Princeton Review (REVU) 8-K The Princeton Review Reports Third Quarter 2006 Operating Results

Exhibit 99.1

Contact:
Harriet Brand
The Princeton Review
(212) 874-8282 ext. 1091

FOR IMMEDIATE RELEASE

The Princeton Review Reports Third Quarter 2006 Operating Results

New York, NY, November 14, 2006— The Princeton Review, Inc. (NASDAQ: REVU), a leading provider of test preparation, educational support, and college admissions services, today announced financial results for the third quarter ended September 30, 2006.

As discussed in detail below under “Pending Restatement”, certain financial information reported in this release is subject to change pending the conclusion of the Company’s ongoing comment and response process with the SEC relating to the Company’s accounting for its Series B-1 Convertible Redeemable Preferred Stock.

Third Quarter and Nine-Month 2006 Financial Highlights

• Revenue for the quarter ended September 30, 2006 increased 3.2% to $35.9 million from $34.8 million in 2005. Revenue for the nine months ended September 30, 2006 increased 7.0% to $105.0 million from $98.2 million in 2005.

• For the quarter, the Company had a net loss attributed to common stockholders of ($2.4) million, or ($0.09) per share, as compared to net income of $964,000, or $0.03 per share, in 2005. Year-to-date the Company had a net loss attributed to common stockholders of ($5.8) million, or ($0.21) per share, as compared to a net loss attributed to common stockholders of ($140,000), or $(0.01) per share, in 2005.

• For the nine months ended September 30, 2006, the Company recorded a restructuring charge of approximately $827,000 related to severance payments in connection with its workforce reduction in certain software development and administrative functions. In addition, the Company has incurred approximately $1.2 million in costs for the quarter ended September 30, 2006 in connection with several significant K-12 contracts in which it expects to recognize related revenue of approximately $2.7 million during the 2006 fourth quarter.

“We’re disappointed that the Test Prep division gave back some of last year’s SAT gains, however, we’re pleased that the other divisions’ strong growth compensated,” said John Katzman, CEO. “And our efforts to cut G&A are beginning to pay off, although slower than I would like. I remain confident that we’re taking the appropriate steps to become a financially healthy organization.”

Test Preparation Services

For the third quarter, Test Preparation Services revenue decreased by $1.7 million, or 6.5%, from $26.7 million in 2005 to $25.0 million in 2006. Retail high school course revenue decreased by $1.3 million and retail LSAT is down by $417,000 compared to prior year.

For the nine months ended September 30^th, Test Preparation Services revenue increased by $1.5 million, or 2.1%, from $70.3 million in 2005 to $71.7 million in 2006. Retail course revenue decreased by $2.5 million. Tutoring increased by $623,000 and institutional sales increased by $3.3 million.

K-12 Services

For the third quarter, K-12 Services revenue increased by $2.0 million, or 38.8%, from $5.3 million in 2005 to $7.3 million in 2006. This increase is primarily related to an increase in assessment services revenue of $2.1 million. Professional development revenue declined by $293,000 and intervention revenue remained flat.

For the nine months ended September 30^th, K-12 Services revenue increased by $3.7 million, or 18.3%, from $20.3 million in 2005 to $24.0 million in 2006. Assessment services revenue increased by $3.8 million, retail book sales increased by $1.4 million, while professional development decreased by $1.2 million.

Admissions Services

For the third quarter, Admissions Services revenue increased by $806,000, or 29.1%, from $2.8 million in 2005 to $3.6 million in 2006. This increase is due to an increase in higher education technology revenue of approximately $486,000 and higher marketing revenue of approximately $630,000. Partially offsetting this is a reduction of $335,000 in counseling revenue.

For the nine months ended September 30^th, Admissions Services revenue increased by $1.6 million, or 21.8%, from $7.6 million in 2005 to $9.3 million in 2006. Higher education technology revenue increased by $681,000, higher education marketing services increased by $468,000 and counseling increased by $612,000.

Pending Restatement

As publicly announced by the Company in a Form 8-K filed on October 27, 2006, the Company expects to restate its historical financial statements for periods subsequent to March 31, 2004 to correct its accounting for the Company’s Series B-1 Convertible Redeemable Preferred Stock. The Company has concluded that it must account for certain “embedded derivatives” and related purchase warrant associated with the Preferred Stock as liabilities at fair value. These liabilities are required to be marked to market in each reporting period following the issuance of the preferred stock, with the changes in value reflected in earnings during the relevant period. However, the Company has not yet completed its comment and response process with the Securities and Exchange Commission related to its accounting for the Preferred Stock, and is therefore unable to finalize its analysis of the impact of these changes on its financial statements. Accordingly, net income (loss), net income (loss) attributed to common stockholders, net income (loss) per share and dividends and accretion on Series B-1 Preferred Stock are presented in this release based on the Company’s current assessment regarding the appropriate accounting treatment for the Preferred Stock. However, until the Company concludes the SEC comment process, this data is subject to further change. Net income (loss), net income (loss) attributed to common stockholders, net income (loss) per share, and dividends and accretion on Series B-1 Preferred Stock have been restated on this basis for the three and nine month periods ended September 30, 2005.

The Princeton Review will review its third quarter 2006 financial results and provide additional business highlights on a conference call at 10:00 a.m. Eastern Standard Time today. A copy of this earnings release is available at http://ir.princetonreview.com/releases.cfm?type=earnings. To participate on the live call, investors should dial(719) 457-2634approximately ten minutes prior to the start time. In addition, the call

will be available via live web cast over the Internet. To access the live web cast of the conference call, please go to http://ir.princetonreview.com/medialist.cfm 15 minutes prior to the start time of the call to register. An archived web cast will be available on the Company’s website at http://ir.princetonreview.com/medialist.cfm. Additionally, a replay of the call can be accessed by dialing either (888) 203-1112 or (719) 457-0820, passcode 7217401, through November 18, 2006.

