##### 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, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934  Commission File No. 0-22187
 RENAISSANCE LEARNING,
    INC.
 (Exact name of Registrant as
    specified in its charter)
  Wisconsin(State or other jurisdiction
    of
    incorporation or organization)

39-1559474(I.R.S. Employer
    Identification No.)2911 Peach Street
    P.O. Box 8036
    Wisconsin Rapids, Wisconsin (Address of principal
    executive offices)

54495-8036(Zip Code)   (715) 424-3636
    Title of Each Class:

Name of Each Exchange on Which Registered:Common Stock, $.01 par value

The NASDAQ Global Select Market   None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
   Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o
    (Do not check if a smaller
    reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
    DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### 





INDEX
  PagePART IItem 1.

BusinessOverview


2Software, Laptop Computing Solutions and Other
    Educational Products


3Professional Services


5Product Development


5Selling and Marketing


5Production


6Competition


6Intellectual Property


7Employees


7Backlog


7Forward-Looking Statements


7Item 1A.

Risk Factors


8Item 1B.

Unresolved Staff Comments


11Item 2.

Properties


12Item 3.

Legal Proceedings


12Item 4.

Submission of Matters to a Vote of Security
    Holders


12PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


14Item 6.

Selected Financial Data


17Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


18Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


26Item 8.

Financial Statements and Supplementary
    Data


28Item 9.

Changes In and Disagreements With Accountants
    on Accounting and Financial Disclosure


49Item 9A.

Controls and Procedures


49Item 9B.

Other Information


49PART IIIItem 10.

Directors and Executive Officers of the
    Registrant


50Item 11.

Executive Compensation


50Item 12.

Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters


50Item 13.

Certain Relationships and Related
    Transactions


51Item 14.

Principal Accountant Fees and Services


51PART IVItem 15.

Exhibits and Financial Statement
    Schedules


52SubsidiariesConsent of Independent Registered Public Accounting FirmDirectors' Powers of AttorneySection 302 Certification by CEOSection 302 Certification by CFOSection 906 Certification by CEOSection 906 Certification by CFOSchedule II - Valuation and Qualifying Accounts   1




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##### Table of Contents



PART I  Item 1.
    Business Overview    Accelerated Reader*, STAR Reading STAR Early Literacy Read Now Power Up! Accelerated Math STAR Math Math Facts in a Flash. AlphaSmart English in a Flash 2Know! Accelerated Math,
  Accelerated Reader Accelerated Reader
  Renaissance Place Renaissance Place Renaissance Place Accelerated
    Reader Enterprise Accelerated Math Enterprise Renaissance Place Accelerated
    Reader Accelerated Math
      AR, AccelScan, Accelerated Math, Accelerated Reader,
    Accelerated Vocabulary, AlphaSmart, Dana, English in a Flash,
    MathFacts in a Flash, Neo, Neo 2, Read Now, Renaissance,
    Renaissance Learning, Renaissance Place, STAR Early Literacy,
    STAR Reading, STAR Math and 2Know! are trademarks of Renaissance
    Learning, Inc. registered
    ®,
    common law or pending registration in the United States and
    other countries. Other trademarks are the property of their
    respective owners.
    Power Up! and Steck-Vaughn are trademarks of Houghton Mifflin
    Harcourt Supplemental Publishers, Inc.
 2




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##### Table of Contents



NASDAQ Global Select
    Market ® 54495-8036 (715) 424-3636). Form 10-K Form 10-Q Form 8-K http://www.renlearn.com 1-800-SEC-0330. Form 10-K.
 Software,
    Laptop Computing Solutions and Other Educational
    Products  Accelerated Reader Accelerated Reader Accelerated Reader Accelerated
    Reader Accelerated Reader Literacy
    Skills
  STAR Reading STAR Reading
  STAR Early Literacy STAR Early Literacy
  Read Now Power Up! Steck-Vaughn
 3




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##### Table of Contents



Read Now Power Up! e-learning
  Accelerated Math Accelerated Math AccelScan Accelerated Math
  AccelScan, Accelerated Math AccelScan
  STAR Math STAR Reading. STAR Math STAR Math
  MathFacts in a Flash
  English in a Flash
  AlphaSmart Laptops Neo 2 Neo Dana. AlphaSmart AlphaSmart AlphaSmart Neo 2 2Know! Accelerated Reader, Renaissance Place Accelerated
    Reader Neo 2
  2Know!
 4




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##### Table of Contents



Renaissance
    Learning
  Educator Resource Products.
 Professional
    Services    Support Plans.
  Technical Services. Renaissance
  Training and Professional Development Services. Renaissance (iii) full-day on-site
  Renaissance Training Center
 Product
    Development   Selling
    and Marketing   5




---



##### Table of Contents



Accelerated Reader Accelerated Math Read Now Power Up! and/or
  Accelerated Reader Enterprise Accelerated Math
    Enterprise Accelerated Reader Enterprise Accelerated Math
    Enterprise
 Production  Accelerated
    Reader Accelerated Math
  AlphaSmart 2Know! AccelScan
 Competition     6




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##### Table of Contents



Intellectual
    Property   Employees   Backlog   Forward-Looking
    Statements  Form 10-K, Item 1-Business Item 7-Managements Item 1A-Risk
 7




---



##### Table of Contents



Item 1A.
    Risk
    Factors  Reliance on Single Product Line. Accelerated
    Reader Accelerated Reader Accelerated Reader
  Geographic Concentration of Sales.
  Dependence on Educational Institutions and Government
    Funding. and/or
  Dependence on Continued Product Development. and/or
  Acquisitions.
  Reliance on statistical studies to demonstrate effectiveness
    of our products and services.
 8




