Haights Cross Communications Reports First Quarter 2006 Results; Investor and Analyst Conference Call Scheduled for Tuesday, May 9, 2006, at 4:00 PM (ET).WHITE PLAINS, N.Y. -- Haights Cross Communications, Inc. (HCC HCC Hepatocellular Carcinoma (liver cancer) HCC Hertfordshire County Council (administrative region of south eastern England UK) HCC Harford Community College (Maryland) ) today reported results for the first quarter ended March 31, 2006. First Quarter 2006 Results Revenue for the first quarter 2006 was $51.5 million, an increase of $5.1 million, or 11.1%, from revenue of $46.4 million for the first quarter 2005, reflecting a strong performance from our Test-prep and Intervention A procedure used in a lawsuit by which the court allows a third person who was not originally a party to the suit to become a party, by joining with either the plaintiff or the defendant. segment, which continued to benefit from the fourth quarter 2005 release of new products and increased demand resulting from NCLB NCLB No Child Left Behind (US education initiative) (No Child Left Behind Act The No Child Left Behind Act of 2001 (Public Law 107-110), commonly known as NCLB (IPA: /ˈnɪkəlbiː/), is a United States federal law that was passed in the House of Representatives on May 23, 2001 ) testing requirements. In addition, revenue for the first quarter 2006 includes that of Scott Publishing and CMEinfo, acquired by our Medical Education segment in April and June June: see month. 2005, respectively, for which there is no revenue counterpart counterpart n. in the law of contracts, a written paper which is one of several documents which constitute a contract, such as a written offer and a written acceptance. for the first quarter 2005. Revenue for the Library segment, representing our Recorded Books business, declined $0.7 million, or 3.7%, for the first quarter 2006 resulting from a decline in Pimsleur Pimsleur may refer to different things:
Revenue for the Test-prep and Intervention segment grew $4.2 million, or 30.7%, to $17.8 million for the first quarter 2006. Revenue for Triumph Learning and Buckle Down buck·le n. 1. A clasp for fastening two ends, as of straps or a belt, in which a device attached to one of the ends is fitted or coupled to the other. 2. , our state-specific test-prep publishers, grew $3.3 million, or 33.4%, for the quarter, reflecting continued strong demand for our new NCLB positioned test-prep products. Options Publishing revenue increased $0.9 million, or 23.9%, for the quarter, also reflecting the benefits of NCLB in promoting student proficiency pro·fi·cien·cy n. pl. pro·fi·cien·cies The state or quality of being proficient; competence. Noun 1. proficiency - the quality of having great facility and competence in basic reading and math skills. Revenue for the K-12 Supplemental Education segment, reflecting our Sundance/Newbridge business, declined $1.3 million, or 13.7%, to $7.9 million for the first quarter 2006, reflecting sales declines in our proprietary supplemental education products, we believe resulting from substantially increased competition in the supplemental education market as previously reported. Revenue for the Medical Education segment increased $2.9 million for the first quarter 2006, including the first quarter 2006 revenue of Scott Publishing and CMEinfo both acquired in the second quarter 2005. Revenue from our existing core Oakstone Medical product line increased $0.2 million, or 7.1%, primarily due to growth in the core practical reviews product line. Income from operations for the first quarter 2006 decreased $1.4 million, or 23.6%, to $4.7 million from $6.1 million for the first quarter of 2005 reflecting our $5.1 million increase in revenue and associated gross margin gain for the period, offset by $4.1 million of increased selling, general and administrative expenses, $1.4 million increased amortization of pre-publication costs, and a $0.1 million increase in other depreciation and amortization. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become , which we define as earnings before interest, taxes, depreciation, and amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. , increased $0.1 million, or 1.3%, to $10.4 million for the first quarter 2006, as our revenue and gross margin gain was almost entirely offset by increased selling, general and administrative expenses. Capital expenditures -- pre-publication costs relates to costs incurred in the development of new products. For the first quarter 2006, HCC invested $5.6 million in pre-publication costs, compared to $4.3 million during the first quarter 2005, reflecting the inclusion of our newly acquired businesses as well as increased investments in our Triumph Learning and Buckle Down businesses. HCC anticipates pre-publication expenditures of approximately $26.0 million for fiscal year 2006. Capital expenditures -- property and equipment relates to the purchase of tangible fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → such as computers, software, and leasehold improvements Leasehold Improvement Improvements on a leased asset that increase the value of the asset. Notes: A leasehold improvement is classified as an asset that must be depreciated over time. . For the first quarter 2006, HCC invested $1.2 million in property and equipment, compared to $0.7 million during the first quarter 2005. HCC anticipates expenditures of approximately $4.1 million for the fiscal year 2006. Peter J. Quandt, HCC Chairman and Chief Executive Officer, said: "First quarter results were in line with our expectations. We are very pleased with the continued growth in our Test-prep and Intervention businesses, and we continue to focus our best efforts on returning Sundance/Newbridge to a sales and profit growth performance, which we are hopeful can be achieved in later periods this fiscal year." Investor Conference Call HCC's conference call for investors, analysts, and the media will be held on May 9, 2006, starting at 4:00 PM (ET). Participating in the call will be Peter J. Quandt, HCC Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , and Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. J. Crecca, HCC Executive Vice President and CFO See Chief Financial Officer. . To participate, please call 1-800-230-1951 (USA) or 612-332-1213 (International). Digitized replay of the conference call will be available from May 9, 2006, starting at 7:30 PM (ET) ending on June 9, 2006 at 11:59 PM (ET). To listen to the replay, please call 1-800-475-6701 (USA) or 320-365-3844 (International) and enter the access code of 826443.
