As filed with the Securities and Exchange Commission on January 12, 2000
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM S-3
Registration Statement Under The Securities Act of 1933
________________
ADVANTAGE LEARNING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1559474
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2911 Peach Street
P.O. Box 8036
Wisconsin Rapids, Wisconsin 54495-8036
(715) 424-3636
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Copies of all communications to:
Michael H. Baum Randall J. Erickson
Advantage Learning Systems, Inc. Godfrey & Kahn, S.C.
901 Deming Way, Suite 101 780 North Water Street
Madison, Wisconsin 53717 Milwaukee, WI 53202
(608) 664-3880 (414) 273-3500
(Address, including zip code, and
telephone number, including area code,
of agent for service)
________________
Approximate date of commencement of proposed sale to
the public: As soon as practicable after the effective
date of this Registration Statement.
If the only securities being registered on this
Form are being offered pursuant to dividend or interest
reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933,
other than securities offered only in connection with
dividend or interest reinvestment plans, check the
following box. [X]
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b)
under the Securities Act, please check the following
box and list the Securities Act registration statement
number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check
the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be
made pursuant to Rule 434, please check the following
box. [ ]
Calculation of Registration Fee
Title of each Amount Proposed maximum Proposed maximum Amount
class of to offering aggregate of
securities to be price per offering registration
be registered registered unit(1) price(1) fee
Common Stock,
$0.01 par
value per share 35,705 $13.59375 $485,364.84 $128.14
(1)Estimated solely for the purpose of calculating the
registration fee in accordance with Rule 457(c)
under the Securities Act of 1933 based on the
average of the high and low prices of the Common
Stock on the Nasdaq National Market, as reported in
the Midwest Edition of The Wall Street Journal on
January 10, 2000.
________________
The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to
delay its effective date until the Registrant shall
file a further amendment which specifically states that
this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may
determine.
<PAGE>
The information in this preliminary prospectus is not
complete and may be changed. These securities may not
be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This
preliminary prospectus is not an offer to sell nor does
it seek an offer to buy these securities in any
jurisdiction where the offer or sale is not permitted.
Subject to completion. Dated January 12, 2000
Prospectus
Advantage Learning Systems, Inc.
35,705 Shares of Common Stock
These shares of common stock are being offered by
the selling shareholders identified in the section
entitled "Selling Shareholders" on page 5 of this
Prospectus. We issued 4,445 of these shares as part of
a post-closing adjustment in connection with the
acquisition of Humanities Software, Inc. on June 9,
1999, and 31,260 of these shares in connection with the
acquisition of computerActive, Inc. on December 30, 1999.
The selling shareholders may sell these shares
from time to time in one or more types of transactions
(which may include block transactions) on the Nasdaq
National Market, in the over-the-counter market, in
negotiated transactions, or a combination of such
methods of sale, at market prices prevailing at the
time of sale, or at negotiated prices. Such
transactions may or may not involve brokers or dealers.
For more information, see the section entitled "Plan of
Distribution" beginning on page 5 of this Prospectus.
We will not receive any proceeds from the sale of
shares by the selling shareholders.
Our common stock trades on the Nasdaq National
Market under the symbol "ALSI." The last reported sale
price of our common stock on January 11, 2000 was
$13.4375 per share.
Investing in our common stock involves a high
degree of risk. See "Risk Factors" beginning on page 1
of this Prospectus.
Neither the Securities and Exchange Commission nor
any state securities commission has approved or
disapproved of these securities or determined if this
Prospectus is accurate or complete. Any representation
to the contrary is a criminal offense.
The date of this Prospectus is ___________, 2000.
<PAGE>
TABLE OF CONTENTS
Page
The Company 1
Risk Factors 1
Forward-Looking Statements 5
Selling Shareholders 5
Plan of Distribution 5
Use of Proceeds 7
Legal Matters 7
Experts 7
Where You Can Find More Information 7
Documents Incorporated by Reference 7
_______________
You should rely only on the information contained
in this Prospectus. We have not authorized anyone to
provide you with different information. Neither we nor
the selling shareholders are making an offer of these
securities in any state where the offer is not
permitted. You should not assume that the information
provided by this Prospectus is accurate as of any date
other than the date on the front of this Prospectus.
<PAGE>
THE COMPANY
Unless the context requires otherwise, the terms
"we," "our," "us" and "ALSI" refer to Advantage
Learning Systems, Inc., a Wisconsin corporation, and
its consolidated subsidiaries.
We are a leading provider of learning information
systems to kindergarten through senior high ("K-12")
schools in the United States and Canada. Our learning
information systems consist of computer software and
related training designed to improve student academic
performance by increasing the quality, quantity and
timeliness of performance data available to educators
and by facilitating increased student practice of
essential skills. Learning information systems provide
to educators benefits similar to those management
information systems provide to business managers. As
of December 31, 1999, we sold our products to
approximately 47,600, or over 40%, of the K-12 schools
in the United States and Canada.
