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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 income3.8 2.0 1.9 7.5 1.5 6.0
Net income margin %9% 5% 7% 1%
EBITDA11.5 11.2 0.3 28.8 28.6 0.2
Adjusted EBITDA12.8 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 income35.9 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 34th 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 RevenuesBookingsNet IncomeCash Income Net RevenuesBookingsNet IncomeCash Income
Learning A-Z20%24%17%26% 21%20%16%19%
Voyager Sopris Learning(11)%(7)%(15)%5% (10)%(12)%(26)%(27)%
ExploreLearning28%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 Benson
Cambium Learning Group, Inc.
investorrelations@cambiumlearning.com

LHA
Jody Burfening/Carolyn Capaccio
212.838.3777
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 expense5,655 5,435 15,477 15,706
Net interest expense1,876 3,575 5,598 10,875
Income tax expense173 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 costs930 930
Merger, acquisition and disposition activities144 199 445 552
Stock-based compensation and expense234 192 681 486
Adjusted EBITDA12,840 11,376 30,827 28,931
Change in deferred revenues32,021 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 expense55 73 32 74 234
Adjusted EBITDA7,877 6,334 2,318 (3,689) 12,840
Change in deferred revenues18,258 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 costs24,272 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 expense167 214 92 208 681
Adjusted EBITDA24,114 10,874 6,486 (10,647) 30,827
Change in deferred revenues6,610 3,740 1,728 12,078
Change in deferred costs(506) (416) (319) (1,241)
Adjusted EBITDA excluding effect of deferred revenues and deferred costs30,218 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 portion5,744 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 portion598 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 expense47 68 24 53 192
Adjusted EBITDA6,710 6,370 1,400 (3,104) 11,376
Change in deferred revenues14,430 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 costs19,537 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 expense125 158 61 142 486
Adjusted EBITDA20,855 13,256 4,849 (10,029) 28,931
Change in deferred revenues5,905 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 costs25,685 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


Source:Cambium Learning Group, Inc.