owned by ABRY Mezzanine
Partners L.P., which holds a significant portion of our preferred stock and has
two members on the Company's Board of Directors.

At December 31, 2003 and 2002, Neue Medien Ulm Holdings GmbH ("Neue
Medien") owed PM Germany, a consolidated subsidiary, $0.5 million and $2.1
million, respectively. These amounts are classified on the consolidated balance
sheets as notes receivable. Neue Median and Penton jointly own PM Germany. The
notes are due on demand and bear interest at the German Federal rate plus 3%, or
4.22% at December 31, 2003.

97

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On August 1, 2002, the Company issued 527,951 shares of common stock to R.
Douglas Greene, a director of the Company, as part of the final contingent
payment required for the acquisition of New Hope Communications, Inc. in 1999.
Contingent payments earned are recorded as additional goodwill, pursuant to the
provisions of EITF 95-8, "Accounting for Contingent Consideration Paid to the
Shareholders of an Acquired Enterprise in a Purchase Business Combination."

NOTE 18 -- SEGMENT INFORMATION

We view and manage our business along four segments: Industry, Technology,
Lifestyle and Retail, and we group our industry portfolios within each segment.
A senior manager is in charge of each segment, and these senior managers report
directly to the Chief Executive Officer.

Our four segments derive their revenues from publications, trade shows and
conferences, and online media products serving customers in 12 distinct
industries. See Note 1 -- Description of Business. The accounting policies of
the operating segments are the same as those described in Note 2 -- Summary of
Significant Accounting Policies.

The executive management team evaluates performance of the segments based
on revenues and adjusted segment EBITDA. As such, in the analysis that follows,
we have used adjusted segment EBITDA, which we define as net income (loss)
before interest, taxes, depreciation and amortization, non-cash compensation,
impairment of assets, restructuring charges, provision for loan impairment,
discontinued operations, general and administrative costs, and other
non-operating items. General and administrative costs include functions such as
finance, accounting, human resources and information systems, which cannot
reasonably be allocated to each segment. Previously, certain general and
administrative costs were allocated to segments. Adjusted segment EBITDA for
2002 and 2001 has been restated to conform to the current year presentation,
which does not allocate these costs. Management believes that this is a more
meaningful presentation. Assets are not allocated to segments and as such have
not been presented.

Summary information by segment for the years ended December 31, 2003, 2002
and 2001, adjusted for discontinued operations, are as follows (in thousands):

98

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Segment revenues, all of which are realized from external customers, equal
Penton's consolidated revenues. Following is a reconciliation of Penton's total
adjusted segment EBITDA to consolidated net loss (in thousands):

ENTERPRISE-WIDE DISCLOSURES

Revenues by product offering are as follows for the years ended December
31, 2003, 2002 and 2001 (in thousands):

Domestic revenues of our products and services comprised $186.1 million,
$209.4 million and $311.6 million of total revenues for the years ended December
31, 2003, 2002 and 2001, respectively. Foreign revenues totaled $20.2 million,
$25.7 million and $47.3 million of our revenues for the years ended December 31,
2003, 2002 and 2001, respectively, of which $16.3 million, $19.2 million and
$32.5 million, respectively, were from the United Kingdom. No single customer
accounted for 10% or more of sales during 2003, 2002 and 2001.

Property, plant and equipment at December 31, 2003, 2002 and 2001 included
$1.5 million, $2.1 million and $2.7 million, respectively, identified with
foreign operations with the remaining assets identified with domestic
operations. Property, plant and equipment identified with the United Kingdom
comprised $1.4 million, $1.6 million and $1.8 million, respectively, of these
foreign assets.

99

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 19 -- SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES

Portions of the following transactions do not provide or use cash and,
accordingly, are not reflected in the consolidated statements of cash flows.

INVESTING ACTIVITIES

In 2003, the Company issued 35,850 shares under the MSPP plan; 372,916
deferred shares; 30,516 performance shares; and 30,249 shares under our stock
option plan. The Company also recorded amortization of deemed dividends and
accretion on preferred stock of $8.9 million.

In 2002, the Company issued 527,951 shares for contingent consideration;
17,472 shares under the MSPP plan; 340,775 deferred shares; and 50,000
performance shares. In addition, three executives returned a total of 115,712
shares to the Company to pay down a portion of their executive loan balances and
to cover taxes for shares issued under the performance share plan. The Company
also recorded amortization of deemed dividend and accretion on preferred stock
of $46.2 million.

In December 2002, Penton sold PM Australia for approximately $0.1 million,
of which $0.01 million was received in cash with the remainder payable in 12
equal monthly installments starting in July 2003.

In 2001, the Company issued 361 shares under the MSPP plan; 6,780 deferred
shares; and 52,164 shares under our stock option plan. In addition, Penton
marked to market its investment in Jupitermedia Corporation stock by
approximately $1.3 million and acquired Hillgate Communications Ltd. for
approximately $4.1 million, of which $3.2 million was in the form of notes
payable. The Company also assumed liabilities of approximately $9.9 million in
connection with acquisitions completed in 2001.

NOTE 20 -- QUARTERLY RESULTS (UNAUDITED)

Quarterly results of operations for the years ended December 31, 2003 and
2002 are shown below (in thousands, except per share amounts):

100

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Earnings per share calculations for each of the quarters are based on the
weighted-average number of shares outstanding for each quarter. The sum of the
quarters may not necessarily be equal to the full-year earnings per share
amount.
- ---------------

(a) Includes $1.9 million restructuring charge and $7.6 million provision for
loan impairment.

(b) Includes $1.5 million restructuring charge and $45.8 million related to
impairment of assets.

(c) Includes $2.4 million restructuring charge.

(d) Includes $7.7 million restructuring charge.

(e) Includes $3.3 million restructuring charge and $223.3 million related to
impairment of assets.

(f) Includes $4.7 million restructuring charge and $0.9 million loss on sale of
properties.

(g) Relates to the initial goodwill impairment test, which resulted in a
non-cash charge of $39.7 million, to reduce the carrying value of goodwill
for two of our seven identified reporting units.

(h) Relates to a one-time, non-cash charge of $44.5 million to remove the
10-year mandatory redemption date on the preferred stock.

