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Cambium Learning Group Reports Second Quarter 2018 Financial Results
Bookings Trends Accelerate into Important Back-to-School Selling Season
Learning A-Z Bookings Up 26% for Q2 Year-over-Year, Up 13% Year-to-Date
ExploreLearning Bookings Up 15% for Q2 Year-over-Year, Up 14% Year-to-Date
Reiterating Full-Year Outlook

DALLAS, TX – August 13, 2018 – Cambium Learning® Group, Inc. (Nasdaq: ABCD, the "Company"), a leading educational technology solutions company committed to helping all students reach their full potential, announced today financial results for its second quarter ended June 30, 2018.

SECOND QUARTER 2018 RESULTS
"Cambium Learning Group's first half results were strong, trending well as we head into the crucial third quarter back-to-school selling season," stated John Campbell, Chief Executive Officer. "Second quarter Bookings grew 11% compared to the second quarter of 2017, led by double-digit increases in our SaaS segments of 26% at Learning A-Z and 15% at ExploreLearning. We executed well in the quarter on our planned strategic investments in development, marketing and sales initiatives to support the long-term growth of our digital solutions, which are reflected as expected in first half results. Two of our Learning A-Z solutions earned prestigious Software and Information Industry Association CODiE Awards: Raz-Plus, for Best Solution for Special Needs Students, and Science A-Z, for Best Science Instruction Solution, marking the seventh consecutive year that one of our products has won. Overall, we are well-positioned heading into the second half selling season."
Financial Snapshot
For the quarter ended June 30, 2018, the Company reported the following financial results:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in millions)
2018
 
2017
 
$ Change
 
2018
 
2017
 
$ Change
GAAP net revenues
$
41.0

 
$
40.4

 
$
0.6

 
$
77.6

 
$
76.3

 
$
1.3

GAAP net income
4.4

 
5.8

 
(1.4
)
 
7.0

 
8.3

 
(1.3
)
Net income margin %
11
%
 
14
 %
 


 
9
 %
 
11
 %
 


EBITDA
11.1

 
12.5

 
(1.3
)
 
19.7

 
21.1

 
(1.5
)
Adjusted EBITDA
12.7

 
12.9

 
(0.2
)
 
21.5

 
21.9

 
(0.4
)
Adjusted EBITDA margin %
31
%
 
32
 %
 

 
28
 %
 
29
 %
 



 

 

 

 

 

Bookings
$
33.1

 
$
29.7

 
$
3.4

 
$
53.0

 
$
48.9

 
$
4.1

Cash income
1.9

 
(0.8
)
 
2.7

 
(8.7
)
 
(11.6
)
 
2.9

Cash income margin %
6
%
 
(3
)%
 

 
(16
)%
 
(24
)%
 


First Half 2018 Financial Highlights
•
Generally Accepted Accounting Principles (GAAP) net revenues for the first half of 2018 increased by $1.3 million, or 2%, to $77.6 million compared with $76.3 million in 2017. GAAP net revenues by segment for the six months ended June 30, 2018, and the change from the same period of 2017, were as follows:
◦
Learning A-Z® - $39.6 million, increased $2.7 million or 7%
◦
ExploreLearning® - $15.2 million, increased $1.7 million or 13%

