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EXHIBIT 99.1
WRC MEDIA, INC.
[WRC MEDIA LOGO] 512 Seventh Avenue
21st Floor
New York, NY 10016
CONTACT: Michele Norris
WRC Media Inc.
908-654-3891
FOR IMMEDIATE RELEASE
WRC MEDIA INC., THE LEADING SUPPLEMENTARY EDUCATION
PUBLISHER, REPORTS THIRD QUARTER EARNINGS
November 10, 2000 - WRC Media Inc. announced results for the third quarter ended
September 30, 2000.
Total revenue for the third quarter of 2000 increased $0.1 million, or 0.2%, to
$56.4 million from $56.3 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.). At American Guidance Service, Inc., sales increased $2.1 million, or
13.4%, to $18.0 million for the third quarter of 2000 from $15.8 million for the
same period in 1999 due to higher sales of both curriculum products and new and
revised testing assessment material. At Weekly Reader Corporation, sales
increased $1.0 million, or 8.0%, to $13.6 million for the third quarter of 2000
from $12.6 million for the same period in 1999 primarily due to higher skills
book sales. At World Almanac Education Group, Inc., third quarter of 2000 sales
increased by $0.6 million, or 4.9%, to $11.9 million from $11.4 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 decrease in sales at CompassLearning, Inc.
Sales decreased $3.6 million, or 21.7%, to $12.9 million for the third quarter
of 2000 from $16.5 million for the same period in 1999 as a result of softness
in software revenue combined with the anticipated erosion of revenue streams
related to the support of older software. Software revenue decreased $1.5
million, or 17.2%, to $6.9 million for the three months ended September 30,
2000, from $8.4 million for the same period in 1999 primarily as a result of
lower sales volume that resulted from increased price competition.
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WRC Media Inc.'s EBITDA increased by $2.0 million, or 13.8%, to $16.1 million
for the third quarter of 2000 from $14.1 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 increase is related to strong revenue
growth in the third quarter at American Guidance Service, Inc., Weekly Reader
Corporation and World Almanac Education Group, Inc. coupled with effective cost
management at CompassLearning.
For the three months ended September 30, 2000, net loss increased by $12.0
million, or 128.6%, to $21.2 million from $9.3 million for the same period in
1999 primarily as a result of the $22.4 million increase in amortization
expenses for intangible assets and $4.5 million increase in interest expense,
resulting from the recapitalization of the businesses on November 17, 1999,
partially offset by $11.1 million decrease in research and development at
CompassLearning and a decrease in provision for income taxes of $2.5 million.
Net loss as a percentage of net sales increased to negative 37.7% for the three
months ended September 30, 2000 from negative 16.5% for the same period in 1999.
Net sales for the nine months ended September 30, 2000 increased $3.2 million,
or 2.1%, to $153.7 million from $150.5 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.). At American Guidance Service, Inc., sales
increased $4.1 million, or 10.4%, to $43.6 million for the nine months ended
September 30, 2000 from $39.5 million for the same period in 1999 due to strong
growth of both curriculum products and new and revised testing assessment
material. At World Almanac Education Group, Inc., sales increased by $2.6
million, or 7.5%, to $36.8 million for the nine months ended September 30, 2000
from $34.2 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. Weekly Reader Corporation sales for the nine months ended
September 30, 2000 increased by $0.2 million, or 0.6%, to $28.1 million from
$28.0 million for the same period in 1999 due to higher skills book sales that
was partially offset by 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. These
increases were partially offset by a decrease in sales at CompassLearning, Inc.
of $3.7 million, or 7.5%, to $45.2
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million for the nine months ended September 30, 2000 from $48.9 million for the
same period in 1999 primarily due to the factors described above.
WRC Media Inc.'s EBITDA increased by $3.4 million, or 11.2%, to $33.6 million
for the nine months ended September 30, 2000 from $30.2 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 for the nine months ended September 30, 2000 at American
Guidance Service, Inc. and World Almanac Education Group, Inc. coupled with
effective cost management at CompassLearning and Weekly Reader Corporation.
For the nine months ended September 30, 2000, net loss increased by $40.5
million, or 346.3%, to $52.1 million from $11.7 million for the same period in
1999 primarily as a result of the $43.0 million increase in depreciation and
amortization expenses for intangible assets and $12.2 million increase in
interest expense, resulting from the recapitalization of the businesses on
November 17, 1999, partially offset by $10.6 million lower research and
development expense at CompassLearning and a decrease in provision for income
taxes of $1.7 million. Net loss as a percentage of net sales increased to
negative 33.9% for the nine months ended September 30, 2000 from negative 7.8%
for the same period in 1999.
As of September 30, 2000, WRC Media Inc.'s cash balance was $8.2 million and the
net book value of our consolidated debt was $282.4 million. During the nine
months ended September 30, 2000, WRC Media Inc. made scheduled principal
payments of $1.9 million on its senior credit facilities and borrowed $7.5
million under its revolving credit facility. Capital expenditures for the nine
months ended September 30, 2000 were $5.7 million.
