23rd Jun 2005 07:02
Pearson PLC23 June 2005 23 June 2005 PEARSON TO ACQUIRE AGS PUBLISHING TARGETS GROWTH IN FUNDING FOR AT-RISK STUDENTS; STRENGTHENS POSITION IN SCHOOL TESTING AND PUBLISHING Pearson, the international media and education company, today announced theacquisition of AGS Publishing from WRC Media for $270 million in cash. Theacquisition will strengthen Pearson's education business in two fast-growingsegments of the US School market: testing and publishing for students withspecial educational needs. AGS, based in Shoreview, Minnesota, publishes assessments and curriculummaterials for US school psychologists, teachers and students. It has aparticular focus on supporting students who are at-risk or performing belowgrade level, including those whose first language is not English. These areasare attracting new attention and funding with the US federal requirement underNo Child Left Behind (NCLB) that all students achieve 'Adequate Yearly Progress'towards mandated state standards in reading, math and science. According to the US Department of Education, approximately three millionstudents (ages 6-21) are being served in the learning-disabled category of theIndividuals with Disabilities Education Act (IDEA). The Special EducationExpenditure Project calculated that nationwide, expenditures for educatingstudents with disabilities made up almost 22 percent of the total expendituresfor elementary and secondary educational services. The number of Englishlanguage learners aged 5-17 in the US grew from 2.4 million in 1990 to 3.5million in 2000, according to the US Census. AGS has grown rapidly in recent years, with sales increasing by more than 20% inboth 2004 and the year to date. AGS's operating profit was $23m in 2004 beforecorporate overheads and is expected to increase significantly as the businessbecomes part of Pearson. Pearson expects the acquisition to enhance adjustedearnings per share from 2006, its first full year, including integration costs,and to be earnings neutral in 2005. Pearson also expects the acquisition to meetits cost of capital in 2006 and to enhance return on invested capital from 2007*. AGS's net asset value was $26m at 31 December 2004. Steve Dowling, President of Pearson's School companies, said: "The central goalof federal education policy is for all students to demonstrate progress towardsstate standards in key subjects. That requires a focus on students with specialeducational needs. AGS reaches these audiences with individually and groupadministered assessments and fills out our curriculum offering from middleschool to high school for low achieving students. This acquisition extends ourposition in a fast-growing market segment and adds to the intellectual property,growth and profitability of our school business." In school testing, AGS publishes a range of copyrighted assessments,administered by school psychologists or special education professionals withindividual students, to assess areas including cognitive ability, educationalachievement, speech/language and personal and social development. AGS alsopublishes a series of 'formative' assessments, administered in the classroom, totrack student performance in reading and math towards 'Adequate Yearly Progress'under No Child Left Behind. The AGS assessment products enable teachers todiagnose special needs, assess where students are struggling and prescriberemedial instruction or intervention. AGS's assessment products add breadth and strong branded assessments in the areaof special educational needs to Pearson's Assessments & Testing business, aleader in psychological and educational assessments. Pearson has particularstrength and leadership in NCLB-required high stakes testing including testdevelopment, scoring, processing and reporting. In school publishing, AGS's curriculum-based instructional materials complementGlobe Fearon, an imprint of the Pearson Learning Group. The AGS products includetextbooks and workbooks in core curriculum areas, test preparation andindependent life skills. The textbooks are geared to a low reading level butwith content and design appropriate for middle and high school students. Thesematerials support the individual learning needs of students who are at-risk andrequire educationally appropriate materials. The acquisition, which is subject to regulatory approval, is expected to becompleted in the third quarter. AGS will become part of the Pearson SchoolCompanies with its president, Kevin Brueggeman, joining the Pearson team andreporting to Steve Dowling.AGS's assessment and curriculum staff and product lines will remain in theMinneapolis area. * Note: operating profit, earnings and ROIC guidance in this announcement isstated before amortisation of intangible assets. IFRS3 requires that intangibleassets other than goodwill (eg intellectual property, customer lists) are 'fairvalued' at the point of acquisition and amortised through the P&L (with no cashimpact) over their estimated useful lives. We have begun the fair valuation ofAGS Publishing's intangible assets as required under IFRS3 and we expect tocomplete it around the time of closing. For more information: Luke Swanson/ Charlotte Elston: +44 (0) 207 010 2310 Wendy Spiegel: 800 745-8489/ David Hakensen: 952 681 3040 Notes to Editors: About AGS PublishingFor nearly fifty years, AGS Publishing has been a leading provider of productsand services to assess cognitive ability, achievement, behaviour, speech,language, and personal and social adjustment. The company's educational testingand measurement services are used by schools and education systems nationwide tosupport quantitative evaluation of educational progress. In addition to testingand measurement tools, AGS Publishing provides curriculum materials forstruggling students. Through scientifically based and technology-enabledproducts and services, AGS Publishing continues to stand with educators aspartners to emphasize the skill development that is essential to lifelonglearning. About Pearson EducationEducating 100 million people worldwide, Pearson Education (www.pearsoned.com) isthe global leader in educational publishing, providing scientificallyresearch-based print and digital programmes to help students of all ages learnat their own pace, in their own way. While virtually all students in Americalearn from a Pearson programme at some point in their educational career, nearly25,000 US schools and one million teachers and students use Pearson technologyto help instruct preK-12 students and manage how they are doing. Pearsonprovides schools with custom services to create, deliver, score and reporteducational assessments, both in print and online, that help promote learning.In Higher Education, about three million college students are currently pursuingtheir courses online using Pearson Higher Education's products. The company ishome to such renowned publishing brands as Pearson Prentice Hall, PearsonLongman, Pearson Scott Foresman, Pearson Early Learning, Pearson Learning Group,Pearson Digital Learning, and Pearson Addison Wesley. Pearson Education is partof Pearson (LSE: PSON; NYSE: PSO), the international media and educationcompany. In addition to Pearson Education, Pearson's primary operations includethe Financial Times Group and the Penguin Group. About Pearson Assessments Pearson Assessments is the premier provider of psychological assessmentsand scoring solutions. For more than 40 years, it has provided tools for use byprofessionals to help assess adult personality, child and adolescentpersonality, biopsychosocial issues, achievement and development, and careerinterests and skills in a variety of settings. About Pearson Learning GroupThe Pearson Learning Group is a leading publisher of supplemental materials fora wide range of ability levels for grades preK-12, and includes the imprintsModern Curriculum Press, Dale Seymour Publications, Celebration Press, andDominie Press, as well as Globe Fearon, and Globe Fearon's Pacemaker Curriculumfor special education students, serving middle and high school students. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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