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##### Table of Contents



Limited Protection of Intellectual Property and Proprietary
    Rights.
  Selling and Marketing Strategy and Product
    Acceptance.
  Risks of International Expansion.
  Educational Philosophies.
  Highly Competitive Industry.
 9




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##### Table of Contents



Dependence on Key Personnel.
  Ability to Attract and Retain Qualified
    Personnel.
  Fluctuations in Quarterly Performance.
  
    delays in the development
    and/or
    shipment of new products;
    the closing of large contract sales, such as those to school
    districts;
    the shipment of new products for which orders have been building
    for a period of time; and
    seasonal variations due to, among other things, the budget and
    school year cycles of our school customers and annual ordering
    patterns related to subscription-based products and services,
    particularly Accelerated Reader Enterpriseand
    Accelerated Math Enterprise.    
    charges related to acquisitions and divestitures, including
    related expenses, the write-off of in-process research and
    development, the amortization of intangible assets, asset
    impairments and similar items;
    charges related to obsolete or impaired tangible assets,
    intangible assets, goodwill, capitalized software development
    costs and similar items;
    supply-chain issues such as manufacturing problems, delivery
    delays, component shortages, strikes or quality issues;
    expenses related to product development and marketing
    initiatives;
    seasonal variability of product support costs; and
    seasonal variations due to delays in quiz order patterns as
    customers consider upgrading to Accelerated Reader
    Enterprise, our turn-key solution, which includes all quiz
    content.    Share Price Volatility.
 10




---



##### Table of Contents



and/or and/or
  War, Acts of War and Terrorism.
  Concentration of Share Ownership; Control by Principal
    Shareholders/Management.
  Shares Eligible for Future Sale.
  Cash Dividends.
  Possible Antitakeover Effects of Certain Articles and By-Laws
    Provisions and Provisions of Wisconsin Law.
  Divestitures.
  Item 1B.
    Unresolved
    Staff Comments   11




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##### Table of Contents



Item 2.
    Properties    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   12




---



##### Table of Contents



EXECUTIVE
    OFFICERS OF THE REGISTRANT
  Name and Age of Officer

OfficeJudith Ames Paul
    Age 61

Ms. Paul is the co-founder of the company and has been
    chairman of the board of directors since February 2006. From
    1986 until July 2001, and again from August 2002 until July
    2003, Ms. Paul served as chairman of the board, and from
    July 2001 until August 2002, and again from July 2003 until
    February 2006, Ms. Paul served as co-chairman with
    Mr. Paul. Ms. Paul has been a director since 1986.
    Ms. Paul acts as our spokesperson and is a leading teacher
    advocate. Ms. Paul holds a bachelors degree in
    elementary education from the University of Illinois. Judith
    Paul is Terrance Pauls wife.Terrance D. Paul
    Age 61

Mr. Paul is the co-founder of the company and has been our
    chief executive officer since February 2006. From February 2006
    to April 2006, Mr. Paul also served as our president. From
    August 2002 until July 2003, Mr. Paul served as our chief
    executive officer. From July 1996 until July 2001, Mr. Paul
    served as vice chairman of the board and from July 2001 until
    August 2002, and again from July 2003 until February 2006,
    Mr. Paul served as co-chairman with Ms. Paul.
    Mr. Paul has been a director since 1986. Mr. Paul
    holds a law degree from the University of Illinois and an MBA
    from Bradley University. Terrance Paul is Judith Pauls
    husband.Steven A. Schmidt
    Age 53

Mr. Schmidt has been our president and chief operating
    officer since April 2006. From November 2005 until January 2006,
    he served as our senior vice president, administration and
    operations. From July 2003 to November 2005, Mr. Schmidt
    served as our executive vice president. From August 1999 until
    November 2004, he served as our chief financial officer and
    secretary, and from August 1999 until July 2003, he also served
    as a vice president. Mr. Schmidt holds a bachelors
    degree in accountancy from the University of
    Wisconsin-La Crosse, and is a certified public accountant.Mary T. Minch
    Age 41

Ms. Minch has been our chief financial officer and
    secretary since November 2004 and has served as senior vice
    president, finance since January 2007. From December 2003 to
    January 2007, Ms. Minch served as our vice president,
    finance. From February 2003 to December 2003, Ms. Minch
    held the position of North American division controller for
    Stora Enso North American Corp., a forest product company whose
    parent company acquired Consolidated Papers, Inc. From October
    2000 to February 2003, she served as controller-magazine papers
    at Stora Enso North American Corp. Ms. Minch holds
    bachelors degrees in managerial accounting and finance
    from the University of Wisconsin-Stevens Point and a
    masters degree from the University of Wisconsin-Oshkosh,
    and is a certified public accountant.      13




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##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
    Holders
    Historical
    Dividends
   14




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##### Table of Contents



Performance
    Graph
      COMPARISON
    OF A 5 YEAR CUMULATIVE TOTAL RETURN*
 Among Renaissance Learning,
    Inc., The NASDAQ Composite Index
 And A Peer Group
  
  Cumulative Return12/02


12/03


12/04


12/05


12/06


12/07Renaissance Learning, Inc.


