EX-99.1 2 exh991.htm EARNINGS RELEASE

Exhibit 99.1

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NEWS RELEASE

For release at 9:00 a.m. EDT, 07/15/08

Contact:  Susan Sutherland

Toll free ofc. (877) 988-8048

Fax (715) 424-3414

Email- pr@renlearn.com

2911 Peach Street P.O. Box 8036 Wisconsin Rapids, WI 54495-8036


Renaissance Learning, Inc. Announces Second Quarter, 2008 Results

WISCONSIN RAPIDS, WI — July 15, 2008 — Renaissance Learning®, Inc. (Nasdaq: RLRN), a leading provider of technology to support personalized practice, differentiated instruction, and progress monitoring in reading, math and writing for pre K-12 schools and districts, today announced financial results for the quarter ended June 30, 2008.  Revenues for the second quarter of 2008 were $28.0 million, an increase of 3.2% from second quarter 2007 revenues of $27.2 million. Net income increased 53.1% for the second quarter of 2008 to $3.3 million, or $.12 per share, compared to net income of $2.2 million, or $.08 per share, for the second quarter last year.   


Revenues for the six-month period ended June 30, 2008 were $57.4 million, up 6.6% from 2007 revenues of $53.9 million. Net income was $6.0 million for the six-month period ended June 30, 2008, up 70.3% from the prior year’s net income of $3.5 million. Earnings per share for the first half of 2008 were $.21 compared to $.12 in the first six months of 2007.


“Second quarter, 2008 marks the third consecutive quarter of year-over-year revenue and earnings per share growth,” commented Terrance D. Paul, Chief Executive Officer.  “In addition, deferred revenue grew by $6.0 million in the quarter, compared to an increase of $4.6 million last year and orders, excluding laptops, were up about 8% compared to the same quarter last year.  This is a good start to the seasonally important subscription renewal and adoption period that begins in the second quarter and supports our expectation of an even stronger third quarter.”


“We continue to see strong interest in Accelerated Reader Enterprise, with over 13,000 schools having now adopted this product,” added Paul.  “Annual per school revenue from Accelerated Reader Enterprise schools that have upgraded from previous versions of the product is higher by an average of over $1,200 and, with only 21% of our reading schools having upgraded to Enterprise, there remains significant future growth potential.”


“The one negative for the quarter is that laptop orders were down 7.5% from last year’s second quarter,” continued Paul.  “Our laptop customers are very enthusiastic about the product, but we have not yet been able to achieve the growth that we believe is possible for this product.  The next few quarters will be telling because Accelerated Reader software quizzes can now be taken on the Neo laptop, and we will be actively introducing Neo to our Accelerated Reader software customers. We believe this is the critical piece in the puzzle to significantly increase laptop sales.”


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Renaissance Learning added approximately 600 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 75,000.  Of these, over 63,000 are using the Company’s reading products, over 30,000 are using the Company’s math products and over 25,000 are using at least one product running on the Renaissance Place platform.  


The Company will hold a conference call at 10:00 a.m. CDT today to discuss its financial results, quarterly highlights and business outlook.  The teleconference may be accessed in listen-only mode by dialing 888-603-6873, ID number 53964942 at 10:00 a.m. CDT.  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 July 15, 2008 at 2:00 p.m. through July 22, 2008 at 11:59 p.m.  The replay dial-in is 800-642-1687.  The conference ID number to access the replay is 53964942.


Renaissance Learning, Inc.

Renaissance Learning, Inc. is the world’s leading provider of computer-based assessment technology for pre-K–12 schools. Adopted by more than 75,000 North American schools, Renaissance Learning’s tools provide daily formative assessment and periodic progress-monitoring technology to enhance core curriculum, support differentiated instruction, and personalize practice in reading, writing and math. Renaissance Learning products help educators make the practice component of their existing curriculum more effective by providing tools to personalize practice and easily manage the daily activities for students of all levels. As a result, teachers using Renaissance Learning products accelerate learning, get more satisfaction from teaching, and help students achieve higher test scores on state and national tests. 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 growth initiatives, growth prospects and management’s expectations regarding orders and financial results for 2008 and future periods.  These forward-looking statements are based on current expectations and various assumptions which management believes are reasonable.  However, these statements involve risks 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 the failure of AR and AM Enterprise and laptop orders to achieve expected growth targets, a decline in quiz sales that exceeds forecasts, risks associated with the implementation of the Company’s strategic growth plan, dependence on educational institutions and government funding, 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 2007 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.

(tables to follow)


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RENAISSANCE LEARNING®, INC.

CONSOLIDATED STATEMENTS OF INCOME

(dollar amounts in thousands, except per share amounts)

(unaudited)

 

Three Months

Ended June 30,

Six Months

Ended June 30,

 

2008

2007

2008

2007

Net sales:

 

 

 

 

Products

$21,888

$22,206

$44,093

$43,908

Services

6,159

4,971

13,340

9,957

Total net sales

28,047

27,177

57,433

53,865

 





Cost of sales:





Products

3,964

4,490

7,999

8,193

Services

2,568

2,443

6,330

5,310

Total cost of sales

6,532

6,933

14,329

13,503

 





Gross profit

21,515

20,244

43,104

40,362

 





Operating expenses:





Product development

4,268

4,636

8,301

9,702

Selling and marketing

8,903

8,835

18,276

18,240

General and administrative

3,429

3,612

7,557

7,455

 





Total operating expenses

16,600

17,083

34,134

35,397

 





Operating income

4,915

3,161

8,970

4,965

 





Other income (expense), net

172

324

340

626

 





Income before income taxes

5,087

3,485

9,310

5,591

 





Income taxes

1,753

1,307

3,358

2,096

 





Net income

$3,334

$2,178

$5,952

$3,495

 





Income per share:





Basic

$0.12

$0.08

$0.21

$0.12

Diluted

$0.12

$0.08

$0.21

$0.12

 





Weighted average shares outstanding:





Basic

28,764,740

28,809,707

28,761,951

28,834,117

Diluted

28,856,397

28,828,288

28,849,554

28,854,858




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RENAISSANCE LEARNING®, INC.

CONSOLIDATED BALANCE SHEETS

(dollar amounts in thousands)

(unaudited)

 

June 30,

2008

December 31,

2007

 

 

 

ASSETS:


 

Current assets:


 

Cash and cash equivalents

$   10,991

$    7,337

Investment securities

7,534

8,136

Accounts receivable, net

15,999

8,791

Inventories

5,076

6,273

Prepaid expenses

1,909

2,197

Income taxes receivable

1,591

1,450

Deferred tax asset

4,425

4,406

Other current assets

165

300

Total current assets

47,690

38,890

 



Investment securities

5,808

8,982

Property, plant and equipment, net

9,688

10,578

Goodwill

47,248

47,065

Other non-current assets

7,355

7,785

 



Total assets

$117,789

$113,300

 



LIABILITIES AND SHAREHOLDERS’ EQUITY:



Current liabilities:



Accounts payable

$    1,984

$    2,011

Deferred revenue

36,319

35,675

Payroll and employee benefits

5,579

4,184

Other current liabilities

3,769

3,563

Total current liabilities

47,651

45,433

 



Deferred revenue

3,043

2,707

Deferred compensation and other employee benefits

1,593

1,933

Income taxes payable

4,614

5,104

Other non-current liabilities

254

136

Total liabilities

57,155

55,313

 



Total shareholders’ equity

60,634

57,987

 



Total liabilities and shareholders’ equity

$117,789

$113,300