EX-99.1 2 exh991.htm PRESS RELEASE

Exhibit 99.1

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NEWS RELEASE

For release at 4:00 p.m. EDST, 7/18/07

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 2007 Results; Increases
Quarterly Dividend and Declares Special Cash Dividend


WISCONSIN RAPIDS, WI — July 18, 2007 — Renaissance Learning®, Inc. (Nasdaq: RLRN), a leading provider of computer-based assessment and progress monitoring technology to support personalized reading, writing, and math instruction and practice in K-12 schools, today announced financial results for the quarter ended June 30, 2007.  Revenues for the second quarter of 2007 were $27.2 million, a decrease of 7.3% from second quarter 2006 revenues of $29.3 million.  Deferred revenue increased by $4.6 million in the second quarter of 2007 versus a $2.0 million increase in the prior year’s second quarter.  Net income for the second quarter of 2007 was $2.2 million, or $.08 per share, compared to net income of $4.7 million, or $.16 per share, for the second quarter last year.  


Revenues for the six-month period ended June 30, 2007 were $53.9 million, down 10.9% from 2006 revenues of $60.4 million.  Deferred revenue increased by $5.0 million versus a decrease of $0.6 million in the first six months of 2006.  Net income was $3.5 million for the six-month period ended June 30, 2007, down 57.1% from the prior year’s net income of $8.2 million.  Earnings per share for the first half of 2007 were $.12 compared to $.27 in the first six months of 2006.

 

“Though it is not apparent yet in the revenue and income numbers because of our transition to the Enterprise subscription model which delays revenue recognition, this was a good quarter for us providing solid evidence of a turnaround,” commented Terrance D. Paul, Chief Executive Officer.  “Second quarter orders, excluding laptops, were up almost 9%, the strongest growth in over four years, and with the recently announced Home Connect feature, we expect Accelerated Reader and Accelerated Math Enterprise sales will continue to grow. We also achieved growth in the number of new school customers compared to last year for most of our products.  The laptop product line was the one glaring negative with revenues declining nearly 17%; however, we expect this to rebound as well. In addition, the feedback on the recently announced NEO2 has been very positive.  NEO2 adds several new features to the already popular NEO product.  In particular, NEO2 will be able to run Accelerated Reader which, with an estimated over one million computers dedicated to running AR in schools nationwide, is a very good thing.”  


The company announced that its Board of Directors declared a special cash dividend of $.75 per share and

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increased its quarterly cash dividend 40% from $.05 per share to $.07 per share, both payable September 4, 2007 to shareholders of record as of August 10, 2007.  “Today’s Board action is a reflection of our confidence in the company’s long-term growth prospects, strong cash flow and overall financial strength,” stated Paul.  “While stock buyback activity may also continue, the Board believes that, at this time, distributing cash to shareholders through higher dividends is a good use of our strong cash flow to enhance shareholder value.”


Renaissance Learning added about 700 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 72,000.  Of these, over 62,000 are using the Company’s reading products, over 28,000 are using the Company’s math products and over 18,000 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 888-603-6873, ID number 8982657 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 July 18, 2007 at 8:00 p.m. through July 25, 2007 at 11:59 p.m.  The replay dial-in is 877-519-4471.  The conference ID number to access the replay is 8982657.


Renaissance Learning, Inc.


Renaissance Learning is the world’s leading provider of computer-based assessment technology for K-12 schools. Adopted by more than 72,000 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. Our 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 ability levels. As a result, teachers using Renaissance Learning products accelerate learning, achieve higher test scores on state and national tests, and get more satisfaction from teaching. 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.

