##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-34575
 Cambium Learning Group, Inc.
  Delaware
(State or Other Jurisdiction of Incorporation or Organization)
    
    27-0587428
(I.R.S. Employer Identification No.)1800 Valley View Lane, Suite 400, Dallas, Texas
(Address of Principal Executive Offices)
    
    75234-8923
(Zip Code)
 (214) 932-9500
  Common Stock, par value $0.001 per share
    
    The NASDAQ Global Market(Title of class)
    
    (Name of exchange on which registered)
  Yes o No þ
 Yes o No þ
 Yes þ No o
 Yes o No o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o
 Yes o No þ




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##### 



TABLE OF CONTENTS
 PagePART IItem 1. Business
    
    
    1Item 1A. Risk Factors
    
    
    11Item 1B. Unresolved Staff Comments
    
    
    21Item 2. Properties
    
    
    21Item 3. Legal Proceedings
    
    
    21Item 4. (Removed and Reserved)
    
    
    21PART IIItem 5. Market for Registrants Common Equity,
Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    21Item 6. Selected Financial Data
    
    
    22Item 7. Managements Discussion and Analysis of
Financial Condition and Results of
Operations
    
    
    23Item 7A. Quantitative and Qualitative Disclosures
About Market Risk
    
    
    43Item 8. Financial Statements and Supplementary Data
    
    
    44Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure
    
    
    90Item 9A. Controls and Procedures
    
    
    90Item 9B. Other Information
    
    
    90PART IIIItem 10. Directors, Executive Officers and
Corporate Governance
    
    
    91Item 11. Executive Compensation
    
    
    91Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related
Stockholder Matters
    
    
    91Item 13. Certain Relationships and Related
Transactions, and Director Independence
    
    
    91Item 14.
Principal Accounting Fees and Services
    
    
    91PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    91SIGNATURES
    
    
    96Exhibit 21.1Exhibit 23.1Exhibit 23.2Exhibit 23.3Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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PART I
 Cautionary Note Regarding Forward-looking Statements.
   
 Item 1. Business.
 Unless otherwise expressly indicated in this Item 1, the discussions set forth herein are as
of December 31, 2009.
   th
  1




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Overview
    Strategy for Growth and Development
  We focus our efforts on the Pre-K-12 at-risk and special education markets.
 We offer content-driven products and services designed to provide school districts with
tools to improve the performance of at-risk and special student populations.
  2




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We employ a multi-faceted sales strategy to increase market penetration.
 We intend to explore strategic acquisitions.
 Our growth prospects derive from several other potential sources.
 
    
    expanding at-risk and special education populations;
 
    
    prospective increases in federal funding aimed at our primary student constituency, or
at-risk students;
 
    
    positive student results achieved in school districts using our programs;
 
    
    growth in services, such as teacher training and professional development; and
 
    
    new programs addressing adjacent markets characterized by different student learning
needs.
 Funding Sources for Our Solutions
      3




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Product Overview
  
    
    Voyager, our comprehensive intervention business;
 
    
    Sopris, our supplemental solutions business; and
 
    
    Cambium Learning Technologies, our technology based education product
business.
  Voyager
  Voyager Reading Programs . tm tm ® ® ® tm
   Reading Next
    4




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Voyager Math Programs ®
      Voyager Professional Development Programs ®
  5




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Sopris
         Cambium Learning Technologies
  Learning A-Z tm tm tm tm tm tm
 tm
  6




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ExploreLearning tm
 Kurzweil Educational Systems
 
    
    Kurzweil 3000.Kurzweil 3000 is a reading, writing and learning software package for
students with dyslexia, attention deficit disorder or other learning difficulties, including
physical impairments or language learning needs.
 
    
    Kurzweil 1000.Kurzweil 1000 provides visually impaired users access to printed and
electronic materials. Documents and digital files are converted from text to speech and read
aloud in a variety of voices that can be modified to suit individual preferences. In addition,
this software provides users with document creation and editing, studying and study skills for
note-taking, summarizing and outlining text.
  7




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IntelliTools.
 
    
    IntelliKeys®USB, which is a programmable alternative keyboard with supporting
software for students or adults who have difficulty using a standard keyboard.
 
    
    IntelliTools Classroom Suite, which is an authoring and application tool intended to
boost achievement on standards-based tests and help meet adequate yearly progress goals
under the No Child Left Behind Act.
 
    
    IntelliTools, which offers software products with a simple interface for students to use.
The software includes lessons, activities and assessments that reinforce reading, writing
and math skills with the capability to generate reports and provide detailed data tracking.
 Marketing and Distribution
 Curriculum Development
 i.e.
 Sales and Marketing
 Sales Force Organization
  Competition
  
    
    Basal text book suppliers, which often offer intervention products as part of
their core reading programs, including Houghton Mifflin/Harcourt (Riverdeep),
Scott Foresman (Pearson), and The McGraw-Hill Companies;
 
    
    Supplemental suppliers, including School Specialty, Haights Cross
Communications and The Hampton-Brown Company;
 
    
    Technology suppliers, including Scientific Learning, Educational Resources,
Renaissance Learning, and Plato Learning; and
 
    
    Service providers, including Sylvan Learning and Kaplan Early Learning
Company.
 Concentration Risk
   8




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Seasonality
  Governmental Regulations
  Employees
  Executive Officers
 Ronald Klausner.
 David F. Cappellucci.
 Bradley C. Almond.
  9




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John Campbell.
 George A. Logue.
 Carolyn W. Getridge
 Todd W. Buchardt.
 Proprietary Rights
    Website Access to Company Reports
 www.cambiumlearning.com
   10




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Code of Ethics
 www.cambiumlearning.com .
  
 Item 1A. Risk Factors.
  Risks Related to our Business
 Changes in funding for public schools could cause the demand for our products to decrease.
    We receive significant sales from certain states and reductions in public school education spending
in those states could cause the demand for our products to decrease.
   11




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We participate in state adoptions and sales may be materially reduced if we are not able to replace
sales in years subsequent to the first year of adoption or if states elect to defer or eliminate
adoption purchases.
  Changes in school procurement policies may adversely affect our business.
  Our failure to expand our customer base could diminish incremental revenues from certain products.
  Our sales growth and profitability will depend, in part, on our ability to attract and retain
productive resellers.
  We may be unable to integrate successfully the businesses of Cambium and VLCY and realize the
anticipated benefits of the mergers.
  
    
    the inability to successfully combine the businesses of Cambium and VLCY in a manner that
permits us to achieve the cost savings and revenue synergies anticipated to result from the
mergers, which would result in the anticipated benefits of the mergers not being realized
partly or wholly in the time frame currently anticipated or at all;
 
    
    lost sales and customers as a result of certain customers of either of the two companies
deciding not to do business with us, including the risks associated with changing the
customer relationship from one sales representative to another sales representative;
  12




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
    
    complexities associated with managing the combined businesses; and
 
    
    integrating personnel from the two companies while maintaining focus on providing
consistent, high-quality products and customer service.
  Our sales and profitability will depend on our ability to continue to develop new products and
services that appeal to customers and end users and respond to changing customer preferences.
  Our business is anticipated to be seasonal and our operating results are anticipated to fluctuate
seasonally.
  
    
    general economic trends;
 
    
    state and local budgets for education;
 
    
    the traditional cyclical nature of educational material sales;
 
    
    school, library and consumer purchasing decisions;
 
    
    unpredictable funding of schools and libraries by federal, state and local governments;
 
    
    consumer preferences and spending trends;
 
    
    the need to increase inventories in advance of the primary selling season; and
 
    
    the timing of introductions of new products and services.
  13




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If we are unable to compete effectively, we may be unable to successfully attract and retain
customers and our profitability could be materially harmed.
   Our intellectual property protection may be inadequate, which may allow others to use our
technologies and thereby reduce our ability to compete.
  Technology content licensed from third parties may not continue to be available.
  Our products could infringe on the intellectual property of others, which may cause us to engage in
costly litigation and to pay substantial damages or restrict or prohibit us from selling our
products.
  Our success will depend in part on our ability to attract and retain key personnel.
  Our customer contracts are not likely to insulate us from potential reductions in revenues.
   14




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Increases in operating costs and expenses, many of which are beyond our control, could materially
and adversely affect our operating performance.
   Acquisitions, if completed, could adversely affect our operations.
  The failure to manage growth properly could have a material adverse effect upon our business,
results of operations, financial condition or liquidity.
  We use the Internet extensively, and federal or state governments may adopt laws or regulations
that could expose us to substantial liability and/or taxation in connection with these activities.
  We could experience system failures, software errors or capacity constraints, any of which would
cause interruptions in the delivery of electronic content to customers and ultimately may cause us
to lose customers.
     15




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Our systems face security risks and we need to ensure the privacy of our customers.
  We have a single distribution center and could experience significant disruption of business and
ultimately lose customers in the event it was damaged or destroyed.
  The complexity of our distribution operations may subject us to technological risk.
  Our business may not grow as anticipated if we are not able to maintain and enhance our brands.
  Failure to efficiently manage our direct marketing initiatives could negatively affect our
business.
  Both Cambium and VLCY have been subjected to material accounting irregularities in recent years,
which could result in enhanced regulatory scrutiny in the future and could undermine the confidence
that some investors may have in the integrity of our financial statements.
   16




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Risks Related to Ownership of our Common Stock
 An active, liquid trading market for our common stock may not develop.
  
    
    actual or anticipated fluctuations in our annual and quarterly results of operations;
    
    changes in securities analysts expectations;
    
    variations in our operating results, which could cause us to fail to meet analysts or investors expectations;
    
    announcements by state governments regarding spending on educational programs;
    
    announcements by our competitors or us of significant new products, contracts, acquisitions, strategic partnerships,
joint ventures or capital commitments;
    
    conditions and trends in our industry;
    
    general market, economic, industry and political conditions;
    
    changes in market values of comparable companies;
    
    additions or departures of key personnel;
    
    stock market price and volume fluctuations attributable to inconsistent trading volume levels; and
    
    future sales of equity or debt securities, including sales which dilute existing investors.
 We do not foresee paying cash dividends in the foreseeable future and, as a result, our investors
sole source of gain, if any, will depend on capital appreciation, if any.
   17




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Our majority stockholder has a contractual right to increase its percentage of ownership in
our company which, if exercised, would dilute the ownership percentage of all other stockholders
and could reduce the price of our common stock.
  The existence of a majority stockholder may adversely affect the market price of our common stock
and could delay, hinder or prevent a change in corporate control or result in the entrenchment of
management and the board of directors, and our majority stockholder has a contractual right to
maintain its percentage ownership in our company.
    We are a controlled company within the meaning of the NASDAQ rules and, as a result, qualify for,
and rely on, exemptions from various corporate governance standards, which limits the presence of
independent directors on our board of directors and board committees.
   18




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Cambium
Learning has a significant amount of senior secured and senior unsecured debt and will have the
obligation to make principal and interest payments on that debt, and to comply with restrictions
contained in credit agreements with our senior secured and senior unsecured lenders.
  
    
    a substantial portion of the cash provided from operations will be committed to the
payment of our debt service and will not be available for other purposes;
 
    
    our ability to obtain additional financing in the future for working capital, capital
expenditures or acquisitions may be limited; and
 
    
    the level of indebtedness of our combined company may limit our flexibility in reacting
to changes in our business environment.
  The failure of the original Cambium Learning investors to own at least 35% of our common stock or
the sale by the VSS
funds of more than 15% of their common stock would constitute an event of default under the Cambium
Learning credit agreements, entitling the lenders to accelerate the repayment of all outstanding
indebtedness.
    We may seek to raise additional funds, finance additional acquisitions or develop strategic
relationships by issuing additional securities, including capital stock.
   Provisions of our organizational documents and Delaware law may delay or deter a change of control.
  
    
    vest our board of directors with the sole power to set the number of directors of our
company;
  19




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
    
    provide that our board of directors will be elected on a staggered term basis, so
that generally only one-third of the board will be elected at each annual meeting of
stockholders;
 
    
    limit the persons that may call special meetings of stockholders;
 
    
    establish advance notice requirements for stockholder proposals and director
nominations; and
 
    
    limit stockholder action by written consent.
   If we are unable to favorably assess the effectiveness of our internal control over financial
reporting, or if our auditors are unable to provide an unqualified attestation report on our
internal control over financial reporting, the stock price of our common stock could be adversely
affected.
    20




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Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties.
   Total(sq ft)Owned
    
    
    Leased
    
    
    350,897Total
    
    
    350,897
  
 Item 3. Legal Proceedings.
  
 Item 4.(Removed and Reserved).
 
 PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
 Market
Information:
 2009
    
    
    2008Fiscal Quarter
    
    High
    
    
    Low
    
    
    High
    
    
    LowFirst
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/ASecond
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AThird
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AFourth
(Since December 9, 2009)
    
    $
    14.80
    
    
    $
    3.62
    
    
    
    N/A
    
    
    
    N/A
 Record
Holders:
 Purchases
Of Equity Securities:
 Dividends:
  21




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Securities
Authorized for Issuance Under Equity Compensation Plans:
  Number of securitiesNumber of securities to be
    
    
    Weighted-average
    
    
    remaining available forissued upon exercise of
    
    
    exercise price of
    
    
    future issuance(in thousands, except per share amounts)
    
    outstanding options
    
    
    outstanding options
    
    
    under equityPlan Category
    
    and rights
    
    
    and rights
    
    
    incentive plan (a)Equity compensation plans approved
by security holders
    
    
    2,256
    
    
    $
    6.03
    
    
    
    2,744Equity compensation plans not
approved by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    2,256
    
    
    $
    6.03
    
    
    
    2,744
 (a)
    
    Excludes securities reflected in the first column, Number of securities to be issued upon
exercise of outstanding options and rights. 
 Recent
Sales of Unregistered Securities:
    Stock Performance
Graph:
 Item 6. Selected Financial Data.
     22




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SuccessorPeriod from
    
    
    
    PredecessorJanuary 29,
    
    
    
    Period from2007
    
    
    
    January 1,(Inception)
    
    
    
    2007
    
    
    Predecessor
    
    
    PredecessorYear Ended
    
    
    Year Ended
    
    
    through
    
    
    
    through
    
    
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    April 11,
    
    
    December 31,
    
    
    December 31,(in thousands, except per share data)
    
    2009
    
    
    2008
    
    
    2007(1)
    
    
    
    2007
    
    
    2006
    
    
    2005Statement of Operations Data:Product sales
    
    $
    90,385
    
    
    $
    89,207
    
    
    $
    71,266
    
    
    
    $
    15,238
    
    
    $
    92,882
    
    
    $
    75,430Service revenues
    
    
    10,663
    
    
    
    10,524
    
    
    
    9,581
    
    
    
    
    3,176
    
    
    
    13,542
    
    
    
    9,726Net sales
    
    
    101,048
    
    
    
    99,731
    
    
    
    80,847
    
    
    
    
    18,414
    
    
    
    106,424
    
    
    
    85,156Total operating expenses, excluding in-process
research and development, impairment, and embezzlement
    
    
    (115,108
    )
    
    
    (104,648
    )
    
    
    (81,305
    )
    
    
    
    (32,179
    )
    
    
    (97,955
    )
    
    
    (81,017
    )Acquired in-process research and development
    
    
    
    
    
    
    
    
    
    
    (890
    )
    
    
    
    
    
    
    
    
    
    
    
    (500
    )Goodwill and other intangible asset impairment(3)
    
    
    (9,105
    )
    
    
    (75,966
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,132
    )Embezzlement and related expense(2)
    
    
    (129
    )
    
    
    (7,254
    )
    
    
    (5,732
    )
    
    
    
    (1,000
    )
    
    
    (3,261
    )
    
    
    (290
    )(Loss)
income before interest, other income (expense), and income taxes
    
    
    (23,294
    )
    
    
    (88,137
    )
    
    
    (7,080
    )
    
    
    
    (14,765
    )
    
    
    5,208
    
    
    
    (783
    )Gain from settlement with previous stockholders(4)
    
    
    
    
    
    
    30,202
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net (loss) income
    
    
    (35,765
    )
    
    
    (69,560
    )
    
    
    (13,931
    )
    
    
    
    (11,812
    )
    
    
    440
    
    
    
    (1,212
    )Net (loss) income per common share
    
    $
    (1.63
    )
    
    $
    (3.39
    )
    
    $
    (0.68
    )
    
    
    $
    (4.34
    )
    
    $
    0.16
    
    
    $
    (0.45
    )
 As of:Predecessor
    
    
    PredecessorDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,(in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(unaudited)Balance Sheet Data:Cash and cash equivalents
    
    $
    13,345
    
    
    $
    2,418
    
    
    $
    1,206
    
    
    $
    1,642
    
    
    $
    9,823Total current assets
    
    
    74,316
    
    
    
    31,617
    
    
    
    26,601
    
    
    
    25,007
    
    
    
    32,672Total assets
    
    
    393,841
    
    
    
    270,477
    
    
    
    369,138
    
    
    
    138,028
    
    
    
    115,034Total current liabilities
    
    
    58,366
    
    
    
    16,360
    
    
    
    16,849
    
    
    
    26,871
    
    
    
    12,416Total long term debt, less current portion
    
    
    150,487
    
    
    
    153,787
    
    
    
    176,402
    
    
    
    17,500
    
    
    
    17,500Total liabilities
    
    
    254,069
    
    
    
    202,273
    
    
    
    239,058
    
    
    
    59,133
    
    
    
    49,414Total
members interest and stockholders equity
    
    
    139,772
    
    
    
    68,204
    
    
    
    130,080
    
    
    
    78,895
    
    
    
    65,620
  (1)
    
    On January 29, 2007, VSS-Cambium Holdings, LLC was
formed for the purpose of acquiring all of the capital
stock of Cambium Learning. That acquisition was
completed on April 12, 2007. The consolidated financial
statements present the Company as of December 31, 2007
(Successor basis reflecting activity of the Company
from January 29, 2007 and including the results of
Cambium Learning from April 12, 2007) and the period
January 1, 2007 through April 11, 2007 (Predecessor
basis for the period prior to Companys acquiring
Cambium Learning).(2)
    
    We discovered in 2008 that a former employee had
perpetrated a significant misappropriation of assets
during a period beginning in 2004 and extending through
April 2008.(3)
    
    Reflects the non-cash effect of the impairment
write-down of goodwill and other intangible assets
during 2009, 2008, and 2005 resulting from a reduction
in the fair value of assets.(4)
    
    For fiscal 2008, we received a settlement from our
previous stockholders relating to the embezzlement we
suffered. For further information, see Note 3 to our
Consolidated Financial Statements. 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations.
   23




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Organization of Information
  
    
    Overview
 
    
    Results of Operations
 
    
    Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
 
    
    Year Ended December 31, 2008 (fiscal 2008) Compared to Period from January
29, 2007 through December 31, 2007 (2007 successor period) and Period from
January 1, 2007 through April 11, 2007 (2007 predecessor period)
 
    
    Liquidity and Capital Resources
 
    
    Non-GAAP Measures
 
    
    Capital Expenditures and Outlook
 
    
    Commitments and Contractual Obligations
 
    
    Off-Balance Sheet Arrangements
 
    
    Critical Accounting Policies and Estimates
 
    
    Recently Issued Financial Accounting Standards
 Overview
  s
   24




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
    
    Voyager, our comprehensive intervention business;
    
    Sopris, our supplemental solutions business; and
 
    
    Cambium Learning Technologies, our technology based education product
business.
  Results of Operations
 Fiscal Year 2009 Compared to Fiscal Year 2008
 Highlights
    
    
    The acquisition of VLCY in late 2009 added several online
subscription-based products
to our portfolio. We expect to see growth in these products in the coming years.
 