100.00



127.35



106.79



110.03



104.58



89.14NASDAQ Composite Index


100.00



149.89



165.01



169.26



188.17



207.11Peer Group


100.00



186.17



149.69



166.92



167.36



220.78   * $100 invested on 12/31/02 in
    stock or index-including reinvestment of dividends. 
    Fiscal year ending December 31.
 15




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##### Table of Contents



Recent
    Sales of Unregistered Securities
    Changes
    in Securities, Use of Proceeds and Issuer Purchases of Equity
    Securities
        Total Number ofShares Purchased as


Maximum Number ofPart of Publicly


Shares that May Yet BeTotal Number of


Average Price


Announced Plans or


Purchased Under thePeriod

Shares Purchased


Paid per Share


Programs


Plans or ProgramsOctober 1-31


93


$
13.10



93



246,767November 1-30


0



0



0



246,767December 1-31


36



15.48



36



246,731Total


129


$
13.76



129  16




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##### Table of Contents



Item 6.
    Selected
    Financial Data  SELECTED
    HISTORICAL CONSOLIDATED FINANCIAL DATA
    (In thousands, except per share amounts)
  Year Ended December 31,2007


2006


2005


2004


2003Consolidated Income Statement DataNet sales:Products

$
84,628


$
90,750


$
94,296


$
91,482


$
106,080Services


23,304



20,778



21,987



20,242



21,552Total net sales


107,932



111,528



116,283



111,724



127,632Cost of sales:Products


15,673



16,455



12,917



6,167



10,656Services


11,830



10,011



8,669



9,532



9,628Total cost of sales


27,503



26,466



21,586



15,699



20,284Gross profit


80,429



85,062



94,697



96,025



107,348Operating expenses:Product development


18,506



17,291



17,046



14,536



14,881Selling and marketing


36,042



33,639



30,778



30,551



27,997General and administrative


14,951



16,330



12,989



12,005



12,346Total operating expenses


69,499



67,260



60,813



57,092



55,224Operating income


10,930



17,802



33,884



38,933



52,124Other, net


1,178



1,234



3,494



1,640



2,267Income  continuing operations before income taxes


12,108



19,036



37,378



40,573



54,391Income taxes  continuing operations


4,541



7,043



13,211



15,012



19,406Income  continuing operations


7,567



11,993



24,167



25,561



34,985Income (loss)  discontinued operations










584



(2,859
)


(2,444
)Net income

$
7,567


$
11,993


$
24,751


$
22,702


$
32,541Earnings (loss) per share:Basic:Continuing operations


0.26



0.41



0.78



0.82



1.12Discontinued operations


0.00



0.00



0.02



(0.09
)


(0.07
)Net income

$
0.26


$
0.41


$
0.80


$
0.73


$
1.05Diluted:Continuing operations


0.26



0.41



0.78



0.82



1.12Discontinued operations


0.00



0.00



0.02



(0.09
)


(0.08
)Net income

$
0.26


$
0.41


$
0.80


$
0.73


$
1.04Cash dividends declared per share

$
0.99
*

$
0.20


$
0.20


$
2.31
**

$
Consolidated Balance Sheet DataWorking capital

$
(6,543
)

$
15,282


$
21,539


$
41,815


$
103,240Total assets


113,300



117,711



128,382



114,724



159,601Shareholders equity


57,987



79,571



95,866



84,417



133,330     *
    
    Includes a special dividend in 2007 of $0.75 per share.**
    
    Includes a special dividend in 2004 of $2.15 per share.   17




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##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Overview
            AlphaSmart
   18




---



##### Table of Contents



Acquisition
    and Divestiture
    Results
    of Operations
        Renaissance Place
  Renaissance Place
   19




---



##### Table of Contents



For the Years Ended December 31,2007


2006


2005Net Sales:Products


78.4
%


81.4
%


81.1
%Services


21.6



18.6



18.9Total net sales


100.0
%


100.0
%


100.0
%Cost of sales:Products


18.5
%


18.1
%


13.7
%Services


50.8



48.2



39.4Total cost of sales


25.5



23.7



18.6Gross profit:Products


81.5



81.9



86.3Services


49.2



51.8



60.6Total gross profit


74.5



76.3



81.4Operating expenses:Product development


17.1



15.5



14.7Selling and marketing


33.4



30.2



26.5General and administrative


13.9



14.6



11.1Operating income


10.1



16.0



29.1Other, net


1.1



1.1



3.1Income  continuing operations before income taxes


11.2



17.1



32.2Income taxes  continuing operations


4.2



6.3



11.4Income  continuing operations


7.0



10.8



20.8Income  discontinued operations


0.0



0.0



0.5Net Income


7.0
%


10.8
%


21.3
%   Years
    Ended December 31, 2007 and 2006
  Net Sales. Accelerated Reader
   20




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##### Table of Contents



Cost of Sales.
  on-site
    Product Development.
  Selling and Marketing.
  General and Administrative.
  Operating Income.
  Other Income.
  Income Tax Expense  Continuing
    Operations.
  Years
    Ended December 31, 2006 and 2005
  Net Sales. AlphaSmart Accelerated Reader
 21




---



##### Table of Contents



Cost of Sales.
      Product Development.
  Selling and Marketing.
  General and Administrative.
  Operating Income.
  Other Income.
  Income Tax Expense  Continuing
    Operations.
 22




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##### Table of Contents



Discontinued Operations.
  Liquidity
    and Capital Resources
            Off-Balance
    Sheet Arrangements and Aggregate Contractual
    Obligations
    Operating Leases.
 23




---



##### Table of Contents



Purchase Obligations. AlphaSmart AccelScan 2Know!
  Tax audit settlements and deposits.
    Payments Due by PeriodLess than 1


1-3


3-5


More thanContractual Obligations

Total


year


years


years


5 years(In Thousands)Operating lease obligations

$
6,498


$
2,225


$
2,610


$
1,259


$
404Tax audit related payments


1,200



1,200











Purchase obligations


3,668



3,668











Total

$
11,366


$
7,093


$
2,610


$
1,259


$
404   Supplemental Executive Retirement Plan. 10-year
  Other Obligations.
  Critical
    Accounting Policies and Estimates
  and/or
  Revenue Recognition. No. 97-2 Software Revenue Recognition
 24




