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8-K - FORM 8-K - CAMBIUM LEARNING GROUP, INC. | c93673e8vk.htm |
EX-99.2 - EXHIBIT 99.2 - CAMBIUM LEARNING GROUP, INC. | c93673exv99w2.htm |
Exhibit 99.1
CORPORATE PARTICIPANTS
Shannan Overbeck
Cambium Learning Group Inc. IR
Cambium Learning Group Inc. IR
Ron Klausner
Cambium Learning Group Inc. CEO
Cambium Learning Group Inc. CEO
David Cappellucci
Cambium Learning Group Inc. President Cambium Learning Group, Inc. and President Voyager
Cambium Learning Group Inc. President Cambium Learning Group, Inc. and President Voyager
Brad Almond
Cambium Learning Group Inc. CFO
Cambium Learning Group Inc. CFO
CONFERENCE CALL PARTICIPANTS
Tucker Golden
Solas Capital Analyst
Solas Capital Analyst
Randy Baron
SM Investors Analyst
SM Investors Analyst
PRESENTATION
Good afternoon, everyone, and welcome to the Cambium Learning Group investor conference call.
I will now turn the conference call over to Ms. Shannan Overbeck.
Thank you, Operator. My name is Shannan Overbeck and I am Cambium Learning Groups Head of
Investor Relations. On the call today is Ron Klausner, Cambium Learning Groups Chief Executive
Officer; David Cappellucci, the Groups President; and Brad Almond, the Chief Financial Officer,
who has some prepared comments.
Before we begin, I have a few comments regarding the information we are providing today. Please
note that some statements made on todays call are forward-looking in nature and are based upon
assumptions and subject to risks and uncertainties. The risks and uncertainties associated with
these statements could cause Cambium Learning Groups actual performance to differ materially from
that reflected in statements made today.
Cambium Learning Group does not undertake any duty to update these statements, whether as a result
of new information, future events, or otherwise. You can find a discussion of some of these risks
under the caption risk factors in our Form S-4 filed with the Securities and Exchange Commission in
association with our recently-closed merger.
Non-GAAP figures will be discussed on this call to provide additional information to investors
regarding financial and business trends. Reconciliations of these figures are included in our Form
S-4 or on a Form 8-K to be filed with the SEC along with a transcript from this call.
Following todays prepared statements, we will take questions. A transcript and webcast of todays
call will be available on the Companys corporate website, CambiumLearning.com. Let me now turn the
call over to Ron.
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1
Final Transcript
Dec 10, 2009 / 09:00PM GMT, ABCD Cambium Learning Group Inc. call to discuss
merger completion of Voyager Learning Company and Cambium Learning, Inc.
Thank you, Shannan, and thank you for joining us today. Im delighted to share with you this
inaugural first investor conference call of Cambium Learning Group, known hereafter on this call as
Cambium.
Two days ago, the Voyager Learning Companys shareholders met and approved the merger of their
company with Cambium Learning with an impressive 99% of the votes that were cast. The process to
get to this point has been a long, but we are emboldened by the strong vote and investor mandate
for the merger that we received.
The combined company we are now leading is well positioned to address the many needs of Americas
23 million struggling students. It is a market that we feel has potential growth and we feel that
our combined solutions provide a significantly more compelling offering than each of the companies
had separately.
My introductory comments will cover the following two areas. One, our organization structure,
including our leadership team, and secondly, an integration update.
First, how have we organized the company? Cambium Learning Group will serve as the organization or
umbrella brand for the combined company, and will also be the corporate parent name for the merged
business.
The newly-combined business will be managed in three distinct business units. Voyager will be the
comprehensive intervention business unit, Sopris will represent our supplementary business unit,
and Cambium Learning Technologies will represent our technology solutions business unit. Id like
to provide you with a summary-level perspective of each of these three business units.
The Voyager business unit has been consolidated of both Cambiums and Voyager core intervention
products under the Voyager brand. This includes our largest product offerings, including our
adolescent literacy solutions, Language! and Journeys; our early literacy solution, Passport and
Read Well, and our math solutions, TransMath, Vmath, and Algebra Rescue.