NOTE 21 -- GUARANTOR AND NON-GUARANTOR SUBSIDIARIES

The following schedules set forth condensed consolidating balance sheets as
of December 31, 2003 and 2002 and condensed consolidating statements of
operations and condensed consolidating statements of cash flows for the years
ended December 31, 2003, 2002 and 2001. In the following schedules, "Parent"
refers to Penton Media, Inc., "Guarantor Subsidiaries" refers to Penton's wholly
owned domestic subsidiaries and "Non-guarantor Subsidiaries" refers to Penton's
foreign subsidiaries. "Eliminations" represent the adjustments necessary to (a)
eliminate intercompany transactions and (b) eliminate the investments in our
subsidiaries.

101

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PENTON MEDIA, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF DECEMBER 31, 2003

- ---------------

(1) Reflects investments in subsidiaries utilizing the equity method.

102

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PENTON MEDIA, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF DECEMBER 31, 2002

- ---------------

(1) Reflects investments in subsidiaries utilizing the equity method.

103

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PENTON MEDIA, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003

104

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PENTON MEDIA, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002

105

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PENTON MEDIA, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001

106

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PENTON MEDIA, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2003

107

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PENTON MEDIA, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2002

108

PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PENTON MEDIA, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2001

NOTE 22 -- SUBSEQUENT EVENTS

On March 24, 2004, the Company announced that its Chairman and Chief
Executive Officer ("CEO"), Thomas L. Kemp, will be leaving the Company later
this year. To serve the Company's best interest and ensure an orderly
transition, Mr. Kemp will remain Chairman and CEO until his replacement has been
named. A national search led by a committee of independent directors will begin
immediately.

In 2004, the Company issued 11,217 shares under our management stock
purchase plan and 242,785 deferred shares. In addition, the Company granted
473,700 shares under our stock option plan and 445,000 deferred shares to
certain key executives.

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PENTON MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At December 31, 2003, the Company classified 4,191 shares outside of
stockholders' deficit because the redemption of the stock is not within the
control of the Company. On March 14, 2004, all rescissionary rights had expired.
See Note 13 -- Common Stock and Common Stock Award Programs.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

As of December 31, 2003, an evaluation was performed under the supervision
and with the participation of the Company's management, including the CEO and
CFO, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)). Based on that evaluation, the Company's management, including
the CEO and CFO, concluded that the Company's disclosure controls and procedures
were adequate and effective as of December 31, 2003, to ensure that material
information relating to the Company would be made known to them by others within
the Company, particularly during the period in which this Form 10-K was being
prepared. During the period covered by this annual report, there have been no
changes in the Company's internal control over financial reporting that have
materially affected or are likely to materially affect the Company's internal
control over financial reporting. There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
internal controls subsequent to December 31, 2003.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

BOARD OF DIRECTORS

Directors Continuing in Office Until 2004:

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Directors Continuing in Office Until 2005:

112

Directors Continuing in Office Until 2006:

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(A) Member of Audit Review Committee

(C) Member of Compensation Committee

(E) Member of Executive Committee

(I) Member of Investment Committee

(N) Member of Nominating and Governance Committee

AGREEMENTS REGARDING BOARD REPRESENTATION

The holders of the preferred stock were initially entitled to appoint three
members to our Board of Directors. Pursuant to the agreement by which Penton
sold its preferred stock and related warrants to a group of investors led by
ABRY Mezzanine Partners, L.P., Mr. Budde and Mmes. Craven and Garber were
appointed by the Board of Directors of Penton to serve as directors of Penton.
At the annual meeting of stockholders in 2002, Mr. Budde and Mmes. Craven and
Garber were elected to the Board of Directors by the preferred stockholders to
serve a three-year term expiring in 2005.

At such time as the holders of convertible preferred stock cease to hold
shares of preferred stock having an aggregate liquidation preference of at least
$25 million, they will lose the right to appoint the director for one of these
three Board seats.

Upon the occurrence of the following events, the holders of a majority of
the preferred stock may nominate two additional members to our Board of
Directors and, if such triggering events have not been cured or waived prior to
the end of the next succeeding quarter, may appoint one less than a minimum
majority of our Board of Directors:

- failure to comply with certain specified covenants and obligations
contained in the convertible preferred stock certificate of
designations or purchase agreement and such failure is not cured
within 90 days;

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- any representation or warranty in the convertible preferred stock
purchase agreement is proven to be false or incorrect in any material
respect; and

- any default that results in the acceleration of indebtedness, where
the principal amount of such indebtedness, when added to the principal
amount of all other indebtedness then in default, exceeds $5 million
or final judgments for the payment of money aggregating more than $1
million (net of insurance proceeds) are entered against us and are not
discharged, dismissed, or stayed pending appeal within 90 days after
entry.

As of April 1, 2003, the holders of preferred stock were entitled to two
additional seats on the Board of Directors as a result of Penton's leverage
ratio, as determined in accordance with the terms of the preferred stock
purchase agreement, exceeding 7.5 to 1.0. In accordance with agreements entered
into at the time of the private placement, Messrs. Meehan and Nussbaum resigned
as directors. The Board of Directors appointed Messrs. Kelly and Sook to fill
the vacancies, both of whom were elected by the stockholders at its annual
meeting in 2003.

Upon the occurrence of the following events, the holders of a majority of
the preferred stock may appoint one less than a minimum majority of our Board of
Directors:

- failure to pay the liquidation preference or any cash dividends, to
the extent declared, when due; and

- failure to comply with certain specified covenants and obligations
contained in the preferred stock certificate of designations or
purchase agreement.

Upon the occurrence of the following event, the holders of a majority of
the preferred stock may appoint a minimum majority of our Board of Directors:

- we initiate or consent to proceedings under any applicable bankruptcy,
insolvency, composition, or other similar laws or make a conveyance or
assignment for the benefit of our creditors generally or any holders
of any lien takes possession of, or a receiver, administrator, or
other similar officer is appointed for, all or substantially all of
our properties, assets or revenues and is not discharged within 90
days.

On March 19, 2008, the holders of a majority of the preferred stock then
outstanding, if they meet the threshold described in the following paragraph,
will be entitled to appoint one less than a minimum majority of our Board of
Directors, subject to the right to appoint a minimum majority of our Board of
Directors as described in the immediately preceding paragraph.

At such time as the holders of preferred stock cease to hold shares of
convertible preferred stock having an aggregate liquidation preference of at
least $10 million and such holders' beneficial ownership of our preferred stock
and common stock constitutes less than 5% of the aggregate voting power of our
voting securities, the holders of preferred stock will no longer have the right
to appoint any directors.

