Cambium Learning Group Reports Third Quarter 2016 Financial Results

Learning A-Z and ExploreLearning Segments Record Strong Year-to-Date Top-Line Growth Year-to-Date Net Income Improves by $6.0 Million, with Positive Impact from 2015 Debt Refinancing Margins Reach Seasonal Third Quarter Highs of 9% for Net Income, 30% for Adjusted EBITDA and 48% for Cash Income

DALLAS, Nov. 10, 2016 (GLOBE NEWSWIRE) -- Cambium Learning ® Group, Inc. (NASDAQ:ABCD) (the "Company"), a leading educational solutions and services company committed to helping all students reach their full potential, announced today financial results for its third quarter ended September 30, 2016.

"In the important back-to-school third quarter, consolidated Bookings, Adjusted EBITDA and Cash Income all accelerated to achieve overall growth for the first nine months of the year," said John Campbell, Chief Executive Officer of Cambium Learning Group. "Learning A-Z and ExploreLearning, our 100% digital segments, continue to extend their track records of growth, each expanding Bookings 20% year-to-date. Learning A-Z, the standard bearer of our digitally-enabled positioning, is now our largest segment in terms of Bookings. Voyager Sopris Learning's transformation to technology-enabled offerings from a history in print solutions is moving in the correct direction, with technology-enabled solutions now making up over 30% of this segment's Bookings, and we are making some adjustments to accelerate this progress. While we are refining our full-year outlook to reflect Voyager Sopris Learning's current pace of change, our results show increasing demand for our solutions that are personalized, adaptive, scalable, and designed to achieve results in the classroom, and we are on track to deliver a year of top-line growth and profitability expansion."

Financial Snapshot

For the quarter ended September 30, 2016, the Company reported the following financial results:
  Three Months Ended September 30,   Nine Months Ended September 30,
(in millions) 2016   2015   $ Change   2016   2015   $ Change
GAAP net revenues $ 42.1     $ 40.3     $ 1.8     $ 114.9     $ 109.3     $ 5.6  
GAAP net income 3.8     2.0     1.9     7.5     1.5     6.0  
Net income margin % 9 %   5 %       7 %   1 %    
EBITDA 11.5     11.2     0.3     28.8     28.6     0.2  
Adjusted EBITDA 12.8     11.4     1.5     30.8     28.9     1.9  
Adjusted EBITDA margin % 30 %   28 %       27 %   26 %    
                       
Bookings $ 74.2     $ 68.5     $ 5.7     $ 127.1     $ 122.4     $ 4.7  
Cash income 35.9     30.7     5.2     25.5     23.9     1.6  
Cash income margin % 48 %   45 %       20 %   20 %    

Nine Months Ended September 30, 2016 Financial Highlights
  • Generally Accepted Accounting Principles (GAAP) net revenues for the nine months ended September 30, 2016 increased by 5% to $114.9 million compared with $109.3 million in 2015. GAAP net revenues by segment for the nine months ended September 30, 2016, and the changes from the same period of 2015, were as follows:
    • Learning A-Z ® - $48.1 million, increased $8.2 million or 21%
    • Voyager Sopris Learning ® - $49.3 million, decreased $(5.6) million or (10)%
    • ExploreLearning ® - $17.5 million, increased $3.0 million or 21%
  • Bookings for the nine months ended September 30, 2016 increased by 4% to $127.1 million compared with $122.4 million in the nine months ended September 30, 2015.
  • Technology-enabled Bookings represented 71% of total year-to-date 2016 Bookings compared with 65% of the first nine months of 2015 Bookings, and grew 15% compared to the nine months ended September 30, 2015.
  • The Company reported net income of $7.5 million during the nine months ended September 30, 2016 compared to net income of $1.5 million during the nine months ended September 30, 2015. Adjusted EBITDA was $30.8 million, up $1.9 million from 2015. Both net income and Adjusted EBITDA reflect the increase in GAAP net revenues, partially absorbed by strategic investments into high-return, technology-enabled opportunities through segment-specific development, marketing and sales programs to support full-year and long-term growth.
  • Net interest expense was $5.6 million for the nine months ended September 30, 2016, down $5.3 million from the nine months ended September 30, 2015 as a result of the debt refinancing completed in December 2015.
  • Cash Income was $25.5 million, an increase of $1.6 million compared to $23.9 million reported in the nine months ended September 30, 2015. Capital expenditures reflect planned investments in product development and totaled $16.2 million in the nine months ended September 30, 2016 versus $15.1 million in the nine months ended September 30, 2015.
  • The Company had cash and cash equivalents of $11.7 million at September 30, 2016. For the nine months ended September 30, 2016, cash provided by operations was $21.8 million, cash used in investing activities was $16.2 million, and cash used in financing activities was $2.5 million. At September 30, 2016, the principal amount of term loans outstanding was $102.1 million and there were no borrowings outstanding under the Company's revolving credit facility.

