Advanstar Reports Results for the First Nine Months and Third Quarter of 2006.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Advanstar Communications Inc. ("Advanstar"), a leading worldwide media company providing integrated marketing solutions for the Fashion & Licensing, Life Sciences, and Powersports industries, today reported operating results for the first nine months and third quarter ended September 30, 2006. First Nine Months and Third Quarter 2006 Overview Joe Loggia loggia Hall, gallery, or porch open to the air on one or more sides. It evolved in the Mediterranean region as an open sitting room with protection from the sun. It is often a roofed, arcaded open gallery on an upper story overlooking a court, though it can also be a , President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Advanstar, said, "We are pleased with our 13% top line growth for the first nine months of the year as well as our solid Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become performance. Our performance for both the quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. demonstrates the strength of our initiatives as well as our continued ability to execute our strategy." The following table summarizes Advanstar's performance for the third quarter and first nine months ended September 30, 2006 and 2005: [TABLE OMITTED] First Nine Months of 2006 Results Revenue increased 13% to $261.9 million from $232.3 million for the same period last year. The increase is due to 23% growth in the Fashion & Licensing segment, 14% growth in the Powersports segment and 5% growth in the Life Sciences segment. There were no material event timing differences between the two periods. Contribution margin grew 13% in the Fashion & Licensing segment, 35% for the Powersports segment and 11% in the Life Sciences segment. Adjusted EBITDA in the first nine months of the year increased to $85.6 million from $71.9 million in the same period of 2005. This increase is due to revenue growth discussed above as well as improved operating efficiencies achieved during our 2005 restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). . Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. in the first nine months of the year increased to $45.6 million from $40.4 million in the same period of 2005. The increase is due to the revenue growth discussed above as well as improved operating efficiencies achieved during our 2005 restructuring. Advanstar's first nine month's operating income includes a third quarter charge of $5.7 million for the estimated contingent earn-out for the 2005 Project tradeshow acquisition and a third quarter charge of $2.0 million pursuant to an agreement to settle all future contingent earn-out payments under the 2005 POOL tradeshow asset purchase agreement, including the termination of the employment of the former owner of POOL. Additional accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. for the Project earn-out may be recognized during the term of the agreement that ends in November 2008. The nine month's 2006 operating income also includes second and third quarter charges of $4.9 million resulting from an accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. for property obligations and the restructuring of our leased office space. These above adjustments total $12.6 million. Operating income for 2005 includes $3.1 million of restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. . Cash provided by operations was $24.7 million compared to cash used in operations of $4.0 million in the first nine months of last year. The improvement in cash flow provided by operations is due to a reduction in cash interest expense of $9.4 million, an increase in tradeshow deposits for 2007 events and a change in working capital items, primarily accounts payable and accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. . Net loss for the first nine months of 2006 was $0.7 million, compared to net income of $26.9 million in the same period of 2005. The reduction is primarily due to the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. charges, and in 2005, $46.5 million of income from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. and $4.6 million of income from the cumulative effect of accounting changes partially offset by a $12.6 million loss on extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt. Third Quarter Results Revenue increased 12% to $96.0 million from $85.7 million for the same quarter last year. The increase is due to 19% growth in the Fashion & Licensing segment, 8% growth in the Powersports segment and 4% growth in the Life Sciences segment. There were no material event timing differences between the two quarters. Contribution margin grew 4% in the Fashion & Licensing segment and 16% in the Life Sciences segment. Losses in our Powersports segment were reduced as our recently launched off road products continue to progress. Adjusted EBITDA in the third quarter increased to $33.0 million from $32.0 million in the same quarter of 2005. The increase is due to the revenue growth discussed above. Operating income in the third quarter decreased to $15.9 million from $22.1 million in the same period of 2005. Advanstar's third quarter 2006 operating income includes a charge of $5.7 million for the estimated contingent earn-out for the 2005 Project tradeshow acquisition and a $2.0 million charge pursuant to a settlement related to the POOL acquisition, discussed above. Third quarter 2006 operating income also includes charges of $0.7 million resulting from an accrual for property obligations. These above charges total $8.4 million for the quarter. Third quarter 2005 operating income includes a charge of $1.0 million related to a workforce and leased office space reduction. Cash provided by operations was $8.5 million compared to $9.6 million in the third quarter last year. