ProQuest Provides Business Update

    ANN ARBOR, Mich., March 7 /PRNewswire-FirstCall/ -- ProQuest Company
 (NYSE:   PQE, "the company"), a publisher of education materials and provider
 of education solutions in the K-12 market, is today providing a business
 update on its ProQuest Education business and corporate transition.
     Cash Position
     As of March 1, 2007, the company had approximately $149 million in
 cash.
     ProQuest previously reported that it closed on the sale of its ProQuest
 Business Solutions segment ("PQBS") to Snap-on Incorporated (NYSE:  SNA) on
 November 28, 2006 and the sale of its ProQuest Information and Learning
 segment ("PQIL") to Cambridge Information Group on February 9, 2007, and
 used a portion of the proceeds to repay all of its then-outstanding senior
 notes and bank revolver debt totaling approximately $535 million. In
 addition, ProQuest used a portion of the proceeds from the sales to, among
 other things, pay certain pension obligations, severance costs, investment
 banking fees, legal fees and accounting fees, and fund working capital
 obligations related to the transactions.
     Taking into account the capital gain on the sale of PQBS and the
 utilization of existing capital loss carry forwards, basis in the assets
 sold, and available tax credits, the company anticipates it will pay
 federal and state income taxes of approximately $60 to 65 million in March
 2007. The sale of PQIL will generate in 2007 a significant capital loss for
 tax purposes which ProQuest intends to carry back against its 2006 taxable
 gain from the sale of PQBS. Taking into account this capital loss and
 remaining available tax credits, it is anticipated that the company will
 receive income tax refunds of $40 to $45 million by the first quarter of
 2008.
     The company anticipates it will have a remaining cash balance of $95 to
 $100 million in early 2008, after projected tax refunds associated with the
 capital loss on the sale of PQIL, tax payments, severance payments,
 corporate expenses, transition costs, restatement costs, operating cash
 flow from its Education businesses, interest income, and working capital
 adjustments to the purchase price for each of the sales of PQBS and PQIL.
     Certain Other Liabilities
     The company previously disclosed liabilities associated with legacy
 retirement plans and long term leases on two buildings in Ann Arbor,
 Michigan. The company anticipates the buildings will be surplus to its
 needs after the company completes its restatement, files its 2006 10-Qs and
 10-K, and transitions its remaining corporate functions to Dallas. The
 company currently estimates the net present value of these legacy
 retirement plans and long-term building lease obligations to be
 approximately $40 million. The company is not obligated to settle these
 legacy obligations in 2007, but should it decide to settle and pay some or
 all of them, any amounts paid for that purpose would reduce the $95 to $100
 million in cash the company projects it will have on hand in early 2008
 after receipt of its tax refund associated with the capital loss on the
 sale of PQIL.
     Litigation and SEC Investigation
     The company has been named in a class action lawsuit originally filed
 in February 2006 by certain shareholders as a result of the accounting
 irregularities that led to its restatement. An amended complaint was filed
 on January 24, 2007 and a motion to dismiss is to be filed on March 15,
 2007. The company and certain current and former directors and officers
 have also been named as defendants in derivative litigation and an
 ERISA-based lawsuit. A shareholder has also brought an action against the
 company in Delaware, requesting access to certain books and records.
     In May 2006, the SEC informed the company that it had opened a formal
 investigation into the accounting irregularities announced by the company
 in April. The investigation is ongoing and the company continues to
 cooperate with the SEC in its investigation.
     Corporate Transition
     As a result of selling two of its three operating segments in 2006 and
 2007, ProQuest intends to transition all of its corporate functions to its
 ProQuest Education ("PQED") offices in Dallas, Texas by year end 2007.
 During the course of 2007, the company intends to maintain a reduced staff
 at the company's Ann Arbor office to fulfill the company's obligations
 under transition services agreements and to complete the transfer of the
 remaining corporate functions to Dallas. The company intends to maintain
 sufficient accounting and finance staff in its Ann Arbor office to complete
 the restatement of previously filed financial statements and file the
 company's 2006 10-Qs and 10-K before transitioning these functions to
 Dallas. The company anticipates these efforts will continue at least
 through year end 2007.
     After the transfer of all corporate functions to Dallas is complete and
 excluding the effects of the legacy pension, building and severance
 obligations, the company expects ProQuest Education to incur ongoing
 incremental expense of $4 to $5 million per year which is not currently
 reflected in the results of ProQuest Education. These costs are associated
 with assuming all corporate functions required by a stand-alone publicly
 traded company including the costs of an external auditor, Sarbanes-Oxley
 compliance, tax compliance, listing fees, franchise fees, SEC
 filing-related expenses, and board costs including corporate general
 liability and D&O insurance which are currently not reflected in PQED
 results.
     Unaudited Full Year 2005 Financial Results for ProQuest Education and
 Corporate
     The following financial results for ProQuest Education and corporate
 are ProQuest Company figures and have not been reviewed or audited by the
