RLRN Renaissance Learning, Inc. (MM)

WISCONSIN RAPIDS, Wis., April 15 /PRNewswire-FirstCall/ -- Renaissance Learning(R), Inc. (NASDAQ:RLRN), a leading provider of technology to support personalized practice, differentiated instruction, and progress monitoring in reading, math and writing for pre K-12 schools and districts, today announced financial results for the quarter ended March 31, 2008. Revenues for the first quarter of 2008 were $29.4 million, an increase of 10.1% from first quarter 2007 revenues of $26.7 million. Net income for the first quarter of 2008 was $2.6 million, or $.09 per share, compared to net income of $1.3 million, or $.05 per share, for the first quarter last year. First quarter 2007 results included pre-tax restructuring costs of approximately $0.5 million, or $.01 per share. (Logo: http://www.newscom.com/cgi-bin/prnh/20001108/RENAISSANCELOGO) "First quarter revenue and earnings growth is a good start to 2008," commented Terrance D. Paul, Chief Executive Officer. "This growth reflects both the strong Accelerated Reader and Accelerated Math Enterprise subscription orders from the second and third quarter last year, which are being recognized as revenue now, and laptop order growth of 6% this quarter compared to the same quarter last year, the second consecutive quarter of growth for the laptop product line. "We continue to see the positive impact of our Enterprise offering, with revenue to same school AR customers increasing by over $1,200 per year and software subscription revenue growing to 40% of total software revenue in the first quarter compared to 22% last year. There is also considerable customer excitement over our recent release of the new Home Connect feature of Enterprise," continued Paul. "However, as we have indicated previously, Enterprise also has some near-term negative effects. It is causing orders to shift to the second and, even more so, the third quarters as schools align their subscriptions with budget cycles. It is also causing customers to hold off purchasing quizzes as they consider upgrading. Thus, orders were down 10.9% for the quarter, and deferred revenue decreased by $5.0 million in the first quarter of 2008 versus a $0.5 million increase in 2007. "We expect that the economic downturn will hurt school funding and our sales in a number of states, particularly California and Florida, and now believe that our initial order projections of 15-20% growth for the full year may be too aggressive," added Paul. "It is too early to predict the full year impact. However, we continue to expect orders in the second and third quarters to be strong, and with the recent release of Home Connect, we are confident of achieving solid results in 2008." Renaissance Learning added approximately 500 new customer schools in the U.S. and Canada during the quarter, bringing total North American schools that are actively using the Company's products to over 74,000. Of these, over 63,000 are using the Company's reading products, over 29,000 are using the Company's math products, and over 22,000 are using at least one Renaissance Place product. The Company will hold a conference call at 4:00 p.m. CDT today to discuss its financial results, quarterly highlights, and business outlook. The teleconference may be accessed in listen-only mode by dialing 888-603-6873, ID number 41088150 at 4:00 p.m. CDT. 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 April 15, 2008 at 8:00 p.m. through April 22, 2008 at 11:59 p.m. The replay dial-in is 800-642-1687. The conference ID number to access the replay is 41088150. Renaissance Learning, Inc. Renaissance Learning, Inc. is the world's leading provider of computer-based assessment technology for pre-K-12 schools. Adopted by more than 74,000 North American schools, Renaissance Learning's tools provide daily formative assessment and periodic progress-monitoring technology to enhance core curriculum, support differentiated instruction, and personalize practice in reading, writing, and math. Renaissance Learning products help educators make the practice component of their existing curriculum more effective by providing tools to personalize practice and easily manage the daily activities for students of all levels. As a result, teachers using Renaissance Learning products accelerate learning, get more satisfaction from teaching, and help students achieve higher test scores on state and national tests. Renaissance Learning has seven U.S. locations and subsidiaries in 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, growth prospects and management's expectations regarding orders and financial results for 2008 and future periods. These forward-looking statements are based on current expectations and various assumptions which management believes are reasonable. However, these statements involve risks 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 the failure of AR and AM Enterprise and laptop orders to achieve expected growth targets, a decline in quiz sales that exceeds forecasts, risks associated with the implementation of the Company's strategic growth plan, dependence on educational institutions and government funding, 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 2007 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. (tables to follow) RENAISSANCE LEARNING(R), INC. CONSOLIDATED STATEMENTS OF INCOME (dollar amounts in thousands, except per share amounts) (unaudited) Three Months Ended March 31, 2008 2007 Net sales: Products $22,205 $21,701 Services 7,181 4,987 Total net sales 29,386 26,688 Cost of sales: Products 4,035 3,703 Services 3,762 2,867 Total cost of sales 7,797 6,570 Gross profit 21,589 20,118 Operating expenses: Product development 4,032 5,065 Selling and marketing 9,373 9,406 General and administrative 4,129 3,842 Total operating expenses 17,534 18,313 Operating income 4,055 1,805 Other income (expense), net 168 302 Income before income taxes 4,223 2,107 Income taxes 1,605 790 Net Income $2,618 $1,317 Income per share: Basic $0.09 $0.05 Diluted $0.09 $0.05 Weighted average shares outstanding: Basic 28,759,046 28,858,799 Diluted 28,842,931 28,881,276 RENAISSANCE LEARNING(R), INC. CONSOLIDATED BALANCE SHEETS (dollar amounts in thousands) (unaudited) March 31, December 31, 2008 2007 ASSETS: Current assets: Cash and cash equivalents $7,975 $7,337 Investment securities 7,786 8,136 Accounts receivable, net 9,477 8,791 Inventories 5,981 6,273 Prepaid expenses 1,976 2,197 Income taxes receivable 137 1,450 Deferred tax asset 4,432 4,406 Other current assets 268 300 Total current assets 38,032 38,890 Investment securities 6,955 8,982 Property, plant and equipment, net 10,186 10,578 Goodwill 47,241 47,065 Other noncurrent assets 7,808 7,785 Total assets $110,222 $113,300 LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Accounts payable $3,193 $2,011 Deferred revenue 30,682 35,675 Payroll and employee benefits 4,424 4,184 Other current liabilities 3,693 3,563 Total current liabilities 41,992 45,433 Deferred revenue 2,723 2,707 Deferred compensation and other employee benefits 1,543 1,933 Income taxes payable 4,721 5,104 Other non-current liabilities 100 136 Total liabilities 51,079 55,313 Total shareholders' equity 59,143 57,987 Total liabilities and shareholders' equity $110,222 $113,300 http://www.newscom.com/cgi-bin/prnh/20001108/RENAISSANCELOGO http://photoarchive.ap.org/ DATASOURCE: Renaissance Learning, Inc. CONTACT: Susan Sutherland of Renaissance Learning, Inc., 1-877-988-8048, fax, +1-715-424-3414, Web site: http://www.renlearn.com/

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