---



##### Table of Contents



Goodwill and Long-Lived Assets.
      Software Support and Product Warranty
    Obligations.
  Software Development Costs. product-by-product
  Taxes. non-United
   25




---



##### Table of Contents



Recent
    Accounting Pronouncement
  Business Combination
  Noncontrolling Interests in Consolidated Financial
    Statements, an amendment of ARB No. 51
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115
  Fair Value Measurements,
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest Rate Risk.
  Market Risk.
     26




---



##### Table of Contents



Foreign Currency Exchange Rate Risk.
 27




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
  Internal Control  Integrated Framework
        Accounting for Stock Based Compensation Accounting for Uncertainty in Income Taxes.
  Internal Control  Integrated Framework
  /s/ DELOITTE & TOUCHE LLP
    28




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##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
 As of
    December 31, 2007 and 2006
  2007


2006(In Thousands,Except Share andPer Share Amounts)ASSETSCurrent assets:Cash and cash equivalents

$
7,337


$
5,953Investment securities


8,136



22,525Accounts receivable, less allowance of $1,072 and $1,133,
    respectively


8,791



10,528Inventories


6,273



4,108Prepaid expenses


2,197



1,896Income taxes receivable


1,450



1,291Deferred tax asset


4,406



3,596Other current assets


300



97Total current assets


38,890



49,994Investment securities


8,982



1,625Property, plant and equipment, net


10,578



11,811Deferred tax asset


1,587



Goodwill


47,065



46,973Other intangibles, net


5,579



6,124Capitalized software, net


452



727Other non-current assets


167



457Total assets

$
113,300


$
117,711LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
2,011


$
2,782Deferred revenue


35,675



23,751Payroll and employee benefits


4,184



4,750Other current liabilities


3,563



3,429Total current liabilities


45,433



34,712Deferred revenue


2,707



885Deferred compensation and other employee benefits


1,933



1,665Deferred tax liability






878Income taxes payable


5,104



Other noncurrent liabilities


136



Total liabilities


55,313



38,140Shareholders equity:Common stock, $.01 par; shares authorized: 150,000,000;
    issued: 34,736,647 shares at December 31, 2007 and 2006


347



347Additional paid-in capital


52,683



54,125Retained earnings


102,887



124,290Treasury stock, at cost: 5,703,450 shares at
    December 31, 2007; 5,733,130 shares at
    December 31, 2006


(98,123
)


(99,265
)Accumulated other comprehensive income


193



74Total shareholders equity


57,987



79,571Total liabilities and shareholders equity

$
113,300


$
117,711    29




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##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF INCOME
 For the
    Years Ended December 31, 2007, 2006 and 2005
  2007


2006


2005(In Thousands, Except Per Share Amounts)Net Sales:Products

$
84,628


$
90,750


$
94,296Services


23,304



20,778



21,987Total net sales


107,932



111,528



116,283Cost of sales:Products


15,673



16,455



12,917Services


11,830



10,011



8,669Total cost of sales


27,503



26,466



21,586Gross profit


80,429



85,062



94,697Operating expenses:Product development


18,506



17,291



17,046Selling and marketing


36,042



33,639



30,778General and administrative


14,951



16,330



12,989Total operating expenses


69,499



67,260



60,813Operating income


10,930



17,802



33,884Other income:Interest income


1,009



1,078



1,324Other, net


169



156



2,170Income  continuing operations before income taxes


12,108



19,036



37,378Income taxes  continuing operations


4,541



7,043



13,211Income  continuing operations


7,567



11,993



24,167Income  discontinued operations










584Net Income

$
7,567


$
11,993


$
24,751Earnings per share:BasicContinuing operations

$
0.26


$
0.41


$
0.78Discontinued operations


0.00



0.00



0.02Net income

$
0.26


$
0.41


$
0.80DilutedContinuing operations

$
0.26


$
0.41


$
0.78Discontinued operations


0.00



0.00



0.02Net income

$
0.26


$
0.41


$
0.80    30




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##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY
 For the
    Years Ended December 31, 2007, 2006 and 2005
  AccumulatedCommon


Additional








Other


TotalStock


Paid-in


Retained


Treasury


Comprehensive


ShareholdersAmount(1)


Capital


Earnings


Stock


Income (Loss)


Equity(In Thousands)Balance, December 31, 2004

$
347


$
54,490


$
99,689


$
(70,213
)

$
104


$
84,417Net income










24,751











24,751Foreign currency translation


















(57
)


(57
)Comprehensive income






















24,694Dividends ($.20 per share)










(6,207
)










(6,207
)Stock repurchased for treasury














(32,374
)






(32,374
)Treasury shares issued forpurchase of AlphaSmart






2,171







20,895







23,066Exercise of stock options






(350
)






2,455







2,105Excess tax benefits from share based payment arrangements






112















112Restricted stock grants






(392
)






392







Shared-based compensation






53















53Balance, December 31, 2005


347



56,084



118,233



(78,845
)


47



95,866Net income










11,993











11,993Foreign currency translation


















27



27Comprehensive income






















12,020Dividends ($.20 per share)










(5,936
)










(5,936
)Stock repurchased for treasury














(22,474
)






(22,474
)Exercise of stock options






(2
)






18







16Payment for cancellation of stock options






(1,001
)














(1,001
)Share-based compensation






687















687Excess tax benefits from share based payment arrangements






393















393Restricted stock grants






(2,036
)






2,036







Balance, December 31, 2006


347



54,125



124,290



(99,265
)


