Soft Funding Leads to Staff Reductions at WRC Media

Total revenue at supplementary educational publisher WRC Media fell 9.3% in 2002, to $210 million, and EBITDA dipped 5.8%, to $53 million. The net loss increased from $48.5 million in 2001 to $95.4 million due in part to one-time charges. Company CEO Martin Kenney attributed the declines to growing state budget deficits, which have curtailed spending on educational materials. Kenney said he expects the difficult funding environment to continue for at least the first half of 2003. Sales may improve in the second part of the year when federal money from the No Child Left Behind Act begins to trickle down to the school district level, Kenney said.

To cope with the sluggish funding outlook, WRC began downsizing its work force in the fourth quarter and finished the process earlier this year. The restructuring eliminated 107 positions, primarily in the administrative and back office areas. The smaller work force combined with the consolidation of some WRC facilities is expected to save the company about $9 million annually.

In a review of 2002 results, WRC reported that sales at its World Almanac division fell 6.9%, to $54 million. Sales were down at World Almanac's WAE Library Services and World Almanac Books units, which offset a nearly 10% sales increase at Gareth Stevens. Sales at the Weekly Reader division declined 5.7%, to $44.6 million. A small increase in licensing revenue was offset by lower sales in WRC's Lifetime Learning and books skills programs, as well as lower revenue from its periodicals. An increase in assessment and curriculum revenue drove a 1% increase in sales, to $57.8 million, at the American Guidance Service division. The poorest performing division last year was CompassLearning, which had a 25.3% drop in sales, to $51.2 million, mainly caused by a 33% decline in software sales.

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