EX-99.1 2 exh991.htm PRESS RELEASE

Exhibit 99.1


[exh991001.jpg]

NEWS RELEASE

For Immediate Release

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 Fourth Quarter Results


WISCONSIN RAPIDS, Wis., — January 25, 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 and year ended December 31, 2005.  Revenues for the fourth quarter of 2005 were $29.0 million, an increase of 14.8% from fourth quarter 2004 revenues of $25.3 million.  Net income, was $6.0 million compared to net income of $5.2 million for the fourth quarter of 2004, an increase of 15.8%.  Earnings per share for the quarter were $0.20, compared to $0.17 per share earned in the prior year. The current quarter results included a pre-tax gain of $1.8 million on the sale of an office building and a decrease in income tax expense of approximately $0.8 million primarily from the favorable resolution of certain state and federal tax positions. Also last year fourth quarter results do not include the revenue and earnings from Alpha Smart, which was merged with Renaissance Learning in June.

Revenues for the twelve-month period ended December 31, 2005 were $116.3 million, up 4.1% from the 2004 revenues of $111.7 million.  Net income for 2005 was $24.8 million, or $.80 per share, compared to net income of $22.7 million, or $.73 per share for 2004.

“Our revenues for our core business, pre-AlphaSmart, while still down slightly for the quarter, continued to show improving trends for the fifth quarter in a row,” commented John R. Hickey, president and chief executive officer of Renaissance Learning, Inc.  “Although AlphaSmart product sales were weaker in the quarter compared to last year, our investment in R & D continues and we remain confident about being able to generate revenue and profit growth from the combined Renaissance Learning and AlphaSmart product line.”

“This quarter is exceptional in that we began shipping two new products, ReadNow with Power Up, our new middle school reading intervention program and the Renaissance Classroom Response System,” said Hickey,  “and there is high interest in both products.”

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page 2 of 4

RLI Q4 Earnings


“With regard to Read Now with PowerUp! it is evident that there is a strong need for an affordable, research-based reading intervention solution that targets struggling readers in grades 5-9,” said Hickey. “This solution provides educators a complete package of progress monitoring technology, reading skills, instructional materials and engaging fiction and nonfiction paperback books to help students needing remediation.”

The Classroom Response System (CRS) incorporates leading radio frequency (RF) technology and easy-to-use interactive software with a remote wireless handheld devise.

“The Renaissance Classroom Response System has resulted in substantial interest from educators, higher than any we have seen in recent years,” said Hickey. “Grading student assignments, and creating tests and quizzes is very time consuming work for teachers, but now with CRS teachers can create test questions in a fraction of the time it takes using traditional methods.”

Excluding AlphaSmart products, Renaissance Learning added about 300 new customer schools in the U.S. and Canada during the quarter, bringing total North American schools that have adopted Company products to more than 69,000.  Of these, more than 65,000 have adopted the Company’s reading products and more than 27,000 have adopted the Company’s math products.

The Company will hold a conference call at 4:00 p.m. CST 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. CST.  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 January 25, 2006 at 8:00 p.m. through February 1, 2006 at 11:59 p.m.  The replay dial-in is 877-519-4471.  The conference ID number to access the replay is 6915840.

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 Australia, 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, management’s revenue expectations and growth prospects for future periods, the introduction and the acceptance of new products and services.  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 2004 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 Q4 Earnings

RENAISSANCE LEARNING®, INC.