    
    We have a growing portfolio to address the math needs of the market, including products
such as Vmath, Algebra Rescue, Transitional Math and ExploreLearning. We have experienced
success in the growth of our math capabilities and expect that the market for these
products will continue to be strong in 2010.
 
    
    We believe our product diversification, such as growth in the online offerings, math
intervention and new reading intervention products for higher grades, will allow us to
strengthen our ability to sustain market share in a troubled market and capture market
share when the market recovers.
 
    
    We believe our focus on product usage and an overall partnership approach with the
customer to implement our solutions with fidelity will result in higher success rates, and
such success, if achieved, will lead to customer retention and growth through reference
sales.
 
    
    We believe there is a trend to direct greater funding to special needs or at risk
children in the United States. New funding sources, such as Race to the Top, could
provide additional funds for our products should recipients of these funding sources chose
to direct them to programs that utilize our products and services.
 
    
    We believe that the economic crisis faced  by many states and local entities will
continue in 2010 and have a continued depressive effect on general spending and thus could
negatively impact our short term sales prospects.
 
    
    Efforts taken in 2009 by both VLCY and Cambium to reduce their cost structures,
including a reduction in force, better align our cost structure to current market
conditions. We expect to achieve further significant cost savings throughout 2010 and 2011
as we integrate VLCY and Cambium, which will be partially offset by one-time integration
cots to achieve these synergies.
  25




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
    
    We performed a goodwill impairment analysis in the second quarter of 2009 and as a
result of the execution of the
merger agreement in late June, which was considered a triggering event, and in consideration
of the continuing impact of adverse marketplace and economic conditions. As a result of this
analysis, we recorded a goodwill impairment charge of $9.1 million in the second quarter.
  Successor Period,from January 29,
    
    
    Predecessor Period2007 (inception)
    
    
    from January 1,Year Ended
    
    
    Year Ended
    
    
    through December
    
    
    2007 through AprilDecember 31, 2009
    
    
    December 31, 2008
    
    
    31, 2007
    
    
    11, 2007% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of(in thousands)
    
    Amount
    
    
    Sales
    
    
    Amount
    
    
    Sales
    
    
    Amount
    
    
    Sales
    
    
    Amount
    
    
    SalesNet sales:Product salesVoyager
    
    $
    44,329
    
    
    
    43.9
    %
    
    $
    40,424
    
    
    
    40.5
    %
    
    $
    35,827
    
    
    
    44.3
    %
    
    $
    4,132
    
    
    
    22.4
    %Sopris
    
    
    23,431
    
    
    
    23.2
    %
    
    
    27,495
    
    
    
    27.6
    %
    
    
    21,496
    
    
    
    26.6
    %
    
    
    5,136
    
    
    
    27.9
    %Cambium Learning Technologies
    
    
    22,625
    
    
    
    22.4
    %
    
    
    21,288
    
    
    
    21.3
    %
    
    
    13,943
    
    
    
    17.2
    %
    
    
    5,970
    
    
    
    32.4
    %Service revenuesVoyager
    
    
    8,594
    
    
    
    8.5
    %
    
    
    7,924
    
    
    
    7.9
    %
    
    
    7,275
    
    
    
    9.0
    %
    
    
    2,287
    
    
    
    12.4
    %Sopris
    
    
    1,754
    
    
    
    1.7
    %
    
    
    2,217
    
    
    
    2.2
    %
    
    
    2,064
    
    
    
    2.6
    %
    
    
    773
    
    
    
    4.2
    %Cambium Learning Technologies
    
    
    315
    
    
    
    0.3
    %
    
    
    383
    
    
    
    0.4
    %
    
    
    242
    
    
    
    0.3
    %
    
    
    116
    
    
    
    0.6
    %Total sales
    
    
    101,048
    
    
    
    100.0
    %
    
    
    99,731
    
    
    
    100.0
    %
    
    
    80,847
    
    
    
    100.0
    %
    
    
    18,414
    
    
    
    100.0
    %Cost of sales:Cost of product salesVoyager
    
    
    10,678
    
    
    
    10.6
    %
    
    
    11,214
    
    
    
    11.2
    %
    
    
    13,106
    
    
    
    16.2
    %
    
    
    1,136
    
    
    
    6.2
    %Sopris
    
    
    6,350
    
    
    
    6.3
    %
    
    
    6,003
    
    
    
    6.0
    %
    
    
    4,755
    
    
    
    5.9
    %
    
    
    1,699
    
    
    
    9.2
    %Cambium Learning Technologies
    
    
    2,537
    
    
    
    2.5
    %
    
    
    3,029
    
    
    
    3.0
    %
    
    
    1,888
    
    
    
    2.3
    %
    
    
    1,061
    
    
    
    5.8
    %Shared Services
    
    
    26
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %Cost of service revenuesVoyager
    
    
    5,992
    
    
    
    5.9
    %
    
    
    5,721
    
    
    
    5.7
    %
    
    
    4,877
    
    
    
    6.0
    %
    
    
    1,384
    
    
    
    7.5
    %Sopris
    
    
    1,093
    
    
    
    1.1
    %
    
    
    1,489
    
    
    
    1.5
    %
    
    
    1,316
    
    
    
    1.6
    %
    
    
    460
    
    
    
    2.5
    %Cambium Learning Technologies
    
    
    172
    
    
    
    0.2
    %
    
    
    253
    
    
    
    0.3
    %
    
    
    119
    
    
    
    0.1
    %
    
    
    64
    
    
    
    0.3
    %Amortization expense
    
    
    17,527
    
    
    
    17.3
    %
    
    
    15,966
    
    
    
    16.0
    %
    
    
    11,719
    
    
    
    14.5
    %
    
    
    3,392
    
    
    
    18.4
    %Total cost of sales
    
    
    44,375
    
    
    
    43.9
    %
    
    
    43,675
    
    
    
    43.8
    %
    
    
    37,780
    
    
    
    46.7
    %
    
    
    9,196
    
    
    
    49.9
    %Research and development expense
    
    
    5,611
    
    
    
    5.6
    %
    
    
    6,416
    
    
    
    6.4
    %
    
    
    5,247
    
    
    
    6.5
    %
    
    
    1,737
    
    
    
    9.4
    %Sales and marketing expense
    
    
    23,368
    
    
    
    23.1
    %
    
    
    24,600
    
    
    
    24.7
    %
    
    
    15,059
    
    
    
    18.6
    %
    
    
    6,393
    
    
    
    34.7
    %General and administrative expense
    
    
    30,519
    
    
    
    30.2
    %
    
    
    16,156
    
    
    
    16.2
    %
    
    
    11,142
    
    
    
    13.8
    %
    
    
    13,676
    
    
    
    74.3
    %Shipping costs
    
    
    1,512
    
    
    
    1.5
    %
    
    
    2,348
    
    
    
    2.4
    %
    
    
    2,739
    
    
    
    3.4
    %
    
    
    445
    
    
    
    2.4
    %Depreciation and amortization expense
    
    
    9,723
    
    
    
    9.6
    %
    
    
    11,453
    
    
    
    11.5
    %
    
    
    9,338
    
    
    
    11.6
    %
    
    
    732
    
    
    
    4.0
    %Acquired in-process research and development
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    890
    
    
    
    1.1
    %
    
    
    
    
    
    
    0.0
    %Goodwill impairment charge
    
    
    9,105
    
    
    
    9.0
    %
    
    
    75,966
    
    
    
    76.2
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Embezzlement and related expense
    
    
    129
    
    
    
    0.1
    %
    
    
    7,254
    
    
    
    7.3
    %
    
    
    5,732
    
    
    
    7.1
    %
    
    
    1,000
    
    
    
    5.4
    %Loss before interest, other income (expense) and income taxes
    
    
    (23,294
    )
    
    
    (23.1
    )%
    
    
    (88,137
    )
    
    
    (88.4
    )%
    
    
    (7,080
    )
    
    
    (8.8
    )%
    
    
    (14,765
    )
    
    
    (80.2
    )%Net interest income (expense)
    
    
    (19,477
    )
    
    
    (19.3
    )%
    
    
    (18,434
    )
    
    
    (18.5
    )%
    
    
    (13,132
    )
    
    
    (16.2
    )%
    
    
    (742
    )
    
    
    (4.0
    )%Gain from settlement with previous stockholders
    
    
    
    
    
    
    
    
    
    
    30,202
    
    
    
    30.3
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (5,632
    )
    
    
    (5.6
    )%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other income (expense), net
    
    
    (698
    )
    
    
    (0.7
    )%
    
    
    (981
    )
    
    
    (1.0
    )%
    
    
    (1,557
    )
    
    
    (1.9
    )%
    
    
    1
    
    
    
    0.0
    %Income tax benefit
    
    
    7,704
    
    
    
    7.6
    %
    
    
    13,422
    
    
    
    13.5
    %
    
    
    7,838
    
    
    
    9.7
    %
    
    
    3,694
    
    
    
    20.1
    %Net loss
    
    $
    (35,765
    )
    
    
    (35.4
    )%
    
    $
    (69,560
    )
    
    
    (69.7
    )%
    
    $
    (13,931
    )
    
    
    (17.2
    )%
    
    $
    (11,812
    )
    
    
    (64.1
    )%
  26




---



##### Table of Contents



Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
 Net sales
  Voyager.
 Sopris.
 Cambium Learning Technologies.
 Cost of product sales
  Voyager.
 Sopris.
 Cambium Learning Technologies.
 Cost of service revenues
   27




---



##### Table of Contents



Voyager.
 Sopris.
 Cambium Learning Technologies.
 Amortization expense
  Research and development expenses
  Sales and marketing expense
  General and administrative expense
  Shipping costs
  Depreciation and amortization expense
  Goodwill impairment
   28




---



##### Table of Contents



Embezzlement and related expenses
  Net interest income (expense)
  Income taxes
   Gain from settlement with previous stockholders
  Loss on extinguishment of debt
  Year Ended December 31, 2008 (fiscal 2008) Compared to Period from January 29, 2007 through
December 31, 2007 (2007 successor period) and Period from January 1, 2007 through April 11, 2007
(2007 predecessor period)
 Net sales
   29




---



##### Table of Contents



Voyager.
 Sopris.
 Cambium Learning Technologies.
 Cost of product sales
  Voyager.
 Sopris.
 Cambium Learning Technologies.
 Cost of service revenues
  Voyager.
 Sopris.
 Cambium Learning Technologies.
  30




---



##### Table of Contents



Amortization expense
  Research and development expense
  Sales and marketing expense
  General and administrative expenses
  Shipping costs
  Depreciation and amortization expense
  Embezzlement and related expenses
  Goodwill impairment
   Net interest income (expense)
   31




---



##### Table of Contents



Gain from settlement with previous stockholders
  Loss on extinguishment of debt
  Income tax benefit
   Liquidity and Capital Resources
  Long-term debt
  
    
    $97.2 million of floating rate senior secured notes due April 11, 2013; and
 
    
    $54.6 million of 13.75% senior unsecured notes due April 11, 2014
 Senior Secured Notes
   32




---



##### Table of Contents



Senior Unsecured Notes.
 Covenants
      33




---



##### Table of Contents



Amendment to Notes
 
    
    Change in Control Definition. Prior to the amendment, the original investors
in Cambium Learning were required to own or control a majority of the outstanding
economic or voting interests of Cambium Learning. This majority threshold is being
reduced to 35%.
 
    
    VSS Funds Ownership. VSS is not permitted to sell or otherwise transfer any
of the Companys common stock that it directly or indirectly owns, unless it
continues to directly or indirectly own or control at least 35% of the outstanding
Company common stock, and it has not sold or otherwise transferred, in the aggregate,
more than 15% of its Company common stock.
 
    
    Increase in Material Indebtedness. An event of default would occur if a
change in control occurred under any of Cambium Learnings other material
indebtedness. The term material indebtedness includes the senior unsecured notes,
as well as any other debt, the principal amount of which exceeds a specified
threshold. The $5 million threshold is being increased under the amendment to $7.5
million.
 
    
    Exceptions to Restricted Payments. Cambium Learning is prohibited from paying
dividends, unless the specific type of payment is permitted. Additional types of
payments are being permitted to allow the following:
 
    
    Up to $3.0 million to fund public company, administrative, overhead, franchise tax
and related costs incurred by the Company; and
    
    Up to $750,000 in annual board of director compensation and expenses.
 
    
    The annual monitoring fee previously payable to VSS is being eliminated.
 
    
    Permitted Acquisition Basket Reset. The amount of consideration payable
in an acquisition is limited under the credit agreements, and the limitations
are being reset after giving effect to the acquisition of Voyager Expanded
Learning by Cambium Learning in connection with the mergers. The limitation
will be reset to a cumulative $150 million amount, but any single acquisition
is limited to $20 million until the ratio of senior secured debt to EBITDA (as
calculated under the credit agreements) does not exceed 2.50 to 1.0, and the
ratio of total leverage to EBITDA (as calculated under the credit agreements)
does not exceed 3.50 to 1.0, at which time the single acquisition limit will be
increased to $100 million.
 
    
    Definition of Consolidated EBITDA. The definition of Consolidated
EBITDA, which is used for calculating leverage ratios under the senior secured
credit agreement, and the minimum EBITDA covenant under the senior unsecured
credit agreement are being modified to allow additional add-backs for the
following items:
 
    
    Deferred revenue associated with a permitted acquisition;
    
    Up to $24.0 million in M&A costs related to the mergers;
    
    Up to $2.0 million in costs incurred in closing of locations or lease terminations in
connection with the mergers;
    
    Up to $5.0 million in severance costs incurred in connection with the mergers;
    
    Up to $3.0 million in integration costs incurred connection with the mergers; and
    
    M&A costs for future transactions (whether or not completed) of up to $5.0 million
for closed transactions and $0.5 million for failed transactions in any calendar year,
and $2.0 million in the aggregate.
    34




---



##### Table of Contents



Cash flows
    
    
    $25.0 million of capital contributed by Cambiums stockholders related to the
VLCY acquisition; and
 
    
    $3.0 million of capital contributed by Cambiums stockholders to fund the
cure to a senior secured credit agreement financial covenant regarding Cambium
Learnings total leverage ratio for the second quarter of 2009.
  
    
    $9.7 million of cash paid for the VLCY acquisition, net of cash acquired;
 
    
    $5.9 million for principal payments on debt and capital leases; and
 
    
    $3.4 million of expenditures related to property, plant, equipment, pre-publication costs, and software.
 Non-GAAP Measures
    35




---



##### Table of Contents



Reconciliation Between Net Loss and Adjusted EBITDA for the Year Ended December 31, 2009  (in thousands)
(Unaudited)
 VLCY
    
    
    
    
    
    
    Non-recurring or non-operating costs excluded from Adjusted EBITDA:Pre-Merger
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    Legacy
    
    
    Stock-based
    
    
    Embezzlement
    
    
    Adj RelatedTotal
    
    
    Results
    
    
    Combined
    
    
    Transaction
    
    
    Integration
    
    
    VLCY
    
    
    Compensation
    
    
    and
    
    
    to Purchase
    
    
    Goodwill
    
    
    AdjustedGAAP
    
    
    (342 days)
    
    
    Results
    
    
    Costs
    
    
    Costs
    
    
    Corporate
    
    
    Expense
    
    
    Related
    
    
    Accounting
    
    
    Impairment
    
    
    EBITDA(a)
    
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)
    
    
    (g)Voyager
    
    $
    52,923
    
    
    $
    77,758
    
    
    $
    130,681
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    509
    
    
    $
    
    
    
    $
    131,190Sopris
    
    
    25,185
    
    
    
    
    
    
    
    25,185
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,185Cambium Learning Technologies
    
    
    22,940
    
    
    
    20,970
    
    
    
    43,910
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    883
    
    
    
    
    
    
    
    44,793Total net sales
    
    
    101,048
    
    
    
    98,728
    
    
    
    199,776
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,392
    
    
    
    
    
    
    
    201,168Cost of sales
    
    
    26,848
    
    
    
    30,839
    
    
    
    57,687
    
    
    
    
    
    
    
    (71
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    148
    
    
    
    
    
    
    
    57,764Cost of sales  amortization
    
    
    17,527
    
    
    
    16,220
    
    
    
    33,747
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,747Total cost of sales
    
    
    44,375
    
    
    
    47,059
    
    
    
    91,434
    
    
    
    
    
    
    
    (71
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    148
    
    
    
    
    
    
    
    91,511Research and development expense
    
    
    5,611
    
    
    
    4,331
    
    
    
    9,942
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,942Sales and marketing expenses
    
    
    23,368
    
    
    
    28,753
    
    
    
    52,121
    
    
    
    
    
    
    
    (155
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108
    
    
    
    
    
    
    
    52,074General and administrative expense
    
    
    30,519
    
    
    
    24,740
    
    
    
    55,259
    
    
    
    (23,507
    )
    
    
    (2,027
    )
    
    
    (2,304
    )
    
    
    (216
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,205Shipping costs
    
    
    1,512
    
    
    
    1,875
    
    
    
    3,387
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,387Depreciation and amortization
    
    
    9,723
    
    
    
    2,081
    
    
    
    11,804
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,804Embezzlement and related
    
    
    129
    
    
    
    
    
    
    
    129
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (129
    )
    
    
    
    
    
    
    
    
    
    
    Goodwill impairment
    
    
    9,105
    
    
    
    27,175
    
    
    
    36,280
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,280
    )
    
    
    Income (loss) from operations
    
    
    (23,294
    )
    
    
    (37,286
    )
    
    
    (60,580
    )
    
    
    23,507
    
    
    
    2,253
    
    
    
    2,304
    
    
    
    216
    
    
    
    129
    
    
    
    1,136
    
    
    
    36,280
    
    
    
    5,245Interest income
    
    
    10
    
    
    
    70
    
    
    
    80
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80Interest expense
    
    
    (19,487
    )
    
    
    (628
    )
    
    
    (20,115
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,115
    )Other income (expense)
    
    
    (698
    )
    
    
    3,279
    
    
    
    2,581
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,581Income tax benefit
    
    
    7,704
    
    
    
    190
    
    
    
    7,894
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,894Net income (loss)
    
    
    (35,765
    )
    
    
    (34,375
    )
    
    
    (70,140
    )
    
    
    23,507
    
    
    
    2,253
    
    
    
    2,304
    
    
    
    216
    
    
    
    129
    
    
    
    1,136
    
    
    
    36,280
    
    
    
    (4,315
    )Normal EBITDA Adjustments:Depreciation and amortization
    
    
    27,250
    
    
    
    18,301
    
    
    
    45,551
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,551Interest income
    
    
    (10
    )
    
    
    (70
    )
    
    
    (80
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (80
    )Interest expense
    
    
    19,487
    
    
    
    628
    
    
    
    20,115
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,115Other income
    
    
    698
    
    
    
    (3,279
    )
    
    
    (2,581
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,581
    )Income tax
    
    
    (7,704
    )
    
    
    (190
    )
    
    
    (7,894
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,894
    )EBITDA
    
    $
    3,956
    
    
    $
    (18,985
    )
    
    $
    (15,029
    )
    