This unit will possess one of the most experienced and skilled sales teams in the industry and this
significantly expanded group will carry what we feel is the most complete suite of products and
services being offered to address the needs of struggling students.
David Cappellucci will lead this business unit, in addition to his role as President of Cambium
Learning Group. David is the co-founder of Cambium Learning and brings an impressive 27-year career
in the education industry.
Estimated 2009 revenues for this business unit are approximately 65% of Cambium Learning Groups
2009 revenues.
The Sopris business unit is our supplemental solutions business. Behind the strength of some of the
nations most respected and revered authors, such as Louisa Moats, Anita Archer, and Roland Good,
is a collection of research-based supplemental education materials, which we will market via direct
sales, sales agents, e-commerce, and catalogs.
Im delighted that George Logue will lead this unit. George has over 30 years of experience in the
education industry, was a co-founder of Cambium Learning, and has served as its Executive Vice
President since June 2003.
Estimated 2009 revenues for this business unit are 12% of Cambium Learning Groups 2009 revenues.
The Cambium Learning Technologies business unit is our companys technology-based education product
unit. This in unit includes the following well-recognized brands special-education tools,
IntelliTools, and Kurzweil Web-based reading, writing, vocabulary, and other resources for students
and teachers, Learning A-Z, and Web-based math and science computer simulations, ExploreLearning.
Historically, this group has demonstrated significant growth and were fortunate to have John
Campbell lead this unit. John was Voyagers Chief Executive Officer and was instrumental in
Voyagers acquisition of ExploreLearning and Learning A-Z, and successfully led these products as
they grew quickly.
Estimated 2009 revenues for this business unit are approximately 23% of Cambiums 2009 revenues.
As you can see, these three business units represent a significant blend of market-leading
education products, service, and technology solutions serving the at-risk student population.
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2
Final Transcript
Dec 10, 2009 / 09:00PM GMT, ABCD Cambium Learning Group Inc. call to discuss
merger completion of Voyager Learning Company and Cambium Learning, Inc.
In addition to David, John, and George, who will each serve as presidents of their respective
business units, were pleased to have the following executives who will report to me. Brad Almond,
who will serve as our Chief Financial Officer. Brad joined Voyager as its Chief Financial Officer
three years ago. Todd Buchardt will serve as our General Counsel. Todd was General Counsel of
Voyager Learning and originally joined the parent company to Voyager as General Counsel in 1998.
Todd and Brad successfully led us through the legal and financial process related to this merger.
Carolyn Getridge will lead human resources and customer urban relations. Dr. Alan Nowakowski will
be the leader of strategy and product development, and Dr. Bob Pasternak will lead our
special-education initiatives.
Integration update. Weve made meaningful progress in planning for integrating the companies over
the last several months. We formed multiple joint task force teams to gather critical facts and
empirical data to enable us to analyze various aspects of each business, identify best practices
and processes, develop recommendations, establish timelines, and determine areas where we had
duplicate resources.
The objective of this process was to hit the ground running at the closing of the merger, while
being thoughtful of risks associated with the integration, especially as it relates to our
customers. The formation of the three business units I just discussed have taken effect at the time
of the merger.
Clearly, the successful integration of the sales forces in all three business units represents
perhaps one of the most critical success factors for the merger. The sales integration task force
is complete, which will allow for a consolidated sales organization to take effect as of January 1,
2010.
As we communicated at the time of the merger, we had estimated that we expect to realize at least
$10 million in annualized synergies as a result of the combination. We continue to feel very
comfortable with this figure and based on the work completed to date, we believe that upside beyond
this level is probable.
We also intend to act quickly, thoughtfully, and decisively to complete the integration by the end
of 2010. We expect a reduction in force of approximately 70 to 80 people to reach and potentially
exceed the annual synergies target of $10 million.
