EX-99.1 2 c08240exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
Cambium Learning Group, Inc. Announces Third Quarter Earnings
DALLAS, Nov. 4, 2010 /PRNewswire via COMTEX/ —
Cambium Learning Group, Inc. [Nasdaq: ABCD, the “Company"], a leading provider of research-based education solutions for students in Pre-K through 12th grade, including intervention curricula, educational technologies and services, today announced financial results for the third quarter ended September 30, 2010.
Third Quarter 2010 Year to Date Financial Summary
•   Adjusted sales of $145 million for the nine months ended Sept 30, 2010 were down 8% versus $157 million for the same period 2009. Adjusted sales by business unit and change from prior year were as follows:
  •   Voyager sales: $90 million, down 13%
 
  •   Cambium Learning Technologies sales: $35 million, up 9%
 
  •   Sopris sales: $20 million, down 7%
•   Year-to-date adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $41 million versus $42 million for the same period in 2009, a decline of 2%.
 
•   The Company continued to achieve merger related synergy savings and variable costs savings relative to prior year which have been effective in keeping earnings relatively flat in the face of revenue declines.
 
•   The Company’s cash flow, being seasonal, turned positive in the second half of the year (excluding non-recurring items) and the Company’s revolving line of credit will be paid off by mid-November.
 
•   The Company has a few transactions remaining in its pipeline that are targeted for closure in 2010. These opportunities are mainly related to customer available ARRA Stimulus funding and will play a significant role in determining the company’s end of year adjusted sales and adjusted EBITDA.
Ron Klausner, Chief Executive Officer stated, “Although challenging state and local budgets continue to impact our large ticket priced products, we were able to maintain earnings consistent with prior year. Year-versus-year declines in sales are primarily in the Voyager unit.”
Klausner added, “While remaining sensitive to our objective to grow earnings, we continued to also make significant new investments in product development and technology to better diversify our portfolio, and provide a platform for renewed top line growth. We released Kurzweil Version 12, redesigned the Sopris Website to better drive e-commerce and e-leads and continued robust investments in our suite of online student centric capabilities in Learning A-Z and ExploreLearning.”
Order Volume Trends
Order volume is an internal metric that is a leading indicator of revenues. Through Q3 2010 we have experienced the following trends in order volume:
•   Year-to-date company-wide order volume decreased by 11%, impacting the Voyager segment the most as order volume in that unit decreased by 20% versus prior year. The Company continued to experience elongated and delayed buying cycles with its customers related to large dollar transactions.

 

 

 

•   Cambium Learning Technologies segment increased order volume year-to-date by 17% led by increases in ExploreLearning and Learning A-Z in excess of 25% each.
 
•   Investments in the Sopris segment, including the launch of the new DIBELS Next, helped increase order volume 10% in the third quarter versus prior year. The full year order volume for the Sopris segment is now down 7% for the year due to the timing of a royalty payment in the first quarter of 2009 that is now expected in Q4 2010.
Non-GAAP Financial Measures
EBITDA, adjusted EBITDA and adjusted sales are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The Company believes that adjusted EBITDA and adjusted sales provide useful information to investors because they reflect the underlying performance of the ongoing operations of the Company, including the recent acquisition of Voyager Learning Company, and provide investors with a view of the combined Company’s operations from management’s perspective. Adjusted EBITDA and adjusted sales exclude items that do not reflect the underlying performance of the combined Company by removing significant one-time or certain non-cash items. The Company uses these measures to monitor and evaluate the operating performance of the Company and as the basis to set and measure progress towards performance targets, which directly affect compensation for employees and executives. The Company generally uses these non-GAAP measures as measures of operating performance and not as measures of the Company’s liquidity.
Investor Conference Call
The Company will discuss its financial results on a conference call today at 5:00 p.m. Eastern Time. The call will address unaudited financial results for the third quarter ended September 30, 2010.
To listen to the Company’s conference call, please dial (800) 860-2442 and reference “Cambium Learning” at 5:00 p.m. Eastern Time on Thursday, November 4, 2010. The call will be recorded and archived until Wednesday, November 24, 2010, and can be replayed by calling (877) 344-7529 and entering ID# 445667. The conference call will also be Webcast and available on the Company’s Website at www.cambiumlearninggroup.com.
About Cambium Learning Group, Inc.
Cambium Learning Group, Inc. (NASDAQ: ABCD) is based in Dallas, Texas, and operates three business units: Voyager, a comprehensive intervention business; Sopris, a supplemental solutions business; and Cambium Learning Technologies, which includes ExploreLearning, IntelliTools, Kurzweil and Learning A-Z. Through its core divisions, Cambium Learning Group, Inc. provides research-based education solutions for students in Pre-K through 12th grade, including intervention curricula, educational technologies and services primarily focused on serving the needs of the nation’s most challenged learners and enabling students to realize their full potential. The company’s website is www.cambiumlearninggroup.com.
Media and Investor Contact:
Shannan Overbeck
Cambium Learning Group, Inc.
214.932.9476
shannan.overbeck@cambiumlearning.com