1


◦
Voyager Sopris Learning® - $22.8 million, decreased $(3.2) million or (12)%
•
Bookings for the first half of 2018 increased by 8% to $53.0 million, compared with $48.9 million in the first half of 2017, with growth in all three segments.
•
The Company reported GAAP net income of $7.0 million during the first half of 2018, decreasing $1.3 million compared to net income of $8.3 million during the first half of 2017. Net income includes expenses of $1.1 million related to the Company's definitive agreement to acquire VKIDZ Holdings Inc. ("VKidz") and its review of strategic alternatives in addition to higher tax expense. The Company's effective tax rate for the first half of 2018 is higher than the effective tax rate for the first half of 2017 as a result of reducing most of the valuation allowance against most of the Company's deferred tax assets in the fourth quarter of 2017.
•
Adjusted EBITDA was $21.5 million, decreasing $0.4 million from $21.9 million in 2017, with the growth in GAAP net revenues in the first half more than offset by planned strategic investments made to development, marketing and sales initiatives to support full-year and long-term growth of the Company's digital solutions.
•
Net interest expense was $1.8 million for the first half of 2018, down $0.8 million from the first half of 2017 as a result of the scheduled debt amortization payments and voluntary prepayments made during 2017.
•
Cash Income was $(8.7) million for the first half of 2018 compared to Cash Income of $(11.6) million for the first half of 2017. Cash Income is a highly seasonal metric and is historically in a loss position for the first half of the year. Capital expenditures totaled $8.0 million in the first half of 2018 versus $8.8 million in the first half of 2017.
•
The Company had cash and cash equivalents of $4.7 million at June 30, 2018. For the six months ended June 30, 2018, cash used in operations was $3.9 million, cash used in investing activities was $8.0 million, and cash provided by financing activities was $8.1 million. At June 30, 2018, the principal amount of term loans outstanding was $45.6 million, the revolving credit facility outstanding was $10.0 million and there was $19.8 million available under the revolving credit facility.
•
The Company's technology-enabled products continue to receive industry recognition. Learning A-Z was recently awarded two Software and Information Industry Association (SIIA) CODiE Awards: Raz-Plus™, for Best Solution for Special Needs Students, and Science A-Z®, for Best Science Instruction Solution.

Second Quarter 2018 Financial Highlights
•
GAAP net revenues for the second quarter of 2018 increased by $0.6 million, or 2%, to $41.0 million compared with $40.4 million in 2017. GAAP net revenues by segment for the three months ended June 30, 2018, and the change from the same period of 2017, were as follows:
•
Learning A-Z - $20.4 million, increased $1.8 million or 10%
•
ExploreLearning - $7.7 million, increased $1.0 million or 15%
•
Voyager Sopris Learning - $12.8 million, decreased $(2.1) million or (14)%
•
Bookings for the second quarter of 2018 were $33.1 million, an increase of 11% compared with $29.7 million in the second quarter of 2017.
•
The Company reported net income of $4.4 million during the second quarter of 2018, decreasing $1.4 million compared to net income of $5.8 million during the second quarter of 2017. Net income includes expenses of $1.1 million related to the Company's definitive agreement to acquire VKIDZ Holdings Inc. and its review of strategic alternatives in addition to higher tax expense.
•
Adjusted EBITDA was $12.7 million, decreasing $0.2 million from $12.9 million in 2017, with the growth in GAAP net revenues in the second quarter more than offset by planned strategic investments made to development, marketing and sales initiatives to support full-year and long-term growth of the Company's digital solutions.
•
Cash Income was $1.9 million for the second quarter of 2018 compared to Cash Income of $(0.8) million for the second quarter of 2017. Capital expenditures totaled $4.0 million in the second quarter of 2018 versus $4.3 million in the second quarter of 2017.

2


Second Quarter 2018 Segment Results
Net Revenues, Bookings, Net Income, and Cash Income changes by segment for the three and six months ended June 30, 2018, compared to the same period of 2017 were as follows:
 
Q2 - 2018
% Change
 
YTD - 2018
% Change
 
Net Revenues
Bookings
Net Income
Cash Income
 
Net Revenues
Bookings
Net Income
Cash Income
Learning A-Z
10
 %
26
 %
2
 %
105
 %
 
7
 %
13
%
1
 %
30
 %
ExploreLearning
15
 %
15
 %
(1
)%
(19
)%
 
13
 %
14
%
(3
)%
(208
)%
Voyager Sopris Learning
(14
)%
(5
)%
(14
)%
2,174
 %
 
(12
)%
1
%
(6
)%
81
 %
Shared Services
 
 
(10
)%
3
 %
 
 
 
