Cengage Reports Second Quarter

Second quarter revenues and EBITDA were negatively impacted by a change in accounting for deferred revenue and as a result Cengage reported slightly lower (1.2%) revenues versus their prior period. Revenues were $496mm and $502mm for 2008 and 2007 respectively. The impact of the change in deferred revenue accounting had a 100% flow-through impact and as a result EBITDA was 7% lower than the period last year ($148mm versus $160mm).

The company recorded a strong first quarter and despite the account change year to date revenue and EBITDA were 2.3% and 3.0% higher respectively. Year to date revenues were $1,146mm and EBITDA was $409mm. Margin is holding steady at a healthy 35.7%.

Other highlights:

• Academic and Professional YTD revenues and EBITDA are up 4.9% and 5.6% respectively. YTD revenues and EBITDA are $791mm and $347mm
• Gale YTD revenues were lower by 4% but EBITDA was up 2.1%. YTD revenues and EBITDA were $167mm and $63mm
• International YTD revenues were higher by 7% but EBITDA was lower than prior year by 4%.

The company indicated that their plans are ahead of schedule on cash flow, cost savings initiatives and projected EBITDA.

Cengage