 

 

 

Forward Looking Statements
Some of the statements contained herein constitute forward-looking statements. These statements relate to future events, including the future financial performance of Cambium Learning Group, Inc., and involve known and unknown risks, uncertainties and other factors that may cause the markets, actual results, levels of activity, performance or achievements of Cambium Learning Group, Inc. to be materially different from any actual future results, levels of activity, performance or achievements. These risks and other factors you should consider include, but are not limited to, the ability to successfully attract and retain a broad customer base for current and future products, changes in customer demands or industry standards, success of ongoing product development, maintaining acceptable margins, the ability to control costs, K-12 enrollment and demographic trends, the level of educational and education technology funding, the impact of federal, state and local regulatory requirements on the business of the company, the loss of key personnel, the impact of competition and the risk that competitors will seek to capitalize on the risks and uncertainties confronting the new combined company, the uncertainty of general economic conditions and financial market performance, and those other risks and uncertainties listed under the heading “RISK FACTORS” in Cambium Learning Group, Inc.’s Form 10-K. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” “projects,” “intends,” “prospects,” or “priorities,” or the negative of such terms, or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. Cambium Learning Group, Inc. does not assume or undertake any obligation to update the information contained in this press release, and expressly disclaims any obligation to do so, whether as a result of new information, future events or otherwise.

 

 

 

Cambium Learning Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,     September 30,     September 30,  
    2010     2009     2010     2009  
Net sales
   $ 56,607     $ 40,972     $ 132,730     $ 77,742  
 
                                
Cost of sales:
                                
Cost of sales
     18,021       10,682       44,550       20,969  
Amortization expense
     7,096       4,195       21,083       12,507  
 
                        
 
                                
Total cost of sales
     25,117       14,877       65,633       33,476  
 
                                
Research and development expense
     2,543       1,558       8,116       4,117  
Sales and marketing expense
     11,966       5,396       34,199       15,883  
General and administrative expense
     5,608       5,176       19,151       13,399  
Shipping costs
     1,122       724       2,834       1,314  
Depreciation and amortization expense
     2,085       2,359       7,022       7,103  
Goodwill impairment
     —       —       —       9,105  
Embezzlement and related expense (recoveries)
     21       (74 )     51       (195 )
 
                        
 
                                
Total costs and expenses
     48,462       30,016       137,006       84,202  
 
                                
Income (loss) before interest, other income (expense)and income taxes
     8,145       10,956       (4,276 )     (6,460 )
 
                                
Net interest expense
     (4,478 )     (4,991 )     (13,460 )     (14,534 )
 
                                
Other income (expense), net
     271       (154 )     176       (359 )
 
                        
 
                                
Income (loss) before income taxes
     3,938       5,811       (17,560 )     (21,353 )
 
                                
Income tax benefit (expense)
     8       (1,373 )     (111 )     5,043  
 
                        
 
