Cambium Learning Group, Inc. Announces 2010 Year End Earnings

Mar 03, 2011, 14:05 ET from Cambium Learning Group, Inc.

DALLAS, March 3, 2011 /PRNewswire/ -- Cambium Learning Group, Inc. (Nasdaq: ABCD, the "Company"), a leading provider of research-based education solutions for students in Pre-K through 12th grade, including intervention curricula, educational technologies and services, today announced financial results for the year ended December 31, 2010.  The Company will hold a conference call today, at 5:00 p.m. Eastern Time.

(Logo: http://photos.prnewswire.com/prnh/20100129/CLGROUPLOGO)

2010 Financial Summary

  • Adjusted net revenues of $194 million for the year ended December 31, 2010 were down 3% versus $201 million in 2009.  Adjusted net revenues by business unit and change from prior year were as follows:
    • Voyager: $122.7 million, down 6%
    • Cambium Learning Technologies: $46.8 million, up 4%
    • Sopris: $24.7 million, down 2%
  • Fourth quarter adjusted net revenues were strong, increasing 13% in 2010 compared to 2009, which narrowed the decline experienced by the Company in the first three quarters.  The growth in the fourth quarter was fueled in part by a few large ARRA stimulus funded transactions.
  • Year-to-date adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $55 million versus $51 million in 2009, an increase of 8%.
  • The Company achieved merger related synergy savings and variable cost savings relative to the prior year that led to increased earnings even though revenue declined.  
  • Ron Klausner, Chief Executive Officer, noted, "While 2010 was a tumultuous year for state and local funding for education, I was pleased with our overall performance, ability to complete the integration, achieve adjusted EBITDA growth and make investments for future growth."  

Business Summary

  • The Company completed the integration resulting from the merger of Voyager Learning Company in December 2009.  Integration was completed on budget with onetime costs of $7 million and the planned $10 million cost synergies were realized.
  • The Company increased spending by approximately $4 million in the Sopris and Cambium Learning Technologies business units, making an investment in planned growth for these units.
  • The Company invested over $20 million in product development in 2010, including substantial upgrades to VPORT®, its student data management system, the launch of the DIBELS® Next early reading assessment tool and the development of the new REFLEX product for teaching math fluency.
  • In February 2011, the Company closed on a bond offering for $175 million with a maturity of 2017 carrying an interest rate of 9.75%.  The majority of the proceeds were used to pay off the existing debt and pay related fees, with the remaining net proceeds to be used for general corporate purposes.  The bond offering and related asset backed revolving loan aligns the Company's capital structure with the long term business objectives.  

Non-GAAP Financial Measures

EBITDA, adjusted EBITDA and adjusted net revenues are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The Company believes that adjusted EBITDA and adjusted net revenues provide useful information to investors because they reflect the underlying performance of the ongoing operations of the Company, including the late 2009 acquisition of Voyager Learning Company, and provide investors with a view of the combined Company's operations from management's perspective. Adjusted EBITDA and adjusted net revenues exclude items that do not reflect the underlying performance of the combined Company by removing significant one-time or certain non-cash items. The Company uses these measures to monitor and evaluate the operating performance of the Company and as the basis to set and measure progress towards performance targets, which directly affect compensation for employees and executives. The Company generally uses these non-GAAP measures as measures of operating performance and not as measures of the Company's liquidity.

Investor Conference Call

The Company will provide additional commentary and more detailed results on today's conference call. To listen to the Company's conference call, please dial (800) 860-2442 and reference "Cambium Learning" at 5:00 p.m. Eastern Time on Thursday, March 3, 2011. The call will be recorded and archived until Thursday, April 7, 2011, and can be replayed by calling

(877) 344-7529 and entering ID# 448276. The conference call will also be Webcast and available on the Company's Website at www.cambiumlearninggroup.com.

About Cambium Learning Group, Inc.

Cambium Learning Group, Inc. (Nasdaq: ABCD) is based in Dallas, Texas, and operates three business units: Voyager, a comprehensive intervention business; Sopris, a supplemental solutions business; and Cambium Learning Technologies, which includes ExploreLearning, IntelliTools, Kurzweil and Learning A-Z. Through its core divisions, Cambium Learning Group, Inc. provides research-based education solutions for students in Pre-K through 12th grade, including intervention curricula, educational technologies and services primarily focused on serving the needs of the nation's most challenged learners and enabling students to realize their full potential. The company's website is www.cambiumlearninggroup.com.

