Scientific Learning (SCIL)

Business Outlook

“We look forward to good growth and cash flow in 2007. The demand for our unique family of Fast ForWord products continues to grow as demonstrated by our record sales pipelines and year to date results,” said Mr. Bowen. “However, sales are closing at a slower pace than we expected and our sales mix is resulting in more revenue deferred than planned. As a result, we are revising our guidance for the year.”

For the year ending December 31, 2007, revenue is expected to be in the range of $46.5 to $47.5 million, compared to $41.0 million in 2006. The Company expects to report net income between $1.3 and $2.0 million compared to $208,000 in 2006. Fully diluted earnings per share in 2007 are expected to be in the range of $.07 to $.11 compared to $.01 in 2006. These estimates have been updated to include estimated pretax costs of $614,000 for legal, accounting and printing costs for our recent secondary offering and $2.1 million of stock-based compensation expense.

The projection for 2007 assumes an effective tax rate of 7%. Scientific Learning expects to reevaluate the full valuation allowance for its deferred tax asset as part of the 2008 planning process and may release part of the valuation allowance during the fourth quarter of 2007. We are unable to estimate the size of any such release at this time. The remaining valuation allowance will continue to be evaluated over future quarters.

For the year ending December 31, 2008, revenue is expected to be in the range of $60.0 to $63.0 million. The Company expects to report a net profit of between $4.5 and $5.3 million. Fully diluted earnings per share in 2008 are expected to be in the range of $.24 and $.30. These estimates include estimated pretax expense of $2.9 million for stock-based compensation. “With strong demand for Fast ForWord and our record pipelines, we are not presently changing our guidance for 2008,” stated Mr. Bowen. “We will update our guidance as we find appropriate after we complete our 2008 operating plan.”

The projection for 2008 assumes an effective tax rate of 35%, reflecting the expected limitation of the Company’s use of its net operating loss carry forward and differences between book and taxable income. Changes in the valuation allowance for the deferred tax asset may also impact the reported tax rate.

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 October 23, 2007. Scientific Learning generally does not 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.

Business Outlook

“We look forward to another strong year in 2007. The demand for our unique family of Fast ForWord products continues to grow as demonstrated by our record sales pipelines and first half results,” said Mr. Bowen. “We remain comfortable with our previous operating guidance for the year. “

For the year ending December 31, 2007, revenue is expected to be in the range of $49.0 to $52.0 million, compared to $41.0 million in 2006. The Company expects to report a net profit of between $3.1 and $4.0 million compared to $208,000 in 2006. Fully diluted earnings per share in 2007 are expected to be in the range of $.17 to $.22 compared to $.01 in 2006. These estimates have been updated to include estimated pretax costs of $650,000 for legal, accounting and printing costs and $2.2 million of stock-based compensation expense.

The projection for 2007 assumes an effective tax rate of 4%. Scientific Learning expects to reevaluate the full valuation allowance for its deferred tax asset as part of the 2008 planning process and may release part of the valuation allowance during the fourth quarter of 2007. It is unable to estimate the size of any such release at this time. The remaining valuation allowance will continue to be evaluated over future quarters.

For the year ending December 31, 2008, revenue is expected to be in the range of $60.0 to $63.0 million. The Company expects to report a net profit of between $4.5 and $5.3 million. Fully diluted earnings per share in 2008 are expected to be in the range of $.24 and $.30. These estimates include estimated pretax expense of $2.9 million for stock-based compensation.

The projection for 2008 assumes an effective tax rate of 35%, reflecting the expected limitation of the Company’s use of its net operating loss carry forward and differences between book and taxable income. Changes in the valuation allowance for the deferred tax asset may also impact the reported tax rate.

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 July 25, 2007. 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.

Business Outlook

“We have not changed our expectations for 2007 financial results,” said Mr. Bowen. For the year ending December 31, 2007, revenue is expected to be in the range of $49.0 to $52.0 million, compared to $41.0 million in 2006. The Company expects to report a net profit of between $3.7 and $4.6 million compared to $208,000 in 2006. Fully diluted earnings per share in 2007 are expected to be in the range of $.20 to $.25 compared to $.01 in 2006.

Business Outlook

“We expect 2007 to be another record year for Scientific Learning. Educators’ interest in our unique family of Fast ForWord products continues to grow. We expect our 2006 product introductions, growing sales organization and strong customer relationships to keep us on track for another strong year. Booked sales and revenue growth is expected to be in the range of 20% to 25% in 2007,” said Mr. Bowen.

For the year ending December 31, 2007, revenue is expected to be in the range of $49.0 to $52.0 million, compared to $41.0 million in 2006. Net income is expected to range from $3.7 to $4.6 million. This includes an estimated $1.8 million (pre-tax) of stock-based compensation expenses. Diluted income per share for 2007 is expected to be in the range of $.20 to $.25 compared to $.01 in 2006.

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 February 14, 2007. Scientific Learning does not expect to update the business outlook until its next quarterly earnings announcement. However, the Company may update the business outlook or any portion thereof at any time for any reason.

Business Outlook

“We expect 2006 to be a record sales year. The demand for our unique family of Fast ForWord products continues to grow, as demonstrated by our strong sales gains in the first nine months of the year,” said Mr. Bowen. “Consequently, we are raising our booked sales guidance for 2006 from $43.0 million to $45.0 million, compared to $31.5 million in 2005. We expect booked sales growth this year of more than 35%, well above our long-term target of 20% to 30%.”

For the year ending December 31, 2006, revenue is now expected to be in the range of $39.0 to $41.0 million, compared to $40.3 million in 2005. Net income is expected to range from a loss of $500,000 to a profit of $500,000. This includes an estimated $2.1 million of stock-based compensation expenses associated with the adoption of FAS 123R in 2006. Basic income per share for 2006 is expected to be in the range of ($.03) to $.03.

