AlphaSmart Announces Year-End 2004 Results LOS GATOS, Calif., Feb.
8 /PRNewswire-FirstCall/ -- AlphaSmart, Inc. (NASDAQ:ALSM) today
announced its unaudited financial results for the fourth quarter
and fiscal year ended December 31, 2004. Final results were
consistent with the preliminary expectations disclosed by the
company on January 25, 2005. AlphaSmart's fourth quarter 2004 net
revenue was $6.8 million, compared with $8.3 million for the fourth
quarter of 2003. Net loss under generally accepted accounting
principles (GAAP) was $220,000, or a loss of $0.01 per share on a
fully diluted basis, compared with net income of $413,000, or $0.04
per share on a fully diluted basis, for the fourth quarter of 2003.
The fourth quarter 2004 net loss under GAAP included the effects of
charges of $160,000 for restructuring costs, $100,000 for legal
costs related to litigation, and $115,000 due to a change in
forecasted volume related to product royalties under AlphaSmart's
license agreement with PalmSource, Inc. for the Palm OS operating
system. In the aggregate, these charges accounted for $0.02 per
share on a fully diluted basis. As a result of AlphaSmart's initial
public offering in February 2004, the number of weighted average
shares outstanding on a fully diluted basis increased by 35% to
14.8 million shares for the fourth quarter of 2004 from 11.0
million shares for the same quarter a year earlier. For the fiscal
year ended December 31, 2004, AlphaSmart's net revenue was $35.5
million, compared with $38.9 million for 2003. Net income under
GAAP was $2.2 million, or $0.15 per share on a fully diluted basis,
compared with $3.4 million, or $0.31 per share on a fully diluted
basis, for 2003. Net income for 2004 included the effects of
$375,000 in aggregate charges for the fourth quarter and $588,000
in interest and a premium paid on the redemption of mandatorily
redeemable preferred stock in the first quarter, which together
accounted for $0.06 per share on a fully diluted basis. On January
25, 2005, AlphaSmart announced a definitive agreement to merge with
Renaissance Learning, Inc. (NASDAQ:RLRN), a leading provider of
learning information systems and school improvement programs for
pre-K-12 schools, in a tax-free reorganization valued at
approximately $57 million. The transaction is expected to be
completed in the second quarter of 2005, subject to approval by
AlphaSmart stockholders, government regulatory review, and other
customary closing conditions described in the definitive merger
agreement. AlphaSmart plans to conduct a management teleconference
on its year-end results at 2:00 p.m. PST / 5:00 p.m. EST today.
This call will be webcast live and archived for all investors on
the AlphaSmart website at http://www.alphasmart.com/ir/. In
addition, a phone replay of the call will be available at (719)
457-0820, access code 2815545, through February 15, 2005.
AlphaSmart intends to discuss financial and other statistical
information on today's teleconference. This information will also
be available on the company's website at
http://www.alphasmart.com/ir/ in the webcast described above.
AlphaSmart, Inc. AlphaSmart, Inc. is a provider of affordable,
portable personal learning solutions for the K-12 classroom. Its
portable computer-companion products are used by students to
enhance writing, keyboarding and comprehension, and have been
adopted by more than 8,000 school districts in the United States
and other countries. Based in Los Gatos, California, the company
was founded in 1992 by former Apple Computer engineers.
Forward-Looking Statements Safe Harbor This press release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934, including statements related to AlphaSmart's financial
results for the fourth quarter and fiscal year ended December 31,
2004 and to AlphaSmart's definitive agreement to merge with
Renaissance Learning, Inc. and the expected closing of that merger.
Any such forward-looking statements may involve risks and
uncertainties that could cause actual results or events to differ
materially from any future results or events encompassed within the
forward-looking statements. Factors that could cause or contribute
to such differences include the possibility that final results for
the fourth quarter and fiscal year ended December 31, 2004 could
vary, perhaps materially, following completion of the audit of our
financial statements by our independent registered public
accounting firm, failure to satisfy the closing conditions of the
merger agreement, and unexpected delays in closing the merger.
