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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 15, 2000
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WRC MEDIA INC.
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(Exact name of registrant as specified in its charter)
Delaware 333-96119 13-4066536
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1 Rockefeller Plaza, 32nd Floor, New York, NY 10020
(Address of principal executive offices) (Zip Code)
(212) 582-6700
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
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<PAGE>
Item 5. Other Events.
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On May 15, 2000, WRC Media Inc. reported the results for the first
quarter ended March 31, 2000 which are set forth in the press release in the
Exhibit hereto.
Item 7. Exhibits.
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Exhibit No. Exhibit
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99.1 Press release issued by WRC Media Inc. on May 15, 2000.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WRC MEDIA INC.
By: /s/ Charles L. Laurey
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Name: Charles L. Laurey
Title: Secretary
Date: May 17, 2000
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INDEX TO EXHIBITS
Exhibit No. Exhibit
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99.1 Press release issued by WRC Media Inc. on May 15, 2000.
[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 FIRST QUARTER EARNINGS
May 15, 2000 - WRC Media Inc. (the "Company") announced results for the first
quarter ended March 31, 2000, its first full quarter since its acquisition of
Weekly Reader Corporation, World Almanac Education Group, Inc. and American
Guidance Service, Inc. in November 1999.
Net sales for the first quarter of 2000 increased $1.7 million, or 3.8%, to
$48.4 million from $46.7 million for the same period in 1999 (calculated on a
pro forma basis to include the results of CompassLearning, 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 $1.2 million, or 11.2%, to $11.9
million for the first quarter of 2000 from $10.7 million for the same period
in 1999 due to higher sales of both new and revised testing assessment
material and textbooks. At World Almanac Education Group, Inc., sales
increased by $1.7 million, or 14.7%, to $13.3 million for the first quarter of
2000 from $11.6 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 offset by a slight decrease in
sales at Weekly Reader Corporation of $0.3 million, or 2.8%, to $10.5 million
for the first quarter of 2000 from $10.8 million for the same period in 1999
primarily as a result of softness in licensing sales and lower subscription
sales due to the timing of shipment of certain issues. CompassLearning, Inc.
sales also decreased $0.9 million, or 6.6%, to $12.7 million for the first
quarter of 2000 from $13.6 million for the same period in 1999 as a result of
an anticipated erosion of service-related revenue streams supporting older
software versions and a decrease in hardware sales consistent with the
Company's strategy to reduce the hardware business and focus on its core
products.
WRC Media Inc.'s EBITDA, adjusted for non-recurring items, decreased by $1.3
million, or 16.7%, to $6.5 million for the first quarter of 2000 from $7.8
million for the same period in 1999 (calculated on a pro forma basis to
include the results of CompassLearning, Inc., Weekly Reader Corporation,
World Almanac Education Group, Inc. and American Guidance Service, Inc.). This
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decrease was primarily due to continuing investment in sales and marketing
efforts and the timing of certain research and development expenses at
CompassLearning, 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 March 31, 2000, WRC Media Inc.'s cash balance was $4.6 million and its
consolidated debt was $278.0 million. During the first quarter of 2000, WRC
Media Inc. made scheduled principal payments of $0.6 million on its senior
credit facilities and borrowed $2.0 million under its revolving credit
facility. Capital expenditures for the first quarter of 2000 were $1.4
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.
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WRC Media Inc.
For the three months ended
($ amounts in millions)
Actual Increase/(Decrease)
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3/31/1999 3/31/2000 $ %
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Revenue
Weekly Reader 10.8 10.5 (0.3) -2.8%
American Guidance Service 10.7 11.9 1.2 11.2%
World Almanac Education 11.6 13.3 1.7 14.7%
Compass Learning 13.6 12.7 (0.9) -6.8%
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Total Revenue 46.7 48.4 1.7 3.8%
Costs and Expenses 43.9 51.2 7.3 16.7%
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Operating Income/(Loss) 2.8 -2.8 (5.6) -201.4%
Interest Expense 4.6 8.4 3.8 81.5%
Other, Net (Income)/Exp 0.2 -0.1 (0.3) -128.0%
Income Taxes 0.0 0.5 0.5 -
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Net Loss -2.0 -11.6 (9.6) -479.2%
EBITDA
Operating Income 2.8 -2.8 (5.6) -201.4%
Depreciation and Amortization 4.8 9.3 4.5 93.2%
Other, Net (Income)/Exp 0.2 -0.1 (0.3) -128.0%
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EBITDA 7.4 6.5 (0.9) -12.5%
Adjusted EBITDA* 7.8 6.5 (1.3) -16.7%
* Adjusted for non-recurring items.
