UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2002
OR
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
Commission File Number 000-32469
THE PRINCETON REVIEW, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-3727603
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2315 Broadway 10024
New York, New York (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (212) 874-8282
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
The Company had 27,211,770 shares of $0.01 par value common stock
outstanding at May 10, 2002.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited)....................................................2
Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001...........................2
Consolidated Statements of Operations for the Three Month Periods ended March 31,
2002 and 2001....................................................................................3
Consolidated Statements of Cash Flows for the Three Months ended March 31, 2002
and 2001.........................................................................................4
Notes to Unaudited Consolidated Financial Statements.............................................5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations.......................................................................................9
Item 3. Quantitative and Qualitative Disclosures about Market Risk......................................12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...............................................................................12
Item 2. Changes in Securities and Use of Proceeds.......................................................12
Item 3. Defaults Upon Senior Securities.................................................................12
Item 4. Submission of Matters to a Vote of Security Holders.............................................12
Item 5. Other Information...............................................................................12
Item 6. Exhibits and Reports on Form 8-K................................................................13
SIGNATURES .........................................................................................................14
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
THE PRINCETON REVIEW, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share data)
March 31, December 31,
----------- ------------
2002 2001
----------- ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents......................................... $ 15,369 $ 21,935
Accounts receivable, net.......................................... 8,571 6,824
Notes receivable.................................................. 1,108 1,841
Other receivables................................................. 1,018 792
Prepaid expenses.................................................. 1,798 1,156
Securities, available for sale.................................... 748 1,002
Other assets...................................................... 2,344 1,977
-------- --------
Total current assets............................................ 30,956 35,527
Furniture, fixtures, equipment and software development, net........ 10,006 10,161
Franchise costs, net................................................ 279 291
Territorial marketing rights, net................................... 1,454 1,481
Publishing rights, net.............................................. 1,278 1,296
Deferred income taxes............................................... 19,508 `17,755
Investments in affiliates........................................... 787 516
Goodwill, net....................................................... 36,262 35,887
Other assets........................................................ 9,232 8,919
-------- --------
Total assets.................................................... $109,762 $111,833
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................. $ 2,751 $ 7,502
Accrued expenses.................................................. 8,914 5,330
Current maturities of long-term debt.............................. 2,094 2,132
Deferred income................................................... 11,020 9,005
Book advances..................................................... 590 801
-------- --------
Total current liabilities....................................... 25,369 24,770
Long-term debt...................................................... 6,414 6,830
Stockholders' equity:
Common stock, $.01 par value; 100,000,000 shares authorized,
27,194,751 issued and outstanding at March 31, 2002 and 27,175,011
issued and outstanding at December 31, 2001....................... 272 272
Additional paid-in capital........................................ 113,320 113,091
Accumulated deficit............................................... (35,733) (33,480)
Accumulated other comprehensive income............................ 120 350
-------- --------
Total stockholders' equity.......................................... 77,979 80,233
-------- --------
Total liabilities and stockholders' equity.......................... $109,762 $111,833
======== ========
See accompanying notes.
-2-
THE PRINCETON REVIEW, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended March 31,
2002 2001
----------------------------------
(Unaudited)
Revenue
Test Preparation Services......................................... $14,221 $10,245
Admissions Services............................................... 3,916 1,678
K-12 Services..................................................... 1,260 1,196
------- -------
Total revenue.................................................... 19,397 13,119
------- -------
Cost of revenue
Test Preparation Services......................................... 4,360 3,577
Admissions Services............................................... 923 331
K-12 Services..................................................... 351 322
-------- -------
Total cost of revenue............................................ 5,634 4,230
-------- -------
Gross profit....................................................... 13,763 8,889
-------- -------
Operating expenses.................................................