    $
    23,507
    
    
    $
    2,253
    
    
    $
    2,304
    
    
    $
    216
    
    
    $
    129
    
    
    $
    1,136
    
    
    $
    36,280
    
    
    $
    50,796Reconciliation Between Net Loss and Adjusted EBITDA for the Year Ended December 31, 2008(in thousands)
(Unaudited)VLCY
    
    
    
    
    
    
    Non-recurring or non-operating costs excluded from Adjusted EBITDA:GAAP
    
    
    Pre-Merger
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    Legacy
    
    
    Stock-based
    
    
    Embezzlement
    
    
    
    
    
    
    LeaseResults
    
    
    Results
    
    
    Combined
    
    
    Transaction
    
    
    Integration
    
    
    VLCY
    
    
    Compensation
    
    
    and
    
    
    Goodwill
    
    
    Termination
    
    
    AdjustedCambium
    
    
    (FY 2008)
    
    
    Results
    
    
    Costs
    
    
    Costs
    
    
    Corporate
    
    
    Expense
    
    
    Related
    
    
    Impairment
    
    
    Costs
    
    
    EBITDA(a)
    
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (g)
    
    
    (h)Voyager
    
    $
    48,348
    
    
    $
    80,743
    
    
    $
    129,091
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    129,091Sopris
    
    
    29,712
    
    
    
    
    
    
    
    29,712
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,712Cambium Learning Technologies
    
    
    21,671
    
    
    
    17,788
    
    
    
    39,459
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,459Total net sales
    
    
    99,731
    
    
    
    98,531
    
    
    
    198,262
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    198,262Cost of sales
    
    
    27,709
    
    
    
    33,761
    
    
    
    61,470
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,470Cost of sales  amortization
    
    
    15,966
    
    
    
    18,497
    
    
    
    34,463
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,463Total cost of sales
    
    
    43,675
    
    
    
    52,258
    
    
    
    95,933
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,933Research and development expense
    
    
    6,416
    
    
    
    5,302
    
    
    
    11,718
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,718Sales and marketing expenses
    
    
    24,600
    
    
    
    33,734
    
    
    
    58,334
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,334General and administrative expense
    
    
    16,156
    
    
    
    30,660
    
    
    
    46,816
    
    
    
    (26
    )
    
    
    (287
    )
    
    
    (18,069
    )
    
    
    (878
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,556Shipping costs
    
    
    2,348
    
    
    
    2,178
    
    
    
    4,526
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,526Depreciation and amortization
    
    
    11,453
    
    
    
    2,861
    
    
    
    14,314
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,314Embezzlement and related
    
    
    7,254
    
    
    
    
    
    
    
    7,254
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,254
    )
    
    
    
    
    
    
    
    
    
    
    Goodwill impairment
    
    
    75,966
    
    
    
    43,141
    
    
    
    119,107
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (119,107
    )
    
    
    
    
    
    
    Lease termination costs
    
    
    
    
    
    
    11,673
    
    
    
    11,673
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,673
    )
    
    
    Income (loss) from operations
    
    
    (88,137
    )
    
    
    (83,276
    )
    
    
    (171,413
    )
    
    
    26
    
    
    
    287
    
    
    
    18,069
    
    
    
    878
    
    
    
    7,254
    
    
    
    119,107
    
    
    
    11,673
    
    
    
    (14,119
    )Interest income
    
    
    86
    
    
    
    1,485
    
    
    
    1,571
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,571Interest expense
    
    
    (18,520
    )
    
    
    (510
    )
    
    
    (19,030
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,030
    )Other income (expense)
    
    
    23,589
    
    
    
    (363
    )
    
    
    23,226
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,226Income tax benefit
    
    
    13,422
    
    
    
    1,160
    
    
    
    14,582
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,582Net loss (income)
    
    
    (69,560
    )
    
    
    (81,504
    )
    
    
    (151,064
    )
    
    
    26
    
    
    
    287
    
    
    
    18,069
    
    
    
    878
    
    
    
    7,254
    
    
    
    119,107
    
    
    
    11,673
    
    
    
    6,230Normal EBITDA Adjustments:Depreciation and amortization
    
    
    27,419
    
    
    
    21,358
    
    
    
    48,777
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,777Interest income
    
    
    (86
    )
    
    
    (1,485
    )
    
    
    (1,571
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,571
    )Interest expense
    
    
    18,520
    
    
    
    510
    
    
    
    19,030
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,030Other income
    
    
    (23,589
    )
    
    
    363
    
    
    
    (23,226
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,226
    )Income tax
    
    
    (13,422
    )
    
    
    (1,160
    )
    
    
    (14,582
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,582
    )EBITDA
    
    $
    (60,718
    )
    
    $
    (61,918
    )
    
    $
    (122,636
    )
    
    $
    26
    
    
    $
    287
    
    
    $
    18,069
    
    
    $
    878
    
    
    $
    7,254
    
    
    $
    119,107
    
    
    $
    11,673
    
    
    $
    34,658
 
 (a)
    
    Adjustment is to eliminate
external incremental costs
incurred by the Company and VLCY
that are directly related to the
merger transaction.(b)
    
    Adjustment is to eliminate costs
directly associated with the
integration of the Company and
VLCY, including severance and
other costs incurred to achieve
synergies and the cost of
retention and change in control
agreements directly related to the
merger. Integration costs also
include approximately $0.3 million
in 2008 related to the closure of
our IntelliTools office in
Petaluma, California, representing
rent and other operating costs for
the Petaluma office from the time
we leased a smaller facility in
January 2008 until its closure.  36




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##### Table of Contents



(c)
    
    Represents corporate overhead
costs for VLCY that are primarily
related to the restatement of
VLCYs financial statements and
the related activities for VLCY to
become current with its SEC
filings, costs to transition
VLCYs corporate office from Ann
Arbor, Michigan to Dallas, Texas,
and internal costs required to
complete the strategic
alternatives process that
culminated in the proposed merger
transaction. Going forward, we
expect to incur ongoing corporate
overhead and public company costs
of approximately $4 million
annually. For the year ended
December 31, 2008, the adjustment
represents the total costs of
these activities less the $4
million estimate which we consider
to be ongoing. Because VLCYs
restatement process and the
relocation of VLCYs corporate
headquarters were substantially
completed by the end of fiscal
2008, non-recurring corporate
costs for the pre-merger period of
2009 are primarily related to
internal costs of VLCYs strategic
alternative process.(d)
    
    For the period from January 1,
2007 through April 11, 2007, we
held in escrow $0.6 million in
connection with stock-based
awards. As a result of the
settlement with the former
stockholders in 2008, the rights
to the $0.6 million held in escrow
were foregone. This amount was
recorded as income in interest and
other expenses in our historical
statement of operations for 2008
and, accordingly, is excluded from
EBITDA. Voyagers historical
statements of operations include
stock-based compensation expense
of $0.9 million for 2008 and $0.2
million for the pre-merger period
of 2009. As of the merger date,
2.3 million stock options were
granted to executives resulting in
stock-based compensation expense
of approximately $37,000 included
in the Companys Consolidated
Statements of Operations for the
year ended December 31, 2009.(e)
    
    During 2008, the Company
discovered certain irregularities
relating to the control and use of
cash and certain other general
ledger items which revealed a
substantial misappropriation of
assets over a period of more than
four years. These irregularities
were perpetrated by a former
employee, resulting in
embezzlement losses, net of
recoveries. For further
information, see Note 3 to our
Consolidated Financial Statements
included herein.(f)
    
    Under applicable accounting
guidance for business
combinations, an acquiring entity
is required to recognize all of
the assets acquired and
liabilities assumed in a
transaction at the acquisition
date fair value. In our
Consolidated Financial Statements
for 2009, net sales have been
reduced by $1.4 million due to the
write-down of deferred revenue to
its estimated fair value as of the
merger date. The write-down was
determined by estimating the cost
to fulfill the related future
customer obligations plus a normal
profit margin. Partially
offsetting this impact, cost of
sales and marketing expenses were
reduced by $0.3 million for other
purchase accounting adjustments,
primarily a write-down of deferred
costs to zero at the acquisition
date. The adjustment of deferred
revenue and deferred costs to fair
value is required only at the
purchase accounting date;
therefore, its impact on net
sales, cost of sales, and sales
and marketing expense is
non-recurring.(g)
    
    For additional information on
goodwill impairment charges, see
Note 8 to our Consolidated
Financial Statements included
herein.(h)
    
    Lease termination charges are for
the discontinuance of office space
and other leases resulting from
the transition of VLCYs corporate
headquarters from Ann Arbor,
Michigan to Dallas, Texas.   37




---



##### Table of Contents



2009 AdjustedEBITDA per(In thousands)
    
    Credit Agreement(unaudited)Adjusted EBITDA per table above
    
    $
    50,796Additional adjustments allowed to EBITDA per
the Companys credit agreement:Equity cure
    
    
    2,959Certain operating taxes
    
    
    1,249Management fees
    
    
    200Employee severance (non-integration)
    
    
    107Certain legal costs
    
    
    342Amendment fees in excess of amount allowed
    
    
    (171
    )Other
    
    
    20Adjusted EBITDA per the credit agreement
    
    $
    55,502
  Capital Expenditures and Outlook
 Period fromJanuary 29, 2007
    
    
    Period fromYear Ended
    
    
    Year Ended
    
    
    (Inception)
    
    
    January 1, 2007December 31,
    
    
    December 31,
    
    
    through December 31,
    
    
    through April 11,(Dollars in millions)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2007Pre-publication costs
    
    $
    2.4
    
    
    $
    2.2
    
    
    $
    2.7
    
    
    $
    0.4Fixed capital
    
    
    1.0
    
    
    
    1.0
    
    
    
    0.7
    
    
    
    0.7Total expenditures for property, equipment,
and pre-publication costs
    
    $
    3.4
    
    
    $
    3.2
    
    
    $
    3.4
    
    
    $
    1.1
   Commitments and Contractual Obligations
   38




---



##### Table of Contents



(in millions)
    
    Total
    
    
    2010
    
    
    2011 & 2012
    
    
    2013 & 2014
    
    
    After 2014Senior secured revolving credit as of December 31, 2009
    
    $
    5.0
    
    
    $
    5.0
    
    
    $
    
    
    
    $
    
    
    
    $
    Senior secured notes as of December 31, 2009
    
    
    126.4
    
    
    
    10.3
    
    
    
    20.3
    
    
    
    95.8
    
    
    
    Senior
unsecured notes as of December 31, 2009
    
    
    64.2
    
    
    
    
    
    
    
    
    
    
    
    64.2
    
    
    
    Build-to-suit lease obligations as of December 31, 2009
    
    
    7.5
    
    
    
    1.0
    
    
    
    2.1
    
    
    
    2.2
    
    
    
    2.2Other capital lease obligations as of December 31, 2009
    
    
    0.2
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    
    
    
    
    Operating lease obligations as of December 31, 2009
    
    
    6.2
    
    
    
    2.3
    
    
    
    2.7
    
    
    
    1.1
    
    
    
    0.1Contingent value rights as of December 31, 2009
    
    
    9.6
    
    
    
    4.0
    
    
    
    5.6
    
    
    
    
    
    
    
    
     Off-Balance Sheet Arrangements
  Critical Accounting Policies and Estimates
    Revenue Recognition.
  39




---



##### Table of Contents



Impairment of Goodwill.
  2009 Quarterly Impairment Reviews
   40




---



##### Table of Contents



Year End Impairment Review.
  Impairment of Long Lived Assets.
  Pre-Publication
Costs.
 Royalty Advances .
 Accounts Receivable.
 Inventory.
  41




---



##### Table of Contents



Derivative Instruments .
 Income Taxes.
  Contingent Value Rights (CVRs).
 
    
    specified VLCY tax refunds received after the effective time
of the merger, plus
 
    
    the lesser of $4.0 million orthe amount of specified post-signing tax refunds
of VLCY received after the date of the merger agreement and on or prior to the
date of the closing, which was $1.6 million, plus
 
    
    any portion of the 280G Escrow Account (as defined in the
merger agreement) which is not paid to its beneficiary, plus
 
    
    other amounts specified in the escrow agreement,
   Other Contingencies.
  42




---



##### Table of Contents



Recently Issued Financial Accounting Standards
  
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
 Interest Rate Risk
   Foreign Currency Risk
   43




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data.
 Report of Independent Registered Public Accounting Firm
 
     
  44




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
      
  45




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
      
  46




---



##### Table of Contents



Cambium Learning Group, Inc. and Subsidiaries (Successor)
Cambium Learning, Inc. (Predecessor)
Consolidated Statements of Operations
 Successor Period
    
    
    
    PredecessorFrom January 29,
    
    
    
    Period FromFor the Year
    
    
    For the Year
    
    
    2007 through
    
    
    
    January 1, 2007Ended December 31,
    
    
    Ended December 31,
    
    
    December 31,
    
    
    
    through April 11,(In thousands, except per share data)
    
    2009
    
    
    2008
    
    
    2007
    
    
    
    2007Net Sales:Product sales
    
    $
    90,385
    
    
    $
    89,207
    
    
    $
    71,266
    
    
    
    $
    15,238Service revenues
    
    
    10,663
    
    
    
    10,524
    
    
    
    9,581
    
    
    
    
    3,176Total net sales
    
    
    101,048
    
    
    
    99,731
    
    
    
    80,847
    
    
    
    
    18,414Cost of sales:Cost of product sales
    
    
    19,591
    
    
    
    20,246
    
    
    
    19,749
    
    
    
    
    3,896Cost of service revenues
    
    
    7,257
    
    
    
    7,463
    
    
    
    6,312
    
    
    
    
    1,908Amortization expense
    
    
    17,527
    
    
    
    15,966
    
    
    
    11,719
    
    
    
    
    3,392Total cost of sales
    
    
    44,375
    
    
    
    43,675
    
    
    
    37,780
    
    
    
    
    9,196Research and development expense
    
    
    5,611
    
    
    
    6,416
    
    
    
    5,247
    
    
    
    
    1,737Sales and marketing expense
    
    
    23,368
    
    
    
    24,600
    
    
    
    15,059
    
    
    
    
    6,393General and administrative expense
    
    
    30,519
    
    
    
    16,156
    
    
    
    11,142
    
    
    
    
    13,676Shipping costs
    
    
    1,512
    
    
    
    2,348
    
    
    
    2,739
    
    
    
    
    445Depreciation and amortization expense
    
    
    9,723
    
    
    
    11,453
    
    
    
    9,338
    
    
    
    
    732Acquired in-process research and development
    
    
    
    
    
    
    
    
    
    
    890
    
    
    
    
    Goodwill impairment
    
    
    9,105
    
    
    
    75,966
    
    
    
    
    
    
    
    
    Embezzlement and related expense
    
    
    129
    
    
    
    7,254
    
    
    
    5,732
    
    
    
    
    1,000Total costs
and expenses
    
    
    124,342
    
    
    
    187,868
    
    
    
    87,927
    
    
    
    
    33,179Loss before interest, other income (expense)
and income taxes
    
    
    (23,294
    )
    
    
    (88,137
    )
    
    
    (7,080
    )
    
    
    
    (14,765
    )Net interest income (expense):Interest income
    
    
    10
    
    
    
    86
    
    
    
    144
    
    
    
    
    24Interest expense
    
    
    (19,487
    )
    
    
    (18,520
    )
    
    
    (13,276
    )
    
    
    
    (766
    )Net interest income (expense)
    
    
    (19,477
    )
    
    
    (18,434
    )
    
    
    (13,132
    )
    
    
    
    (742
    )Gain from settlement with previous stockholders
    
    
    
    
    
    
    30,202
    
    
    
    
    
    
    
    
    Loss on extinguishment of debt
    
    
    
    
    
    
    (5,632
    )
    
    
    
    
    
    
    
    Other income (expense), net
    
    
    (698
    )
    
    
    (981
    )
    
    
    (1,557
    )
    
    
    
    1Loss before income taxes
    
    
    (43,469
    )
    
    
    (82,982
    )
    
    
    (21,769
    )
    
    
    
    (15,506
    )Income tax benefit
    
    
    7,704
    
    
    
    13,422
    
    
    
    7,838
    
    
    
    
    3,694Net loss
    
    $
    (35,765
    )
    
    $
    (69,560
    )
    
    $
    (13,931
    )
    
    
    $
    (11,812
    )Net loss per common share:Basic net loss per common share
    
    $
    (1.63
    )
    
    $
    (3.39
    )
    
    $
    (0.68
    )
    
    
    $
    (4.34
    )Diluted net loss per common share
    
    $
    (1.63
    )
    
    $
    (3.39
    )
    
    $
    (0.68
    )
    
    
    $
    (4.34
    )Average number of common shares and equivalents outstanding:Basic
    
    
    21,994
    
    
    
    20,493
    
    
    
    20,493
    
    
    
    
    2,721Diluted
    
    
    21,994
    
    
    
    20,493
    
    
    
    20,493
    
    
    
    
    2,721
 The accompanying Notes to the Consolidated Financial Statements are an integral part of these
statements.
  47




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##### Table of Contents



Cambium Learning Group, Inc. and Subsidiaries (Successor)
Cambium Learning, Inc. (Predecessor)
Consolidated Balance Sheets
As of December 31, 2009 and December 31, 2008
 (In thousands, except per share data)
    
    2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    13,345
    
    
    $
    2,418Accounts receivable, net
    
    
    19,127
    
    
    
    10,550Inventory
    
    
    19,812
    
    
    
    12,850Deferred tax assets
    
    
    6,267
    
    
    
    4,618Restricted assets, current
    
    
    9,755
    
    
    
    Other current assets
    
    
    6,010
    
    
    
    1,181Total current assets
    
    
    74,316
    
    
    
    31,617Property, equipment and software at cost
    
    
    24,951
    
    
    
    20,769Accumulated depreciation and amortization
    
    
    (4,294
    )
    
    
    (2,459
    )Net property, equipment and software
    
    
    20,657
    
    
    
    18,310Goodwill
    
    
    151,915
    
    
    
    116,373Acquired curriculum and technology intangibles, net
    
    
    44,695
    
    
    
    3,847Acquired publishing rights, net
    
    
    52,312
    
    
    
    66,261Other intangible assets, net
    
    
    28,133
    
    
    
    28,488Pre-publication costs, net
    
    
    5,464
    
    
    
    3,838Restricted assets, less current portion
    
    
    14,930
    
    
    
    Other assets
    
    
    1,419
    
    
    
    1,743Total assets
    
    $
    393,841
    
    
    $
    270,477
 The accompanying Notes to the Consolidated Financial Statements are an integral part of these
statements.
  48




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##### Table of Contents



Cambium Learning Group, Inc. and Subsidiaries (Successor)
Cambium Learning, Inc. (Predecessor)
Consolidated Balance Sheets
As of December 31, 2009 and December 31, 2008
 (In thousands, except per share data)
    
    2009
    
    
    2008LIABILITIES AND STOCKHOLDERS/MEMBERS EQUITYCurrent liabilities:Notes payable  line of credit
    
    $
    5,000
    
    
    $
    5,000Current portion of long-term debt
    
    
    1,280
    
    
    
    1,280Current portion of capital lease obligations
    
    
    443
    
    
    
    375Accounts payable
    
    
    2,308
    
    
    
    3,035Contingent value rights, current
    
    
    3,950
    
    
    
    Accrued expenses
    
    
    23,920
    
    
    