Haights Cross Communications Operating Unit Highlights
First Quarter 2006
Recorded Books At Recorded Books, new standing order plans, the Classics Continuous Order Plan and "Your Coach in the Box" Standing Order Plan, launched in the first quarter of 2006, are selling well in libraries. Recorded Books' eAudiobook Service, which allows libraries to provide downloadable audiobooks to their patrons, also continues to sell well. The School Division launched a downloadable audiobook service developed for the education market and also began pre-selling its new literature-based reading program, Janet Janet: see Clouet, Jean. JANET - Joint Academic NETwork Allen's Plugged-in to Reading. The product is scheduled to begin shipping in late June. The Consumer Division's revenues for the first quarter 2006 grew 28% over first quarter 2005, driven by Recorded Books Unlimited, whose membership topped 7,000 at the end of the quarter. The acquisitions team signed several significant rights deals, including new works by Cormac McCarthy For the musician, see . Cormac McCarthy, born Charles McCarthy,[1] July 20th, 1933 in Providence, Rhode Island, is a Pulitzer Prize-winning American novelist who has authored ten novels in the Southern Gothic, western, and post-apocalyptic genres. , Walter Mosley Walter Mosley (born January 12, 1952) is a prominent American novelist, most widely recognized for his crime fiction. Mosley has written a series of best-selling historical mysteries featuring the hard-boiled detective Easy Rawlins, a black private investigator and World War , Lee Smith, Nevada Smith is a small town in Lyon County, Nevada. Transportation Air service is located at Rosaschi Air Park. External links The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs Mullen Mul´len n. 1. (Bot.) See Mullein. . Triumph Learning/Buckle Down Publishing Triumph Learning and Buckle Down together grew sales in excess of 30% in the quarter. Buckle Down appointed Thomas Emrick President and General Manager. Emrick had served as Buckle Down Executive Vice President and Publisher. Triumph Learning received three nominations for the Association of Educational Publishing's annual Distinguished Achievement Awards. These Golden Lamp awards recognize the top achievement in educational publishing. Buckle Down began the process of moving of its customer service and shipping operations from Iowa City Iowa City, city (1990 pop. 59,738), seat of Johnson co., E Iowa, on both sides of the Iowa River; founded 1839 as the capital of Iowa Territory, inc. 1853. Among its manufactures are foam rubber, animal feed, paper, and food products. The city is the seat of the Univ. to the consolidated Haights Cross Operations facility in Northborough, MA. The move is expected to be completed during the second quarter of 2006 and will result in substantial cost savings. Buckle Down's finance and accounting functions are being consolidated at Triumph's headquarters in Manhattan Manhattan, indigenous people of North America Manhattan (mănhăt`ən), indigenous people of North America of the Algonquian-Wakashan linguistic stock (see Native American languages). . Buckle Down re-launched its Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and product line, and is now the only company offering a complete series of books that support the new Florida Comprehensive Achievement Test standards. Buckle Down also introduced new test preparation materials for Oklahoma Oklahoma (ōkləhō`mə), state in SW United States. It is bordered by Missouri and Arkansas (E); Texas, partially across the Red R. (S, W); New Mexico, across the narrow edge of the Oklahoma Panhandle (W); and Colorado and Kansas (N). , the first and only such series developed exclusively for Oklahoma's Core Curriculum Test (OCCT OCCT Off Campus College Transport (Binghamton University, NY bus service) OCCT Off Campus College Transport OCCT Orange County Children's Theater (Stanton, CA) OCCT Oil Cooler Coolant Temperature ). Options Publishing Options Publishing's sales for the first quarter grew 23.9%. Sales in the Northeast and mid-West were particularly strong, reflecting demand for new products as well as intervention and parent involvement materials. Also in the first quarter, Options Publishing's direct sales force began representing Buckle Down Publishing state-specific test-prep products in three states. As a result of this early success, Options Publishing now represents Buckle Down products in five additional large states, bringing the total to eight states. Options Publishing also received notification of several significant summer school adoptions that will contribute to second-quarter growth. Sundance/Newbridge Educational Publishing As announced in the fourth quarter last year, Paul Konowitch was promoted to President of Sundance/Newbridge following the retirement of Bob Laranga. Konowitch had been Senior Vice President for Corporate and New Business Development at Haights Cross Communications. In the first quarter, Michael Morley Michael Morley may refer to one of the following people:
