Cambium Learning Group Announces Third Quarter Earnings

           Cambium Learning Group Announces Third Quarter Earnings

Company Beginning to See Improvement in Order Volume in the Fourth Quarter

PR Newswire

DALLAS, Nov. 8, 2012

DALLAS, Nov. 8, 2012 /PRNewswire/ --Cambium Learning Group, Inc. (NASDAQ:
ABCD, the "Company"), the leading educational company focused primarily on
serving the needs of at-risk and special student populations, will hold a
conference call today at 5:00 p.m. Eastern Time to discuss 2012 third-quarter
earnings. The call will be based on unaudited financial results through
September 30, 2012.

          Three Months Ended                    Nine Months Ended
(In       September  September  $       %       September  September  $        %
millions) 30, 2012   30, 2011   Change  Change  30, 2012   30, 2011   Change   Change
GAAP net  $        $        $       -13%    $         $         $(26.6)  -19%
revenues  46.0      52.9      (6.9)          114.2     140.8
Change in
deferred  13.2       11.9       1.3     11%     6.4        5.9        0.5      8%
revenue
GAAP net
income    (2.2)      3.1        (5.3)   -171%   (45.0)     (2.9)      (42.1)   1452%
(loss)
EBITDA    11.1       17.0       (5.9)   -35%    (5.9)      37.7       (43.6)   -116%
Adjusted  12.5       17.6       (5.1)   -29%    16.9       38.0       (21.1)   -56%
EBITDA



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

The third quarter of 2012 continues to be challenging in replicating the order
volume achieved in 2011 when American Recovery and Reinvestment Act ("ARRA")
funding was still in place. The Company continues to see order volume decline
in each of its three operating segments for the full nine months; however, the
Company saw sales growth in the Cambium Learning Technologies ("CLT") segment
in the third quarter and the service offerings within the Voyager Learning
segment, led by the school turnaround offering, continue to grow. Overall in
Q3 we started to see some abatement in the negative trends from the first half
of the year, led by our student-directed learning applications and turnaround
services. Additionally, to date in the fourth quarter, order volumes have
improved over prior year when compared with the same quarter-to-date time
period in 2011.

"While the challenging funding environment continued to weigh on order volumes
in the third quarter, we are beginning to see favorable year-over-year
comparative trends and expect to sustain those improvements through the
remainder of the fourth quarter," said Ron Klausner, chief executive officer
of Cambium Learning Group, Inc.

  oCompany order volume decreased 9.6% for the three months ending September
    30, 2012, versus a decline in the first half of the year of 21.4%,
    indicating a slowing of the year-over-year declines.
  oThrough November 7, 2012, the Company has experienced an increase in order
    volume in the fourth quarter of over 10%, providing further indication
    that year-over-year declines in order volume are abating.
  oCompany order volume decreased 16% for the first nine months of 2012
    versus the first nine months of 2011. Order volume changes by business
    unit were as follows:

       oVoyager Learning decreased 22%
       oCLT decreased 3%
       oSopris Learning decreased 22%

  oWithin the CLT unit, order volumes of the combined Learning A-Z and
    ExploreLearning product lines continued to grow, but this combined growth
    was offset by continued declines in order volumes of the Kurzweil 
    Educational Systems^® and IntelliTools^® technology based products.
  oGAAP net revenues for the first nine months declined by 19% to $114.2
    million compared with $140.8 million in 2011. The decline was primarily
    caused by the decline in order volume. GAAP net revenues by business unit
    for the first nine months of the year and the percentage change from the
    first nine months of 2011 were as follows: 

       oVoyager Learning: $58.6 million, down 28%
       oCLT: $38.2 million, up 1%.
       oSopris Learning: $17.5 million, down 21%