    5,190Deferred revenue, current
    
    
    21,465
    
    
    
    1,480Total current liabilities
    
    
    58,366
    
    
    
    16,360Long-term liabilities:Long-term debt, less current portion
    
    
    150,487
    
    
    
    153,787Capital lease obligations, less current portion
    
    
    12,695
    
    
    
    12,960Deferred revenue, less current portion
    
    
    2,716
    
    
    
    430Contingent value rights, less current portion
    
    
    5,649
    
    
    
    Other liabilities
    
    
    24,156
    
    
    
    18,736Total long-term liabilities
    
    
    195,703
    
    
    
    185,913Commitments and contingencies (See Note 19)Stockholders and members equity:Preferred stock ($.001 par value, 15,000 shares authorized,
zero shares issued and outstanding at December 31, 2009)
    
    
    
    
    
    
    Common stock ($.001 par value, 150,000 shares authorized,
43,859 shares issued and outstanding at
December 31, 2009)
    
    
    44
    
    
    
    Capital surplus
    
    
    258,789
    
    
    
    Members interest
    
    
    
    
    
    
    151,707Accumulated deficit
    
    
    (119,268
    )
    
    
    (83,503
    )Other comprehensive income (loss):Pension and postretirement plans
    
    
    206
    
    
    
    Net unrealized gain on securities
    
    
    1
    
    
    
    Accumulated other comprehensive income (loss)
    
    
    207
    
    
    
    Total stockholders and members equity
    
    
    139,772
    
    
    
    68,204Total liabilities and stockholders/members equity
    
    $
    393,841
    
    
    $
    270,477
 The accompanying Notes to the Consolidated Financial Statements are an integral part of these
statements.
  49




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##### Table of Contents



Cambium Learning Group, Inc. and Subsidiaries (Successor)
Cambium Learning, Inc. (Predecessor)
Consolidated Statements of Cash Flows
 Successor Periodfrom January
    
    
    
    Predecessor29, 2007
    
    
    
    Period fromYear Ended
    
    
    Year Ended
    
    
    (Inception)
    
    
    
    January 1, 2007December 31,
    
    
    December 31,
    
    
    through December 31,
    
    
    
    through April 11,(in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    
    2007Operating activities:Net loss
    
    $
    (35,765
    )
    
    $
    (69,560
    )
    
    $
    (13,931
    )
    
    
    $
    (11,812
    )Adjustments to reconcile net loss
to net cash provided by (used in) operating activities:Depreciation and amortization expense
    
    
    27,250
    
    
    
    27,419
    
    
    
    21,057
    
    
    
    
    4,123Acquired in-process research and development
    
    
    
    
    
    
    
    
    
    
    890
    
    
    
    
    Inventory step-up
    
    
    
    
    
    
    
    
    
    
    2,931
    
    
    
    
    Goodwill impairment
    
    
    9,105
    
    
    
    75,966
    
    
    
    
    
    
    
    
    Gain from settlement with previous stockholders
    
    
    
    
    
    
    (30,202
    )
    
    
    
    
    
    
    
    Gain from recovery of property held for sale
    
    
    
    
    
    
    (1,578
    )
    
    
    
    
    
    
    
    Loss on extinguishment of debt  unamortized debt issuance costs
    
    
    
    
    
    
    4,594
    
    
    
    
    
    
    
    
    Non-cash interest expense
    
    
    2,309
    
    
    
    1,701
    
    
    
    642
    
    
    
    
    Amortization of deferred financing costs
    
    
    
    
    
    
    604
    
    
    
    679
    
    
    
    
    Loss (gain) on derivative instruments
    
    
    (1,390
    )
    
    
    848
    
    
    
    1,534
    
    
    
    
    Loss on disposal of assets
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation  employee awards
    
    
    37
    
    
    
    (618
    )
    
    
    
    
    
    
    
    (69
    )Stock-based compensation  subscription rights
    
    
    2,222
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred income taxes
    
    
    (7,975
    )
    
    
    (13,526
    )
    
    
    (8,365
    )
    
    
    
    (4,553
    )Changes in operating assets and liabilities:Accounts receivable, net
    
    
    2,306
    
    
    
    (1,041
    )
    
    
    306
    
    
    
    
    (769
    )Inventory
    
    
    4,725
    
    
    
    (3,152
    )
    
    
    (867
    )
    
    
    
    (499
    )Other current assets
    
    
    3,022
    
    
    
    (355
    )
    
    
    488
    
    
    
    
    1,732Other assets
    
    
    1,579
    
    
    
    (15
    )
    
    
    724
    
    
    
    
    40Restricted assets
    
    
    (7,948
    )
    
    
    
    
    
    
    
    
    
    
    
    Accounts payable
    
    
    (1,812
    )
    
    
    (2,941
    )
    
    
    (1,183
    )
    
    
    
    3,856Accrued expenses
    
    
    4,980
    
    
    
    (2,651
    )
    
    
    (8,162
    )
    
    
    
    4,049Deferred revenue
    
    
    497
    
    
    
    480
    
    
    
    861
    
    
    
    
    154Other long-term liabilities
    
    
    (1,115
    )
    
    
    172
    
    
    
    (369
    )
    
    
    
    (4
    )Other, net
    
    
    (95
    )
    
    
    
    
    
    
    (469
    )
    
    
    
    20Net cash provided by (used in) operating activities
    
    
    1,934
    
    
    
    (13,855
    )
    
    
    (3,234
    )
    
    
    
    (3,732
    )Investing activities:Cash paid for acquisitions, net of cash acquired
    
    
    (9,697
    )
    
    
    (112
    )
    
    
    (303,236
    )
    
    
    
    Expenditures for property, equipment, and pre-publication costs
    
    
    (3,395
    )
    
    
    (3,201
    )
    
    
    (3,370
    )
    
    
    
    (1,100
    )Settlement proceeds from previous stockholders
    
    
    
    
    
    
    30,202
    
    
    
    
    
    
    
    
    Net cash provided by (used in) investing activities
    
    
    (13,092
    )
    
    
    26,889
    
    
    
    (306,606
    )
    
    
    
    (1,100
    )Financing activities:Proceeds from debt
    
    
    
    
    
    
    
    
    
    
    172,105
    
    
    
    
    Repayment of debt
    
    
    (5,585
    )
    
    
    (24,280
    )
    
    
    (960
    )
    
    
    
    Principal payments under capital lease obligations
    
    
    (289
    )
    
    
    (226
    )
    
    
    (195
    )
    
    
    
    (26
    )Borrowings under revolving credit agreement
    
    
    10,000
    
    
    
    5,000
    
    
    
    4,500
    
    
    
    
    3,600Payment of revolving credit facility
    
    
    (10,000
    )
    
    
    
    
    
    
    (4,500
    )
    
    
    
    Proceeds from capital contributions
    
    
    2,959
    
    
    
    684
    
    
    
    140,108
    
    
    
    
    Proceeds from issuance of common stock in connection with the merger
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    
    Borrowings from affiliates
    
    
    
    
    
    
    7,000
    
    
    
    
    
    
    
    
    Distribution to members
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    
    Net cash provided by (used in) financing activities
    
    
    22,085
    
    
    
    (11,822
    )
    
    
    311,046
    
    
    
    
    3,574Increase (decrease) in cash and cash equivalents
    
    
    10,927
    
    
    
    1,212
    
    
    
    1,206
    
    
    
    
    (1,258
    )Cash and cash equivalents, beginning of year
    
    
    2,418
    
    
    
    1,206
    
    
    
    
    
    
    
    
    1,642Cash and cash equivalents, end of year
    
    $
    13,345
    
    
    $
    2,418
    
    
    $
    1,206
    
    
    
    $
    384Supplemental disclosure of cash flow information:Income taxes paid (refunded)
    
    $
    (3,080
    )
    
    $
    742
    
    
    $
    (337
    )
    
    
    $
    278Interest paid
    
    
    16,936
    
    
    
    16,215
    
    
    
    11,983
    
    
    
    
    799Supplemental disclosure of noncash investing and financing activities:Non-cash acquisition costs paid
    
    
    86,546
    
    
    
    
    
    
    
    
    
    
    
    
    Rollover in capital contribution
    
    
    
    
    
    
    
    
    
    
    3,915
    
    
    
    
    Conversion of unsecured notes payable  affiliates
    
    
    
    
    
    
    7,000
    
    
    
    
    
    
    
    
    Assets received in settlement  property held for sale
    
    
    
    
    
    
    1,578
    
    
    
    
    
    
    
    
    
 The accompanying Notes to the Consolidated Financial Statements are an integral part of these
statements.
  50




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##### Table of Contents



Cambium Learning Group, Inc. and Subsidiaries (Successor)
Cambium Learning, Inc. (Predecessor)
Consolidated Statements of Stockholders and Members Equity and Comprehensive Income (Loss)
 Series A Convertible
    
    
    
    
    
    
    
    
    
    
    AdditionalPreferred Stock
    
    
    Common Stock
    
    
    Paid in
    
    
    Accumulated(in thousands)
    
    Shares
    
    
    Value
    
    
    Shares
    
    
    Par Value
    
    
    Capital
    
    
    Deficit
    
    
    TotalPredecessor PeriodBalance at December 31, 2006
    
    
    84,700
    
    
    $
    84,655
    
    
    
    2,721
    
    
    $
    27
    
    
    $
    6,895
    
    
    $
    (12,682
    )
    
    $
    78,895Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (69
    )
    
    
    
    
    
    
    (69
    )Conversion of preferred stock to common stock
    
    
    (84,700
    )
    
    
    (84,655
    )
    
    
    84,700
    
    
    
    85
    
    
    
    84,570
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,812
    )
    
    
    (11,812
    )Balance at April 11, 2007
    
    
    
    
    
    $
    
    
    
    
    87,421
    
    
    $
    112
    
    
    $
    91,396
    
    
    $
    (24,494
    )
    
    $
    67,014
 Additional
    
    
    
    
    
    
    Accumulated OtherCommon Stock
    
    
    Paid in
    
    
    Members
    
    
    Comprehensive
    
    
    Accumulated(Dollars and shares in thousands)
    
    Shares
    
    
    Par Value
    
    
    Capital
    
    
    Interest
    
    
    Income
    
    
    Deficit
    
    
    TotalSuccessor PeriodBalance at January 29, 2007 (inception):
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Capital contribution by members
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144,023
    
    
    
    
    
    
    
    
    
    
    
    144,023Distribution to members
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12
    )
    
    
    (12
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,931
    )
    
    
    (13,931
    )Balance at December 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144,023
    
    
    
    
    
    
    
    (13,943
    )
    
    
    130,080Capital contribution by members
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,684
    
    
    
    
    
    
    
    
    
    
    
    7,684Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (69,560
    )
    
    
    (69,560
    )Balance at December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    151,707
    
    
    
    
    
    
    
    (83,503
    )
    
    
    68,204Capital contribution by members
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,959
    
    
    
    
    
    
    
    
    
    
    
    2,959Conversion of members interests to common shares in
connection with the merger (a)
    
    
    20,493
    
    
    
    20
    
    
    
    154,646
    
    
    
    (154,666
    )
    
    
    
    
    
    
    
    
    
    
    Issuance of common stock to members in exchange for a
$25 million capital contribution in connection
with the merger
    
    
    3,846
    
    
    
    4
    
    
    
    24,996
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000Issuance of common stock to Voyager stockholders in
connection with the merger
    
    
    19,520
    
    
    
    20
    
    
    
    76,888
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,908Issuance of subscription rights in connection with
the merger
    
    
    
    
    
    
    
    
    
    
    2,222
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,222Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37Comprehensive income (loss):Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,765
    )
    
    
    (35,765
    )Pension plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    206
    
    
    
    
    
    
    
    206Unrealized gain on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Total comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,558
    )Balance at December 31, 2009
    
    
    43,859
    
    
    $
    44
    
    
    $
    258,789
    
    
    $
    
    
    
    $
    207
    
    
    $
    (119,268
    )
    
    $
    139,772
 (a)
    
    As the previous members are also majority stockholders in Cambium Learning Group, Inc., the
common shares issued on December 8, 2009 in connection with the merger will be considered
outstanding for all successor periods presented for purposes of calculating earnings per share. The accompanying Notes to the Consolidated Financial Statements are an integral part of these
statements.
  51




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##### Table of Contents



Cambium Learning Group, Inc. and Subsidiaries (Successor)
Cambium Learning, Inc. (Predecessor)
Notes to the Consolidated Financial Statements
 Note 1  Basis of Presentation
 Cambium
Learning Group, Inc. (Successor)
  Cambium Learning, Inc. (Predecessor)
  Fiscal Year
 Nature of Operations
    52




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##### Table of Contents



Reclassifications
 Segments
 Note 2  Significant Accounting Policies
 Use of Estimates
 Principles of Consolidation
  Revenue Recognition
   53




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##### Table of Contents



Accounts Receivable
 Net Earnings (Loss) per Common Share
 Successor Period
    
    
    
    Predecessor PeriodFrom January 29,
    
    
    
    From January 1,For the Year Ended
    
    
    For the Year Ended
    
    
    2007 through
    
    
    
    2007 throughDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    April 11,(in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    
    2007Basic
    
    
    21,994
    
    
    
    20,493
    
    
    
    20,493
    
    
    
    
    2,721Dilutive effect of awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted
    
    
    21,994
    
    
    
    20,493
    
    
    
    20,493
    
    
    
    
    2,721
   Cash and Cash Equivalents
 Inventory
  54




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##### Table of Contents



Restricted Assets
 Property and Equipment
 Estimated Useful LifeBuilding
    
    35 yearsLand improvements
    
    19 yearsMachinery and equipment
    
    8  15 yearsFurniture and fixtures
    
    8 yearsComputer equipment and software
    
    2  5 yearsLeasehold improvements
    
    Lesser of useful life or lease term
  Purchased and Developed Software
 Acquired Curriculum and Technology
 Acquired Publishing Rights
 Pre-Publication Costs
 Goodwill and Other Intangible Assets
  55




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##### Table of Contents



Depreciation and Amortization
 For the Period FromJanuary 31, 2007
    
    
    For the Period FromFor the Year Ended
    
    
    For the Year Ended
    
    
    through
    
    
    January 1, 2007 through(in thousands)
    
    December 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007
    
    
    April 11, 2007Acquired publishing rights
    
    $
    13,949
    
    
    $
    13,566
    
    
    $
    10,473
    
    
    $
    2,283Acquired curriculum and technology
    
    
    1,852
    
    
    
    1,328
    
    
    
    1,146
    
    
    
    621Pre-publication costs
    
    
    1,707
    
    
    
    1,072
    
    
    
    100
    
    
    
    488Internally developed software related to product
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    Total amortization included in cost of sales
    
    
    17,527
    
    
    
    15,966
    
    
    
    11,719
    
    
    
    3,392Tradenames and trademarks
    
    
    1,349
    
    
    
    1,330
    
    
    
    1,130
    
    
    
    120Other intangible assets
    
    
    6,555
    
    
    
    8,650
    
    
    
    7,222
    
    
    
    311Property, equipment and software
    
    
    1,819
    
    
    
    1,473
    
    
    
    986
    
    
    
    301Total depreciation and amortization
included in operating expenses
    
    
    9,723
    
    
    
    11,453
    
    
    
    9,338
    
    
    
    732Total depreciation and amortization
    
    $
    27,250
    
    
    $
    27,419
    
    
    $
    21,057
    
    
    $
    4,124
 Impairment of Long Lived Assets
 Deferred Costs
 Advertising Costs
 Income Taxes
  56




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##### Table of Contents



Royalty Advances
 Sales Taxes
 Derivative
 Instruments and Hedging Activities
   Stock-Based Compensation
 Recently Issued Financial Accounting Standards
    57




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##### Table of Contents



Note 3  Embezzlement
  Year/Period
    
    Amount(in thousands)2004
    
    $
    1,9132005
    
    
    2902006
    
    
    3,261January 1, 2007  April 11, 2007
    
    
    1,000Total  Predecessor
    
    
    6,464April 12, 2007  December 31, 2007
    
    
    5,7322008
    
    
    1,800Total  Successor
    
    
    7,532Total Embezzlement Loss
    
    $
    13,996
    58




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##### Table of Contents



Note 4  Acquisitions
 Acquisition
of VLCY
  
    
    Capitalizing on the complementary nature of the companies products to
enhance certain products with minimal development costs, achieve critical mass
in certain markets, facilitate the cross-selling of each others products to
established customers, and expand sales and marketing reach.
 
    
    Leveraging the companies combined implementation services and robust
technological capabilities.
 
    
    Combining two experienced management teams to spread best practices,
attract leading authors and programs, and acquire additional product lines and
business as opportunities arise.
 
    
    Increasing sales into existing and new markets of certain products through
complementary sales channels.
   
    
    at the election of the stockholder, either,
 
    
    one share of Company common stock, or
 
    
    $6.50 in cash, limited to a maximum of $67.5 million in the aggregate
and prorated in accordance with the merger agreement;
 
    
    plus, regardless of the election made,
 
    
    an amount in cash equal to the amount of certain tax refunds specified
in the merger agreement and received by VLCY prior to the closing of the
mergers (reduced by the amount of the VLCY tax refunds contractually
required to be placed in escrow at closing), divided by the total number
of shares of VLCY common stock outstanding immediately prior to the
effective time of the mergers; plus
 
    
    a Contingent Value Right (CVR) to receive cash in an amount
equal to the aggregate amount of specified tax refunds received after the
closing of the mergers and various other amounts deposited in escrow on
or after the closing date, reduced by any payments to be made under the
escrow agreement entered into in connection with the mergers, with
respect to agreed contingencies, a potential working capital adjustment
and allowed expenses, divided by the total number of shares of VLCY
common stock outstanding immediately prior to the effective time of the
mergers.
    59




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##### Table of Contents



(in thousands)Cash paid to shareholders making the cash election
    
    $
    67,499Cash paid to shareholders for specified tax refunds
    
    
    15,523Fair value of shares of Company issued to shareholders
    
    
    76,907Fair value of equity awards converted at acquisition
    
    
    22Fair value of the Contingent Value Rights
    
    
    9,617Total consideration
    
    $
    169,568
  (in thousands)Cash and cash equivalents
    
    $
    73,325Accounts receivable
    
    
    10,883Income tax receivable
    
    
    4,713Inventory
    
    
    11,687Other current assets
    
    
    11,919Property, plant and equipment
    
    
    3,216Intangible assets
    
    
    50,249Curriculum in development
    
    
    909Other assets
    
    
    11,891Accounts payable and accrued expenses
    
    
    (14,835
    )Deferred revenue
    
    
    (21,774
    )Capital lease obligations
    
    
    (187
    )Other liabilities
    
    
    (17,075
    )Goodwill
    
    
    44,647Total net assets acquired
    
    $
    169,568
  Cambium
 LearningVoyager
    
    
    Technologies
    
    
    Useful Life(in thousands)Curriculum and technology
    
    $
    23,700
    
    
    $
    19,000
    
    
    7 yearsCustomer relationships
    
    
    3,880
    
    
    
    1,500
    
    
    7 yearsTradenames and trademarks
    
    
    1,610
    
    
    
    559
    
    
    15 years
  Supplemental Pro Forma Information
   60




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##### Table of Contents



Years Ended December 31,(in thousands) (unaudited)
    
    2009
    
    
    2008Net sales
    
    $
    188,211
    
    
    $
    187,123Loss before income taxes
    
    
    (59,582
    )
    
    
    (170,403
    )Net loss
    
    
    (59,582
    )
    
    
    (157,441
    )Net loss per share  basic and diluted
    
    $
    (1.34
    )
    
    $
    (3.55
    )
  
    
    the pro forma impact of the amortization of intangible assets and the reduction in
deferred revenue and related deferred costs based on the purchase price allocation;
 
    
    the pro forma impact of reduced interest income lost as a result of the $58.0
million of cash used in the purchase price consideration (net of $25.0 million
contributed by the sole stockholder of the Company at the time of the merger);
 
    
    the pro forma impact of certain employment agreements and stock option grants
entered into on the effective date of the merger;
 
    
    the elimination of merger transaction costs incurred by the Company and VLCY;
and
 
    
    the pro forma tax effect of the merger, which was estimated using a combined
company effective tax rate of 0% for 2009 and 7.6% for 2008.
   Acquisition of Cambium Learning, Inc.
  
