8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 28, 2006

PLATO LEARNING, INC.

(Exact name of Registrant as specified in its charter)

Delaware	0-20842	36-3660532
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)
10801 Nesbitt Avenue South, Bloomington, MN		55437
(Address of principal executive offices)		(Zip Code)
Registrant’s telephone number, including area code:		(952) 832-1000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.02. Results of Operations and Financial Condition.
	Item 7.01. Regulation FD Disclosure.
	Item 9.01. Financial Statements and Exhibits.
SIGNATURES
Press Release
Transcript of Prepared Remarks for Conference Call

Item 2.02. Results of Operations and Financial Condition.

On February 28, 2006, we issued a press release, attached hereto as Exhibit 99.1, announcing our first quarter 2006 financial results.

Item 7.01. Regulation FD Disclosure.

On February 28, 2006, we held our regularly scheduled conference call with the investment community to discuss our first quarter 2006 financial results. A transcript of our prepared remarks for this conference call is attached hereto as Exhibit 99.2.

Item 9.01. Financial Statements and Exhibits.

     (c) Exhibits.

     Exhibit 99.1 Press Release dated February 28, 2006.

     Exhibit 99.2 Transcript of prepared remarks for our first quarter 2006 earnings release conference call on February 28, 2006.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	PLATO LEARNING, INC.
February 28, 2006	By /s/ Laurence L. Betterley
	Senior Vice President and
	Chief Financial Officer

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EX-99.1

For Immediate Release

Contact:	Michael Morache — President and CEO
	Larry Betterley — Sr. VP and CFO
	Steve Schuster — VP and Treasurer
	952.832.1000

PLATO Learning, Inc. Reports First Quarter Fiscal Year 2006 Results

Net Loss Declines By $7.3 million

MINNEAPOLIS, MN — February 28, 2006 — PLATO Learning, Inc. (NASDAQ: TUTR), a leading provider of K—adult computer-based and e-learning solutions, today announced revenues for its first quarter ended January 31, 2006, totaling $23.5 million. This represents a $2.0 million or 8% decrease from the $25.5 million reported for the comparable period of fiscal 2005.

Net loss for the first quarter of 2006 declined 70.0% to ($3.2) million, or ($0.14) per diluted share, compared to a net loss of ($10.5) million, or ($0.46) per diluted share, for the same period of 2005. Last year’s net loss included restructuring and other charges of $2.3 million, or $0.10 per diluted share.

Gross margin was 57.4% for the quarter, versus 46.7% in first quarter 2005. The higher gross margin was primarily driven by cost reductions and increased productivity in the service organization, and by lower amortization expense resulting from asset impairment charges taken in the fourth quarter of 2005. These improvements were partially offset by a reduction in high gross margin license fee revenue. Operating expenses declined 24.2% from the first quarter of 2005. The reduction primarily resulted from cost reduction initiatives in sales and marketing and to a decline in restructuring and other charges of $2.2 million. First quarter 2006 includes a $322,000 non-cash charge for stock-based compensation from the adoption of FAS 123(R).

Michael Morache, PLATO Learning President and CEO, said, “We completely reengineered our sales organization in 2005. This not only included changes to systems and procedures, but also to the people through voluntary and involuntary attrition and a thorough recruiting process. As a result of this transition many of our sales representatives had been with the company less than six months during the first quarter. This resulted in a decline in orders from last year and, accordingly, lower license fee and deferred revenues; however, this was partially offset by stronger services revenue. By the end of the quarter we were fully staffed in our sales organization with highly talented professionals, which is expected to result in an increased order rate going forward and achievement of our previously communicated financial guidance for the year.”

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“Cost of revenues and operating expenses were down substantially due to our restructuring and cost reduction initiatives implemented in 2005. Our operating expenses, excluding restructuring and other charges, declined 16%, demonstrating a significant reduction in our break-even point for profitability. This was accomplished while aggressively pursuing our product development plan, with the launch of our new whole-semester online courses for high school occurring in January,” added Morache.

