WRC Media revenue falls 3% in ’03, company seeks new financing

WRC Media revenue falls 3% in ’03, company seeks new financing

The financial picture at K-12 supplemental publisher WRC Media (New York) continues to be bleak. Revenue in 2003 declined for the second year in a row, according to preliminary and unaudited year-end results released last week.

Corporate-wide, WRC Media revenue fell 3% to $202.8 million in 2003, although the rate of decline slowed from 2002.

Moreover, revenue at the company’s instructional software business, CompassLearning, declined almost 6% to $50.5 million. WRC Media through much of the year had touted the growth of ChildU revenue, which is included in the CompassLearning figure. However, ChildU contributes only a small portion of the revenue, and it is clear that CompassLearning has yet to gain traction from available federal No Child Left Behind funding.

While WRC Media struggled in 2003 to generate growth, the company improved its operating performance and significantly reduced its net loss. Operating income in 2003 rose 24% to $24.5 million, while the company reduced its net loss almost 92% to $7.8 million from $95.4 million in 2002. At the end of 2002, the company began laying off 100 employees from its workforce of just under 1,000 people.

The company is pursuing new financing to help it meet its financial covenants and expects to complete that transaction by the end of this month. Management said last fall that it had enough cash to see it through the first quarter, but that finances would become more critical in after March. At the end of September, the company had a cash balance of $4.8 million. That balance was $1.8 million at the end of December.

WRC Media: 212 768-1150; www.wrcmedia.com

WRC Media Year-End Financial Results, 2003 vs. 2002 (1)

(Period ended Dec. 31; $ in thousands)

2003 2002 % Chg.

Corporate Revenue $202,807 $209,154 -3.0%

CompassLearning (2) $50,462 $53,460 -5.6%

Operating Income $24,543 $19,745 24.3%

Operating Margin 12.10% 9.40% 2.7

Net Loss ($7,812) ($95,444) 91.8%

(1) Results are preliminary and unaudited.

(2) CompassLearning results include ChildU revenue.

Source: WRC Media

COPYRIGHT 2004 RR Bowker

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