Cambium Learning Group Announces Second Quarter Earnings

           Cambium Learning Group Announces Second Quarter Earnings

Technology-Enabled Products Continue Growth Trajectory

PR Newswire

DALLAS, Aug. 8, 2013

DALLAS, Aug. 8, 2013 /PRNewswire/ --Cambium Learning Group, Inc. (NASDAQ:
ABCD, the "Company"), a leading educational solutions and services company
committed to helping all students reach their full potential by providing
evidence-based solutions and expert professional services, announced today its
financial results for the second quarter of 2013.

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

                   Three Months Ended             Six Months Ended
                   June  June 30, $               June  June   $
($ in millions)    30,   2012     Change % Change 30,   30,    Change % Change
                   2013                           2013  2012
GAAP net revenues  $42.8 $40.4    $2.4   5.8%     $74.2 $68.3  $5.9   8.7%
Change in deferred (1.6) 0.3      (1.9)  (626.2)% (9.5) (6.8)  (2.8)  (40.6)%
revenue
GAAP net income    0.4   (22.5)   22.9   101.9%   (8.6) (42.7) 34.1   79.8%
(loss)
EBITDA             10.7  (9.7)    20.4   210.4%   11.2  (17.0) 28.2   166.0%
Adjusted EBITDA    11.2  7.5      3.6    48.4%    13.4  4.4    9.0    205.7%



For the first half of 2013, company-wide order volumes decreased 5% compared
to the first half of 2012, and order volume changes by segment were as
follows:

     oVoyager Sopris Learning decreased 10%
     oLearning A-Z increased 11%
     oExploreLearning increased 23%
     oKurzweil/IntelliTools decreased 14%

The Company's Voyager Sopris Learning and Kurzweil/IntelliTools segments
experienced order volume challenges in the first half of 2013, while Learning
A-Z and ExploreLearning continued their double digit growth. 

"Learning A-Z and ExploreLearning have a compelling value proposition in
today's educational market with quality content and innovative and
award-winning technology. We expect continued growth from these business
units," said John Campbell, chief executive officer of Cambium Learning Group,
Inc. "We have been slow to execute our strategy of transitioning the
Voyager Sopris Learning and Kurzweil/IntelliTools products to the innovative
technology-based learning solutions demanded by today's market, which has
impacted our top line growth. We believe our ongoing development efforts will
result in a product portfolio that provides school districts with updated
technology and solutions that address the issues teachers are facing with the
new Common Core State Standards. Voyager Sopris Learning's recent release of
the adolescent intervention literacy solution LANGUAGE! Live and
Kurzweil/IntelliTools' firefly offering, a subscription solution which has
shown strong growth year over year, are examples of the types of products that
we believe will reverse the downward top-line trend," continued Mr. Campbell.


Other highlights include:

  oGAAP net revenues for the first half of 2013 increased by 9% to $74.2
    million, compared with $68.3 million in the first half of 2012. In
    addition to the order volume improvement in the Company's subscription
    businesses, deferred revenue balances decreased by $9.5 million in the
    first half of 2013, as the Company recognized revenue on prior-period
    technology and service sales that were delivered during the period.
    Comparatively, deferred revenue balances decreased by $6.8 million in the
    first half of 2012. 
  oGAAP net revenues by segment for the first half of 2013, and the
    percentage change from the first half of 2012, were as follows:

       oVoyager Sopris Learning: $45.8 million, increased 6%
       oLearning A-Z: $15.7 million, increased 27%
       oExploreLearning: $7.8 million, increased 13%
       oKurzweil/IntelliTools: $4.9 million, decreased 17%