The Company highlighted additional key financial information for the first quarter 2006:

• Earnings Before Interest Taxes Depreciation and Amortization, adjusted for restructuring and other charges and stock-based compensation expense (Adjusted EBITDA, a non-GAAP measure) was $0.5 million for the quarter, compared to a loss of ($3.3) million in 2005.

• Cash, cash equivalents, and marketable securities were $41.6 million at January 31, 2006, compared to $47.1 million at October 31, 2005, and $41.9 million at January 31, 2005.

• Deferred revenue was $33.1 million at January 31, 2006, versus $40.4 million at October 31, 2005, and $46.7 million at January 31, 2005.

Use of Non-GAAP Financial Measures
The non-GAAP financial measures used in this press release exclude the impact of restructuring and other charges on PLATO Learning’s operating results, as well as present Adjusted EBITDA. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may not be computed the same as similarly titled measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. PLATO Learning’s management views these non-GAAP financial measures to be helpful in assessing the Company’s ongoing operating results. In addition, these non-GAAP financial measures facilitate management’s internal comparisons to PLATO Learning’s historical operating results and comparisons to competitors’ operating results. PLATO Learning includes these non-GAAP financial measures in its earnings announcement, because the Company believes they are useful to investors in allowing for greater transparency related to supplemental information used by management in its financial and operational analysis. Investors are encouraged to review the reconciliations of the non-GAAP financial measures used in this press release to their most directly comparable GAAP financial measures as provided with the financial statements attached to this press release.

Quarterly Conference Call
A conference call to discuss this announcement is scheduled for today at 3:45 p.m. (Central Time). The dial-in number for this call is 1-877-209-0397 in the U.S. and Canada, and 612-332-0530 internationally. Please call 10 minutes prior to the start of the call and inform the operator you are participating in PLATO Learning’s call. Should you be unable to attend the live conference call, a recording will be available to you from 8:15 p.m. (Central Time) on February 28, 2006, until midnight on March 7, 2006. To access the recording, call 1-800-475-6701 in the U.S. and Canada and 1-320-365-3844 internationally. At the prompt, enter pass code number 816343.

Additionally, investors have the opportunity to listen to the conference call over the Internet through PLATO Learning’s website at http://www.plato.com/aboutus/investor_calls.asp.

About PLATO Learning
PLATO Learning, Inc. is a leading provider of computer-based and e-learning instruction for kindergarten through adult learners, offering curricula in reading, writing, math, science, social studies, and life and job skills. The Company also offers innovative online assessment and accountability solutions and standards-based professional development services. With over 6,000 hours of objective-based, problem-solving courseware, plus assessment, alignment and curriculum management tools, we create standards-based curricula that facilitate learning and school improvement.

PLATO Learning, Inc. is a publicly held company traded as TUTR on the NASDAQ. PLATO Learning educational software delivered via networks, CD-ROM, the Internet, and private intranets, is primarily

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marketed to K—12 schools and colleges. The Company also sells to job training programs, correctional institutions, military education programs, corporations, and individuals.

PLATO Learning is headquartered at 10801 Nesbitt Avenue South, Bloomington, Minnesota 55437, 952. 832.1000 or 800.869.2000. The Company has offices throughout the United States, Canada, and the United Kingdom, as well as international distributors in Puerto Rico, South Africa, and the United Arab Emirates. For more information, please visit http://www.plato.com.

This announcement includes forward-looking statements. PLATO Learning has based these forward-looking statements on its current expectations and projections about future events. Although PLATO Learning believes that its assumptions made in connection with the forward-looking statements are reasonable, no assurances can be given that its assumptions and expectations will prove to have been correct. These forward-looking statements are subject to various risks, uncertainties and assumptions. PLATO Learning undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Any forward looking statements made are subject to the risks and uncertainties as those described in the Company’s Annual Report on Form 10-K for the year ended October 31, 2005. Actual results may differ materially from anticipated results.

^® PLATO is a registered trademark of PLATO Learning, Inc. PLATO Learning is a trademark of PLATO Learning, Inc.

