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CRP in the News
November 2005


eCollege Achieves Record Third Quarter Earnings and Revenue, and Provides Initial Outlook for Solid 2006 Growth

CHICAGO -- eCollege(R), a leading provider of value-added information services to the post-secondary education industry, today announced its financial results for the third quarter ended September 30, 2005. Among the highlights, the Company achieved net income of $1.8 million ($0.08 per diluted share) for the third quarter of 2005, compared to net income of $1.1 million ($0.05 per diluted share) for the third quarter of 2004.

"We are having an outstanding year for earnings, and are exceeding the earnings guidance we gave at the beginning of the year by wide margins," said Oakleigh Thorne, chairman and CEO of eCollege. "This is primarily a result of the operating leverage we are building into our businesses, a reduction in SOX and audit fees and lower interest payments."

Thorne continued, "We expect a significant upturn in revenue growth for the fourth quarter as we realize an acceleration of marketing programs in our Enrollment Division and the impact of new customer signings and strong customer renewals in our eLearning Division. Additionally, we expect strong revenue growth in the eLearning Division in 2006 as we roll out major new customers we signed this year." Financial Summary * Revenue for the third quarter ended September 30, 2005 was $26.4 million, up 9 percent from the third quarter of 2004. Results for the quarter include revenue of $10.4 million from the Company's eLearning Division and $16.0 million from the Company's Enrollment Division, Datamark, Inc. * Operating income for the third quarter of 2005 was $4.0 million, up 63 percent from the third quarter of 2004. Operating margin for the quarter was 15.0 percent compared to 10.0 percent for the same period last year. * Net income before taxes for the third quarter of 2005 was $3.1 million, up 171 percent from the third quarter of 2004. The Company expensed $1.3 million for income taxes in the third quarter of 2005 versus $40 thousand in the same period last year, resulting in net income for the third quarter of 2005 of $1.8 million ($0.08 per diluted share), up 59 percent from $1.1 million ($0.05 per diluted share), for the same period last year. * Adjusted Net Income for the third quarter of 2005 was $3.4 million ($0.15 per share), up 31 percent from Adjusted Net Income of $2.6 million ($0.12 per share) for the same period last year. * Free Cash Flow (Adjusted EBITDA less cash interest and capital expenditures) for the third quarter of 2005 was $4.2 million, up 133 percent from $1.8 million for the third quarter last year.

Financial Highlights Revenue eLearning Division revenue for the third quarter of 2005 increased 18 percent from the same period last year to $10.4 million. Student fee revenue, which represented 89 percent of the eLearning Division's revenue, increased 18 percent compared to the third quarter of 2004. All other eLearning revenue was up 25 percent compared to the same period last year, primarily driven by academic consulting revenue associated with new customers.

Enrollment Division revenue for the third quarter of 2005 increased 3.3 percent from the same period last year to $16.0 million. Direct mail revenue, which represented 58 percent of the Enrollment Division's revenue, declined 8 percent compared to the same period last year, primarily as a result of one customer shifting its marketing mix from outsource direct mail to in-house interactive marketing. Interactive revenue, which represented 30 percent of the Enrollment Division's revenue, increased 17 percent compared to the third quarter of 2004. Growth rates in interactive revenue as compared to the third quarter of 2004 were affected by a large customer pilot conducted during the prior year, as well as the introduction in 2005 of a new managed services model that generally reduces revenue and increases margins as compared to traditional pricing models.

Gross Margin

Gross margin for the third quarter of 2005 increased to 48.8 percent from 46.9 percent for the same period last year. The Company's consolidated gross margin was favorably impacted by improved margin from interactive revenues at the Company's Enrollment Division.

Operating Margin

Operating margin for the third quarter of 2005 increased to 15.0 percent from 10.0 percent for the same period last year, primarily as a result of improved gross margin and relatively flat operating expenses. Operating margin adjusted for stock-based compensation expense was 18.6 percent, up from 13.5 percent for the same period last year. Differences between the Company's GAAP income from operations and Adjusted Income from Operations are further explained in the financial table that accompanies the unaudited Condensed Consolidated Statements of Operations included in this press release.