CONSOLIDATED STATEMENTS OF INCOME

(dollar amounts in thousands, except per share amounts)

(unaudited)

  

Three Months

 

Twelve Months

  

Ended December 31,

 

Ended December 31,

  

2005

2004

 

2005

2004

       

Net sales:

      

  Products

 

$23,920

$20,431

 

$94,296

$91,482

  Services

 

5,070

4,827

 

21,987

20,242

     Total net sales

 

28,990

25,258

 

116,283

111,724

       

Cost of sales:

      

  Products

 

4,105

1,149

 

12,917

6,167

  Services

 

1,997

2,071

 

8,669

9,532

     Total cost of sales

 

6,102

3,220

 

21,586

15,699

       

Gross profit

 

22,888

22,038

 

94,697

96,025

       

Operating expenses:

      

  Product development

 

4,463

3,539

 

17,046

14,536

  Selling and marketing

 

8,347

7,118

 

30,778

30,551

  General and administrative

 

3,619

2,816

 

12,989

12,005

  

  

    

     Total operating expenses

 

16,429

13,473

 

60,813

57,092

       

Operating income

 

6,459

8,565

 

33,884

38,933

       

Other income (expense), net

 

2,133

454

 

3,494

1,640

       

Income  - continuing operations before income taxes

 

8,592

9,019

 

37,378

40,573

       

Income taxes – continuing operations

 

2,560

3,337

 

13,211

14,993

       

Income – continuing operations

 

6,032

5,682

 

24,167

25,580

       

Income (loss) on discontinued operations,

Net of tax benefit of $0 in 2005 and $279 for the three months ended December 31, 2005 and 2004, respectively; and $1,417 and $1,690 for the twelve months ended December 31, 2005 and 2004, respectively

 

-

(475)

 

584

(2,878)

       

Net income

 

$6,032

$5,207

 

$24,751

$22,702

     

 

   

Earnings per share:

      

Basic:

      

  Continuing Operations

 

$0.20

$0.18

 

$0.78

$0.82

  Discontinued Operations

 

0.00

(0.01)

 

0.02

(0.09)

  Net income

 

$0.20

$0.17

 

$0.80

$0.73

Diluted:

      

  Continuing Operations

 

$0.20

$0.18

 

$0.78

$0.82

  Discontinued Operations

 

0.00

(0.01)

 

0.02

(0.09)

  Net income

 

$0.20

$0.17

 

$0.80

$0.73

       

Weighted average shares outstanding:

      

Basic

 

30,826,539

31,018,228

 

30,966,501

31,046,200

Diluted

 

30,879,523

31,109,686

 

31,029,672

31,199,811

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CONSOLIDATED BALANCE SHEETS

(dollar amounts in thousands)

(unaudited)

     
  

December 31,

 

December 31,

  

2005

 

2004

     

ASSETS:

    

Current assets:

    

Cash and cash equivalents

 

7,083

 

$27,460

Investment securities

 

23,363

 

25,103

Accounts receivable, net

 

11,393

 

8,441

Inventories

 

4,138

 

2,364

Prepaid expenses

 

1,722

 

1,194

Deferred tax asset

 

3,693

 

3,800

Assets of discontinued operations

 

-

 

1,149

Other current assets

 

390

 

453

   Total current assets

 

51,782

 

69,964

     

Investment securities

 

4,132

 

21,003

Property, plant and equipment, net

 

11,475

 

18,552

Deferred  tax asset

 

738

 

1,620

Goodwill

 

45,906

 

2,757

Other assets

 

14,349

 

828

     

    Total assets

 

$128,382

 

$114,724

     


LIABILITIES AND SHAREHOLDERS’ EQUITY:

    

Current liabilities:

    

Accounts payable

 

3,280

 

$1,226

Deferred revenue

 

18,255

 

16,484

Payroll and employee benefits

 

4,156

 

3,983

Income taxes payable

 

313

 

925

Liabilities of discontinued operations

 

-

 

1,650

Other current liabilities

 

4,214

 

3,881

   Total current liabilities

 

30,218

 

28,149

Deferred revenue

 

670

 

620

Deferred compensation

 

1,603

 

1,354

Other noncurrent liabilities

 

25

 

-

   Total liabilities

 

32,516

 

30,123

     

   Minority interest

 

-

 

184

     

   Total shareholders' equity

 

95,866

 

84,417

     

   Total liabilities and shareholders' equity

 

$128,382

 

$114,724


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