(6
)%
(3
)%
Cambium Learning Group, Inc.
2
 %
11
 %
(23
)%
342
 %
 
2
 %
8
%
(15
)%
25
 %

2018 Outlook
Mr. Campbell stated, "We are on track as we enter the back-to-school selling season and are reiterating our full-year outlook. We target higher Bookings growth than last year's, driven by our SaaS businesses, and expansions in Adjusted EBITDA and Cash Income as we make selected investments in development, marketing and sales. Cambium Learning Group's solutions leverage technology to offer unique, personalized, adaptive, scalable and effective answers to the challenges students face, and we are focused on increasing our share of market to drive returns for all stakeholders."
Management's outlook for company-wide full-year 2018 Bookings growth at a higher percentage than 2017 is unchanged, with most of the growth expected in the second half of the year during the Company's seasonally strong periods. Cambium Learning Group's business is highly seasonal, with Bookings historically peaking during the third quarter, which represents by far the preponderance of Bookings, revenue and income each year.
The Company continues to expect its full-year 2018 Bookings growth to be driven by its two 100% digital subscription businesses, Learning A-Z and ExploreLearning. Voyager Sopris Learning is expected to build on the momentum of the LANGUAGE! Live solution and continue to make progress on repositioning the segment's role in the intervention marketplace.
Capital expenditures in 2018 are expected to be roughly consistent with 2017, and the Company expects growth in its Cash Income margin from 2017, with the impact of spending on strategic investments in its technology subscription products offset by the ongoing benefit of the transition in mix to these higher margin product lines. The Company continues to expect cash generation during the year from normal operations to be in line with previous guidance. The Company will assess the impact of cash expenditures related to the strategic alternatives process and the VKidz acquisition as the year progresses.
REVIEW OF STRATEGIC ALTERNATIVES and VKIDZ TRANSACTION
As previously announced in May 2018, the Company has an ongoing review of strategic alternatives to maximize shareholder value. Such strategic alternatives could include a sale of the Company or a sale of a division or divisions thereof, a strategic merger, a business combination or continuing as a standalone entity executing on its business plan. The Company has not set a definitive timetable for completion of its review of strategic alternatives, nor has it made any decisions related to any such strategic alternative at this time, and there can be no assurances that the process will result in any transaction being announced or completed in the future. The Company does not intend to make any further announcements related to its review unless and until its Board of Directors has approved a specific transaction or otherwise determined that further disclosure is appropriate.
Also as previously announced, on May 13, 2018, the Company entered into a definitive agreement to acquire VKIDZ Holdings Inc. ("VKidz"), an award winning Florida-based edtech company dedicated to helping deliver the best education to students using digital solutions. Organized in two business units, VKidz serves both school systems and homeschooling families with 100% digital, 100% subscription, innovative, research-based educational products. For the first half of 2018, VKidz reported a Bookings increase of 12% over prior year first half. The acquisition is expected to be consummated, subject to all applicable approvals, after completion of the Company's review of strategic alternatives. The terms of the agreement provide the Company the right to terminate the agreement prior to consummation.


3


Conference Call
Cambium Learning Group's management team will conduct a conference call at 5 p.m. EDT today (August 13, 2018) to discuss its financial results. In consideration of its review of strategic alternatives, management does not plan to conduct a question and answer session during the call. 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 844.707.0670 or 703.639.1224, passcode #6575109.
A replay will be available by dialing 855.859.2056 or 404.537.3406, passcode #6575109, until August 14, 2018. The webcast will also be archived on the Company's Investor Relations page.
Cambium Learning Group also announces investor information, including news about its business and financial performance, SEC filings, notices of investor events, investor presentations, and press and earnings releases, on its website in the Investor Relations section.

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. Further, the Cash Income measure directly affects 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 (Nasdaq: ABCD) is an award-winning educational technology solutions leader dedicated to helping all students reach their potential through individualized and differentiated instruction. Using a research-based, personalized approach, Cambium Learning Group delivers SaaS resources and instructional products that engage students and support teachers in fun, positive, safe and scalable environments. These solutions are provided through Learning A-Z® (online differentiated instruction for elementary school reading, writing and science), ExploreLearning® (online interactive math and science simulations and a math fact fluency solution) and Voyager Sopris Learning® (blended solutions that accelerate struggling learners to achieve in literacy and math and professional development for teachers). We believe that every student has unlimited potential, that teachers matter, and that data, instruction, and practice are the keys to success in the classroom and beyond.
Come learn with us at 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



4


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, explorations of possible transactions and other strategic alternatives, 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.