Selling, general and administrative............................... 17,568 12,775
Research and development.......................................... 48 116
-------- -------
Total operating expenses......................................... 17,616 12,891
-------- -------
Loss from operations............................................... (3,853) (4,002)
Interest expense................................................... (152) (589)
Other income....................................................... 257 67
-------- -------
Loss before benefit for income taxes............................... (3,748) (4,524)
Benefit for income taxes........................................... 1,494 1,637
-------- -------
Net loss........................................................... (2,254) (2,887)
Accreted dividends on Series A redeemable preferred stock.......... - (1,237)
Accreted dividends on Class B non-voting common stock.............. - (1,136)
-------- -------
Net loss attributed to common stockholders......................... $ (2,254) $(5,260)
======== =======
Net loss per share - basic and diluted:
Net loss per share - basic and diluted............................ $ (0.08) $ (0.34)
======== =======
Weighted average basic and diluted shares used in
computing net loss per share................................... 27,187 15,299
======== =======
See accompanying notes.
-3-
THE PRINCETON REVIEW, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
For the Three Months Ended
March 31,
2002 2001
---------------------------
(Unaudited)
Cash flows from operating activities:
Net loss................................................................ $ (2,254) $ (2,887)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation......................................................... 341 503
Amortization......................................................... 1,142 702
Bad debt expense..................................................... 132 (123)
Loss on disposal of fixed assets..................................... 4 -
Deferred income taxes................................................ (1,634) (1,722)
Deferred rent........................................................ 36 14
Stock based compensation............................................. 101 70
Net change in operating assets and liabilities:
Accounts receivable.............................................. (1,879) 2,095
Other receivables................................................ (226) 152
Notes receivable................................................. 733 -
Prepaid expenses................................................. (642) (34)
Other assets..................................................... (368) (550)
Accounts payable................................................. (4,751) (1,026)
Accrued expenses................................................. 3,509 (1,591)
Deferred income.................................................. 1,979 (780)
Book advances.................................................... (211) (482)
-------- --------
Net cash used in operating activities................................... (3,988) (5,659)
-------- --------
Cash flows from investing activities:
Purchase of furniture, fixtures, equipment and software development.. (968) (808)
Investment in affiliates............................................. (270) -
Purchase of franchises and other businesses.......................... (375) (15,193)
Stockholder loan..................................................... (416) -
Investment in other assets........................................... (224) (343)
-------- --------
Net cash used in investing activities................................... (2,253) (16,344)
-------- --------
Cash flows from financing activites
Repayment term loan, net............................................. - (11)
(Repayment) proceeds loan payable, net............................... (425) 17,100
Capital leases payments.............................................. (29) (53)
Notes payable related to franchises purchased........................ - 3,625
Proceeds from exercise of options.................................... 129 -
-------- --------
Net cash (used in) provided by financing activities..................... (325) 20,661
-------- --------
Net decrease in cash and cash equivalents............................... (6,566) (1,342)
Cash and cash equivalents, beginning of period.......................... 21,935 4,874
-------- --------
Cash and cash equivalents, end of period................................ $ 15,369 $ 3,532
======== ========
See accompanying notes.
-4-
THE PRINCETON REVIEW, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 2002
1. Basis of Presentation
The accompanying unaudited interim consolidated financial statements of The
Princeton Review, Inc. (the "Company") include the accounts of the Company and
its wholly-owned subsidiaries, Princeton Review Products, LLC, Princeton Review
Management, LLC, Princeton Review Publishing, LLC, Princeton Review Operations,
LLC, and The Princeton Review of Canada Inc. This financial information has been
prepared in accordance with generally accepted accounting principles for interim
financial information and reflects all adjustments, consisting only of normal
recurring accruals, that are, in the opinion of management, necessary for a fair
presentation of the interim financial statements. The interim consolidated
financial statements should be read in conjunction with the consolidated
financial statements and related notes for the year ended December 31, 2001
included in the Company's Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission. The results of operations for the
three-month period ended March 31, 2002 are not necessarily indicative of the
results to be expected for the entire fiscal year or any future period.
