DALLAS, July 22 /PRNewswire-FirstCall/ -- Voyager Learning Company
(OTC: VLCY.PK, the "Company"), a publisher of education materials and
provider of education solutions in the K-12 market, announced today that it
will provide a business update for the first half of 2008. The update
includes preliminary first quarter results, earnings guidance, cash
position, projected dates for completing its SEC filings and the class
action law suit.
All financial information for the years 2006, 2007 and 2008 in this
press release is preliminary. The information has not been reviewed or
audited by our independent registered public accounting firm and is
therefore subject to change.
Q1 2008 Financial Results
For the three months ending March, 31, 2008, the Voyager operating
business had preliminary and unaudited revenue of $16 million, negative
earnings before interest and taxes, or EBIT of $8 million, and negative
earnings before interest, taxes, depreciation and amortization, or EBITDA
of $3 million. This compares to 2007 preliminary and unaudited revenue of
$20 million, negative EBIT of $2 million, and positive EBITDA of $3
million. The annual quarter over quarter variance is attributable primarily
to lower revenues in the first quarter of 2008, driven by timing of sales
and higher revenue deferral rates in 2008 versus 2007 related to the
increased services and technology provided with our products. In addition,
the first quarter of 2008 includes significant upfront costs associated
with several state adoptions.
Q2 Year to Date Business Volume Relative to Prior Year
For the six months ending June 30, 2008 the Company's year-to-date
volume (as indicated by shipments of printed materials and subscriptions to
various online services) was roughly flat when compared with the same six
month period in 2007. The Company experienced year on year weakness in the
summer school market which was offset by year on year growth in shipments
of its updated Voyager Passport product, success in the Florida reading
intervention adoption and growth in its online offerings. The Company
expects to release preliminary financial results for Q2 year to date on an
investor conference call on Thursday, August 7, 2008.
Full Year Outlook
Q1 and Q2 results were in the range of expected activity as envisioned
when the Company issued guidance on April 15, 2008. As previously discussed
on conference calls, the cyclical nature of the Company's business means
that the ultimate ability to achieve full year targets rests heavily in the
peak selling months of August - October. The availability of federal and
local funding sources will play a pivotal role in these coming peak selling
months. Recent trends such as the accelerated decline in property tax
receipts at the local level and the potential future elimination of Reading
First funding as a whole at the federal level are concerning. The magnitude
of the impact of these trends on 2008 results, if any, will become more
evident over the next four to six months.
Cash Position and Cash Outlook
The Company has on hand approximately $20 million in cash and cash
equivalents. The Company has not filed its 2007 federal taxes yet, and
therefore, has not received an anticipated tax refund of $45 million to $50
million. The Company previously projected filing the 2007 returns and
receiving the refund in June or July 2008, but the filing of the 2007
return has been delayed as a result of the on-going efforts to complete the
2006 and 2007 financials. The company now anticipates it will receive the
expected refund in September or October 2008. The Company projects an
ending 2008 cash balance of $75 to $80 million which includes the
anticipated tax refund, the anticipated settlement of the class action
lawsuit and projected operating cash flow of $25 to $30 million for 2008.
The $75 to $85 million cash projection excludes remaining legacy
employee benefit plan liabilities and various employee retention agreements
of $30 to $33 million, as the majority of these outflows are expected to
occur subsequent to 2008.
Status of 2006 and 2007 SEC filings
The Company anticipates it will file its 2006 10-K by July 31, 2008. It
further expects that the 2007 10-K will be filed four to eight weeks after
the filing of the 2006 10-K. The Company provided preliminary and unaudited
2007 financial results for the Voyager Learning Company operating business
by means of a conference call on April 15, 2008. As the Company has
continued its efforts to file 2006 and 2007 financials, certain estimates
made April 15, 2008 have been updated resulting in a change to the
projected 2007 earnings before interest, taxes, depreciation and
amortization (EBITDA). EBITDA is now expected to be in the range of $28 -
$29 million versus the previously reported $30 million. This updated
information has not been reviewed or audited by our independent registered
public accounting firm and is, therefore, subject to further change.
2006 Goodwill Impairment
In the Company's April 15, 2008 conference call with investors, the
Company announced an expected impairment of goodwill related to its
education segment of between $35 and $45 million as of year end 2006. The
Company currently anticipates the actual impairment to goodwill will be
$42.5 million as of year end 2006. The Company has not completed its
impairment testing as of December 30, 2007. When such testing is completed,
it may require the Company to additionally impair goodwill or long-lived
assets.
Agreement in Principle to Settle the Securities Class Action Lawsuit
The Company has reached an agreement in principle to settle the
consolidated shareholder securities class action law suit filed against it
and certain officers and directors in the U.S. District Court for the
Eastern District of Michigan. The settlement will be funded largely by
insurance. Under the terms of the agreement, the Company would pay
approximately $5 million in fees and settlement amounts to settle the class
action law suit.