                                
Net income (loss)
   $ 3,946     $ 4,438     $ (17,671 )   $ (16,310 )
 
                        
 
                                
Net income (loss) per common share:
                                
Basic net income (loss) per common share
   $ 0.09     $ 0.22     $ (0.40 )   $ (0.80 )
Diluted net income (loss) per common share
   $ 0.09     $ 0.22     $ (0.40 )   $ (0.80 )
 
                                
Average number of common shares and equivalents outstanding:
                                
Basic
     44,324       20,493       44,322       20,493  
Diluted
     44,395       20,493       44,322       20,493  

 

 

 

Cambium Learning Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
                 
    September 30,     December 31,  
    2010     2009  
    (unaudited)      
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 5,838     $ 13,345  
Accounts receivable, net
     34,073       19,127  
Inventory
     23,594       19,812  
Deferred tax assets
     6,267       6,267  
Restricted assets, current
     3,177       9,755  
Other current assets
     5,147       6,010  
 
            
Total current assets
     78,096       74,316  
 
                
Property, equipment and software at cost
     30,213       24,951  
Accumulated depreciation and amortization
     (7,111 )     (4,294 )
 
            
Net property, equipment and software
     23,102       20,657  
 
            
 
                
Goodwill
     151,915       151,915  
Acquired curriculum and technology intangibles, net
     35,901       44,695  
Acquired publishing rights, net
     42,108       52,312  
Other intangible assets, net
     23,569       28,133  
Pre-publication costs, net
     7,281       5,464  
Restricted assets, less current portion
     12,935       14,930  
Other assets
     13,428       1,419  
 
            
 
                
Total assets
   $ 388,335     $ 393,841  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
 
                
Current liabilities:
                
Notes payable — line of credit
   $ 11,200     $ 5,000  
Current portion of long-term debt
     1,280       1,280  
Current portion of capital lease obligations
     359       443  
Accounts payable
     5,354       2,308  
Contingent value rights, current
     2,847       3,950  
Accrued expenses
     19,951       23,920  
Deferred revenue, current
     30,156       21,465  
 
            
 
                
Total current liabilities
     71,147       58,366  
 
            
 
                
Long-term liabilities:
                
Long-term debt, less current portion
     151,112       150,487  
Capital lease obligations, less current portion
     12,424       12,695  
Deferred revenue, less current portion
     3,145       2,716  
Contingent value rights, less current portion
     5,746       5,649  
Other liabilities
     21,841       24,156  
 
            
 
                
Total long-term liabilities
     194,268       195,703  
 
            
 
                
Stockholders’ equity:
                
Preferred stock ($.001 par value, 15,000 shares authorized, zero shares issued and outstanding at September 30, 2010 and December 31, 2009)
     —       —  
Common stock ($.001 par value, 150,000 shares authorized, 43,869 and 43,859 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively)
     44       44  
Capital surplus
     259,608       258,789  
Accumulated deficit
     (136,939 )     (119,268 )
Other comprehensive income (loss):
                
Pension and postretirement plans
     206       206  
Net unrealized gain on securities
     1       1  
 
            
 
                
Accumulated other comprehensive income
     207       207  
 
            
 
                
Total stockholders’ equity
     122,920       139,772  
 
            
 
                
Total liabilities and stockholders’ equity
   $ 388,335     $ 393,841  
 
            

 

 

 

Cambium Learning Group, Inc.
Reconciliation of Adjusted Sales and Adjusted EBITDA
Three Months Ended September 30, 2010
(In thousands)
Unaudited
                                                                 
            Non-recurring or non-operating costs excluded from Adjusted EBITDA:        
                    Legacy     Stock-based     Embezzlement     Adj Related              
    Total     Integration     VLCY     Compensation     and     to Purchase     Adjustments to     Adjusted  
    GAAP     Costs     Corporate     Expense     Related     Accounting     CVR Liability     EBITDA  
Voyager
   $ 37,376     $ —     $ —     $ —     $ —     $ 610     $ —     $ 37,986  
Sopris
     9,587       —       —       —       —       —       —       9,587  
Cambium Learning Technologies
     9,644       —       —       —       —       1,790       —       11,434  
 
