EX-99.1
2
as2006ex991.txt

                                                                    Exhibit 99.1

                   ALPHASMART ANNOUNCES YEAR-END 2004 RESULTS

    LOS GATOS, Calif., Feb. 8 /PRNewswire-FirstCall/ -- AlphaSmart, Inc.
(Nasdaq: ALSM) today announced its unaudited financial results for the fourth
quarter and fiscal year ended December 31, 2004. Final results were consistent
with the preliminary expectations disclosed by the company on January 25, 2005.

    AlphaSmart's fourth quarter 2004 net revenue was $6.8 million, compared with
$8.3 million for the fourth quarter of 2003. Net loss under generally accepted
accounting principles (GAAP) was $220,000, or a loss of $0.01 per share on a
fully diluted basis, compared with net income of $413,000, or $0.04 per share on
a fully diluted basis, for the fourth quarter of 2003.

    The fourth quarter 2004 net loss under GAAP included the effects of charges
of $160,000 for restructuring costs, $100,000 for legal costs related to
litigation, and $115,000 due to a change in forecasted volume related to product
royalties under AlphaSmart's license agreement with PalmSource, Inc. for the
Palm OS operating system. In the aggregate, these charges accounted for $0.02
per share on a fully diluted basis.

    As a result of AlphaSmart's initial public offering in February 2004, the
number of weighted average shares outstanding on a fully diluted basis increased
by 35% to 14.8 million shares for the fourth quarter of 2004 from 11.0 million
shares for the same quarter a year earlier.

    For the fiscal year ended December 31, 2004, AlphaSmart's net revenue was
$35.5 million, compared with $38.9 million for 2003. Net income under GAAP was
$2.2 million, or $0.15 per share on a fully diluted basis, compared with $3.4
million, or $0.31 per share on a fully diluted basis, for 2003. Net income for
2004 included the effects of $375,000 in aggregate charges for the fourth
quarter and $588,000 in interest and a premium paid on the redemption of
mandatorily redeemable preferred stock in the first quarter, which together
accounted for $0.06 per share on a fully diluted basis.

    On January 25, 2005, AlphaSmart announced a definitive agreement to merge
with Renaissance Learning, Inc. (Nasdaq: RLRN), a leading provider of learning
information systems and school improvement programs for pre-K-12 schools, in a
tax-free reorganization valued at approximately $57 million. The transaction is
expected to be completed in the second quarter of 2005, subject to approval by
AlphaSmart stockholders, government regulatory review, and other customary
closing conditions described in the definitive merger agreement.

    AlphaSmart plans to conduct a management teleconference on its year-end
results at 2:00 p.m. PST / 5:00 p.m. EST today. This call will be webcast live
and archived for all investors on the AlphaSmart website at
www.alphasmart.com/ir/. In addition, a phone replay of the call will be
available at (719) 457-0820, access code 2815545, through February 15, 2005.

    AlphaSmart intends to discuss financial and other statistical information on
today's teleconference. This information will also be available on the company's
website at www.alphasmart.com/ir/ in the webcast described above.



    AlphaSmart, Inc.
    AlphaSmart, Inc. is a provider of affordable, portable personal learning
solutions for the K-12 classroom. Its portable computer-companion products are
used by students to enhance writing, keyboarding and comprehension, and have
been adopted by more than 8,000 school districts in the United States and other
countries. Based in Los Gatos, California, the company was founded in 1992 by
former Apple Computer engineers.

    Forward-Looking Statements Safe Harbor
    This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including statements related to AlphaSmart's financial
results for the fourth quarter and fiscal year ended December 31, 2004 and to
AlphaSmart's definitive agreement to merge with Renaissance Learning, Inc. and
the expected closing of that merger. Any such forward-looking statements may
involve risks and uncertainties that could cause actual results or events to
differ materially from any future results or events encompassed within the
forward-looking statements. Factors that could cause or contribute to such
differences include the possibility that final results for the fourth quarter
and fiscal year ended December 31, 2004 could vary, perhaps materially,
following completion of the audit of our financial statements by our independent
registered public accounting firm, failure to satisfy the closing conditions of
the merger agreement, and unexpected delays in closing the merger. AlphaSmart
expressly disclaims a duty to provide updates to forward- looking statements,
whether as a result of new information, future events or other occurrences.

