[GRAPHIC OMITTED] WRC Media, Inc.
512 Seventh Avenue
21st Floor
New York, NY 10016
CONTACT: Michele Norris
WRC Media Inc.
908-654-3891
For Immediate Release
WRC MEDIA INC., A LEADING SUPPLEMENTARY EDUCATION
PUBLISHER, REPORTS SECOND QUARTER EARNINGS
August 10, 2000 - WRC Media Inc. announced results for the second quarter
ended June 30, 2000.
Total revenue for the second quarter of 2000 increased $1.3 million, or
2.7%, to $48.8 million from $47.6 million for the same period in 1999
(calculated on a pro forma basis to include the results of Compass
Learning, Inc., which WRC Media Inc. acquired in July 1999, and Weekly
Reader Corporation, World Almanac Education Group, Inc. and American
Guidance Service, Inc.). At American Guidance Service, Inc., sales
increased $0.7 million, or 5.8%, to $13.7 million for the second quarter of
2000 from $13.0 million for the same period in 1999 due to higher sales of
both new and revised testing assessment material. At World Almanac
Education Group, Inc., second quarter of 2000 sales increased by $0.3
million, or 2.3%, to $11.5 million from $11.3 million for the same period
in 1999 as a result of increased catalog and telemarketing sales at World
Almanac Education Library Services and Gareth Stevens, Inc.
CompassLearning, Inc. sales increased $0.8 million, or 4.1%, to $19.6
million for the second quarter of 2000 from $18.8 million for the same
period in 1999 as a result of strong growth in software revenue of 12.0%
and professional development revenue of 23.7%, slightly offset by the
anticipated erosion of service-related revenue streams supporting older
software. These increases were partially offset by a decrease in sales at
Weekly Reader Corporation of $0.5 million, or 10.4%, to $4.0 million for
the second quarter of 2000 from $4.5 million for the same period in 1999
primarily due to the discontinuation of the Summer Weekly Reader and some
softness in periodical subscriptions and licensing revenue.
WRC Media Inc.'s EBITDA increased by $1.3 million, or 14.1%, to $10.6
million for the second quarter of 2000 from $9.3 million for the same
period in 1999 (calculated on a pro forma basis to include the results of
Compass Learning, Inc., Weekly Reader Corporation, World Almanac Education
Group, Inc. and American Guidance Service, Inc.). This increase is related
to strong revenue growth in the second quarter coupled with effective cost
management and timing of certain expenses.
Net sales for the first half of 2000 increased $3.1 million, or 3.2%, to
$97.3 million from $94.2 million for the same period in 1999 (calculated on
a pro forma basis to include the results of Compass Learning, Inc., which
WRC Media Inc. acquired in July 1999, and Weekly Reader Corporation, World
Almanac Education Group, Inc. and American Guidance Service, Inc.). At
American Guidance Service, Inc., sales increased $2.0 million, or 8.4%, to
$25.6 million for the first half of 2000 from $23.6 million for the same
period in 1999 due to strong growth of both new and revised testing
assessment material and curriculum products. At World Almanac Education
Group, Inc., first half of 2000 sales also increased by $2.0 million, or
8.8%, to $24.8 million from $22.8 million for the same period in 1999 as a
result of increased catalog and telemarketing sales at World Almanac
Education Library Services and Gareth Stevens, Inc. These increases were
partially offset by a slight decrease in sales at CompassLearning, Inc. of
$0.1 million, or 0.3%, to $32.3 million for the first half of 2000 from
$32.4 million for the same period in 1999 primarily due to timing of
certain orders and an anticipated decrease in service-related revenue
supporting older software. Weekly Reader Corporation sales for the first
half of 2000 decreased by $0.8 million, or 5.5%, to $14.5 million from
$15.3 million for the same period in 1999 due to lower periodical sales
related to lower periodical circulation in the 1999-2000 school year,
coupled with some softness in licensing revenue and the discontinuation of
Summer Weekly Reader.
WRC Media Inc.'s EBITDA increased by $0.1 million, or 0.7%, to $17.1
million for the first half of 2000 from $17.0 million for the same period
in 1999 (calculated on a pro forma basis to include the results of Compass
Learning, Inc., Weekly Reader Corporation, World Almanac Education Group,
Inc. and American Guidance Service, Inc.). This increase is related to
revenue growth in the first half partially offset by continuing investment
in sales and marketing efforts at CompassLearning, Inc., telemarketing
efforts at World Almanac Education Group, Inc., product revisions at
American Guidance Service, Inc. and increased investment in international
sales
efforts at WRC Media Inc., all of which were provided for in WRC Media
Inc.'s budget for its current fiscal year.
As of June 30, 2000, WRC Media Inc.'s cash balance was $5.1 million and its
consolidated debt was $289.5 million. During the first half of 2000, WRC
Media Inc. made scheduled principal payments of $1.3 million on its senior
credit facilities and borrowed $14.0 million under its revolving credit
facility. Capital expenditures for the first half of 2000 were $3.9
million.