 company's independent registered public accounting firm. All of the
 financial results contained in this section are unaudited, preliminary and
 are subject to change, including potential impairment charges, prior to the
 filing of the company's 2005 10-K.
     ProQuest Education
     ProQuest Education comprises three product lines; Voyager Expanded
 Learning ("Voyager") which was acquired on January 31, 2005,
 ExploreLearning which was acquired on February 25, 2005 and LearningPage
 which was acquired in 2004. For the year ended December 31, 2005, including
 11 months of Voyager, 10 months of ExploreLearning and 12 months of
 LearningPage, ProQuest Education is expected to report revenue of $91
 million.
     For the year ended December 31, 2005, ProQuest Education is expected to
 report EBIT of $7.4 million and EBITDA of $27.7 million.
     EBIT for 2005 is lower than the company previously projected as a
 result of a change in the amortization of curriculum development costs
 acquired with Voyager. As a result of its accounting review, the company
 intends to amortize certain portions of the curriculum development costs
 acquired with Voyager using the sum-of-the-years method rather than
 straight-line over 10 years. The effect of this change is to increase
 amortization of these curriculum development costs in early years and
 decrease amortization costs in later years as compared to the straight-line
 method.
     Capital expenditures for the Education segment were approximately $9
 million in 2005. Capital expenditures include both the purchase of fixed
 assets and the capitalization of certain curriculum expenses.
     On a proforma basis, as if ProQuest had acquired Voyager Expanded
 Learning on January 2, 2005, the first day of ProQuest Company's 2005
 fiscal year, the ProQuest Education segment generated revenue of $101
 million, EBIT of $10.3 million, and EBITDA of $32.3 million. A
 reconciliation of preliminary and unaudited GAAP revenue, EBIT and EBITDA
 to proforma results as if Voyager Expanded Learning was acquired on January
 2, 2005 is attached.
     Corporate Expense
     ProQuest corporate expense before interest and taxes for fiscal year
 2005 is expected to be $15.7 million.
     Unaudited Full Year 2006 Financial Results for ProQuest Education and
 Corporate
     The following financial results for ProQuest Education are ProQuest
 Company figures and have not been reviewed or audited by the company's
 independent registered public accounting firm. All of the financial results
 contained in this section are unaudited, preliminary and are subject to
 change, including the effect of potential impairment charges during the
 restatement period, prior to the filing of the company's 2005 and 2006
 10-Ks.
     ProQuest Education
     ProQuest Education preliminary results were $117.3 million in revenue,
 $12 million in EBIT, and $34.5 million in EBITDA. Capital expenditures were
 $5.8 million.
     EBIT for 2006 is lower than the company previously projected as a
 result of a change in the amortization of curriculum development costs
 acquired with Voyager.
     Corporate
     Preliminary corporate expense before interest and taxes was $40.8
 million for 2006. Included in this amount is option and restricted stock
 expense of approximately $4.6 million in accordance with the adoption of
 SFAS 123R, Share-Based Payment, as well as restatement costs of $19.4
 million associated with accounting, legal, and other costs for the
 restatement.
     2007 Guidance for ProQuest Education and Corporate
     ProQuest is providing 2007 guidance for ProQuest Education and
 Corporate as follows:
     ProQuest Education
     The company expects 2007 revenue for the ProQuest Education segment of
 $116 to $124 million, EBIT of $10 to $13 million, and EBITDA of $32 to $35
 million. Capital expenditures are expected to total $10 to $12 million.
     This guidance for ProQuest Education does not include the ongoing
 incremental cost of assuming corporate functions as a stand-alone publicly
 traded company, which the company expects to be $4 to $5 million starting
 in 2008.
     Corporate
     For the full year 2007, the company expects corporate expense before
 interest and taxes to be between $30 and $32 million, including restatement
 costs of approximately $12 million, equity compensation expense of
 approximately $1.5 million in accordance with SFAS 123R, Share-Based
 Payment, severance costs of $4 million, pension and retirement plan related
 costs of $2 million, and building costs associated with its share of Ann
 Arbor real estate of $2 million. Interest income is anticipated to be
 between $3 and $4 million pre-tax.
     Proforma Comparison of 2005 Preliminary Actuals, 2006 Preliminary
 Actuals and 2007 Guidance for ProQuest Education Revenue
     On a proforma basis, presented to exclude certain revenue-related
 effects of purchase accounting for the January 31, 2005 acquisition of
 Voyager and to adjust for a change in business practices regarding customer
 shipping terms implemented in 2006, ProQuest Education generated
 preliminary revenue of $110.3 million in 2005, $113.1 million in 2006 and
 projects revenue of $116 to $124 million in 2007. This represents projected
 revenue growth between 2006 and 2007 of 3% to 10% on a proforma basis.
     The company recorded the acquired assets and liabilities of Voyager at
 fair value in accordance with GAAP purchase accounting when it acquired
 Voyager on January 31, 2005. As a result, certain deferred revenue
 liabilities on the balance sheet as of the acquisition date were marked
 down to fair value. The deferred revenue liability primarily relates to
 sales of recurring training which is recorded in future periods after the
 acquisition at full value when new training is sold. Proforma revenue is