  oOn an adjusted basis, EBITDA was $13.4 million in the first half of 2013,
    up $9.0 million from $4.4 million in the first half of 2012. The increase
    in adjusted EBITDA was the result of the increase in net revenues and cost
    savings from the re-engineering and restructuring initiatives completed in
    2012.
  oIn the second quarter of 2013, the Company received a $12.3 million tax
    refund from the state of Michigan. Additionally, the Company was able to
    move $3.0 million of cash out of an escrow fund held for the benefit of a
    potential tax indemnity obligation which was not triggered. Both of these
    cash inflows are reflected as cash provided from operating activities.
    Portions of the Michigan settlement and the escrow account held for the
    benefit of the potential tax indemnity were in turn paid out to the
    holders of the contingent value rights issued in the Company's 2009 merger
    with Voyager Learning Company. The contingent value rights payments of
    $7.7 million are reflected as cash used in investing activities.
  oThe Company has cash and cash equivalents of $46.3million on the balance
    sheet as of June 30, 2013. Cash provided by operations during the first
    half of 2013 was $11.0million, cash used in investing activities was
    $15.6 million, and cash used in financing activities was $0.9 million.
    The Company's operations are highly seasonal and the first half of the
    year is historically cash flow negative. 

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
(In thousands, except per share data)
(Unaudited)
                             Three Months Ended       Six Months Ended
                             June30,    June30,      June30,    June30,
                             2013        2012          2013        2012
Net revenues                 $ 42,786    $ 40,429      $ 74,215    $ 68,284
Cost of revenues:
Cost of revenues               12,647      14,397        24,050      25,563
Amortization expense           4,281       6,579         7,988       12,949
Total cost of revenues         16,928      20,976        32,038      38,512
Research and development       2,528       2,652         4,859       5,984
expense
Sales and marketing expense    11,715      12,041        22,048      23,937
General and administrative     4,880       5,061         11,673      10,806
expense
Shipping and handling costs    399         954           698         1,281
Depreciation and               1,220       1,591         2,436       3,250
amortization expense
Goodwill impairment            -           14,700        -           14,700
Embezzlement and related       115         44            115         (41)
expense (recoveries)
Impairment of long-lived       -           320           -           3,111
assets
Total costs and expenses       37,785      58,339        73,867      101,540
Income (loss) before
interest, other income         5,001       (17,910)      348         (33,256)
(expense) and income taxes
Net interest expense           (4,679)     (4,627)       (9,255)     (9,404)
Other income, net              211         37            430         73
Income (loss) before income    533         (22,500)      (8,477)     (42,587)
taxes
Income tax benefit (expense)   (102)       23            (170)       (154)
Net income (loss)            $ 431       $ (22,477)    $ (8,647)   $ (42,741)
Net income (loss) per common
share:
Basic net income (loss) per  $ 0.01      $ (0.45)      $ (0.18)    $ (0.86)
common share
Diluted net income (loss)    $ 0.01      $ (0.45)      $ (0.18)    $ (0.86)
per common share
Average number of common
shares and equivalents
outstanding:
Basic                          47,357      49,941        47,377      49,944
Diluted                        47,637      49,941        47,377      49,944





Cambium Learning Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
                                                 As of
                                                 June30,        December31,
                                                 2013            2012
ASSETS                                             (unaudited)
Current assets:
Cash and cash equivalents                        $ 46,271        $  51,904
Accounts receivable, net                           20,900           17,813
Inventory                                          12,030           16,620
Tax receivables                                    92               12,234
Restricted assets, current                         1,350            4,387
Assets held for sale                               261              380
Other current assets                               4,954            5,892
Total current assets                               85,858           109,230
Property, equipment and software at cost           39,537           35,535
Accumulated depreciation and amortization          (18,510)         (14,514)
Property, equipment and software, net              21,027           21,021
Goodwill                                           47,404           47,404
Acquired curriculum and technology intangibles,    7,446            9,320
net
Acquired publishing rights, net                    6,154            7,602
Other intangible assets, net                       6,933            7,836
Pre-publication costs, net                         13,329           11,660
Restricted assets, less current portion            6,107            6,754
Other assets                                       9,341            9,632
Total assets                                     $ 203,599       $  230,459