Intangible Assets and Goodwill
In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets ("SFAS 142"), effective for fiscal years beginning after
December 15, 2001. Under the new rules goodwill, and intangible assets deemed to
have indefinite lives, are no longer amortized, but are subject to annual
impairment tests in accordance with SFAS 142. Other intangible assets continue
to be amortized over their useful lives.
The Company applied the SFAS 142 rules in accounting for goodwill and other
intangible assets in the first quarter of 2002. During the second quarter of
2002 the Company will perform the required impairment tests on goodwill and
other intangible assets. The Company has not yet determined what the effect of
these tests will be on the results of operations and financial position of the
Company. The following adjusts reported net loss and earnings per share to
exclude goodwill amortization:
Three Months
Ended
March 31, 2001
--------------
Reported net loss $(5,260,000)
Goodwill amortization 163,000
-----------
Adjusted net loss $(5,097,000)
===========
-5-
Reported basic and diluted net loss per share $ (0.34)
Goodwill amortization 0.01
-------
Adjusted basic and diluted net loss per share $ (0.33)
=======
In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets ("SFAS 144"), which addresses financial accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of, and the accounting and reporting provisions
of APB Opinion No. 30, Reporting the Results of Operations for a Disposal of a
Segment of a Business. The Company adopted SFAS 144 as of January 1, 2002. The
adoption of the Statement did not have a significant impact on the Company's
financial position and results of operations.
Reclassification
Certain balances have been reclassified to conform with the current year
presentation.
Products and Services
The following table summarizes the Company's revenue and cost of revenue
for the three months ended March 31, 2002 and 2001:
Book, Software Web Based
Course Royalty and Publication Subscription and Other
Revenues Service Fees Income Processing Fees Income Total
-------- ------------ ------ --------------- ------ -----
Three Months Ended March 31, 2002
Revenue
Test Preparation Services $12,898,000 $1,265,000 - - $ 58,000 $ 14,221,000
Admissions Services - - $ 778,000 $2,876,000 262,000 3,916,000
K-12 Services - - 658,000 259,000 343,000 1,260,000
----------- ---------- ---------- ---------- -------- -----------
Total $12,898,000 $1,265,000 $1,436,000 $3,135,000 $663,000 $19,397,000
=========== ========== ========== ========== ======== ===========
Cost of Revenue
Test Preparation Services $ 4,360,000 - - - - $ 4,360,000
Admissions Services - - $ 274,000 $ 649,000 - 923,000
K-12 Services - - 72,000 158,000 $121,000 351,000
----------- ---------- ---------- ---------- -------- -----------
Total $ 4,360,000 - $ 346,000 $ 807,000 $121,000 $ 5,634,000
=========== ========== ========== ========== ======== ===========
Three Months Ended March 31, 2001
Revenue
Test Preparation Services $ 9,086,000 $1,030,000 - - $129,000 $10,245,000
Admissions Services - - $ 476,000 $ 361,000 841,000 1,678,000
K-12 Services - - 1,157,000 39,000 - 1,196,000
----------- ---------- ---------- ---------- -------- -----------
Total $ 9,086,000 $1,030,000 $1,633,000 $ 400,000 $970,000 $13,119,000
=========== ========== ========== ========== ======== ===========
Cost of Revenue
Test Preparation Services $ 3,577,000 - - - - $3,577,000
Admissions Services - - $ 92,000 $ 81,000 $158,000 331,000
K-12 Services - - 192,000 106,000 24,000 322,000
----------- ---------- ---------- ---------- -------- -----------
Total $ 3,577,000 - $ 284,000 $ 187,000 $182,000 $4,230,000
=========== ========== ========== ========== ======== ==========
-6-
2. Segment Information
The Company's operations are aggregated into three reportable segments. The
operating segments reported below are the segments of the Company for which
separate financial information is available and for which operating income is
evaluated regularly by executive management in deciding how to allocate
resources and in assessing performance.
