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Cambium Learning Group, Inc. Announces 2009 Earnings

Posted on: Thursday, 11 March 2010, 08:02 CST

DALLAS, March 11 /PRNewswire-FirstCall/ -- 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, will hold a conference call today at 4:00 p.m. Eastern Time to discuss 2009 financial results. The call will be based on unaudited results through December 31, 2009.

(Logo: http://www.newscom.com/cgi-bin/prnh/20100129/CLGROUPLOGO )

The Company reported sales of $101.0 million for the year ended December 31, 2009, representing an increase of 1.3 percent over sales of $99.7 million for the year ended December 31, 2008. The net loss for the years ended December 31, 2009 and 2008 was $35.8 million and $69.6 million, respectively.

The Company's financial statements include results from the Voyager Learning Company acquisition beginning on the December 8, 2009 merger date. Adjusted Sales including combined results from both companies (but excluding any pro forma effects of the acquisition) were $201.2 million for 2009 and $198.3 million for 2008. Adjusted EBITDA including combined results from both companies (but excluding any pro forma effects of the acquisition) was $50.8 million for 2009 and $34.7 million for 2008.

Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA and Adjusted Sales 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 Sales provide useful information to investors because they reflect the underlying performance of the ongoing operations of the company, including the recent 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 Sales 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 hold a conference call today at 4:00 p.m. Eastern Time. The call will address unaudited financial results through December 31, 2009.

To listen to the Company's upcoming conference call, please dial (866) 333-9117 and reference "Cambium" at 4:00 p.m. Eastern Time on Thursday, March 11, 2010. The call will be recorded and archived until Thursday, March 25, 2010, and can be replayed by calling (877) 344-7529 and entering ID# 438319. The conference call will also be Webcast and available on the Company's website at www.cambiumlearning.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 those realizing their full potential. The company's website is www.cambiumlearning.com.

