[PLATO LEARNING LOGO]
FOR IMMEDIATE RELEASE
CONTACT: JOHN MURRAY -- CHAIRMAN, PRESIDENT & CEO
GREG MELSEN -- CFO
STEVE SCHUSTER -- VP & TREASURER
952.832.1000
PLATO LEARNING, INC.
PROVIDES UPDATED FINANCIAL GUIDANCE FOR
THIRD QUARTER AND FISCAL YEAR 2004
MINNEAPOLIS, MN -- AUGUST 11, 2004 -- PLATO Learning, Inc. (NASDAQ: TUTR), a
leading provider of K-Adult computer-based and e-learning solutions, announced
today that it expects revenues for the third fiscal quarter ended July 31, 2004
to total approximately $40.0 million to $41.0 million. The Company presently
anticipates its revenues for the fiscal year ending October 31, 2004 will be in
the range of $143.0 million to $147.0 million. As a result, net earnings will
also be less than anticipated, but are expected to benefit from the Company's
continued leverage of operations.
Revenues and operating results for the third quarter ended July 31, 2004 will be
announced on August 26, 2004 following completion of the Company's regular
quarterly closing and analysis procedures and review by the Company's
independent auditors. Final results could vary from those currently projected.
John Murray, Chairman, President and CEO, said, "Despite strong sales order
intake and several large wins in what continues to be a challenging environment,
our revenue results for the third quarter fell below our expectations. The
shortfall was primarily driven by market conditions which in turn resulted in a
product mix significantly different from that planned. While disappointing in
the short term, this results in an increase in deferred revenue which provides
greater visibility into future revenues. We have also now merged the PLATO
Learning and former Lightspan order processing systems and procedures, which
will be of long-term benefit. Unfortunately, some of our third quarter
transactions contained terms inconsistent with our policies and could not be
recognized as revenue. Our challenge now is to maximize our combined selling
opportunities and effectively utilize our processes and systems. Finally, during
these tough economic times, we continue to tighten our revenue recognition
policies and are taking revenue only on a cash basis for an increasing number of
deals."
Mr. Murray continued, "Our license fee, subscription and services revenue
categories are all expected to show growth. However, our hardware and other
revenue declined in the third quarter relative to the second quarter 2004
revenue and the third quarter 2003 pro forma revenue, assuming Lightspan had
been combined with PLATO Learning in the third quarter of 2003. Our other
financial measurements are expected to improve, including progress in our
accounts receivable metrics. Cash and marketable securities are approximately
$31 million at July 31, 2004, up more than $9 million from the April 30, 2004
balances. Most importantly, we have significantly leveraged our operations to
yield substantial improvement in operating profits and cash flows which is very
noteworthy when compared to the pro forma combined results of PLATO Learning and
Lightspan."
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Mr. Murray added, "While these recent results have also caused us to reduce our
projected revenues and results of operations for the full fiscal year, we remain
optimistic about fourth quarter performance and should end the year with growth
in excess of the overall market. Our focus is on maximizing profitable revenue
growth to enhance shareholder value. While we believe the school spending
environment remains soft, especially as state budgets are being finalized,
funding is available for quality products that deliver measurable results. We
believe PLATO Learning's product and service offerings and business model are
the best in the industry and continue to be optimistic about our potential for
future revenue and earnings growth."
USE OF NON-GAAP FINANCIAL MEASURES
The non-GAAP financial measures used in this press release present certain
combined operations as if Lightspan had been acquired as of November 1, 2002.
These non-GAAP financial measures are not prepared in accordance with generally
accepted accounting principles and may be different from non-GAAP financial
measures used by other companies. Non-GAAP financial measures should not be
considered as a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP. PLATO Learning's management views
these non-GAAP financial measures to be helpful in assessing the Company's
progress in integrating the operations of Lightspan. In addition, these non-GAAP
financial measures facilitate management's internal comparisons to PLATO
Learning's historical operating results and comparisons to competitors'
operating results. PLATO Learning includes these non-GAAP financial measures in
its earnings announcement because the Company believes they are useful to
investors in allowing for greater transparency related to supplemental
information used by management in its financial and operational analysis.
QUARTERLY CONFERENCE CALL
A conference call to discuss this announcement is scheduled for today at 3:30 PM
(CDT). The dial-in number for this call is 1-877-775-1746. Please call ten
minutes prior to the start of the call and inform the operator you are
participating in PLATO Learning's call. Should you be unable to attend the live
conference call, a recording will be available to you from 4:30 p.m. on August
11, 2004, through midnight August 20, 2004. To access the recording call:
1-800-642-1687. At the prompt, enter pass code number 9405114.
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 6,000 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 approximately $112 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 and colleges. We also
sell to job training programs, correctional institutions, military education
programs, corporations and individuals and delivered via networks, CD-ROM, the
Internet and private intranets.
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.
This announcement includes forward-looking statements. PLATO Learning has based
these forward-looking statements on its current expectations and projections
about future events. Although PLATO Learning believes that its 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 undertakes 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 Company's
Annual Report on Form 10-K for the year ended October 31, 2003. Actual results
may differ materially from anticipated results.
(R) PLATO is a registered trademark of PLATO Learning, Inc. PLATO Learning is a
trademark of PLATO Learning, Inc.
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