WRC Media Inc. (www.wrcmedia.com), 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. According
to Educational Marketer, WRC Media was the nation's largest supplementary
materials publisher for 1999. WRC Media Inc. has four principal operating
subsidiaries.
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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 and World
Almanac for Kids, Facts On File news periodicals and Internet services, Gareth
Stevens books and the Funk & Wagnalls encyclopedia. The company distributes high
quality books to schools and libraries through its Library Services division.
American Guidance Service, Inc. is a leader in producing highly reliable and
valid behavior, ability, achievement, and speech-language instruments, and
publishes a variety of high-interest, low-reading-level textbooks for middle and
high school students.
Information in this press release contains forward-looking statements, including
statements regarding our expectations, beliefs, intentions or strategies that
involve a number of risks, uncertainties, and assumptions. Should any of the
risks or uncertainties develop into actual events, or our assumptions prove to
be inaccurate, actual outcomes and results could differ materially from what is
expressed in such forward-looking statements and these developments or
inaccuracies could materially and adversely affect our business, financial
condition and results of operations. Risks and uncertainties relating to WRC
Media's and its subsidiaries' businesses are set forth in the documents and
reports filed from time to time with the Securities and Exchange Commission.
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WRC Media Inc.
For the three months ended
($ amounts in millions)
<TABLE>
<CAPTION>
Actual Increase/(Decrease)
-------------------- -------------------
9/30/99 9/30/00 $ %
------- ------- ------ ------
<S> <C> <C> <C> <C>
Revenue
Weekly Reader $12.6 $ 13.6 $ 1.0 8.0%
American Guidance Service 15.8 18.0 2.1 13.4%
World Almanac Education 11.4 11.9 0.6 4.9%
Compass Learning 16.5 12.9 (3.6) (21.7%)
----- ------ ------ ------
Total Revenue $56.3 $ 56.4 $ 0.1 0.2%
Costs and Expenses 59.0 69.2 10.2 17.2%
Operating Income/(Loss) $(2.7) $(12.8) $(10.0) (367.2%)
Interest Expense 4.6 9.1 4.5 97.8%
Other, Net (Income)/Expense 0.0 (0.1) (0.1) (350.0%)
Income Taxes 1.9 (0.6) (2.5) (128.8%)
----- ------ ------ ------
Net Loss $(9.3) $(21.2) $(12.0) (128.6%)
EBITDA
Net Loss $(9.3) $(21.2) $(12.0) (128.6%)
Depreciation and Amortization 15.3 28.8 13.5 88.5%
Income Taxes 1.9 (0.6) (2.5) (128.8%)
Interest Expense 4.6 9.1 4.5 97.8%
Non-cash, non-recurring charges 1.8 0.0 (1.7) (99.7%)
Non-cash revenues included in Net Loss (0.1) - 0.1 100.0%
----- ------ ------ ------
EBITDA $14.1 $ 16.1 $ 2.0 13.8%
</TABLE>
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WRC Media Inc.
For the nine months ended
($ amounts in millions)
<TABLE>
<CAPTION>
Actual Increase/(Decrease)
--------------------- --------------------
9/30/99 9/30/00 $ %
------- ------- ------ ------
<S> <C> <C> <C> <C>
Revenue
Weekly Reader $ 28.0 $ 28.1 $ 0.2 0.6%
American Guidance Service 39.5 43.6 4.1 10.4%
World Almanac Education 34.2 36.8 2.6 7.5%
Compass Learning 48.9 45.2 (3.7) (7.5%)
------ ------ ------ ------
Total Revenue $150.5 $153.7 $ 3.2 2.1%
Costs and Expenses 146.0 179.4 33.4 22.9%
Operating Income/(Loss) $ 4.5 $(25.8) $(30.2) (675.8%)
Interest Expense 14.1 26.4 12.3 87.4%
Other, Net (Income)/Expense 0.2 (0.2) (0.3) (219.4%)
Income Taxes 1.9 0.2 (1.7) (89.7%)
------ ------ ------ ------
Net Loss $(11.7) $(52.1) $(40.5) (346.3%)
EBITDA
Net Loss $(11.7) $(52.1) $(40.5) (346.3%)
Depreciation and Amortization 24.9 58.7 33.9 136.3%
Income Taxes 1.9 0.2 (1.7) (89.7%)
Interest Expense 14.1 26.4 12.3 87.4%
Non-cash, non-recurring charges 1.4 0.4 (0.9) (68.3%)
Non-cash revenues included in Net Loss (0.3) - 0.3 100.0%
------ ------ ------ ------
EBITDA $ 30.2 $ 33.6 $ 3.4 11.2%
</TABLE>
