Renaissance Learning (NASDAQ:RLRN)
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Renaissance Learning(R) Announces Fourth Quarter Financial
Results
WISCONSIN RAPIDS, Wis., Jan. 31 /PRNewswire-FirstCall/ -- Renaissance
Learning(R), Inc. (NASDAQ:RLRN), a leading provider of learning information
systems and school improvement programs for pre-K-12 schools, today announced
financial results for the quarter and year ended December 31, 2004. Revenues
for the fourth quarter of 2004 were $25.8 million, a decrease of 17.8% from
fourth quarter 2003 revenues of $31.4 million. Net income for the quarter was
$5.2 million, or $0.17 per share, compared to net income of $7.6 million, or
$0.25 per share for the fourth quarter of 2003.
(Logo: http://www.newscom.com/cgi-bin/prnh/20001108/RENAISSANCELOGO )
Revenues for the twelve-month period ended December 31, 2004 were $114.0
million, down 12.6% from 2003 revenues of $130.5 million. Net income for 2004
was $22.7 million, or $0.73 per share, compared to net income of $32.5 million,
or $1.04 per share for 2003.
"Fourth quarter order rates were similar to third quarter 2004 and last year's
fourth quarter, excluding one large district contract signed in the fourth
quarter last year," stated John R. Hickey, President and Chief Executive
Officer of Renaissance Learning, Inc. "Deferred revenue increased by
approximately $1 million in the fourth quarter and we continue to be impacted
by the transition to our new subscription-based model, as well as by the longer
selling cycles to districts and Renaissance Place enterprise-wide applications.
Despite the extended selling cycle, we now have over 4,000 schools who have
taken the first step and ordered Renaissance Place applications. We are
confident that orders for Renaissance Place will be strong as districts begin
planning for the 2005-2006 school year."
The Company is announcing six initiatives which are expected to significantly
enhance growth in 2005 and beyond. These are: (1) Continued focus on
Renaissance Place with a goal of more than doubling Renaissance Place
installations in 2005; (2) The recently announced proposed merger with
AlphaSmart, Inc., and related initiatives to enhance sales of Renaissance's
writing software solutions; (3) Providing enhanced versions of StandardsMaster
with a wider range of content and assessments; (4) Adding additional marketing
resources to the selling of English In a Flash, which is being well received by
the large and growing ELL market; (5) Leverage the new web-based version of the
popular Accelerated Reader solution to roll out a national Renaissance Summer
Reading Program to help students retain and grow their reading skills through
the summer months; and (6) Divest the Generation21 subsidiary which has not
achieved profitability.
"I believe the new products and initiatives will help us get back to
significant growth levels," noted Hickey. "While 2005 will be a critical
transition year with some added costs to implement these strategies, including
one-time transitional expenses related to Generation21 and AlphaSmart, Inc. and
higher product development costs, we expect to achieve growth in both revenue
and profit for 2005 and the long-term outlook looks very promising."
Renaissance Learning added about 300 new customer schools in the U.S. and
Canada during the quarter, bringing total North American schools using Company
products to over 67,000. Of these, over 63,000 use the Company's reading
products and about 25,000 use math. The Company also added over 800 new
Renaissance Place customers in the quarter, bringing the total customer schools
using Renaissance Place to over 4,000.
The Company will hold a conference call at 4:00 p.m. CST today to discuss its
financial results, quarterly highlights and business outlook. The
teleconference may be accessed in listen-only mode by dialing 888-868-9083 at
4:00 p.m. CST. 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 January
31, 2005 at 8:00 p.m. through February 7, 2005 at 11:59 p.m. The replay
dial-in is 877-519-4471. The conference ID number to access the replay is
5579163.
Renaissance Learning(R), Inc.
Renaissance Learning, Inc. is a leading provider of research-based learning
information systems software, school improvement programs, teacher training and
consulting. Adopted by more than 67,000 schools, Renaissance information
technology products give students and teachers continuous constructive feedback
that helps motivate students, dramatically accelerate learning, improve test
scores, and help students master all standards, while reducing teacher
paperwork. Renaissance Learning has six U.S. locations and subsidiaries in
Australia, 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 growth initiatives, management's revenue and
profit expectations for future periods, the introduction and acceptance of new
products and services, and new marketing approaches. 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 2003 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.
