Renaissance Learning(R) Announces Fourth Quarter Financial Results
WISCONSIN RAPIDS, Wis., Jan. 31 /PRNewswire-FirstCall/ --
Renaissance Learning(R), Inc. (NASDAQ:RLRN), a leading provider of
learning information systems and school improvement programs for
pre-K-12 schools, today announced financial results for the quarter
and year ended December 31, 2004. Revenues for the fourth quarter
of 2004 were $25.8 million, a decrease of 17.8% from fourth quarter
2003 revenues of $31.4 million. Net income for the quarter was $5.2
million, or $0.17 per share, compared to net income of $7.6
million, or $0.25 per share for the fourth quarter of 2003. (Logo:
http://www.newscom.com/cgi-bin/prnh/20001108/RENAISSANCELOGO )
Revenues for the twelve-month period ended December 31, 2004 were
$114.0 million, down 12.6% from 2003 revenues of $130.5 million.
Net income for 2004 was $22.7 million, or $0.73 per share, compared
to net income of $32.5 million, or $1.04 per share for 2003.
"Fourth quarter order rates were similar to third quarter 2004 and
last year's fourth quarter, excluding one large district contract
signed in the fourth quarter last year," stated John R. Hickey,
President and Chief Executive Officer of Renaissance Learning, Inc.
"Deferred revenue increased by approximately $1 million in the
fourth quarter and we continue to be impacted by the transition to
our new subscription-based model, as well as by the longer selling
cycles to districts and Renaissance Place enterprise-wide
applications. Despite the extended selling cycle, we now have over
4,000 schools who have taken the first step and ordered Renaissance
Place applications. We are confident that orders for Renaissance
Place will be strong as districts begin planning for the 2005-2006
school year." The Company is announcing six initiatives which are
expected to significantly enhance growth in 2005 and beyond. These
are: (1) Continued focus on Renaissance Place with a goal of more
than doubling Renaissance Place installations in 2005; (2) The
recently announced proposed merger with AlphaSmart, Inc., and
related initiatives to enhance sales of Renaissance's writing
software solutions; (3) Providing enhanced versions of
StandardsMaster with a wider range of content and assessments; (4)
Adding additional marketing resources to the selling of English In
a Flash, which is being well received by the large and growing ELL
market; (5) Leverage the new web-based version of the popular
Accelerated Reader solution to roll out a national Renaissance
Summer Reading Program to help students retain and grow their
reading skills through the summer months; and (6) Divest the
Generation21 subsidiary which has not achieved profitability. "I
believe the new products and initiatives will help us get back to
significant growth levels," noted Hickey. "While 2005 will be a
critical transition year with some added costs to implement these
strategies, including one-time transitional expenses related to
Generation21 and AlphaSmart, Inc. and higher product development
costs, we expect to achieve growth in both revenue and profit for
2005 and the long-term outlook looks very promising." Renaissance
Learning added about 300 new customer schools in the U.S. and
Canada during the quarter, bringing total North American schools
using Company products to over 67,000. Of these, over 63,000 use
the Company's reading products and about 25,000 use math. The
Company also added over 800 new Renaissance Place customers in the
quarter, bringing the total customer schools using Renaissance
Place to over 4,000. 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 888-868-9083 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 31, 2005 at 8:00 p.m. through
February 7, 2005 at 11:59 p.m. The replay dial-in is 877-519-4471.
The conference ID number to access the replay is 5579163.
Renaissance Learning(R), Inc. Renaissance Learning, Inc. is a
leading provider of research-based learning information systems
software, school improvement programs, teacher training and
consulting. Adopted by more than 67,000 schools, Renaissance
information technology products give students and teachers
continuous constructive feedback that helps motivate students,
dramatically accelerate learning, improve test scores, and help
students master all standards, while reducing teacher paperwork.
