Haights Cross Communications Reports Fourth Quarter and Year-End 2007 Results
Haights Cross Communications, Inc. — Tuesday, April 01, 2008
WHITE PLAINS, N.Y.--(via BUSINESS WIRE)--Haights Cross Communications, Inc. (HCC) today reported results for the fourth quarter and the year ended December 31, 2007. As announced on January 28, 2008, HCC had completed a comprehensive review of its strategic alternatives and finalized plans to offer for sale all of its business assets, including its Triumph Learning, Recorded Books and Oakstone Publishing operating businesses. HCC’s Sundance/Newbridge business was offered for sale in November 2007, and in March 2008 an orderly wind-down of the business was initiated. As a result of these sale processes which are ongoing, HCC does not plan to hold its regular quarterly conference call to discuss operations and financial performance for this reporting period. HCC filed its Annual Report on Form 10-k on March 31, 2008.
Fourth Quarter and Year End 2007 Results
Revenue for the fourth quarter 2007 was $57.5 million, an increase of 5.1% over revenue of $54.7 million for the fourth quarter 2006, primarily reflecting growth in our Test-prep and Intervention, K-12 Supplemental Education and Medical Education segments, partially offset by a decline in our Library segment.
Revenue for the year ended December 31, 2007 grew $9.9 million, or 4.5%, to $231.9 million from $222.0 million for the year ended December 31, 2006, reflecting growth in our Test-prep and Intervention, Library, and Medical Education segments, partially offset by a revenue decline in our K-12 Supplemental Education segment.
Revenue for the Library segment, representing our Recorded Books business, was $20.2 million for the fourth quarter 2007, compared to $20.4 million for the fourth quarter 2006. This quarter over quarter decline was primarily the result of a slight sales decline in the library channel, partially offset by growth in the school and consumer channels.
For the year ended December 31, 2007, revenue for the segment improved $3.2 million, or 3.9%, to $84.5 million. This year over year revenue growth reflects 7.0% growth in the core library channel, representing approximately two-thirds of the segment revenue for the period, and 9.0% growth in the school channel. These gains were partially offset by declines in the retail channel, Pimsleur language series royalties, and travel center rentals.
Revenue for the Test-prep and Intervention segment, representing our Triumph Learning business, grew $2.6 million, or 13.6%, to $21.8 million for the fourth quarter 2007, reflecting growth in both our Coach (Triumph Learning’s flagship brand) and Buckle Down/Options lines. As previously announced, in the fourth quarter 2007 we initiated the consolidation of our Options Publishing business into our Buckle Down test-prep business based in Iowa City, now operating under the Triumph Learning group. For the year ended December 31, 2007, revenue for the segment grew $12.2 million, or 16.5%, to $86.1 million. Our Coach and Buckle Down test-prep product lines accounted for essentially all of the segment’s growth with a 22.8% revenue gain, reflecting the continued strong demand for our NCLB-positioned test-prep products.
Revenue for the Medical Education segment, representing our Oakstone Publishing business, was $10.5 million in the fourth quarter 2007 compared with $10.4 million for the fourth quarter 2006. For the year ended December 31, 2007, revenue for the segment improved $1.6 million, or 4.9%, resulting from revenue growth for our Oakstone Wellness line, which includes newsletters, calendars, and other ancillary wellness products, partially offset by a slight revenue decline for our Oakstone Medical line.
Revenue for the K-12 Supplemental Education segment, reflecting our Sundance/Newbridge business, improved $0.3 million, or 6.2%, for the fourth quarter 2007. For the year ended December 31, 2007, revenue for the segment declined $7.0 million, or 20.4%. As mentioned, our Sundance/Newbridge business was offered for sale in November 2007, and in March 2008 our Board of Directors authorized an orderly wind-down of the Sundance/Newbridge business.
Our operating loss for the fourth quarter 2007 decreased $0.8 million to $3.9 million from $4.7 million for the fourth quarter 2006. For the year ended December 31, 2007, income from operations increased $21.6 million, primarily due to the $37.7 million asset impairment charges recorded in 2006 for Sundance/Newbridge and Options Publishing, partially offset by asset impairment charges of $10.7 million recorded in 2007 primarily related to Sundance/Newbridge.
EBITDA, which we define as earnings before interest, taxes, depreciation, amortization, discontinued operations, asset impairment charges and gain on troubled debt restructuring, declined $0.5 million for the fourth quarter 2007, reflecting the negative impact of the $2.6 million restructuring charges associated with the Sundance/Newbridge wind-down plan and the Options Publishing consolidation into Buckle Down, offset by the profit impact of the period over period revenue growth. For the year ended December 31, 2007, EBITDA decreased $3.8 million reflecting the 2007 restructuring costs for Sundance/Newbridge and Options Publishing, the executive severance and restricted stock compensation expenses and the poor performance of our Sundance/Newbridge business, offset by strong performances for the year in our Test-prep and Intervention, Library, and Medical Education segments.
Adjusted EBITDA, which we define as EBITDA excluding non-recurring expenses and restructuring and restructuring related charges, increased $2.7 million, or 22.1%, to $14.8 million for the fourth quarter 2007, reflecting growth in the Test-prep and Intervention and Library segments. For the year ended December 31, 2007, Adjusted EBITDA increased $5.3 million, or 9.7%, to $59.9 million, reflecting growth in the Test-prep and Intervention, Library and Medical Education segments partially offset by a decline in the K-12 Supplemental Education segment.
Capital expenditures -- pre-publication costs relate to costs incurred in the development of new products. For the year ended December 31, 2007, we invested $21.8 million in pre-publication costs, compared to $22.9 million during the same period in 2006.
Capital expenditures -- property and equipment relates to the purchase of tangible fixed assets such as computers, software, and leasehold improvements. For the year ended December 31, 2007, we invested $3.0 million in property and equipment, compared to $2.8 million during the same period in 2006.
About Haights Cross Communications
Founded in 1997 and based in White Plains, NY, Haights Cross Communications is a premier educational and library publisher dedicated to creating the finest books, audio products, periodicals, software and online services, serving the following markets: K-12 supplemental education, public library and school publishing, audio books, and medical continuing education publishing. Haights Cross companies include: Sundance/Newbridge Educational Publishing (Northborough, MA), Triumph Learning (New York, NY), Buckle Down Publishing (Iowa City, IA), Options Publishing (Iowa City, IA), Recorded Books (Prince Frederick, MD), and Oakstone Publishing (Birmingham, AL). For more information, visit www.haightscross.com.
Contact: Haights Cross Communications, Inc., Paul J. Crecca, 914-289-9420, email@example.com