We have also granted the holders of the preferred stock the right to have
representatives attend meetings of the Board of Directors until such time as
they no longer own any preferred stock, warrants or shares of common stock
issued upon conversion of the preferred stock and exercise of the warrants.

EXECUTIVE OFFICERS

All officers of Penton are elected each year by the Board of Directors at
its annual organization meeting. In addition to Messrs. Kemp and Ramella,
information with respect to whom is set forth above, the executive officers of
Penton include the following:

Darrell C. Denny, 45, President of the Lifestyle Media and IT Media Groups
of Penton since September 2002, Executive Vice President of Penton and President
of the Lifestyle Media division of Penton from October 2000 to September 2002.
Executive Vice President/Group President and Operating Chair from August 1998 to
September 2000 of Miller Freeman, Inc. (business magazine publisher and
exhibition manager).
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William C. Donohue, 59, Executive Vice President of Penton and President of
the Retail Media division of Penton since September 2003, Executive Vice
President of Penton and President of the Industry Media division of Penton since
July 2002, Executive Vice President of Penton and President of the Retail Media
division of Penton from February 2001 until June 2002. President of Donohue
Meehan Publishing Company (business publishing company and a subsidiary of
Penton) from January 1987 to August 2003.

David B. Nussbaum, 46, Executive Vice President of Penton and President of
the Technology and Lifestyle Media division of Penton since September 2002,
Executive Vice President of Penton and President of the Technology Media
division of Penton from September 1998 until August 2002. President of Internet
World Media, Inc. (a business trade show and publishing company and a subsidiary
of Penton) since December 1998.

Preston L. Vice, 55, Chief Financial Officer of Penton since February 2003,
Interim Chief Financial Officer of Penton from May 2002 until February 2003,
Senior Vice President and Secretary of Penton since July 1998.

AUDIT REVIEW COMMITTEE FINANCIAL EXPERT

The Board of Directors has determined that Mr. Edward Schwartz, Chairman of
the Audit Review Committee, qualifies as an "audit committee financial expert"
and possesses "accounting or related financial management expertise" within the
meaning of all applicable laws and regulations. In addition, the Board has
determined that all members of the Audit Review Committee are financially
literate and independent within the meaning of SEC rules and regulations.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Based solely on a review of reports of ownership, reports of changes of
ownership and written representations under Section 16(a) of the Securities
Exchange Act of 1934 which were furnished to Penton during or with respect to
2003 by persons who were, at any time during 2003, directors or officers of
Penton or beneficial owners of more than 10% of the outstanding shares of common
stock, no such person failed to file on a timely basis any report required by
such section during 2003.

CODE OF ETHICS

The Company has a Code of Business Conduct, which is applicable to all
employees of the Company, including the principal executive officer, the
principal financial officer and the principal accounting officer. The Code of
Business Conduct is available on the Company's Web site (www.penton.com) and
will be provided upon request at no charge. The Company intends to post
amendments to or waivers from its Code of Business Conduct (to the extent
applicable to the Company's chief executive officer, principal financial officer
or principal accounting officer) at this location on its Web site and will be
disclosed in the next periodic report required to be filed with the Securities
and Exchange Commission.

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ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth compensation information for the Chief
Executive Officer of Penton (who served in this capacity throughout 2003) and
for each of Penton's four most highly compensated other executive officers
during 2003 who were serving at the end of 2003.

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(1) Each of Messrs. Kemp, Ramella, Denny and Donohue voluntarily agreed to a 5%
reduction to his 2002 base salary compared to his 2001 base salary, which
reduction was effective from April 1, 2002 until December 31, 2002.

(2) Deferred shares awarded: Mr. Kemp, 125,000; Mr. Ramella, 82,000; Mr.
Nussbaum, 34,000; and Mr. Denny, 8,500, shares awarded in 2001; Mr. Kemp,
211,480; Mr. Ramella, 133,200; Mr. Nussbaum, 55,760; and Mr. Denny, 13,900,
shares awarded in 2002; and Mr. Kemp, 180,000; Mr. Ramella, 104,800; Mr.
Nussbaum, 60,000; and Mr. Denny, 10,600 shares awarded in 2003, each having
a one-year deferral period; provided, however, that each such award of
deferred shares will become nonforfeitable with respect to 25% of the award
on each three-month anniversary of the date of grant. Deferral periods are
subject to acceleration in the event of death, permanent disability,
retirement upon reaching age sixty-five, termination without cause,
termination for good reason or upon a change of control of Penton. These
numbers are based on the value of Penton's common stock as of the date of
grant. As of December 31, 2003, the value of the deferred shares awarded in
2001 was $170,000 to Mr. Kemp; $111,520 to Mr. Ramella; $46,240 to Mr.
Nussbaum; and $11,560 to Mr. Denny. As of December 31, 2003, the value of
the deferred shares awarded in 2002 was $287,613 to Mr. Kemp; $181,152 to
Mr. Ramella; $75,834 to Mr. Nussbaum; and $18,904 to Mr. Denny. As of
December 31, 2003, the value of the deferred shares awarded in 2003 was
$244,800 to Mr. Kemp; $142,528 to Mr. Ramella; $81,600 to Mr. Nussbaum; and
$14,416 to Mr. Denny. The deferred shares do not provide for dividend
equivalents or voting rights.

(3) For term life and long-term disability insurance provided by Penton during
the year.

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STOCK OPTION GRANTS DURING THE YEAR

The following table sets forth information with respect to stock options
granted during 2003 to executive officers named in the Summary Compensation
Table.

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(1) The assumed annual rates of appreciation in the price of common stock are in
accordance with rules of the Securities and Exchange Commission and are not
predictions of future market prices of the common stock nor of the actual
values the named executive officers will realize. In order for such annual
rates of appreciation to be realized over the 10-year term of the options,
the market price of the common stock would have to increase to $.60/share
(5%) or $.96/share (10%) during that term. In such event, and assuming
corresponding annual rates of increase for the market price of common stock,
the market value of all currently outstanding shares of common stock would
have increased by approximately $20,097,642 (5%) or $32,156,227 (10%) during
that 10-year term.