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PLATO Learning, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)

	Three Months Ended
	January 31,
	2006			2005
Revenues:
License fees	$	9,049		$	12,002
Subscriptions		4,356			4,533
Services		10,081			8,920
Total revenues		23,486			25,455
Cost of revenues:
License fees		2,973			4,404
Subscriptions		2,241			2,313
Services		4,782			6,854
Total cost of revenues		9,996			13,571
Gross profit		13,490			11,884
Operating expenses:
Sales and marketing		9,734			13,326
General and administrative		4,648			4,210
Product development		1,539			1,471
Amortization of intangibles		969			1,092
Restructuring and other charges		80			2,289
Total operating expenses		16,970			22,388
Operating loss		(3,480	)		(10,504	)
Other income (expense):
Interest income		465			212
Interest expense		(21	)		(15	)
Other expense, net		(11	)		(70	)
Loss before income taxes		(3,047	)		(10,377	)
Income tax expense		150			150
Net loss	$	(3,197	)	$	(10,527	)
Loss per share:
Basic and diluted	$	(0.14	)	$	(0.46	)
Weighted average common shares outstanding:
Basic and diluted		23,629			23,110

Note: Amounts previously reported in 2005 as other revenues and other cost of revenues were reclassified to license fees and services to conform to the 2006 classification. The reclassifications had no effect on previously reported 2005 total revenues, total cost of revenues, or gross profit.

PLATO Learning, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except per share amounts)

	January 31,			October 31,
	2006			2005
ASSETS
Current assets:
Cash and cash equivalents	$	41,362		$	46,901
Marketable securities		221			213
Accounts receivable, net		14,518			22,768
Inventories		3,530			4,026
Other current assets		6,012			6,351
Total current assets		65,643			80,259
Equipment and leasehold improvements, net		5,320			5,711
Product development costs, net		16,149			14,753
Goodwill		71,865			71,865
Identified intangible assets, net		21,235			22,505
Other long-term assets		2,006			2,235
Total assets	$	182,218		$	197,328
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,384		$	2,938
Accrued employee salaries and benefits		6,768			7,772
Accrued liabilities		6,275			8,933
Deferred revenue		28,752			35,218
Total current liabilities		43,179			54,861
Long-term deferred revenue		4,300			5,213
Deferred income taxes		2,081			1,931
Other long-term liabilities		404			496
Total liabilities		49,964			62,501
Stockholders’ equity:
Common stock		237			236
Additional paid in capital		166,935			166,295
Treasury stock at cost		(205	)		(205	)
Accumulated deficit		(33,734	)		(30,537	)
Accumulated other comprehensive loss		(979	)		(962	)
Total stockholders’ equity		132,254			134,827
Total liabilities and stockholders’ equity	$	182,218		$	197,328

PLATO Learning, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)

	Three Months Ended
	January 31,
	2006			2005
Operating activities:
Net loss	$	(3,197	)	$	(10,527	)
Adjustments to reconcile net loss to net cash used in operating activities:
Deferred income taxes		150			150
Amortization of capitalized product development costs		1,600			1,868
Amortization of identified intangible and other noncurrent assets		1,354			2,243
Depreciation and amortization of equipment and leasehold improvements		638			873
Provision for doubtful accounts		227			305
Stock-based compensation		322			—
Loss on disposal of equipment		—			14
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable		8,023			12,875
Inventories		496			(696	)
Other current and long-term assets		484			(243	)
Accounts payable		(1,554	)		(2,197	)
Other current and long-term liabilities		(3,760	)		(1,449	)
Deferred revenue		(7,379	)		(4,916	)
Total adjustments		601			8,827
Net cash used in operating activities		(2,596	)		(1,700	)
Investing activities:
Capitalized product development costs		(2,996	)		(2,876	)
Purchases of equipment and leasehold improvements		(248	)		(748	)
Purchases of marketable securities		—			(2,985	)
Sales and maturities of marketable securities		—			16,251
Net cash (used in) provided by investing activities		(3,244	)		9,642
Financing activities:
Net proceeds from issuance of common stock		355			1,400
Repayments of capital lease obligations		(30	)		(26	)
Net cash provided by financing activities		325			1,374
Effect of currency exchange rate changes on cash and cash equivalents		(24	)		308
Net (decrease) increase in cash and cash equivalents		(5,539	)		9,624
Cash and cash equivalents at beginning of period		46,901			29,235
Cash and cash equivalents at end of period	$	41,362		$	38,859