    
    Capitalizing on a growing market and the need for accountability.
 
    
    Increasing program penetration by expanding sales from current customers.
 
    
    Exploring acquisition opportunities in a fragmented market.
   61




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##### Table of Contents



(in thousands)Current assets
    
    $
    30,259Property, plant and equipment
    
    
    19,152Other long-term assets
    
    
    235Goodwill
    
    
    192,287Other identified intangible assets
    
    
    143,380Current liabilities
    
    
    (23,891
    )Long-term deferred tax liabilities
    
    
    (39,808
    )Other liabilities
    
    
    (15,353
    )In-process research and development
    
    
    890Purchase price
    
    $
    307,151
  62




---



##### Table of Contents



Estimated(in thousands)
    
    Fair Value
    
    
    Useful LifePublishing rights
    
    $
    90,300
    
    
    11 yearsDeveloped technology
    
    
    6,300
    
    
    6 yearsTrademarks
    
    
    15,580
    
    
    16 yearsReseller networks
    
    
    12,300
    
    
    11 yearsCustomer relationships
    
    
    13,700
    
    
    6  11 yearsNoncompetes
    
    
    2,600
    
    
    3 yearsContracts
    
    
    2,100
    
    
    4 yearsConference attendee relationships
    
    
    500
    
    
    8 yearsTotal other identified intangibles
    
    $
    143,380
  Acquisition of Certain Assets of Tobii Assistive Technology, Inc.
  Note 5  Income Taxes
   Period fromJanuary   29, 2007
    
    
    Period fromYear Ended
    
    
    Year Ended
    
    
    (inception)
    
    
    January 1, 2007December 31,
    
    
    December 31,
    
    
    through December 31,
    
    
    through April 11,(in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2007Current income tax expense (benefit):United States federal
    
    $
    
    
    
    $
    
    
    
    $
    18
    
    
    $
    501State and local
    
    
    272
    
    
    
    103
    
    
    
    508
    
    
    
    357Current income tax expense
    
    
    272
    
    
    
    103
    
    
    
    526
    
    
    
    858Deferred income tax benefitUnited States federal
    
    
    (5,571
    )
    
    
    (11,951
    )
    
    
    (7,110
    )
    
    
    (4,309
    )State and local
    
    
    (2,405
    )
    
    
    (1,574
    )
    
    
    (1,254
    )
    
    
    (243
    )Deferred income tax benefit
    
    
    (7,976
    )
    
    
    (13,525
    )
    
    
    (8,364
    )
    
    
    (4,552
    )Income tax benefit
    
    $
    (7,704
    )
    
    $
    (13,422
    )
    
    $
    (7,838
    )
    
    $
    (3,694
    )
  63




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##### Table of Contents



Period fromJanuary 29, 2007
    
    
    Period fromYear Ended
    
    
    Year Ended
    
    
    (inception)
    
    
    January 1, 2007December 31,
    
    
    December 31,
    
    
    through December 31,
    
    
    through April 11,(in thousands)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2007Statutory federal income tax benefit
    
    $
    (15,214
    )
    
    $
    (29,044
    )
    
    $
    (7,624
    )
    
    $
    (5,427
    )Increase (reduction) from:State taxes (net of federal benefit)
    
    
    (1,378
    )
    
    
    (1,057
    )
    
    
    (484
    )
    
    
    (428
    )Goodwill impairment
    
    
    3,187
    
    
    
    26,588
    
    
    
    
    
    
    
    Purchase price adjustment
    
    
    
    
    
    
    (10,244
    )
    
    
    
    
    
    
    Merger transaction expenses
    
    
    4,745
    
    
    
    
    
    
    
    
    
    
    
    1,674Change in valuation allowance
    
    
    625
    
    
    
    122
    
    
    
    
    
    
    
    373Other
    
    
    331
    
    
    
    213
    
    
    
    270
    
    
    
    114Income tax benefit
    
    $
    (7,704
    )
    
    $
    (13,422
    )
    
    $
    (7,838
    )
    
    $
    (3,694
    )
  (in thousands)
    
    2009
    
    
    2008Deferred tax assets are attributable to:Net operating loss carryforwards
    
    $
    25,916
    
    
    $
    9,403Tax credit carryforwards
    
    
    7,670
    
    
    
    Reserves
    
    
    7,164
    
    
    
    190Inventory
    
    
    4,435
    
    
    
    4,004Deferred financing costs
    
    
    2,317
    
    
    
    2,437Embezzlement loss
    
    
    1,528
    
    
    
    1,894Fixed assets
    
    
    1,039
    
    
    
    Other
    
    
    738
    
    
    
    1,718Total gross deferred tax assets
    
    
    50,807
    
    
    
    19,646Valuation allowance
    
    
    (14,312
    )
    
    
    (2,858
    )Net deferred tax assets
    
    
    36,495
    
    
    
    16,788Deferred tax liabilities are attributable to:Intangibles
    
    
    (33,981
    )
    
    
    (26,457
    )Fixed assets
    
    
    
    
    
    
    (880
    )Deferred revenue
    
    
    (4,403
    )
    
    
    Total gross deferred tax liabilities
    
    
    (38,384
    )
    
    
    (27,337
    )Net deferred tax liability:
    
    $
    (1,889
    )
    
    $
    (10,549
    )
  (in thousands)
    
    2009
    
    
    2008Short-term deferred tax asset
    
    $
    6,267
    
    
    $
    4,617Long-term deferred tax liability
    
    
    (8,156
    )
    
    
    (15,166
    )Net deferred tax asset (liability)
    
    $
    (1,889
    )
    
    $
    (10,549
    )
   64




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##### Table of Contents



Amount as of
    
    
    Expire or start expiring(in thousands)
    
    year ended 2009
    
    
    at the end of:U.S. net operating loss (1)
    
    $
    62,791
    
    
    
    2028State net operating loss carryforward (net):State tax net operating losses (2)
    
    
    4,441
    
    
    
    2012  2028Tax credits:Minimum tax credit
    
    
    7,254
    
    
    
    Carry forward indefinitelyResearch and development tax credit
    
    
    416
    
    
    
    2014  2021Total tax credits
    
    
    7,670
 (1)
    
    $38.3 million of the U.S. net operating loss (NOL) above is related to the VLCY
acquisition. The utilization of this NOL is subject to an annual limitation of $7.1 million.(2)
    
    $2.9 million of the state NOL above are expected to expire unutilized. These
NOLs are associated with specific legal entities that are not expected to generate taxable income
within the statute of limitation period. The Company has established a valuation allowance against
these deferred tax assets.   Uncertain Tax Positions
  (in thousands)
    
    2009
    
    
    2008Balance at the beginning of the year
    
    $
    
    
    
    $
    Increases for acquisitions during the period
    
    
    14,685
    
    
    
    Increases for tax positions taken during the period
    
    
    752
    
    
    
    Decreases relating to settlements
    
    
    
    
    
    
    Balance at the end of the year
    
    $
    15,437
    
    
    $
    
  65




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##### Table of Contents



Note 6  Performance Share Plan
  Note 7  Property, Equipment and Software
  Year Ended December 31,2009
    
    
    2008Land and building
    
    $
    13,360
    
    
    $
    13,360Furniture and fixtures
    
    
    775
    
    
    
    287Machinery, computers and equipment
    
    
    5,867
    
    
    
    4,535Software
    
    
    4,619
    
    
    
    2,435Leasehold improvements
    
    
    330
    
    
    
    152Total
    
    
    24,951
    
    
    
    20,769Less accumulated depreciation and amortization
    
    
    4,294
    
    
    
    2,459Property, equipment and software, net
    
    $
    20,657
    
    
    $
    18,310
  66




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##### Table of Contents



Note 8  Goodwill and Other Intangible Assets
  (in thousands)
    
    Publishing
    
    
    Voyager
    
    
    Sopris
    
    
    CLT
    
    
    TotalBalance as of December 31, 2007Goodwill
    
    $
    153,533
    
    
    $
    
    
    
    $
    
    
    
    $
    38,754
    
    
    $
    192,287Accumulated impairment losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    153,533
    
    
    
    
    
    
    
    
    
    
    
    38,754
    
    
    
    192,287Goodwill from acquisitions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52
    
    
    
    52Goodwill impairment
    
    
    (75,966
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75,966
    )Balance as of December 31, 2008Goodwill
    
    
    153,533
    
    
    
    
    
    
    
    
    
    
    
    38,806
    
    
    
    192,339Accumulated impairment losses
    
    
    (75,966
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75,966
    )77,567
    
    
    
    
    
    
    
    
    
    
    
    38,806
    
    
    
    116,373Goodwill impairment
    
    
    (9,105
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,105
    )Allocation of Publishing goodwill
among Voyager and Sopris segments
    
    
    (68,462
    )
    
    
    51,162
    
    
    
    17,300
    
    
    
    
    
    
    
    Goodwill from acquisitions
    
    
    
    
    
    
    24,923
    
    
    
    
    
    
    
    19,724
    
    
    
    44,647Balance as of December 31, 2009Goodwill
    
    
    
    
    
    
    161,156
    
    
    
    17,300
    
    
    
    58,530
    
    
    
    236,986Accumulated impairment losses
    
    
    
    
    
    
    (85,071
    )
    
    
    
    
    
    
    
    
    
    
    (85,071
    )$
    
    
    
    $
    76,085
    
    
    $
    17,300
    
    
    $
    58,530
    
    
    $
    151,915
    67




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##### Table of Contents



Balance at
December 31,
    
    
    
    
    
    
    Impairment
    
    
    Balance at
December 31,
    
    
    
    
    
    
    Impairment
    
    
    Balance at
December 31,(in thousands)
    
    2007
    
    
    Additions
    
    
    Charge
    
    
    2008
    
    
    Additions
    
    
    Charge
    
    
    2009Goodwill
    
    $
    192,287
    
    
    $
    52
    
    
    $
    (75,966
    )
    
    $
    116,373
    
    
    $
    44,647
    
    
    $
    (9,105
    )
    
    $
    151,915Other intangible assets  gross book value:Publishing rights
    
    
    90,300
    
    
    
    
    
    
    
    
    
    
    
    90,300
    
    
    
    
    
    
    
    
    
    
    
    90,300Trademark
    
    
    15,580
    
    
    
    
    
    
    
    
    
    
    
    15,580
    
    
    
    2,169
    
    
    
    
    
    
    
    17,749Customer relationships
    
    
    13,700
    
    
    
    39
    
    
    
    
    
    
    
    13,739
    
    
    
    5,380
    
    
    
    
    
    
    
    19,119Contracts
    
    
    2,100
    
    
    
    
    
    
    
    
    
    
    
    2,100
    
    
    
    
    
    
    
    
    
    
    
    2,100Acquired curriculum and technology
    
    
    6,300
    
    
    
    21
    
    
    
    
    
    
    
    6,321
    
    
    
    42,700
    
    
    
    
    
    
    
    49,021Reseller network
    
    
    12,300
    
    
    
    
    
    
    
    
    
    
    
    12,300
    
    
    
    
    
    
    
    
    
    
    
    12,300Conference attendees
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    500Non-compete
    
    
    2,600
    
    
    
    
    
    
    
    
    
    
    
    2,600
    
    
    
    
    
    
    
    
    
    
    
    2,600Total other intangibles  gross book value
    
    
    143,380
    
    
    
    60
    
    
    
    
    
    
    
    143,440
    
    
    
    50,249
    
    
    
    
    
    
    
    193,689Other intangible assets  accumulated amortization:Publishing rights
    
    
    (10,473
    )
    
    
    (13,566
    )
    
    
    
    
    
    
    (24,039
    )
    
    
    (13,949
    )
    
    
    
    
    
    
    (37,988
    )Trademark
    
    
    (1,130
    )
    
    
    (1,330
    )
    
    
    
    
    
    
    (2,460
    )
    
    
    (1,349
    )
    
    
    
    
    
    
    (3,809
    )Customer relationships
    
    
    (3,371
    )
    
    
    (3,804
    )
    
    
    
    
    
    
    (7,175
    )
    
    
    (2,915
    )
    
    
    
    
    
    
    (10,090
    )Contracts
    
    
    (440
    )
    
    
    (1,047
    )
    
    
    
    
    
    
    (1,487
    )
    
    
    (555
    )
    
    
    
    
    
    
    (2,042
    )Acquired curriculum and technology
    
    
    (1,146
    )
    
    
    (1,328
    )
    
    
    
    
    
    
    (2,474
    )
    
    
    (1,852
    )
    
    
    
    
    
    
    (4,326
    )Reseller network
    
    
    (2,636
    )
    
    
    (2,790
    )
    
    
    
    
    
    
    (5,426
    )
    
    
    (2,132
    )
    
    
    
    
    
    
    (7,558
    )Conference attendees
    
    
    (151
    )
    
    
    (142
    )
    
    
    
    
    
    
    (293
    )
    
    
    (86
    )
    
    
    
    
    
    
    (379
    )Non-compete
    
    
    (624
    )
    
    
    (866
    )
    
    
    
    
    
    
    (1,490
    )
    
    
    (867
    )
    
    
    
    
    
    
    (2,357
    )Total other intangibles  accumulated amortization
    
    
    (19,971
    )
    
    
    (24,873
    )
    
    
    
    
    
    
    (44,844
    )
    
    
    (23,705
    )
    
    
    
    
    
    
    (68,549
    )Other intangible assets, net
    
    $
    123,409
    
    
    $
    (24,813
    )
    
    $
    
    
    
    $
    98,596
    
    
    $
    26,544
    
    
    $
    
    
    
    $
    125,140
  Amortization -
    
    
    Amortization -
    
    
    Total(in thousands)
    
    Cost of Sales
    
    
    Operating Expense
    
    
    Amortization2010
    
    $
    25,238
    
    
    $
    6,000
    
    
    $
    31,2382011
    
    
    21,785
    
    
    
    4,296
    
    
    
    26,0812012
    
    
    17,519
    
    
    
    3,440
    
    
    
    20,9592013
    
    
    12,710
    
    
    
    2,779
    
    
    
    15,4892014
    
    
    8,978
    
    
    
    2,781
    
    
    
    11,759Thereafter
    
    
    10,779
    
    
    
    8,835
    
    
    
    19,614$
    97,009
    
    
    $
    28,131
    
    
    $
    125,140
 Note 9  Other Current Assets
  (in thousands)
    
    2009
    
    
    2008Settlement receivable
    
    $
    2,400
    
    
    $
    Prepaid expenses
    
    
    2,019
    
    
    
    1,181Income taxes receivable
    
    
    1,322
    
    
    
    Deferred costs
    
    
    269
    
    
    
    Total
    
    $
    6,010
    
    
    $
    1,181
   68




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##### Table of Contents



Note 10  Accrued Expenses
  (in thousands)
    
    2009
    
    
    2008Salaries, bonuses and benefits
    
    $
    12,428
    
    
    $
    1,613Accrued royalties
    
    
    1,770
    
    
    
    1,432Pension and post-retirement medical benefits
    
    
    1,293
    
    
    
    Interest rate swap
    
    
    992
    
    
    
    Deferred compensation
    
    
    633
    
    
    
    Other
    
    
    6,804
    
    
    
    2,145Total
    
    $
    23,920
    
    
    $
    5,190
  Note 11  Other Liabilities
  (in thousands)
    
    2009
    
    
    2008Pension and post-retirement medical benefits, long-term portion
    
    $
    10,509
    
    
    $
    Long-term deferred tax liability
    
    
    8,156
    
    
    
    15,166Long-term income tax payable
    
    
    1,255
    
    
    
    Long-term deferred compensation
    
    
    1,179
    
    
    
    182Interest rate swap
    
    
    
    
    
    
    2,382Other
    
    
    3,057
    
    
    
    1,006Total
    
    $
    24,156
    
    
    $
    18,736
  Note 12  Leases
 Capital Lease Obligations
     69




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##### Table of Contents



Operating Leases
    (in thousands)2010
    
    $
    1,1602011
    
    
    1,0732012
    
    
    1,1102013
    
    
    1,0922014
    
    
    1,138Thereafter
    
    
    2,127Total minimum lease payments
    
    
    7,700Less: Amount representing interest
    
    
    (4,409
    )Present value of net minimum lease payments
    
    
    3,291Less: Current portion
    
    
    (443
    )Add: Remaining liability at end of build-to-suit lease
    
    
    9,847Capital leases obligations, less current portion
    
    $
    12,695
  (in thousands)2010
    
    $
    2,2602011
    
    
    1,3342012
    
    
    1,3732013
    
    
    8692014
    
    
    291Thereafter
    
    
    48Total minimum lease payments
    
    $
    6,175
 Note 13  Fair Value of Financial Instruments
   
    
    Level 1  Quoted prices for identical instruments in active markets.
 
    
    Level 2  Quoted prices for similar instruments in active markets; quoted
prices for identical or similar instruments in markets that are not active; and
model-derived valuations in which significant value drivers are observable.
 