Through attrition during the process, we have already achieved a reduction of approximately 15 of
this estimate and we anticipate the majority of the remaining 55 to 65 reductions to occur between
next week and early 2010. We expect that virtually all of the actions required to complete the full
integration will be completed in 12 months.
Due to the extensive preplanning of our integration in advance of closing, we have an ability to
act on the cost-savings opportunities immediately, and thus we expect to realize on a reported
basis a significant portion of our estimated savings during the 2010 fiscal year. Partially
offsetting the savings will be some material one-time costs. In future calls, we will update you
regarding both savings and costs associated with completing the integration process.
And now, I will turn the call over to David.
Thank you, Ron, and thank you for joining us today. I would like to briefly share an update on
Cambium Learnings third-quarter and year-to-date results, after which Ill turn the call over to
Brad who will speak to the results of the newly-combined company, Cambium Learning Group.
Of course, the results Ill be addressing reflect Cambium Learnings performance pre-merger as a
stand-alone entity and will not include any results related to Voyagers performance pre-merger.
Brad will do the same for Voyager in his comments.
As the merger is occurring so late in the year, providing this information for each of the two
companies separately will provide you with better visibility regarding how each company performed
pre-merger and how we expect to finish the year. Going forward, we will conform to the structure of
the three major business units which Ron just outlined.
Let me turn to the third-quarter 2009 results. Cambium experienced strong and improved business
conditions and performance during the quarter ended September 30, 2009, relative to the first half
of the year. Cambiums third-quarter revenues of $41 million were up approximately 16%
compared to the same period in 2008. This was particularly evident in the month of September, which
saw an increase of sales of 72% when compared to September of 2008.
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3
Final Transcript
Dec 10, 2009 / 09:00PM GMT, ABCD Cambium Learning Group Inc. call to discuss
merger completion of Voyager Learning Company and Cambium Learning, Inc.
Cambium Learning has significantly less deferred revenues in Voyager, and consequently September
and third-quarter sales results were entirely driven by strength in new orders. In the third
quarter, intervention products revenues were up approximately 17% and our technology division was
up approximately 13% versus the same period in the prior year.
Third-quarter revenue increase in Texas, where we won new business in Houston for our language
comprehensive literacy curriculum, and in Louisiana, where Caddo Parish purchased approximately $3
million in order to implement our Read Well reading program in grades K-2 and Language! for their
adolescent literacy intervention.
Additionally, transitional mathematics helped more than offset the revenue declines we experienced
in Florida and Alabama, also a result of higher sales in those adoptions last year.
We were particularly pleased with our performance in California, which is our largest and most
challenged market. Total third-quarter revenues in California increased 50% over the same period
last year, to approximately $5 million. While the vast majority of districts elected to delay their
participation in this years literacy intervention adoption, a few did move forward, resulting in a
doubling of our language sales, which is listed for sale in that adoption.
In the area of math, sales of our newly revised transitional mathematics program, targeted for
students requiring intensive math intervention, increased by 65% in the third quarter, or
approximately $2 million.
Adjusted EBITDA for the third quarter was $19 million, an increase of $5 million, or 35%, from the
third quarter of 2008. This increase is both volume and rate driven, attributable to increased
gross margin from the higher third-quarter sales and more favorable cost of sale and services.
We were able to hold our largest operating expense items sales, marketing, and product
development about flat with last year, so the resulting margin increase from the higher sales
volume basically flowed directly through to adjusted EBITDA. It should be noted that adjusted
EBITDA in this context is lower than the adjusted EBITDA allowed by our credit agreement, which
permits additional add-back items to income.
Cambiums strong third-quarter performance helped us to partially reverse the year-to-year sales
decline that existed for the six months ended June 30, 2009. For the nine months ended September
30, 2009, sales of $78 million are 5% lower than in the comparable period in 2008, which represents
an improvement from the 21% unfavorable prior-year variance through the second quarter, and based
on what we are seeing, represents an outperforming of the K-12 market generally and really, to some
extent, the need to address some of the challenges with at-risk students, especially adolescent
literacy and math intervention where we are particularly well positioned.