Forward Looking Statements

Some of the statements contained herein constitute forward-looking statements.  These statements relate to future events, including the future financial performance of Cambium Learning Group, Inc., and involve known and unknown risks, uncertainties and other factors that may cause the markets, actual results, levels of activity, performance or achievements of Cambium Learning Group, Inc. to be materially different from any actual future results, levels of activity, performance or achievements.  These risks and other factors you should consider include, but are not limited to, the ability to successfully attract and retain a broad customer base for current and future products, changes in customer demands or industry standards, success of ongoing product development, maintaining acceptable margins, the ability to control costs, K-12 enrollment and demographic trends, the level of educational and education technology funding, the impact of federal, state and local regulatory requirements on the business of the company, the loss of key personnel, the impact of competition, the uncertainty of general economic conditions and financial market performance, and those other risks and uncertainties listed under the heading "RISK FACTORS" in Cambium Learning Group, Inc.'s Form 10-K. 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," or "priorities," or the negative of such terms, or other comparable terminology. These statements are only predictions.  Actual events or results may differ materially. Cambium Learning Group, Inc. does not assume or undertake any obligation to update the information contained in this press release, and expressly disclaims any obligation to do so, whether as a result of new information, future events or otherwise.

Cambium Learning Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

For the Years Ended December 31,

2010

2009

2008

Net revenues:

Product revenues

$ 160,778

$  90,385

$   89,207

Service revenues

20,482

10,663

10,524

Total net revenues

181,260

101,048

99,731

Cost of revenues:

Cost of product revenues

41,583

19,591

20,246

Cost of service revenues

18,308

7,257

7,463

Amortization expense

28,511

17,527

15,966

Total cost of revenues

88,402

44,375

43,675

Research and development expense

10,558

5,611

6,416

Sales and marketing expense

45,987

23,368

24,600

General and administrative expense

23,857

30,519

16,156

Shipping and handling costs

3,570

1,512

2,348

Depreciation and amortization expense

9,154

9,723

11,453

Goodwill impairment

-

9,105

75,966

Embezzlement and related expense (recoveries)

(353)

129

7,254

Total costs and expenses

181,175

124,342

187,868

Income (loss) before interest, other income (expense)

and income taxes

85

(23,294)

(88,137)

Net interest income (expense):

Interest income

19

10

86

Interest expense

(17,311)

(19,487)

(18,520)

Net interest income (expense)

(17,292)

(19,477)

(18,434)

Gain from settlement with previous stockholders

-

-

30,202

Loss on extinguishment of debt

-

-

(5,632)

Other income (expense), net

674

(698)

(981)

Loss before income taxes

(16,533)

(43,469)

(82,982)

Income tax benefit

583

7,704

13,422

Net loss

$ (15,950)

$(35,765)

$ (69,560)

Net loss per common share:

Basic net loss per common share

$     (0.36)

$     (1.63)

$     (3.39)

Diluted net loss per common share

$     (0.36)

$     (1.63)

$     (3.39)

Average number of common shares and equivalents outstanding:

Basic

44,322

21,994

20,493

Diluted

44,322

21,994

20,493

Cambium Learning Group, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands, except per share data)

As of December 31,

2010

2009

ASSETS

(Unaudited)

Current assets:

Cash and cash equivalents

$   11,831

$   13,345

Accounts receivable, net

31,627

19,127

Inventory

22,015

19,812

Deferred tax assets

3,703

6,267

Restricted assets, current

3,064

9,755

Other current assets

3,937

6,010

Total current assets

76,177

74,316

Property, equipment and software at cost

32,944

24,951

Accumulated depreciation and amortization

(7,838)

(4,294)

Net property, equipment and software

25,106

20,657

Goodwill

151,915

151,915

Acquired curriculum and technology intangibles, net

33,063

44,695

Acquired publishing rights, net

38,707

52,312

Other intangible assets, net

22,132

28,133

Pre-publication costs, net

7,834

5,464

Restricted assets, less current portion

12,641

14,930

Other assets

15,487

1,419

Total assets

$ 383,062

$ 393,841

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Notes payable - line of credit

$             -

$     5,000

Current portion of long-term debt

1,280

1,280

Current portion of capital lease obligations

378

443

Accounts payable

6,465

2,308

Contingent value rights, current

1,623

3,950

Accrued expenses

22,888

23,920

Deferred revenue, current

34,140

21,465

Total current liabilities

66,774

58,366

Long-term liabilities:

Long-term debt, less current portion

150,850

150,487

Capital lease obligations, less current portion

12,317

12,695

Deferred revenue, less current portion

3,416

2,716

Contingent value rights, less current portion

5,746

5,649

Other liabilities

19,947

24,156

Total long-term liabilities

192,276

195,703

Stockholders' equity:

Preferred stock ($.001 par value, 15,000 shares authorized,

zero shares issued and outstanding at December 31, 2010 and 2009)

-

-

Common stock ($.001 par value, 150,000 shares authorized,

43,869 and 43,859 shares issued and outstanding at

December 31, 2010 and 2009)