Income Taxes

The tax provision for the third quarter of 2005 was $1.3 million, which reflects an effective tax rate for the quarter of 43.2 percent. This compares to a tax provision of $40 thousand for the same period last year. The effective tax rate is higher than the statutory corporate tax rate due to the impact of certain non-deductible stock-based compensation and other expenses.

Adjusted Net Income

In the third quarter of 2005, the Company recorded non-cash charges of $1.6 million, including expenses related to stock-based compensation, amortization of identifiable intangible assets associated with the Datamark acquisition and the accretion of the discount on the Company's debt (non-cash interest expense). After adding these items back to GAAP net income, Adjusted Net Income was $3.4 million ($0.15 per diluted share) for the third quarter of 2005 compared to Adjusted Net Income of $2.6 million ($0.12 per diluted share) for the third quarter of 2004. Differences between the Company's GAAP net income and Adjusted Net Income are further explained in the financial table that accompanies the unaudited Condensed Consolidated Statements of Operations included in this press release.

Cash Flow and Capital Expenditures

For the third quarter of 2005, the Company generated Free Cash Flow of $4.2 million compared to $1.8 million for the third quarter last year. Free Cash Flow, an alternative non-GAAP measure of liquidity, is defined as Adjusted EBITDA less cash interest and capital expenditures. Capital expenditures, including capitalized software development costs, were $1.4 million for the quarter, compared to $1.5 million for the same period last year. Cash interest expense decreased by $403 thousand from the prior year to $634 thousand as a result of debt prepayment. Differences between the Company's GAAP net income and Free Cash Flow are further explained in the financial table that accompanies the unaudited Condensed Consolidated Statements of Operations included in this press release.

Balance Sheet

As of September 30, 2005, the Company had cash of $16.2 million, up from a balance of $12.9 million at June 30, 2005 and a balance of $8.2 million at December 31, 2004.

As of September 30, 2005, the Company's debt level remained at $2 million of face value seller notes and $20 million face value senior subordinated debt. The Company recently obtained a new revolving credit facility of $15 million, an increase of $5 million from the previous credit facility. Operating Highlights * For the 2005 summer academic term, which impacts both second and third quarters, the total number of distance student enrollments supported by the eLearning Division was approximately 168,000, up 60 percent from approximately 105,000 distance student enrollments in the summer term of 2004. * For the 2005 fall academic term, which primarily impacts third and fourth quarters, the number of distance student enrollments supported by the eLearning Division is expected to exceed 280,000, up 61 percent from approximately 174,000 distance student enrollments in the 2004 fall term. * As of the date of this press release, the Company's eLearning Division has signed seven new platinum customers for the year, ahead of internal plans. * Average annualized revenue per client at the eLearning Division was $220,000, up 22 percent from $181,000 in the third quarter of last year. * Total media under management (defined as customers' gross media spending for direct mail, interactive and other media managed by Datamark), totaled approximately $27 million for the third quarter, up 38 percent from the same quarter last year. * The Company's Board of Directors approved the adoption of a share repurchase program, authorizing the repurchase by the Company of up to $15 million of its outstanding shares of common stock. The program will continue until December 31, 2006. No shares were repurchased during the third quarter.