5


Cambium Learning Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
Net revenues
$
40,996

 
$
40,362

 
$
77,603

 
$
76,332

Cost of revenues:
 

 
 

 
 

 
 

Cost of revenues
7,038

 
7,215

 
13,101

 
13,400

Amortization expense
4,043

 
4,328

 
7,947

 
8,418

Total cost of revenues
11,081

 
11,543

 
21,048

 
21,818

Research and development expense
3,893

 
3,294

 
7,619

 
6,392

Sales and marketing expense
12,717

 
12,190

 
25,520

 
25,100

General and administrative expense
6,135

 
4,900

 
11,416

 
9,783

Shipping and handling costs
186

 
195

 
307

 
313

Depreciation and amortization expense
718

 
669

 
1,435

 
1,350

Total costs and expenses
34,730

 
32,791

 
67,345

 
64,756

Income before interest and income taxes
6,266

 
7,571

 
10,258

 
11,576

Net interest expense
(927
)
 
(1,336
)
 
(1,757
)
 
(2,563
)
Other income (expense), net
118

 
(109
)
 
15

 
(217
)
Income before income taxes
5,457

 
6,126

 
8,516

 
8,796

Income tax expense
(1,022
)
 
(334
)
 
(1,474
)
 
(474
)
Net income
$
4,435

 
$
5,792

 
$
7,042

 
$
8,322

Net income per common share:
 

 
 

 
 

 
 

Basic
$
0.09

 
$
0.13

 
$
0.15

 
$
0.18

Diluted
$
0.09

 
$
0.12

 
$
0.15

 
$
0.18

Average number of common shares and equivalents outstanding:
 

 
 

 
 

 
 

Basic
47,172

 
46,283

 
47,036

 
46,243

Diluted
48,385

 
47,476

 
48,250

 
47,460





6


Cambium Learning Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
 
June 30, 2018
 
December 31, 2017
 
(Unaudited)
 
 
ASSETS
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
4,680

 
$
8,493

Accounts receivable, net
13,277

 
12,937

Inventory
1,813

 
2,382

Restricted assets, current
961

 
961

Other current assets
9,731

 
11,193

Total current assets
30,462

 
35,966

Property, equipment and software at cost
62,966

 
65,250

Accumulated depreciation and amortization
(42,006
)
 
(43,164
)
Property, equipment and software, net
20,960

 
22,086

Goodwill
43,518

 
43,518

Other intangible assets, net
3,108

 
3,607

Pre-publication costs, net
17,986

 
17,758

Restricted assets, less current portion
839

 
1,293

Deferred tax assets
30,020

 
30,614

Other assets
3,372

 
3,712

Total assets
$
150,265

 
$
158,554

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
2,075

 
$
2,388

Accrued expenses
13,770

 
12,121

Revolving credit facility
10,000

 
—

Current portion of long-term debt
6,651

 
5,958

Deferred revenue, current
61,286

 
86,913

Total current liabilities
93,782

 
107,380

Long-term liabilities:
 

 
 

Long-term debt
38,477

 
41,841

Deferred revenue, less current portion
15,232

 
13,995

Other liabilities
9,257

 
9,630

Total long-term liabilities
62,966

 
65,466

Stockholders' equity (deficit):
 

 
 

Preferred stock ($.001 par value, 15,000 shares authorized, zero shares issued and outstanding at June 30, 2018 and December 31, 2017)
—

 
—

Common stock ($.001 par value, 150,000 shares authorized, 53,789 and 53,333 shares issued, and 47,257 and 46,800 shares outstanding at June 30, 2018 and December 31, 2017, respectively)
54

 
53

Capital surplus
290,468

 
289,022

Accumulated deficit
(282,199
)
 
