SOURCE: SCIENTIFIC LEARNING CORP.

September 12, 2005 21:54 ET

Scientific Learning Corp. Reaffirms Guidance

Presentation at ThinkEquity Partners 3rd Annual Growth Conference to Be Webcast

OAKLAND, CA -- (MARKET WIRE) -- September 12, 2005 -- Scientific Learning Corp. (NASDAQ: SCIL) today reaffirmed its previously issued guidance for 2005 and 2006. For the year ending December 31, 2005, revenue is expected to be in the range of $44.0 to $46.0 million, an increase of approximately 40% to 50%. The Company expects to report a net profit for 2005 between $5.6 million and $6.4 million and basic earnings per share of $.33 to $.38. Diluted earnings per share are expected to be in the range of $.31 to $.35. These estimates include approximately $1.6 million of stock option expense for the adoption of FAS 123®. The Company has not made a final determination whether to adopt FAS 123® in 2005.

"Our sales outlook for the second half remains very positive, despite the devastation of hurricane Katrina, which will have negative consequences for our business as well," said Robert C. Bowen, Chairman and CEO. "The growing acceptance of our Fast ForWord® products, new product additions to our Fast ForWord to Reading line, and a significantly larger sales force make us optimistic about our growth in the balance of 2005 and 2006. We continue to expect that booked sales will grow in the range of 45% to 65% in the second half of 2005 and in the range of 20% to 30% in 2006."

"We expect revenue to be above sales in 2005, reflecting the impact of the strategic pricing change we made late in 2004. As previously discussed, this pricing change results in recognition of the majority of the product revenue from perpetual licenses at shipment. In addition, revenue in 2005 is also benefiting from the roll off of deferred revenue from previous years' sales," added Mr. Bowen. "In 2006, we expect the relationship between booked sales and revenue to reverse, with booked sales higher than revenue."

For the year ended December 31, 2006, the company expects revenue to increase in the range of 5% to 10% and to achieve an operating margin in the range of 8% to 10%.

The above targets represent the Company's current revenue and earnings goals as of the date of this release and are based on information current as of September 12, 2005. Scientific Learning does not expect to update the business outlook until the release of its next quarterly earnings announcement. However, the Company may update the business outlook or any portion thereof at any time for any reason.

ThinkEquity Partners 3rd Annual Growth Conference

As previously announced, Robert C. Bowen, Chairman and Chief Executive Officer, and Jane A. Freeman, Senior Vice President and Chief Financial Officer, will present at ThinkEquity Partners 3rd Annual Growth Conference at the Ritz-Carlton Hotel in San Francisco, CA. The presentation will begin at 8:00 a.m. (Pacific Time) on Wednesday, September 14, 2005. A live audio webcast of the presentation can be accessed by going to http://www.wsw.com/webcast/tep6/scil/. A replay of this webcast will be made available on the Scientific Learning web site in the Investor Relations section starting on September 15, 2005.

About Scientific Learning Corporation

Scientific Learning produces the patented Fast ForWord® family of products, a series of computer-delivered reading intervention products that complement reading instruction. Based on more than 30 years of neuroscience and cognitive research, Fast ForWord products help children, adolescents, and adults build the cognitive skills critical for improving reading and language skills.

The exercises align with the scientifically based reading-research guidelines and the requirements of the No Child Left Behind Act. The efficacy of the products has been confirmed by independent researchers, by evaluating the results of standardized achievement tests, and by Scientific Learning's scientists.

For more information about Scientific Learning and its products, visit our Web sites at www.scientificlearning.com and www.brainconnection.com, or call toll-free 888-452-7323.

This press release contains projections and other forward-looking statements that are subject to the safe harbor created by the federal securities laws. Such statements include, among others, statements relating to projected levels of revenue, sales, margins, expenses, profit or loss, and other financial results. Such statements are subject to substantial risks and uncertainties. Actual events or results may differ materially as a result of many factors, including but not limited to: general economic conditions; the extent of acceptance and purchase of the Company's products by target customers; seasonality and sales cycles in Scientific Learning's markets; competition; availability of funding to purchase the Company's products and generally available to schools; the extent to which the Company's marketing, sales and implementation strategies are successful; the Company's ability to continue to demonstrate the efficacy of its products, which depends on how the programs are administered, the demography of participants and other factors; the Company's ability to recruit and retain key personnel; the Company's ability to timely execute its new product development strategies; pricing pressures; expense levels at the Company; risks associated with litigation and intellectual property; and other risks detailed in the Company's SEC reports, including but not limited to the 2004 Report on Form 10-K (Part 1. Item 1. Business), filed April 15, 2005, as amended by the Form 10-K/A filed May 26, 2005 and the Report on Form 10-Q filed August 15, 2005 (Part1, Item 2. Management's Discussion and Analysis).

Contact Information

  • Media Contact:

    Mary Anne Petrillo
    Director of Marketing
    Scientific Learning Corporation
    (510) 625-2218
    Email Contact

    Investor Contact:

    Jane A. Freeman
    Senior Vice President and
    Chief Financial Officer
    Scientific Learning Corporation
    (888) 665-9707, ext. 5526
    Email Contact