Third Quarter 2016 Financial Highlights
  • GAAP net revenues for the third quarter of 2016 increased by 4% to $42.1 million compared with $40.3 million in 2015. GAAP net revenues by segment for the three months ended September 30, 2016, and the change from the same period of 2015, were as follows:
    • Learning A-Z - $16.5 million, increased $2.8 million or 20%
    • Voyager Sopris Learning - $19.5 million, decreased $(2.4) million or (11)%
    • ExploreLearning - $6.1 million, increased $1.3 million or 28%
  • Bookings for the third quarter of 2016 increased by 8% to $74.2 million compared with $68.5 million in the third quarter of 2015, with strong growth at the Learning A-Z and ExploreLearning segments offset by a decline in the Voyager Sopris Learning segment.
  • The Company reported a net income of $3.8 million during the third quarter of 2016 compared to net income of $2.0 million during the third quarter of 2015. Adjusted EBITDA was $12.8 million, increasing $1.5 million from $11.4 million in 2015. Both net income and Adjusted EBITDA reflect the increase in GAAP net revenues, partially offset by strategic investments into high-return, technology-enabled opportunities through segment-specific development, marketing and sales programs to support full-year and long-term growth.
  • Net interest expense was $1.9 million for third quarter of 2016, down $1.7 million from the third quarter of 2015 as a result of the debt refinancing completed in December 2015.
  • At Voyager Sopris Learning, management made some tactical decisions in the third quarter to right-size costs and accelerate this segment's transformation from slower-growing legacy products toward newer and technology-enabled solutions. As a result, net income for the third quarter of 2016 includes restructuring costs of $0.9 million, representing severance charges. These restructuring costs are excluded from Adjusted EBITDA and Cash Income.
  • Cash Income was $35.9 million, an increase of $5.2 million compared to Cash Income of $30.7 million in the third quarter of 2015. Capital expenditures totaled $5.4 million in the third quarter of 2016 versus $5.3 million in the third quarter of 2015.
  • The Company's technology-enabled products continue to receive industry recognition. Cambium Learning Group was recently awarded 15 Education Software (EDDIE) awards from ComputED Gazette, which is more EDDIE awards than any other company. Of the 15 EDDIE awards, Learning A-Z earned nine. Additionally, Tech & Learning magazine recently recognized ExploreLearning Gizmos as the Best Upgraded Product in the 34 th Annual Awards of Excellence.

Year to Date 2016 Segment Discussion

Net Revenues, Bookings, Net Income, and Cash Income changes by segment for the three and nine months ended September 30, 2016, compared to the same period of 2015 were:
  Q3 - 2016 % Change   YTD - 2016 % Change
  Net Revenues Bookings Net Income Cash Income   Net Revenues Bookings Net Income Cash Income
Learning A-Z 20 % 24 % 17 % 26 %   21 % 20 % 16 % 19 %
Voyager Sopris Learning (11 )% (7 )% (15 )% 5 %   (10 )% (12 )% (26 )% (27 )%
ExploreLearning 28 % 11 % 66 % 11 %   21 % 20 % 34 % 42 %
Shared Services     6 % (15 )%       12 % (9 )%
Cambium Learning Group, Inc. 4 % 8 % 95 % 17 %   5 % 4 % 408 % 7 %