PLATO Learning, Inc.
Supplemental Financial Information
(Unaudited)

Operating Expenses	Three Months Ended January 31,
($000's)	2006						2005
				% of						% of
				Revenue						Revenue			% Change
Total operating expenses	$	16,970			72	%	$	22,388			88	%		-24	%
Restructuring and other charges		(80	)					(2,289	)
Operating expenses before restructuring and other charges	$	16,890			72	%	$	20,099			79	%		-16	%

Reconciliation of GAAP Loss Per Share to Non-GAAP Loss	Three Months Ended
Per Share Before Before Restructuring and Other Charges	January 31,
($000's, except per share amounts)	2006			2005
Net loss	$	(3,197	)	$	(10,527	)
Restructuring and other charges		80			2,289
Net loss before restructuring and other charges	$	(3,117	)	$	(8,238	)
Loss per share (basic and diluted):
Net loss	$	(0.14	)	$	(0.46	)
Restructuring and other charges		0.01			0.10
Net loss before restructuring and other charges	$	(0.13	)	$	(0.36	)
Weighted average common shares outstanding:
Basic and diluted		23,629			23,110

Order Size	Three Months Ended January 31,
($000's)	2006				2005				% Change
	Number		Value		Number		Value		Number			Value
$100 to $249		21	$	3,171		18	$	2,529		17	%		25	%
$250 or greater		5		2,154		11		4,924		-55	%		-56	%
		26	$	5,325		29	$	7,453		-10	%		-29	%

PLATO Learning, Inc.
Supplemental Financial Information
(Unaudited)

Reconciliation of GAAP Net Loss to Non-GAAP Adjusted EBITDA
(excluding impairment, restructuring and other charges, and stock-based compensation)
($000’s)

													Twelve
													Months
													Ended
													January 31,
	Q1-2006			Q4-2005			Q3-2005			Q2-2005			2006
Net loss	$	(3,197	)	$	(13,895	)	$	(311	)	$	(2,954	)	$	(20,357	)
Income taxes		150			410			150			150			860
Interest, net		(444	)		(394	)		(205	)		(140	)		(1,183	)
Depreciation and amortization		3,592			4,374			5,074			4,585			17,625
Impairment charges		—			13,194			—			—			13,194
Restructuring and other charges		80			2,904			200			632			3,816
Stock-based compensation		322			—			—			39			361
Adjusted EBITDA	$	503		$	6,593		$	4,908		$	2,312		$	14,316

													Twelve
													Months
													Ended
													January 31,
	Q1-2005			Q4-2004			Q3-2004			Q2-2004			2005
Net earnings (loss)	$	(10,527	)	$	2,213		$	6,724		$	(3,230	)	$	(4,820	)
Income taxes		150			1,580			150			150			2,030
Interest, net		(197	)		(112	)		(13	)		(101	)		(423	)
Depreciation and amortization		4,984			4,481			4,388			4,623			18,476
Restructuring and other charges		2,289			—			—			—			2,289
Stock-based compensation		—			—			—			217			217
Adjusted EBITDA	$	(3,301	)	$	8,162		$	11,249		$	1,659		$	17,769

EX-99.2

PLATO Learning, Inc
Fiscal Year 2006 Q1 Financial Release
Conference Call
February 28, 2006

OPERATOR INTRODUCTION

MIKE MORACHE
Good afternoon. Thank you for joining us today for our regularly scheduled quarterly conference call. With me today is Larry Betterley, our Senior Vice President and Chief Financial Officer.

I will make a few opening remarks, Larry will comment on the financial results, and then I will make some concluding comments. We will then take your questions.