(2) Consists of non-qualified options to purchase common stock granted under the
Equity Incentive Plan at an exercise price equal to the closing price of the
common stock on the date of grant, February 24, 2003. Each option becomes
fully exercisable on the third anniversary of the date of grant, subject to
full or partial acceleration in the event of earlier termination of
employment (full acceleration if earlier termination is on account of death,
permanent disability, retirement upon or after reaching age sixty-five or
upon a change of control of Penton; partial acceleration in increments of
33 1/3% each year commencing one year after the date of grant if termination
is for any other reason other than for "cause").

OPTION EXERCISES AND YEAR-END VALUES

The following table sets forth information with respect to exercises of
options during 2003 by the executive officers named in the Summary Compensation
Table and the values of unexercised options held by them as of December 31,
2003.

AGGREGATED OPTION EXERCISES IN 2003 AND YEAR-END OPTION VALUES

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LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR

The following table sets forth information relating to the long-term
incentive awards that were made on May 22, 2003, under the Equity and
Performance Incentive Plan for the following named executive officers.

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(1) Estimated payout if certain performance levels are achieved. No payout
occurs unless a specified minimum performance is achieved.

The above table presents information about performance units granted during
the year to the executive officers listed above. Each performance unit, if
earned, entitles the executive officer to receive a cash payment. The earning of
the performance shares awarded is subject to the achievement of specified
performance goals, based on the compound annual growth rate (the "CAGR") of
Penton's income (loss) before interest, taxes, depreciation and amortization,
non-cash compensation, impairment of assets, restructuring charges, provision
for loan impairment, discontinued operations, and other non-operating items
(adjusted EBITDA) over the three-year period from January 1, 2003 through
December 31, 2005.

No payments will be made in respect of performance units unless a specified
minimum CAGR performance level is achieved. If the target CAGR performance level
is achieved, each executive officer will be entitled to receive $1.00 for each
performance unit. If the CAGR is below the specified target level but above the
minimum performance level, the executive officer will be entitled to receive a
portion of $1.00 (from $0.50 to $0.90) for each performance unit. If the CAGR
exceeds the specified target level, up to $2.00 for each performance unit may be
earned.

An executive officer may earn a payment in respect of a performance unit
upon the occurrence of certain events prior to the end of the three-year
performance period. Upon an executive's death or disability or upon the
occurrence of a termination of executive's employment without cause, a
termination for executive's employment for good reason or a change of control,
an executive officer may earn a payment in respect of each performance unit
based upon the CAGR during the period from January 1, 2003 through the date on
which any such event occurs; provided, however, that upon the occurrence of a
change of control, the minimum payment with respect to each performance unit
will be $1.00.

BOARD COMPENSATION

Compensation of non-employee directors consists of an annual retainer of
$20,000, plus $3,000 for each Board meeting attended in person, $1,000 for each
Board meeting attended by telephone and $1,000 for each committee meeting
attended, except that $500 is paid for attending a committee meeting held on the
same day as a Board meeting. The Chairman of each of the Audit Review Committee
and the Compensation Committee is paid an additional $5,000 per year. Ms.
Garber, Mr. Budde and Ms. Craven and employee directors are not compensated for
serving as directors.

Each director of Penton will be reimbursed by Penton for out-of-pocket
expenses incurred in attending board and board committee meetings.

Penton has adopted the Penton Media, Inc. 1998 Director Stock Option Plan
(as Amended and Restated Effective as of March 15, 2001) for non-employee
directors. The plan was approved by the stockholders at the 1999 annual meeting,
and an increase in the number of shares of common stock authorized under the
plan was approved by stockholders at the 2001 annual meeting. Pursuant to the
plan, and subject to certain limitations

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contained in it, the Board may grant non-qualified options to purchase common
stock, at an exercise price not less than fair market value on the date of
grant, to directors of Penton who at the time of grant are not employees of
Penton or any of its subsidiaries. In addition, the Board may authorize the
grant of restricted stock or deferred shares to non-employee directors under the
plan. The plan also provides that the Board may permit non-employee directors to
elect to receive non-qualified options, restricted stock or deferred shares in
lieu of all or a portion of such non-employee director's compensation otherwise
payable in cash. On February 5, 2003, five non-employee directors were each
awarded an option to purchase 4,000 shares of common stock, which will vest at
the rate of 33 1/3% per year.

EMPLOYMENT AGREEMENTS WITH MESSRS. KEMP, RAMELLA, NUSSBAUM AND DENNY

The Compensation Committee approved restated employment agreements with
each of Messrs. Kemp and Ramella in 1999 and approved initial employment
agreements with each of Messrs. Nussbaum and Denny in 1998 and 2000,
respectively. Each of these employment agreements was amended on December 11,
2001. The agreements are for terms currently expiring December 31, 2006, in the
case of Messrs. Kemp and Ramella; September 8, 2005, in the case of Mr.
Nussbaum; and October 15, 2005, in the case of Mr. Denny; and renew
automatically for an additional year on each anniversary of the effective date
of the agreement (or until age 65, if earlier) unless either party thereto
elects otherwise but may be terminated by the executive with 120 days notice.

The agreements for Messrs. Kemp, Ramella and Denny provide for
participation in Penton's Supplemental Executive Retirement Plan. Effective
December 31, 2003, the Supplemental Executive Retirement Plan was frozen and all
participants ceased to accrue benefits under the plan on such date. The
agreements also provide for supplementary life insurance for Messrs. Kemp,
Ramella, Nussbaum and Denny in an amount equal to one and one-half times each
executive's salary and supplementary long-term disability coverage that provides
for a maximum monthly benefit (when combined with Penton's base long-term
disability plan) of $18,333 per month for Messrs. Kemp, Ramella, Nussbaum and
Denny.

In addition, the agreements provide for additional supplementary life and
long-term disability insurance coverage for Messrs. Kemp, Ramella, Nussbaum and
Denny that would provide benefits, in the event of the executive's covered death
or disability, in the amount of $4,000,000 for Mr. Kemp; $2,610,000 for Mr.
Ramella; $1,070,000 for Mr. Nussbaum; and $270,000 for Mr. Denny, payable in a
single lump sum. In the event the life or long-term disability insurance
coverage described in the preceding sentence cannot be procured or maintained,
Penton will pay the benefit from its own funds.

Each employment agreement provides for a payment to each executive in an
amount equal to the total of all income taxes imposed on the executive as a
result of (a) the provision of the life insurance and the long-term disability
coverage, (b) imputed income to the executive with respect to the Senior
Executive Loan Program and (c) such payment.