The settlement is subject to completion of a Stipulation and Agreement
of Settlement to be signed by the parties, preliminary and final court
approval and the participation of a sufficient percentage of the putative
class. There is no assurance that a final Stipulation and Agreement of
Settlement will be completed, court approval will be obtained or putative
class member participation will be sufficient. A copy of the recently
signed Memorandum of Understanding regarding this settlement will be filed
on Form 8-K with the SEC.
Settlement of the Securities and Exchange Enforcement Action
On July 22, 2008, the Securities and Exchange Commission ("SEC" or
"Commission") filed a settled enforcement action against the Company in the
United States District Court for the Eastern District of Michigan (the
"Court"). Pursuant to that settlement, the terms of which were disclosed
previously by the Company, without admitting or denying the allegations in
the Complaint, the Company consented to the filing by the Commission of a
Complaint, and to the imposition by the Court of a final judgment of
permanent injunction against the Company. The Complaint alleges civil
violations of the reporting, books and records and internal controls
provisions of the Securities Exchange Act of 1934. The proposed final
judgment will permanently enjoin the Company from future violations of
those provisions. The settlement is subject to final approval by the Court.
No monetary penalty is imposed. The settlement resolves fully the
previously disclosed SEC investigation of the Company's restatement.
Strategic Alternatives
The Company announced on January 2, 2008, that it had retained Allen &
Co. to assist the Company in evaluating strategic alternatives including a
possible sale of the Company. That review is ongoing and the Company
continues to evaluate and pursue possible strategic alternatives. Recent
conditions in the credit market and fluctuations in various government
educational funding sources have created a challenging and complex
environment for strategic alternatives. The Company cautions that there can
be no assurance that this process will result in any specific transaction
or, if any specific transaction is to occur, the timing of such a
transaction. The Company does not undertake any obligation to make any
further announcement or disclosure of any further developments with respect
to its evaluation of strategic alternatives.
Investor Conference Call
The Company will hold a conference call to discuss year to date results
and provide other corporate updates on Thursday, August 7, 2008, at 4:00
p.m. Eastern Time. The call will be based on unaudited results through June
30, 2008, for its operating business. Dial in information will be forth
coming. The conference call will also be webcast and archived on the
Company's website at http://www.voyagercompany.com
Voyager Learning Company
Non-GAAP to GAAP Reconciliations
Millions $'s Fiscal Quarter Fiscal Quarter Fiscal Year
Ended Ended Ended
March 31, 2008 March 31, 2007 December 29, 2007
Earnings from
continuing operations
before interest and
income taxes (EBIT) (8) (2) 6-7
Amortization of
Purchased Intangibles 4 4 16
All Other Depreciation
and Amortization 1 1 6
Earnings before interest,
taxes, depreciation,
and amortization
(EBITDA) (3) 3 28-29
About Voyager Learning Company
Voyager Learning Company (OTC: VLCY.PK) is based in Dallas, Texas, and
is a publisher of education materials and provider of education solutions
serving the K-12 market. Through its product lines, which include Voyager
Expanded Learning, ExploreLearning and Learning A-Z, the Company is a
leading provider of K-12 curriculum products, in-school core reading
programs, reading and math intervention programs, and professional
development programs for school districts throughout the United States.
Forward-Looking Statements
Some of the statements contained herein constitute forward-looking
statements. These statements relate to future events, the results of our
pending restatement process, and our future financial performance and
involve known and unknown risks, uncertainties and other factors that may
cause our or our markets' actual results, levels of activity, performance
or achievements to be materially different from any future results, levels
of activity, performance or achievements. These risks and other factors you
should consider include, but are not limited to, the Company's ability to
successfully conclude the review and completion and filing of its financial
results for fiscal year 2006 and 2007, the existing securities and
derivative litigation in which the Company is involved and any other
current or future litigation, results related to the investigation of the
Securities and Exchange Commission, the Company's ability to successfully
settle the securities class action litigation and the investigation with
the SEC, additional expenses related to the transition of the corporate
administrative functions to Dallas, loss of key personnel, success of
ongoing product development, maintaining acceptable margins, the ability to
control costs, changes in customer demands or industry standards, the
ability to successfully attract and retain customers, the ability to sell
additional products to existing customers and win new business from new
customers, the ability to maintain a broad customer base to avoid
dependence on a few customers, the risks and uncertainties affecting the
Company, 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 Company's business, the impact on the
Company's stock price and trading volume as a result of the Company's
common stock being traded over-the-counter, the impact of competition and
the risk that our competitors will seek to capitalize on the risks and
uncertainties confronting the Company including those listed above and the
uncertainty of economic conditions in general, financial market
performance, and other risks listed under "Risk Factors" in our filings
with the Securities and Exchange Commission. 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,"
"priorities," or the negative of such terms or other comparable
terminology. These statements are only predictions. Actual events or
results may differ materially. The Company undertakes no obligation to
update any of these statements.
SOURCE Voyager Learning Company
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Related links:
http://www.voyagercompany.com
http://www.prnewswire.com/comp/108291.html/
CONTACT:
Investors, Shannan Overbeck, +1-214-932-9476,
soverbeck@voyagerlearning.com, for Voyager Learning Company
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