(288,490
)
Treasury stock at cost (6,532 shares at June 30, 2018 and December 31, 2017)
(12,784
)
 
(12,784
)
Accumulated other comprehensive loss:
 
 
 

Pension and postretirement plans
(2,022
)
 
(2,093
)
Accumulated other comprehensive loss
(2,022
)
 
(2,093
)
Total stockholders' equity (deficit)
(6,483
)
 
(14,292
)
Total liabilities and stockholders' equity (deficit)
$
150,265

 
$
158,554


7


Cambium Learning Group, Inc. and Subsidiaries
Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Cash Income
(unaudited)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
(in thousands)
2018
 
2017
 
2018
 
2017
Net income
$
4,435

 
$
5,792

 
$
7,042

 
$
8,322

Reconciling items between net income and EBITDA:
 
 
 
 
 
 
 
Depreciation and amortization expense
4,761

 
4,997

 
9,382

 
9,768

Net interest expense
927

 
1,336

 
1,757

 
2,563

Income tax expense
1,022

 
334

 
1,474

 
474

Income from operations before interest, income taxes, and depreciation and amortization (EBITDA)
11,145

 
12,459

 
19,655

 
21,127

Non-operational or non-cash costs included in EBITDA but excluded from Adjusted EBITDA:
 
 
 
 
 
 
 
Income from sale of excess state tax credits
(222
)
 
—

 
(222
)
 
—

Merger, acquisition and disposition activities
1,499

 
212

 
1,621

 
339

Stock-based compensation and expense
252

 
224

 
479

 
424

Adjusted EBITDA
12,674

 
12,895

 
21,533

 
21,890

Change in deferred revenues
(7,900
)
 
(10,576
)
 
(24,814
)
 
(27,419
)
Change in deferred costs
1,132

 
1,168

 
2,589

 
2,731

Capital expenditures
(3,980
)
 
(4,284
)
 
(7,988
)
 
(8,816
)
Cash income
$
1,926

 
$
(797
)
 
$
(8,680
)
 
$
(11,614
)

Cambium Learning Group, Inc. and Subsidiaries
Reconciliation of Bookings to Net Revenues by Segment – 2018
(unaudited)
 
Three Months Ended June 30, 2018
(in thousands)
Learning A-Z
 
ExploreLearning
 
Voyager Sopris
Learning
 
Consolidated
Bookings
$
14,683

 
$
6,797

 
$
11,636

 
$
33,116

Change in deferred revenues
5,752

 
991

 
1,157

 
7,900

Other
—

 
(56
)
 
36

 
(20
)
Net revenues
$
20,435

 
$
7,732

 
$
12,829

 
$
40,996


 
Six Months Ended June 30, 2018
(in thousands)
Learning A-Z
 
ExploreLearning
 
Voyager Sopris
Learning
 
Consolidated
Bookings
$
24,282

 
$
9,970

 
$
18,717

 
$
52,969

Change in deferred revenues
15,289

 
5,338

 
4,187

 
24,814

Other
—

 
(72
)
 
(108
)
 
(180
)
Net revenues
$
39,571

 
$
15,236

 
$
22,796

 
$
77,603





8


Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Cash Income by Segment – 2018
(unaudited)
 
Three Months Ended June 30, 2018
(in thousands)
Learning A-Z
 
Explore
Learning
 
Voyager Sopris
Learning
 
Other
 
Consolidated
Net income
$
9,888

 
$
2,776

 
$
2,937

 
$
(11,166
)
 
$
4,435

Reconciling items between net income and EBITDA:
 
 
 
 
 
 
 
 
 
Depreciation and amortization expense
—

 
—

 
—

 
4,761

 
4,761

Net interest expense
—

 
—

 
—

 
927

 
927

Income tax expense
—

 
—

 
—

 
1,022

 
1,022

Income from operations before interest, income taxes, and depreciation and amortization (EBITDA)
9,888

 
2,776

 
2,937

 
(4,456
)
 
11,145

Non-operational or non-cash costs included in EBITDA but excluded from Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
Income from sale of excess state tax credits
—