Bookings increased 4% for the nine months ended September 30, 2016 compared to 2015. By segment:
  • Learning A-Z reported a 20% growth in Bookings for the nine months ended September 30, 2016 compared to prior year, with strong third quarter growth of 24%.
  • Voyager Sopris Learning reported a 12% Bookings decrease for the nine months ended September 30, 2016 versus prior year. Bookings for the segment's print and transactional solutions declined 16%, in line with expectations. Bookings for the segment's technology-enabled solutions declined 3%, falling short of Company expectations for significant growth this year. LANGUAGE!Live ®, the segment's flagship solution for technology-enabled adolescent intervention, had solid growth of 9% despite the delay in purchases expected to result from slower-paced adoption in California. However, overall segment Bookings were adversely impacted by sluggish performance by many of the segment's older technology offerings and the use of pilot programs for the recently launched Velocity ® product, which helps expand the pool of customer prospects for the long-term but does not immediately generate material top-line growth.
  • ExploreLearning reported a 20% growth in Bookings for the nine months ended September 30, 2016 versus prior year. This segment continued to show strong momentum in the Reflex ® math product and in the Gizmos ® math and science simulations which were upgraded to HTML5 earlier this year.

2016 Outlook

Mr. Campbell concluded, "Cambium Learning Group's strategy is to leverage technology to provide solutions that dramatically improve the learning trajectory of every student we reach and to revolutionize our business model and our role in the educational marketplace. For the rest of the year, our focus remains to drive the investments we are making in development, marketing and sales to create a platform for accelerated growth, expanded Cash Income profitability and higher cash flow generation in the future."

As part of the business' seasonality, Bookings historically peak during the third quarter, which represents by far the preponderance of Bookings, revenue, and income each year. With this quarter completed, the Company has refined its expectations for 2016.

Company-wide Bookings growth for the full fiscal year 2016 versus 2015 is expected to be approximately 3%, with growth of approximately 17% at Learning A-Z and approximately 22% at ExploreLearning, partially offset by a decline of approximately 15% at Voyager Sopris Learning. These growth expectations include management assumptions regarding the timing of sales, including both new customer purchases and subscription renewals.

Based on the achievement of Bookings growth roughly in line with the expectations above, Adjusted EBITDA and Cash Income margins for the full fiscal year 2016 are expected to be approximately consistent with 2015. By segment: Learning A-Z margins are expected to be approximately consistent with prior year; ExploreLearning margins are expected to grow slightly in 2016 as this segment gains scale; and Voyager Sopris Learning margins are expected to decline versus prior year, with the impact of the lower Bookings and net revenues only partially offset by cost right-sizing activities.

Overall capital expenditures for product development for the full year 2016 are expected to be roughly $18.0 million, with roughly $8.0 million at Learning A-Z, roughly $7.5 million at Voyager Sopris Learning, and roughly $2.5 million at ExploreLearning. General capital expenditures are expected to be approximately $3.0 million.

Conference Call

Cambium Learning Group's management team will conduct a conference call at 9 a.m. EST today (November 10, 2016) to discuss its financial results. Participants are encouraged to listen to the presentation via a live web broadcast at www.cambiumlearning.com in the Investor Relations section. In addition, a live dial-in is available at 720.634.2941 or 855.899.0417, passcode #2072467.

A replay will be available at 404.537.3406 or 855.859.2056, passcode #2072467, until November 12, 2016.

Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA, and Cash Income are not prepared in accordance with GAAP and may be different from similarly named, non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The Company believes these non-GAAP measures provide useful information to investors because they reflect the underlying performance of the ongoing operations of the Company and provide investors with a view of the Company's operations from management's perspective. Adjusted EBITDA and Cash Income remove significant restructuring, non-operational, or certain non-cash items from earnings. The Company uses Adjusted EBITDA and Cash Income to monitor and evaluate the operating performance of the Company and as the basis to set and measure progress toward performance targets, which directly affect compensation for employees and executives. The Company generally uses these non-GAAP measures as measures of operating performance and not as measures of the Company's liquidity. The Company's presentation of EBITDA, Adjusted EBITDA, and Cash Income should not be construed as an indication that our future results will be unaffected by unusual, non-operational, or non-cash items.

About Cambium Learning Group, Inc.