    
    Level 3  Valuations derived from valuation techniques in which significant
value drivers are unobservable.
  70




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##### Table of Contents



Fair Value at Reporting Date UsingQuoted Pricesin Active
    
    
    SignificantMarkets for
    
    
    Other
    
    
    SignificantYear Ended
    
    
    Identical
    
    
    Observable
    
    
    Unobservable
    
    
    Total(in thousands)
    
    December 31,
    
    
    Assets
    
    
    Inputs
    
    
    Inputs
    
    
    GainsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    (Losses)Restricted Assets Money Market
    
    $
    24,686
    
    
    $
    24,686
    
    
    $
    
    
    
    $
    
    
    
    $
    Warrant
    
    
    280
    
    
    
    
    
    
    
    280
    
    
    
    
    
    
    
    1Interest rate swap
    
    
    992
    
    
    
    
    
    
    
    992
    
    
    
    
    
    
    
    1,390CVRs
    
    
    9,617
    
    
    
    
    
    
    
    
    
    
    
    9,617
    
    
    
    
 Fair Value at Reporting Date UsingQuoted Pricesin Active
    
    
    SignificantMarkets for
    
    
    Other
    
    
    SignificantYear Ended
    
    
    Identical
    
    
    Observable
    
    
    Unobservable
    
    
    Total(in thousands)
    
    December 31,
    
    
    Assets
    
    
    Inputs
    
    
    Inputs
    
    
    GainsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    (Losses)Interest rate swap
    
    $
    2,382
    
    
    $
    
    
    
    $
    2,382
    
    
    $
    
    
    
    $
    (848
    )
   71




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##### Table of Contents



Fair Value at Reporting Date UsingQuoted Prices in
    
    
    
    
    
    
    SignificantYear Ended
    
    
    Active Markets for
    
    
    Significant Other
    
    
    Unobservable(in thousands)
    
    December 31,
    
    
    Identical Assets
    
    
    Observable Inputs
    
    
    Inputs
    
    
    Total GainsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    (Losses)Goodwill
    
    $
    151,915
    
    
    
    
    
    
    
    
    
    
    $
    151,915
    
    
    $
    (9,105
    )
 Fair Value at Reporting Date UsingQuoted Pricesin Active
    
    
    SignificantMarkets for
    
    
    Other
    
    
    SignificantYear Ended
    
    
    Identical
    
    
    Observable
    
    
    Unobservable
    
    
    Total(in thousands)
    
    December 31,
    
    
    Assets
    
    
    Inputs
    
    
    Inputs
    
    
    GainsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    (Losses)Goodwill
    
    $
    116,373
    
    
    $
    
    
    
    $
    
    
    
    $
    116,373
    
    
    $
    (75,966
    )
   Fair ValueMeasurements UsingSignificantUnobservableInputs (Level 3)(in thousands)
    
    CVRsBeginning balance
    
    $
    Initial valuation of obligation
    
    
    9,617Ending balance
    
    $
    9,617Gains(losses) for the period included in
earnings attributable to the change in
unrealized gains or losses related to
liabilities still held as of December 31, 2009
    
    $
    
 Note 14  Debt
  (in thousands)
    
    2009
    
    
    2008$128.0 million of floating rate senior secured notes
due April 11, 2013, interest payable quarterly
    
    $
    97,169
    
    
    $
    102,760$64.2 million of 13.75% senior unsecured notes due
April 11, 2014, interest payable quarterly
    
    
    54,598
    
    
    
    52,307151,767
    
    
    
    155,067Less: Current portion of long-term debt
    
    
    (1,280
    )
    
    
    (1,280
    )Total long-term debt
    
    $
    150,487
    
    
    $
    153,787
  72




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##### Table of Contents



Permanent Waiver
         Senior Secured Credit Facility
     73




---



##### Table of Contents



Senior Unsecured Notes
  Covenants under the Senior Facility and Senior Unsecured Notes
     74




---



##### Table of Contents



Amendments to the Senior Facility and Senior Unsecured Notes
  
    
    Change in Control Definition. Prior to the amendment, the original investors
in Cambium Learning were required to own or control a majority of the outstanding
economic or voting interests of Cambium Learning. This majority threshold is being
reduced to 35%.
 
    
    VSS Funds Ownership. VSS is not permitted to sell or otherwise transfer any
of the Companys common stock that it directly or indirectly owns, unless it
continues to directly or indirectly own or control at least 35% of the outstanding
Company common stock, and it has not sold or otherwise transferred, in the aggregate,
more than 15% of its Company common stock.
 
    
    Increase in Material Indebtedness. An event of default would occur if a
change in control occurred under any of Cambium Learnings other material
indebtedness. The term material indebtedness includes the senior unsecured notes,
as well as any other debt, the principal amount of which exceeds a specified
threshold. The $5 million threshold is being increased under the amendment to
$7.5 million.
 
    
    Exceptions to Restricted Payments. Cambium Learning is prohibited from paying
dividends, unless the specific type of payment is permitted. Additional types of
payments are being permitted to allow the following:
 
    
    Up to $3.0 million to fund public company, administrative, overhead, franchise tax
and related costs incurred by the Company; and
    
    Up to $750,000 in annual board of director compensation and expenses.
 
    
    The annual monitoring fee previously payable to VSS is being eliminated.
 
    
    Permitted Acquisition Basket Reset. The amount of consideration payable
in an acquisition is limited under the credit agreements, and the limitations
are being reset after giving effect to the acquisition of Voyager Expanded
Learning by Cambium Learning in connection with the mergers. The limitation
will be reset to a cumulative $150 million amount, but any single acquisition
is limited to $20 million until the ratio of senior secured debt to EBITDA (as
calculated under the credit agreements) does not exceed 2.50 to 1.0, and the
ratio of total leverage to EBITDA (as calculated under the credit agreements)
does not exceed 3.50 to 1.0, at which time the single acquisition limit will be
increased to $100 million.
 
    
    Definition of Consolidated EBITDA. The definition of Consolidated
EBITDA, which is used for calculating leverage ratios under the senior secured
credit agreement, and the minimum EBITDA covenant under the senior unsecured
credit agreement are being modified to allow additional add-backs for the
following items:
 
    
    Deferred revenue associated with a permitted acquisition;
    
    Up to $24.0 million in M&A costs related to the mergers;
    
    Up to $2.0 million in costs incurred in closing of locations or lease terminations in
connection with the mergers;
    
    Up to $5.0 million in severance costs incurred in connection with the mergers;
    
    Up to $3.0 million in integration costs incurred connection with the mergers; and
    
    Merger and acquisition costs for future transactions (whether or not completed) of up
to $5.0 million for closed transactions and $0.5 million for failed transactions in any
calendar year, and $2.0 million in the aggregate.
    75




---



##### Table of Contents



(in thousands)
    
    20092010
    
    $
    1,2802011
    
    
    1,2802012
    
    
    1,2802013
    
    
    93,3292014
    
    
    64,202Thereafter
    
    
    Total debt repayment
    
    $
    161,371
  Note 15  Profit-Sharing, Pension, and Other Postretirement Benefit Plans
 Defined Contribution Plans
    Defined Benefit Plan
    76




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##### Table of Contents



U.S. Defined BenefitPension Plan(in thousands)
    
    2009Service cost
    
    $
    Interest cost
    
    
    36Recognized net actuarial loss/(gain)
    
    
    (206
    )Net pension and other postretirement
benefit cost (income)
    
    $
    (170
    )
 Obligation and Funded Status
  U.S Defined BenefitPension Plan(in thousands)
    
    2009Change in Benefit ObligationBenefit obligation, beginning of period
    
    $
    12,010Service cost
    
    
    Interest cost
    
    
    36Actuarial (gain)/loss
    
    
    (206
    )Benefits paid
    
    
    (106
    )Benefit obligation, end of year
    
    $
    11,734Change in Plan AssetsFair value, beginning of period
    
    $
    Company contributions
    
    
    106Benefits paid
    
    
    (106
    )Fair value, end of year
    
    $
    Funded/(unfunded) status
    
    $
    (11,734
    )Accrued benefit cost
    
    $
    (11,734
    )Amounts Recognized in the Consolidated Balance SheetsCurrent accrued benefit liability
    
    
    (1,266
    )Non-current accrued benefit liability
    
    
    (10,468
    )Net amount recognized
    
    $
    (11,734
    )
   77




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##### Table of Contents



Plan Assumptions
 U.S. Defined BenefitPension Plan2009Discount rate
    
    
    5.25
    %
  Additional Information
  U.S. Defined BenefitPension Plan(in thousands)
    
    2009Projected benefit obligation
    
    $
    11,734Accumulated benefit obligation
    
    $
    11,734
 Future Contributions
   U.S. Retirement Plans(in thousands)
    
    (Pension Plan and RBP)2010
    
    $
    1,7452011
    
    
    1,5892012
    
    
    1,2422013
    
    
    1,1922014
    
    
    1,1122015  2019
    
    
    4,788
 Note 16  STOCKHOLDERS/MEMBERS EQUITY
 Common Stock
 Shares Authorized and Outstanding
   
    
    20.5 million shares were issued to the former sole stockholder in consideration of
its pre-merger interest;
 
    
    3.8 million shares were issued to the former sole stockholder as consideration
for a $25.0 million capital contribution made in conjunction with the merger; and
 
    
    19.5 million shares were issued to the former VLCY stockholders as part of the
purchase price consideration for the acquisition.
 Voting Rights
 Dividend Rights
  78




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##### Table of Contents



Rights Upon Liquidation
 Preemptive Rights; Subscription Rights
  Preferred Stock
 Shares Authorized and Outstanding
 Blank Check Preferred Stock
 Members Interest  Successor Period through December 8, 2009
 VSS-Cambium
Holdings, LLC
 VSS-Cambium
Management, LLC
  79




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##### Table of Contents



Cambium Learning, Inc.  Predecessor Period
  Common Stock.
 Voting
 Dividends
 Series A Preferred Stock
 Ranking pari passu
 Voting Rights
   Conversion
 Note 17  Stock-Based Compensation and Expense
    80




---



##### Table of Contents



Stock Option Plan
  Warrant
   The Cambium Specified Asset Recoupment Amount
  The Additional Share Amount
  The Formula Amount
  81




---



##### Table of Contents



Subscription Right
  
 
  Fair Value of Stock Option and SAR Grants
   2009Expected stock volatility
    
    
    35.00
    %Risk-free interest rate
    
    
    1.02
    %Expected years until exercise
    
    
    2.56  0.1Dividend yield
    
    
    0.00
    %
  2009Expected stock volatility
    
    
    35.00
    %Risk-free interest rate
    
    
    2.69
    %Expected years until exercise
    
    
    6.25Dividend yield
    
    
    0.00
    %
   82




---



##### Table of Contents



Summary of Stock Option and SAR Activity
  Stock Option Grantees
    
    
    SAR GranteeWeighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageShares
    
    
    Exercise
    
    
    Shares
    
    
    Exercise(000s)
    
    
    Price
    
    
    (000s)
    
    
    PriceFor the year ended
December 31, 2009:Granted
    
    
    2,256
    
    
    $
    6.03
    
    
    
    200
    
    
    $
    8.55Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited/cancelled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Awards outstanding at
December 31, 2009
    
    
    2,256
    
    
    $
    6.03
    
    
    
    200
    
    
    $
    8.55Awards exercisable at
December 31, 2009
    
    
    127
    
    
    $
    23.26
    
    
    
    200
    
    
    $
    8.55Weighted average fair value of
awards granted during the
year ended December 31, 2009
    
    $
    1.16
    
    
    
    
    
    
    $
    0.11
    Awards Outstanding
    
    
    Awards ExercisableWeighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    Average
    
    
    WeightedNumber
    
    
    Remaining
    
    
    Average
    
    
    Number
    
    
    Remaining
    
    
    AverageRange of
    
    Outstanding
    
    
    Contractual
    
    
    Exercise
    
    
    Exercisable
    
    
    Contractual
    
    
    ExerciseExercise Price
    
    (000s)
    
    
    Life (Years)
    
    
    Price
    
    
    (000s)
    
    
    Life (Years)
    
    
    Price$4.50 and below
    
    
    1,612
    
    
    
    9.9
    
    
    $
    4.50
    
    
    
    16
    
    
    
    9.9
    
    
    $
    4.50$4.51  $6.50
    
    
    538
    
    
    
    9.9
    
    
    
    6.50
    
    
    
    5
    
    
    
    9.9
    
    
    
    6.50$6.51  $36.00
    
    
    106
    
    
    
    1.4
    
    
    
    26.93
    
    
    
    106
    
    
    
    1.4
    
    
    
    26.932,256
    
    
    
    9.5
    
    
    $
    6.03
    
    
    
    127
    
    
    
    1.6
    
    
    $
    23.26
  83




---



##### Table of Contents



Securities Authorized for Issuance
  Number of securitiesNumber of securities to be
    
    
    Weighted-average
    
    
    remaining available forissued upon exercise of
    
    
    exercise price of
    
    
    future issuance(in thousands, except per share amounts)
    
    outstanding options
    
    
    outstanding options
    
    
    under equityPlan Category
    
    and rights
    
    
    and rights
    
    
    incentive plan (a)Equity compensation plans approved
by security holders
    
    
    2,256
    
    
    $
    6.03
    
    
    
    2,744Equity compensation plans not
approved by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    2,256
    
    
    $
    6.03
    
    
    
    2,744
 (a)
    
    Excludes securities reflected in the first column, Number of securities to be issued upon
exercise of outstanding options and rights. Note 18  Restructuring
  Incurred inSuccessor PeriodTotal
    
    
    Incurred in
    
    
    Incurred in
    
    
    from January 29,Total Amount
    
    
    Incurred as
    
    
    Year Ended
    
    
    Year Ended
    
    
    2007 throughExpected to
    
    
    of December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,(in thousands)
    
    be Incurred
    
    
    2009
    
    
    2009
    
    
    2008
    
    
    2007One-time termination benefits
    
    $
    314
    
    
    $
    314
    
    
    $
    16
    
    
    $
    238
    
    
    $
    60Other associated costs
    
    
    348
    
    
    $
    348
    
    
    
    40
    
    
    
    307
    
    
    
    $
    662
    
    
    $
    662
    
    
    $
    56
    
    
    $
    545
    
    
    $
    60
  Period fromYear Ended
    
    
    Year Ended
    
    
    January 29, 2007December 31,
    
    
    December 31,
    
    
    through December 31,(in thousands)
    
    2009
    
    
    2008
    
    
    2007Beginning Balance
    
    $
    48
    
    
    $
    60
    
    
    $
    Accrued Expenses:One-time termination benefits
    
    
    16
    
    
    
    238
    
    
    
    60Facility-related expenses
    
    
    40
    
    
    
    307
    
    
    
    Cash Payments:One-time termination benefits
    
    
    (64
    )
    
    
    (250
    )
    
    
    Facility-related expenses
    
    
    (40
    )
    
    
    (307
    )
    
    
    Ending Balance
    
    $
    
    
    
    $
    48
    
    
    $
    60
   84




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##### Table of Contents



Note 19  Contingent Liabilities
     Note 20  Related Party Transactions
 Agreements with VSS
     85




---



##### Table of Contents



Stockholders Agreement
  Board of Directors.
 
    
    the written consent of  Vowel Representative, LLC, which consent
may be granted or withheld in its sole and absolute discretion;
    
    the full distribution by the escrow agent of the CVR escrow fund in
accordance with the terms of the escrow agreement entered into in
connection with the merger transaction;
    
    the second anniversary of the effective time  of the mergers with respect to the
Voyager Class II designees and the third anniversary of the
effective time with respect to the Voyager Class III designees; or
    
    the date on which funds managed or controlled by VSS cease to
collectively beneficially own in the aggregate at least 10% of the
issued and outstanding shares of the Companys common stock.
  
    
    none of the funds managed or controlled by VSS nor VSS-Cambium
Holdings III, LLC will vote or otherwise take any action to amend,
modify or repeal the Companys certificate of incorporation or
bylaws to eliminate the Class II or Class III director classes, to
increase or decrease the size of the board of directors or in any
other manner that would result in a breach of the Stockholders
Agreement; and
    
    VSS-Cambium Holdings III, LLC and funds managed or controlled by
VSS will vote or act by written consent to maintain a classified or
staggered board of directors, with the director classes and other
terms as set forth in our certificate of incorporation and bylaws.
 Preemptive Rights
  86




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##### Table of Contents



Subscription Rights.
 Other Agreements
   Note 21  Segment Reporting
   Voyager:
  Sopris:
  Cambium Learning Technologies:
   87




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##### Table of Contents



Other:
    CambiumLearning(in thousands)
    
    Voyager
    
    
    Sopris
    
    
    Technologies
    
    
    Other
    
    
    ConsolidatedPredecessor Period from January 1, 2007 through April 11, 2007Product sales
    
    $
    4,132
    
    
    $
    5,136
    
    
    $
    5,970
    
    
    $
    
    
    
    $
    15,238Service revenues
    
    
    2,287
    
    
    
    773
    
    
    
    116
    
    
    
    
    
    
    
    3,176Net sales
    
    
    6,419
    
    
    
    5,909
    
    
    
    6,086
    
    
    
    
    
    
    
    18,414Cost of product sales
    
    
    1,136
    
    
    
    1,699
    
    
    
    1,061
    
    
    
    
    
    
    
    3,896Cost of service revenues
    
    
    1,384
    
    
    
    460
    
    
    
    64
    
    
    
    
    
    
    
    1,908Amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,392
    
    
    
    3,392Total cost of sales
    
    
    2,520
    
    
    
    2,159
    
    
    
    1,125
    
    
    
    3,392
    
    
    
    9,196Segment net (loss) income
    
    $
    (7
    )
    
    $
    (912
    )
    
    $
    2,348
    
    
    $
    (13,241
    )
    
    $
    (11,812
    )Successor Period, from January 29, 2007 (inception)
through December 31, 2007Product sales
    
    $
    35,827
    
    
    $
    21,496
    
    
    $
    13,943
    
    
    $
    
    
    
    $
    71,266Service revenues
    
    
    7,275
    
    
    
    2,064
    
    
    
    242
    
    
    
    
    
    
    
    9,581Net sales
    
    
    43,102
    
    
    
    23,560
    
    
    
    14,185
    
    
    
    
    
    
    
    80,847Cost of product sales
    
    
    13,106
    
    
    
    4,755
    
    
    
    1,888
    
    
    
    
    
    
    
    19,749Cost of service revenues
    
    
    4,877
    
    
    
    1,316
    
    
    
    119
    
    
    
    
    
    
    
    6,312Amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,719
    
    
    
    11,719Total cost of sales
    
    
    17,983
    
    
    
    6,071
    
    
    
    2,007
    
    
    
    11,719
    
    
    
    37,780Segment net (loss) income
    
    $
    9,767
    
    
    $
    9,960
    
    
    $
    4,834
    
    
    $
    (38,492
    )
    
    $
    (13,931
    )Year ended December 31, 2008Product sales
    
    $
    40,424
    
    
    $
    27,495
    
    
    $
    21,288
    
    
    $
    
    
    
    $
    89,207Service revenues
    
    
    7,924
    
    
    
    2,217
    
    
    
    383
    
    
    
    
    
    
    
    10,524Net sales
    
    
    48,348
    
    
    
    29,712
    
    
    
    21,671
    
    
    
    
    
    
    
    99,731Cost of product sales
    
    
    11,214
    
    
    
    6,003
    
    
    
    3,029
    
    
    
    
    
    
    
    20,246Cost of service revenues
    
    
    5,721
    
    
    
    1,489
    
    
    
    253
    
    
    
    
    
    
    
    7,463Amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,966
    
    
    
    15,966Total cost of sales
    
    
    16,935
    
    
    
    7,492
    
    
    
    3,282
    
    
    
    15,966
    
    
    
    43,675Segment net (loss) income
    
    $
    10,949
    
    
    $
    8,658
    
    
    $
    7,732
    
    
    $
    (96,899
    )
    
    $
    (69,560
    )Year ended December 31, 2009Product sales
    
    $
    44,329
    
    
    $
    23,431
    
    
    $
    22,625
    
    
    $
    
    
    
    $
    90,385Service revenues
    
    
    8,594
    
    
    
    1,754
    
    
    
    315
    
    
    
    
    
    
    
    10,663Net sales
    
    
    52,923
    
    
    
    25,185
    
    
    
    22,940
    
    
    
    
    
    
    
    101,048Cost of product sales
    
    
    10,678
    
    
    
    6,350
    
    
    
    2,537
    
    
    
    26
    
    
    
    19,591Cost of service revenues
    
    
    5,992
    
    
    
    1,093
    
    
    
    172
    
    
    
    
    
    
    
    7,257Amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,527
    
    
    
    17,527Total cost of sales
    
    
    16,670
    
    
    
    7,443
    
    
    
    2,709
    
    
    