74



79,571Net income










7,567











7,567Foreign currency translation


















119



119Comprehensive income






















7,686Dividends ($.99 per share)










(28,699
)










(28,699
)Stock repurchased for treasury






1







(1,435
)






(1,434
)Exercise of stock options






(15
)






30







15Share-based compensation






1,109















1,109Effect of adoption of new acct principle










(271
)










(271
)Excess tax benefits from share based payment arrangements






10















10Restricted stock grants






(2,547
)






2,547







Balance, December 31, 2007

$
347


$
52,683


$
102,887


$
(98,123
)

$
193


$
57,987     (1)
    
    Common Stock, $0.01 par value, 150,000,000 shares
    authorized.   31




---



##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 For the
    Years Ended December 31, 2007, 2006 and 2005
  2007


2006


2005(In Thousands)Reconciliation of net income to net cash provided by operating
    activities:Net income

$
7,567


$
11,993


$
24,751Income from discontinued operations










(584
)Income from continuing operations


7,567



11,993



24,167Adjustments to arrive at cash provided by operating activities:Depreciation and amortization


3,838



3,541



3,179Amortization of investment discounts/premiums


34



163



396Share-based compensation expense


1,109



687



53Deferred income taxes


(1,305
)


2,719



1,437Excess tax benefits from share based payment arrangements


(10
)


(393
)


(112
)Gain on sale of property


30



(4
)


(1,798
)Change in assets and liabilities, excluding the effects of
    acquisitions and divestituresAccounts receivable


1,737



938



1,903Inventories


(2,165
)


(334
)


568Prepaid expenses


(331
)


(291
)


(369
)Income taxes


2,715



(975
)


(937
)Accounts payable and other liabilities


(1,147
)


(1,405
)


(483
)Deferred revenue


13,747



5,711



1,821Other current assets


(203
)


293



1,460Other


337



(375
)


128Cash provided by continuing operating activities


25,953



22,268



31,413Cash used by discontinued operations










(116
)Net cash provided by operating activities


25,953



22,268



31,297Cash flows from investing activities:Purchase of property, plant and equipment


(2,147
)


(2,819
)


(2,419
)Purchase of investment securities


(26,441
)


(20,040
)


(36,866
)Maturities/sales of investment securities


33,746



23,220



71,481Capitalized software development costs


(203
)


(689
)


(279
)Proceeds from mortgage note






5,909



Net proceeds from sale of property


570



23



3,166Net proceeds from sale of subsidiary










75Acquisitions of business, net of cash acquired










(33,970
)Cash provided by investing activities


5,525



5,604



1,188Cash used by discontinued operations










Net cash provided by investing activities


5,525



5,604



1,188Cash flows from financing activities:Return of capital to minority interest










(98
)Proceeds from exercise of stock options


30



16



2,105Payment for cancellation of stock options






(1,001
)


Excess tax benefits from share based payment arrangements


10



393



112Dividends paid


(28,699
)


(5,936
)


(6,207
)Purchase of treasury stock


(1,435
)


(22,474
)


(32,374
)Net cash used by financing activities


(30,094
)


(29,002
)


(36,462
)Net increase (decrease) in cash and cash equivalents


1,384



(1,130
)


(3,977
)Cash and cash equivalents, beginning of period


5,953



7,083



11,060Cash and cash equivalents, end of period

$
7,337


$
5,953


$
7,083Supplemental cash flow informationCash paid during the year for Income taxes (net of refunds)

$
2,979


$
5,281


$
11,121    32




---



##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  (1)
    Consolidation    (2)
    Basis of
    presentation    (3)
    Nature of
    operations    Accelerated Reader STAR Reading, STAR Early Literacy, Read Now Power
    Up!, Accelerated Math, STAR Math, MathFacts in a Flash and
    English in a Flash.
  AlphaSmart 2Know! AccelScan Accelerated Math
    (4)
    Acquisition   33




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##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10-year
  available-for-sale
  Twelve Months EndedDecember 31, 2005(In Thousands, ExceptPer Share Amounts)Net sales

$
131,576Income from continuing operations


24,104Earnings per share from continuing operationsBasic earnings per share

$
0.75Diluted earnings per share


0.75   (5)
    Significant
    accounting policies  (a)
    Use of
    estimates    (b)
    Revenue
    recognition  No. 97-2 Software Revenue Recognition (SOP 97-2)
  (i) off-the-shelf off-the-shelf percentage-of-completion
 34




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##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      (c)
    Impairment
    or Disposal of Long-Lived Assets.      (d)
    Cash and
    cash equivalents    (e)
    Investment
    securities  held-to-maturity, Accounting for Certain
    Investments in Debt and Equity Securities
  held-to-maturity
   35




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##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        2007


2006Carrying


Fair


Carrying


FairValue


Value


Value


Value(In Thousands)Debt securities due in less than 1 year:Auction rate securities

$
2,500


$
2,500


$
20,025


$
20,025Municipal bonds


5,636



5,654



2,500



2,496Current investment securities


8,136



8,154



22,525



22,521Debt securities due in 1 to 2 years:Municipal bonds


7,051



7,078







Equity securities:Mutual fund investments


1,931



1,931



1,625



1,625Non-current investment securities


8,982



9,009



1,625



1,625Total investment securities

$
17,118


$
17,163


$
24,150


$
24,146   (f) Inventories
  first-in,
  (g)
    Advertising
    costs    (h)
    Property,
    plant and equipment     36




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##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006(In Thousands)Land and improvements