Each employment agreement also provides for a payment to each executive in
an amount equal to the total of all income taxes imposed on the executive as a
result of (a) (i) the issuance to the executive of the deferred shares granted
to the executive on April 23, 2002, on an accelerated basis following a change
of control, the executive's death or permanent disability, a termination without
cause, a termination by the executive for good reason or involuntary retirement
or (ii) any other issuance of the deferred shares if a change of control occurs
prior to the payment in full of amounts due under the Senior Executive Loan
Program and (b) such payment.

Each employment agreement further entitles the executive to receive a
payment in the event that the excise tax under Section 4999 of the Internal
Revenue Code applies to the issuance of the deferred shares or the payment
described in the preceding paragraph and the sum of (a) the value of the
deferred shares (reduced by such excise tax) plus (b) the value of the shares
purchased by the executive pursuant to the Senior Executive Loan Program plus
(c) the proceeds of any life insurance or long-term disability coverage ((a),
(b) and (c), the "Loan Payments") is less than the amount due and owing under
the Senior Executive Loan Program at the time of the change of control (the
"Change of Control Loan Balance"). In that event, the payment referred to in the
preceding sentence will be in an amount equal to the sum of (x) the lesser of
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(1) the difference between the Change of Control Loan Balance and the Loan
Payments or (2) 20% of the sum of the value of the deferred shares at the time
of the change of control plus such payment plus (y) an amount, such that after
payment of all taxes (including any excise tax under Code Section 4999) imposed
on such payment, the executives retain an amount equal to the Code Section 4999
excise tax imposed upon such payment.

The agreements also provide that in the event the executive's employment is
terminated by Penton (other than for "cause" (as defined in the agreements) or
by reason of his death, disability or retirement) or by the executive for "good
reason" (as defined in the agreements and as described below), the executive
will be entitled to receive certain severance benefits.

In the case of Messrs. Kemp and Ramella, upon the occurrence of the events
described in the preceding paragraph, each such executive is entitled to receive
(a) any accrued but unpaid salary and expense reimbursement and (b) his salary
(as in effect at the time of termination or, if higher, as in effect as of the
most recent extension of the employment period) for a period of three years
following the date of his termination of employment. In addition, in the event
that the employment of Messrs. Kemp or Ramella is terminated by Penton other
than for cause or by the executive for good reason within the two year period
following a "change of control," each such executive will be entitled to receive
a payment (payable, at the executive's option, in a lump sum) equal to (i) the
executive's target bonus for the year in which the termination occurs or, if
higher, the executive's target bonus for the preceding year or the year in which
the change of control occurs and (ii) if the executive's employment is
terminated after July 1 of the then-current year, a pro-rated portion of the
executive's target bonus for the year in which the termination occurs or, if
higher, a pro-rated portion of the executive's target bonus for the preceding
year or the year in which the change of control occurs.

In the case of Messrs. Nussbaum and Denny, each such executive is entitled
to receive (a) any accrued but unpaid salary and expense reimbursement and (b)
his salary (as in effect at the time of termination or, if higher, as in effect
as of the most recent extension of the employment period) for a period of two
years following the date of his termination of employment. In addition, in the
event that the employment of Messrs. Nussbaum or Denny is terminated by Penton
other than for cause or by the executive for good reason within the two year
period following a "change of control," each such executive will be entitled to
receive a payment (payable, at the executive's option, in a lump sum) equal to
his target bonus for the year in which the termination occurs or, if higher, the
executive's target bonus for the preceding year or the year in which the change
of control occurs. All executives party to such agreements are also entitled to
the continuation of certain additional benefits (e.g., medical insurance).

Payments and benefits under the employment agreements are subject to
reduction in order to avoid the application of the excise tax on "excess
parachute payments" under the Internal Revenue Code, but only if the reduction
would increase the net after-tax amount received by the executive.

The transactions that are deemed to result in a change of control for the
purposes of these agreements include: (a) any person (with certain exceptions as
described in the agreements) becoming the beneficial owner of 40% or more of the
voting stock of Penton (or, with respect to Mr. Nussbaum, the filing of a
Schedule 13D or Schedule 14D that discloses that any person has become the
beneficial owner of 20% or more of the voting stock of Penton); (b) individuals
who, as of the date of the agreements, constitute the Board of Directors (the
"Incumbent Board") cease for any reason (other than death or disability) to
constitute at least a majority of the Board of Directors (provided that any
individual who becomes a director subsequent to the date of the agreements whose
appointment or election is approved by a majority of the Incumbent Board is
considered to be a member of the Incumbent Board); (c) a merger or consolidation
with, or sale of all of or substantially all of Penton's assets to another
entity, as a result of which less than a majority of the voting shares of the
surviving entity are owned by former stockholders of Penton; and (d) approval by
the stockholders of Penton of a complete liquidation or dissolution of Penton.
"Good reason" for termination of employment by the executive includes reduction
in salary, the failure by Penton to extend the executive's employment under the
agreement or a breach by Penton of the terms of the agreement and, in the case
of Mr. Nussbaum, a change of control.

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Each agreement includes non-competition, non-solicitation and
confidentiality obligations on the part of the executive, which survive its
termination.

EMPLOYMENT AGREEMENT WITH MR. DONOHUE

The Compensation Committee approved an employment agreement with Mr.
Donohue in 2003. The agreement is for a term currently expiring May 14, 2005 and
will renew automatically for an additional year on each anniversary of the
effective date (or until age 65, if earlier) unless either party elects
otherwise, but may be terminated by Mr. Donohue with 120 days notice.

The agreement provides for supplementary life insurance for Mr. Donohue in
an amount equal to his annual salary and supplementary long-term disability
coverage that provides for a maximum monthly benefit (when combined with
Penton's base long-term disability plan) of $17,875 per month.

The agreement also provides that in the event that Mr. Donohue's employment
is terminated by Penton (other than for "cause" (as defined in the agreement) or
by reason of his death, disability or retirement) or by Mr. Donohue for "good
reason" (as defined in the agreement and set forth in the description of the
employment agreements of the other executive officers above), Mr. Donohue will
be entitled to receive certain severance benefits.