In spite of the slightly unfavorable revenue variance through the first nine months of the year, we
were able to report adjusted EBITDA of $24.5 million during this period, an increase of $3.5
million, or approximately 17% over the same period in 2008. Weve continued to experience positive
business conditions in the fourth fiscal quarter; therefore for the full year, we expect revenues
to end in the range of $95 million to $96 million with full-year adjusted EBITDA of approximately
$27 million.
Now let me turn the call over to Brad Almond.
Thanks, David. I will cover four topics, and then we will turn the call over to the Operator
for questions.
These four topics are, first, the review of the final steps of the closing; second, update the
full-year Voyager guidance; third, Ill tie in the guidance just provided by David for a complete
picture of how the newly-formed Cambium Learning Group is performing on a combined basis; and
fourth, the resulting cash balances from the merger and a summary look at the liquidity position of
Cambium.
As Ron mentioned, clearly the Voyager shareholders viewed the merger favorably and we were
encouraged by the overwhelming overwhelmingly positive vote. As we had projected, Voyager
maximized the cash available for distribution to the shareholders and, outside of the tax refunds,
we distributed $67.5 million in cash to those electing cash for their shares.
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4
Final Transcript
Dec 10, 2009 / 09:00PM GMT, ABCD Cambium Learning Group Inc. call to discuss
merger completion of Voyager Learning Company and Cambium Learning, Inc.
Such cash election was oversubscribed, and therefore we provided cash tender for the maximum 10.4
million shares. The remaining 19.5 million shares of Voyager stock were converted into shares of
Cambium Learning Group Inc. Thus combined with the new shares issued to the former shareholder of
Cambium Learning, the newly-formed Company now has a total shares outstanding of 43.8 million.
I want to spend just a moment providing the results of the cash elections in the merger, share some
information on the exchange of Voyager stock, and summarize the delivery of the cash component of
the merger consideration.
Subject to a final reconciliation, a stockholder owning 1,000 shares of common stock of Voyager
Learning Company, and who elected to receive cash consideration for all 1,000 shares, would receive
in exchange for those shares the following three components of consideration.
First, total cash of $2,859.61, consisting of $2,340 for the cash election and $519.61 for the tax
refunds received through closing, excluding certain escrowed amounts. The second component is 640
shares of Cambium Learning Group Inc. stock, and the third is one contingent value right
representing the right to receive certain future tax refunds and amounts put in escrow at closing
if certain contingencies occur over time.
Looked at a different way, the shareholder electing all cash consideration for their shares will
receive a pro-rated amount of cash from the cash election equal to $2.34 a share, plus $0.52 per
share for the tax refunds, providing a total pro-rated cash payout of $2.86 a share held.
The process for the distribution of the cash and shares includes the final reconciliation that
should be completed by the end of this week, and distribution of letters of transmittal to the
shareholders by the end of next week. Upon receipt of the letters of transmittal, shareholders will
be required to complete the letter and return their shares of Voyager Learning Company stock. Upon
receipt of a properly-completed letter of transmittal and the shares, the cash and shares in
Cambium Learning Group Inc. will be mailed in approximately two to three weeks after receipt of the
documents.
Please recognize that each of the previous time periods an estimate based on the current process.
Each of the time periods could vary, especially during the holiday season.
We have been listed on the NASDAQ global market under the ticker symbol ABCD, and trading has
begun. Obviously, all of this represents the culmination of a long process which we are thankful
has been completed. However, we realize that our job has just begun regarding our investor
relations effort and we look forward to getting started. We also realize that step one in the
investor relations process is results and we begin from a good starting point with the results of
both Voyager and Cambium Learning for 2009.
As David just did for Cambium Learnings results, I will speak to both Voyager and Cambium
Learnings outlooks as separate entities. I do this given the lateness in the year of this closing.
By understanding how each company had done individually prior to the closing, and how we both
project the year, you will have a picture of performance prior to undergoing the various purchase
accounting adjustments that will now be required.