 presented as if the deferred revenue liability had not been reduced to fair
 value for purchase accounting upon the acquisition of Voyager.
     In 2006, Voyager changed business practices to allow it to recognize
 revenue when product is shipped (FOB origin) where appropriate
 documentation exists. Under GAAP, in prior periods, business practices did
 not allow the company to recognize revenue when product was shipped but
 instead it was recognized when product was received by the customer (FOB
 destination). The proforma revenue reported above adjusts revenue as if
 this business practice was in place prior to 2005 and therefore treats
 revenue more consistently for 2005, 2006, and 2007. A reconciliation of
 preliminary and unaudited GAAP revenue to proforma results as if Voyager
 Expanded Learning was acquired on January 2, 2005, as if the reduction of
 deferred revenue liabilities for purchase accounting was not made, and as
 if consistent business practices related to shipping terms were in place is
 attached.
     SEC Filing Timeline and New York Stock Exchange Status
     The company received an extension for continued listing and trading on
 the New York Stock Exchange (NYSE) through April 2, 2007. The NYSE has
 indicated it will move forward with the initiation of suspension procedures
 in the event that ProQuest Company has not filed its Annual Report on Form
 10-K for 2005 by April 2, 2007. While the company believes that it may have
 sufficient time to file its 10-K before April 2, 2007, there is a risk that
 it will not file before the NYSE-imposed deadline and may as a result be
 delisted.
     The company also announced that it will not file its Form 10-K for the
 fiscal year ended December 30, 2006 within the prescribed time period. The
 company intends to file its 2006 10-K at the earliest practicable date.
 Until the company is current with its SEC filings, the company will not be
 in compliance with NYSE listing standards.
     Basis of Presentation
     The unaudited preliminary financial results in this press release are
 presented in accordance with generally accepted accounting principles
 (GAAP), but are subject to change until the company finalizes its
 accounting review and restatement adjustments. Earnings from continuing
 operations before interest and income taxes (EBIT), which excludes
 interest, income taxes and discontinued operations, is a key metric used by
 ProQuest Company to assess the performance of its business segments. EBIT
 provides useful information about how ProQuest Company's management
 assesses the company's ability to fund working capital items and capital
 expenditures and, in prior periods, service and comply with the terms of
 its debt agreements. The company's ability to fund working capital items,
 fund capital expenditures and service debt in the future, however, may be
 affected by other operating or legal requirements.
     About ProQuest Company
     ProQuest Company (NYSE:   PQE) is based in Ann Arbor, Michigan, and is a
 publisher of education materials and provider of education solutions
 serving the K-12 market. Through its Education product lines, which include
 Voyager Expanded Learning, ExploreLearning and LearningPage, the company is
 a leading provider of K-12 curriculum products, in-school core reading
 programs, reading and math intervention programs, and professional
 development programs for school districts throughout the United States.
     Forward-Looking Statements
     Some of the statements contained herein constitute forward-looking
 statements. These statements relate to future events, the results of our
 pending restatement process, or our future financial performance and
 involve known and unknown risks, uncertainties and other factors that may
 cause our or our markets' actual results, levels of activity, performance
 or achievements to be materially different from any future results, levels
 of activity, performance or achievements expressed or implied by such
 forward-looking statements. These risks and other factors you should
 specifically consider include, but are not limited to the company's ability
 to successfully conclude the review and restatement of its financial
 results, the discovery of additional restatement items, litigation, loss of
 key personnel, success of ongoing product development, maintaining
 acceptable margins, ability to control costs, changes in customer demands
 or industry standards, the ability to successfully attract and retain
 customers, the ability to sell additional products to existing customers
 and win new business from new customers, the ability to maintain a broad
 customer base to avoid dependence on any one single customer, K-12
 enrollment and demographic trends, the level of educational and education
 technology funding, the impact of federal, state and local regulatory
 requirements on ProQuest's business, the risk of delisting by the NYSE, the
 impact of competition and the uncertainty of economic conditions in
 general, financial market performance, and other risks listed under "Risk
 Factors" in our regular filings with the Securities and Exchange
 Commission. In some cases, you can identify forward- looking statements by
 terminology such as "may," "should," "expects," "plans," "anticipates,"
 "believes," "estimates," "predicts," "potential," "continue," "projects,"
 "intends," "prospects," "priorities," or the negative of such terms or
 other comparable terminology. These statements are only predictions. Actual
 events or results may differ materially. The company undertakes no
 obligation to update any of these statements.
                         PROQUEST COMPANY AND SUBSIDIARIES
                        RECONCILIATION OF NON-GAAP MEASURES
                                  (In $ Millions)
 