$
1,146


$
1,219Buildings


9,587



9,967Furniture, fixtures and office equipment


4,772



4,694Computer and production equipment


12,870



11,474Other


1,490



1,713Total property, plant and equipment


29,865



29,067Less  accumulated depreciation and amortization


19,287



17,256Property, plant and equipment, net

$
10,578


$
11,811   (i)
    Software
    development costs  product-by-product
  (j)
    Sales and
    concentration of credit risks    (k)
    Share-based
    compensation  Share-Based
    Payments
  Accounting for Stock Issued to Employees
   37




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##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        2005(In Thousands, ExceptPer Share Amounts)Net Income, as reported

$
24,751Add: share based compensation included in reported net income,
    net of tax


33Deduct: total share-based compensation expense determined under
    fair-value based method for all awards, net of tax


2,518Pro forma net income

$
22,266Basic earnings per share:As reported

$
0.80Pro forma


0.72Diluted earnings per share:As reported

$
0.80Pro forma


0.72The per share weighted average fair value of options granted
    under the plan during the year is:

$
10.06     2007


2006


2005Dividend yield


2.01
%


1.39
%


1.01
%Expected volatility


48.21
%


55.00
%


57.08
%Risk-free interest rate


4.37
%


4.66
%


4.00
%Expected life (in years)


5



5



5    38




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##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (l)
    Earnings
    per common share  Earnings per
    Share (
        2007


2006


2005Basic weighted average shares outstanding


28,792,337



29,551,309



30,966,501Dilutive effect of outstanding stock options


2,982



7,626



63,151Dilutive effect of restricted shares


31,301



10,325



20Diluted weighted average shares outstanding


28,826,620



29,569,260



31,029,672   (m)
    Income
    taxes  Accounting for Income Taxes Accounting for Uncertainty in Income Taxes
  (n)
    Comprehensive
    income (loss)   39




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##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (o)
    Shipping
    and handling revenues and costs    (p)
    Sales,
    use and value added taxes    (q)
    Product
    warranty and support obligations      (In Thousands)Balance at December 31, 2005

$
1,297Amount expensed for new warranty and support obligations and
    changes in estimates for pre-existing obligations


4,375Cost of warranty and support provided during the year


(4,477
)Balance at December 31, 2006


1,195Amount expensed for new warranty and support obligations and
    changes in estimates for pre-existing obligations


4,571Cost of warranty and support provided during the year


(4,463
)Balance at December 31, 2007

$
1,303   (6)
    Goodwill
    and other intangible assets  Goodwill and Other Intangible Assets
    (In Thousands)Balance at December 31, 2005


45,906Acquisition  final allocation adjustment


1,066Currency translation


1Balance at December 31, 2006

$
46,973Currency translation


92Balance at December 31, 2007

$
47,065  40




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##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10-year
    December 31, 2007


December 31, 2006Gross


Accumulated





Gross


AccumulatedAmount


Amortization


Net


Amount


Amortization


Net(In Thousands)Tradename

$
3,000


$



$
3,000


$
3,000


$



$
3,000Customer relationships


4,150



1,571



2,579



4,150



1,026



3,124Other intangibles

$
7,150


$
1,571


$
5,579


$
7,150


$
1,026


$
6,124   (7)
    Income
    taxes    2007


2006


2005(In Thousands)Current tax provision:U.S. federal

$
5,081


$
3,783


$
9,840State and local


696



518



1,850Foreign


69



23



84Total current tax provision


5,846



4,324



11,774Deferred tax provision:U.S. federal


(1,231
)


2,571



1,329State and local


(74
)


148



108Total deferred tax provision


(1,305
)


2,719



1,437Provision for income taxes

$
4,541


$
7,043


$
13,211     2007


2006


2005(In Thousands)Income tax provision at statutory tax rate

$
4,239



35.0
%

$
6,663



35.0
%

$
13,083



35.0
%State and local taxes, net of federal tax benefit


379



3.1
%


433



2.3
%


1,273



3.4
%Federal tax credits and exclusions


(469
)


(3.9
)%


(82
)


(0.4
)%


(327
)


(0.9
)%Resolution of prior period tax matters






0.0
%






0.0
%


(658
)


(1.8
)%Provision for uncertain tax positions


507



4.2
%


171



0.9
%


(121
)


(0.3
)%Other


(115
)


(0.9
)%


(142
)


(0.8
)%


(39
)


(0.1
)%Provision for income taxes

$
4,541



37.5
%

$
7,043



37.0
%

$
13,211



35.3
%  41




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##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006(In Thousands)Current deferred tax assets:Deferred revenue

$
1,768


$
1,062Expenses not currently deductible


2,638



2,534Net current deferred tax assets


4,406



3,596Noncurrent deferred tax assets (liabilities):Deferred revenue


104



32Expenses not currently deductible


2,401



86Depreciation and amortization


495



388Intangibles


(1,413
)


(1,384
)Net noncurrent deferred tax asset (liability)


1,587



(878
)Total deferred tax assets

$
5,993


$
2,718   (8) Uncertain
    Tax Positions
        Tax


Interest & penalties


Total(In Thousands)Balance at January 1, 2007

$
3,034


$
1,159


$
4,193Additions for tax positions related to the current year


730



40



770Additions for tax positions of prior years


61



265



326Reductions due to lapse of applicable statute of limitations


(55
)


(17
)


(72
)Settlements


(81
)


(32
)


(113
)Balance at December 31, 2007

$
3,689


$
1,415


$
5,104    42




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##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (9)
    Lines of
    credit    (10)
    Lease
    commitments      (In Thousands)2008

$
2,2252009


1,5082010


1,1022011


7162012


543After 2012


404$
6,498   (11) Litigation
    (12)
    Retirement
    plans         43




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##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        2007