  oOn an adjusted basis, EBITDA was $16.9 million in the first nine months of
    2012, down $21.1 million from $38.0 million in the comparable period in
    2011. The decline in adjusted EBITDA is primarily the result of a $26.6
    million decline in revenues, and an increased 2012 investment in
    development, made primarily in the growing online-based products segment.
    However, this was partially offset by lower costs associated with lower
    order volumes and cost reduction efforts. 
  oThe first nine months reported cash used in operations of $12.8 million
    due primarily to the nature of the Company's operations, which are highly
    seasonal. The first half is typically cash-flow negative due to declines
    in order volumes while investment in key areas has been maintained.
  oThe Company has cash and cash equivalents of $35.1 million on the balance
    sheet as of September 30, 2012, and the balance has been rising since that
    date and is expected to continue increasing by the end of 2012.
  oThe Company has progressed with and has expanded the scope of its
    re-engineering and restructuring effort that began in late 2011 and will
    continue through the end of 2012. This effort is intended to realign the
    Company's resources and skill sets with emerging digital trends, align our
    organizational and cost structure to our strategic goals, enhance the
    customer experience, and provide significant cost reductions in several
    operational areas through re-engineering and optimizing certain key
    processes.  Savings are designed to provide financial flexibility to
    invest in growth areas or improve future earnings potential.

Third Quarter 2012 Business Highlights

  oThe Company announced on September 27, 2012, that Thomas Kalinske,
    executive chairman of Global Education Learning, an online business
    teaching English to non-English speaking children in Asia, was appointed
    as the Company's chairman of the board. Mr. Kalinske has been a member of
    the Company's Board since February 2010.
  oThe ComputED Gazette announced that  five Cambium Learning Group online
    programs, ExploreLearning Gizmos^®, ExploreLearning Reflex^™, VmathLive^®,
    Ticket to Read^® and firefly^®, ^ were named winners in its 17^th Annual
    2012 Education Software Review Awards (EDDIES). The EDDIES target
    content-rich and innovative programs and websites that augment classroom
    curriculum and improve the productivity of teachers. Winning products
    provide teachers and parents alike with technology that fosters
    educational excellence and are chosen from titles submitted by publishers
    worldwide.
  oOn August 13, 2012, Voyager Learning announced an update to its VmathLive 
    program, a web-based online math resource that creates a stimulating game
    environment for students in grades 2-8. Math will virtually "unfold" for
    students using VmathLive as they gain greater confidence in their math
    abilities and improve their results in a unique origami-themed program.
  oKurzweil 3000^® firefly by Kurzweil Educational Systems received an
    Honorable Mention in the 2012-13 Reader's Choice Awards sponsored by
    eSchoolMedia, the parent organization of eSchoolNews, eCampusNews, and
    eClassroomNews. The winning products were chosen after 1300 readers
    submitted their top choices for products that made the greatest impact on
    their schools.
  oSopris Learning released innovative educator tools to support RAVE-O®:
    Proven Literacy Intervention: RAVE-O Town, www.raveotown.com, and RAVE-O
    Online Training, www.soprislearningtrainingcenter.com.

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 these non-GAAP measures
provide useful information to investors because they reflect the underlying
performance of the ongoing operations of the Company, and provide investors
with a view of the Company's operations from management's perspective.
Adjusted EBITDA and Adjusted Net Revenues remove significant purchase
accounting, non-operational or certain non-cash items from earnings. The
Company uses Adjusted EBITDA and Adjusted Net Revenues 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. The Company's presentation of EBITDA, Adjusted EBITDA and Adjusted
Net Revenues should not be construed as an indication that future results will
be unaffected by unusual, non-operational or non-cash items.

Investor Conference Call

The company will provide additional commentary on today's conference call. To
listen to the Company's upcoming conference call, please dial (800) 860-2442
and reference "Cambium Learning" at 5:00 p.m. Eastern Time on Thursday,
November 8, 2012. The call will be recorded and archived until Friday,
December 7, 2012, and can be replayed by calling (877) 344-7529 and entering
ID#10019972. The conference call will also be Webcast and available on the
Company's Website at http://cambiumlearning.investorroom.com/events.

About Cambium Learning Group, Inc.