                                                
Total net sales
     56,607       —       —       —       —       2,400       —       59,007  
 
                                                                
Cost of sales
     18,021       (69 )     —       (14 )     —       242       —       18,180  
Cost of sales — amortization
     7,096       —       —       —       —       —       —       7,096  
 
                                                
Total cost of sales
     25,117       (69 )     —       (14 )     —       242       —       25,276  
 
                                                                
Research and development expense
     2,543       (62 )     —       (30 )     —       —       —       2,451  
Sales and marketing expenses
     11,966       (58 )     —       (34 )     —       209       —       12,083  
General and administrative expense
     5,608       (760 )     (360 )     (167 )     —       —       (100 )     4,221  
Shipping costs
     1,122       —       —       —       —       —       —       1,122  
Depreciation and amortization
     2,085       —       —       —       —       —       —       2,085  
Embezzlement and related
     21       —       —       —       (21 )     —       —       —  
 
                                                
Income (loss) from operations
     8,145       949       360       245       21       1,949       100       11,769  
 
                                                                
Net interest income (expense)
     (4,478 )     —       —       —       —       —       —       (4,478 )
Other income (expense)
     271       —       —       —       —       —       —       271  
Income tax benefit
     8       —       —       —       —       —       —       8  
 
                                                
Net income (loss)
     3,946       949       360       245       21       1,949       100       7,570  
 
                                                
 
                                                                
Normal non-GAAP EBITDA Adjustments:
                                                                
Depreciation and amortization
     9,181       —       —       —       —       —       —       9,181  
Net interest income (expense)
     4,478       —       —       —       —       —       —       4,478  
Other income
     (271 )     —       —       —       —       —       —       (271 )
Income tax
     (8 )     —       —       —       —       —       —       (8 )
 
                                                
EBITDA
   $ 17,326     $ 949     $ 360     $ 245     $ 21     $ 1,949     $ 100     $ 20,950  
 
                                                
Cambium Learning Group, Inc.
Reconciliation of Adjusted Sales and Adjusted EBITDA
Three Months Ended September 30, 2009
(In thousands)
Unaudited
                                                                                 
                            Non-recurring or non-operating costs excluded from Adjusted EBITDA:        
                    Total                     Legacy     Stock-based     Embezzlement              
    Total             Combined     Transaction     Integration     VLCY     Compensation     and     Goodwill     Adjusted  
    GAAP     VLCY     Results     Costs     Costs     Corporate     Expense     Related     Impairment     EBITDA  
Voyager
   $ 25,596     $ 26,768     $ 52,364     $ —     $ —     $ —     $ —     $ —     $ —     $ 52,364  
Sopris
     8,799       —       8,799       —       —       —       —       —       —       8,799  
Cambium Learning Technologies
     6,577       5,807       12,384       —       —       —       —       —       —       12,384  
 
                                                            
Total net sales
     40,972       32,575       73,547       —       —       —       —       —       —       73,547  
 
                                                                                
Cost of sales
     10,682       9,910       20,592       —       —       —       —       —       —       20,592  
Cost of sales — amortization
     4,195       4,382       8,577       —       —       —       —       —       —       8,577  
 
                                                            
Total cost of sales
     14,877       14,292       29,169       —       —       —       —       —       —       29,169  
 
                                                                                
Research and development expense
     1,558       1,274       2,832       —       —       —       —       —       —       2,832  
Sales and marketing expenses
     5,396       8,541       13,937       —       —       —       —       —       —       13,937  
General and administrative expense
     5,176       5,939       11,115       (2,096 )     (511 )     (1,237 )     (85 )     —       —       7,186  
Shipping costs
     724       784       1,508       —       —       —       —       —       —       1,508  
Depreciation and amortization
     2,359       540       2,899       —       —       —       —       —       —       2,899  
Embezzlement and related
     (74 )     —       (74 )     —       —       —       —       74       —       0  
Goodwill impairment
     —       5,191       5,191       —       —       —       —       —       (5,191 )     (0 )
 