2006


2005(In Thousands)Employer matching contribution  401(k) Plan

$
1,459


$
1,318


$
1,027Employer matching contribution  SERP


18



15



16Total

$
1,477


$
1,333


$
1,043   (13) Stock
    incentive plan
    (a) Stock option awards
    2007


2006


2005Weighted





Weighted





Weightedaverage





average





averageexercise





exercise





exerciseShares


price


Shares


price


Shares


priceOutstanding at beginning of year


895,516


$
22.96



1,519,820


$
22.42



1,625,038


$
22.85Granted


11,551



12.37



9,616



14.86



223,044



20.58Exercised


(1,755
)


8.88



(241,149
)*


13.54



(135,880
)


15.49Forfeitures


(25,015
)


23.06



(392,771
)


26.47



(192,382
)


28.82Outstanding at end of year


880,297



22.85



895,516



22.96



1,519,820



22.42Options exercisable at end of year


880,297


$
22.85



893,297


$
22.98



1,515,381


$
22.44     *
    
    Includes 240,119 of shares related to payment of $1,000,501 to
    cancel
    in-the-money
    options, primarily of the companys former chief executive
    officer in 2006. 44




---



##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Exercisable and Outstanding OptionsWeighted Average


WeightedRange of

Options


Remaining


AverageExercise price

Outstanding


Contractual Life


Exercise Price$8.00 to $16.00


76,599



3.26


$
12.59$16.01 to $22.00


420,093



4.07



17.82$22.01 to $29.00


95,819



6.41



24.48$29.01 to $34.00


186,427



3.42



60.63$34.01 to $40.00


100,825



2.92



35.46$40.01 to $52.00


534



3.55



51.49$8.00 to $51.58


880,297



3.99


$
22.85   Restricted stock awards 
    (14)
    Shareholders
    equity      Aggregate annualWeighted average


cost ofNumber of shares


repurchased price


repurchasedrepurchased


per share*


stock*2007


117,480


$
12.22


$
1,435,0992006


1,461,216


$
15.38


$
22,474,6282005


1,837,231


$
18.00


$
32,373,719     *
    
    Includes broker commission   45




---



##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (15)
    Segment
    reporting  Disclosures about Segments of an Enterprise and Related
    Information
  (16)
    Quarterly
    results of operations (unaudited)    Quarter EndedMarch 31


June 30


September 30


December 31(In Thousands, Except Per Share Amounts)2007Net sales

$
26,688


$
27,177


$
25,809


$
28,258Gross profit


20,118



20,244



18,969



21,098Operating income


1,805



3,161



1,898



4,066Income  before income taxes


2,107



3,485



2,188



4,328Income taxes


790



1,307



821



1,623Net income


1,317



2,178



1,367



2,705Earnings per share:Basic and diluted


0.05



0.08



0.05



0.09Common stock price per share:High


17.94



13.29



13.81



15.75Low


12.51



10.97



10.92



11.37 46




---



##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Quarter EndedMarch 31


June 30


September 30


December 31(In Thousands, Except Per Share Amounts)2006Net sales

$
31,117


$
29,319


$
25,167


$
25,925Gross profit


23,983



22,462



18,768



19,849Operating income


5,240



7,076



2,987



2,499Income  before income taxes


5,522



7,419



3,303



2,792Income taxes


2,043



2,745



1,222



1,033Net income


3,479



4,674



2,081



1,759Earnings per share:Basic and diluted


0.12



0.16



0.07



0.06Common stock price per share:High


19.96



17.21



15.19



18.76Low


15.98



12.64



10.61



13.71   Earnings per share amounts for each quarter are required to
    be calculated independently and therefore may not total to the
    amount calculated for the year.
  (17)
    Recent
    accounting pronouncements  Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements, an amendment of ARB No. 51
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115
  Fair Value Measurements
 47




---



##### Table of Contents



RENAISSANCE
    LEARNING, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (18)
    Discontinued
    operations      2005(In Thousands)Operating loss

$
(192
)Income tax benefit


76Loss from operations, net


(116
)Loss on disposal


(642
)Tax benefit on disposal


1,342Gain on disposal, net


700Gain from discontinued operations, net

$
584   (19)
    Subsequent
    event   48




---



##### Table of Contents



Item 9.
    Changes
    In and Disagreements With Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures
  Rule 13a-15(e)
    Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f) Internal
    Control  Integrated Framework Internal Control  Integrated Framework
    Item 9B.
    Other
    Information  Not applicable.
 49




---



##### Table of Contents



PART III  Item 10.
    Directors
    and Executive Officers of the Registrant  Executive Officers.
  Directors.
  Section 16 Compliance.
  Code of Ethics. Regulation S-K.
  Audit Committee and Audit Committee Financial
    Expert.
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  Regulation S-K
 50




---



##### Table of Contents



Regulation S-K
  EQUITY
    COMPENSATION PLAN INFORMATION
    Number of SecuritiesAvailable for FutureNumber of Securities





Issuance Underto be Issued Upon


Weighted-Average


Equity CompensationExercise of


Exercise Price of


Plans (ExcludingOutstanding Options,


Outstanding Options,


Securities ReflectedPlan category

Warrants and Rights


Warrants and Rights


in First Column)Equity compensation plans approved by security holders


880,297


$
22.85



2,426,597
(1)Equity compensation plans not approved by security holders(2)


N/A



N/A



N/ATotal


880,297


$
22.85



2,426,597     (1)
    
    Of the 6,000,000 shares authorized for issuance under our
    1997 stock incentive plan, 2,187,203 remain available for future
    issuance as of December 31, 2007. Under our
    1998 employee stock purchase plan (ESPP),
    239,394 shares remain available for future issuance. We did
    not offer the ESPP to employees in 2007 and do not intend to
    offer the plan to employees in 2008.(2)
    