So first, recall that in the S-4 filing we provided an adjusted EBITDA for the first nine months of
2009 for Voyager of $17 million, and the adjusted EBITDA for the same nine-month period for Cambium
Learning was $25 million, for a combined total of $42 million. Again, before pro forma adjustments.
The S-4 filing reconciled adjusted EBITDA to GAAP net earnings for each company, and adjusted
EBITDA in this call is calculated in a consistent way for any historical and projected amounts.
Regarding how we see the full year of 2009 for both individual entities and assuming the merger had
not taken place, for Voyager we previously guided that we believed estimated adjustment adjusted
EBITDA would be between $17 million and $19 million. We are now estimating that we will be at the
high end of that range and reach $19 million to $20 million.
As stated by David previously, the comparable Cambium Learning stand-alone guidance for full-year
2009 adjusted EBITDA is $27 million. Combining these as stand-alone entities would provide a 2009
adjusted EBITDA of $46 million to $47 million, with the comparable number from 2008 being $34
million, or an increase of approximately 35% to 38%.
Adjusted EBITDA was increased from cost cutting achieved by both companies well ahead of the merger
in late 2008 in preparation for the market challenges management believed were in store for 2009.
This was accomplished with revenue from Voyager projected to be between $99 million and $100
million for 2009 and $95 million to $96 million for Cambium Learning.
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5
Final Transcript
Dec 10, 2009 / 09:00PM GMT, ABCD Cambium Learning Group Inc. call to discuss
merger completion of Voyager Learning Company and Cambium Learning, Inc.
Combined, the expected range of stand-alone revenue would be $194 million to $196 million, compared
with a combined 2008 revenue amount of $198 million. Again, before any purchase accounting
adjustments have been made.
Assuming we meet our projections, we will have been collectively successful in improving our
adjusted EBITDA a meaningful amount in a tough economic environment. As David mentioned, we believe
both our revenue and adjusted EBITDA performance compares favorably to the general K-12 education
market for products and services.
It is important to note that while the $46 million to $47 million of combined projected adjusted
EBITDA does not include pro forma or purchase accounting adjustments, it also doesnt include
expected savings to be realized from integration. As stated earlier, we believe that these savings,
when fully realized, will add a minimum of $10 million to our annualized EBITDA.
As we file our Cambium Learning Group Form 10-K for 2009, we will appropriately apply purchase
accounting, but I also point out that the Voyager part of the results will only be presented for
the period between the closing date and the end of the year. As a combined company going forward,
we have not yet determined whether we will be giving guidance of any sort, and if we do give
guidance, what that guidance would consist of.
Let me circle back to the merger closing and its effect on cash balances of the newly-combined
company. Given the improved business performance of both Cambium Learning and Voyager experienced
in the third quarter, cash generation at both companies was strong. As I mentioned earlier, Voyager
maximized the cash to be distributed to Voyager shareholders and funded all required escrow
accounts for legacy liabilities and ultimately left behind for the new business operating cash of
$4 million after paying all Voyager transaction costs.
The newly-formed Cambium Learning Group, after paying the Cambium share of the transaction expenses
and after making the scheduled Q4 interest payment, is expected to have approximately $11 million
to $13 million in operating cash. We intend to use this excess cash to pay down $10 million of the
principal of our outstanding revolver, bringing its principal balance to $5 million at year end.
Therefore, we project at the end of 2009 Cambium Learning Group will have an operating cash balance
between $1 million and $3 million, as well as $25 million of available funding via our revolving
line of credit. Combined, this provides us with ample liquidity needed for working capital purposes
in the early part of 2010, which is historically a cash flow negative period for us.
At the end of the year, we expect our net debt balance to be approximately $156 million. This is
largely the companys long-term debt, which has maturity in 2013. As an indication of our improved
liquidity as a result of the merger, we can look at the simple leverage metric comparing debt to
adjusted EBITDA. Taking our total expected year-end debt of $156 million, and dividing by the two
companies combined adjusted EBITDA guidance of $46 million to $47 million, provides a ratio of
approximately 3.3 to 3.4 debt to EBITDA.