Oakstone Publishing Oakstone Publishing appointed Andrew Thorne Senior Vice President of Marketing. Prior to joining Oakstone, Thorne was Vice President of Marketing for Oxmoor House, the book publishing book publishing. The term publishing means, in the broadest sense, making something publicly known. Usually it refers to the issuing of printed materials, such as books, magazines, periodicals, and the like. and product marketing arm of Southern Progress Corporation. Oakstone Medical Publishing launched two board review courses in video and audio formats, Cleveland Clinic's Pediatric pediatric /pe·di·at·ric/ (pe?de-at´rik) pertaining to the health of children. pe·di·at·ric adj. Of or relating to pediatrics. Board Review Symposium symposium In ancient Greece, an aristocratic banquet at which men met to discuss philosophical and political issues and recite poetry. It began as a warrior feast. Rooms were designed specifically for the proceedings. and Cleveland Clinic's Endocrinology endocrinology Medical discipline dealing with regulation of body functions by hormones and other biochemicals and treatment of endocrine system imbalances. In 1841 Friedrich Gustav Henle first recognized “ductless glands,” which secrete products directly into and Metabolism metabolism, sum of all biochemical processes involved in life. Two subcategories of metabolism are anabolism, the building up of complex organic molecules from simpler precursors, and catabolism, the breakdown of complex substances into simpler molecules, often Board Review; Johns Hopkins University Johns Hopkins University, mainly at Baltimore, Md. Johns Hopkins in 1867 had a group of his associates incorporated as the trustees of a university and a hospital, endowing each with $3.5 million. Daniel C. School of Medicine's Pain Medicine Update; University of California The University of California has a combined student body of more than 191,000 students, over 1,340,000 living alumni, and a combined systemwide and campus endowment of just over $7.3 billion (8th largest in the United States). at San Francisco's Advances in Clinical MR/CT Imaging in video format; and recorded new course offerings with two prestigious medical schools, which are scheduled for launch in second quarter 2006. Oakstone Wellness Publishing launched six new health and wellness posters, which complement its recently launched health and wellness observances posters, including such titles as Smart Eating, Boosting Energy and Beating Fatigue fatigue, in engineering fatigue, in engineering, microscopic cracking of materials, especially metals, after repeated applications of stress. Fissures may be formed within pieces of metal during their manufacture when, while cooling from the molten state, ; 10 new health and wellness brochure titles, including Healthy, Healthy Heart, The Big Six Heartbreakers and Healthy Top 10; and "Three Steps to Safety" table-top poster series (12 titles), including Protecting Your Back, Prevent Hearing Loss and Easy Ergonomics ergonomics, the engineering science concerned with the physical and psychological relationship between machines and the people who use them. The ergonomicist takes an empirical approach to the study of human-machine interactions. .
Results of Operations:
Three Months Ended
March 31,
2006 2005
--------- --------
Library $18,744 $19,459
Test-prep and Intervention 17,810 13,622
K-12 Supplemental Education 7,940 9,201
Medical Education 6,996 4,084
--------- --------
Total Revenue $51,490 $46,366
Operating Expenses 46,816 40,246
--------- --------
Income From Operations 4,674 6,120
Net Income/(Loss) $(12,804) $(9,169)
========= ========
Other Financial Data:
Three Months Ended
March 31,
2006 2005
--------- --------
EBITDA by Segment:
Library $5,211 $5,783
Test-prep and Intervention 5,417 3,500
K-12 Supplemental Education 406 1,996
Medical Education 862 367
Corporate (1,530) (1,414)
--------- --------
EBITDA $10,366 $10,232
Adjusted EBITDA $10,500 $10,420
"EBITDA" is defined as net loss before interest, taxes, depreciation,
amortization, discontinued operations and cumulative effect of a
change in accounting for goodwill. Adjusted EBITDA is defined as
EBITDA adjusted for restructuring and related charges (see table).