Cambium Learning Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
                                                 As of
                                                 June30,        December31,
                                                 2013            2012
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)     (unaudited)
Current liabilities:
Capital lease obligations, current               $ 1,068         $  1,290
Accounts payable                                   2,354            3,007
Contingent value rights, current                   —                7,599
Accrued expenses                                   21,042           20,530
Deferred revenue, current                          35,114           45,974
Total current liabilities                          59,578           78,400
Long-term liabilities:
Long-term debt                                     174,409          174,328
Capital lease obligations, less current portion    2,534            3,014
Deferred revenue, less current portion             6,962            5,631
Other liabilities                                  14,593           15,131
Total long-term liabilities                        198,498          198,104
Stockholders' equity (deficit):
Preferred stock ($.001 par value, 15,000 shares
authorized, zero shares issued and outstanding     —                —
at June30, 2013 and December31, 2012)
Common stock ($.001 par value, 150,000 shares
authorized, 51,208 and 51,208 shares issued, and
46,904 and 47,098 shares outstanding at June30,   51               51
2013 and December31, 2012,
respectively)
Capital surplus                                    282,849          282,450
Accumulated deficit                                (327,089)        (318,442)
Treasury stock at cost (4,304 and 4,110 shares
at June30, 2013 and December31, 2012,            (7,772)          (7,528)
respectively)
Accumulated other comprehensive income (loss):
Pension and postretirement plans                   (2,516)          (2,576)
Accumulated other comprehensive income (loss)      (2,516)          (2,576)
Total stockholders' equity (deficit)               (54,477)         (46,045)
Total liabilities and stockholders' equity       $ 203,599       $  230,459
(deficit)





Reconciliation Between Net Revenues and Adjusted Net Revenues and Between Net
Income (Loss) and Adjusted EBITDA for the Three Months Ended June 30, 2013 and
2012
                                                  ThreeMonthsEndedJune30,
                                                  2013           2012
                                                  (In thousands)
                                                  (Unaudited)
Total net revenues                                $  42,786      $  40,429
Non-operational or non-cash costs included in net
revenues but excluded from adjusted net revenues:    9              123
Adjustments related to purchase accounting
Adjusted net revenues                             $  42,795      $  40,552
Net income (loss)                                 $  431         $  (22,477)
Reconciling items between net income (loss) and
EBITDA:
Depreciation and amortization                        5,501          8,170
Net interest expense                                 4,679          4,627
Income tax (benefit) expense                         102            (23)
Income (loss) from operations before interest,
income taxes, and depreciation and amortization      10,713         (9,703)
(EBITDA)
Non-operational or non-cash costs included in
EBITDA but excluded from Adjusted EBITDA:
Other income, net                                    (211)          (37)
Re-engineering and restructuring costs               —              2,045
Merger and acquisition activities                    156            343
Stock-based compensation and expense                 362            (20)
Embezzlement and related expenses (recoveries)       115            44
Adjustments related to purchase accounting           9              95
Adjustments to CVR liability                         19             54
Goodwill impairment                                  —              14,700
Adjusted EBITDA                                   $  11,163      $  7,521





Reconciliation Between Net Revenues and Adjusted Net Revenues and Between Net
Loss and Adjusted EBITDA for the Six Months Ended June 30, 2013 and 2012
                                                    SixMonthsEndedJune30,
                                                    2013           2012
                                                    (In thousands)
                                                    (Unaudited)
Total net revenues                                  $  74,215      $ 68,284
Non-operational or non-cash costs included in net
revenues but excluded from adjusted net revenues:      18            255
Adjustments related to purchase accounting
Adjusted net revenues                               $  74,233      $ 68,539
Net loss                                            $  (8,647)     $ (42,741)
Reconciling items between net loss and EBITDA:
Depreciation and amortization                          10,424        16,199
Net interest expense                                   9,255         9,404
Income tax expense                                     170           154
Income (loss) from operations before interest,
income taxes, and depreciation and amortization        11,202        (16,984)
(EBITDA)
Non-operational or non-cash costs included in
EBITDA but excluded from Adjusted EBITDA:
Other income, net                                      (430)         (73)
Re-engineering and restructuring costs                 —             5,749
Management transition                                  1,501         —
Merger and acquisition activities                      314           524
Stock-based compensation and expense                   591           205
Embezzlement and related expenses (recoveries)         115           (41)
Adjustments related to purchase accounting             38            198
Adjustments to CVR liability                           74            107
Goodwill impairment                                    —             14,700
Adjusted EBITDA                                     $  13,405      $ 4,385

SOURCE Cambium Learning Group, Inc.

Website: http://www.cambiumlearning.com