Cambium Learning Group Announces First Quarter Earnings

           Cambium Learning Group Announces First Quarter Earnings

Second Consecutive Quarter of Order Volume Growth

PR Newswire

DALLAS, May 9, 2013

DALLAS, May 9, 2013 /PRNewswire/ -- Cambium Learning Group, Inc. (NASDAQ:
ABCD, the "Company"), a leading educational solutions and services company
committed to helping every student reach their full potential by providing
evidence-based solutions and expert professional services, announced today its
financial results for the first quarter of 2013.

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

                            Three Months Ended
(In millions)               March 31, 2013  March 31, 2012  $ Change  % Change
GAAP net revenues           $   31.4      $   27.9      $  3.6  13%
Decrease in deferred        (7.9)           (7.1)           (0.8)     -12%
revenue
GAAP net loss               (9.1)           (20.3)          11.2      55%
EBITDA                      0.5             (7.3)           7.8       107%
Adjusted EBITDA             2.2             (3.1)           5.4       171%



The Company reported increases in order volume and revenue in the first
quarter of 2013 compared to the first quarter of 2012, due to continued growth
in service offerings and online products. The growth in these areas in the
first quarter was sufficient to overcome continued weakness in the Company's
legacy print-based product sales. The Learning A-Z and ExploreLearning
segments and service offerings led by the school turnaround product line have
been the most consistent growth areas of the Company. 

"While modest at 3%, the continued order volume improvement for a second
consecutive quarter is a good indicator that our continued investment in
technology and high-growth services aligns strategically with the changing
market," said John Campbell, chief executive officer of Cambium Learning
Group, Inc.

In the first quarter of 2013, the Company began providing separate results for
the Learning A-Z, ExploreLearning and Kurzweil/IntelliTools businesses, rather
than reporting them as a combined Cambium Learning Technologies
segment.

For the first quarter of 2013, company-wide order volumes increased 3%
compared to the first quarter of 2012, and order volume changes by segment
were as follows:

     oVoyager Sopris Learning decreased 2%
     oLearning A-Z increased 15%
     oExploreLearning increased 62%
     oKurzweil/IntelliTools decreased 20%

Other highlights include:

  oGAAP net revenues for the first quarter of 2013 increased by 13% to $31.4
    million, compared with $27.9 million in the first quarter of 2012. In
    addition to the order volume improvement, the Company's deferred revenue
    balances decreased by $7.9 million in the first quarter of 2013, as the
    Company recognized revenue on prior-period technology and service sales
    that were delivered during the quarter. Comparatively, deferred revenue
    balances decreased by $7.1 million in the first quarter of 2012. 
  oGAAP net revenues by segment for the first quarter of 2013, and the
    percentage change from the first quarter of 2012, were as follows:

       oVoyager Sopris Learning: $17.5 million, increased 15%
       oLearning A-Z: $7.6 million, increased 27%
       oExploreLearning: $3.8 million, increased 13%
       oKurzweil/IntelliTools: $2.6 million, decreased 21%

  oOn an adjusted basis, EBITDA was $2.2 million in the first quarter of
    2013, up $5.4 million from a loss of $3.1 million in the first quarter of
    2012. The increase in adjusted EBITDA was primarily due to the increase in
    net revenues and cost savings from the re-engineering and restructuring
    initiatives completed in 2012.
  oThe Company has cash and cash equivalents of $31.1million on the balance
    sheet as of March31, 2013. Cash used in operations during the first
    quarter of 2013 was $16.2million, as the Company's operations are highly
    seasonal and the first half of the year is historically cash flow
    negative. 

Discontinuance of Investor Conference Calls

Effective immediately, the Company will cease holding investor conference
calls to discuss quarterly financial results. The Company is a Smaller
Reporting Company and a "controlled company" within the context of the NASDAQ
rules. Accordingly, in addition to eliminating the management time commitment
associated with these conference calls, the Company determined that conference
calls are not an efficient means of communicating with stakeholders. For
additional details on the Company's first quarter financial results, please
see the Company's Quarterly Report on Form 10-Q, which has been filed with the
Securities and Exchange Commission.

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.

About Cambium Learning Group, Inc.
Cambium Learning Groupis a leading educational solutions and services company
that is committed to helping every student reach their full potential by
providing evidence-based solutions and expert professional services to empower
educators and raise the achievement levels of all students. Cambium is
composed of four business units: Voyager Learning (www.voyagerlearning.com)
and Sopris Learning (www.soprislearning.com), Learning A–Z
(www.learninga-z.com), ExploreLearning (www.explorelearning.com), and
Kurzweil/IntelliTools (www.kurzweiledu.com). Together, these business units
provide best-in-class intervention and supplemental instructional materials;
gold-standard professional development and school-improvement
services;breakthrough technology solutions for online learning and
professional support; valid and reliable assessments; and proven materials to
support a positive and safe school environment. For more information, visit
www.cambiumlearning.com.