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 November 7, 2006. Scientific Learning does not expect to update the business outlook until the release of its year- end results. However, the Company may update the business outlook or any portion thereof at any time for any reason.

Business Outlook

“We continue to expect a strong year in 2006. The demand for our unique family of Fast ForWord products continues to grow as demonstrated by our record sales pipelines and strong first half results,” said Mr. Bowen. “Consequently, we are raising our booked sales guidance for 2006 to reflect a 25% to 35% annual growth rate. Our long-term targeted booked sales growth remains 20% to 30%.

For the year ending December 31, 2006, revenue is expected to be in the range of $38.0 to $40.0 million, compared to $40.3 million in 2005. The Company expects to report a net loss of between breakeven and $1.0 million. One factor driving expense growth is the adoption of FAS 123R which requires the expensing of stock-based compensation. The estimated equity compensation expense in 2006 is $2.1 million. For the full year 2006, basic loss per share is expected to be in the range of $.00 to $.06.

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 August 9, 2006. 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.

Business Outlook

“We continue to expect a strong year in 2006. The demand for our unique family of Fast ForWord products continues to grow as represented by our record sales pipelines and strong first quarter results,” said Mr. Bowen. “There is no change in our guidance for the year. Our target is to grow booked sales in the range of 20% to 30% in 2006.”

For the year ending December 31, 2006, revenue is expected to be in the range of $36.0 to $38.0 million, compared to $40.3 million in 2005. The Company expects to report a net loss of between $1.0 and $2.0 million, primarily due to the adoption of FAS 123R which requires the expensing of stock-based compensation. The estimated impact of FAS 123R is $1.7 million. Basic loss per share is expected to be in the range of $.06 to $.12.

“2006 will be the final year of transition in our revenue model. A strategic pricing change in late 2004 has resulted in a higher proportion of revenue recognized on an up front basis. 2005 revenue benefited strongly as well from the large current deferred revenue balance from prior years’ transactions. 2006 revenue will not receive the same benefit from prior period transactions as we saw in 2005,” said Mr. Bowen. “In 2005, revenue was $8.8 million in excess of booked sales. We expect this relationship to reverse in 2006 with revenue $2.0-$3.0 million below booked sales. In 2007, we expect revenue and sales growth to be much more aligned.”

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 May 11, 2006. 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.

Business Outlook

“While educators have been more cautious in their buying decisions than we anticipated, our outlook remains positive. We believe the fundamental need for our Fast ForWord products to improve student learning is unchanged,” stated Mr. Bowen. “We expect resumed growth in booked sales in 2006 in our target 20%-30% growth range.”

For the year ending December 31, 2006, the Company is lowering its guidance. Revenue is expected to be in the range of $36.0 million to $38.0 million compared to $40.3 million in 2005. As a result of the lower revenue and the adoption of FAS 123(R), which requires expensing of stock-based compensation, the Company expects to report a net loss between $1.0 million and $2.0 million. The estimated impact of FAS 123(R) is $1.7 million. Basic loss per share is expected to be in the range of $.06 to $.12.

“2006 will be the final year of transition for our business as a result of the strategic pricing change we made in late 2004. We expect that the sales growth we project for 2006 will not result in a similar rate of revenue growth. As we anticipated when we reported year end 2004 results, 2005 revenue benefited from a substantial roll-off of deferred revenue from prior year’s sales. This will not be repeated in 2006,” said Mr. Bowen. “In 2005, booked sales were below revenue. We expect this relationship to reverse in 2006, with booked sales above revenue. In 2007, sales and revenue growth should be much more aligned.”

The above information represents the Company’s current expectations as of the date of this release and is based on information current as of February 23, 2006. 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.

Business Outlook

“While there is more caution in K-12 buying decisions than we anticipated at the beginning of the year, we believe the funding environment continues to improve and the long-term outlook is positive. Based on the lengthening sales cycle, we are anticipating modest booked sales growth in the fourth quarter and an overall booked sales decline for the 2005 year in the 5% to 10% range,” stated Mr. Bowen. “Based on our increased sales capacity, record sales pipelines, expanded product offerings, growing user acceptance of the Fast ForWord family of products, and no multiple million dollar transactions in

Business Outlook

“We continue to expect an improvement in the education spending environment in 2005,” said Mr. Bowen. “In addition, the growing acceptance of our Fast ForWord® products, new product additions to our Fast ForWord to Reading line, and a growing sales force make us optimistic about our growth in 2005 and 2006. We expect booked sales will grow in the range of 15% to 25% in 2005 and in the range of 20% to 30% in 2006.”

“We expect 2005 revenue to be above sales in 2005, reflecting the impact of our strategic pricing change combined with the strong roll off of deferred revenue from previous years’ sales,” added Mr. Bowen. “In 2006, we expect this relationship to reverse, with booked sales higher than revenue.”

For the year ending December 31, 2005, the Company is increasing its guidance. Revenue is expected to be in the range of $48.0 to $51.0 million, an increase of approximately 55% to 65%. The revenue projections include both deferred revenue from previous sales and the revenue from sales of licenses recognized during the period of sale. The Company expects to report a net profit for 2005 between $7.9 million and $8.5 million and primary earnings per share of $.47 to $.50. Fully diluted earnings per share are expected to be in the range of $.43 to $.46.

Revenue and earnings growth rates in 2005 are not expected to continue in 2006. For the year ended December 31, 2006, the company expects revenue to increase in the range of 10% to 15% and to achieve an operating margin in the range of 15% to 17%.

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 May 26, 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.