44

44

Capital surplus

259,887

258,789

Accumulated deficit

(135,218)

(119,268)

Other comprehensive income (loss):

Pension and postretirement plans

(702)

206

Net unrealized gain on securities

1

1

Accumulated other comprehensive income (loss)

(701)

207

Total stockholders' equity

124,012

139,772

Total liabilities and stockholders' equity

$ 383,062

$ 393,841

Reconciliation Between Net Revenues to Adjusted Net Revenues and Between Net Income (Loss)

and Adjusted EBITDA for the Three Months Ended December 31, 2010

VLCY

Pre-Merger

Results

Pro Forma

Pro Forma

Cambium

Cambium

(69 days)

Adjustments

Combined

Learning Group

Q4 2009

Q4 2010

                                               (In thousands)

                                             (Unaudited)

Total net revenues

$ 23,306

$     19,144

$              566

$  43,016

$  48,530

Non-recurring and non-operational costs included in

net revenues but excluded from adjusted net revenues:

Adjustments related to purchase accounting

1,392

-

(566)

826

825

Adjusted net revenues

$ 24,698

$     19,144

$                    -

$  43,842

$ 49,355

Net income (loss)

$(19,455)

$      (1,945)

$         14,248

$    (7,152)

$ 1,721

Reconciling items between net income (loss) and EBITDA:

Depreciation and amortization

7,640

3,696

(1,443)

9,893

9,560

Net interest expense

4,943

17

18

4,978

3,832

Other (income) expense

339

(2,325)

-

(1,986)

(498)

Income tax

(2,661)

(109)

2,770

-

(694)

Income (loss) from operations before interest and other income

(expense), income taxes, and depreciation and

amortization (EBITDA)

(9,194)

(666)

15,593

5,733

$  13,921

Non-recurring and non-operational costs included in

EBITDA but excluded from Adjusted EBITDA:

Transaction costs

11,704

3,791

(15,495)

-

-

Integration and merger-related costs

1,531

50

92

1,673

457

Legacy VLCY corporate

57

105

-

162

133

Stock-based compensation expense

37

(41)

111

107

307

Embezzlement and related expenses (recoveries)

324

-

-

324

(404)

Adjustments related to purchase accounting

1,136

-

(301)

835

730

Adjustments to CVR liability

-

-

-

-

(1,224)

Adjusted EBITDA

$   5,595

$       3,239

$                 -

$     8,834

$  13,920

Reconciliation Between Net Revenues to Adjusted Net Revenues and Between Net Income (Loss) and Adjusted EBITDA

for the Years Ended December 31, 2009 and 2010

VLCY

Pre-Merger

Results

Pro Forma

Pro Forma

Cambium

Cambium

(342 days)

Adjustments

Combined

Learning Group

2009

2010

                                    (In thousands)

                                    (Unaudited)

Total net revenues

$ 101,048

$     98,728

$        (11,565)

$  188,211

$       181,260

Non-recurring and non-operational costs included in

net revenues but excluded from adjusted net revenues:

Adjustments related to purchase accounting

1,392

-

11,565

12,957

12,937

Adjusted net revenues

$ 102,440

$     98,728

$                 -

$  201,168

$          194,197

Net loss

$ (35,765)

$    (34,375)

$           8,870

$   (61,270)

$       (15,950)

Reconciling items between net loss and EBITDA:

Depreciation and amortization

27,250

18,301

(5,772)

39,779

37,665

Net interest expense

19,477

558

71

20,106

17,292

Other (income) expense

698

(3,279)

-

(2,581)

(674)

Income tax

(7,704)

(190)

7,894

-

(583)

Income (loss) from operations before interest and other income

(expense), income taxes, and depreciation and

amortization (EBITDA)

3,956

(18,985)

11,063

(3,966)

37,750

Non-recurring and non-operational costs included in

EBITDA but excluded from Adjusted EBITDA:

Transaction costs

13,570

9,937

(23,507)

-

-

Integration and merger-related costs

2,133

120

1,864

4,117

5,963

Legacy VLCY corporate

57

2,247

-

2,304

968

Stock-based compensation expense

37

179

552

768

1,085

Embezzlement and related expenses (recoveries)

129

-

-

129

(353)

Adjustments related to purchase accounting

1,136

-

10,028

11,164

10,748

Goodwill impairment

9,105

27,175

-

36,280

-

Adjustments to CVR liability

-

-

-

-

(1,124)

Adjusted EBITDA

$   30,123

$     20,673

$                 -

$    50,796

$         55,037

Media and Investor Contact:

Shannan Overbeck

Cambium Learning Group, Inc.

214.932.9476

shannan.overbeck@cambiumlearning.com

SOURCE Cambium Learning Group, Inc.



RELATED LINKS

http://www.cambiumlearninggroup.com