    17,553
    
    
    
    44,375Segment net (loss) income
    
    $
    16,417
    
    
    $
    7,734
    
    
    $
    11,235
    
    
    $
    (71,151
    )
    
    $
    (35,765
    )
  88




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##### Table of Contents



Note 22  Interim Financial Information (Unaudited)
  First
    
    
    Second
    
    
    Third
    
    
    Fourth
    
    
    Total(in thousands, except per share data)
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Year2009Net sales
    
    $
    15,794
    
    
    $
    20,976
    
    
    $
    40,972
    
    
    $
    23,306
    
    
    $
    101,048Operating expenses
    
    
    22,268
    
    
    
    31,918
    
    
    
    30,016
    
    
    
    40,140
    
    
    
    124,342Earnings (loss) before income taxes
    
    
    (11,214
    )
    
    
    (15,950
    )
    
    
    5,811
    
    
    
    (22,116
    )
    
    
    (43,469
    )Income tax (expense) benefit
    
    
    4,317
    
    
    
    2,099
    
    
    
    (1,373
    )
    
    
    2,661
    
    
    
    7,704Net income (loss)
    
    $
    (6,897
    )
    
    $
    (13,851
    )
    
    $
    4,438
    
    
    $
    (19,455
    )
    
    $
    (35,765
    )Basic income (loss) per share
    
    
    (0.34
    )
    
    
    (0.68
    )
    
    
    0.22
    
    
    
    (0.74
    )
    
    
    (1.63
    )Diluted income (loss) per share
    
    
    (0.34
    )
    
    
    (0.68
    )
    
    
    0.22
    
    
    
    (0.74
    )
    
    
    (1.63
    )2008Net sales
    
    $
    17,071
    
    
    $
    29,721
    
    
    $
    35,263
    
    
    $
    17,676
    
    
    $
    99,731Operating expenses
    
    
    26,617
    
    
    
    33,405
    
    
    
    30,423
    
    
    
    97,423
    
    
    
    187,868Earnings (loss) before income taxes
    
    
    (15,031
    )
    
    
    (7,190
    )
    
    
    24,413
    
    
    
    (85,174
    )
    
    
    (82,982
    )Income tax benefit
    
    
    5,712
    
    
    
    2,732
    
    
    
    2,329
    
    
    
    2,649
    
    
    
    13,422Net income (loss)
    
    $
    (9,319
    )
    
    $
    (4,458
    )
    
    $
    26,742
    
    
    $
    (82,525
    )
    
    $
    (69,560
    )Basic income (loss) per share
    
    
    (0.45
    )
    
    
    (0.22
    )
    
    
    1.30
    
    
    
    (4.03
    )
    
    
    (3.39
    )Diluted income (loss) per share
    
    
    (0.45
    )
    
    
    (0.22
    )
    
    
    1.30
    
    
    
    (4.03
    )
    
    
    (3.39
    )
   89




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##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item 9A. Controls and Procedures.
 Managements Report on Internal Control Over Financial Reporting
 (a) Evaluation of Disclosure Controls and Procedures
   (b) Managements Report on Internal Control Over Financial Reporting
      (c) Changes in Internal Control Over Financial Reporting
  
 Item 9B. Other Information.
   90




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##### Table of Contents



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance.
  
 Item 11. Executive Compensation.
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence.
  
 Item 14. Principal Accounting Fees and Services.
  
 PART IV
 
 Item 15. Exhibits, Financial Statement Schedules.
 (a) 1.
Financial Statements:
  
    
    Reports of Independent Registered Public Accounting Firms
    
    Consolidated Statements of Operations for the years ended December 31,
2009 and 2008, the period from January 29, 2007 through December 31,
2007 (Successor), and the period from January 1, 2007 through April
11, 2007 (Predecessor)
    
    Consolidated Balance Sheets at December 31, 2009 and 2008
    
    Consolidated Statements of Cash Flows for the years ended December 31,
2009 and 2008, the period from January 29, 2007 through December 31,
2007 (Successor), and the period from January 1, 2007 through April
11, 2007 (Predecessor)
    
    Consolidated Statements of Stockholders and Members Equity and
Comprehensive Income (Loss) for the years ended December 31, 2009 and
2008, the period from January 29, 2007 through December 31, 2007
(Successor), and the period from January 1, 2007 through April 11,
2007 (Predecessor)
    
    Notes to the Consolidated Financial Statements
  91




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##### Table of Contents



2.
Financial Statement Schedules:
 Schedule II: Valuation and Qualifying Accounts
 Accountsreceivable(in thousands)
    
    reserveBalance as of December 31, 2006 (Predecessor)
    
    $
    502Charged to costs and expenses
    
    
    (4
    )Charged to other accounts(1)
    
    
    61Recoveries
    
    
    Write-offs
    
    
    (2
    )Other
    
    
    Balance as of April 11, 2007 (Predecessor)
    
    $
    557Balance as of April 11, 2007 (Successor)
    
    $
    557Charged to costs and expenses
    
    
    157Charged to other accounts(1)
    
    
    (10
    )Recoveries
    
    
    Write-offs
    
    
    (9
    )Other
    
    
    Balance as of December 31, 2007 (Successor)
    
    $
    695Charged to costs and expenses
    
    
    18Charged to other accounts(1)
    
    
    (5
    )Recoveries
    
    
    Write-offs
    
    
    (2
    )Other
    
    
    Balance as of December 31, 2008 (Successor)
    
    $
    706Charged to costs and expenses
    
    
    5Charged to other accounts(1)
    
    
    12Recoveries
    
    
    11Write-offs
    
    
    (418
    )Other
    
    
    Balance as of December 31, 2009 (Successor)
    
    $
    316
 (1)
    
    Charges to other accounts include sales returns   92




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##### Table of Contents



3. Exhibits:
  Exhibit
Number
    
    Description*2.1
    
    Agreement and Plan of Mergers, dated as of June 20, 2009, among
Cambium Learning Group, Inc., Voyager Learning Company, VSS-Cambium
Holdings II Corp., Consonant Acquisition Corp., Vowel Acquisition
Corp. and Vowel Representative, LLC. (incorporated by reference to
Annex A to Amendment No. 3 to the Registration Statement on Form S-4
of Cambium Learning Group, Inc. (File No. 333-161075) filed with the
SEC on November 10, 2009).*3.1
    
    Second Amended and Restated Certificate of Incorporation of
Cambium-Voyager Holdings, Inc. (incorporated by reference to Annex C
to Amendment No. 3 to the Registration Statement on Form S-4 of
Cambium Learning Group, Inc. (File No. 333-161075) filed with the
SEC on November 10, 2009).*3.2
    
    Amended and Restated Bylaws of Cambium Learning Group, Inc.
(incorporated by reference to Annex D to Amendment No. 3 to the
Registration Statement on Form S-4 of Cambium Learning Group, Inc.
(File No. 333-161075) filed with the SEC on November 10, 2009).*4.1
    
    Specimen share certificate of Cambium Learning Group, Inc.
(incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the
Registration Statement on Form S-4 of Cambium Learning Group, Inc.
(File No. 333-161075) filed with the SEC on October 9, 2009).*4.2
    
    Form of Cambium Learning Group, Inc. Warrant. (incorporated by
reference to Exhibit 4.2 to the Registration Statement on Form S-4
of Cambium Learning Group, Inc. (File No. 333-161075) filed with the
SEC on August 6, 2009).*10.1
    
    Limited Guarantee given by certain funds managed by VSS Fund
Management LLC. (incorporated by reference to Annex G to Amendment
No. 3 to the Registration Statement on Form S-4 of Cambium Learning
Group, Inc. (File No. 333-161075) filed with the SEC on November 10,
2009).*10.2
    
    Voting and Support Agreement given to Voyager Learning Company by
VSS-Cambium Holdings III, LLC. (incorporated by reference to Annex H
to Amendment No. 3 to the Registration Statement on Form S-4 of
Cambium Learning Group, Inc. (File No. 333-161075) filed with the
SEC on November 10, 2009).*10.3
    
    Form of Voting and Support Agreement given to Cambium-Voyager
Holdings, Inc. (incorporated by reference to Annex I to Amendment
No. 3 to the Registration Statement on Form S-4 of Cambium Learning
Group, Inc. (File No. 333-161075) filed with the SEC on November 10,
2009).*10.4
    
    Form of Contingent Rights Agreement by and among Cambium-Voyager
Holdings, Inc., Vowel Representative, LLC and Wells Fargo Bank,
National Association. (incorporated by reference to Annex J to
Amendment No. 3 to the Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with the SEC on
November 10, 2009).*10.5
    
    Form of Escrow Agreement by and among Cambium-Voyager Holdings,
Inc., Vowel Representative, LLC, Voyager Learning Company, Richard
Surratt and Wells Fargo Bank, National Association. (incorporated by
reference to Annex K to Amendment No. 3 to the Registration
Statement on Form S-4 of Cambium Learning Group, Inc. (File No.
333-161075) filed with the SEC on November 10, 2009).*10.6
    
    Form of Stockholders Agreement by and among Cambium-Voyager
Holdings, Inc., VSS-Cambium Holdings III, LLC and Vowel
Representative, LLC. (incorporated by reference to Annex L to
Amendment No. 3 to the Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with the SEC on
November 10, 2009).*10.7
    
    Cambium Learning Group, Inc. 2009 Equity Incentive Plan.
(incorporated by reference to Exhibit 10.7 to the Registration
Statement on Form S-4 of Cambium Learning Group, Inc. (File No.
333-161075) filed with the SEC on August 6, 2009).*10.8
    
    Senior Secured Credit Agreement dated as of April 12, 2007 among
VSS-Cambium Merger Corp. as the Borrower (the predecessor to Cambium
Learning, Inc.); VSS-Cambium Holdings, LLC and other Guarantors; the
Lenders; Credit Suisse Securities (USA) LLC and Barclays Capital,
the investment banking division of Barclays Bank PLC, as Co-Lead
Arrangers and Joint Bookmanagers; Barclays Bank PLC, as
Administrative Agent and Collateral Agent; Credit Suisse Securities
(USA) LLC, as Co-Syndication Agent; BNP Paribas, as Co-Syndication
Agent; and TD Securities (USA) LLC, as Documentation Agent.
(incorporated by reference to Exhibit 10.8 to Amendment No. 2 to the
Registration Statement on Form S-4 of Cambium Learning Group, Inc. (File No. 333-161075)
filed with the SEC on October 30, 2009).*10.9
    
    Limited Waiver and Amendment, dated as of May 20,
2008, by and among, Cambium Learning, Inc., as the
Borrower (the successor to VSS-Cambium Merger Corp.),
Barclays Bank PLC, as Administrative Agent and the
required lenders, to the Senior Secured Credit
Agreement, dated as of April 12, 2007. (incorporated
by reference to Exhibit 10.9 to Amendment No. 1 to
the Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on October 9, 2009).*10.10
    
    Letter Agreement, dated July 15, 2008, by and among
Cambium Learning, Inc., as the Borrower, Barclays
Bank PLC, as Administrative Agent and the required
lenders. (incorporated by reference to Exhibit 10.10
to the Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*10.11
    
    Permanent Waiver and Amendment No. 2, dated as of
August 22, 2008, by and among, Cambium Learning,
Inc., as the Borrower (the successor to VSS-Cambium
Merger Corp.), Barclays Bank PLC, as Administrative
Agent and the required lenders to the Senior Secured
Credit Agreement, dated as of April 12, 2007, as
amended. (incorporated by reference to Exhibit 10.11
to Amendment No. 2 to the Registration Statement on
Form S-4 of Cambium Learning Group, Inc. (File No.
333-161075) filed with the SEC on October 30, 2009).
  93




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##### Table of Contents



Exhibit
Number
    
    Description*10.12
    
    Note Purchase Agreement dated as of April 12, 2007
among VSS-Cambium Merger Corp., as Company (the
predecessor to Cambium Learning, Inc.); VSS-Cambium
Holdings, LLC, as Guarantor; TCW/Crescent Mezzanine
Partners IV, L.P., TCW/Crescent Mezzanine Partners
IVB, L.P., MAC Capital, Ltd., New York Life
Investment Management Mezzanine Partners II, LP,
NYLIM Mezzanine Partners II Parallel Fund, LP,
Goldentree Capital Solutions Fund Financing,
Goldentree Capital Opportunities, LP, as Purchasers;
and TCW/Crescent Mezzanine Partners IV, L.P., as
Administrative Agent. (incorporated by reference to
Exhibit 10.12 to Amendment No. 2 to the Registration
Statement on Form S-4 of Cambium Learning Group, Inc.
(File No. 333-161075) filed with the SEC on October
30, 2009).*10.13
    
    Temporary Waiver and Amendment, dated as of May 20,
2008, by and among Cambium Learning, Inc., (the
successor to VSS-Cambium Merger Corp.), TCW/Crescent
Mezzanine Partners IV, L.P., as Administrative Agent
and the required note holders, to the Note Purchase
Agreement, dated as of April 12, 2007. (incorporated
by reference to Exhibit 10.13 to Amendment No. 1 to
the Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on October 9, 2009).*10.14
    
    Letter Agreement, dated July 15, 2008, by and among
Cambium Learning, Inc., TCW/Crescent Mezzanine
Partners IV, L.P., as Administrative Agent and the
required note holders. (incorporated by reference to
Exhibit 10.14 to the Registration Statement on Form
S-4 of Cambium Learning Group, Inc. (File No.
333-161075) filed with the SEC on August 6, 2009).*10.15
    
    Permanent Waiver and Amendment No. 2 dated as of
August 22, 2008, by and among Cambium Learning, Inc.,
(the successor to VSS-Cambium Merger Corp.),
TCW/Crescent Mezzanine Partners IV, L.P., as
Administrative Agent and the required note holders,
to the Note Purchase Agreement, dated as of April 12,
2007, as amended. (incorporated by reference to
Exhibit 10.15 to Amendment No. 1 to the Registration
Statement on Form S-4 of Cambium Learning Group, Inc.
(File No. 333-161075) filed with the SEC on October
9, 2009).*10.16
    
    Promissory Note, dated April 12, 2007, made by
Cambium Learning, Inc. in favor of TCW/Crescent
Mezzanine Partners IV, L.P. in the aggregate
principal amount of $12,973,131.22. (incorporated by
reference to Exhibit 10.16 to the Registration
Statement on Form S-4 of Cambium Learning Group, Inc.
(File No. 333-161075) filed with the SEC on August 6,
2009).*10.17
    
    Promissory Note, dated April 12, 2007, made by
Cambium Learning, Inc. in favor of TCW/Crescent
Mezzanine Partners IVB, L.P. in the aggregate
principal amount of $9,526,868.78. (incorporated by
reference to Exhibit 10.17 to the Registration
Statement on Form S-4 of Cambium Learning Group, Inc.
(File No. 333-161075) filed with the SEC on August 6,
2009).*10.18
    
    Promissory Note, dated April 12, 2007, made by
Cambium Learning, Inc. in favor of MAC Capital LTD in
the aggregate principal amount of $2,500,000.
(incorporated by reference to Exhibit 10.18 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*10.19
    
    Promissory Note, dated April 12, 2007, made by
Cambium Learning, Inc. in favor of NYLIM Mezzanine
Partners II Parallel Fund, L.P. in the aggregate
principal amount of $3,063,436.24. (incorporated by
reference to Exhibit 10.19 to the Registration
Statement on Form S-4 of Cambium Learning Group, Inc.
(File No. 333-161075) filed with the SEC on August 6,
2009).*10.20
    
    Promissory Note, dated April 12, 2007, made by
Cambium Learning, Inc. in favor of NY Life Investment
Management Mezzanine Partners II, L.P. in the
aggregate principal amount of $8,936,536.76.
(incorporated by reference to Exhibit 10.20 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*10.21
    
    Promissory Note, dated April 12, 2007, made by
Cambium Learning, Inc. in favor of Goldentree Capital
Solutions Fund Financing in the aggregate principal
amount of $10,000,000. (incorporated by reference to
Exhibit 10.21 to the Registration Statement on Form
S-4 of Cambium Learning Group, Inc. (File No.
333-161075) filed with the SEC on August 6, 2009).*10.22
    
    Promissory Note, dated April 12, 2007, made by
Cambium Learning, Inc. in favor of Goldentree Capital
Opportunities in the aggregate principal amount of
$3,000,000. (incorporated by reference to Exhibit
10.22 to the Registration Statement on Form S-4 of
Cambium Learning Group, Inc. (File No. 333-161075)
filed with the SEC on August 6, 2009).*10.23
    
    Employment Agreement, dated April 12, 2007, by and
between Cambium Learning, Inc. and David Cappellucci.
(incorporated by reference to Exhibit 10.23 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*10.24
    
    Amendment, dated June 26, 2009, by and among David
Cappellucci, Cambium Learning, Inc. and Cambium
Voyager Holdings, Inc. to Employment Agreement, dated
April 12, 2007. (incorporated by reference to Exhibit
10.24 to the Registration Statement on Form S-4 of
Cambium Learning Group, Inc. (File No. 333-161075)
filed with the SEC on August 6, 2009).*10.25
    
    Restrictive Covenants Agreement, dated November 28,
2006 by and between ProQuest Company and Snap-on
Incorporated. (incorporated by reference to Exhibit
10.25 to the Registration Statement on Form S-4 of
Cambium Learning Group, Inc. (File No. 333-161075)
filed with the SEC on August 6, 2009).*+10.26
    
    Employment agreement dated April 9, 2009, between
Voyager Learning Company and Ron Klausner.
(incorporated by reference to Exhibit 10.26 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*+10.27
    
    Employment agreement dated June 19, 2009, between
Voyager Expanded Learning and Brad Almond.
(incorporated by reference to Exhibit 10.27 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*+10.28
    
    Employment agreement dated May 8, 2009, between
Voyager Learning Company and Richard Surratt.
(incorporated by reference to Exhibit 10.28 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*+10.29
    
    Retention Agreement, dated July 13, 2006, by and
between Voyager Learning Company (f/k/a ProQuest
Company) and Todd Buchardt. (incorporated by
reference to Exhibit 10.29 to Amendment No. 1 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on October 9, 2009).*+10.30
    
    Employment agreement dated May 8, 2009, between
Voyager Learning Company and Todd Buchardt.
(incorporated by reference to Exhibit 10.30 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*+10.31
    
    Employment agreement dated March 4, 2009, between
Voyager Expanded Learning and John Campbell.
(incorporated by reference to Exhibit 10.31 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).
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Exhibit
Number
    
    Description*10.32
    
    Letter Agreement, dated June 20, 2009, by and among
Voyager Learning Company, Cambium-Voyager Holdings,
Inc. (f/k/a Cambium Holdings, Inc.), VSS-Cambium
Holdings III and VSS Cambium Holdings II Corp.
(incorporated by reference to Exhibit 10.32 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*10.33
    
    Letter Agreement, dated July 24, 2009, by and between
Cambium-Voyager Holdings, Inc. and VSS Fund
Management LLC. (incorporated by reference to Exhibit
10.33 to the Registration Statement on Form S-4 of
Cambium Learning Group, Inc. (File No. 333-161075)
filed with the SEC on August 6, 2009).*+10.34
    
    Voyager Supplemental Retirement Plan. (incorporated
by reference to Exhibit 10.34 to Amendment No. 1 to
the Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on October 9, 2009).*+10.35
    