                                                            
Income (loss) from operations
     10,956       (3,986 )     6,970       2,096       511       1,237       85       (74 )     5,191       16,016  
 
                                                                                
Net interest income (expense)
     (4,991 )     (126 )     (5,117 )     —       —       —       —       —       —       (5,117 )
Other income (expense)
     (154 )     (230 )     (384 )     —       —       —       —       —       —       (384 )
Income tax benefit
     (1,373 )     (366 )     (1,739 )     —       —       —       —       —       —       (1,739 )
 
                                                            
Net income (loss)
     4,438       (4,708 )     (270 )     2,096       511       1,237       85       (74 )     5,191       8,776  
 
                                                            
 
                                                                                
Normal non-GAAP EBITDA Adjustments:
                                                                                
Depreciation and amortization
     6,554       4,922       11,476       —       —       —       —       —       —       11,476  
Net interest income (expense)
     4,991       126       5,117       —       —       —       —       —       —       5,117  
Other income
     154       230       384       —       —       —       —       —       —       384  
Income tax
     1,373       366       1,739       —       —       —       —       —       —       1,739  
 
                                                            
EBITDA
   $ 17,510     $ 936     $ 18,446     $ 2,096     $ 511     $ 1,237     $ 85     $ (74 )   $ 5,191     $ 27,492  
 
                                                            

 

 

 

Cambium Learning Group, Inc.
Reconciliation of Adjusted Sales and Adjusted EBITDA
Nine Months Ended September 30, 2010
(In thousands)
Unaudited
                                                                 
            Non-recurring or non-operating costs excluded from Adjusted EBITDA:        
                    Legacy     Stock-based     Embezzlement     Adj Related              
    Total     Integration     VLCY     Compensation     and     to Purchase     Adjustments to     Adjusted  
    GAAP     Costs     Corporate     Expense     Related     Accounting     CVR Liability     EBITDA  
Voyager
   $ 85,848     $ —     $ —     $ —     $ —     $ 4,589     $ —     $ 90,437  
Sopris
     19,898       —       —       —       —       —       —       19,898  
Cambium Learning Technologies
     26,984       —       —       —       —       7,523       —       34,507  
 
                                                
Total net sales
     132,730       —       —       —       —       12,112       —       144,842  
 
                                                                
Cost of sales
     44,550       (1,041 )     —       (44 )     —       1,168       —       44,633  
Cost of sales — amortization
     21,083       —       —       —       —       —       —       21,083  
 
                                                
Total cost of sales
     65,633       (1,041 )     —       (44 )     —       1,168       —       65,716  
 
                                                                
Research and development expense
     8,116       (375 )     —       (93 )     —       —       —       7,648  
Sales and marketing expenses
     34,199       (302 )     —       (102 )     —       926       —       34,721  
General and administrative expense
     19,151       (3,484 )     (835 )     (539 )     —       —       (100 )     14,193  
Shipping costs
     2,834       (304 )     —       —       —       —       —       2,530  
Depreciation and amortization
     7,022       —       —       —       —       —       —       7,022  
Embezzlement and related
     51       —       —       —       (51 )     —       —       —  
 
                                                
Income (loss) from operations
     (4,276 )     5,506       835       778       51       10,018       100       13,012  
 
                                                                
Net interest income (expense)
     (13,460 )     —       —       —       —       —       —       (13,460 )
Other income (expense)
     176       —       —       —       —       —       —       176  
Income tax expense
     (111 )     —       —       —       —       —       —       (111 )
 
                                                
Net income (loss)
     (17,671 )     5,506       835       778       51       10,018       100       (383 )
 
                                                
 
                                                                
Normal non-GAAP EBITDA Adjustments:
                                                                