WRC Media Inc., a publishing and media company, creates and distributes
innovative quality supplementary educational materials for use in schools,
technology software, testing materials, reference products and teacher
materials, and appropriate products for the home and library market. WRC
Media Inc has four principal operating subsidiaries.
CompassLearning, Inc. is a leading provider of electronically delivered
instruction and assessment with over 7,000 hours of instruction and an
installed base of over 20,000 schools.
Weekly Reader Corporation publishes Weekly Reader periodicals serving over
7 million school children. It also publishes other branded periodicals and
instructional materials, including Teen Newsweek, published for middle and
high school students.
World Almanac Education Group, Inc. publishes the World Almanac, Facts on
File, Gareth Stevens and Funk and Wagnalls and has a large subscriber base
of many school, public, and private libraries.
American Guidance Service, Inc. is a leader in individually administered
assessments to evaluate learner traits and publishes a variety of
high-interest, low reading-level instructional products.
Information in this press release contains forward-looking statements based
on current expectations that involve a number of risks, uncertainties, and
assumptions. Such forward-looking statements are not guarantees of future
performance. Important factors that may cause actual outcomes and results
to differ materially from what is expressed in such forward-looking
statements are difficult to predict, and include but are not limited to:
leverage and debt service;
restrictive covenants on debt instruments; a history of losses at
CompassLearning; no prior operations as an independent company; ability to
implement the business plan; increases in paper and postage costs; customer
purchasing power and dependence on various sources of government funding;
ability to successfully compete; seasonality; dependence on intellectual
property; dependence on key management and highly skilled personnel;
ownership of the Company which may conflict with the interests of the
holders of the notes; the operating units ability to introduce new
products, product extensions and enhancements; the level of future cash
flow, debt levels, and capital expenditures and pre-publication cost
investment.
WRC Media Inc.
For the three months ended
($ amounts in millions)
Actual Increase/(Decrease)
-------------------- -----------------------
6/30/99 6/30/00 $ %
------- ------- --------- ---------
Revenue
Weekly Reader 4.5 4.0 (0.5) (10.4)%
American Guidance 13.0 13.7 0.7 5.8%
Service
World Almanac 11.3 11.5 0.3 2.3%
Education
Compass Learning 18.8 19.6 0.8 4.1%
- --------------------------------------------- -----------------------
Total Revenue 47.5 48.8 1.3 2.7%
Costs and 43.1 58.9 15.8 36.7%
Expenses
- --------------------------------------------- -----------------------
Operating 4.4 (10.1) (14.5) (328.3)%
Income/(Loss)
Interest Expense 4.8 8.8 4.0 83.7%
Other, Net (0.1) (0.0) 0.0 32.3%
(Income)/Exp
Income Taxes 0.0 0.3 0.3 1268.2%
- --------------------------------------------- -----------------------
Net Loss (0.3) (19.2) (18.9) (5463.8)%
EBITDA
Net (0.3) (19.2) (18.9) (5475.9)%
Loss
Depreciation and 4.9 21.0 16.1 326.0%
Amortization
Taxes 0.0 0.3 0.2 1109.1%
Interest 4.7 8.6 3.9 83.3%
Expense
- --------------------------------------------- -----------------------
EBITDA 9.3 10.6 1.3 14.1%
Adjusted EBITDA * 11.3 11.0 (0.3) (2.9)%
WRC Media Inc.
For the six months ended
($ amounts in millions)
Actual Increase/(Decrease)
-------------------- -----------------------
6/30/99 6/30/00 $ %
------- ------- --------- ---------
Revenue
Weekly Reader 15.3 14.5 (0.8) (5.5)%
American Guidance Service 23.6 25.6 2.0 8.4%
World Almanac Education 22.8 24.8 2.0 8.8%
Compass Learning 32.4 32.3 (0.1) (0.3)%
- ------------------------------------------------- -----------------------
Total Revenue 94.2 97.3 3.1 3.2%
Costs and Expenses 87.0 110.3 23.3 26.7%
- ------------------------------------------------- -----------------------
Operating Income/(Loss) 7.2 (13.0) (20.2) (280.5)%
Interest Expense 9.5 17.2 7.8 82.3%
Other, Net (Income)/Exp (0.1) (0.1) 0.0 31.5%
Income Taxes 0.3 0.8 0.5 178.1%
- ------------------------------------------------- -----------------------
Net Loss (2.4) (30.9) (28.5) (1203.1)%
EBITDA
Net Loss (2.4) (30.9) (28.5) (1203.1)%
Depreciation and Amortization 9.9 30.4 20.5 207.9%
Taxes 0.3 0.8 0.5 178.1%
Interest Expense 9.2 16.8 7.6 83.0%
- ------------------------------------------------- -----------------------
EBITDA 17.0 17.1 0.1 0.7%
Adjusted EBITDA * 19.4 17.5 (1.9) (9.8)%