    Additional Information and Where to Find It
    AlphaSmart and Renaissance Learning intend to file a registration statement
on Form S-4, which will include a proxy statement/prospectus and other relevant
materials in connection with the proposed merger transaction involving
AlphaSmart and Renaissance Learning. INVESTORS AND SECURITY HOLDERS ARE URGED TO
READ THIS FILING WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT
INFORMATION REGARDING THE PROPOSED MERGER TRANSACTION. Investors and security
holders may obtain free copies of these documents and other documents filed with
the SEC when they become available at the SEC's website at www.sec.gov. In
addition, investors and security holders may obtain free copies of the documents
filed with the SEC by AlphaSmart at AlphaSmart's website at www.alphasmart.com
or by contacting AlphaSmart investor relations at IR@alphasmart.com or via
telephone at (408) 355-1029. Investors and security holders may obtain free
copies of the documents filed with the SEC by Renaissance Learning by directing
such requests to Renaissance Learning, Inc., Attention: Corporate Secretary,
2911 Peach Street, P.O. Box 8036, Wisconsin Rapids, Wisconsin 54995 or via
telephone at (715) 424-3636.

    Renaissance Learning, AlphaSmart and their respective directors and
executive officers may be deemed to be participants in the solicitation of
proxies from the stockholders of AlphaSmart in connection with the merger
transaction. Information regarding directors and executive officers of
AlphaSmart and Renaissance Learning and their respective interests in the
proposed transaction will be available in the proxy statement/prospectus of
AlphaSmart and Renaissance Learning described above and other relevant materials
to be filed with the SEC.

    NOTE: AlphaSmart is a registered trademark of AlphaSmart, Inc. in the United
States and other countries. All other trademarks are the property of their
respective owners.



                                ALPHASMART, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

Dec. 31, Dec. 31, 2004 2003 ------------ ------------ (unaudited) ASSETS Current assets: Cash and cash equivalents $ 4,070 $ 2,285 Accounts receivable, net 4,052 4,405 Inventory 4,087 2,818 Deferred tax assets 498 572 Other current assets 3,225 898 Total current assets 15,932 10,978 Property and equipment, net 572 709 Deferred tax assets, net of current portion 285 361 Other assets 2,193 1,644 Total assets $ 18,982 $ 13,692 LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 750 $ 1,892 Accrued liabilities 2,171 3,957 Income taxes payable 642 625 Borrowings under loan facility, current portion -- 2,680 Capital lease obligations, current portion 92 76 Total current liabilities 3,655 9,230 Borrowings against line of credit -- 873 Borrowings under loan facility, net of current portion -- 1,340 Capital lease obligations, net of current portion 24 106 Other long-term liabilities 18 60 Mandatorily redeemable preferred stock -- 9,747 Total liabilities 3,697 21,356 Redeemable convertible preferred stock -- 13,468 Stockholders' equity (deficit) 15,285 (21,132) Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit) $ 18,982 $ 13,692
ALPHASMART, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
Three Months Ended Twelve Months Ended --------------------------- --------------------------- Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2004 2003 2004 2003 ------------ ------------ ------------ ------------ (unaudited) (unaudited) Net revenue $ 6,805 $ 8,264 $ 35,461 $ 38,864 Cost of revenue 3,777 3,935 17,149 18,803 Gross margin 3,028 4,329 18,312 20,061 Operating expenses: Research and development 567 768 2,410 3,177 Sales and marketing 1,750 1,557 7,084 5,971 General and administrative 1,269 1,067 4,613 4,163 Total operating expenses 3,586 3,392 14,107 13,311 Operating profit (loss) (558) 937 4,205 6,750 Other income (expense), net 48 (248) (580) (1,043) Profit (loss) before income taxes (510) 689 3,625 5,707 Provision for (benefit from) income taxes (290) 276 1,413 2,283 Net income (loss) $ (220) $ 413 $ 2,212 $ 3,424 Net income (loss) per share: Basic $ (0.01) $ 0.07 $ 0.16 $ 0.62 Diluted $ (0.01) $ 0.04 $ 0.15 $ 0.31 Shares used in computing per share amounts: Basic 14,800 5,597 13,803 5,550 Diluted 14,800 10,964 14,727 10,955
SOURCE AlphaSmart, Inc. -0- 02/08/2005 /CONTACT: Investors, James M. Walker, Vice President, Chief Financial Officer and Chief Operating Officer of AlphaSmart, Inc., +1-408-355-1029, or IR@alphasmart.com/ /Web site: http://www.alphasmart.com /

The following information was filed by Alphasmart Inc on Tuesday, February 8, 2005 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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