Upon the occurrence of the events described in the preceding paragraph, Mr.
Donohue is entitled to receive (a) any accrued but unpaid salary and expense
reimbursement and (b) his salary (as in effect at the time of termination or, if
higher, as in effect as of the most recent extension of the employment period)
for a period of two years following the date of his termination of employment.
In addition, in the event that Mr. Donohue's employment is terminated by Penton
other than for cause or by him for good reason within the two year period
following a "change of control," Mr. Donohue will be entitled to receive a
payment (payable, at his option in a lump sum) equal to his target bonus for the
year in which the termination occurs or, if higher, his target bonus for the
preceding year or the year in which the change of control occurs. Mr. Donohue is
also entitled to the continuation of certain additional benefits (e.g., medical
insurance).

Payments and benefits under Mr. Donohue's employment agreement are subject
to reduction in order to avoid the application of the excise tax on "excess
parachute payments" under the Internal Revenue Code, but only if the reduction
would increase the net after-tax amount received by Mr. Donohue.

Mr. Donohue's agreement includes non-competition, non-solicitation and
confidentiality obligations on the part of Mr. Donohue, which survive
termination of the agreement.

PLANS AND ARRANGEMENTS

Retirement Plan

Participants in the Penton Media, Inc. Retirement Plan ("the Plan") consist
of a majority of the full-time employees of Penton and its subsidiaries in the
United States, including the executive officers. The Plan is fully paid for by
Penton, and employees become fully vested after five years of service. The
annual benefit payable to an employee under the Plan upon retirement, computed
as a straight life annuity amount, equals the sum of the separate amounts the
employee accrues for each of his years of service under the Plan. Such separate
amounts are determined as follows: for each year through 1988, 1.2% of such
year's compensation up to the Social Security wage base for such year and 1.85%
(2.0% for years after 1986) of such year's compensation above such wage base;
for each year after 1988 through the year in which the employee reaches
thirty-five years of service, 1.2% of such year's "covered compensation" and
1.85% of such year's compensation above such "covered compensation"; and for
each year thereafter, 1.2% of such year's compensation. Years of service and
compensation with Pittway Corporation prior to Penton's spinoff from Pittway in
August of 1998 are taken into account under the Plan. The employee's
compensation under the Plan for any year includes all salary (before any
election under Pittway's or Penton's salary reduction plan or cafeteria plan),
commissions and overtime pay and, beginning in 1989, bonuses, subject to such
year's limit applicable to tax-qualified retirement plans ($160,000 for 1999,
$170,000 for 2000 and 2001, and $200,000 each year thereafter). The employee's
"covered compensation" under the plan for any year is generally the average,
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computed as of such year, of the Social Security wage bases for each of the
thirty-five years preceding the employee's Social Security retirement age,
assuming that such year's Social Security wage base will not change in the
future. Normal retirement age under the plan is age 65, and reduced benefits are
available as early as age 55. Benefits are not subject to reduction for Social
Security benefits or other offset amounts.

Effective December 31, 2003, the Plan was frozen and participants in the
Plan ceased to accrue benefits under the Plan as of such date. Estimated annual
benefits payable under the Plan upon retirement at normal retirement age for the
following persons (assuming 1999 compensation at $160,000, 2000 and 2001
compensation at $170,000 and 2002 and 2003 compensation at $200,000 are $19,621
for Mr. Kemp; $55,873 for Mr. Ramella; $14,229 for Mr. Nussbaum; $6,369 for Mr.
Denny; and $14,853 for Mr. Donohue.

Supplemental Executive Retirement Plan

Messrs. Kemp, Ramella, Denny and Nussbaum participate in Penton's
Supplemental Executive Retirement Plan, which is not tax-qualified. The annual
benefit payable to a participant under the plan at age 65, computed as a
straight life annuity amount, equals the sum of the separate amounts the
participant accrues for each of his years of service after September 3, 1996,
for Mr. Kemp; July 1, 1977, for Mr. Ramella; September 8, 1998, for Mr.
Nussbaum; and October 16, 2000, for Mr. Denny. Years of service and compensation
with Pittway are taken into account. The separate amount for each such year is
1.85% of that portion of the participant's salary and annual discretionary cash
bonus, if any, for such year (before any election under Pittway's or Penton's
salary reduction plan, and including any portion of such bonus taken in the form
of Deferred Shares Awards) in excess of the limit applicable that year to the
compensation that may be taken into account under tax-qualified retirement plans
($160,000 in 1999, $170,000 in 2000 and 2001 and $200,000 in 2002 and 2003) but
less than $500,000. Benefits are not subject to reduction for Social Security
benefits or other offset amounts. Accrued benefits are subject to forfeiture in
certain events. Effective December 31, 2003, the plan was frozen and
participants in the plan ceased to accrue benefits under the plan as of such
date. Estimated annual benefits payable under the plan upon retirement at age 65
for the following persons are $42,180 for Mr. Kemp; $59,605 for Mr. Ramella;
$27,300 for Mr. Nussbaum; and $10,564 for Mr. Denny.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of the individuals who served as members of the Compensation Committee
in 2003 was or has been an officer or employee of Penton or engaged in
transactions with Penton (other than in his capacity as director).

None of Penton's executive officers serves as a director or member of the
compensation committee of another entity, one of whose executive officers serves
as a member of the Compensation Committee or a director of Penton.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The following table sets forth information with respect to the beneficial
ownership of Penton's common stock and preferred stock as of March 30, 2004 by
(a) the persons known by Penton to be the beneficial owners of more than 5% of
the outstanding shares of common stock, (b) each director of Penton, (c) each of
the executive officers of Penton listed in the Summary Compensation Table, and
(d) all directors and executive officers of Penton as a group. The information
set forth in the table as to directors and executive officers is based upon
information furnished to Penton by them in connection with the preparation of
this Form 10-K.

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* Less than one percent

(1) Except as otherwise indicated below, beneficial ownership means the sole
power to vote and dispose of shares.

(2) Calculated using 33,496,070, the number of shares of common stock
outstanding as of March 30, 2004. This number excludes the number of shares
of common stock (1) into which the outstanding preferred stock is
convertible, (2) for which the outstanding warrants are exercisable and (3)
for which any options to purchase common stock held by directors and
executive officers are exercisable.

(3) The information as to ABRY Mezzanine Partners, L.P. (ABRY) and entities
controlled directly or indirectly by ABRY is derived in part from Schedule
13D, as filed with the Securities and Exchange Commission on March 28,
2002, statements required to be filed by ABRY pursuant to Section 16(a) of
the Exchange Act, and information furnished to Penton separately by ABRY.