 
—

 
—

 
(222
)
 
(222
)
Merger, acquisition and disposition activities
—

 
—

 
—

 
1,499

 
1,499

Stock-based compensation and expense
70

 
55

 
59

 
68

 
252

Adjusted EBITDA
9,958

 
2,831

 
2,996

 
(3,111
)
 
12,674

Change in deferred revenues
(5,752
)
 
(991
)
 
(1,157
)
 
—

 
(7,900
)
Change in deferred costs
597

 
282

 
253

 
—

 
1,132

Capital expenditures - product development
(2,006
)
 
(1,017
)
 
(548
)
 
—

 
(3,571
)
Capital expenditures - general expenditures
(318
)
 
(65
)
 
(9
)
 
(17
)
 
(409
)
Cash income
$
2,479

 
$
1,040

 
$
1,535

 
$
(3,128
)
 
$
1,926



9


 
Six Months Ended June 30, 2018
(in thousands)
Learning A-Z
 
Explore
Learning
 
Voyager Sopris
Learning
 
Other
 
Consolidated
Net income
$
18,777

 
$
5,347

 
$
3,790

 
$
(20,872
)
 
$
7,042

Reconciling items between net income and EBITDA:
 
 
 
 
 
 
 
 
 
Depreciation and amortization expense
—

 
—

 
—

 
9,382

 
9,382

Net interest expense
—

 
—

 
—

 
1,757

 
1,757

Income tax expense
—

 
—

 
—

 
1,474

 
1,474

Income from operations before interest, income taxes, and depreciation and amortization (EBITDA)
18,777

 
5,347

 
3,790

 
(8,259
)
 
19,655

Non-operational or non-cash costs included in EBITDA but excluded from Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
Income from sale of excess state tax credits
—

 
—

 
—

 
(222
)
 
(222
)
Merger, acquisition and disposition activities
—

 
—

 
—

 
1,621

 
1,621

Stock-based compensation and expense
127

 
100

 
118

 
134

 
479

Adjusted EBITDA
18,904

 
5,447

 
3,908

 
(6,726
)
 
21,533

Change in deferred revenues
(15,289
)
 
(5,338
)
 
(4,187
)
 
—

 
(24,814
)
Change in deferred costs
1,292

 
657

 
640

 
—

 
2,589

Capital expenditures - product development
(3,874
)
 
(2,036
)
 
(1,195
)
 
—

 
(7,105
)
Capital expenditures - general expenditures
(576
)
 
(161
)
 
(115
)
 
(31
)
 
(883
)
Cash income
$
457

 
$
(1,431
)
 
$
(949
)
 
$
(6,757
)
 
$
(8,680
)

Deferred Revenue by Segment – 2018
(unaudited)

 
June 30, 2018
(in thousands)
Learning A-Z
 
ExploreLearning
 
Voyager Sopris
Learning
 
Consolidated
Deferred revenue, current
$
36,251

 
$
13,432

 
$
11,603

 
$
61,286

Deferred revenue, less current portion
7,533

 
3,802

 
3,897

 
15,232

Deferred revenue
$
43,784

 
$
17,234

 
$
15,500

 
$
76,518


Deferred Costs by Segment – 2018
(unaudited)
 
June 30, 2018
(in thousands)
Learning A-Z
 
ExploreLearning
 
Voyager Sopris
Learning
 
Consolidated
Deferred costs, current
$
3,499

 
$
1,222

 
$
1,705

 
$
6,426

Deferred costs, less current portion
492

 
177

 
753

 
1,422

Deferred costs
$
3,991

 
$
1,399

 
$
2,458

 
$
7,848



10


Cambium Learning Group, Inc. and Subsidiaries
Reconciliation of Bookings to Net Revenues by Segment – 2017
(unaudited)
 
Three Months Ended June 30, 2017
(in thousands)
Learning A-Z
 
ExploreLearning
 
Voyager Sopris
Learning
 
Consolidated
Bookings
$
11,661

 
$
5,888

 
$
12,192

 
$
29,741

Change in deferred revenues
6,990

 
873

 
2,713

 
10,576

Other
(1
)
 