Our flagship product, the Accelerated Reader,* is
software for motivating and monitoring increased
literature-based reading practice. We believe that the
Accelerated Reader has achieved a leading market
position as a result of its demonstrated effectiveness
in improving student reading levels and overall
academic performance. Our other primary learning
information system products include STAR Reading,*
Accelerated Math,* STAR Math* and Perfect Copy*. In
addition, we provide professional development training
for educators through our Reading Renaissance*, Math
Renaissance* and Effective Teaching* programs, test-
generation software to educational publishers and
enterprise software for training and management
throughout organizations.
ALSI was founded in 1986 and is incorporated under
the laws of the State of Wisconsin. Our common stock
is listed on the Nasdaq National Market under the
symbol "ALSI." Our principal executive offices are
located at 2911 Peach Street, P.O. Box 8036, Wisconsin
Rapids, Wisconsin 54495-8036 (telephone: (715) 424-3636).
RISK FACTORS
Investing in our common stock involves a high
degree of risk. Please carefully consider the specific
risk factors set forth below as well as other
information contained in, or incorporated by reference
into, this Prospectus before purchasing shares of our
common stock.
Reliance on Single Product Line and Significant
Distributor. Our Accelerated Reader software and
supplemental Accelerated Reader quiz disks accounted
for approximately 48%, 51% and 69% of our net sales in
1998, 1997 and 1996, respectively. Sales of our
products through one book distributor accounted for
13.9%, 14.4% and 15.2% of net sales in 1998, 1997 and
1996, respectively. An overall decline in sales of the
Accelerated Reader, supplemental quiz disks, STAR
Reading and related products, including sales through
book distributors, would have a material adverse effect
on our business, financial condition and results of
operations.
Dependence on Continued Product Development. The
K-12 educational technology and professional
development markets in which we compete are
characterized by evolving industry standards, frequent
product introductions and, to a lesser extent, sudden
technological change. Our future success will depend,
to a significant extent, on a number of factors,
including our ability to enhance our existing products
and develop and successfully introduce new products,
including new products designed for use in other areas
of the curriculum, our ability to ship new products in
a timely fashion and our ability to
- -----------------
* The Accelerated Reader and Reading Renaissance are registered
trademarks of ALSI. STAR Reading, Accelerated Math, STAR Math,
Perfect Copy, Math Renaissance and Effective Teaching are common
law trademarks of ALSI.
<PAGE>
respond quickly and in a cost efficient manner to
technological change, including shifts in operating
systems, languages, alternative delivery systems and
other environments. There can be no assurance that
products designed for use in other areas of the curriculum
besides reading will be as well received as our reading
products, particularly since such other products may require
technology and/or resources not generally available in
all schools. We attempt to maintain high standards for
the demonstrated academic effectiveness of our
products. Our adherence to these standards could delay
or inhibit the introduction of new products. Moreover,
there can be no assurance that our products will not be
rendered obsolete or that we will have sufficient
resources to make the necessary investments or be able
to develop and market the products required to maintain
our competitive position.
Management of Growth. We have recently
experienced rapid growth. If such growth continues, it
may place a strain on our financial, management and
other resources. Our ability to manage our growth
effectively will require us to attract, train,
motivate, manage and retain key employees and to
improve our operational, financial and management
information systems. If we are unable to maintain and
manage growth effectively, our business, financial
condition and results of operations would be adversely
affected.
Opposing Educational Philosophies. We focus on
developing and marketing educational products and
services that demonstrate effectiveness through
measurable results. This approach, however, is not
accepted by all academics and educators, some of whom
formulate opinions about the desirability of a
particular educational product or service based on
philosophical or other concerns rather than the
effectiveness of the product. Certain academics and
educators are opposed to the principles and
methodologies underlying and associated with our
products, such as the use of objective standards,
standardized testing, computers and motivational
techniques, among others. Some of these philosophical
opponents of our products and services have the
capacity to influence the market for our products, and
such influence could have a material adverse impact on
demand for our products and, thus, our business,
financial condition and results of operations.
Dependence on Educational Institutions and
Government Funding. Substantially all of our revenue
is derived from sales to educational institutions,
individual educators and suppliers thereto. There can
be no assurance that educational institutions and/or
individual educators will continue to invest in
technology-based products and professional development
for reading and other curricula or continue to respond
favorably to our marketing. Our inability to increase
the number of products sold or number of schools served
would adversely affect our business, financial
condition and results of operations. Because of our
dependence on educational institutions, the funding of
which is largely dependent on government support, a
substantial decrease in government budgets or funding
for educational software or technology would have a
material adverse effect on our business, financial
condition and results of operations. In addition,
certain aspects of government sponsored education
initiatives may not endorse, or be complementary to,
the principles and methodologies underlying and
associated with our products, which could adversely
affect our business, financial condition and results of
operations.
Geographic Concentration of Sales. A substantial
portion of our sales is concentrated in several states,
including Texas, Florida, California, Georgia and
Illinois, which accounted for approximately $6.4
million, $3.6 million, $3.2 million, $2.8 million and
$2.3 million, respectively, of our net sales in 1998.