(4) ABRY does not currently own any shares of common stock. This number
represents the number of shares of common stock ABRY would be entitled to
receive upon conversion of its preferred stock and exercise of its warrants
to purchase common stock. ABRY and its affiliated entities currently own
30,000 shares of preferred stock convertible, as of March 30, 2004, into
approximately 8,956,343 shares of common stock and warrants to purchase an
aggregate of 1,917,480 shares of common stock.

(5) This number reflects the total number of shares of common stock such holder
is entitled to receive upon conversion of its preferred stock and exercise
of the related warrants. The number of shares into which a share of
preferred stock is convertible is calculated by dividing its current
liquidation preference by the conversion price. The liquidation preference
is the sum of the liquidation value of the preferred stock, currently
$1,000, plus any accrued dividends. Currently, dividends compound and
accrue daily. Consequently, the number of shares into which the preferred
stock is convertible increases daily. So long as any of Penton's 10 3/8%
senior subordinated notes due 2011 and 11 7/8% senior secured notes due
2007 remain outstanding, the number of shares of common stock that each of
ABRY and its affiliated entities, ABACUS Fund Partners, L.P., ABACUS Fund,
Ltd. and Sandler Capital Management and its affiliated entities are
entitled to receive pursuant to the conversion of their preferred stock and
exercise of the warrants is limited by the terms of the Certificate of
Designations governing the preferred stock and warrant agreements,
respectively, to prevent any holder or group of holders of preferred stock
or warrants from becoming the beneficial owner of more than 35% of the
aggregate votes of the outstanding capital stock of Penton entitled to vote
in the election of directors. Currently, no holder of preferred stock is
limited by this provision.

(6) ABACUS Fund Partners, L.P. and ABACUS Fund, Ltd. do not currently own any
shares of common stock. This number represents the number of shares of
common stock they would be entitled to receive upon conversion of their
preferred stock and exercise of their warrants to purchase common stock.
They currently own 5,000 shares of preferred stock convertible, as of March
30, 2004, into approximately 1,490,983 shares of common stock and warrants
to purchase an aggregate of 319,581 shares of common stock.

(7) The information as to Select Equity Group, Inc., et al. is derived from
Schedule 13G/A, as filed with the Security and Exchange Commission on
February 17, 2004, which was filed jointly by Select Equity Group (Select),
Select Offshore Advisors, LLC (Select Offshore), and George S. Loening, the
controlling shareholder of Select and Select Offshore (Loening). Select and
Select Offshore are the beneficial owners of the shares. As the President
and controlling shareholder of Select and the Manager of Select Offshore,
Loening has the power to vote and to direct the voting of and the power to
dispose and direct the disposition of the shares owned by Select and Select
Offshore. Accordingly, Loening may be deemed to be the beneficial owner of
all the shares owned by Select and Select Offshore.

(8) The information as to Mario J. Gabelli and entities controlled directly or
indirectly by Mr. Gabelli is derived from Schedule 13D/A, as filed with the
Securities and Exchange Commission on February 4, 2004, and statements
required to be filed by Mr. Gabelli and entities controlled directly or
indirectly by Mr. Gabelli pursuant to Section 16(a) of the Exchange Act.
Such statement discloses that (i) Mr. Gabelli is the chief investment
officer for each of the entities signing such statements and is

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deemed to have beneficial ownership of the shares beneficially owned by all
such entities, (ii) Mr. Gabelli and such entities do not admit that they
constitute a group within the meaning of Section 13(d) of the Exchange Act
and the rules and regulations thereunder, and (iii) with respect to Penton
common stock, Mr. Gabelli and such entities have the sole power to vote and
dispose of all the shares of which they are beneficial owners, unless the
aggregate voting interest of all such entities exceeds 25% of Penton's
total voting interest or other special circumstances exist, in which case
the proxy voting committees of certain of such entities would have the sole
power to vote certain shares of Penton common stock except 220,383 shares
of Penton's common stock as to which they have no voting power.

(9) The information as to Mr. Greene is derived in part from Schedule 13D, as
filed with the Securities and Exchange Commission on June 21, 1999,
statements required to be filed by Mr. Greene pursuant to Section 16(a) of
the Exchange Act, and information furnished to Penton separately by Mr.
Greene. Mr. Greene has indirect beneficial ownership of the common stock
under Rule 13d-3 of the Securities Exchange Act of 1934 through New Hope
Group, LLC, a Colorado corporation (New Hope Group). Mr. Greene is the
chief executive officer, sole director and sole shareholder of New Hope
Group. Mr. Greene is a director of Penton.

(10) Includes 8,499 shares subject to options currently exercisable or
exercisable within 60 days of March 30, 2004.

(11) The information as to Sandler Capital Management and entities controlled
directly or indirectly by Sandler is derived in part from Schedule 13D, as
filed with the Securities and Exchange Commission on March 28, 2002, and
information furnished to Penton separately by Sandler.

(12) Sandler does not currently own any shares of common stock. This number
represents the number of shares of common stock Sandler would be entitled
to receive upon conversion of its preferred stock and exercise of its
warrants to purchase common stock. Sandler and its affiliated entities
currently own 15,000 shares of preferred stock convertible, as of March 30,
2004, into approximately 4,477,425 shares of common stock and warrants to
purchase an aggregate of 958,740 shares of common stock.

(13) Ms. Garber and Mr. Budde may be deemed to beneficially own the stock
beneficially owned by ABRY and its affiliated entities because of their
relationship with ABRY and its affiliated entities and because they were
appointed to Penton's Board of Directors at the request of ABRY. Ms. Garber
and Mr. Budde disclaim any beneficial ownership of the shares of stock
owned by ABRY and its affiliates. In addition, Mr. Budde owns 1,000 shares
individually.

(14) Ms. Craven may be deemed to beneficially own the stock beneficially owned
by Sandler and its affiliated entities because of her relationship with
Sandler and its affiliated entities and because she was appointed to
Penton's Board of Directors at the request of Sandler. Ms. Craven disclaims
any beneficial ownership of the shares of stock owned by Sandler and its
affiliates.

(15) Includes 30,000 shares subject to options currently exercisable or
exercisable within 60 days of March 30, 2004.

(16) Includes 74,075 shares held in trust for the benefit of Mr. Donohue's
children, for which Mr. Donohue disclaims beneficial ownership. Includes
13,000 shares subject to options currently exercisable or exercisable
within 60 days of March 30, 2004.