We present EBITDA because we believe that EBITDA provides useful
information regarding our operating results. We rely on EBITDA
as a primary measure to review and assess the operational performance
of our company and our management team in connection with executive
compensation and bonus plans. We also use EBITDA to compare our
current operating results with corresponding historical periods and
with the operating performance of other publishing companies and for
evaluating acquisition targets. We believe it is useful to investors
to provide disclosures of our operating results on the same basis as
that used by our management. We also believe it can assist investors
in comparing our performance to that of other publishing companies on
a consistent basis without regard to depreciation, amortization,
interest, taxes, and cumulative effects of accounting changes and
discontinued operations that do not directly affect our operations.
EBITDA has limitations as an analytical tool, and you should not
consider it in isolation, or as a substitute for net income, cash
flows from operating activities and other consolidated income or cash
flow statement data prepared in accordance with accounting principles
generally accepted in the United States. Some of the limitations are:
-- EBITDA does not reflect our cash expenditures or future
requirements for capital expenditures or capitalized
pre-publication costs;
-- EBITDA does not reflect changes in, or cash requirements for,
our working capital needs;
-- EBITDA does not reflect the significant interest expense, or
the cash requirements necessary to service interest or
principal payments on our debt;
-- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to
be replaced in the future, and EBITDA does not reflect any
cash requirements for such replacements and
-- Other companies in our industry may calculate EBITDA
differently than we do, thereby limiting its usefulness as a
comparative measure.
Because of these limitations, EBITDA should not be considered a
measure of discretionary cash available to us to invest in the growth
of our business or as a measure of performance in compliance with
GAAP. We compensate for these limitations by relying primarily on our
GAAP results and using EBITDA on supplementary basis.
Reconciliation of Net Income/(Loss) to EBITDA and Adjusted EBITDA:
Three Months Ended
March 31,
2006 2005
--------- --------
Net Income/(Loss) $(12,804) $(9,169)
Interest Expense and Other Including Income
Taxes and Discontinued Operations 17,478 15,289
--------- --------
Income From Operations 4,674 6,120
Amortization of Pre-publication Costs 4,339 2,904
Depreciation and Amortization 1,353 1,208
--------- --------
EBITDA $10,366 $10,232
Restructuring and Restructuring Related Charges 134 188
--------- --------
Adjusted EBITDA $10,500 $10,420
Other Data:
Three Months Ended
March 31,
2006 2005
------- -------
Capital Expenditures - Product Development Costs
(Pre-publication Costs) $5,605 $4,315
Capital Expenditures - Property and Equipment $1,173 $715
------- -------
Balance Sheet Data:
As of
March 31, 2006
--------------
Cash and Cash Equivalents $53,630
Working Capital $72,127
Long Term Debt including current portion:
Senior secured term loan $127,125
11 3/4% senior notes (1) 172,510
12 1/2% senior discount notes 95,714
Series B senior preferred stock (2) 133,038
--------------
$528,387
Redeemable preferred stock:
Series A preferred stock (3) 39,124
Series C preferred stock (4) 1,602
--------------
$40,726
(1) Face value at March 31, 2006 is $170,000
(2) Approximate aggregate liquidation value as of March 31, 2006 of
$134,646
(3) Approximate aggregate liquidation value as of March 31, 2006 of
$37,050
(4) Approximate aggregate liquidation value as of March 31, 2006 of
$3,858
About Haights Cross Communications: Founded in 1997 and based in White Plains, NY, Haights Cross Communications is a premier educational and library publisher dedicated to creating the finest books, audio products, periodicals, software and online services, serving the following markets: K-12 supplemental education, public library and school publishing, audio books, and medical continuing education continuing education: see adult education. continuing education or adult education Any form of learning provided for adults. In the U.S. the University of Wisconsin was the first academic institution to offer such programs (1904). publishing. Haights Cross companies include: Sundance/Newbridge Educational Publishing (Northborough, MA), Triumph Learning (New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , NY), Buckle Down Publishing (Iowa City, IA), Options Publishing (Merrimack, NH), Recorded Books (Prince Frederick There are several people named Prince Frederick:
Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement: This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "could," "would," "expect," "plan," "anticipate," "believe," "potential" and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. These risks, uncertainties and other factors may cause our actual results, performances or achievements to be materially different from those expressed or implied by our forward-looking statements. Factors that may cause our actual results to differ materially from our forward-looking statements include, among others, changes in external market factors, changes in our business or growth strategy, or an inability to execute our strategy due to changes in our industry or the economy generally, the emergence of new or growing competitors and various other competitive factors. In light of these risks and uncertainties, there can be no assurance that the events and circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or described in forward-looking statements contained in this press release will in fact occur. You should read this press release completely and with the understanding that our actual results may be materially different from what we expect. We will not update these forward-looking statements, even though our situation may change in the future. We qualify all of our forward-looking statements by these cautionary statements. |
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