2005 Financial Guidance


The Company is providing the following guidance for the fourth quarter and full year 2005: * Fourth quarter revenue of $29.0 million to $30.0 million, of which approximately 62 percent to 63 percent is expected to come from the Enrollment Division and approximately 37 percent to 38 percent is expected to come from the eLearning Division; full year revenue of $102.4 million to $103.4 million, up from prior guidance of $101 to $103 million. * Fourth quarter operating income of $3.3 million to $4.0 million; full year operating income of $13.0 million to $13.7 million, up from prior guidance of $12.0 to $13.5 million. * Fourth quarter net income of $1.4 million to $1.8 million (EPS of $0.06 to $0.08 based on an estimated 22.5 million diluted shares), assuming an effective tax rate of 40 percent; full year net income of $5.4 million to $5.8 million (EPS of $0.24 to $0.26 based on an estimated 22.5 million diluted shares), in line with prior guidance of $5.0 million to $6.0 million. * Fourth quarter adjusted net income of $2.9 million to $3.3 million (Adjusted EPS of $0.13 to $0.15), which reflects adjustments of approximately $1.5 million for non-cash expenses including stock-based compensation, amortization of intangibles and non-cash interest expense; full year adjusted net income of $10.8 million to $11.2 million (adjusted EPS of $0.48 to $0.50), consistent with prior guidance of $10.4 to $11.5 million. * Fourth quarter Free Cash Flow of $4.2 million to $4.9 million, reflect ing cash interest expense of approximately $800 thousand and capital expenditures (including capitalized software development costs) of approximately $600 thousand; full year Free Cash Flow of $13.2 million to $13.9 million, at the high end of the prior range of $12.3 to $13.8 million.

2006 Initial Outlook


The Company is currently finalizing its budgets for 2006, and is providing the following initial outlook for the coming year. The Company will provide detailed guidance in a subsequent press release and conference call. * Revenue growth between 18 percent and 21 percent, with the eLearning Division providing growth of 25 percent to 28 percent and the Enrollment Division providing growth of 13 percent to 15 percent. * The Company plans to generate substantial Free Cash Flow in 2006, and intends to use part of that cash flow to pay off debt and make modest investments in new growth opportunities, including: -- International expansion -- Expansion of Datamark's admissions product line * Excluding these investments, the Company expects to be on track with the four year plan and growth objectives it announced on February 1, 2005.

Conference Call


eCollege will hold a conference call to discuss its 2005 third quarter financial results at 7:30 a.m. Central time (8:30 a.m. Eastern time) on November 8, 2005. Interested parties can listen to the live conference call webcast by going to the Investor Relations section of eCollege's Web site at http://www.ecollege.com/ and clicking on the "Live Webcast" link. Please access the Web site at least 15 minutes prior to the call to register, download and install any necessary audio software.

For those unable to listen at the designated time, the archived webcast will be available on eCollege's Web site for the next 12 months. A conference call replay also will be available from approximately 10:30 a.m. Central time (11:30 a.m. Eastern time) on November 8, 2005 until 11 p.m. Central time (midnight Eastern time) on November 15, 2005. To listen to the replay, participants should dial 800-642-1687. The conference ID for the replay is 1274459.



Softbrands --  Kimberley Products Chooses Fourth Shift Edition for SAP Business One

MINNEAPOLIS -- SoftBrands, Inc., a global leader in next-generation enterprise software for manufacturing and hospitality businesses, today announced that Kimberley Products Pty Ltd of Australia has selected Fourth Shift Edition for SAP Business One as its manufacturing ERP solution.

Kimberley Products, founded in 1955 in Moorabbin, Victoria, serves the commercial and residential building and kitchen hardware trades in Australia. Kimberley Products currently manufactures more than 1,500 different products, including door handles, concealed waste bins, access frames and other innovative kitchen and building hardware. The sale to Kimberley Products was made by Acumen Alliance, SoftBrands' first implementation partner in Australia. Acumen Alliance is one of Australia's leading consulting firms, with more than 300 staff across offices in Melbourne, Sydney, Canberra, Brisbane and Hong Kong.

"Our small and midsize customers demand that we deliver a superior manufacturing solution," said David Tonkin, business development director for the SMB Division at Acumen Alliance. "Partnering with leading software organizations such as SoftBrands and SAP allows us to do just that."

Kimberley's current system lacks desired manufacturing capability and requires many spreadsheet calculations and manual processing of data. Also, Kimberley's clients needed better information regarding production costs and scheduling. Fourth Shift Edition gives Kimberley better financial and production planning, increased visibility over its entire operation, the ability to process real-time reports, and a platform for future growth.

"With such a wide array of products, efficient and flexible management is critical to Kimberley's manufacturing operations," said Ralf Suerken, SoftBrands senior vice president and general manager of manufacturing. "Fourth Shift Edition gives Kimberley Products a solution that will help them grow and find even further success."


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