(26
)
 
72

 
45

Net revenues
$
18,650

 
$
6,735

 
$
14,977

 
$
40,362

 
Six Months Ended June 30, 2017
(in thousands)
Learning A-Z
 
ExploreLearning
 
Voyager Sopris
Learning
 
Consolidated
Bookings
$
21,560

 
$
8,764

 
$
18,529

 
$
48,853

Change in deferred revenues
15,275

 
4,854

 
7,290

 
27,419

Other
—

 
(105
)
 
165

 
60

Net revenues
$
36,835

 
$
13,513

 
$
25,984

 
$
76,332



Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Cash Income by Segment – 2017
(unaudited)
 
Three Months Ended June 30, 2017
(in thousands)
Learning A-Z
 
Explore
Learning
 
Voyager Sopris
Learning
 
Other
 
Consolidated
Net income
$
9,688

 
$
2,814

 
$
3,408

 
$
(10,118
)
 
$
5,792

Reconciling items between net income and EBITDA:
 
 
 
 
 
 
 
 
 
Depreciation and amortization expense
—

 
—

 
—

 
4,997

 
4,997

Net interest expense
—

 
—

 
—

 
1,336

 
1,336

Income tax expense
—

 
—

 
—

 
334

 
334

Income from operations before interest, income taxes, and depreciation and amortization (EBITDA)
9,688

 
2,814

 
3,408

 
(3,451
)
 
12,459

Non-operational or non-cash costs included in EBITDA but excluded from Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
Merger, acquisition and disposition activities
—

 
—

 
—

 
212

 
212

Stock-based compensation and expense
53

 
30

 
75

 
66

 
224

Adjusted EBITDA
9,741

 
2,844

 
3,483

 
(3,173
)
 
12,895

Change in deferred revenues
(6,990
)
 
(873
)
 
(2,713
)
 
—

 
(10,576
)
Change in deferred costs
547

 
104

 
517

 
—

 
1,168

Capital expenditures - product development
(1,869
)
 
(721
)
 
(1,316
)
 
—

 
(3,906
)
Capital expenditures - general expenditures
(220
)
 
(77
)
 
(45
)
 
(36
)
 
(378
)
Cash income
$
1,209

 
$
1,277

 
$
(74
)
 
$
(3,209
)
 
$
(797
)

11


 
Six Months Ended June 30, 2017
(in thousands)
Learning A-Z
 
Explore
Learning
 
Voyager Sopris
Learning
 
Other
 
Consolidated
Net income
$
18,556

 
$
5,490

 
$
4,043

 
$
(19,767
)
 
$
8,322

Reconciling items between net income and EBITDA:
 
 
 
 
 
 
 
 
 
Depreciation and amortization expense
—

 
—

 
—

 
9,768

 
9,768

Net interest expense
—

 
—

 
—

 
2,563

 
2,563

Income tax expense
—

 
—

 
—

 
474

 
474

Income from operations before interest, income taxes, and depreciation and amortization (EBITDA)
18,556

 
5,490

 
4,043

 
(6,962
)
 
21,127

Non-operational or non-cash costs included in EBITDA but excluded from Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
Merger, acquisition and disposition activities
—

 
—

 
—

 
339

 
339

Stock-based compensation and expense
100

 
54

 
145

 
125

 
424

Adjusted EBITDA
18,656

 
5,544

 
4,188

 
(6,498
)
 
21,890

Change in deferred revenues
(15,275
)
 
(4,854
)
 
(7,290
)
 
—

 
(27,419
)
Change in deferred costs
1,162

 
493

 
1,076

 
—

 
2,731

Capital expenditures - product development
(3,798
)
 
(1,481
)
 
(2,809
)
 
—

 
(8,088
)
Capital expenditures - general expenditures
(393
)
 
(167
)
 
(115
)
 
(53
)
 
(728
)
Cash income
$
352

 
$
(465
)
 
$
(4,950
)
 
$
(6,551
)
 
$
(11,614
)



12