[PLATO LEARNING LOGO] [LIGHTSPAN LOGO]
_____________________________________________________FOR IMMEDIATE RELEASE
JOHN MURRAY, PRESIDENT & CEO JOHN KERNAN, CHAIRMAN & CEO
GREG MELSEN, CFO MICHAEL A. SICURO, CFO
STEVE SCHUSTER, VP & TREASURER 858.824.8000
952.832.1000
PLATO LEARNING, INC. AND
LIGHTSPAN, INC. PLAN TO MERGE
MINNEAPOLIS, MN AND SAN DIEGO, CA-- SEPTEMBER 9, 2003 -- PLATO Learning, Inc.
(NASDAQ: TUTR), a leading provider of K-Adult computer-based and e-learning
solutions, today announced that it has signed an Agreement and Plan of Merger
with Lightspan, Inc. (NASDAQ: LSPND), a leading provider of curriculum-based
educational software and online products and services used in schools, at home
and in community colleges. The merger will allow PLATO Learning to offer two
strong and complimentary brands that will significantly enhance its K-12
district-level and post-secondary selling efforts.
Pursuant to the merger, PLATO Learning will acquire all the shares of
publicly-held Lightspan in exchange for shares of PLATO Learning common stock.
The definitive exchange ratio is based on the volume-weighted average of the
closing price of PLATO Learning common stock for the 15 trading days prior to
the closing date. Depending on the definitive exchange ratio, Lightspan's
shareholders will own between 28% and 33% of the fully-diluted outstanding
shares of PLATO Learning following the transaction. For example, assuming the
value of a PLATO Learning common share is greater than $7.89 per share,
approximately 6.5 million shares of PLATO Learning common stock will be issued
based on an exchange ratio of 1.330 shares of PLATO Learning common stock for
each share of Lightspan common stock. If the weighted average value of a PLATO
Learning common share declines below $7.89 per share, the exchange ratio could
increase to a maximum of 1.685 shares of PLATO Learning common stock for each
share of Lightspan common stock. The transaction requires and is subject to the
approval by both PLATO Learning and Lightspan stockholders and certain
regulatory clearances, including the effectiveness of a registration statement
registering the common stock to be issued to Lightspan stockholders and other
customary closing conditions. Lehman Brothers is acting as financial advisor to
PLATO Learning in this transaction, while Lightspan is advised by U.S. Bancorp
Piper Jaffray and Pacific Capital Partners.
Lightspan generated revenues of $50.0 million in its fiscal year ended January
31, 2003. The merger is expected to be modestly dilutive to PLATO Leaning's
earnings per share in PLATO Learning's fiscal year ending October 2004,
particularly in the earlier quarters of the fiscal year. Earnings per share will
be impacted by non-cash charges for amortization of intangible assets created as
a result of the transaction. The transaction is expected to be accretive to
earnings in 2004 excluding these charges, and is expected to be accretive to
reported earnings in PLATO Learning's fiscal year ending October 2005.
1
The combination of Lightspan and PLATO Learning creates a significant elementary
product offering with potent brand recognition. It also unites Lightspan's
Academic Systems products with PLATO Learning's community college products to
establish the largest provider of on-line content for under-prepared college
students. In addition, the merger of sales forces will provide critical mass for
servicing elementary, secondary, district level, and colleges across all product
lines and services. We believe these advantages, plus the elimination of
significant duplicate costs, will provide greater earnings and cash flow
potential for the combined company, and ultimately greater valuation.
John Murray, President and Chief Executive Officer of PLATO Leaning, said,
"PLATO Learning will emerge as a stronger, leading provider of products and
services to the K-12 market following the merger with Lightspan. Already the
leader in secondary schools, we will be the solid number two player in
elementary with an opportunity to compete for the number one spot. Recently
emerging as an enterprise-wide solutions provider at the district level, we will
be even better positioned with strong assessment systems from Lightspan's
eduTest in combination with our existing Princeton Review partnership. We will
also clearly be the leader in the post-secondary market.
Mr. Murray added, "Accountability and Assessment systems are becoming more
crucial to the compliance with and success of the No Child Left Behind (NCLB)
legislation. Lightspan's eduTest has been growing rapidly and is among the
leaders in private label assessment systems. While our recent sales traction of
the Princeton Review products has been good, the addition of eduTest will make
these systems an integral part of our product offering. Bringing together two
strong brands and having the ability to leverage two overlapping installed bases
will serve to the benefit of all current and prospective customers.
Additionally, we believe the transaction has the potential to offer substantial
value creation for the shareholders of both companies and that the merger will
improve PLATO Learning's liquidity and trading fundamentals, create a stronger
public company with better capital markets access, improve our stock as an
acquisition currency, and enhance the ability to attract additional research
sponsorship and a larger investor base."
Lightspan founder, Chairman and Chief Executive Officer, John Kernan will remain
active as a Board member of the combined companies and will be involved in the
integration of the entities under a two year consulting and non-competition
agreement. He will also serve as a consultant to Mr. Murray to ensure the smooth
transition of Lightspan's operations to PLATO Learning's management team and to
assist with the transparent transition to Lightspan's clients and shareholders.