Cambium Learning ® Group is a leading educational solutions and services company committed to helping all students reach their full potential. Cambium Learning accomplishes this goal by providing evidence-based solutions and expert professional services to empower educators and raise the achievement levels of all students. The company is composed of four business units: Learning A-Z ® ( www.learninga-z.com), ExploreLearning ® ( www.explorelearning.com), Kurzweil Education ® ( www.kurzweiledu.com), and Voyager Sopris Learning ® ( www.voyagersopris.com). Together, these business units provide breakthrough technology solutions for online learning and professional support; best-in-class intervention and supplemental instructional materials; gold-standard professional development and school-improvement services; valid and reliable assessments; and proven materials to support a positive and safe school environment. Cambium Learning Group, Inc. (NASDAQ:ABCD) , is based in Dallas, Texas. For more information, visit www.cambiumlearning.com.

Media and Investor Contact:

Barbara BensonCambium Learning Group, Inc. investorrelations@cambiumlearning.com

LHAJody Burfening/Carolyn Capaccio212.838.3777 ccapaccio@lhai.com

Forward-Looking Statements

Some of the statements contained herein constitute forward-looking statements. These statements relate to future events, including the future financial performance of Cambium Learning Group, Inc., and involve known and unknown risks, uncertainties, and other factors that may cause the markets, actual results, levels of activity, performance, or achievements of Cambium Learning Group, Inc., to be materially different from any actual future results, levels of activity, performance, or achievements. These risks and other factors you should consider include, but are not limited to, the ability to successfully attract and retain a broad customer base for current and future products, changes in customer demands or industry standards, success of ongoing product development, maintaining acceptable margins, the ability to control costs, K-12 enrollment and demographic trends, the level of educational funding, the impact of federal, state, and local regulatory requirements on the business of the company, the loss of key personnel, the impact of competition, the uncertainty of general economic conditions and financial market performance, and those other risks and uncertainties listed under the heading "RISK FACTORS" in Cambium Learning Group, Inc.'s Form 10-K and other reports filed with the Securities and Exchange Commission. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," "projects," "intends," "prospects," or "priorities," or the negative of such terms, or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. Cambium Learning Group, Inc., does not assume or undertake any obligation to update the information contained in this press release, and expressly disclaims any obligation to do so, whether as a result of new information, future events, or otherwise.
 
Cambium Learning Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
 
    Three Months Ended September 30,   Nine Months Ended September 30,
    2016   2015   2016   2015
Net revenues   42,113     40,339     114,871     109,264  
Cost of revenues:                
Cost of revenues   8,876     9,120     23,615     24,283  
Amortization expense   4,780     4,434     12,905     12,712  
Total cost of revenues   13,656     13,554     36,520     36,995  
Research and development expense   3,301     2,935     9,440     7,827  
Sales and marketing expense   12,152     11,722     36,309     32,845  
General and administrative expense   5,872     5,120     15,976     15,537  
Shipping and handling costs   380     457     760     879  
Depreciation and amortization expense   875     1,001     2,572     2,994  
Total costs and expenses   36,236     34,789     101,577     97,077  
Income before interest, other income (expense) and income taxes   5,877     5,550     13,294     12,187  
Net interest expense   (1,876 )   (3,575 )   (5,598 )   (10,875 )
Other income, net       204         679  
Income before income taxes   4,001     2,179     7,696     1,991  
Income tax expense   (173 )   (213 )   (206 )   (517 )
Net income   3,828     1,966     7,490     1,474  
Net income per common share:                
Basic   $ 0.08     $ 0.04     $ 0.16     $ 0.03  
Diluted   $ 0.08     $ 0.04     $ 0.16     $ 0.03  
Average number of common shares and equivalents outstanding:                
Basic   45,869     45,562     45,791     45,513  
Diluted   47,285     47,103     47,157     46,744  

 
Cambium Learning Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
 
    September 30, 2016   December 31, 2015
    (Unaudited)    
ASSETS        
Current assets:        
Cash and cash equivalents   $ 11,738     $ 8,645  
Accounts receivable, net   29,490     14,640  
Inventory   3,111     4,694  
Restricted assets, current   1,254     1,265  
Other current assets   12,196     9,981  
Total current assets   57,789     39,225  
Property, equipment and software at cost   62,403     55,824  
Accumulated depreciation and amortization   (37,864 )   (33,284 )
Property, equipment and software, net   24,539     22,540  
Goodwill   47,842     47,842  
Acquired curriculum and technology intangibles, net   1,589     2,731  
Acquired publishing rights, net   804     1,459  
Other intangible assets, net   2,393     3,231  
Pre-publication costs, net   17,768     16,441  
Restricted assets, less current portion   2,264     3,099  
Other assets   4,481     4,817  
Total assets   $ 159,469     $ 141,385  