    Both of the companys equity compensation plans have been
    approved by shareholders.  Item 13.
    Certain
    Relationships and Related Transactions    Item 14.
    Principal
    Accountant Fees and Services   51




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  (a)(1)
    Financial Statements.  Consolidated
    Financial StatementsReport
    of Independent Registered Public Accounting FirmConsolidated
    Balance Sheets as of December 31, 2007 and 2006Consolidated
    Statements of Income for the years ended December 31, 2007,
    2006 and 2005Consolidated
    Statements of Shareholders Equity for the years ended
    December 31, 2007, 2006 and 2005Consolidated
    Statements of Cash Flows for the years ended December 31,
    2007, 2006 and 2005Notes
    to Consolidated Financial Statements   (a)(2) Financial Statement Schedules.
    (a)(3)
    Exhibits.    (b)
    Exhibits.    (c)
    Financial
    Statements Excluded from Annual Report to
    Shareholders.   52




---



##### Table of Contents



SIGNATURES
      By:
    /s/  Terrance
    D. Paul         Name

Title

Date/s/  Terrance
    D. PaulTerrance
    D. Paul

Chief Executive Officer
    (Principal Executive Officer) and a Director

February 27, 2008/s/  Mary
    T. MinchMary
    T. Minch

Senior Vice President-Finance,
    Chief Financial Officer and
    Secretary (Principal
    Financial and Accounting
    Officer)

February 27, 2008   Directors:
    Judith A. Paul, Addison L. Piper, John H. Grunewald, Gordon H.
    Gunnlaugsson, Harold E. Jordan and Judith A. Ryan  By:

/s/  Mary
    T. MinchMary
    T. MinchAttorney-In-Fact*



February 27, 2008     *
    
    Pursuant to authority granted by powers of attorney, copies of
    which are filed herewith. 53




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##### Table of Contents



Exhibit Index
  ExhibitNumber

Exhibit3
.1

Amended and Restated Articles of Incorporation of Registrant, as
    amended.(1)3
.2

Amended and Restated By-Laws of Registrant, as amended.(2)4
.1

Form of Stock Certificate.(3)10
.1

Amended and Restated Employee Stock Purchase Plan.(4)*10
.2

1997 Stock Incentive Plan (Amended and Restated Effective
    April 16, 2003).(5)*10
.3

Incentive Bonus Plan.(6)*10
.4

Form of Nonstatutory Stock Option Agreement between Registrant
    and certain employees and consultants.(7)*10
.5

Form of Nonstatutory Stock Option Agreement between Registrant
    and certain non-employee directors.(7)*10
.6

Form of Restricted Stock Agreement with certain executive
    officers.(8)*10
.7

Form of Restricted Stock Agreement with certain non-employee
    directors.(8)*10
.8

Form of Restricted Stock Unit Agreement with certain
    non-employee directors.(9)*10
.9

Form of Non-Employee Director Indemnification Agreement.(10)10
.10

Credit Agreement dated as of October 1, 2007 by and between
    Registrant and Wells Fargo Bank, National Association.(11)14
.1

Code of Business Conduct and Ethics.(12)21
.1

Subsidiaries of Registrant.23
.1

Consent of Independent Registered Public Accounting Firm.24
.1

Directors Powers of Attorney.31
.1

Section 302 Certification by Terrance D. Paul, Chief
    Executive Officer.31
.2

Section 302 Certification by Mary T. Minch, Chief Financial
    Officer.32
.1

Section 906 Certification by Terrance D. Paul, Chief
    Executive Officer.32
.2

Section 906 Certification by Mary T. Minch, Chief Financial
    Officer.99
.1

Schedule II  Valuation and Qualifying Accounts.     (1)
    
    Incorporated by reference to
    Registrants
    Form 10-Q
    for the quarter ended March 31, 2001 (SEC File
    No. 0-22187).(2)
    
    Incorporated by reference to
    Registrants
    Form 10-Q
    for the quarter ended March 31, 2000 (SEC File
    No. 0-22187).(3)
    
    Incorporated by reference to
    Registrants Amendment No. 2 to
    Form 8-A
    filed on August 9, 2006 (SEC File
    No. 0-22187).(4)
    
    Incorporated by reference to
    Registrants
    Form 10-K
    for the fiscal year ended December 31, 2000 (SEC File
    No. 0-22187).(5)
    
    Incorporated by reference to
    Registrants
    Form S-8
    filed on April 18, 2003 (SEC File
    No. 333-104622).(6)
    
    Incorporated by reference to
    Registrants
    Form 10-Q
    for the quarter ended June 30, 2003 (SEC File
    No. 0-22187).(7)
    
    Incorporated by reference to
    Registrants
    Form 8-K
    filed on March 7, 2005 (SEC File
    No. 0-22187).(8)
    
    Incorporated by reference to
    Registrants
    Form 8-K
    filed on May 10, 2006 (SEC File
    No. 0-22187).(9)
    
    Incorporated by reference to
    Registrants
    Form 10-Q
    for the quarter ended September 30, 2006 (SEC File
    No. 0-22187).(10)
    
    Incorporated by reference to
    Registrants
    Form 8-K
    filed on January 29, 2007 (SEC File
    No. 0-22187).(11)
    
    Incorporated by reference to
    Registrants
    Form 10-Q
    for the quarter ended September 30, 2007 (SEC File
    No. 0-22187).(12)
    
    Incorporated by reference to
    Registrants
    Form 10-K
    for the fiscal year ended December 31, 2003 (SEC File
    No. 0-22187).*
    
    Management contract or compensatory
    plan or arrangement.  54495-8036,
 54