    Voyager Amended and Restated Replacement Benefit
Plan. (incorporated by reference to Exhibit 10.35 to
Amendment No. 1 to the Registration Statement on Form
S-4 of Cambium Learning Group, Inc. (File No.
333-161075) filed with the SEC on October 9, 2009).*+10.36
    
    Amendment to Employment Agreement dated as of August
7, 2009, by and among Cambium-Voyager Holdings, Inc.,
Voyager Learning Company and Ronald Klausner.
(incorporated by reference to Exhibit 10.36 to
Amendment No. 1 to the Registration Statement on Form
S-4 of Cambium Learning Group, Inc. (File No.
333-161075) filed with the SEC on October 9, 2009).*10.37
    
    Amendment No. 3, dated as of October 29, 2009, by and
among Cambium Learning, Inc., as the Borrower (the
successor to VSS-Cambium Merger Corp.), Barclays Bank
PLC, as Administrative Agent, and the required
lenders to the Senior Secured Credit Agreement, dated as of April 12, 2007, as amended. (incorporated by reference
to Exhibit 10.37 to Amendment No. 2 to the Registration Statement on Form S-4
of Cambium Learning Group, Inc. (File No. 333-161075) filed with the SEC on
October 30, 2009).*10.38
    
    Amendment No. 3, dated as of October 29, 2009, by and
among Cambium Learning, Inc., (the successor to
VSS-Cambium Merger Corp.), TCW/Crescent Mezzanine
Partners IV, L.P., as Administrative Agent, and the
required note holders, to the Note Purchase
Agreement, dated as of April 12, 2007, as amended.
(incorporated by reference to Exhibit 10.38 to
Amendment No. 2 to the Registration Statement on Form
S-4 of Cambium Learning Group, Inc. (File No.
333-161075) filed with the SEC on October 30, 2009).21.1
    
    Subsidiaries of Cambium Learning Group, Inc.23.1
    
    Consent of Ernst & Young LLP.23.2
    
    Consent of Grant Thornton LLP.23.3
    
    Consent of Whitley Penn LLP.31.1
    
    Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.31.2
    
    Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.32.1
    
    Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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SIGNATURES
  Date: March 26, 2010
    Cambium Learning Group, Inc.By:
    /s/ Bradley C. AlmondBradley C. AlmondSenior Vice President and
Chief Financial Officer  Signature
    
    Title
    
    Date/s/ Ronald Klausner

Ronald Klausner
    
    Director and Chief Executive Officer 
(Principal Executive Officer)
    
    March 26, 2010/s/ David F. Cappellucci

David F. Cappellucci
    
    Director and President
    
    March 26, 2010/s/
Bradley C. Almond

Bradley C. Almond
    
    Senior Vice President and 
Chief Financial Officer
(Principal Financial Officer)
    
    March 26, 2010/s/ Barbara Benson

Barbara Benson
    
    Controller(Principal Accounting
Officer)
    
    March 26, 2010/s/ Harold O. Levy

Harold O. Levy
    
    Director
    
    March 26, 2010/s/ Thomas Kalinske

Thomas Kalinske
    
    Director
    
    March 26, 2010/s/ Neil Weiner

Neil Weiner
    
    Director
    
    March 26, 2010/s/ Frederick J. Schwab

Frederick J. Schwab
    
    Director
    
    March 26, 2010/s/ Scott J. Troeller

Scott J. Troeller
    
    Director
    
    March 26, 2010/s/ Richard J. Surratt

Richard J. Surratt
    
    Director
    
    March 26, 2010/s/ Jeffrey T. Stevenson

Jeffrey T. Stevenson
    
    Director
    
    March 26, 2010
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3. Exhibits:
  Exhibit
Number
    
    Description*2.1
    
    Agreement and Plan of Mergers, dated as of June 20, 2009, among
Cambium Learning Group, Inc., Voyager Learning Company, VSS-Cambium
Holdings II Corp., Consonant Acquisition Corp., Vowel Acquisition
Corp. and Vowel Representative, LLC. (incorporated by reference to
Annex A to Amendment No. 3 to the Registration Statement on Form S-4
of Cambium Learning Group, Inc. (File No. 333-161075) filed with the
SEC on November 10, 2009).*3.1
    
    Second Amended and Restated Certificate of Incorporation of
Cambium-Voyager Holdings, Inc. (incorporated by reference to Annex C
to Amendment No. 3 to the Registration Statement on Form S-4 of
Cambium Learning Group, Inc. (File No. 333-161075) filed with the
SEC on November 10, 2009).*3.2
    
    Amended and Restated Bylaws of Cambium Learning Group, Inc.
(incorporated by reference to Annex D to Amendment No. 3 to the
Registration Statement on Form S-4 of Cambium Learning Group, Inc.
(File No. 333-161075) filed with the SEC on November 10, 2009).*4.1
    
    Specimen share certificate of Cambium Learning Group, Inc.
(incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the
Registration Statement on Form S-4 of Cambium Learning Group, Inc.
(File No. 333-161075) filed with the SEC on October 9, 2009).*4.2
    
    Form of Cambium Learning Group, Inc. Warrant. (incorporated by
reference to Exhibit 4.2 to the Registration Statement on Form S-4
of Cambium Learning Group, Inc. (File No. 333-161075) filed with the
SEC on August 6, 2009).*10.1
    
    Limited Guarantee given by certain funds managed by VSS Fund
Management LLC. (incorporated by reference to Annex G to Amendment
No. 3 to the Registration Statement on Form S-4 of Cambium Learning
Group, Inc. (File No. 333-161075) filed with the SEC on November 10,
2009).*10.2
    
    Voting and Support Agreement given to Voyager Learning Company by
VSS-Cambium Holdings III, LLC. (incorporated by reference to Annex H
to Amendment No. 3 to the Registration Statement on Form S-4 of
Cambium Learning Group, Inc. (File No. 333-161075) filed with the
SEC on November 10, 2009).*10.3
    
    Form of Voting and Support Agreement given to Cambium-Voyager
Holdings, Inc. (incorporated by reference to Annex I to Amendment
No. 3 to the Registration Statement on Form S-4 of Cambium Learning
Group, Inc. (File No. 333-161075) filed with the SEC on November 10,
2009).*10.4
    
    Form of Contingent Rights Agreement by and among Cambium-Voyager
Holdings, Inc., Vowel Representative, LLC and Wells Fargo Bank,
National Association. (incorporated by reference to Annex J to
Amendment No. 3 to the Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with the SEC on
November 10, 2009).*10.5
    
    Form of Escrow Agreement by and among Cambium-Voyager Holdings,
Inc., Vowel Representative, LLC, Voyager Learning Company, Richard
Surratt and Wells Fargo Bank, National Association. (incorporated by
reference to Annex K to Amendment No. 3 to the Registration
Statement on Form S-4 of Cambium Learning Group, Inc. (File No.
333-161075) filed with the SEC on November 10, 2009).*10.6
    
    Form of Stockholders Agreement by and among Cambium-Voyager
Holdings, Inc., VSS-Cambium Holdings III, LLC and Vowel
Representative, LLC. (incorporated by reference to Annex L to
Amendment No. 3 to the Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with the SEC on
November 10, 2009).*10.7
    
    Cambium Learning Group, Inc. 2009 Equity Incentive Plan.
(incorporated by reference to Exhibit 10.7 to the Registration
Statement on Form S-4 of Cambium Learning Group, Inc. (File No.
333-161075) filed with the SEC on August 6, 2009).*10.8
    
    Senior Secured Credit Agreement dated as of April 12, 2007 among
VSS-Cambium Merger Corp. as the Borrower (the predecessor to Cambium
Learning, Inc.); VSS-Cambium Holdings, LLC and other Guarantors; the
Lenders; Credit Suisse Securities (USA) LLC and Barclays Capital,
the investment banking division of Barclays Bank PLC, as Co-Lead
Arrangers and Joint Bookmanagers; Barclays Bank PLC, as
Administrative Agent and Collateral Agent; Credit Suisse Securities
(USA) LLC, as Co-Syndication Agent; BNP Paribas, as Co-Syndication
Agent; and TD Securities (USA) LLC, as Documentation Agent.
(incorporated by reference to Exhibit 10.8 to Amendment No. 2 to the
Registration Statement on Form S-4 of Cambium Learning Group, Inc. (File No. 333-161075)
filed with the SEC on October 30, 2009).*10.9
    
    Limited Waiver and Amendment, dated as of May 20,
2008, by and among, Cambium Learning, Inc., as the
Borrower (the successor to VSS-Cambium Merger Corp.),
Barclays Bank PLC, as Administrative Agent and the
required lenders, to the Senior Secured Credit
Agreement, dated as of April 12, 2007. (incorporated
by reference to Exhibit 10.9 to Amendment No. 1 to
the Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on October 9, 2009).*10.10
    
    Letter Agreement, dated July 15, 2008, by and among
Cambium Learning, Inc., as the Borrower, Barclays
Bank PLC, as Administrative Agent and the required
lenders. (incorporated by reference to Exhibit 10.10
to the Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*10.11
    
    Permanent Waiver and Amendment No. 2, dated as of
August 22, 2008, by and among, Cambium Learning,
Inc., as the Borrower (the successor to VSS-Cambium
Merger Corp.), Barclays Bank PLC, as Administrative
Agent and the required lenders to the Senior Secured
Credit Agreement, dated as of April 12, 2007, as
amended. (incorporated by reference to Exhibit 10.11
to Amendment No. 2 to the Registration Statement on
Form S-4 of Cambium Learning Group, Inc. (File No.
333-161075) filed with the SEC on October 30, 2009).
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Exhibit
Number
    
    Description*10.12
    
    Note Purchase Agreement dated as of April 12, 2007
among VSS-Cambium Merger Corp., as Company (the
predecessor to Cambium Learning, Inc.); VSS-Cambium
Holdings, LLC, as Guarantor; TCW/Crescent Mezzanine
Partners IV, L.P., TCW/Crescent Mezzanine Partners
IVB, L.P., MAC Capital, Ltd., New York Life
Investment Management Mezzanine Partners II, LP,
NYLIM Mezzanine Partners II Parallel Fund, LP,
Goldentree Capital Solutions Fund Financing,
Goldentree Capital Opportunities, LP, as Purchasers;
and TCW/Crescent Mezzanine Partners IV, L.P., as
Administrative Agent. (incorporated by reference to
Exhibit 10.12 to Amendment No. 2 to the Registration
Statement on Form S-4 of Cambium Learning Group, Inc.
(File No. 333-161075) filed with the SEC on October
30, 2009).*10.13
    
    Temporary Waiver and Amendment, dated as of May 20,
2008, by and among Cambium Learning, Inc., (the
successor to VSS-Cambium Merger Corp.), TCW/Crescent
Mezzanine Partners IV, L.P., as Administrative Agent
and the required note holders, to the Note Purchase
Agreement, dated as of April 12, 2007. (incorporated
by reference to Exhibit 10.13 to Amendment No. 1 to
the Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on October 9, 2009).*10.14
    
    Letter Agreement, dated July 15, 2008, by and among
Cambium Learning, Inc., TCW/Crescent Mezzanine
Partners IV, L.P., as Administrative Agent and the
required note holders. (incorporated by reference to
Exhibit 10.14 to the Registration Statement on Form
S-4 of Cambium Learning Group, Inc. (File No.
333-161075) filed with the SEC on August 6, 2009).*10.15
    
    Permanent Waiver and Amendment No. 2 dated as of
August 22, 2008, by and among Cambium Learning, Inc.,
(the successor to VSS-Cambium Merger Corp.),
TCW/Crescent Mezzanine Partners IV, L.P., as
Administrative Agent and the required note holders,
to the Note Purchase Agreement, dated as of April 12,
2007, as amended. (incorporated by reference to
Exhibit 10.15 to Amendment No. 1 to the Registration
Statement on Form S-4 of Cambium Learning Group, Inc.
(File No. 333-161075) filed with the SEC on October
9, 2009).*10.16
    
    Promissory Note, dated April 12, 2007, made by
Cambium Learning, Inc. in favor of TCW/Crescent
Mezzanine Partners IV, L.P. in the aggregate
principal amount of $12,973,131.22. (incorporated by
reference to Exhibit 10.16 to the Registration
Statement on Form S-4 of Cambium Learning Group, Inc.
(File No. 333-161075) filed with the SEC on August 6,
2009).*10.17
    
    Promissory Note, dated April 12, 2007, made by
Cambium Learning, Inc. in favor of TCW/Crescent
Mezzanine Partners IVB, L.P. in the aggregate
principal amount of $9,526,868.78. (incorporated by
reference to Exhibit 10.17 to the Registration
Statement on Form S-4 of Cambium Learning Group, Inc.
(File No. 333-161075) filed with the SEC on August 6,
2009).*10.18
    
    Promissory Note, dated April 12, 2007, made by
Cambium Learning, Inc. in favor of MAC Capital LTD in
the aggregate principal amount of $2,500,000.
(incorporated by reference to Exhibit 10.18 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*10.19
    
    Promissory Note, dated April 12, 2007, made by
Cambium Learning, Inc. in favor of NYLIM Mezzanine
Partners II Parallel Fund, L.P. in the aggregate
principal amount of $3,063,436.24. (incorporated by
reference to Exhibit 10.19 to the Registration
Statement on Form S-4 of Cambium Learning Group, Inc.
(File No. 333-161075) filed with the SEC on August 6,
2009).*10.20
    
    Promissory Note, dated April 12, 2007, made by
Cambium Learning, Inc. in favor of NY Life Investment
Management Mezzanine Partners II, L.P. in the
aggregate principal amount of $8,936,536.76.
(incorporated by reference to Exhibit 10.20 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*10.21
    
    Promissory Note, dated April 12, 2007, made by
Cambium Learning, Inc. in favor of Goldentree Capital
Solutions Fund Financing in the aggregate principal
amount of $10,000,000. (incorporated by reference to
Exhibit 10.21 to the Registration Statement on Form
S-4 of Cambium Learning Group, Inc. (File No.
333-161075) filed with the SEC on August 6, 2009).*10.22
    
    Promissory Note, dated April 12, 2007, made by
Cambium Learning, Inc. in favor of Goldentree Capital
Opportunities in the aggregate principal amount of
$3,000,000. (incorporated by reference to Exhibit
10.22 to the Registration Statement on Form S-4 of
Cambium Learning Group, Inc. (File No. 333-161075)
filed with the SEC on August 6, 2009).*10.23
    
    Employment Agreement, dated April 12, 2007, by and
between Cambium Learning, Inc. and David Cappellucci.
(incorporated by reference to Exhibit 10.23 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*10.24
    
    Amendment, dated June 26, 2009, by and among David
Cappellucci, Cambium Learning, Inc. and Cambium
Voyager Holdings, Inc. to Employment Agreement, dated
April 12, 2007. (incorporated by reference to Exhibit
10.24 to the Registration Statement on Form S-4 of
Cambium Learning Group, Inc. (File No. 333-161075)
filed with the SEC on August 6, 2009).*10.25
    
    Restrictive Covenants Agreement, dated November 28,
2006 by and between ProQuest Company and Snap-on
Incorporated. (incorporated by reference to Exhibit
10.25 to the Registration Statement on Form S-4 of
Cambium Learning Group, Inc. (File No. 333-161075)
filed with the SEC on August 6, 2009).*+10.26
    
    Employment agreement dated April 9, 2009, between
Voyager Learning Company and Ron Klausner.
(incorporated by reference to Exhibit 10.26 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*+10.27
    
    Employment agreement dated June 19, 2009, between
Voyager Expanded Learning and Brad Almond.
(incorporated by reference to Exhibit 10.27 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*+10.28
    
    Employment agreement dated May 8, 2009, between
Voyager Learning Company and Richard Surratt.
(incorporated by reference to Exhibit 10.28 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*+10.29
    
    Retention Agreement, dated July 13, 2006, by and
between Voyager Learning Company (f/k/a ProQuest
Company) and Todd Buchardt. (incorporated by
reference to Exhibit 10.29 to Amendment No. 1 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on October 9, 2009).*+10.30
    
    Employment agreement dated May 8, 2009, between
Voyager Learning Company and Todd Buchardt.
(incorporated by reference to Exhibit 10.30 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*+10.31
    
    Employment agreement dated March 4, 2009, between
Voyager Expanded Learning and John Campbell.
(incorporated by reference to Exhibit 10.31 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).
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Exhibit
Number
    
    Description*10.32
    
    Letter Agreement, dated June 20, 2009, by and among
Voyager Learning Company, Cambium-Voyager Holdings,
Inc. (f/k/a Cambium Holdings, Inc.), VSS-Cambium
Holdings III and VSS Cambium Holdings II Corp.
(incorporated by reference to Exhibit 10.32 to the
Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on August 6, 2009).*10.33
    
    Letter Agreement, dated July 24, 2009, by and between
Cambium-Voyager Holdings, Inc. and VSS Fund
Management LLC. (incorporated by reference to Exhibit
10.33 to the Registration Statement on Form S-4 of
Cambium Learning Group, Inc. (File No. 333-161075)
filed with the SEC on August 6, 2009).*+10.34
    
    Voyager Supplemental Retirement Plan. (incorporated
by reference to Exhibit 10.34 to Amendment No. 1 to
the Registration Statement on Form S-4 of Cambium
Learning Group, Inc. (File No. 333-161075) filed with
the SEC on October 9, 2009).*+10.35
    
    Voyager Amended and Restated Replacement Benefit
Plan. (incorporated by reference to Exhibit 10.35 to
Amendment No. 1 to the Registration Statement on Form
S-4 of Cambium Learning Group, Inc. (File No.
333-161075) filed with the SEC on October 9, 2009).*+10.36
    
    Amendment to Employment Agreement dated as of August
7, 2009, by and among Cambium-Voyager Holdings, Inc.,
Voyager Learning Company and Ronald Klausner.
(incorporated by reference to Exhibit 10.36 to
Amendment No. 1 to the Registration Statement on Form
S-4 of Cambium Learning Group, Inc. (File No.
333-161075) filed with the SEC on October 9, 2009).*10.37
    
    Amendment No. 3, dated as of October 29, 2009, by and
among Cambium Learning, Inc., as the Borrower (the
successor to VSS-Cambium Merger Corp.), Barclays Bank
PLC, as Administrative Agent, and the required
lenders to the Senior Secured Credit Agreement, dated as of April 12, 2007, as amended. (incorporated by reference
to Exhibit 10.37 to Amendment No. 2 to the Registration Statement on Form S-4
of Cambium Learning Group, Inc. (File No. 333-161075) filed with the SEC on
October 30, 2009).*10.38
    
    Amendment No. 3, dated as of October 29, 2009, by and
among Cambium Learning, Inc., (the successor to
VSS-Cambium Merger Corp.), TCW/Crescent Mezzanine
Partners IV, L.P., as Administrative Agent, and the
required note holders, to the Note Purchase
Agreement, dated as of April 12, 2007, as amended.
(incorporated by reference to Exhibit 10.38 to
Amendment No. 2 to the Registration Statement on Form
S-4 of Cambium Learning Group, Inc. (File No.
333-161075) filed with the SEC on October 30, 2009).21.1
    
    Subsidiaries of Cambium Learning Group, Inc.23.1
    
    Consent of Ernst & Young LLP.23.2
    
    Consent of Grant Thornton LLP.23.3
    
    Consent of Whitley Penn LLP.31.1
    
    Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.31.2
    
    Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.32.1
    
    Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  99