Media and Investor Contact: Shannan Overbeck Cambium Learning Group, Inc. 214.932.9476 shannan.overbeck@cambiumlearning.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 and the risk that competitors will seek to capitalize on the risks and uncertainties confronting the new combined company, 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 Registration Statement on Form S-4 (File No. 333-161075), as amended 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. Consolidated Statements of Operations (In thousands, except per share data) Unaudited Three Months Ended Twelve Months Ended December 31, December 31, -------------- -------------- 2009 2008 2009 2008 ---- ---- ---- ---- Net Sales: Product sales $20,054 $15,561 $90,385 $89,207 Service revenues 3,253 2,116 10,663 10,524 ----- ----- ------ ------ Total net sales 23,307 17,677 101,048 99,731 Cost of sales: Cost of product sales 3,967 3,896 21,103 22,594 Cost of service revenues 2,109 1,816 7,257 7,463 Amortization expense 5,020 4,023 17,527 15,966 ----- ----- ------ ------ Total cost of sales 11,096 9,735 45,887 46,023 Research and development expense 1,494 1,490 5,611 6,416 Sales and marketing expense 7,484 5,090 23,368 24,600 General and administrative expense 17,120 3,697 30,519 16,156 Depreciation and amortization expense 2,621 2,875 9,723 11,453 Goodwill impairment - 75,966 9,105 75,966 Embezzlement and related expense (recoveries) 324 (1,430) 129 7,254 --- ------ --- ----- Loss before interest, other income (expense) and income taxes (16,832) (79,746) (23,294) (88,137) Net interest income (expense): Interest income 4 6 10 86 Interest expense (4,949) (4,910) (19,487) (18,520) ------ ------ ------- ------- Net interest income (expense) (4,945) (4,904) (19,477) (18,434) Gain from settlement with previous stockholders - - - 30,202 Loss on extinguishment of debt - - - (5,632) Other income (expense), net (339) (524) (698) (981) ---- ---- ---- ---- Loss before income taxes (22,116) (85,174) (43,469) (82,982) Income tax benefit 2,660 2,649 7,704 13,422 ----- ----- ----- ------ Net loss $(19,456) $(82,525) $(35,765) $(69,560) ======== ======== ======== ======== Net loss per common share: Basic net loss per common share $(0.74) $(4.03) $(1.63) $(3.39) Diluted net loss per common share $(0.74) $(4.03) $(1.63) $(3.39) Average number of common shares and equivalents outstanding: Basic 26,334 20,493 21,965 20,493 Diluted 26,334 20,493 21,965 20,493 Cambium Learning Group, Inc. Consolidated Balance Sheets (In thousands, except per share data) Unaudited 2009 2008 ---- ---- ASSETS Current assets: Cash and cash equivalents $13,345 $2,418 Accounts receivable, net 19,127 10,550 Inventory 19,812 12,850 Deferred tax assets 6,267 4,618 Restricted assets, current 9,755 - Other current assets 6,010 1,181 ----- ----- Total current assets 74,316 31,617 Property, equipment and software at cost 24,951 20,769 Accumulated depreciation and amortization (4,294) (2,459) ------ ------ Net property, equipment and software 20,657 18,310 ------ ------ Goodwill 151,915 116,373 Acquired curriculum and technology intangibles, net 44,695 3,847 Acquired publishing rights, net 52,312 66,261 Other intangible assets, net 28,133 28,488 Pre-publication costs, net 5,464 3,838 Restricted assets, less current portion 14,930 - Other assets 1,419 1,743 ----- ----- Total assets $393,841 $270,477 ======== ======== LIABILITIES AND STOCKHOLDERS'/MEMBERS' EQUITY Current liabilities: Notes payable - line of credit $5,000 $5,000 Current portion of long-term debt 1,280 1,280 Current portion of capital lease obligations 443 375 Accounts payable 2,308 3,035 Contingent value rights, current 3,950 - Accrued expenses 22,928 5,190 Deferred revenue, current 21,465 1,480 ------ ----- Total current liabilities 57,374 16,360 ------ ------ Long-term liabilities: Long-term debt, less current portion 150,487 153,787 Capital lease obligations, less current portion 12,695 12,960 Deferred revenue, less current portion 2,716 430 Contingent value rights, less current portion 5,649 - Other liabilities 25,148 18,736 ------ ------ Total long-term liabilities 196,695 185,913 ------- ------- Stockholders' and members' equity: Preferred stock ($.001 par value, 15,000 shares authorized, zero