 
Cambium Learning Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
 
    September 30, 2016   December 31, 2015
    (Unaudited)    
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)        
Current liabilities:        
Accounts payable   $ 2,822     $ 1,993  
Accrued expenses   14,056     14,224  
Current portion of long-term debt   6,475     3,850  
Deferred revenue, current   84,313     74,107  
Total current liabilities   107,666     94,174  
Long-term liabilities:        
Long-term debt   93,057     97,872  
Deferred revenue, less current portion   13,353     11,481  
Other liabilities   10,885     12,027  
Total long-term liabilities   117,295     121,380  
Stockholders' equity (deficit):        
Preferred stock ($.001 par value, 15,000 shares authorized, zero shares issued and outstanding at September 30, 2016 and December 31, 2015)        
Common stock ($.001 par value, 150,000 shares authorized, 52,523 and 52,268 shares issued, and 45,991 and 45,736 shares outstanding at September 30, 2016 and December 31, 2015, respectively)   53     52  
Capital surplus   286,380     285,306  
Accumulated deficit   (336,485 )   (343,975 )
Treasury stock at cost (6,532 shares at September 30, 2016 and December 31, 2015)   (12,784 )   (12,784 )
Accumulated other comprehensive loss:        
Pension and postretirement plans   (2,656 )   (2,768 )
Accumulated other comprehensive loss   (2,656 )   (2,768 )
Total stockholders' equity (deficit)   (65,492 )   (74,169 )
Total liabilities and stockholders' equity (deficit)   $ 159,469     $ 141,385  

 
Cambium Learning Group, Inc. and Subsidiaries
Reconciliation of Net Income to Adjusted EBITDA and Cash Income
(unaudited)
 
  Three Months Ended September 30,   Nine Months Ended September 30,
(in thousands) 2016   2015   2016   2015
Net income $ 3,828     $ 1,966     $ 7,490     $ 1,474  
Reconciling items between net income and EBITDA:              
Depreciation and amortization expense 5,655     5,435     15,477     15,706  
Net interest expense 1,876     3,575     5,598     10,875  
Income tax expense 173     213     206     517  
Income from operations before interest, income taxes, and depreciation and amortization (EBITDA) 11,532     11,189     28,771     28,572  
Non-operational or non-cash costs included in EBITDA but excluded from Adjusted EBITDA:              
Other income, net     (204 )       (679 )
Restructuring costs 930         930      
Merger, acquisition and disposition activities 144     199     445     552  
Stock-based compensation and expense 234     192     681     486  
Adjusted EBITDA 12,840     11,376     30,827     28,931  
Change in deferred revenues 32,021     28,299     12,078     12,998  
Change in deferred costs (3,574 )   (3,694 )   (1,241 )   (2,915 )
Capital expenditures (5,405 )   (5,275 )   (16,171 )   (15,107 )
Cash income $ 35,882     $ 30,706     $ 25,493     $ 23,907  

 
Cambium Learning Group, Inc. and Subsidiaries
Reconciliation of Bookings to Net Revenues by Segment - 2016
(unaudited)
 
  Three Months Ended September 30, 2016
(in thousands) Learning A-Z   Voyager Sopris Learning   ExploreLearning   Consolidated
Bookings $ 34,795     $ 27,762     $ 11,663     $ 74,220  
Change in deferred revenues (18,258 )   (8,016 )   (5,747 )   (32,021 )
Other (19 )   (280 )   213     (86 )
Net revenues $ 16,518     $ 19,466     $ 6,129     $ 42,113  
               
  Nine Months Ended September 30, 2016
(in thousands) Learning A-Z   Voyager Sopris Learning   ExploreLearning   Consolidated
Bookings $ 54,826     $ 53,289     $ 19,028     $ 127,143  
Change in deferred revenues (6,610 )   (3,740 )   (1,728 )   (12,078 )
Other (89 )   (297 )   192     (194 )
Net revenues $ 48,127     $ 49,252     $ 17,492     $ 114,871  

