Event Brief of Q2 2004 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., EVP & CFO

OVERVIEW

2Q04 EPS was $0.25 per share vs. $0.29 per share for 2Q03. 2Q04 net income was $7.7m, down 14.4% from 2Q03. Gross profit margin was 87.2%, the highest quarterly GM ever achieved. Despite the fact that revenue was down compared to the prior year, RLRN remains very confident in the Co.'s strategy and expectations for significant growth spurred on by new product offerings, particularly the new Renaissance Place platform. Q&A Focus: Products, operations, customers, D&A, & CapEx.

FINANCIAL DATA

A. Key Data From Call 1. 2Q04 revenues = $31.2m. 2. 2Q04 net income = $7.7m. 3. 2Q04 EPS = $0.25 per share. 4. 2Q04 sales = $31.2m.

5. 2Q04 gross profit margin = 87.2%. 6. 2Q04 OpEx = nearly $15.3m.

7. 2Q04 G&A expenses = $3.4m. 8. 2Q04 net income = $7.7m.

PRESENTATION SUMMARY

S1. 2Q04 Operations Review (J.H.) 1. 2Q04 Highlights: 1. 2Q04 revenues were $31.2m, down 7.2% from 2Q03. 2. 2Q04 net income was $7.7m, down 14.4% from 2Q03. 3. 2Q04 EPS was $0.25 per share vs. $0.29 per share for 2Q03. 2. 2Q04 Review: 1. Despite the fact that revenue was down compared to the prior year, RLRN remains very confident in the Co.'s strategy and expectations for significant growth spurred on by new product offerings, particularly the new Renaissance Place platform. 2. RLRN expected 2Q04 revenues to be down vs. 2Q03 as a result of the difficult spending environment of the 2003-2004 school year. 3. Likewise, orders rate were also continued to be impacted by customers' desire to take time to evaluate RLRN's new Renaissance Place product lineup and the benefit it offers vs. traditional RLRN product versions.

4. While RLRN was successful in getting many of its customers to

upgrade to Renaissance Place platforms since the May shipment

of Accelerated Reader and Accelerated Math, the potential for

more significant conversion momentum still lies ahead. 1. Therefore, RLRN believes that the Co. has turned the corner and is simply experiencing the effects of the deferred nature of a greater portion of its revenue stream, and a delay in the significant ramp up that is anticipated to follow. 3. 2Q04 Positive Events: 1. Despite the weakness in reported sales and earnings, there are

several reasons to be excited about 2Q04 events and about the

long-term outlook: 1. RLRN successfully completed and began shipping the Accelerated Reader and Accelerated Math versions of the Renaissance Place product line on schedule in May, and the

interest in Renaissance Place products continues to grow. 1. RLRN now has at least one Renaissance Place product in over 2,200 buildings and Co. continues to provide a large number of quotes everyday. 2. RLRN truly believes that Renaissance Place is a platform of the future and that RLRN will transform the way the educators get the information they need to make data-driven decisions. 3. RLRN is confident that once educators see the true power of the centralized always-accessible data that Renaissance Place provides, they will become even more excited about the way that these products can enhance a quicker and accelerated learning. 2. In addition to the growth in Renaissance Place quotes and orders, RLRN saw growth of $2.1m in the Co.'s deferred revenue balance for 2Q04. 1. This is a reflection that RLRN's business is stronger than the reported revenue number suggest, and how Renaissance Place and the Co.'s other new service offerings are changing RLRN's business model and revenue recognition pattern. 2. RLRN will continue to track the metric of Renaissance Place schools and report it quarterly, as Renaissance Place is a very important part of the Co.'s strategy.

3. Another initiative critical to RLRN's growth strategy is the

Co.'s effort to sell at the district level. 1. Despite 2Q04 continuing to be impacted by the ongoing state budgetary concerns of 2003-2004 school year as anticipated, RLRN was able to make good progress in closing district deals. 2. RLRN had 50 significant district level purchases in the qtr. and many small district deals as well. 3. RLRN anticipates even greater contributions from the district sales effort in the future, and Co. is very excited about several significant opportunities in the pipeline. 4. Sales Force Expansion: 1. Key to the district sales initiative is RLRN's field sales force expansion. 2. As of 6/30/04, RLRN's team included 42 professionals. 3. While RLRN continues to aggressively search for new sales representatives, the Co.'s field sales staffing is

relatively flat vs. 1Q04, but Co. ultimately plans to reach its goal of approx. 60 sales representatives within the next 6-9 months.

4. Academic Coaching Service: 1. One of RLRN's newest service offerings, the academic coaching service for classroom teachers is beginning to gain some momentum. 2. Access to an individual coach will provide educators with a yearlong practicum of activities that will help improve implementation allowing each teacher to reap the benefits of RLRN's products and improve learning in classrooms. 3. Early feedbacks from customers are very positive, and RLRN expects coaching to be an important growth area, and to some extent to replace on-site training sessions as preferred

service offerings for individual teachers. 4. The coaching service offered at a list price of $499 (Phonetic) per teacher per year is another example of RLRN's changing …