If large numbers of schools or a district controlling a
large number of schools in such states were to
discontinue purchasing our products, our business,
financial condition and results of operations would be
materially adversely affected.
Highly Competitive Industry. The K-12 educational
technology and professional development markets in
which we operate are very competitive. We compete
primarily against more traditional methods of
education, training and testing, including pencil and
paper testing. In addition, we compete
<PAGE>
with other companies offering educational software products
to schools, including larger companies with greater
resources than us, such as International Business
Machines Corporation, Apple Computer, Inc. and
Broderbund Software, Inc. Our reading products also
compete more directly with products such as Scholastic
Reading Counts (formerly Electronic Bookshelf). Many
other companies, including Microsoft Corp. and Walt
Disney Co., provide educational software products which
we believe are not marketed primarily to schools.
Existing competitors may continue to broaden their
product lines, and potential competitors, including
large hardware manufacturers, software developers and
educational publishers, may enter or increase their
focus on the school market, resulting in greater
competition for us. Our success in selling our
products, particularly our reading products, may cause
competitors to focus on our products in their marketing
efforts thereby increasing direct competition. There
can be no assurance that we will continue to be able to
market our products successfully or compete effectively
in the educational products marketplace.
Dependence on Key Personnel. Our success depends
to a significant extent upon the continued active
participation of certain key members of management,
including Judith Paul and Terrance Paul, our Chairman
and Vice Chairman, respectively. In addition to
serving as Chairman of ALSI, Ms. Paul is a spokesperson
for ALSI and coordinates our public relations and
customer communications policies. Mr. Paul is
primarily responsible for our long-term strategic
planning and new product development strategy. Mr.
Paul also coordinates the research activities conducted
by the Institute for Academic Excellence, Inc., one of
our wholly-owned subsidiaries. We do not have
employment agreements with either of these persons and
have no current intention of entering into any such
employment agreements. The loss of services of either
of these persons would have a material adverse effect
on our business, financial condition and results of
operations.
Ability to Attract and Retain Qualified Personnel.
Our future success will depend, in part, upon our
continuing ability to retain the employees, including
senior management personnel, who have assisted in the
development and marketing of our products and to
attract and retain qualified additional employees
trained in computer technology, marketing and finance
to enhance our product offerings and broaden our
operations. There can be no assurance that we will
continue to be able to attract and retain such
personnel. The failure to attract or retain the
necessary personnel would have a material adverse
effect on our business, financial condition and results
of operations.
Fluctuations in Quarterly Performance. We
generally ship products as orders are received, and,
therefore, we have historically operated without
significant backlog. Thus, revenues in any quarter are
substantially dependent on the quantity of product
orders received in that quarter. The quantity of
product orders in any quarter can be affected by a
variety of factors, including the following:
* delays in the development and/or shipment of new
products can adversely affect our revenue in one or
more quarters;
* the shipment of new products for which orders have
been building for some period of time can cause the
revenues in the quarter in which shipment occurs to be
higher than revenues in preceding or subsequent
quarters; and
* seasonal variations due to, among other things,
the budget cycles of our school customers.
In addition to fluctuations in product orders, our
quarterly results can also be affected by the following:
* charges related to acquisitions, including
acquisition expenses, the write-off of in-process
research and development, the amortization of goodwill,
and similar items;
<PAGE>
* charges related to obsolete or impaired assets; and
* expenses related to product development and
marketing initiatives.
Our overall gross margins also fluctuate based upon the
mix of product sales and service sales. We realize
significantly higher margins on our product sales.
Service revenues tend to be more seasonal than product
revenues. Quarterly service revenues are typically
highest in the third quarter. This results in seasonal
variations in margins.
Share Price Volatility. Numerous factors, many of
which are beyond our control, may cause the market
price of our common stock to fluctuate significantly.
These factors include announcements of technological
innovations and/or new products by us and our
competitors, earnings releases and earnings warnings by
us and our competitors, market conditions in the
industry and the general state of the securities
markets. The market price of our common stock may
decline significantly if we fail to meet the published
earnings estimates of analysts and others. In
addition, quarterly fluctuations in our results of
operations as described above may cause significant
decline in the market price of our common stock.
Limited Protection of Intellectual Property and
Proprietary Rights. We regard certain of our
technologies as proprietary and rely primarily on a
combination of copyright, trademark and trade secret
laws and employee non-disclosure agreements to
establish and protect our proprietary rights. There
can be no assurance that the steps taken by us to
protect our rights will be adequate to prevent or deter
misappropriation. In addition, while we do not believe
that our products, trademarks or other proprietary
rights infringe upon the proprietary rights of third
parties, there can be no assurance that a third party
will not make a contrary assertion. The cost of
responding to such an assertion may be material,
whether or not the assertion is validated. The
software market has traditionally experienced
widespread unauthorized reproduction of products in
violation of intellectual property rights. Such
activity is difficult to detect and legal proceedings
to enforce intellectual property rights are often
burdensome and involve a high degree of uncertainty and
costs. There can be no assurance that our software
products will not experience unauthorized reproduction,
which would have a material adverse effect on our
business, financial condition and results of
operations.