AlphaSmart expressly disclaims a duty to provide updates to
forward- looking statements, whether as a result of new
information, future events or other occurrences. Additional
Information and Where to Find It AlphaSmart and Renaissance
Learning intend to file a registration statement on Form S-4, which
will include a proxy statement/prospectus and other relevant
materials in connection with the proposed merger transaction
involving AlphaSmart and Renaissance Learning. INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ THIS FILING WHEN IT BECOMES
AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION REGARDING
THE PROPOSED MERGER TRANSACTION. Investors and security holders may
obtain free copies of these documents and other documents filed
with the SEC when they become available at the SEC's website at
http://www.sec.gov/. In addition, investors and security holders
may obtain free copies of the documents filed with the SEC by
AlphaSmart at AlphaSmart's website at http://www.alphasmart.com/ or
by contacting AlphaSmart investor relations at or via telephone at
(408) 355-1029. Investors and security holders may obtain free
copies of the documents filed with the SEC by Renaissance Learning
by directing such requests to Renaissance Learning, Inc.,
Attention: Corporate Secretary, 2911 Peach Street, P.O. Box 8036,
Wisconsin Rapids, Wisconsin 54995 or via telephone at (715)
424-3636. Renaissance Learning, AlphaSmart and their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from the stockholders of AlphaSmart
in connection with the merger transaction. Information regarding
directors and executive officers of AlphaSmart and Renaissance
Learning and their respective interests in the proposed transaction
will be available in the proxy statement/prospectus of AlphaSmart
and Renaissance Learning described above and other relevant
materials to be filed with the SEC. NOTE: AlphaSmart is a
registered trademark of AlphaSmart, Inc. in the United States and
other countries. All other trademarks are the property of their
respective owners. ALPHASMART, INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (in thousands) Dec. 31, Dec. 31, 2004 2003 (unaudited)
ASSETS Current assets: Cash and cash equivalents $4,070 $2,285
Accounts receivable, net 4,052 4,405 Inventory 4,087 2,818 Deferred
tax assets 498 572 Other current assets 3,225 898 Total current
assets 15,932 10,978 Property and equipment, net 572 709 Deferred
tax assets, net of current portion 285 361 Other assets 2,193 1,644
Total assets $18,982 $13,692 LIABILITIES, REDEEMABLE CONVERTIBLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) Current
liabilities: Accounts payable $750 $1,892 Accrued liabilities 2,171
3,957 Income taxes payable 642 625 Borrowings under loan facility,
current portion -- 2,680 Capital lease obligations, current portion
92 76 Total current liabilities 3,655 9,230 Borrowings against line
of credit -- 873 Borrowings under loan facility, net of current
portion -- 1,340 Capital lease obligations, net of current portion
24 106 Other long-term liabilities 18 60 Mandatorily redeemable
preferred stock -- 9,747 Total liabilities 3,697 21,356 Redeemable
convertible preferred stock -- 13,468 Stockholders' equity
(deficit) 15,285 (21,132) Total liabilities, redeemable convertible
preferred stock and stockholders' equity (deficit) $18,982 $13,692
ALPHASMART, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts) Three Months Ended Twelve
Months Ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2004 2003 2004
2003 (unaudited) (unaudited) Net revenue $6,805 $8,264 $35,461
$38,864 Cost of revenue 3,777 3,935 17,149 18,803 Gross margin
3,028 4,329 18,312 20,061 Operating expenses: Research and
development 567 768 2,410 3,177 Sales and marketing 1,750 1,557
7,084 5,971 General and administrative 1,269 1,067 4,613 4,163
Total operating expenses 3,586 3,392 14,107 13,311 Operating profit
(loss) (558) 937 4,205 6,750 Other income (expense), net 48 (248)
(580) (1,043) Profit (loss) before income taxes (510) 689 3,625
5,707 Provision for (benefit from) income taxes (290) 276 1,413
2,283 Net income (loss) $(220) $413 $2,212 $3,424 Net income (loss)
per share: Basic $(0.01) $0.07 $0.16 $0.62 Diluted $(0.01) $0.04
$0.15 $0.31 Shares used in computing per share amounts: Basic
14,800 5,597 13,803 5,550 Diluted 14,800 10,964 14,727 10,955
DATASOURCE: AlphaSmart, Inc. CONTACT: Investors, James M. Walker,
Vice President, Chief Financial Officer and Chief Operating Officer
of AlphaSmart, Inc., +1-408-355-1029, or Web site:
http://www.alphasmart.com/
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