Depreciation and amortization
     28,105       —       —       —       —       —       —       28,105  
Net interest income (expense)
     13,460       —       —       —       —       —       —       13,460  
Other income (expense)
     (176 )     —       —       —       —       —       —       (176 )
Income tax
     111       —       —       —       —       —       —       111  
 
                                                
EBITDA
   $ 23,829     $ 5,506     $ 835     $ 778     $ 51     $ 10,018     $ 100     $ 41,117  
 
                                                
Cambium Learning Group, Inc.
Reconciliation of Adjusted Sales and Adjusted EBITDA
Nine Months Ended September 30, 2009
(In thousands)
Unaudited
                                                                                 
                            Non-recurring or non-operating costs excluded from Adjusted EBITDA:        
                    Total                     Legacy     Stock-based     Embezzlement              
    Total             Combined     Transaction     Integration     VLCY     Compensation     and     Goodwill     Adjusted  
    GAAP     VLCY     Results     Costs     Costs     Corporate     Expense     Related     Impairment     EBITDA  
Voyager
   $ 40,774     $ 63,299     $ 104,073     $ —     $ —     $ —     $ —     $ —     $ —     $ 104,073  
Sopris
     21,465       —       21,465       —       —       —       —       —       —       21,465  
Cambium Learning Technologies
     15,503       16,285       31,788       —       —       —       —       —       —       31,788  
 
                                                            
Total net sales
     77,742       79,584       157,326       —       —       —       —       —       —       157,326  
 
                                                                                
Cost of sales
     20,969       24,831       45,800       —       —       —       —       —       —       45,800  
Cost of sales — amortization
     12,507       12,920       25,427       —       —       —       —       —       —       25,427  
 
                                                            
Total cost of sales
     33,476       37,751       71,227       —       —       —       —       —       —       71,227  
 
                                                                                
Research and development expense
     4,117       3,436       7,553       —       —       —       —       —       —       7,553  
Sales and marketing expenses
     15,883       22,615       38,498       —       —       —       —       —       —       38,498  
General and administrative expense
     13,399       18,379       31,778       (8,012 )     (673 )     (2,142 )     (219 )     —       —       20,732  
Shipping costs
     1,314       1,467       2,781       —       —       —       —       —       —       2,781  
Depreciation and amortization
     7,103       1,685       8,788       —       —       —       —       —       —       8,788  
Embezzlement and related
     (195 )     —       (195 )     —       —       —       —       195       —       —  
Goodwill impairment
     9,105       27,175       36,280       —       —       —       —       —       (36,280 )     —  
 
                                                            
Income (loss) from operations
     (6,460 )     (32,924 )     (39,384 )     8,012       673       2,142       219       (195 )     36,280       7,747  
 
                                                                                
Net interest income (expense)
     (14,534 )     (541 )     (15,075 )     —       —       —       —       —       —       (15,075 )
Other income (expense)
     (359 )     954       595       —       —       —       —       —       —       595  
Income tax benefit
     5,043       81       5,124       —       —       —       —       —       —       5,124  
 
                                                            
Net income (loss)
     (16,310 )     (32,430 )     (48,740 )     8,012       673       2,142       219       (195 )     36,280       (1,609 )
 
                                                            
 
                                                                                
Normal non-GAAP EBITDA Adjustments:
                                                                                
Depreciation and amortization
     19,610       14,605       34,215       —       —       —       —       —       —       34,215  
Net interest income (expense)
     14,534       541       15,075       —       —       —       —       —       —       15,075  
Other income
     359       (954 )     (595 )     —       —       —       —       —       —       (595 )
Income tax
     (5,043 )     (81 )     (5,124 )     —       —       —       —       —       —       (5,124 )
 
                                                            
EBITDA
   $ 13,150     $ (18,319 )   $ (5,169 )   $ 8,012     $ 673     $ 2,142     $ 219     $ (195 )   $ 36,280     $ 41,962  
 
                                                            
SOURCE Cambium Learning Group, Inc.