EX-99.1 2 exh991.htm EARNINGS PRESS RELEASE


Exhibit 99.1


[exh991001.jpg]

NEWS RELEASE

For release at 3:00 p.m. CDST, 4/18/06

Contact:  Julie Blystone

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 First Quarter, 2006 Results


WISCONSIN RAPIDS, Wis., — April 18, 2006 — Renaissance Learning®, Inc., (Nasdaq: RLRN), a leading provider of computerized assessment and progress monitoring tools for pre-K—12 schools and districts, today announced financial results for the quarter ended March 31, 2006.  Revenues for the first quarter of 2006 were $31.1 million, an increase of 12.9% from first quarter 2005 revenues of $27.6 million. Net income, which includes a pre-tax restructuring charge of $1.9 million or $.04 cents per share, was $3.5 million compared to net income of $6.5 million for the first quarter of 2005, a decrease of 46.2%.  Earnings per share for the quarter were $0.12, compared to $0.21 per share earned in the prior year. Excluding AlphaSmart, the Company’s revenues declined by 4.8% compared to the prior year.  AlphaSmart revenues declined by 30% compared to its first quarter of 2005 results, which were prior to its acquisition by Renaissance Learning.   


“It wasn’t a good quarter and our performance hasn’t been great for several years,” commented Terrance D. Paul, Chief Executive Officer. “We have great products, good margins, outstanding employees and are fundamentally sound but our product line has become too complicated and we are not executing as well as we need to in several key areas. We are, therefore, phasing out several products which take inordinate resources and do not generate profit to focus on those products with the most opportunity. We are making other changes as well that are intended to put us on a high growth path,” added Paul. “Although the next several quarters will be challenging, I believe that by refocusing on our core strengths, we will start to see the type of growth that both we and our shareholders expect.”


Renaissance Learning added about 400 new customer schools in the U.S. and Canada during the quarter, bringing total North American schools that are actively using the Company products to more than 70,000.  Of these, more than 57,000 are using the Company’s reading products and more than 24,000 are using the company’s math products.


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page 2 of 4

RLI Q3 Earnings


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 866-425-6193 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 April 18, 2006 at 8:00 p.m. through April 25, 2006 at 11:59 p.m. CDST. The replay dial-in is 877-519-4471.  The conference ID number to access the replay is 7144008.


Renaissance Learning, Inc.


Renaissance Learning, Inc. is a leading provider of computerized assessment and progress monitoring tools for pre-K-12 schools and districts.  Renaissance Learning products give students and teachers continuous feedback to inform instruction and help teachers and administrators motivate students, dramatically accelerate learning, and improve test scores. 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 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 2005 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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page 3 of 4

RLI Q1 Earnings


RENAISSANCE LEARNING®, INC.

CONSOLIDATED STATEMENTS OF INCOME

(dollar amounts in thousands, except per share amounts)

(unaudited)

  

Three Months

  

Ended March 31,

  

2006

2005

    

Net sales:

   

  Products

 

$25,323

$21,126

  Services

 

5,794

6,431

     Total net sales

 

31,117

27,557

    

Cost of sales:

   

  Products

 

4,328

1,189

  Services

 

2,806

2,760

     Total cost of sales

 

7,134

3,949

    

Gross profit

 

23,983

23,608

    

Operating expenses:

   

  Product development

 

4,182

3,618

  Selling and marketing

 

9,356

8,045

  General and administrative

 

5,205

3,069

  

  

 

     Total operating expenses

 

18,743

14,732

    

Operating income

 

5,240

8,876

    

Other income, net

 

282

456

    

Income  - continuing operations before income taxes

 

5,522

9,332

    

Income taxes – continuing operations

 

2,043

3,453

    

Income – continuing operations

 

3,479

5,879

    

Income on discontinued operations,

Net of tax benefit of  $1,417 for the three months ended

March 31, 2005

 

-

584

    

Net income

 

$3,479

$6,463

    

Earnings per share:

   

Basic:

   

  Continuing operations

 

$0.12

$0.19

  Discontinued operations

 

0.00

0.02

  Net income

 

$0.12

$0.21

Diluted:

   

  Continuing operations

 

$0.12

$0.19

  Discontinued operations

 

0.00

0.02

  Net income

 

$0.12

$0.21

    

Weighted average shares outstanding:

   

Basic

 

30,144,940

30,816,536

Diluted

 

30,165,995

30,858,293




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page 4 of 4

RLI Q1 Earnings

                                          

       

                                       

RENAISSANCE LEARNING®, INC.

CONSOLIDATED BALANCE SHEETS

(dollar amounts in thousands)

(unaudited)

     
  

March 31,

 

December 31,

  

2006

 

2005

     

ASSETS:

    

Current assets:

    

Cash and cash equivalents

 

$5,900

 

$7,083

Investment securities

 

20,664

 

23,363

Accounts receivable, net

 

11,759

 

11,393

Inventories

 

3,442

 

4,138

Prepaid expenses

 

1,786

 

1,722

Deferred tax asset

 

3,988

 

3,693

Other current assets

 

270

 

390

   Total current assets

 

47,809

 

51,782

     

Investment securities

 

2,814

 

4,132

Property, plant and equipment, net

 

11,432

 

11,475

Deferred tax asset

 

242

 

738

Goodwill

 

46,101

 

45,906

Other Receivables

 

5,863

 

5,909

Other noncurrent assets

 

8,238

 

8,440

     

    Total assets

 

$122,499

 

$128,382

     


LIABILITIES AND SHAREHOLDERS’ EQUITY:

    

Current liabilities:

    

Accounts payable

 

$3,544

 

$3,280

Deferred revenue

 

15,753

 

18,255

Payroll and employee benefits

 

4,073

 

4,156

Income taxes payable

 

1,120

 

313

Other current liabilities

 

3,771

 

4,239

   Total current liabilities

 

28,261

 

30,243

     

Deferred revenue

 

543

 

670

Deferred compensation and other

 employee benefits

 

2,219

 

1,603

   Total liabilities

 

31,023

 

32,516

     

   Total shareholders' equity

 

91,476

 

95,866

     

   Total liabilities and shareholders' equity

 

$122,499

 

$128,382


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