Keep in mind this is illustrative using the two companies stand-alone adjusted EBITDA projections,
and going forward we will have the expected purchase accounting adjustments. However, Ill also
point out that we have adequate provisions in the debt agreement to add back the impact of purchase
accounting adjustments for covenant compliance. The merger is expected to provide very sufficient
debt covenant coverage due to the combined earnings, as well as expected synergies.
As you are aware, the first part of any year is seasonally our lowest, and we typically see
additional draws on the revolver for items such as inventory build-up prior to an expected cash
flow positive second half of the year. We do not expect the revolver to come close to its maximum
amount of $30 million. Thus, we believe we have adequate liquidity in the business as we enter
2010, due to the improved results of both companies prior to the merger.
We are pleased with the performance of both Cambium Learning and Voyager, with our financial
position, and the quick start of our integration process.
That concludes our prepared remarks, and I would like to turn the call over to the Operator for
questions.
QUESTION AND ANSWER
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6
Final Transcript
Dec 10, 2009 / 09:00PM GMT, ABCD Cambium Learning Group Inc. call to discuss merger completion of Voyager Learning Company and Cambium Learning, Inc.
(Operator Instructions). Tucker Golden, Solas Capital.
Good afternoon. Congratulations on finalizing the transaction, and it looks like a great end
to the year as well. A couple of questions regarding cash flows looking forward, can you provide us
with some sort of rough estimate for CapEx cash interest expense and any significant use or source
of cash from or towards working capital expected next year?
I knew Id get at least one forward-looking question. So were going to refrain from answering
forward-looking questions at this time.
I think there is some good historical stuff out there for you in terms of what the combined and why
we provided the two companies separately like we did. Of what the at least the combined adjusted
EBITDA was for both companies.
Our adjusted EBITDA is relatively a pretty close approximation for cash because well additive
to adjusted EBITDA, you would have the fact that our deferred revenue rises, and then subtracting
for that would be capital. And the two, typically, historically, at least for Voyager, have netted
themselves out to be the same.
So at this point, Id point you to the historical stuff we have, and as we go into next year, well
look to give you a little bit more visibility.
Okay, thats great. I mean, I think there is enough detail as well in your S-4, between the
solvency opinion and various other sections to make a nice guess-timate. And there should be pretty
significant cash generation next year.
Can you talk to some extent about you mentioned your expected year-end net debt to EBITDA ratio.
I think you excluded the synergies in that 3.3, 3.4 number. Can you talk about where the company is
comfortable running going forward? I know you have some ability to make acquisitions, and obviously
theres an opportunity to pay down debt. Can you talk about the philosophy there going in?
I figure first, you identified very correctly that we omitted from that liquidity or the
debt ratio calculation, I excluded the synergies, but again Ill also [adequately] point out wed
be excluding some of the pro forma effects of accounting.
But I think if you look at it from a cash flow basis, that is our starting point. Obviously, we
would expect to see our synergies provide us with additional room, but really the key to that is
the top line for next year, and thats one area that we havent given guidance for at this time.
And Tucker, we will on our first call share with you our priorities and give you insight into
our strategy. But at this call
Sure. Got it. No, thanks. I appreciate it. In terms of cash taxes, I assume that isnt going
to be an issue going forward. Forgetting about an estimate but just in terms of end-of-year net
operating loss numbers, can you provide us some color there? Whats left at Cambium and anything
that comes over from Voyager?
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7
Final Transcript
Dec 10, 2009 / 09:00PM GMT, ABCD Cambium Learning Group Inc. call to discuss merger completion of Voyager Learning Company and Cambium Learning, Inc.
Just speaking on the tax side?
Yes.
We dont were assuming no significant cash tax payments this year, and into next year I
think we said, at least on a previous call we said we didnt expect any in 2010, and beyond that,
we have not projected beyond that.
Okay. What are the federal and or just, I guess, starting with federal NOLs at Cambium at
year-end?
I dont have those. Im still working through with the lawyers on which NOL survives, so I
dont have that handy in front of me.