Concentration of Share Ownership; Control by
Principal Shareholders/Management. Our principal
shareholders, Judith Paul and Terrance Paul, who are
also our Chairman and Vice Chairman, respectively,
beneficially own a substantial amount of our
outstanding common stock. As a result, such principal
shareholders have the ability to control ALSI and
direct our business and affairs.
Shares Eligible for Future Sale. Sales of a
substantial number of shares of common stock in the
public market could adversely affect the market price
for the common stock. Approximately 26,800,000 shares
are held by "affiliates" of ALSI and may be publicly
sold only if registered under the Securities Act of
1933 or sold in accordance with an applicable exemption
from registration, such as Rule 144. In addition, we
have filed registration statements under the Securities
Act of 1933 to register an aggregate of 3,000,000
shares of common stock reserved for issuance under our
1997 Stock Incentive Plan and an aggregate of 500,000
shares of common stock reserved for issuance under our
Employee Stock Purchase Plan, which will, when issued
in accordance with such plans, be eligible for
immediate sale in the public market, subject to the
Rule 144 resale limitations for affiliates.
No Payment of Cash Dividends. We do not
anticipate paying any cash dividends in the foreseeable
future.
Possible Antitakeover Effects of Certain Articles and
By-Law Provisions and Provisions of Wisconsin Law. Our
Amended and Restated Articles of Incorporation and Amended
and Restated By-Laws, along with Wisconsin statutory law,
contain provisions that could discourage potential
<PAGE>
acquisition proposals and might delay or
prevent a change in control. Such provisions could
result in ALSI being less attractive to a potential
acquiror and could result in the shareholders receiving
less for their common stock than otherwise might be
available in the event of a takeover attempt.
FORWARD-LOOKING STATEMENTS
In accordance with the Private Securities
Litigation Reform Act of 1995, we can obtain a "safe-
harbor" for forward-looking statements by identifying
those statements and by accompanying those statements
with cautionary statements which identify factors that
could cause actual results to differ materially from
those in the forward-looking statements. Accordingly,
the following information contains or may contain
forward-looking statements: (1) information included
or incorporated by reference in this Registration
Statement on Form S-3, including, without limitation,
statements with respect to growth plans, projected
sales, revenues, earnings and costs, and product
development schedules and plans, (2) information
included or incorporated by reference in our future
filings with the Securities and Exchange Commission
including, without limitation, statements with respect
to growth plans, projected sales, revenues, earnings
and costs, and product development schedules and plans
and (3) information contained in written material,
releases and oral statements issued by us, or on our
behalf, including, without limitation, statements with
respect to growth plans, projected sales, revenues,
earnings and costs, and product development schedules
and plans. Our actual results may differ materially
from those contained in the forward-looking statements
identified above. Factors which may cause such a
difference to occur include, but are not limited to,
those factors set forth in the section entitled "Risk
Factors," above.
SELLING SHAREHOLDERS
The following information regarding the common
stock offered hereby has been provided to us by the
selling shareholders identified below and reflects
information concerning beneficial ownership of common
stock as of the date of this Prospectus. The shares of
common stock offered for sale by Jon Madian, Karen
Jostad and Alan Madian were acquired by such persons in
connection with our acquisition of Humanities Software,
Inc. on June 9, 1999. These shares were issued post-
closing to reflect an adjustment in purchase price, as
contemplated by the acquisition agreement. The shares
of common stock offered for sale by Kevin Ford, Debra
Ford and the Kevra Family Trust were acquired by such
persons in connection with our acquisition of
computerActive, Inc. on December 30, 1999.
Shares Owned
Name of Shares Owned Prior Shares Offered After Completion
Selling Shareholder to this Offering Hereby(1) of this Offering
Jon Madian 11,033 2,089 0
Karen Jostad 11,033 2,089 0
Alan Madian 1,409 267 0
Kevin Ford 15,205 15,205 0
Debra Ford 12,193 12,193 0
Kevra Family Trust 3,862 3,862 0
____________
(1)Some or all of the shares of common stock covered
by this Prospectus may be offered from time to time
on a delayed or continuous basis by a selling
shareholder.
PLAN OF DISTRIBUTION
We are registering the shares of common stock
offered hereby on behalf of the selling shareholders.
As used herein, "selling shareholders" includes donees
and pledgees selling shares received from a named
selling shareholder after the date of this Prospectus.
All costs, expenses and fees in
<PAGE>
connection with the registration of the shares offered
hereby will be borne by us. Brokerage commissions and
similar selling expenses, if any, attributable to the sale
of shares will be borne by the selling shareholders. Sales
of shares of common stock may be effected by selling
shareholders from time to time in one or more types of
transactions (which may include block transactions) on
the Nasdaq National Market, in the over-the-counter
market, in negotiated transactions, or a combination of
such methods of sale, at market prices prevailing at
the time of sale, or at negotiated prices. Such
transactions may or may not involve brokers or dealers.