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. in 2006 reflects a $2.8 million cash payment related to Advanstar's office lease restructuring activities, and a $1.5 million cash payment to the former owner of POOL discussed above. These items were partially offset by an increase in tradeshow booth deposits for future events. Net income was $1.1 million, compared to $5.2 million in the third quarter of 2005. The reduction is primarily due to the aforementioned charges. Net income in the third quarter of 2005 included $1.0 million in restructuring charges discussed above. First Nine Months Segment Operating Summary The following table summarizes the first nine months segment operating results: [TABLE OMITTED] Fashion & Licensing: Revenue and contribution margin from Fashion & Licensing for the first nine months of 2006 increased 23% and 13% over 2005. The growth was driven by our Las Vegas Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. MAGIC Marketplace events as well as our New York Project, POOL, and Licensing International events. The Project and Pool events were acquired in August 2005. Life Sciences: Revenue and contribution margin from Life Sciences increased 5% and 11% due to strong performances in our healthcare projects and publications groups as well as the improved operating efficiencies achieved during our 2005 restructuring efforts. Powersports: Revenue and contribution margin from Powersports increased 14% and 35% driven by strong growth across most of our expositions and publications as well as a reduction in losses incurred in our recently launched off-road publications. Other: Contribution margin from Other declined 51% in the third quarter of 2006. The decline is primarily due to the renegotiation of certain tradeshow vendor arrangements and investments in the development of our e-media product offerings. General and Administrative: General and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. increased 25% to $39.2 million from $31.4 million in the first nine months of 2005 primarily due to previously mentioned special charges totaling $10.3 million, partially offset by a decrease of $2.7 million in strategic consulting and employee medical expense. Third Quarter Segment Operating Summary The following table summarizes the quarterly segment operating results: [TABLE OMITTED] Fashion & Licensing: Revenue and contribution margin from Fashion & Licensing for the third quarter of 2006 increased 19% and 4% over 2005 driven by the growth in our Fall Las Vegas MAGIC Marketplace. Third quarter revenue also includes $3.4 million from our New York Project and POOL events held in July 2006, which were acquired in August 2005. Life Sciences: Revenue and contribution margin from Life Sciences increased 4% and 16% due to strong performances in our primary care and dental publications as well as the improved operating efficiencies achieved during our 2005 restructuring efforts. Powersports: Revenue and contribution margin from Powersports increased $0.4 million and $0.3 million driven primarily by strong growth in our automotive publications and a reduction in losses incurred in our recently launched off-road publications. Other: Contribution margin from Other declined 50% in the third quarter of 2006. The decline is primarily due to the renegotiation of certain tradeshow vendor arrangements and investments in the development of our e-media product offerings. General and Administrative: General and administrative costs increased to $18.7 million from $8.9 million in the third quarter of 2005. This increase is primarily due to the aforementioned third quarter 2006 charges totaling $8.4 million and additional accruals for legal claims and executive separation costs. Discontinued Operations Advanstar completed a significant strategic realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. and refocusing Noun 1. refocusing - focusing again focalisation, focalization, focusing - the act of bringing into focus of its portfolio through the sale of its non-core assets in a series of transactions in 2005. In May 2005, Advanstar sold its tradeshows, publications and direct marketing products in the information technology, travel, beauty, home entertainment and portfolio sectors to Questex Media Group. Also during 2005, Advanstar closed the remaining East Coast fashion events acquired in the Larkin transaction and sold its Arenacross Championship Series events. Income from discontinued operations for 2005 includes the results of the operations of assets sold or discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: during 2005 and the gain on the sale of assets. The results included in discontinued operations are not included in reported revenue, contribution margin or EBITDA. Conference Call Information