(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

 

 

 

Six Months

 

 

 

 

 

 

 

 

 

Ended June 30,

 

 

 

Ended June 30,

 

 

 

 

 

 

 

 

 

2007

 

2006

 

2007

 

2006

 

 

 

 

 

 

 

 

Net sales:

 

 

 

 

 

 

 

    Products

$22,206

 

$24,925

 

43,908 

 

$50,249

    Services

  4,971 

 

  4,394 

 

9,957 

 

10,188 

        Total net sales

  27,177 

 

  29,319 

 

  53,865 

 

60,437 

 

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

    Products

  4,490 

 

  4,982 

 

8,193 

 

9,311 

    Services

  2,443 

 

  1,875 

 

5,310 

 

4,681 

        Total cost of sales

  6,933 

 

  6,857 

 

  13,503 

 

13,992 

 

 

 

 

 

 

 

 

Gross profit

  20,244 

 

  22,462 

 

  40,362 

 

46,445 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

    Product development

  4,636 

 

  4,305 

 

  9,702 

 

8,487 

    Selling and marketing

  8,835 

 

  7,389 

 

  18,240 

 

16,744 

    General and administrative

  3,612 

 

  3,692 

 

  7,455 

 

8,898 

 

 

 

 

 

 

 

 

        Total operating expenses

  17,083 

 

  15,386 

 

  35,397 

 

34,129 

 

 

 

 

 

 

 

 

Operating income

  3,161 

 

  7,076 

 

  4,965 

 

12,316 

 

 

 

 

 

 

 

 

Other income (expense), net

  324 

 

  343 

 

626

 

625 

 

 

 

 

 

 

 

 

Income before income taxes

  3,485 

 

  7,419 

 

  5,591 

 

  12,941 

 

 

 

 

 

 

 

 

Income taxes

  1,307 

 

  2,745 

 

2,096 

 

4,788 

 

 

 

 

 

 

 

 

Net Income

$2,178

 

$4,674

 

$3,495

 

$8,153

 

 

 

 

 

 

 

 

Income per share:

 

 

 

 

 

 

 

    Basic

$0.08

 

$0.16

 

$0.12

 

$0.27

    Diluted

$0.08

 

$0.16

 

$0.12

 

$0.27

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

  28,809,707 

 

  29,830,082 

 

28,834,117 

 

29,986,642 

Diluted

  28,828,288 

 

  29,837,205 

 

28,854,858 

 

29,996,432 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 




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RENAISSANCE LEARNING®, INC.

CONSOLIDATED BALANCE SHEETS

(dollar amounts in thousands)

(unaudited)

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2007

 

2006

 

 

 

 

 

ASSETS:

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$8,005

 

$5,953

Investment securities

 

14,536

 

22,525

Accounts receivable, net

 

14,404

 

10,528

Inventories

 

5,268

 

4,108

Prepaid expenses

 

1,638

 

1,895

Income taxes receivable

 

2,231

 

4,104

Deferred tax asset

 

3,599

 

3,596

Other current assets

 

288

 

97

   Total current assets

 

49,969

 

52,806

 

 

 

 

 

Investment securities

 

10,303

 

1,625

Property, plant and equipment, net

 

11,455

 

11,811

Goodwill

 

47,022

 

46,973

Other noncurrent assets

 

6,665

 

7,308

 

 

 

 

 

    Total assets

 

$125,414

 

$120,523

 

 

 

 

 


LIABILITIES AND SHAREHOLDERS’ EQUITY:

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$1,969

 

$2,782

Deferred revenue

 

27,751

 

23,751

Payroll and employee benefits

 

5,062

 

4,750

Other current liabilities

 

3,457

 

3,429

   Total current liabilities

 

38,239

 

34,712

Deferred revenue

 

1,895

 

885

Deferred compensation and other

 

 

 

 

   employee benefits

 

1,822

 

1,665

Deferred tax liability

 

-

 

878

Income taxes payable

 

4,193

 

2,812

Other non-current liabilities

 

207

 

-

   Total liabilities

 

46,356

 

40,952

 

 

 

 

 

   Total shareholders' equity

 

79,058

 

79,571

 

 

 

 

 

   Total liabilities and shareholders' equity

 

$125,414

 

$120,523