Exhibit 99.1
For Immediate Release
VARSITY GROUP REPORTS FINANCIAL RESULTS FOR
FIRST QUARTER 2004
COMPANY ANNOUNCES RECORD GROWTH OF ITS EDUPARTNERS PROGRAM AND SETS ANNUAL SHAREHOLDER MEETING DATE.
Washington, D.C., May 12, 2004– Varsity Group Inc. (OTCBB: VSTY.OB) today reported its results for the first quarter of 2004. Total revenues for the first quarter were $1.8 million, compared to $1.2 million for the same period in 2003, an increase of 49.4%. Revenues were positively impacted by the Company’s continued success in increasing the number of schools served by its eduPartners program. Net loss for the quarter was $351,000, or $0.02 per basic and diluted share, compared to a net loss of $444,000, or $0.03 per basic and diluted share, in the first quarter of 2003.
The Company also announced that the network of private middle and high schools, small colleges and distance learning organizations that are members of its eduPartners program has now reached 300 institutions nationwide, compared to approximately 200 at this time last year.
“We have continued to make great strides extending the reach of our eduPartners program,” commented Eric J. Kuhn, Chairman and Chief Executive Officer of Varsity Group Inc. “Our momentum is driven by the superior quality of our program, the continued satisfaction of our eduPartners schools, and our strong commitment to meeting the individual needs of each school community.”
“While there are still many schools completing the process of evaluating their bookstore operations for Fall 2004, our success to date has already positioned us to significantly improve upon our financial performance of 2003,” continued Kuhn.
Separately, the Company announced that its annual shareholder meeting will be held on June 24, 2004, at 10:00 am at the Park Hyatt Hotel, 24th and M St., N.W., Washington D.C.
ABOUT VARSITY GROUP INC.
Varsity Group Inc. is a leading provider of online bookstore solutions for educational institutions. Varsity Group’s eduPartners program offers educational institutions a comprehensive eCommerce solution for their textbook procurement operations. EduPartners today comprises a nationwide network of hundreds of educational institutions that have chosen to move their bookstore operations online through its innovative and convenient outsource model.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Varsity Group’s business that are not historical facts are “Forward-Looking statements” that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.
Contact:
Contact: Jack Benson
Company: Varsity Group Inc.
Title: Chief Financial Officer
Voice: 202-667-3400
URL:http://varsity-group.com
VARSITY GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
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| | | Three Months Ended March 31,
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| | | 2004
| | | 2003
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Net sales: | | | | | | | | |
Product | | $ | 1,659 | | | $ | 1,068 | |
Shipping | | | 168 | | | | 155 | |
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Total net sales | | | 1,827 | | | | 1,223 | |
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Operating expenses: | | | | | | | | |
Cost of product | | | 1,199 | | | | 776 | |
Cost of shipping | | | 137 | | | | 91 | |
Sales and marketing | | | 552 | | | | 400 | |
Product development | | | 25 | | | | 55 | |
General and administrative | | | 524 | | | | 350 | |
Non-cash compensation | | | 23 | | | | 69 | |
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Total operating expenses | | | 2,460 | | | | 1,741 | |
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Loss from operations | | | (633 | ) | | | (518 | ) |
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Other income, net | | | 60 | | | | 74 | |
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Loss before income taxes | | | (573 | ) | | | (444 | ) |
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Income tax benefit | | | 222 | | | | — | |
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Net loss | | $ | (351 | ) | | $ | (444 | ) |
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Net income per share: | | | | | | | | |
Basic and diluted | | $ | (0.02 | ) | | $ | (0.03 | ) |
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Weighted average shares: | | | | | | | | |
Basic and diluted | | | 16,631 | | | | 16,211 | |
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VARSITY GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
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| | | March 31,
2004
| | December 31,
2003
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ASSETS | | | | | | |
Current assets: | | | | | | |
Cash and cash equivalents | | | 17,964 | | | 19,904 |
Accounts receivable, net | | | 805 | | | 546 |
Inventory | | | 477 | | | 328 |
Other | | | 230 | | | 138 |
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Total current assets | | | 19,476 | | | 20,916 |
Property, plant and equipment, net | | | 285 | | | 175 |
Deferred income taxes | | | 2,315 | | | 2,093 |
Other assets | | | 22 | | | 22 |
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Total assets | | $ | 22,098 | | $ | 23,206 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
Current liabilities: | | | | | | |
Accounts payable | | $ | 86 | | $ | 176 |
Other accrued expenses and other current liabilities | | | 491 | | | 1,186 |
Sales taxes payable | | | 411 | | | 443 |
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Total current liabilities | | | 988 | | | 1,805 |
Total stockholders’ equity | | | 21,110 | | | 21,401 |
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Total liabilities and stockholders’ equity | | $ | 22,098 | | $ | 23,206 |
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