About The Princeton Review

The Princeton Review (Nasdaq: REVU) is a pioneer in the world of education. Founded in 1981 and headquartered in New York City, the Company offers private tutoring and classroom and online test preparation to help students improve their scores in college and graduate school admissions tests. The Company’s free website,www.PrincetonReview.com, helps university-bound students research, apply to, prepare for, and learn how to pay for their higher education, and helps hundreds of colleges and universities streamline their admissions and recruiting activities. In addition, The Princeton Review works with school districts around the U.S. to measurably strengthen students’ academic skills by connecting ongoing assessment with professional development and instruction and by providing districts with college and career resources for both students and guidance counselors. The Company also authors more than 200 print and software titles on test preparation, college and graduate school selection and admissions, and related topics.

Safe Harbor Statement

All statements in this press release that are not historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by words such as “believe”, “intend,” “expect”, “may”, “could”, “would”, “will”, “should”, “plan”, “project”, “contemplate”, “anticipate”, or similar statements. Because these statements reflect The Princeton Review’s current views concerning future events, these forward-looking statements are subject to risks and uncertainties. The Princeton Review’s actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, the completion of the comment process with the SEC, demand for the company’s products and services; the company’s ability to compete effectively and adjust to rapidly changing market dynamics; the timing of revenue recognition from significant contracts with schools and school districts; market acceptance of the company’s newer products and services; continued federal and state focus on assessment and remediation in K-12 education; and the other factors described under the caption “Risk Factors” in The Princeton Review’s most recent Forms 10-K and 10-Q filed with the Securities and Exchange Commission. The Princeton Review undertakes no obligation to update publicly any forward-looking statements contained in this press release.

- Tables to Follow -

THE PRINCETON REVIEW, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2005			2006			2005
				As Restated						As Restated
Revenue
Test Preparation Services	$	25,008		$	26,748		$	71,753		$	70,263
K-12 Services		7,331			5,280			24,031			20,322
Admissions Services		3,573			2,768			9,265			7,606
Total revenue		35,912			34,796			105,049			98,191
Cost of revenue
Test Preparation Services		8,372			7,979			23,636			21,441
K-12 Services		5,446			2,841			15,030			9,845
Admissions Services		1,501			1,159			4,288			2,942
Total cost of revenue		15,319			11,979			42,954			34,228
Gross Profit		20,593			22,817			62,095			63,963
Operating expenses		22,833			22,155			66,970			63,489
Income (loss) from operations		(2,240	)		662			(4,875	)		474
Interest income (expense)		(168	)		(44	)		(390	)		(312	)
Other income (expense)		67			803			(88	)		1,069
Equity in the income (loss) of affiliates		—			(71	)		(51	)		(232	)
Income (loss) before income taxes		(2,341	)		1,350			(5,404	)		999
(Provision) benefit for income taxes		—			—			—			—
Net income (loss)		(2,341	)		1,350			(5,404	)		999
Dividends and accretion on Series B-1 Preferred Stock		(106	)		(386	)		(411	)		(1,139	)
Income (loss) attributed to common stockholders	$	(2,447	)	$	964		$	(5,815	)	$	(140	)
Basic income (loss) per share	$	(0.09	)	$	0.03		$	(0.21	)	$	(0.01	)
Diluted income (loss) per share	$	(0.09	)	$	0.03		$	(0.21	)	$	(0.01	)
Weighted average shares used in computing loss per share
Basic income (loss) per share		27,575			27,571			27,574			27,570
Diluted income (loss) per share		27,575			28,733			27,574			27,570

THE PRINCETON REVIEW, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except share data)

	September 30,			December 31,
	2006			2005
	(unaudited)			As Restated
ASSETS:
Current assets:
Cash and cash equivalents	$	8,368		$	8,002
Accounts receivable, net of allowance of $1,298 in 2006 and $1,601 in 2005		19,266			22,493
Accounts receivable-related parties		1,797			1,591
Other receivables, principally related parties		624			813
Inventory		2,861			2,798
Prepaid expenses		1,873			2,229
Other current assets		1,813			1,307
Total current assets		36,602			39,233
Furniture, fixtures, equipment and software development, net		16,512			16,155
Goodwill		31,506			31,506
Investment in affiliates		1,889			1,938
Other intangibles, net		12,174			13,371
Other assets		3,390			3,168
Total assets	$	102,073		$	105,371
LIABILITIES & STOCKHOLDERS’ EQUITY:
Current liabilities:
Line of credit	$	10,000		$	—
Accounts payable		3,265			10,449
Accrued expenses		11,538			10,826
Current maturities of long-term debt		1,264			1,530
Deferred income		20,101			16,548
Total current liabilities		46,168			39,353
Deferred rent		2,559			2,327
Long-term debt		1,945			2,845
Fair value of derivatives and warrants		267			556
Series B-1 Preferred Stock, $0.01 par value; 10,000 shares authorized; 6,000 shares issued and outstanding at September 30, 2006 and 10,000 shares issued and outstanding at December 31, 2005		6,000			10,000
Stockholders’ equity
Preferred stock, $0.01 par value; 4,990,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.01 par value; 100,000,000 shares authorized; 27,577,312 and 27,572,172 issued and outstanding at September 30, 2006 and December 31, 2005, respectively		276			276
Additional paid-in capital		116,959			116,279
Accumulated deficit		(71,802	)		(65,986	)
Accumulated other comprehensive loss		(299	)		(279	)
Total stockholders’ equity		45,134			50,290
Total liabilities and stockholders’ equity	$	102,073		$	105,371

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