The following segment results include the allocation of certain information
technology costs, accounting services, executive management costs, office
facilities expenses, human resources expenses and other shared services which
are allocated based on consumption. Corporate consists of unallocated
administrative support functions. The Company operates its business through
three divisions. The majority of the Company's revenue is earned by the Test
Preparation Services division, which sells a range of services including test
preparation, tutoring and academic counseling. Test Preparation Services derives
its revenue from Company operated locations and from royalties from and product
sales to independently-owned franchises. The Admissions Services division earns
revenue from developing content for books, software and other publications for
third-party publishers, sells advertising and sponsorships and earns
subscription, transaction and marketing fees from higher education institutions.
The K-12 Services division earns fees from its content development work, an
Internet-based subscription service for K-12 schools, professional training and
development services and K-12 print based products. The tables below include
segment EBITDA, which represents earnings before interest, taxes, depreciation
and amortization.
Three Months Ended March 31, 2002
---------------------------------------------------------------------------------------
Test Preparation
Services Admissions Services K-12 Services Corporate Total
---------------- ------------------- ------------- ----------- ------------
Revenue $14,221,000 $ 3,916,000 $ 1,260,000 $ - $ 19,397,000
Segment operating profit (loss) 714,000 (1,577,000) (2,431,000) (559,000) (3,853,000)
Segment EBITDA 1,206,000 (1,006,000) (2,143,000) (425,000) (2,368,000)
Segment Assets 30,234,000 25,463,000 7,553,000 46,512,000 109,762,000
Three Months Ended March 31, 2001
---------------------------------------------------------------------------------------
Test Preparation
Services Admissions Services K-12 Services Corporate Total
---------------- ------------------- ------------- ----------- ------------
Revenue $10,245,000 $ 1,678,000 $ 1,196,000 $ - $ 13,119,000
Segment operating loss (155,000) (1,640,000) (2,043,000) (164,000) (4,002,000)
Segment EBITDA 366,000 (1,343,000) (1,821,000) - (2,798,000)
Segment Assets 22,365,000 7,422,000 9,173,000 34,372,000 73,332,000
Three Months Ended March 31,
2002 2001
--------------------------------
Reconciliation to net loss
Total loss for reportable segments $(3,853,000) $(4,002,000)
Unallocated amounts:
Interest expense (152,000) (589,000)
Other income 257,000 67,000
Benefit for income taxes 1,494,000 1,637,000
----------- -----------
Net loss $(2,254,000) $(2,887,000)
=========== ===========
-7-
3. Income (Loss) Per Share
Basic and diluted net income (loss) per share information for all periods is
presented under the requirements of SFAS No. 128, Earnings per Share. Basic net
income (loss) per share is computed by dividing net income (loss) applicable to
common stockholders by the weighted average number of common shares outstanding
during the period. Diluted net income (loss) per share is determined in the same
manner as basic net income (loss) per share except that the number of shares is
increased assuming exercise of dilutive stock options, warrants and convertible
securities. The calculation of diluted net income (loss) per share excludes
potential common shares if the effect is antidilutive. During the periods
presented, certain shares of Series A preferred stock, warrants and stock
options were outstanding that would be dilutive, but were excluded because to
include them would have been antidilutive.
4. Comprehensive Income (Loss)
The components of comprehensive loss for the three month periods ended March 31,
2002 and 2001 are as follows:
Three months ended
March 31,
2002 2001
--------------------------
Net loss $(2,254,000) $(2,887,000)
Foreign currency translation adjustment (95,000) 38,000
Unrealized loss on available-for-sale
securities, net of tax benefits (135,000) (913,000)
----------- -----------
Total comprehensive loss $(2,484,000) $(3,762,000)
============ ===========
-8-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
All statements in this Form 10-Q that are not historical facts are
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. 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 our current views concerning future events, these
forward-looking statements are subject to risks and uncertainties. Our 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 our products and services, our ability to compete effectively, our ability
to increase revenue from our Internet operations and the other factors described
under the caption "Risk Factors" in our Annual Report on Form 10-K for the year
ended December 31, 2001 filed with the Securities and Exchange Commission (the
"10-K"). We undertake no obligation to update publicly any forward-looking
statements for any reason, even if new information becomes available or other
events occur in the future.
