WISCONSIN RAPIDS, Wis., April 17 /PRNewswire-FirstCall/ — Renaissance Learning(R), Inc., (NASDAQ:RLRN) , a leading provider of technology for personalizing reading, math, and writing instruction and practice in pre-K-12 schools and districts, today announced financial results for the quarter ended March 31, 2007. Revenues for the first quarter of 2007 were $26.7 million, a decrease of 14.2% from first quarter 2006 revenues of $31.1 million. Deferred revenue increased by $0.5 million in the first quarter of 2007 versus a $2.6 million decline in the prior year’s first quarter. Net income, which included pre-tax restructuring costs of approximately $0.5 million, or $.01 per share, was $1.3 million, or $.05 per share, compared to net income of $3.5 million, or $.12 per share, for the first quarter last year. 2006 first quarter results included pre-tax costs for executive separation expenses of $1.9 million or $.04 cents per share.
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“First quarter results, excluding pre-tax restructuring costs, were similar to the trailing fourth quarter,” commented Terrance D. Paul, Chief Executive Officer of Renaissance Learning. “Although the first quarter is seasonally not our strongest period, we continue to see trends that support our expectation of improved financial results in the future. Reading orders were strong, the number of new math and reading customers increased year over year for the first time in several years, and laptop sales were down just 6% compared to declines of 18% and 38% in the fourth and third quarters, respectively. In addition, we have done some restructuring involving our laptop line which will reduce annual operating costs by approximately $1 million.”
Renaissance Learning added about 500 new customer schools in the U.S. and Canada during the quarter, bringing total North American schools that are actively using the Company’s products to over 71,000. Of these, over 60,000 are using the Company’s reading products, over 27,000 are using the Company’s math products and over 16,000 are using at least one Renaissance Place product.
The Company will hold a conference call at 4:00 p.m. CDST today to discuss its financial results, quarterly highlights and business outlook. The teleconference may be accessed in listen-only mode by dialing 888-373-2605, ID number 8623016 at 4:00 p.m. CDST. Please call a few minutes before the scheduled start time to ensure a proper connection.
A digital recording of the conference call will be made available on April 17, 2007 at 8:00 p.m. through April 24, 2007 at 11:59 p.m. The replay dial-in is 877-519-4471. The conference ID number to access the replay is 8623016.
Renaissance Learning, Inc.
Renaissance Learning, Inc. is a leading provider of technology for personalizing reading, math, and writing instruction and practice in pre-K-12 schools and districts. Renaissance Learning products give students and teachers continuous feedback to inform instruction and help teachers and administrators motivate students, dramatically accelerate learning and improve test scores. Renaissance Learning has seven U.S. locations and subsidiaries in Canada, India and the United Kingdom.
This press release contains forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including statements regarding 2007 financial results, growth initiatives and management’s revenue expectations and growth prospects for future periods. Any such forward-looking statements may involve risk and uncertainties that could cause actual results to differ materially from any future results encompassed within the forward-looking statements. Factors that could cause or contribute to such differences include risks associated with the implementation of the Company’s strategic growth plan and other risks affecting the Company’s business as described in the Company’s filings with the Securities and Exchange Commission, including the Company’s 2006 Annual Report on Form 10-K and later filed quarterly reports on Form 10-Q and Current Reports on Form 8-K, which factors are incorporated herein by reference. The Company expressly disclaims a duty to provide updates to forward-looking statements, whether as a result of new information, future events or other occurrences.
RENAISSANCE LEARNING(R), INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollar amounts in thousands, except per share amounts)
(unaudited)Three Months
Ended March 31,
2007 2006Net sales:
Products $21,701 $25,323
Services 4,987 5,794
Total net sales 26,688 31,117Cost of sales:
Products 3,703 4,328
Services 2,867 2,806
Total cost of sales 6,570 7,134Gross profit 20,118 23,983
Operating expenses:
Product development 5,065 4,182
Selling and marketing 9,406 9,356
General and administrative 3,842 5,205Total operating expenses 18,313 18,743
Operating income 1,805 5,240
Other income (expense), net 302 282
Income before income taxes 2,107 5,522
Income taxes 790 2,043
Net Income $1,317 $3,479
Income per share:
Basic $0.05 $0.12
Diluted $0.05 $0.12Weighted average shares outstanding:
Basic 28,858,799 30,144,940
Diluted 28,881,276 30,165,995RENAISSANCE LEARNING(R), INC.
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
(unaudited)March 31, December 31,
2007 2006ASSETS:
Current assets:
Cash and cash equivalents $22,123 $25,978
Investment securities 2,005 2,500
Accounts receivable, net 11,387 10,528
Inventories 5,395 4,108
Prepaid expenses 1,880 1,895
Income taxes receivable 3,316 4,104
Deferred tax asset 3,596 3,596
Other current assets 140 97
Total current assets 49,842 52,806Investment securities 6,592 1,625
Property, plant and equipment, net 11,541 11,811
Goodwill 46,977 46,973
Other noncurrent assets 6,750 7,308Total assets $121,702 $120,523
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable $3,905 $2,782
Deferred revenue 23,731 23,751
Payroll and employee benefits 4,092 4,750
Other current liabilities 3,663 3,429
Total current liabilities 35,391 34,712Deferred revenue 1,357 885
Deferred compensation and other
employee benefits 1,693 1,665
Deferred tax liability 875 878
Income taxes payable 3,083 2,812
Total liabilities 42,399 40,952Total shareholders’ equity 79,303 79,571
Total liabilities and
shareholders’ equity $121,702 $120,523
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Source: Renaissance Learning, Inc.