First, Larry will preface our remarks with a safe harbor statement. Larry.

LARRY BETTERLEY
This announcement includes forward-looking statements. We have based these statements on our current expectations and projections about future events. Although we believe that the assumptions made in connection with the forward-looking statements are reasonable, no assurances can be given that the assumptions and expectations will prove to have been correct.

These statements are subject to the risks and uncertainties as those described in the Company’s Annual Report on Form 10-K for the year ended October 31, 2005. Actual results may differ materially from anticipated results.

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The content of our call contains time-sensitive information that is accurate only as of today, February 28, 2006. PLATO Learning undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

This call is the property of PLATO Learning, Inc. Any re-distribution, or rebroadcast of this call in any form without the express written consent of PLATO Learning is prohibited. Mike.

MIKE MORACHE

Thanks Larry.

The financial results we announced today for our first quarter of fiscal 2006 show a substantial improvement in net loss from last year, reflecting many restructuring and cost saving initiatives implemented during 2005.

Revenues were $23.5 million for the quarter, down 8% from 2005. The decline was a result of low order volume. This was due to the significant turnover in account managers in the field in 2005 and early 2006. As discussed previously, we implemented many changes at PLATO Learning last year to position it for long-term profitable growth. These changes were made throughout the company, including our sales organization and the systems, processes and procedures they use.

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As a result, we had significant voluntary and involuntary turnover in our sales organization. We moved aggressively to replace these individuals utilizing a highly selective recruiting process. The result is a new sales force of highly qualified professionals that is expected to accelerate our order rate going forward. During first quarter, however, about 40% of the sales force had been with the company less than six months, so they were not fully productive and orders were low as a result.

This group is gaining momentum, so we expect the order rate to increase substantially for the remainder of the year. As a result, we continue to believe the financial guidance for 2006, as communicated in our fourth quarter earnings call, is achievable.

As I mentioned, costs declined substantially as a result of our restructuring and cost reduction initiatives during 2005. This is reflected in a greatly improved gross margin of 57%, compared to 47% last year, even though revenues declined, and in a 16% decrease in operating expenses, excluding restructuring and other charges. Even though costs were reduced, we continued to make substantial investments in our product development plan.

The result was a net loss of $3.1 million for first quarter 2006, a $5.1 million, or 62% decrease from 2005, excluding restructuring and other charges in both periods. This dramatic improvement further demonstrates our ability to become profitable at much lower revenue levels than in the past.

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I will provide a few more comments after Larry reviews the financial results in more detail. Larry.

LARRY BETTERLEY
Thank you Mike.

Before I begin, I would like to point out that classification changes were made in our 2006 presentation of revenue and cost of revenue to eliminate the other revenue and other cost of revenue line items. 2005 amounts have been reclassified to reflect these changes and facilitate comparability. These changes had no effect on total revenues or total cost of revenues in either period.

Revenues:
The $2.0 million decline in revenue in the first quarter from last year was primarily the result of a decrease in License Fees. License fee revenue was $9.0 million, a $3.0 million or 25% decrease from 2005. The decline was caused by a new sales force, as discussed by Mike, resulting in low order volume and a decrease in the dollar amount of large orders closed. 26 transactions over $100,000, with a total order value of $5.3 million, were closed in the quarter, compared to 29 transactions with a total order value of $7.5 million last year.

Subscription revenue was similar to last year. Service revenue grew substantially by 13%, partially offsetting the decline in license fee revenue. The growth occurred in software support fees, professional development, and technical services, partially offset by lower Supplemental Educational Services, which is no longer a significant focus of our service offerings.

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Our deferred revenue balance at quarter-end was $33.1 million. This is down $7.4 million from year-end 2005, due to the low order volume for the quarter as previously discussed, and to growth in services delivered.

Gross Profit:
The overall gross profit margin for the quarter was 57.4%, versus 46.7% in first quarter 2005. License fee gross margin was 3.8 percentage points above last year at 67.1%, even though revenue was $3.0 million less. This reflects the improved control over discounting of those products and a reduction in amortization expense as a result of asset impairment charges taken in fourth quarter of last year. Subscription revenue gross margin was 48.6%, similar to last year. Service revenue gross margin improved 29.4 percentage points to 52.6%, due to higher revenue and lower costs, driven by cost reduction initiatives and by higher productivity.