The selling shareholders have advised us that they have
not entered into any agreements, understandings or
arrangements with any underwriters or broker-dealers
regarding the sale of their securities, nor is there an
underwriter or coordinating broker acting in connection
with the proposed sale of shares by the selling
shareholders.
The selling shareholders may effect such
transactions by selling shares of common stock directly
to purchasers or to or through broker-dealers, which
may act as agents or principals. Such broker-dealers
may receive compensation in the form of discounts,
concessions or commissions from the selling
shareholders and/or the purchasers of shares for whom
such broker-dealers may act as agents or to whom they
sell as principal, or both (which compensation as to a
particular broker-dealer might be in excess of
customary commissions).
The selling shareholders and any broker-dealers
that act in connection with the sale of shares of
common stock might be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities
Act of 1933, and any commissions received by such
broker-dealers and any profit on the resale of the
shares sold by them while acting as principals might be
deemed to be underwriting discounts or commissions
under the Securities Act of 1933. We have agreed to
indemnify each selling shareholder against certain
liabilities, including liabilities arising under the
Securities Act of 1933. The selling shareholders may
agree to indemnify any agent, dealer or broker-dealer
that participates in transactions involving sales of
the shares against certain liabilities, including
liabilities arising under the Securities Act of 1933.
Because selling shareholders may be deemed to be
"underwriters" within the meaning of Section 2(11) of
the Securities Act of 1933, the selling shareholders
will be subject to the prospectus delivery requirements
of the Securities Act of 1933. We have informed the
selling shareholders that the anti-manipulative
provisions of Regulation M promulgated under the
Securities Exchange Act of 1934 may apply to their
sales in the market.
Selling shareholders also may resell all or a
portion of their shares of common stock in open market
transactions in reliance upon Rule 144 under the
Securities Act of 1933, provided they meet the criteria
and conform to the requirements of such Rule.
Upon being notified by a selling shareholder that
any material arrangement has been entered into with a
broker-dealer for a sale of shares through a block
trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or
dealer, we will file a supplement to this Prospectus,
if required, pursuant to Rule 424(b) under the
Securities Act of 1933, disclosing (1) the name of each
such selling shareholder and of the participating
broker-dealer(s), (2) the number of shares involved,
(3) the price at which such shares were sold, (4) the
commissions paid or discounts or concessions allowed to
such broker-dealer(s), where applicable, (5) that such
broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by
reference in this Prospectus and (6) other facts
material to the transaction. In addition, upon being
notified by a selling shareholder that a donee or
pledgee intends to sell more than 500 shares, we will
file a supplement to this Prospectus.
<PAGE>
USE OF PROCEEDS
The proceeds from the sale of shares of common
stock covered by this Prospectus are entirely for the
benefit of the selling shareholders. We will not
receive any proceeds from the sale of shares of common
stock by the selling shareholders.
LEGAL MATTERS
The validity of the shares of common stock offered
hereby has been passed upon by Godfrey & Kahn, S.C.,
Milwaukee, Wisconsin. In the opinion of Godfrey &
Kahn, S.C., the shares are duly and validly authorized,
fully paid and, subject to Section 180.0622(2)(b) of
the Wisconsin Statutes, nonassessable. Section
180.0622(2)(b) of the Wisconsin Statutes provides that
shareholders of a corporation may be assessed up to the
par value of their shares to satisfy the obligations of
such corporation to its employees for services
rendered, but not exceeding six months' service in the
case of any individual employee. Certain Wisconsin
courts have interpreted "par value" to mean the full
amount paid by the purchaser of shares upon issuance
thereof.
EXPERTS
The audited financial statements and schedules
incorporated by reference in this Prospectus have been
audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in
giving said reports.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the information requirements of
the Securities Exchange Act of 1934, and in accordance
therewith, file reports, proxy and information
statements and other information with the Securities
and Exchange Commission. We have filed with the
Securities and Exchange Commission a Registration
Statement on Form S-3 under the Securities Act of 1933
with respect to the common stock offered hereby. This
Prospectus does not contain all the information set
forth in the Registration Statement and exhibits
thereto, or amendments thereto, to which reference is
hereby made. Such reports, proxy and information
statements, Registration Statement and exhibits and
other information filed by us may be inspected and,
upon payment of prescribed fees, copied at the public
reference facilities of the Securities and Exchange
Commission at 450 Fifth Street N.W., Washington, D.C.