The following information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and related notes included
in our 10-K, as well as in conjunction with the consolidated financial
statements and related notes appearing elsewhere in this Form 10-Q.
Results of Operations for Three Months Ended March 31, 2002 Compared with Three
Months Ended March 31, 2001
Revenue
Our total revenue increased from $13.1 million in 2001 to $19.4 million
in 2002, representing a 48% increase.
Test Preparation Services revenue increased from $10.2 million in 2001
to $14.2 million in 2002, representing a 39% increase, comprised primarily of an
increase of approximately $4.3 million in revenue from our company-owned
operations. The increased revenue from company-owned operations resulted from an
increase of approximately $3.7 million in revenue attributable to the operations
acquired from our former franchisees, Princeton Review of Boston, Inc.,
Princeton Review of New Jersey, Inc., Princeton Review Peninsula Inc., and
T.S.T.S., Inc. in 2001, and an increase of approximately $670,000 at our other
locations. Of the $670,000 increase at our other locations, approximately
$400,000 is attributable to enrollment increases and approximately $270,000 is
attributable to average price increases.
Admissions Services revenue increased from $1.7 million in 2001 to $3.9
million in 2002, representing a 133% increase. This increase resulted primarily
from an increase of approximately $2.5 million in Web-based subscription,
application and marketing fees, primarily attributable to our acquisition of the
business of Embark.com, Inc., and an increase of approximately $270,000 in book
royalty revenue. These increases were partially offset by a $615,000 decrease in
advertising revenues.
-9-
K-12 Services revenue increased from $1.2 million in 2001 to $1.3
million in 2002 representing a 5% increase. This increase resulted primarily
from an increase of approximately $560,000 in revenue from schools for
Homeroom.com subscriptions and training and professional development fees, which
was partially offset by a decrease in revenues from McGraw Hill.
Cost of Revenue
Our total cost of revenue increased from $4.2 million in 2001 to $5.6
million in 2002, representing a 33% increase.
Test Preparation Services cost of revenue increased from $3.6 million
in 2001 to $4.4 million in 2002, representing a 22% increase. This increase
resulted primarily from an increase of approximately $925,000 in costs
associated with the operation of the businesses acquired from Princeton Review
of Boston, Princeton Review of New Jersey, Princeton Review Peninsula and
T.S.T.S. during 2001.
Admissions Services cost of revenue increased from $331,000 in 2001 to
$923,000 in 2002, representing a 179% increase. The increase is primarily
attributable to the cost of providing Web-based subscription and application
services relating to products acquired from Embark.
K-12 Services cost of revenue increased from $322,000 in 2001 to
$351,000 in 2002, representing a 9% increase. This increase is primarily
attributable to an increase in costs incurred to service the Homeroom.com
subscription service and consulting contracts.
Operating Expenses
Selling, general and administrative expenses increased from $12.8
million in 2001 to $17.6 million in 2002, representing a 38% increase. This
increase resulted primarily from an increase of approximately $2.0 million
incurred as a result of our acquisitions of the businesses of our former
franchisees, an increase of approximately $1.3 million incurred as a result of
our acquisition of the business of Embark and the following, which exclude
expenses relating to the foregoing acquired businesses:
o an increase of approximately $727,000 attributable primarily to
personnel related costs, including office rent and expenses, travel and
entertainment, employee benefits and recruiting fees;
o an increase of approximately $387,000 in salaries and payroll taxes
primarily due to increased headcount;
o an increase of approximately $383,000 in professional fees; and
o an increase of approximately $317,000 in advertising and marketing
expenses.
These increases were partially offset by a decrease of approximately
$492,000 in Web site technology and development expenses.
-10-
Interest Expense
Interest expense decreased from $589,000 in 2001 to $152,000 in 2002.
This decrease was due to the repayment of certain outstanding loan balances in
the second quarter of 2001.