(17) Mr. Harris shares the power to vote and dispose of 25,000 such shares.
Includes 16,499 shares subject to options currently exercisable or
exercisable within 60 days of March 30, 2004.

(18) Includes 2,625 shares held in trust for the benefit of Mr. Kemp's children,
for which Mr. Kemp disclaims beneficial ownership. Includes 240,655 shares
subject to options currently exercisable or exercisable within 60 days of
March 30, 2004

(19) Includes 83,500 shares subject to options currently exercisable or
exercisable within 60 days of March 30, 2004.

(20) Includes 136,000 shares subject to options currently exercisable or
exercisable within 60 days of March 30, 2004.

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(21) Includes 29,499 shares subject to options currently exercisable or
exercisable within 60 days of March 30, 2004.

(22) Includes 14,499 shares subject to options currently exercisable or
exercisable within 60 days of March 30, 2004.

(23) Includes the 10,873,423 shares of common stock that may be deemed to be
beneficially owned by Ms. Garber and Mr. Budde, the 5,436,165 shares of
common stock that may be deemed to be beneficially owned by Ms. Craven and
597,151 shares subject to options currently held by directors and executive
officers exercisable or exercisable within 60 days of March 30, 2004.

The Company currently maintains the Penton Media, Inc. 1998 Equity and
Performance Incentive Plan (As Amended and Restated Effective as of March 15,
2001) (the "Incentive Plan"), the Penton Media, Inc. 1998 Director Stock Option
Plan (As Amended and Restated Effective as of March 15, 2001) (the "Director
Plan"), the Penton Media, Inc. Management Stock Purchase Plan (As Amended and
Restated Effective as of January 1, 2000) (the "Management Stock Purchase Plan")
and the Penton Media, Inc. Employee Stock Purchase Plan (the "Employee Stock
Purchase Plan"), pursuant to which it has made equity available to eligible
persons.

The following table summarizes information about these plans as of December
31, 2003. All outstanding awards relate to our common stock.

EQUITY COMPENSATION PLAN INFORMATION

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(1) Includes 1,748,280 and 163,000 shares to be issued upon the exercise of
outstanding options under the Incentive Plan and Director Plan,
respectively.

(2) Includes 1,833,674 shares available for issuance under the Incentive Plan,
79,000 shares available for issuance under the Director Plan, no shares
available for issuance under the Employee Stock Purchase Plan and 89,925
shares available for issuance under the Management Stock Purchase Plan.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In January 2003, the Company sold its PTS group assets to Cygnus
Expositions, a division of Cygnus Business Media, Inc., a Delaware corporation,
for $3.3 million. Cygnus Business Media, Inc. is owned by ABRY Mezzanine
Partners L.P., which holds a significant portion of our preferred stock and has
two members on the Company's Board of Directors.

In 2000, Penton adopted the Senior Executive Loan Program pursuant to which
certain executives purchased common stock from the Company in exchange for a
promissory note. The maximum amount of indebtedness that was outstanding under
this loan program since January 1, 2003 was $3,985,635 for Mr. Kemp; $2,600,158
for Mr. Ramella; $1,062,623 for Mr. Nussbaum; $895,902 for Mr. Vice; and
$264,958 for Mr. Denny. These amounts also represent the outstanding balances as
of March 30, 2004.

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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth the aggregate fees paid to
PricewaterhouseCoopers LLP for audit services rendered in connection with the
consolidated financial statements and reports for 2003 and 2002 and for other
services rendered during 2003 and 2002 on behalf of the Company and its
subsidiaries, as well as all out-of-pocket costs incurred in connection with
these services (amounts in thousands):

AUDIT FEES

Consists of fees billed for professional services rendered for the audit of
the Company's consolidated financial statements and the reviews of interim
financial statements in the Company's Form 10-Q reports.

AUDIT-RELATED FEES

Consists of fees billed for services related to employee benefit plan
audits, the issuance of consents and comfort letters, and consultations
concerning financial accounting and reporting standards.

TAX FEES

Tax fees represent fees for tax compliance, tax consulting and tax
planning.

ALL OTHER FEES

Consists of fees for a process improvement project completed in 2003 and
for other miscellaneous services not reported above.

AUDIT PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF INDEPENDENT
AUDITORS

The Audit Committee pre-approves all audit and permissible non-audit
services provided by PricewaterhouseCoopers LLP. These services may include
audit services, audit-related services, tax services and other services.

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PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this Report.

1. FINANCIAL STATEMENTS

The following documents are filed as part of this Report:

Report of Independent Auditors.

Consolidated Balance Sheets at December 31, 2003 and 2002.

Consolidated Statements of Operations for the Years Ended December 31,
2003, 2002 and 2001.

Consolidated Statements of Cash Flows for the Years Ended December 31,
2003, 2002 and 2001.

Consolidated Statements of Stockholders' Equity (Deficit) and of
Comprehensive Loss for the Years Ended December 31, 2003, 2002 and 2001.

Notes to Consolidated Financial Statements.

2. FINANCIAL STATEMENT SCHEDULE

The following financial statement schedule of Penton Media, Inc. is filed
as part of this Report and should be read in conjunction with the Consolidated
Financial Statements of Penton Media, Inc.:

Schedule II -- Valuation and Qualifying Accounts.

Schedules not listed above have been omitted because they are not
applicable or are not required or the information required to be set forth
therein is included in the Consolidated Financial Statements or Notes thereto.

3. EXHIBITS

128

129

(b) Reports on Form 8-K

(c) Exhibits

See subsection (a)(3) above.

(d) Financial Statement schedules

Not applicable.

130

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES AND
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

PENTON MEDIA, INC.

By: /s/ PRESTON L. VICE
------------------------------------
Name: Preston L. Vice
Title: Chief Financial Officer

Dated: March 30, 2004

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES INDICATED ON MARCH 30, 2004.

131

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* The undersigned, by signing his name hereto, does sign and execute this Annual
Report on Form 10-K pursuant to a Power of Attorney executed on behalf of the
above named officers and directors of Penton Media, Inc. and files herewith as
Exhibit 24 on behalf of Penton Media, Inc. and each such person.

March 30, 2004

By: /s/ PRESTON L. VICE
----------------------------------
Preston L. Vice
Attorney-in-Fact

132

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

133