Advanstar will hold a conference call to review third quarter 2006 results tomorrow at 1:00 p.m. Eastern Time. The call can be accessed by dialing 1-800-399-1392 with access code number 1383726. A copy of this release will also be available at our website, www.advanstar.com. About Advanstar Advanstar Communications Inc. (www.advanstar.com) is a leading worldwide media company providing integrated marketing solutions for the Fashion & Licensing, Life Sciences and Powersports industries. Advanstar serves business professionals and consumers in these industries with its portfolio of 87 events, 60 publications and directories, 128 electronic publications and Web sites, as well as educational and direct marketing products and services. Market leading brands and a commitment to delivering innovative, quality products and services enables Advanstar to "Connect Our Customers With Theirs." Advanstar has roughly 1,000 employees and currently operates from multiple offices in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Europe. Business Risks The statements contained in this press release and our other oral and written statements that are not historical in nature are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties. Management of Advanstar believes that its expectations are based upon reasonable assumptions within the bounds of its knowledge of Advanstar's business. However, there can be no assurance that they in fact will be realized. Numerous factors may affect Advanstar's actual results and may cause results to differ materially from those expressed in forward-looking statements made by or on behalf of Advanstar including such factors listed from time to time in Advanstar's reports filed with the Securities and Exchange Commission including the factors described in Advanstar's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. (333-57201) filed March 30, 2006 under the heading "Risk Factors." Advanstar does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Non-GAAP Financial Information In this press release Advanstar discloses various non-GAAP financial measures as defined by SEC Regulation G, including EBITDA and Adjusted EBITDA. A reconciliation of the differences between the GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial measures and the non-GAAP financial measures can be found at the end of this press release. [TABLE OMITTED] The following table reconciles EBITDA and Adjusted EBITDA to cash flows provided by operating activities for each period presented: [TABLE OMITTED] Use of Non-GAAP Financial Information To supplement our consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ("GAAP"), we use non-GAAP measures, such as EBITDA and Adjusted EBITDA which are derived from results based on GAAP. The presentation of this additional information is not meant to be considered superior to, in isolation of, or as a substitute for results prepared in accordance with GAAP. We define "EBITDA" as operating income or loss plus amortization, depreciation. We define "Adjusted EBITDA" as operating income or loss plus amortization, depreciation, compensation expense related to acquisition earn-out payments, restructuring and other unusual charges. EBITDA and Adjusted EBITDA are key liquidity measure but should not be construed as an alternative to cash flows from operating activities or operating income (as determined in accordance with GAAP) or as a measure of our profitability or performance. We provide information about EBITDA and Adjusted EBITDA because we believe they are a useful way for us and our investors to measure our ability to satisfy cash needs, including interest payments on our debt, taxes and capital expenditures. GAAP requires us to provide information about cash flow generated from operations. However, GAAP cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses is reduced by the amount of interest and tax payments and also takes into account changes in net current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. (e.g., changes in working capital) that do not impact net income. Because changes in working capital can reverse in subsequent periods, and because we want to provide information about cash available to satisfy interest and income tax expense (by showing our cash flows before deducting interest and income tax expense), we are also presenting EBITDA and Adjusted EBITDA information. Our definition of EBITDA and Adjusted EBITDA does not take into account our working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. , debt service requirements or other commitments. Accordingly, EBITDA and Adjusted EBITDA are not necessarily indicative of amounts of cash that may be available to us for discretionary purposes. Our method of computing computing - computer EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. Additionally, our management uses EBITDA to determine our compliance with key financial covenants under our existing Credit Facility, which impact the amount of indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. we are permitted to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. . The definition of EBITDA in our existing Credit Facility is based, in part, on our EBITDA and includes other adjustments described in our credit agreement. |
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