RLRN Renaissance Learning, Inc. (MM)

Renaissance Learning(R) Announces Second Quarter Financial Results WISCONSIN RAPIDS, Wis., July 19 /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 three and six month periods ended June 30, 2004. Revenues for the second quarter of 2004 were $31.2 million, a decrease of 7.2% from second quarter 2003 revenues of $33.6 million. Net income for the quarter was $7.7 million compared to net income of $9.0 million for the second quarter 2003, a decrease of 14.4%. Earnings per share for the quarter were $0.25, compared to $0.29 per share for second quarter 2003. (Logo: http://www.newscom.com/cgi-bin/prnh/20001108/RENAISSANCELOGO ) Revenues for the six-month period ended June 30, 2004 were $62.7 million, down 7.6% from the 2003 revenues of $67.8 million. Net income for the six- month period of $13.6 million was down by 18.1% from the 2003 net income of $16.6 million. Earnings per share for the first half of 2004 was $0.44 per share compared to $0.53 per share earned in the first six months of 2003. "Second quarter financial results continued to be affected by the difficult school funding environment and the transition to our new subscription based Renaissance Place platform," commented John R. Hickey, president and chief executive officer of Renaissance Learning, Inc. "However, with deferred revenue growth of about $2.1 million over the previous quarter there is strong evidence we have turned the corner and that our strategies are working. Over 2,200 schools have purchased Renaissance Place and quote activity continues to be excellent." "Although it now appears unlikely that we will achieve full year growth for 2004, we expect our second half sales and earnings to grow over the same period of 2003," continued Hickey. "Even more important, we expect Renaissance Place and our new services will continue to gain momentum making the longer term look quite promising." Renaissance Learning added about 600 new customer schools in the U.S. and Canada during the quarter, bringing total North American schools using Company products to over 66,000. Of these, about 63,000 use the Company's reading products and about 24,000 use math. 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 888-868-9083 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 July 19, 2004 at 8:00 p.m. through July 26, 2004 at 11:59 p.m. The replay dial-in is 877-519-4471. The conference ID number to access the replay is 4938518. Renaissance Learning(R), Inc., is a leading provider of research-based learning information systems software, school improvement programs, teacher training and consulting. Adopted by over 66,000 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 future financial and operating results, 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 those matters disclosed in the Company's Annual Report on Form 10-K, quarterly reports on Form 10-Q and the Company's other Securities and Exchange Commission filings which factors are incorporated herein by reference. RENAISSANCE LEARNING(R), INC. CONSOLIDATED STATEMENTS OF INCOME (dollar amounts in thousands, except per share amounts) (unaudited) Three Months Six Months ended June 30, ended June 30, 2004 2003 2004 2003 Net sales: Products $26,315 $28,698 $51,400 $55,888 Services 4,866 4,918 11,314 11,955 Total net sales 31,181 33,616 62,714 67,843 Cost of sales: Products 1,798 2,856 3,588 6,024 Services 2,191 2,045 5,937 5,402 Total cost of sales 3,989 4,901 9,525 11,426 Gross profit 27,192 28,715 53,189 56,417 Operating expenses: Product development 4,247 4,201 8,451 8,664 Selling and marketing 7,667 6,748 17,017 14,851 General and administrative 3,366 3,942 6,763 7,405 Total operating expenses 15,280 14,891 32,231 30,920 Operating income 11,912 13,824 20,958 25,497 Other income (expense), net 287 712 672 1,444 Income before taxes 12,199 14,536 21,630 26,941 Income taxes 4,514 5,560 8,003 10,305 Net income $7,685 $8,976 $13,627 $16,636 Earnings per share: Basic $0.25 $0.29 $0.44 $0.53 Diluted $0.25 $0.29 $0.44 $0.53 Weighted average shares outstanding: Basic 31,076,098 30,927,711 31,019,830 31,289,921 Diluted 31,254,214 31,091,949 31,228,966 31,423,459 RENAISSANCE LEARNING(R), INC. CONSOLIDATED BALANCE SHEETS (dollar amounts in thousands) June 30, December 31, 2004 2003 (unaudited) ASSETS: Current assets: Cash and cash equivalents $21,524 $62,524 Investment securities 24,476 42,825 Accounts receivable, net 13,503 13,182 Inventories 2,780 2,354 Prepaid expenses 702 1,352 Deferred tax asset 3,833 3,743 Other current assets 621 889 Total current assets 67,439 126,869 Investment Securities 15,132 6.485 Property, plant and equipment, net 19,765 20,536 Deferred tax asset 1,687 1,795 Other assets 3,710 3,746 Total assets $107,733 $159,431 LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Accounts payable $2,457 $3,144 Deferred revenue 12,920 10,705 Payroll and employee benefits 3,250 3,153 Income taxes payable 503 2,295 Other current liabilities 4,357 4,869 Total current liabilities 23,487 24,166 Deferred revenue 576 800 Deferred compensation 1,095 958 Total liabilities 25,158 25,924 Minority interest 154 177 Total shareholders' equity 82,421 133,330 Total liabilities and shareholders' equity $107,733 $159,431 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, Email, Web site: http://www.renlearn.com/

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