 
Reconciliation of Net Income to Adjusted EBITDA and Cash Income by Segment - 2016
(unaudited)
 
  Three Months Ended September 30, 2016
(in thousands) Learning A-Z   Voyager Sopris Learning   Explore Learning   Other   Consolidated
Net income $ 7,822     $ 5,331     $ 2,286     $ (11,611 )   $ 3,828  
Reconciling items between net income and EBITDA:                  
Depreciation and amortization expense             5,655     5,655  
Net interest expense             1,876     1,876  
Income tax expense             173     173  
Income from operations before interest, income taxes, and depreciation and amortization (EBITDA) 7,822     5,331     2,286     (3,907 )   11,532  
Non-operational or non-cash costs included in EBITDA but excluded from Adjusted EBITDA:                  
Restructuring costs     930             930  
Merger, acquisition and disposition activities             144     144  
Stock-based compensation and expense 55     73     32     74     234  
Adjusted EBITDA 7,877     6,334     2,318     (3,689 )   12,840  
Change in deferred revenues 18,258     8,016     5,747         32,021  
Change in deferred costs (1,863 )   (1,033 )   (678 )       (3,574 )
Adjusted EBITDA excluding effect of deferred revenues and deferred costs 24,272     13,317     7,387     (3,689 )   41,287  
Capital expenditures - pre-publication costs (1,441 )   (634 )   (378 )       (2,453 )
Capital expenditures - software development costs (563 )   (1,283 )   (314 )       (2,160 )
Capital expenditures - general expenditures (487 )   (173 )   (127 )   (5 )   (792 )
Cash income $ 21,781     $ 11,227     $ 6,568     $ (3,694 )   $ 35,882  

  Nine Months Ended September 30, 2016
(in thousands) Learning A-Z   Voyager Sopris Learning   Explore Learning   Other   Consolidated
Net income $ 23,947     $ 9,730     $ 6,394     $ (32,581 )   $ 7,490  
Reconciling items between net income and EBITDA:                  
Depreciation and amortization expense             15,477     15,477  
Net interest expense             5,598     5,598  
Income tax expense             206     206  
Income from operations before interest, income taxes, and depreciation and amortization (EBITDA) 23,947     9,730     6,394     (11,300 )   28,771  
Non-operational or non-cash costs included in EBITDA but excluded from Adjusted EBITDA:                  
Restructuring costs     930             930  
Merger, acquisition and disposition activities             445     445  
Stock-based compensation and expense 167     214     92     208     681  
Adjusted EBITDA 24,114     10,874     6,486     (10,647 )   30,827  
Change in deferred revenues 6,610     3,740     1,728         12,078  
Change in deferred costs (506 )   (416 )   (319 )       (1,241 )
Adjusted EBITDA excluding effect of deferred revenues and deferred costs 30,218     14,198     7,895     (10,647 )   41,664  
Capital expenditures - pre-publication costs (4,004 )   (1,974 )   (749 )       (6,727 )
Capital expenditures - software development costs (1,814 )   (4,127 )   (1,075 )       (7,016 )
Capital expenditures - general expenditures (952 )   (456 )   (350 )   (670 )   (2,428 )
Cash income $ 23,448     $ 7,641     $ 5,721     $ (11,317 )   $ 25,493  

Deferred Revenue by Segment - 2016
(unaudited)
 
  September 30, 2016
(in thousands) Learning A-Z   Voyager Sopris Learning   ExploreLearning   Consolidated
Deferred revenue, current $ 47,517     $ 20,927     $ 15,869     $ 84,313  
Deferred revenue, less current portion 5,744     4,624     2,985     13,353  
Deferred revenue $ 53,261     $ 25,551     $ 18,854     $ 97,666  

 
Deferred Costs by Segment - 2016
(unaudited)
 
  September 30, 2016
(in thousands) Learning A-Z   Voyager Sopris Learning   ExploreLearning   Consolidated
Deferred costs, current $ 4,840     $ 3,228     $ 1,518     $ 9,586  
Deferred costs, less current portion 598     761     289     1,648  
Deferred costs $ 5,438     $ 3,989     $ 1,807     $ 11,234  

 
Cambium Learning Group, Inc. and Subsidiaries
Reconciliation of Bookings to Net Revenues by Segment - 2015
(unaudited)
 