Cambium Learning® Group (NASDAQ: ABCD) is the leading educational company
focused primarily on serving the needs of at-risk and special student
populations. The company is comprised of three business units: Voyager
Learning, provides comprehensive print and online intervention solutions,
professional development, and school turnaround offerings and includes Lincoln
National Academy, Class.com, and Voyager Education Services; Sopris Learning
is known for supplemental solutions, including assessment, supplemental
intervention, positive behavior supports and professional development; and
Cambium Learning Technologies develops instructional and assistive technology
and represents IntelliTools®, Kurzweil Educational Systems®, Learning A–Z, and
ExploreLearning. Cambium Learning Group is committed to providing
evidence-based support and expert professional services to empower educators
and raise the achievement levels of all students. Learn more at
www.cambiumlearning.com.

Media and Investor Contact:
Chris Cleveland
Cambium Learning Group, Inc.
214.932.9474
chris.cleveland@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, 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
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
                         Three Months Ended         Nine Months Ended
                         September     September    September     September
                         30,           30,          30,           30,
                         2012          2011         2012          2011
Net revenues             $  45,958   $  52,906  $  114,242   $  140,792
Cost of revenues:
Cost of revenues         14,274        16,318       39,837        45,104
Amortization expense     7,035         6,962        19,984        20,424
Total cost of revenues  21,309        23,280       59,821        65,528
Research and             2,622         2,199        8,606         7,093
development expense
Sales and marketing      11,331        11,817       35,268        35,594
expense
General and              4,837         4,795        15,643        16,136
administrative expense
Shipping and handling    1,204         844          2,485         1,995
costs
Depreciation and         1,592         1,858        4,842         5,342
amortization expense
Goodwill impairment      -             -            14,700        -
Embezzlement and
related expense          493           (56)         452           (2,452)
(recoveries)
Impairment of            236           -            3,347         -
long-lived assets
Total costs and          43,624        44,737       145,164       129,236
expenses
Income (loss) before
interest, other income   2,334         8,169        (30,922)      11,556
(expense) and income
taxes
Net interest expense     (4,628)       (4,950)      (14,032)      (14,237)
Other income, net        163           -            236           365
Income (loss) before     (2,131)       3,219        (44,718)      (2,316)
income taxes
Income tax expense       (104)         (155)        (258)         (570)
Net income (loss)        $  (2,235)  $   3,064  $  (44,976)  $  (2,886)
Net income (loss) per
common share:
Basic net income (loss)  $   (0.05)  $   0.07  $   (0.90)  $   (0.06)
per common share
Diluted net income       $   (0.05)  $   0.07  $   (0.90)  $   (0.06)
(loss) per common share
Average number of
common shares and
equivalents
outstanding:
Basic                    49,284        46,743       49,722        44,911
Diluted                  49,284        47,130       49,722        44,911





Cambium Learning Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
                                                   September 30,  December 31,
                                                   2012           2011
ASSETS                                             (unaudited)
Current assets:
Cash and cash equivalents                          $  35,139    $  63,191
Accounts receivable, net                           32,915         13,485
Inventory                                          18,937         21,561
Deferred tax assets                                2,800          2,829
Restricted assets, current                         4,389          1,393
Assets held for sale                               1,847          2,727
Other current assets                               5,553          4,735
Total current assets                               101,580        109,921
Property, equipment and software at cost           34,667         42,878
Accumulated depreciation and amortization          (13,023)       (12,968)
Property, equipment and software, net              21,644         29,910
Goodwill                                           99,597         114,297
Acquired curriculum and technology intangibles,    19,966         26,996
net
Acquired publishing rights, net                    19,910         26,861
Other intangible assets, net                       15,517         18,111
Pre-publication costs, net                         12,009         10,034
Restricted assets, less current portion            7,063          11,082
Other assets                                       21,505         22,468
Total assets                                       $  318,791    $ 369,680
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Capital lease obligations, current                 $   1,278    $   826
Accounts payable                                   4,402          3,024
Contingent value rights, current                  1,717          -
Accrued expenses                                   17,335         21,203
Deferred revenue, current                          45,237         38,984
Total current liabilities                          69,969         64,037
Long-term liabilities:
Long-term debt                                     174,287        174,165
Capital lease obligations, less current portion    3,243          12,294
Deferred revenue, less current portion             4,441          4,304
Contingent value rights, less current portion     5,128          6,684
Other liabilities                                  16,994         18,126
Total long-term liabilities                        204,093        215,573
Stockholders' equity:
Preferred stock ($.001 par value, 15,000 shares
authorized, zero shares
issued and outstanding at September 30, 2012 and   -              -
December 31, 2011)
Common stock ($.001 par value, 150,000 shares
authorized,
51,208 and 51,162 shares issued, and 48,370 and
49,518 shares
outstanding at September 30, 2012 and December 31, 51             51
2011, respectively)
Capital surplus                                    282,147        281,240
Accumulated deficit                                (229,635)      (184,659)
Treasury stock at cost (2,838 and 1,644 shares at
September 30, 2012
and December 31, 2011, respectively)               (6,228)        (4,931)
Other comprehensive income (loss):
Pension and postretirement plans                   (1,606)        (1,632)
Net unrealized gain on securities                  -              1
Accumulated other comprehensive loss               (1,606)        (1,631)
Total stockholders' equity                        44,729         90,070
Total liabilities and stockholders' equity         $  318,791    $ 369,680