Renaissance Learning has six 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 and profit expectations for future periods,
the introduction and acceptance of new products and services, and
new marketing approaches. 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 2003 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. ADDITIONAL INFORMATION
AlphaSmart, Inc. and the Company intend to file a registration
statement on Form S-4, which will include a proxy
statement/prospectus and other relevant materials in connection
with the proposed merger transaction involving AlphaSmart and the
Company. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THIS
FILING WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION REGARDING THE PROPOSED MERGER TRANSACTION. Investors
and security holders may obtain free copies of these documents and
other documents filed with the SEC when they become available at
the SEC's web site at http://www.sec.gov/ . In addition, investors
and security holders may obtain free copies of the documents filed
with the SEC by AlphaSmart at AlphaSmart's web site at
http://www.alphasmart.com/ or by contacting AlphaSmart investor
relations at or via telephone at (408) 355-1029. Investors and
security holders may obtain free copies of the documents filed with
the SEC by the Company by directing such requests to Renaissance
Learning, Inc., Attention: Corporate Secretary, 2911 Peach Street,
P.O. Box 8036, Wisconsin Rapids, Wisconsin 54995 or via telephone
at (715) 424-3636. The Company, AlphaSmart and their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from the stockholders of AlphaSmart
in connection with the merger transaction. Information regarding
directors and executive officers of AlphaSmart and the Company and
their respective interests in the proposed transaction will be
available in the proxy/prospectus of AlphaSmart and the Company
described above and other relevant materials to be filed with the
SEC. (tables to follow) RENAISSANCE LEARNING(R), INC. CONSOLIDATED
STATEMENTS OF INCOME (dollar amounts in thousands, except per share
amounts) (unaudited) Three Months Twelve Months ended December 31,
ended December 31, 2004 2003 2004 2003 Net sales: Products $20,611
$26,335 $92,326 $107,863 Services 5,181 5,052 21,722 22,681 Total
net sales 25,792 31,387 114,048 130,544 Cost of sales: Products
1,268 2,222 6,419 10,826 Services 2,193 2,344 10,322 10,256 Total
cost of sales 3,461 4,566 16,741 21,082 Gross profit 22,331 26,821
97,307 109,462 Operating expenses: Product development 3,961 4,074
16,803 17,000 Selling and marketing 7,519 7,905 33,022 30,623
General and administrative 3,031 3,016 13,086 13,593 Total
operating expenses 14,511 14,995 62,911 61,216 Operating income
7,820 11,826 34,396 48,246 Other income (expense), net 445 281
1,639 2,266 Income before taxes 8,265 12,107 36,035 50,512 Income
taxes 3,058 4,480 13,333 17,971 Net income $5,207 $7,627 $22,702
$32,541 Earnings per share: Basic $0.17 $0.25 $0.73 $1.05 Diluted
$0.17 $0.25 $0.73 $1.04 Weighted average shares outstanding: Basic
31,018,228 30,864,276 31,046,200 31,110,578 Diluted 31,109,686
31,114,936 31,199,811 31,305,431 RENAISSANCE LEARNING(R), INC.
CONSOLIDATED BALANCE SHEETS (dollar amounts in thousands) December
31, December 31, 2004 2003 ASSETS: Current assets: Cash and cash
equivalents $27,460 $62,524 Investment securities 25,103 42,825
Accounts receivable, net 8,969 13,352 Inventories 2,375 2,354
Prepaid expenses 1,227 1,352 Deferred tax asset 3,800 3,743 Other
current assets 452 889 Total current assets 69,386 127,039
Investment Securities 21,003 6,485 Property, plant and equipment,
net 19,130 20,536 Deferred tax asset 1,620 1,795 Other assets 3,585
3,746 Total assets $114,724 $159,601 LIABILITIES AND SHAREHOLDERS'
EQUITY: Current liabilities: Accounts payable $2,667 $3,144
Deferred revenue 17,554 10,875 Payroll and employee benefits 3,069
3,153 Income taxes payable 925 2,295 Other current liabilities
3,934 4,869 Total current liabilities 28,149 24,336 Deferred
revenue 620 800 Deferred compensation 1,354 958 Total liabilities
30,123 26,094 Minority interest 184 177 Total shareholders' equity
84,417 133,330 Total liabilities and shareholders' equity $114,724
$159,601
http://www.newscom.com/cgi-bin/prnh/20001108/RENAISSANCELOGO
http://photoarchive.ap.org/ DATASOURCE: Renaissance Learning, Inc.
CONTACT: Julie Blystone of Renaissance Learning, Inc., Toll free
ofc., +1-877-988-8048, or Fax, +1-715-424-3414, or Web site:
http://www.renlearn.com/
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