     Reconciliations of non-GAAP measures to preliminary, unaudited GAAP
     measures:
     These results are preliminary and subject to change based on results of
     the ongoing restatement.
 
     EBITDA & EBIT
                               Year Ended December 31, 2005
                                        Education
 
      EBITDA (1, 4)                        $27.7
      Less: Depreciation & amortization    (20.3)
      EBIT (2, 4)                           $7.4
 
 
     EBITDA & EBIT
                               Proforma Basis - Year Ended
                                   December 31, 2005 (3)
                                        Education
 
      EBITDA (1)                           $32.3
      Less: Depreciation & amortization    (22.0)
      EBIT (2)                             $10.3
 
 
     EBITDA & EBIT
                               Year Ended December 30, 2006
                                        Education
 
      EBITDA (1)                           $34.5
      Less: Depreciation & amortization    (22.5)
      EBIT (2)                             $12.0
 
 
     EBITDA & EBIT
                               Year Ended December 29, 2007
                                        Education
 
      EBITDA (1)                          $32.0  -  35.0
      Less: Depreciation & amortization    22.0  -  22.0
      EBIT (2)                            $10.0  -  13.0
 
      (1) EBITDA is earnings before interest, taxes, depreciation, and
          amortization.
      (2) EBIT is earnings before interest and taxes.
      (3) Proforma Basis results are as if ProQuest had acquired Voyager on
          January 2, 2005, the first day of ProQuest's 2005 fiscal year.
      (4) Results include 11 months of Voyager, 10 months of
          ExploreLearning, and 12 months of LearningPage.
 
 
     Unaudited Proforma Results Assuming PQE Had Acquired Voyager on
      January 2, 2005
 
                       PQE 2005 Voyager    January 2005    *PQE  Proforma 2005
 
     Revenue                  $91.0            $10.0            $101.0
     EBIT                      $7.4             $2.9             $10.3
     EBITDA                   $27.7             $4.6             $32.3
 
     *ExploreLearning results for January and February 2005, prior to the
       acquisition of ExploreLearning by PQE, are immaterial.
 
 
     Unaudited Proforma Revenue Presentation ProQuest Education 2005 and 2006
 
                                                      2005           2006
 
     Preliminary GAAP Revenue                        $91.0         $117.3
     Add Voyager January 2005 Revenue                 10.0            -
     Proforma Revenue with 12 months of Voyager     $101.0         $117.3
 
     Remove adjustment for deferred revenue
      liability marked to fair value                   7.0            0.7
     Adjust for change in business practice
      regarding shipping terms                         2.3           (4.9)
     Proforma Revenue *                             $110.3         $113.1
 
     * Includes adjustments for 12 months of Voyager and to eliminate the
       effect of purchase accounting on deferred revenue liabilities and for
       consistent reporting of revenue recognition for F.O.B. origin for all
       periods.
 
     Contacts:
     Jennifer Chelune
     Investor Relations Manager
     (734) 997-4910
     jennifer.chelune@proquest.com
 
 

SOURCE ProQuest Company
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