ADDITIONAL INFORMATION
AlphaSmart, Inc. and the Company intend to file a registration statement on
Form S-4, which will include a proxy statement/prospectus and other relevant
materials in connection with the proposed merger transaction involving
AlphaSmart and the Company. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ
THIS FILING WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION REGARDING THE PROPOSED MERGER TRANSACTION. Investors and security
holders may obtain free copies of these documents and other documents filed
with the SEC when they become available at the SEC's web site at
http://www.sec.gov/ . In addition, investors and security holders may obtain
free copies of the documents filed with the SEC by AlphaSmart at AlphaSmart's
web site at http://www.alphasmart.com/ or by contacting AlphaSmart investor
relations at or via telephone at (408) 355-1029. Investors and security
holders may obtain free copies of the documents filed with the SEC by the
Company by directing such requests to Renaissance Learning, Inc., Attention:
Corporate Secretary, 2911 Peach Street, P.O. Box 8036, Wisconsin Rapids,
Wisconsin 54995 or via telephone at (715) 424-3636. The Company, AlphaSmart and
their respective directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders of AlphaSmart
in connection with the merger transaction. Information regarding directors and
executive officers of AlphaSmart and the Company and their respective interests
in the proposed transaction will be available in the proxy/prospectus of
AlphaSmart and the Company described above and other relevant materials to be
filed with the SEC.
(tables to follow)
RENAISSANCE LEARNING(R), INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollar amounts in thousands, except per share amounts)
(unaudited)
Three Months Twelve Months
ended December 31, ended December 31,
2004 2003 2004 2003
Net sales:
Products $20,611 $26,335 $92,326 $107,863
Services 5,181 5,052 21,722 22,681
Total net sales 25,792 31,387 114,048 130,544
Cost of sales:
Products 1,268 2,222 6,419 10,826
Services 2,193 2,344 10,322 10,256
Total cost of sales 3,461 4,566 16,741 21,082
Gross profit 22,331 26,821 97,307 109,462
Operating expenses:
Product development 3,961 4,074 16,803 17,000
Selling and marketing 7,519 7,905 33,022 30,623
General and
administrative 3,031 3,016 13,086 13,593
Total operating
expenses 14,511 14,995 62,911 61,216
Operating income 7,820 11,826 34,396 48,246
Other income
(expense), net 445 281 1,639 2,266
Income before taxes 8,265 12,107 36,035 50,512
Income taxes 3,058 4,480 13,333 17,971
Net income $5,207 $7,627 $22,702 $32,541
Earnings per share:
Basic $0.17 $0.25 $0.73 $1.05
Diluted $0.17 $0.25 $0.73 $1.04
Weighted average
shares outstanding:
Basic 31,018,228 30,864,276 31,046,200 31,110,578
Diluted 31,109,686 31,114,936 31,199,811 31,305,431
RENAISSANCE LEARNING(R), INC.
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
December 31, December 31,
2004 2003
ASSETS:
Current assets:
Cash and cash equivalents $27,460 $62,524
Investment securities 25,103 42,825
Accounts receivable, net 8,969 13,352
Inventories 2,375 2,354
Prepaid expenses 1,227 1,352
Deferred tax asset 3,800 3,743
Other current assets 452 889
Total current assets 69,386 127,039
Investment Securities 21,003 6,485
Property, plant and equipment, net 19,130 20,536
Deferred tax asset 1,620 1,795
Other assets 3,585 3,746
Total assets $114,724 $159,601
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $2,667 $3,144
Deferred revenue 17,554 10,875
Payroll and employee benefits 3,069 3,153
Income taxes payable 925 2,295
Other current liabilities 3,934 4,869
Total current liabilities 28,149 24,336
Deferred revenue 620 800
Deferred compensation 1,354 958
Total liabilities 30,123 26,094
Minority interest 184 177
Total shareholders' equity 84,417 133,330
Total liabilities and shareholders' equity $114,724 $159,601
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DATASOURCE: Renaissance Learning, Inc.
CONTACT: Julie Blystone of Renaissance Learning, Inc., Toll free ofc.,
+1-877-988-8048, or Fax, +1-715-424-3414, or
Web site: http://www.renlearn.com/