20549, and at the regional offices of the Securities
and Exchange Commission at Seven World Trade Center,
New York, New York 10048, and at Citicorp Center, 500
West Madison Street, Chicago, Illinois 60661. You may
obtain information on the operation of the public
reference facilities by calling the Securities and
Exchange Commission at 1-800-SEC-0330. Such
information may also be accessed electronically by
means of the Securities and Exchange Commission's
website on the Internet at http://www.sec.gov. In
addition, our common stock is listed on the Nasdaq
National Market, and such reports, proxy and
information statements, Registration Statement and
other information should be available for inspection
and copying at the offices of the National Association
of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
DOCUMENTS INCORPORATED BY REFERENCE
The Securities and Exchange Commission allows us
to "incorporate by reference" into this Prospectus the
information we file with them, which means that we can
disclose important information to you by referring you
to those documents. The information incorporated by
reference is considered to be part of this Prospectus,
and information that we file later with the Securities
and Exchange Commission will automatically update and
supercede this information. We incorporate by
reference the documents
<PAGE>
listed below and any future filings we will make with
the Securities and Exchange Commission under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
including any we make after the date we file the Registration
Statement of which this Prospectus is a part and before the
Registration Statement becomes effective:
(1) our Annual Report on Form 10-K for the
year ended December 31, 1998;
(2) our Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1999, June 30, 1999
and September 30, 1999;
(3) our Current Reports on Form 8-K dated
December 14, 1999 and December 30, 1999; and
(4) the description of our common stock
contained in our Registration Statement filed
pursuant to Section 12 of the Securities Exchange
Act of 1934, including any amendment or report
filed for the purpose of updating such
description.
We will provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon
the written or oral request of any such person, a copy
of any or all of the incorporated documents, other than
exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such
documents). Requests for such copies should be
directed to Corporate Secretary, Advantage Learning
Systems, Inc., 2911 Peach Street, P.O. Box 8036,
Wisconsin Rapids, Wisconsin 54495-8036; telephone (715) 424-3636.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated
expenses to be incurred by the Registrant in connection
with the distribution of the securities being
registered hereby:
SEC registration fee $ 128.14
Nasdaq listing fee 625.20
Accounting fees and expenses 5,000.00
Legal fees and expenses 10,000.00
Miscellaneous 34,246.66
-----------
TOTAL $50,000.00
===========
All of the above expenses, other than the SEC
registration fee, are estimates. All of the expenses
listed will be paid by the Registrant.
Item 15. Indemnification of Directors and Officers.
Section 180.0851 of the Wisconsin Business
Corporation Law (the "WBCL") requires a corporation to
indemnify a director or officer, to the extent such
person is successful on the merits or otherwise in the
defense of a proceeding, for all reasonable expenses
incurred in the proceeding, if such person was a party
to such proceeding because he or she was a director or
officer of the corporation. In cases where a director
or officer is not successful on the merits or otherwise
in the defense of a proceeding, a corporation is
required to indemnify a director or officer against
liability incurred by the director or officer in a
proceeding if such person was a party to such
proceeding because he or she is a director or officer
of the corporation unless it is determined that he or
she breached or failed to perform a duty owed to the
corporation and such breach or failure to perform
constitutes: (i) a willful failure to deal fairly with
the corporation or its shareholders in connection with
a matter in which the director or officer has a
material conflict of interest; (ii) a violation of
criminal law, unless the director or officer had
reasonable cause to believe his or her conduct was
lawful or no reasonable cause to believe his or her
conduct was unlawful; (iii) a transaction from which
the director or officer derived an improper personal
profit; or (iv) willful misconduct.
Section 180.0858 of the WBCL provides that subject
to certain limitations, the mandatory indemnification
provisions do not preclude any additional right to
indemnification or allowance of expenses that a
director or officer may have under a corporation's
articles of incorporation or by-laws, a written
agreement between the director or officer and the
corporation or a resolution of the board of directors
or the shareholders.
Unless otherwise provided in the articles of
incorporation or by-laws, or by written agreement
between the director or officer and the corporation, an
officer or director seeking indemnification is entitled
to indemnification if approved in any of the following
manners as specified in Section 180.0855 of the WBCL:
(i) by majority vote of a disinterested quorum of the
board of directors, or if such disinterested quorum
cannot be obtained, by a majority vote of a committee
of two or more disinterested directors; (ii) by
independent legal counsel chosen by a quorum of
disinterested directors or its committee (or if unable
to obtain such a quorum or committee, by a majority
vote of the full board of directors); (iii) by a panel
of three arbitrators (one of which is chosen by a
quorum of disinterested directors); (iv) by the vote of
the shareholders; (v) by a court; or (vi) by any other
method permitted in Section 180.0858 of the WBCL.
Reasonable expenses incurred by a director or
officer who is a party to a proceeding may be
reimbursed by a corporation, pursuant to Section
180.0853 of the WBCL, at such time as the director or
officer furnishes to the corporation written
affirmation of his or her good faith belief that he or
she has not breached or failed to perform his or her
duties; and written confirmation to repay any amounts
advanced if it is determined that indemnification by
the corporation is not required.
<PAGE>
Section 180.0859 of the WBCL provides that it is
the public policy of the State of Wisconsin to require
or permit indemnification, allowance of expenses and
insurance to the extent required or permitted under
Sections 180.0850 to 180.0858 of the WBCL for any
liability incurred in connection with any proceeding
involving a federal or state statute, rule or
regulation regulating the offer, sale or purchase of
securities.