Operating Expenses:
Our total operating expenses declined 16% in the first quarter to $16.9 million, compared to $20.1 million in last year’s first quarter, excluding restructuring and other charges in both periods. The reduction was driven by a 27% decline in sales and marketing expenses, primarily reflecting the effect of reorganization and cost reduction activities initiated during 2005 and, to a lesser extent, several open sales positions during part of the quarter and lower variable costs due to lower revenue.

Statement of Financial Accounting Standards Number 123(R), related to share based payments, has been implemented effective the beginning of this fiscal year. Related expenses of $322,000 are included in our first quarter results.

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The net loss for the quarter was $3.2 million or $0.14 per share, compared to $8.2 million or $0.36 per share in last year’s first quarter, excluding restructuring and other charges of $2.3 million or $0.10 per share in 2005.

Balance Sheet and Cash Flow:

Cash and marketable securities were $41.6 million at quarter-end, down $5.5 million from year-end 2005, but similar to the end of first quarter last year. Cash used in operations was $2.6 million, driven by a positive Adjusted EBITDA of $503,000 and a use of $3.7 million from changes in operating asset and liability balances in the quarter. Our receivable days sales outstanding were 61 on a trailing twelve months revenue basis, which is a significant reduction from a DSO of 92 at the end of first quarter 2005.

Total capitalized courseware development costs and capital expenditures were $3.2 million for the quarter, which was $1.0 million more than the related amortization and depreciation expense. This reflects the increase in our product development activity and lower amortization expense as a result of asset impairment charges recorded in fourth quarter 2005.

This concludes my formal remarks. I’ll turn it back over to Mike now for his further comments.

MIKE MORACHE
Thank you Larry.

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Today is my one year anniversary at PLATO Learning. When I joined PLATO last year, I spent the first couple of months concentrating on listening to customers and employees. Subsequently, I made a lot of changes.

The cost structure has been reduced dramatically, lowering our break-even point by more than $17.0 million. We developed a new strategy for growth and are executing that strategy. Many new processes have been implemented to improve how we sell and develop new products, support our customers, and recruit and train new employees. We hired more than 40 new account managers and reorganized the sales organization. Finally, we opened an offshore development center that gives us more capacity at a lower cost.

Although these changes had a near-term negative effect on financial performance, they were necessary to position the company for long-term sustainable and profitable growth. We have accomplished much the last year and we will continue to improve our execution as we move forward as a re-engineered organization.

As I stated earlier we continue to aggressively pursue our product development strategy and will be releasing many new exciting products in the coming months. Our 2006 plan includes introduction of five new products consisting of whole courses across subject areas for high school learners and supplemental instructional resources for use by teachers in K-8 classrooms. Every product will be released with pre-designed professional development services to help teachers and administrators achieve the student learning gains they expect from their investment in PLATO products. We will also unveil a new instructional

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management and delivery platform that will be the foundation for state-of-the-art, reliable, and cost-effective Internet delivery of our classroom solutions.

Recently, we announced the release of the first of these products. This included a series of whole semester online courses, including Algebra, English, Biology, Physical Science, Geography, and American History, all aimed to provide high schools a way to deliver rigorous credit recovery solutions and alternatives to the traditional delivery environment, such as distance learning and home school programs.

These courses are aligned to national standards and provide a comprehensive course curriculum, including assessments, instructional content, cumulative final exams, state standards coverage reports, and teacher support materials.

As I talk to you today, our strategy is on track and we expect to return to profitability in 2006.

That concludes our formal remarks. We will now take any questions you may have. Operator.

Q&A

CLOSING STATEMENT
Thank you again for joining us today. I am very excited about PLATO’s new strategy, as I hope you are, and I continue to be optimistic about our ability to achieve profitable growth in the long-term. Thank you and good bye.

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