Mr. Kernan commented, "The combined entity will have a distinct and significant
strategic advantage, as well as financial strength and profitability. This
announcement is truly exciting for the schools, teachers and students who
benefit from our respective products and services."
CONFERENCE CALL
A conference call to discuss this announcement is scheduled for Wednesday,
September 10, 2003 at 8:00 AM (CDT). The dial-in number for this call is
1-877-775-1746. Please call about ten minutes prior and inform the operator you
are participating in PLATO Learning, Inc.'s call. Should you be unable to attend
the live conference call, a recording will be available to you from 10:00 a.m.
on September 10, 2003 through midnight September 17, 2003. To access the
recording call: 1-800-642-1687. At the prompt, enter pass code number 2735680.
2
ABOUT PLATO LEARNING
PLATO Learning, Inc. is a leading provider of computer-based and e-learning
instruction for Kindergarten through adult learners, offering curricula in
reading, writing, math, science, social studies, and life and job skills. The
company also offers innovative online assessment and accountability solutions
and standards-based professional development services. With over 4,000 hours of
objective-based, problem-solving courseware, plus assessment, alignment and
curriculum management tools, we create standards-based curricula that facilitate
learning and school improvement.
With trailing 12-month revenues of about $78 million, PLATO Learning, Inc. is a
publicly held company traded as TUTR on the NASDAQ-NMS. PLATO(R) Learning
educational software is marketed to K-12 schools, colleges, job training
programs, correctional institutions, military education programs, corporations
and individuals and delivered via networks, CD-ROM, the Internet and private
intranets. It is available for immediate purchase and electronic download on the
Company's Web site.
PLATO Learning is headquartered at 10801 Nesbitt Avenue South, Bloomington,
Minnesota 55437, (952) 832-1000 or (800) 869-2000. The Company has domestic
offices throughout the United States and international offices in the United
Kingdom and Canada. International distributors are located in Puerto Rico,
Singapore, South Africa and the United Arab Emirates. The Company's Web address
is http://www.plato.com.
ABOUT LIGHTSPAN
Lightspan, Inc. (Nasdaq: LSPND), provides curriculum-based educational software
and on-line products and services that increase student achievement and enhance
teacher professional development. These products are used in schools and homes
and align to all key federal education reform initiatives, offering school
districts a complete solution to assess, align, instruct and evaluate, as a
comprehensive achievement and accountability system. More than 1,000 independent
studies prove Lightspan products enhance student achievement, improve teacher
effectiveness and help build stronger connections with families.
Lightspan, Inc. is headquartered at 10140 Campus Point Drive, San Diego,
California 92121, (858) 824-8000. The Company's Web address is
http://www.lightspan.com.
Investors and security holders are advised to read the joint proxy
statement/prospectus regarding the proposed merger when it becomes available,
because it will contain important information. Such joint proxy
statement/prospectus will be filed with the Securities and Exchange Commission
by Plato Learning and Lightspan. Investors and security holders may obtain a
free copy of the joint proxy statement/prospectus (when available) and other
documents filed by Plato Learning and Lightspan at the Securities and Exchange
Commission's web site at www.sec.gov. The joint proxy statement/prospectus and
such other documents may also be obtained from Plato Learning by directing such
request to Plato Learning, Steve Schuster, tel: (952) 832-1502; e-mail:
sschuster@plato.com. The joint proxy statement/prospectus and such other
documents may also be obtained from Lightspan by directing such request to
Lightspan, Lynne Goldacker, tel: (858) 824.8210; e-mail:
lgoldacker@lightspan.com
PLATO Learning, Lightspan and their respective executive officers and directors
may be deemed to be participants in the solicitation of proxies from
stockholders of PLATO Learning and Lightspan with respect to the transactions
contemplated by the merger agreement. A description of any interests that PLATO
Learning's or Lightspan's directors and executive officers have in the proposed
merger will be available in the joint proxy statement/prospectus. Information
regarding Lightspan officers and directors is included in Lightspan's Proxy
Statement for its 2003 Annual Meeting of Stockholders filed with the Securities
and Exchange Commission on July 29, 2003. Information regarding PLATO Learning
officers and directors is included in PLATO Learning's Proxy Statement for its
2003 Annual Meeting of Stockholders filed with the Securities and Exchange
Commission on January 31, 2003. These proxy statements are available free of
charge at the Securities and Exchange Commission's web site at
http://www.sec.gov and from Lightspan and PLATO Learning.
This announcement includes forward-looking statements. PLATO Learning and
Lightspan have based these forward-looking statements on its current
expectations and projections about future events. Although PLATO Learning and
Lightspan believe that the assumptions made in connection with the
forward-looking statements are reasonable, no assurances can be given that its
assumptions and expectations will prove to have been correct. These
forward-looking statements are subject to various risks, uncertainties and
assumptions. PLATO Learning and Lightspan undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Any forward looking statements made are
subject to the risks and uncertainties as those described in the PLATO Learning
and Lightspan Annual Reports on Form 10-K for the years ended October 31, 2002
and January 31, 2003, respectively. Actual results may differ materially from
anticipated results.
(R) PLATO is a registered trademark of PLATO Learning, Inc.
(R) Lightspan is a registered trademark of Lightspan, Inc.
3