As permitted by Section 180.0858, the Registrant
has adopted indemnification provisions in its by-laws
which closely track the statutory indemnification
provisions with certain exceptions. In particular,
Section 7.1 of the Registrant's by-laws, among other
items, provides that (i) an individual shall be
indemnified unless it is proved by a final judicial
adjudication that indemnification is prohibited and
(ii) payment or reimbursement of expenses, subject to
certain limitations, will be mandatory rather than
permissive. The Registrant has purchased directors'
and officers' liability insurance which insures the
Registrant's officers and directors against certain
liabilities which may arise under the Securities Act of
1933.
Item 16. Exhibits.
The following Exhibits are filed as part of this
Registration Statement.
Exhibit No. Description
5.1 Opinion of Counsel
23.1 Consent of Independent Public Accountants
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Powers of Attorney
Item 17. Undertakings.
*(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which
offers or sales are being made, a post-effective
amendment to this Registration Statement:
(i) to include any prospectus required
by Section 10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any
facts or events arising after the effective
date of the Registration Statement (or the
most recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement. Notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar value
of securities offered would not exceed that
which was registered) and any deviation from
the low or high end of the estimated maximum
offering range may be reflected in the form
of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume
and price represent no more than a 20% change
in the maximum aggregate offering price set
forth in the "Calculation of Registration
Fee" table in the effective Registration
Statement.
(iii) to include any material
information with respect to the plan of
distribution not previously disclosed in the
Registration Statement or any material change
to such information in the Registration
Statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to
be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by
the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities
offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide
offering thereof.
<PAGE>
(3) To remove from registration by means of
a post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
*(b) The undersigned Registrant hereby undertakes
that, for purposes of determining any liability under
the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934
that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein,
and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
*(h) Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and
Exchange Commission such indemnification is against
public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
____________
* Paragraph references correspond to those of Item 512
of Regulations S-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the
City of Wisconsin Rapids, State of Wisconsin, on
January 5, 2000.
ADVANTAGE LEARNING
SYSTEMS, INC.
By: /s/ Michael H. Baum
----------------------------------
Michael H. Baum, Chief Executive Officer
and a Director
Pursuant to the requirements of the Securities Act
of 1933, this Registration Statement has been signed
below by the following persons in the capacities and on
the dates indicated.
Signature Title Date
/s/ Michael H. Baum Chief Executive Officer and a Director January 5, 2000
- --------------------- (Principal Executive Officer)
Michael H. Baum
/s/ Steven A. Schmidt Vice President and Chief Financial January 5, 2000
- --------------------- Officer (Principal Financial and
Steven A. Schmidt Accounting Officer)
Directors: Judith A. Paul, Terrance D. Paul, John R. Hickey, Timothy P. Welch,
John H. Grunewald and Perry S. Akins.
By: /s/ Michael H. Baum January 5, 2000
----------------------------
Michael H. Baum, As Attorney-In-Fact*
* Pursuant to authority granted by powers of attorney which are filed herewith.
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
5.1 Opinion of Counsel
23.1 Consent of Independent Public Accountants
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Powers of Attorney
Exhibit 5.1
January 10, 2000
Advantage Learning Systems, Inc.
2911 Peach Street
Wisconsin Rapids, Wisconsin 54495-8036
Ladies and Gentlemen:
We have acted as counsel to Advantage Learning
Systems, Inc., a Wisconsin corporation (the "Company"),
in connection with the preparation of a Registration
Statement on Form S-3 to be filed with the Securities
and Exchange Commission on or about January 12, 2000
(the "Registration Statement"). The Registration
Statement relates to the sale by certain selling
shareholders of up to 35,705 shares of the Company's
common stock, $.01 par value (the "Shares").
In connection with this opinion we have examined:
(a) the Registration Statement, (b) copies of the
Company's Amended and Restated Articles of
Incorporation and By-laws, (c) certain resolutions of
the Company's Board of Directors and (d) such other
proceedings, documents and records as we have deemed
necessary to enable us to render this opinion.
Based upon the foregoing, we are of the opinion
that the Shares are duly and validly authorized, fully
paid and nonassessable, subject to Section
180.0622(2)(b) of the Wisconsin Statutes. Section
180.0622(2)(b) of the Wisconsin Statutes provides that
shareholders of a corporation may be assessed up to the
par value of their shares to satisfy the obligations of
such corporation to its employees for services
rendered, but not exceeding six months service in the
case of any individual employee. Certain Wisconsin
courts have interpreted "par value" to mean the full
amount paid by the purchaser of shares upon issuance
thereof.
We consent to the use of this opinion as an
exhibit to the Registration Statement. In giving this
consent, however, we do not admit that we are "experts"
within the meaning of Section 11 of the Securities Act
of 1933, as amended, or within the category of persons
whose consent is required by Section 7 of said Act.
Very truly yours,
/s/ Godfrey & Kahn, S.C.
GODFREY & KAHN, S.C.