  Three Months Ended September 30, 2015
(in thousands) Learning A-Z   Voyager Sopris Learning   ExploreLearning   Consolidated
Bookings $ 28,164     $ 29,780     $ 10,545     $ 68,489  
Change in deferred revenues (14,430 )   (8,111 )   (5,758 )   (28,299 )
Other (1 )   151     (1 )   149  
Net revenues $ 13,733     $ 21,820     $ 4,786     $ 40,339  

  Nine Months Ended September 30, 2015
(in thousands) Learning A-Z   Voyager Sopris Learning   ExploreLearning   Consolidated
Bookings $ 45,851     $ 60,774     $ 15,820     $ 122,445  
Change in deferred revenues (5,905 )   (5,804 )   (1,289 )   (12,998 )
Other (16 )   (139 )   (28 )   (183 )
Net revenues $ 39,930     $ 54,831     $ 14,503     $ 109,264  

 
Reconciliation of Net Income to Adjusted EBITDA and Cash Income by Segment - 2015
(unaudited)
 
  Three Months Ended September 30, 2015
(in thousands) Learning A-Z   Voyager Sopris Learning   Explore Learning   Other   Consolidated
Net income $ 6,663     $ 6,302     $ 1,376     $ (12,375 )   $ 1,966  
Reconciling items between net income and EBITDA:                  
Depreciation and amortization expense             5,435     5,435  
Net interest expense             3,575     3,575  
Income tax expense             213     213  
Income from operations before interest, income taxes, and depreciation and amortization (EBITDA) 6,663     6,302     1,376     (3,152 )   11,189  
Non-operational or non-cash costs included in EBITDA but excluded from Adjusted EBITDA:                  
Other income, net             (204 )   (204 )
Merger, acquisition and disposition activities             199     199  
Stock-based compensation and expense 47     68     24     53     192  
Adjusted EBITDA 6,710     6,370     1,400     (3,104 )   11,376  
Change in deferred revenues 14,430     8,111     5,758         28,299  
Change in deferred costs (1,603 )   (1,553 )   (538 )       (3,694 )
Adjusted EBITDA excluding effect of deferred revenues and deferred costs 19,537     12,928     6,620     (3,104 )   35,981  
Capital expenditures - pre-publication costs (1,327 )   (741 )   (181 )       (2,249 )
Capital expenditures - software development costs (565 )   (1,274 )   (390 )       (2,229 )
Capital expenditures - general expenditures (384 )   (180 )   (112 )   (121 )   (797 )
Cash income $ 17,261     $ 10,733     $ 5,937     $ (3,225 )   $ 30,706  

  Nine Months Ended September 30, 2015
(in thousands) Learning A-Z   Voyager Sopris Learning   Explore Learning   Other   Consolidated
Net income $ 20,730     $ 13,098     $ 4,788     $ (37,142 )   $ 1,474  
Reconciling items between net income and EBITDA:                  
Depreciation and amortization expense             15,706     15,706  
Net interest expense             10,875     10,875  
Income tax expense             517     517  
Income from operations before interest, income taxes, and depreciation and amortization (EBITDA) 20,730     13,098     4,788     (10,044 )   28,572  
Non-operational or non-cash costs included in EBITDA but excluded from Adjusted EBITDA:                  
Other income, net             (679 )   (679 )
Merger, acquisition and disposition activities             552     552  
Stock-based compensation and expense 125     158     61     142     486  
Adjusted EBITDA 20,855     13,256     4,849     (10,029 )   28,931  
Change in deferred revenues 5,905     5,804     1,289         12,998  
Change in deferred costs (1,075 )   (1,667 )   (173 )       (2,915 )
Adjusted EBITDA excluding effect of deferred revenues and deferred costs 25,685     17,393     5,965     (10,029 )   39,014  
Capital expenditures - pre-publication costs (3,591 )   (2,422 )   (488 )       (6,501 )
Capital expenditures - software development costs (1,521 )   (3,945 )   (1,218 )       (6,684 )
Capital expenditures - general expenditures (861 )   (502 )   (225 )   (334 )   (1,922 )
Cash income $ 19,712     $ 10,524     $ 4,034     $ (10,363 )   $ 23,907  

 

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