Event Brief of Q3 2003 Renaissance Learning, Inc. Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

CORPORATE PARTICIPANTS

. John Hickey, Renaissance Learning, Inc., President, CEO . Steve Schmidt, Renaissance Learning, Inc., CFO

OVERVIEW

For RLRN, 3Q03 revenues of $31.3m were down 3.4% vs. 3Q02. RLRN attributes the lower overall revenues for 3Q03 to the timing of a few district opportunities. RLRN continues to face a very difficult school spending environment for the remainder of 2003 and most likely into at least 1H04. Q&A Focus: Renaissance Place, STAR, district business, sales force, DSO, and guidance.

FINANCIAL DATA

A. Key Data From Call 1. 3Q03 revenues = $31.3m. 2. 3Q03 net income = $8.3m. 3. 3Q03 EPS = $0.27.

PRESENTATION SUMMARY

S1. 3Q03 Business Performance (J.H.) 1. 3Q03 Results: 1. Revenues of $31.3m were down 3.4% vs. 3Q02. 2. Net income increased 7.3% to $8.3m. 3. On a per share basis, RLRN earned $0.27 per share this year, $0.04 per share or 17% over last year. 4. Net income includes a one-time tax benefit of $1.1m or about $0.04 per share related to tax credits for prior period research activities in excess of previously estimated amounts. 1. Excluding this tax credit, net income was down 7% from 3Q02. 2. Industry Trend:

1. The K-12 school funding environment continues to remain

difficult. 2. Despite state government efforts to protect K-12 educational funding, many states either cut school funding or held it relatively flat. 3. California and Texas, co.'s two key states, were particularly challenged and RLRN's order activity with customers in these states clearly reflected the environments there. 4. RLRN attributes the lower overall revenues for 3Q03 to the timing of a few district opportunities. 3. Sales Force: 1. Co. remains confident in the progress that it has made by its field sales staff. 2. RLRN continues to ramp up its field sales force. 1. Although this initiative had a minimum impact on revenue in 3Q03, there are now many positive signs. 3. Co. is seeing increased numbers of quotes, meetings, contract

proposals, RFPs, etc. 4. Since its last conference call in July, co. has hired three additional sales reps, which brings the total sales team to 36. 4. Market Stance: 1. In the current environment, there is a shift in school buying and spending patterns moving to a more centralized decision making process at the district level. 2. RLRN believes that it is one of the best in the business in selling at the school level, primarily to teachers and principals, and intends to be one of the best at the district level as well. 5. Product Development: 1. In 2Q03, co. discussed the rollout of the client/server Web-based versions of its products in order to provide school districts many technical and reporting efficiencies. 1. Co.'s brand name for this new line of products is Renaissance Place. 2. Renaissance Place: 1. StandardsMaster and co.'s STAR products will be available in the Renaissance Place platform in 4Q03, and Accelerated Reader, Accelerated Math, and co.'s other products will be offered in Renaissance Place versions next year. 2. Enables schools and districts to centralize all the information from RLRN's products into a single accessible database, allowing for consolidated school and district-wide

reporting, improved ease of use, and enhanced service and support.

3. Will allow schools and districts to more easily implement

RLRN's programs and significantly improve information accessibility for teachers, librarians, principals, parents, and district personnel by providing many cost benefits in a time of tightening budgets.

4. Over time, co. expects most of its existing customers to upgrade their current versions of RLRN's products to Renaissance Place. 5. Has been co.'s vision for several years and RLRN sees a huge need for consolidated reporting of student achievement and

the progress at the classroom, school, and district level. 3. During 3Q03, co. began shipping two new products: Accelerated

Grammar & Spelling and Read Now. 1. Early order rates for Accelerated Grammar & Spelling has been good. 2. Co. is getting solid customer interest in Read Now, but it has had a minimum impact on 3Q03.

3. RLRN continues to be very excited about the long-term prospects of Read Now, as schools increasingly look for reading intervention programs. 6. Summary: 1. Co. continues to face a very difficult school spending environment for the remainder of 2003 and most likely into at least 1H04. 2. Federal funding availability appears to be improving, but it is currently a small part of co.'s business, but could become more important as co. moves towards further penetration of district sales. 3. Despite the tough marketing conditions, RLRN believes it can achieve a slight increase in revenue and earnings for the full-year 2003. 4. Co. continues to base its cautious confidence on the numerous

initiatives that are underway, including the field sales force

ramp-up, new product introductions, and additional marketing

programs. 7. 2004 Projections: 1. Co. expects to improve on revenue and earnings growth rates achieved in 2003. 2. RLRN is still expecting market conditions, particularly in 1H04, to hold growth to low-to-middle single-digit percentages.

3. In the longer-term, co. continues to be very optimistic regarding the growth that it can achieve.

S2. 3Q03 Financial Update (S.S.) 1. Revenues: 1. 3Q03 revenues of $31.3m were down $1.1m or 3.4% vs. 3Q02. 1. Primarily due to market weakness and the timing of district business opportunities not working in co.'s favor. 2. Service revenues were weak in 3Q03, declining nearly 9% vs. 2002. 1. A falloff in performance vs. 1H03 when service sales were growing at double-digit rates.

3. RLRN's service revenues are becoming more dependent on district-wide implementations. 4. Single event sales were also weak in 3Q03. 5. Co. expects improved performance in YoverY comparisons from the service segment in 4Q03, aided by success in the district

sales. 6. Growth in service revenues may still …