Other Income
Other income increased from $67,000 in 2001 to $257,000 in 2002. This
increase resulted primarily from interest on late royalty payments from one of
our franchisees.
Liquidity and Capital Resources
Net cash used in operating activities during the three months ended
March 31, 2002 was $4.0 million, resulting primarily from the net loss from
operations. Net cash used in investing activities during the three months ended
March 31, 2002 was $2.3 million, resulting primarily from the purchase of fixed
assets and investment in software development projects. Net cash used in
financing activities during the three months ended March 31, 2002 was $325,000,
resulting primarily from payments made with respect to an outstanding loan.
At March 31, 2002, we had approximately $15.4 million of cash and cash
equivalents. We anticipate that our cash balances, together with cash generated
from operations, will be sufficient to meet our normal operating requirements
for at least the next 12 months. We may also seek to obtain a new credit
facility as a source of additional liquidity and to fund a portion of the
purchase price of any future acquisitions of the businesses of our franchisees.
Impact of Inflation
Inflation has not had a significant impact on our historical
operations.
Seasonality in Results of Operations
We experience, and we expect to continue to experience, seasonal
fluctuations in our revenue because the markets in which we operate are subject
to seasonal fluctuations based on the scheduled dates for standardized
admissions tests and the typical school year. These fluctuations could result in
volatility or adversely affect our stock price. In addition, as our revenue
grows, these seasonal fluctuations may become more evident. We typically
generate the largest portion of our test preparation revenue in the third
quarter. We also expect that the electronic application revenue from the
business we acquired from Embark will be highest in the first and fourth
quarters, corresponding with the busiest times of year for submission of
applications to academic institutions. Our Homeroom.com subscription service may
also experience seasonal fluctuations in revenue, but we are not yet able to
predict the impact of seasonal factors on this business with any degree of
accuracy.
-11-
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Our portfolio of marketable securities includes primarily short-term
money market funds. The fair value of our portfolio of marketable securities
would not be significantly impacted by either a 100 basis point increase or
decrease in interest rates due primarily to the short-term nature of the
portfolio. Our outstanding long-term debt bears interest at fixed rates. We do
not currently hold or issue derivative financial instruments.
Royalty payments from our international franchisees constitute an
insignificant percentage of our revenue. Accordingly, our exposure to exchange
rate fluctuations is minimal.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we are involved in legal proceedings incidental to
the conduct of our business. We are not currently a party to any legal
proceeding which, in the opinion of our management, is likely to have a material
adverse effect on us.
Item 2. Changes in Securities and Use of Proceeds
Initial Public Offering and Use of Proceeds from Sales of Registered Securities
Our Registration Statement on Form S-1 (File No. 333-43874) related to
our initial public offering was declared effective by the Securities and
Exchange Commission on June 18, 2001. Through the end of the reporting period
covered by this report on Form 10-Q, we have used approximately $13.7 million of
the net proceeds from the initial public offering for working capital and other
general corporate purposes and $29.9 million of the net proceeds to repay
outstanding indebtedness, including accrued interest, under our previously
existing credit facilities.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
-12-
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit
Number Description
------ -----------
10.1 Employment Agreement, dated as of April 11, 2002, by and
between The Princeton Review, Inc. and John Katzman.
10.2 Employment Agreement, dated as of April 10, 2002, by and
between The Princeton Review, Inc. and Mark Chernis.
10.3 Employment Agreement, dated as of April 10, 2002, by and
between The Princeton Review, Inc. and Steve Quattrociocchi.
10.4 Employment Agreement, dated as of April 10, 2002, by and
between The Princeton Review, Inc. and Bruce Task.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by The Princeton Review, Inc.
during the period covered by this report on Form 10-Q.
-13-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The Princeton Review, Inc.
By: /s/ Stephen Melvin
-----------------------------------
Stephen Melvin
Chief Financial Officer and
Treasurer
(Duly Authorized Officer and
Principal Financial and
Accounting Officer)
May 14, 2002
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