Reconciliation Between Net Revenues and Adjusted Net Revenues and Between Net
Income (Loss)
and Adjusted EBITDA for the Three Months Ended September 30, 2012 and 2011
(In thousands)
(Unaudited)
                                             Three Months Ended September 30,
                                             2012                2011
Total net revenues                           $45,958             $52,906
Non-operational or non-cash costs included
in
  net revenues but excluded from adjusted
  net revenues:
  Adjustments related to purchase            58                  234
  accounting
Adjusted net revenues                        $46,016             $53,140
Net income (loss)                            (2,235)             3,064
Reconciling items between net income (loss)
and EBITDA:
  Depreciation and amortization              8,627               8,820
  Net interest expense                       4,628               4,950
  Income tax expense                         104                 155
Income from operations before interest,
income taxes,
  and depreciation and amortization (EBITDA) 11,124              16,989
Non-operational or non-cash costs included
in
  EBITDA but excluded from Adjusted EBITDA:
  Other income, net                          (163)               -
  Re-engineering and restructuring costs    491                 -
  Merger and acquisition activities         160                 182
  Stock-based compensation expense^         313                 349
  Embezzlement and related expenses          493                 (56)
  (recoveries)^
  Adjustments related to purchase            49                  185
  accounting
  Adjustments to CVR liability              54                  -
Adjusted EBITDA                              $12,521             $17,649







Reconciliation Between Net Revenues and Adjusted Net Revenues and Between Net
Loss and
Adjusted EBITDA for the Nine Months Ended September 30, 2012 and 2011
(In thousands)
(Unaudited)
                                              Nine Months Ended September 30,
                                              2012               2011
Total net revenues                            $114,242           $140,792
Non-operational or non-cash costs included in
  net revenues but excluded from adjusted net
  revenues:
  Adjustments related to purchase accounting 313                889
Adjusted net revenues                         $114,555           $141,681
Net loss                                      $(44,976)          $ (2,886)
Reconciling items between net loss and
EBITDA:
  Depreciation and amortization               24,826             25,766
  Net interest expense                        14,032             14,237
  Income tax expense                          258                570
Income (loss) from operations before
interest,
  income taxes, and depreciation and
  amortization (EBITDA)                       (5,860)            37,687
Non-operational or non-cash costs included in
  EBITDA but excluded from Adjusted EBITDA:
  Other income, net                           (236)              (365)
  Re-engineering and restructuring costs     6,240              -
  Merger and acquisition activities          684                859
  Stock-based compensation expense^          518                953
  Embezzlement and related expenses           452                (2,452)
  (recoveries)^
  Adjustments related to purchase accounting 247                756
  Adjustments to CVR liability               161                520
  Goodwill impairment                        14,700             -
Adjusted EBITDA                               $ 16,906           $ 37,958







SOURCE Cambium Learning Group, Inc.

Website: http://www.cambiumlearning.com