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to
the incorporation by reference in this registration
statement of our reports dated February 2, 1999
included in Advantage Learning System, Inc.'s Annual
Report of Form 10-K for the year ended December 31,
1998 and to all references to our firm included in this
registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
January 10, 2000
Exhibit 24.1
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Advantage Learning
Systems, Inc. (the "Company") hereby constitutes and
appoints Michael H. Baum and John R. Hickey, and each
of them, the undersigned's true and lawful attorney-in-
fact and agent, with full power of substitution and
resubstitution, for the undersigned and in the
undersigned's name, place and stead, in any and all
capacities, to sign for the undersigned and in the
undersigned's name in the capacity as a director of the
Company the Registration Statement on Form S-3 to which
this Power of Attorney is attached, including any
supplements or amendments thereto, and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission and any other regulatory authority, granting
unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and
thing requisite and necessary to be done in and about
the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact
and agent, or the undersigned's substitute, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed
this Power of Attorney on this 5th day of January, 2000.
/s/ Judith A. Paul
-----------------------
Judith A. Paul
<PAGE>
Exhibit 24.1
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Advantage Learning
Systems, Inc. (the "Company") hereby constitutes and
appoints Michael H. Baum and John R. Hickey, and each
of them, the undersigned's true and lawful attorney-in-
fact and agent, with full power of substitution and
resubstitution, for the undersigned and in the
undersigned's name, place and stead, in any and all
capacities, to sign for the undersigned and in the
undersigned's name in the capacity as a director of the
Company the Registration Statement on Form S-3 to which
this Power of Attorney is attached, including any
supplements or amendments thereto, and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission and any other regulatory authority, granting
unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and
thing requisite and necessary to be done in and about
the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact
and agent, or the undersigned's substitute, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed
this Power of Attorney on this 5th day of January, 2000.
/s/ Terrance D. Paul
----------------------
Terrance D. Paul
<PAGE>
Exhibit 24.1
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Advantage Learning
Systems, Inc. (the "Company") hereby constitutes and
appoints Michael H. Baum and John R. Hickey, and each
of them, the undersigned's true and lawful attorney-in-
fact and agent, with full power of substitution and
resubstitution, for the undersigned and in the
undersigned's name, place and stead, in any and all
capacities, to sign for the undersigned and in the
undersigned's name in the capacity as a director of the
Company the Registration Statement on Form S-3 to which
this Power of Attorney is attached, including any
supplements or amendments thereto, and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission and any other regulatory authority, granting
unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and
thing requisite and necessary to be done in and about
the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact
and agent, or the undersigned's substitute, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed
this Power of Attorney on this 5th day of January, 2000.
/s/ Timothy P. Welch
--------------------------
Timothy P. Welch
<PAGE>
Exhibit 24.1
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Advantage Learning
Systems, Inc. (the "Company") hereby constitutes and
appoints Michael H. Baum and John R. Hickey, and each
of them, the undersigned's true and lawful attorney-in-
fact and agent, with full power of substitution and
resubstitution, for the undersigned and in the
undersigned's name, place and stead, in any and all
capacities, to sign for the undersigned and in the
undersigned's name in the capacity as a director of the
Company the Registration Statement on Form S-3 to which
this Power of Attorney is attached, including any
supplements or amendments thereto, and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission and any other regulatory authority, granting
unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and
thing requisite and necessary to be done in and about
the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact
and agent, or the undersigned's substitute, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed
this Power of Attorney on this 5th day of January, 2000.
/s/ John H. Grunewald
----------------------
John H. Grunewald
<PAGE>
Exhibit 24.1
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Advantage Learning
Systems, Inc. (the "Company") hereby constitutes and
appoints Michael H. Baum and John R. Hickey, and each
of them, the undersigned's true and lawful attorney-in-
fact and agent, with full power of substitution and
resubstitution, for the undersigned and in the
undersigned's name, place and stead, in any and all
capacities, to sign for the undersigned and in the
undersigned's name in the capacity as a director of the
Company the Registration Statement on Form S-3 to which
this Power of Attorney is attached, including any
supplements or amendments thereto, and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission and any other regulatory authority, granting
unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and
thing requisite and necessary to be done in and about
the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact
and agent, or the undersigned's substitute, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed
this Power of Attorney on this 5th day of January, 2000.
/s/ Perry S. Akins
----------------------
Perry S. Akins
<PAGE>
Exhibit 24.1
DIRECTOR'S POWER OF ATTORNEY
The undersigned director of Advantage Learning
Systems, Inc. (the "Company") hereby constitutes and
appoints Michael H. Baum and John R. Hickey, and each
of them, the undersigned's true and lawful attorney-in-
fact and agent, with full power of substitution and
resubstitution, for the undersigned and in the
undersigned's name, place and stead, in any and all
capacities, to sign for the undersigned and in the
undersigned's name in the capacity as a director of the
Company the Registration Statement on Form S-3 to which
this Power of Attorney is attached, including any
supplements or amendments thereto, and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission and any other regulatory authority, granting
unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and
thing requisite and necessary to be done in and about
the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact
and agent, or the undersigned's substitute, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed
this Power of Attorney on this 5th day of January, 2000.
/s/ John R. Hickey
--------------------
John R. Hickey