Okay, well look forward to maybe hearing more about that in the future. Thanks a lot, guys,
and good luck.
(Operator Instructions). [Randy Baron], [SM Investors].
Hi, guys, good afternoon. I guess I want to piggyback on Tuckers question there. I recognize
youre not giving 2010 guidance, but Im just curious. In the S-4, it talks about $10 million of
CapEx. What does that CapEx what does it go towards?
The extreme majority of that is development of the curriculum. We I know on the Voyager
side, we spent roughly $1 million in property, plant, and equipment, and I know the Cambium side
was a little bit less than that. So the majority of that youre going to see is the capitalization
of curriculum development.
Okay. And thats all capitalized?
No, its only roughly, weve been running at about 60% capitalization of the spend, and
then the rest, if it is not capitalized, shows up in your development line.
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8
Final Transcript
Dec 10, 2009 / 09:00PM GMT, ABCD Cambium Learning Group Inc. call to discuss merger completion of Voyager Learning Company and Cambium Learning, Inc.
Okay. Ron, you may cut this off, Im not sure, but if you have roughly $30 million plus a free
cash next year, is it all towards debt or is there I guess what Im trying to get at, are there
other, smaller how many other equivalent bolt-on acquisitions are out there? Not a real number,
but just a ballpark idea?
Is this it for now or are we going to continue looking for other things in the same size, given all
the federal money coming through and given the strong third quarter?
Well share with you our strategy in the early part of 2010. But that being said, there are a
number of capabilities and a number of entrepreneurial capabilities that we think would be very
nice tuck-in acquisitions, primarily technology-based capabilities.
So we have a track record of acquiring companies that have good capabilities, Learning A-Z and
ExploreLearning, without good sales and marketing acumen, and growing those significantly. And so,
I think you could assume that is part of our plans, but well get more specific as we go forward.
Yes, I certainly think you guys have a proven track record. But does that infer that you would
go more towards a software-specific company and not an education I mean, is (multiple speakers)
it something to help what you are ready have?
No, no. Education what I said is our thought clearly, were staying in the education
sector, but our priorities would be capabilities that are web-based [canna] capabilities. Niches
that we think could fill out our suite of capabilities even more completely.
Okay, maybe youll elaborate on a future call and thats certainly an interesting concept. And
then, just one last thing, Davids comments. He mentioned something that caught my interest, which
is Cambium didnt have as much deferred revenue. Can you just talk about the new company going
forward, what the deferred revenue sense of the mix is going to be?
Ill go ahead and comment to that is typically the model, the Cambium products have had less
embedded technological features that some of ours have had, so we have had a high and also, we
have a significant portion of our sales come from online subscription products that are just simply
sold stand-alone.
So we dont yet know the mix going forward for two reasons. One is we do have a plan to start
including a lot of our technology products within the Cambium print products, which will increase
the deferral of percentage, but to the extent that were going to do that is not yet known, and
mainly the timing of when were going to do that is not yet determined.
Okay. Lastly, on the $156 million of debt at year-end maturing in 2013, what is the rate on
that? And is it fixed or floating?
It is that is a great question. I dont the debt details in front of me. Its actually I
think the debt details are in the S-4.
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Final Transcript
Dec 10, 2009 / 09:00PM GMT, ABCD Cambium Learning Group Inc. call to discuss merger completion of Voyager Learning Company and Cambium Learning, Inc.
Theres two pieces of debt; there is an original piece and theres a mezzanine piece. And the
mezzanine piece, Id hate to quote a bad rate for you, but it is in excess of 10%. And the larger
piece is probably somewhere around the 10% range as well, but lower than the mezzanine piece.
Okay, thank you and good luck.
(Operator Instructions). There are no further questions at this time. I would now like to turn
the conference back over to Mr. Almond.
Thank you, again, and to reiterate what Ron has said, were absolutely thrilled to share this
inaugural call with you and look forward to future calls. Thanks for your attendance.
Thank you. This does conclude todays conference call. You may now disconnect your line.
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