SOURCE: Varsity Group Inc.

May 16, 2005 16:58 ET

Varsity Group Reports Financial Results for First Quarter 2005 and Schedules Conference Call for May 26, 2005

WASHINGTON, DC -- (MARKET WIRE) -- May 16, 2005 -- Varsity Group Inc. (NASDAQ: VSTY) today reported its results for the first quarter of 2005 and announced management will host a conference call on Thursday, May 26, 2005 to discuss financial and operational results and other business highlights.

Total revenues for the first quarter were $2.3 million, compared to $1.8 million for the same period in 2004, an increase of 28%. Revenues were positively impacted by the Company's continued success in increasing the number of schools served by its eduPartners program. Net loss for the quarter was $502,000, or $0.03 per basic and diluted share, compared to a net loss of $351,000, or $0.02 per basic and diluted share, in the first quarter of 2004, driven largely by the Company's continuing investment in the expansion, development and support of its eduPartners program and overhead costs associated with its efforts to meet the numerous reporting and control requirements imposed by the Sarbanes-Oxley Act.

"We believe our eduPartners program offers the finest online bookstore solution in the marketplace today. We continue to enhance the quality of the program and extend the eduPartners footprint nationwide," commented Eric J. Kuhn, Chairman and Chief Executive Officer of Varsity Group Inc. "We look forward to discussing our recent results on May 26th at which point we will have substantially completed our eduPartners sales efforts for back-to-school 2005."

The Company's conference call, specific details of which will be announced separately, will be available by live call and archived for investor access following the completion of the call.

ABOUT VARSITY GROUP INC.

Varsity Group Inc. is a leading provider of online bookstore solutions for educational institutions. Varsity Group's eduPartners program offers educational institutions a comprehensive eCommerce solution for their textbook procurement operations. EduPartners today comprises a nationwide network of hundreds of educational institutions that have chosen to move their bookstore operations online through its innovative and convenient outsource model.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Varsity Group's business that are not historical facts are "Forward-Looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2004.

                           VARSITY GROUP INC.
      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                 (in thousands, except per share data)

                                                      Three Months Ended
                                                           March 31,
                                                       2005        2004
                                                     --------    --------
Net sales:
     Product                                         $  2,146    $  1,659
     Shipping                                             198         168
                                                     --------    --------
          Total net sales                               2,344       1,827
                                                     --------    --------

Operating expenses:
     Cost of product                                    1,436       1,199
     Cost of shipping                                     161         137
     Sales and marketing                                  849         552
     Product development                                  129          25
     General and administrative                           730         524
     Non-cash compensation                                  -          23
                                                     --------    --------
          Total operating expenses                      3,305       2,460
                                                     --------    --------

Loss from operations                                     (961)       (633)
                                                     --------    --------

     Other income, net                                    151          60
                                                     --------    --------

Loss before income taxes                                 (810)       (573)
                                                     --------    --------

Income tax benefit                                        308         222
                                                     --------    --------

Net loss                                             $   (502)   $   (351)
                                                     --------    --------

Net income per share:
     Basic and diluted                               $  (0.03)   $  (0.02)
                                                     ========    ========

Weighted average shares:
     Basic and diluted                                 16,769      16,631
                                                     ========    ========


                  VARSITY GROUP INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                             (in thousands)

                                                     March 31, December 31,
                                                       2005        2004
                                                     --------    --------
ASSETS
Current assets:
     Cash and cash equivalents                            856       4,865
     Short-term investments                             4,000       7,000
     Accounts receivable, net                             513       1,251
     Inventory                                          2,296       2,463
     Other                                                395       1,248
                                                     --------    --------
           Total current assets                         8,060      16,827
Property, plant and equipment, net of depreciation        266         252
Software developed for internal use, net of
 amortization                                             783         708
Deferred income taxes                                   6,209       5,901
Long-term investments                                  13,381       6,993
Other assets                                               26          31
                                                     --------    --------
           Total assets                              $ 28,725    $ 30,712
                                                     ========    ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                $    468    $    696
     Other accrued expenses and other current
      liabilities                                         415       1,569
     Taxes payable                                        422         459
                                                     --------    --------
           Total current liabilities                    1,305       2,724

     Total stockholders' equity                        27,420      27,988
                                                     --------    --------
     Total liabilities and stockholders' equity      $ 28,725    $ 30,712
                                                     ========    ========

Supplemental Balance Sheet Information:
    Total cash, cash equivalents, short-term and
     long-term investments                           $ 18,237    $ 18,858

Contact Information

  • Contact:

    Jack Benson
    Company: Varsity Group Inc.
    Title: Chief Financial Officer
    Voice: 202-667-3400
    URL: http://varsity-group.com