shares issued and outstanding at December 31, 2009) - - Common stock ($.001 par value, 150,000 shares authorized, 43,859 shares issued and outstanding at December 31, 2009) 44 - Capital surplus 258,789 - Members' interest - 151,707 Accumulated deficit (119,268) (83,503) Other comprehensive income (loss): Pension and postretirement plans 206 - Net unrealized gain on securities 1 - - - Accumulated other comprehensive income (loss) 207 - --- - Total stockholders' and members' equity 139,772 68,204 ------- ------ Total liabilities and stockholders'/members' equity $393,841 $270,477 ======== ======== Cambium Learning Group, Inc. Reconciliation of Adjusted Sales and Adjusted EBITDA Year Ended December 31, 2009 (In thousands) Unaudited Voyager Pre-Merger Total Total Results Combined GAAP (342 days) Results ---- ---------- ------- Voyager $52,923 $77,758 $130,681 Sopris 25,185 - 25,185 Cambium Learning Technologies 22,940 20,970 43,910 ------ ------ ------ Total net sales 101,048 98,728 199,776 Cost of sales 28,360 32,714 61,074 Cost of sales - amortization 17,527 16,220 33,747 ------ ------ ------ Total cost of sales 45,887 48,934 94,821 Research and development expense 5,611 4,331 9,942 Sales & Marketing expenses 23,368 28,753 52,121 General and administrative expense 30,519 24,740 55,259 Depreciation and Amortization 9,723 2,081 11,804 Embezzlement and related 129 - 129 Goodwill Impairment 9,105 27,175 36,280 ----- ------ ------ Income (loss) from operations (23,294) (37,286) (60,580) Interest income 10 70 80 Interest expense (19,487) (628) (20,115) Other income (expense) (698) 3,279 2,581 Income tax benefit 7,704 190 7,894 ----- --- ----- Net income (loss) (35,765) (34,375) (70,140) ======= ======= ======= Normal EBITDA Adjustments: Depreciation and amortization 27,250 18,301 45,551 Interest income (10) (70) (80) Interest expense 19,487 628 20,115 Other income 698 (3,279) (2,581) Income tax (7,704) (190) (7,894) ------ ---- ------ EBITDA $3,956 $(18,985) $(15,029) ====== ======== ======== Non-recurring or non-operating costs excluded from Adjusted EBITDA: ------------------------------ Stock- Embezzle- Inte- Legacy based ment Transaction gration Voyager Comp and Costs Costs Corporate Expense Related ----------- ------- -------- ------- ------- Voyager $- $- $- $- $- Sopris - - - - - Cambium Learning Technologies - - - - - - - - - - Total net sales - - - - - Cost of sales - (71) - - - Cost of sales - amortization - - - - - - - - - - Total cost of sales - (71) - - - Research and development expense - - - - - Sales & Marketing expenses - (155) - - - General and administrative expense (23,507) (2,027) (2,304) (216) - Depreciation and Amortization - - - - - Embezzlement and related - - - - (129) Goodwill Impairment - - - - - - - - - - Income (loss) from operations 23,507 2,253 2,304 216 129 Interest income - - - - - Interest expense - - - - - Other income (expense) - - - - - Income tax benefit - - - - - - - - - - Net income (loss) 23,507 2,253 2,304 216 129 ====== ===== ===== === === Normal EBITDA Adjustments: Depreciation and amortization - - - - - Interest income - - - - - Interest expense - - - - - Other income - - - - - Income tax - - - - - - - - - - EBITDA $23,507 $2,253 $2,304 $216 $129 ======= ====== ====== ==== ==== Non-recurring or non- operating costs excluded from Adjusted EBITDA: ----------------------- Adj Related to Purchase Goodwill Adjusted Accounting Impairment EBITDA ---------- ---------- ------ Voyager $509 $- $131,190 Sopris - - 25,185 Cambium Learning Technologies 883 - 44,793 --- - ------ Total net sales 1,392 - 201,168 Cost of sales 148 - 61,151 Cost of sales - amortization - - 33,747 - - ------ Total cost of sales 148 - 94,898 Research and development expense - - 9,942 Sales & Marketing expenses 108 - 52,074 General and administrative expense - - 27,205 Depreciation and Amortization - - 11,804 Embezzlement and related - - - Goodwill Impairment - (36,280) - - ------- - Income (loss) from operations 1,136 36,280 5,245 Interest income - - 80 Interest expense - - (20,115) Other income (expense) - - 2,581 Income tax benefit - - 7,894 - - ----- Net income (loss) 1,136 36,280 (4,315) ===== ====== ====== Normal EBITDA Adjustments: Depreciation and amortization - - 45,551 Interest income - - (80) Interest expense - - 20,115 Other income - - (2,581) Income tax - - (7,894) - - ------ EBITDA $1,136 $36,280 $50,796 ====== ======= ======= Cambium Learning Group, Inc. Reconciliation of Adjusted Sales and Adjusted EBITDA Year Ended December 31, 2008 (In thousands) Unaudited Voyager GAAP Pre-Merger Total Results Results Combined Cambium (FY 2008) Results ------- --------- ------- Voyager $48,348 $80,743 $129,091 Sopris 29,712 - 29,712 Cambium Learning Technologies 21,671 17,788 39,459 ------ ------ ------ Total net sales 99,731 98,531 198,262 Cost of sales 30,057 35,939 65,996 Cost of sales - amortization 15,966 18,497 34,463 ------ ------ ------ Total cost of sales 46,023 54,436 100,459 Research and development expense 6,416 5,302 11,718 Sales & Marketing expenses 24,600 33,734 58,334 General and administrative expense 16,156 30,660 46,816 Depreciation and Amortization 11,453 2,861 14,314 Embezzlement and related 7,254 - 7,254 Goodwill Impairment 75,966 43,141 119,107 Lease termination costs - 11,673 11,673 - ------ ------ Income (loss) from operations (88,137) (83,276) (171,413) Interest income 86 1,485 1,571 Interest expense (18,520) (510) (19,030) Other income (expense) 23,589 (363) 23,226 Income tax benefit 13,422 1,160 14,582 ------ ----- ------ Net loss (income) (69,560) (81,504) (151,064) ======= ======= ======== Normal EBITDA Adjustments: Depreciation and amortization 27,419 21,358 48,777 Interest income (86) (1,485) (1,571) Interest expense 18,520 510 19,030 Other income (23,589) 363 (23,226) Income tax (13,422) (1,160) (14,582) ------- ------ ------- EBITDA $(60,718) $(61,918) $(122,636) ======== ======== ========= Non-recurring or non-operating costs excluded from Adjusted EBITDA: ------------------------------ Stock- Embezzle- Inte- Legacy based ment Transaction gration Voyager Comp and Costs Costs Corporate Expense Related ----------- ------- -------- ------- ------- Voyager $- $- $- $- $- Sopris - - - - - Cambium Learning Technologies - - - - - - - - - - Total net sales - - - - - Cost of sales - - - - - Cost of sales - amortization - - - - - - - - - - Total cost of sales - - - - - Research and development expense - - - - - Sales & Marketing expenses - - - - - General and administrative expense (26) (287) (18,069) (878) - Depreciation and Amortization - - - - - Embezzlement and related - - - - (75,966) Goodwill Impairment - - - - - Lease termination costs - - - - - - - - - - Income (loss) from operations 26 287 18,069 878 75,966 Interest income - - - - - Interest expense - - - - - Other income (expense) - - - - - Income tax benefit - - - - - - - - - - Net loss (income) 26 287 18,069 878 75,966 == === ====== === ====== Normal EBITDA Adjustments: Depreciation and amortization - - - - - Interest income - - - - - Interest expense - - - - - Other income - - - - - Income tax - - - - - - - - - - EBITDA $26 $287 $18,069 $878 $75,966 === ==== ======= ==== ======= Non-recurring or non- operating costs excluded from Adjusted EBITDA: ----------------------- Lease Termination Goodwill Adjusted Costs Impairment EBITDA ----- ---------- ------ Voyager $- $- $129,091 Sopris - - 29,712 Cambium Learning Technologies - - 39,459 - - ------ Total net sales - - 198,262 Cost of sales - - 65,996 Cost of sales - amortization - - 34,463 - - ------ Total cost of sales - - 100,459 Research and development expense - - 11,718 Sales & Marketing expenses - - 58,334 General and administrative expense - - 27,556 Depreciation and Amortization - - 14,314 Embezzlement and related - - (68,712) Goodwill Impairment - (50,395) 68,712 Lease termination costs (11,673) - - ------- - - Income (loss) from operations 11,673 50,395 (14,119) Interest income - - 1,571 Interest expense - - (19,030) Other income (expense) - - 23,226 Income tax benefit - - 14,582 - - ------ Net loss (income) 11,673 50,395 6,230 ====== ====== ===== Normal EBITDA Adjustments: Depreciation and amortization - - 48,777 Interest income - - (1,571) Interest expense - - 19,030 Other income - - (23,226) Income tax - - (14,582) - - ------- EBITDA $11,673 $50,395 $34,658 ======= ======= =======

SOURCE Cambium Learning Group, Inc.

Source: PR Newswire

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