Media and Investor Contact:
Barbara Benson
Cambium Learning Group, Inc.
investorrelations@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 and Comprehensive Loss
(In thousands, except per share data)
(Unaudited)
                                                          Three Months Ended
                                                          March 31,  March 31,
                                                          2013       2012
Net revenues                                              $31,429    $ 27,855
Cost of revenues:
Cost of revenues                                          11,403     11,166
Amortization expense                                      3,707      6,370
Total cost of revenues                                   15,110     17,536
Research and development expense                          2,331      3,332
Sales and marketing expense                               10,333     11,896
General and administrative expense                        6,793      5,745
Shipping and handling costs                               299        327
Depreciation and amortization expense                     1,216      1,659
Embezzlement and related expense (recoveries)             -          (85)
Impairment of long-lived assets                           -          2,791
Total costs and expenses                                  36,082     43,201
Loss before interest, other income (expense) and income   (4,653)    (15,346)
taxes
Net interest expense                                      (4,576)    (4,777)
Other income, net                                         219        36
Loss before income taxes                                  (9,010)    (20,087)
Income tax expense                                        (68)       (177)
Net loss                                                  $(9,078)   $(20,264)
Net loss per common share:
Basic net loss per common share                           $ (0.19)   $ (0.41)
Diluted net loss per common share                         $ (0.19)   $ (0.41)
Average number of common shares and equivalents
outstanding:
Basic                                                     47,397     49,947
Diluted                                                   47,397     49,947



Cambium Learning Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
                                                     As of
                                                     March 31,    December 31,
                                                     2013         2012
ASSETS                                               (unaudited)
Current assets:
Cash and cash equivalents                            $ 31,149    $  51,904
Accounts receivable, net                             18,152       17,813
Inventory                                            14,253       16,620
Tax receivables                                      12,312       12,234
Restricted assets, current                           4,351        4,387
Assets held for sale                                 380          380
Other current assets                                 5,393        5,892
Total current assets                                 85,990       109,230
Property, equipment and software at cost             37,465       35,535
Accumulated depreciation and amortization            (16,305)     (14,514)
Property, equipment and software, net                21,160       21,021
Goodwill                                             47,404       47,404
Acquired curriculum and technology intangibles, net  8,383        9,320
Acquired publishing rights, net                      6,878        7,602
Other intangible assets, net                         7,385        7,836
Pre-publication costs, net                           12,499       11,660
Restricted assets, less current portion              6,422        6,754
Other assets                                         9,294        9,632
Total assets                                         $ 205,415    $ 230,459
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Capital lease obligations, current                   $  1,044    $  1,290
Accounts payable                                     1,352        3,007
Contingent value rights, current                    7,654        7,599
Accrued expenses                                     14,766       20,530
Deferred revenue, current                            38,614       45,974
Total current liabilities                            63,430       78,400
Long-term liabilities:
Long-term debt                                       174,368      174,328
Capital lease obligations, less current portion      2,781        3,014
Deferred revenue, less current portion               5,067        5,631
Other liabilities                                    14,854       15,131
Total long-term liabilities                          197,070      198,104
Stockholders' equity (deficit):
Preferred stock ($.001 par value, 15,000 shares
authorized, zero shares issued and outstanding at    -            -
March 31, 2013 and December 31, 2012)
Common stock ($.001 par value, 150,000 shares
authorized, 51,208 and 51,208 shares issued, and
46,904 and 47,098 shares                             51           51

outstanding at March 31, 2013 and December 31,
2012, respectively)
Capital surplus                                      282,702      282,450
Accumulated deficit                                  (327,520)    (318,442)
Treasury stock at cost (4,304 and 4,110 shares at    (7,772)      (7,528)
March 31, 2013 and December 31, 2012, respectively)
Other comprehensive income (loss):
Pension and postretirement plans                     (2,546)      (2,576)
Accumulated other comprehensive income (loss)        (2,546)      (2,576)
Total stockholders' equity (deficit)                 (55,085)     (46,045)
Total liabilities and stockholders' equity           $ 205,415    $ 230,459
(deficit)



Reconciliation Between Net Revenues to Adjusted Net Revenues and Between Net
Loss and
Adjusted EBITDA for the Three Months Ended March 31, 2013 and 2012
                                                  Three Months Ended March 31,
                                                  2013             2012
                                                  (In thousands)
                                                  (Unaudited)
Total net revenues                                $31,429          $27,855
Non-operational or non-cash costs included in net
revenues but excluded from adjusted net revenues:
             Adjustments related to purchase      9                132
             accounting
Adjusted net revenues                             $31,438          $27,987
Net loss                                          (9,078)          (20,264)
Reconciling items between net loss and EBITDA:
             Depreciation and amortization        4,923            8,029
             Net interest expense                 4,576            4,777
             Income tax expense                   68               177
Income (loss) from operations before interest,
income taxes, and depreciation and amortization   489              (7,281)
(EBITDA)
Non-operational or non-cash costs included in
EBITDA but excluded from Adjusted EBITDA:
             Other income, net                    (219)            (36)
             Re-engineering and restructuring     -                3,704
             costs
             Management transition                1,501            -
             Merger and acquisition activities    158              181
             Stock-based compensation and expense 229              225
             Embezzlement and related expenses    -                (85)
             (recoveries)
             Adjustments related to purchase      29               103
             accounting
             Adjustments to CVR liability         55               53
Adjusted EBITDA                                   $ 2,242          $(3,136)



SOURCE Cambium Learning Group, Inc.

Website: http://www.cambiumlearning.com
 
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