Exhibit 99.1
| Contacts: |
| Harriet Brand |
| The Princeton Review |
| (212) 874-8282 ext. 1091 |
| |
| Robin Raskin |
| The Princeton Review |
| (212) 874-8282 ext. 1647 |
FOR IMMEDIATE RELEASE
The Princeton Review Reports First Quarter 2006 Operating Results
New York, NY, May 9, 2006 -- The Princeton Review, Inc. (Nasdaq: REVU), a leading provider of test preparation, educational support, and college admissions services, today announced financial results for its first quarter ended March 31, 2006.
First Quarter 2006 Financial Highlights
• | Revenue for the first quarter ended March 31, 2006 increased 4.4% to $35.1 million from $33.6 million in 2005. |
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• | For the quarter, the Company had a net loss attributable to common stockholders of ($2.1) million, or ($0.08) per share, as compared to a net loss of ($340,000), or ($0.01) per share, in 2005. |
“This quarter, we took a significant step in our efforts to reduce the Company’s cost structure and we expect to be profitable for the year,” said John Katzman, Chief Executive Officer of The Princeton Review. “Revenue is expected to be strong, especially those related to SES and K-12, where we are currently negotiating several significant contracts with some major school districts. We will continue to address our expense base and drive productivity.”
Test Preparation Services
For the quarter, Test Preparation Services revenue increased by $2.1 million, or 9.3%, from $22.9 million to $25.0 million in 2006. The division experienced solid growth in its SES business. However, retail classroom revenue was down due to the significant enrollment experienced during the first quarter of 2005 as a result of preparation for the then-newly redesigned SAT test.
K-12 Services
For the quarter, K-12 Services revenue declined by $1.0 million, or 13.2%, from $7.9 million to $6.9 million in 2006. This decline was primarily the result of lower sales related to intervention materials as well as a decrease in SES professional development course revenue now recorded primarily by the Test
Preparation Services division. Additionally, there was a reduction in assessment fees related to the New York City Department of Education Interim Assessment Contract, which decided to forgo customary math and reading tests for grades 3 through 8 in the first quarter this year. Total Assessment Services revenue is up primarily due to several new contracts.
Admissions Services
For the quarter, Admissions Services revenue grew by $0.4 million, or 13.6%, from $2.8 million to $3.2 million in 2006 due to an increase in counseling revenue.
Business Outlook
Since the beginning of 2006, the Company has made progress in improving its cost structure. For the remainder of the year, management expects to further reduce costs and increase revenue. The Company’s K-12 Services division is currently negotiating several significant, new contracts with school districts which, if closed, will contribute to revenue growth for the balance of the year.
The Princeton Review will review its first 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) 457-2638 approximately ten minutes prior to the start time. In addition, the call will be available via live webcast over the Internet. To access the live webcast 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 webcast 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 1768974, through May 12, 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 over half of 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, 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 Form 10-K for the year ended December 31, 2005 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
(in thousands, except per share data)
(Unaudited)
| | Three Months Ended
March 31, | |
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| | 2006 | | 2005 (a) | |
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Revenue | | | | | | | |
Test Preparation Services | | $ | 25,033 | | $ | 22,885 | |
K-12 Services | | | 6,873 | | | 7,919 | |
Admissions Services | | | 3,174 | | | 2,794 | |
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Total revenue | | | 35,080 | | | 33,598 | |
Cost of revenue | | | | | | | |
Test Preparation Services | | | 7,845 | | | 7,037 | |
K-12 Services | | | 4,726 | | | 4,023 | |
Admissions Services | | | 1,290 | | | 773 | |
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Total cost of revenue | | | 13,861 | | | 11,833 | |
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Gross profit | | | 21,219 | | | 21,765 | |
Operating expenses | | | 23,089 | | | 21,575 | |
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Income (loss) from operations | | | (1,870 | ) | | 190 | |
Interest expense | | | (31 | ) | | (309 | ) |
Other income, net | | | — | | | 41 | |
Equity in the loss of affiliates | | | (67 | ) | | (67 | ) |
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Loss before benefit from income taxes | | | (1,968 | ) | | (145 | ) |
Benefit from income taxes | | | — | | | — | |
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Net loss | | | (1,968 | ) | | (145 | ) |
Dividends and accretion on Series B-1 Preferred Stock | | | (157 | ) | | (195 | ) |
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Net loss attributed to common stockholders | | $ | (2,125 | ) | $ | (340 | ) |
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Basic loss per share - basic and diluted | | $ | (0.08 | ) | $ | (0.01 | ) |
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Weighted average shares used in computing net loss per share | | | 27,572 | | | 27,570 | |
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(a) 2005 results have been restated to reflect certain reclassifications to the divisions’ operating expenses on a basis comparable with 2006. |
THE PRINCETON REVIEW, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except share data)
| | March 31,
2006 | | December 31,
2005 | |
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| | (unaudited) | | | | |
ASSETS | | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | | $ | 3,143 | | $ | 8,002 | |
Accounts receivable, net | | | 25,788 | | | 24,897 | |
Inventory | | | 2,828 | | | 2,798 | |
Prepaid expenses | | | 2,467 | | | 2,229 | |
Other assets | | | 1,310 | | | 1,307 | |
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Total current assets | | | 35,536 | | | 39,233 | |
Furniture, fixtures, equipment and software development, net | | | 16,074 | | | 16,155 | |
Goodwill, net | | | 31,506 | | | 31,506 | |
Investment in affiliates | | | 1,873 | | | 1,938 | |
Other intangibles, net | | | 13,717 | | | 13,371 | |
Other assets | | | 3,753 | | | 3,168 | |
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Total assets | | $ | 102,459 | | $ | 105,371 | |
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LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
Current liabilities: | | | | | | | |
Accounts payable | | $ | 8,931 | | $ | 10,449 | |
Accrued expenses | | | 9,634 | | | 10,826 | |
Current maturities of long-term debt | | | 1,469 | | | 1,530 | |
Deferred income | | | 18,438 | | | 16,548 | |
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Total current liabilities | | | 38,472 | | | 39,353 | |
Deferred rent | | | 2,408 | | | 2,327 | |
Long-term debt | | | 2,681 | | | 2,845 | |
Series B-1 Preferred Stock, $.01 par value; 10,000 shares authorized issued and outstanding at March 31, 2006 and December 31, 2005, respectively (liquidation value of $11,018) | | | 10,000 | | | 10,000 | |
Stockholders’ equity | | | | | | | |
Preferred stock, $.01 par value; 4,990,000 shares authorized; none issued and outstanding at March 31, 2006 and December 31, 2005 | | | — | | | — | |
Common stock, $.01 par value; 100,000,000 shares authorized; 27,572,172 issued and outstanding at March 31, 2006 and December 31, 2005 | | | 276 | | | 276 | |
Additional paid-in capital | | | 116,449 | | | 116,279 | |
Accumulated deficit | | | (67,555 | ) | | (65,430 | ) |
Accumulated other comprehensive loss | | | (272 | ) | | (279 | ) |
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Total stockholders’ equity | | | 48,898 | | | 50,846 | |
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Total liabilities and stockholders’ equity | | $ | 102,459 | | $ | 105,371 | |
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