[THE PRINCETON REVIEW LOGO]
CONTACT:
Harriet Brand
The Princeton Review
(212) 874-8282 ext. 1091
FOR IMMEDIATE RELEASE
THE PRINCETON REVIEW REPORTS SECOND QUARTER 2006 OPERATING RESULTS
NEW YORK, NY, AUGUST 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 the second quarter
ended June 30, 2006.
SECOND QUARTER & SIX-MONTH 2006 FINANCIAL HIGHLIGHTS
o Revenue for the quarter ended June 30, 2006 increased 14.2% to $34.0 million
from $29.8 million in 2005. Revenue for the six months ended June 30, 2006
increased 9.0% to $69.1 million from $63.4 million in 2005.
o For the quarter, the Company had a net loss attributable to common
stockholders of ($1.5) million, or ($0.05) per share, as compared to a net
loss of ($666,000), or ($0.02) per share, in 2005. Year-to-date, the Company
had a net loss attributable to common stockholders of ($3.6) million, or
($0.13) per share, as compared to a net loss of ($1.0) million, or ($0.04)
per share, in 2005.
o During the quarter, 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. These actions were to better align the Company's cost structure
and improve efficiencies. Excluding this restructuring charge, the Company
had a net loss attributable to common stockholders of ($638,000), or ($0.02)
per share, and ($2.8) million, or ($0.10) per share, for the three months and
six months ended June 30, 2006, respectively. The Company believes this
non-GAAP financial measure is useful information to better understand how it
measures its financial performance going forward.
"Revenue and bookings remain strong, and we're particularly gratified by large
orders in Los Angeles, New York, and Florida. At the same time, we're
making strides in streamlining the Company and cutting G&A, as evidenced by
our restructuring charge," said John Katzman, CEO. "Our cost reductions
continue, and we are taking further action during this next quarter."
TEST PREPARATION SERVICES
For the second quarter, Test Preparation Services revenue increased by $1.1
million, or 5.1%, from $20.6 million in 2005 to $21.7 million in 2006. SES
revenue grew by $766,000, reflecting strong enrollment in the cities where the
Company was selected as an after-school provider.
For the six months ended June 30, Test Preparation Services revenue increased by
$3.2 million, or 7.4%, from $43.5 million in 2005 to $46.7 million in 2006. This
increase is primarily comprised of SES revenue, which increased by $3.0 million.
K-12 SERVICES
For the second quarter, K-12 Services revenue increased by $2.7 million, or
38.0%, from $7.1 million in 2005 to $9.8 million in 2006. Assessment revenue
increased by $1.3 million and revenue related to intervention increased by $1.5
million.
For the six months ended June 30, K-12 Services revenue increased by $1.7
million, or 11.0%, from $15.0 million in 2005 to $16.7 million in 2006,
primarily related to an increase in intervention revenue of $1.8 million.
ADMISSIONS SERVICES
For the second quarter, Admissions Services revenue increased by $472,000, or
23.1%, from $2.0 million in 2005 to $2.5 million in 2006. This increase was
primarily related to an increase in counseling services revenue of $638,000.
For the six months ended June 30, Admissions Services revenue increased by
$852,000 or 17.6%, from $4.8 million in 2005 to $5.7 million in 2006 primarily
related to an increase in counseling services revenue of $1.0 million.
- --------------------------------------------------------------------------------
The Princeton Review will review its second 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) 457-2728 approximately 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 1456782, through August 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 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 SIX MONTHS ENDED
JUNE 30 JUNE 30,
-------------------------- ----------------------------
2006 2005 2006 2005
-------------------------- ----------------------------
REVENUE
Test Preparation Services $ 21,682 $ 20,630 $ 46,745 $ 43,528
K-12 Services 9,828 7,122 16,701 15,041
Admissions Services 2,517 2,045 5,691 4,839
--------- -------- --------- ----------
Total revenue 34,027 29,797 69,137 63,408
--------- -------- --------- ----------
COST OF REVENUE
Test Preparation Services 7,448 6,458 15,265 13,475
K-12 Services 4,830 2,935 9,584 7,003
Admissions Services 1,496 1,009 2,786 1,783
--------- -------- --------- ----------
Total cost of revenue 13,774 10,402 27,635 22,261
GROSS PROFIT 20,253 19,395 41,502 41,147
--------- -------- --------- ----------
OPERATING EXPENSES 21,018 19,772 44,137 41,335
--------- -------- --------- ----------
Loss from operations (765) (377) (2,635) (188)
Interest income (expense) (192) 3 (222) (266)
Other expense (377) - (377) -
Equity in the income (loss) of affiliates 16 (94) (51) (161)
--------- -------- --------- ----------
LOSS BEFORE INCOME TAXES (1,318) (468) (3,285) (615)
(Provision) benefit for income taxes - - - -
--------- -------- --------- ----------
NET LOSS (1,318) (468) (3,285) (615)
DIVIDENDS AND ACCRETION ON SERIES B-1 PREFERRED STOCK (147) (198) (305) (393)
--------- -------- --------- ----------
LOSS ATTRIBUTED TO COMMON STOCKHOLDERS $ (1,465) $ (666) $ (3,590) $ (1,008)
--------- -------- --------- ----------
BASIC AND DILUTED LOSS PER SHARE $ (0.05) $ (0.02) $ (0.13) $ (0.04)
--------- -------- --------- ----------
WEIGHTED AVERAGE SHARES USED IN COMPUTING LOSS PER SHARE 27,574 27,570 27,574 27,570
--------- -------- --------- ----------
THE PRINCETON REVIEW, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 30, DECEMBER 31,
2006 2005
-------------- ------------
(unaudited)
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 7,327 $ 8,002
Accounts receivable, net of allowance of $1,021 in 2006 and $1,601 in 2005 23,647 22,493
Accounts receivable-related parties 1,630 1,591
Other receivables, principally related parties 2,053 813
Inventory 3,094 2,798
Prepaid expenses 1,660 2,229
Other current assets 1,785 1,307
-------------- -----------
Total current assets 41,196 39,233
Furniture, fixtures, equipment and software development, net 15,108 16,155
Goodwill 31,506 31,506
Investment in affiliates 1,889 1,938
Other intangibles, net 12,946 13,371
Other assets 4,873 3,168
-------------- -----------
TOTAL ASSETS $ 107,518 $ 105,371
-------------- -----------
LIABILITIES & STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Line of credit $ 10,000 $ -
Accounts payable 4,645 10,449
Accrued expenses 11,374 10,826
Current maturities of long-term debt 2,761 1,530
Deferred income 21,827 16,548
-------------- -----------
Total current liabilities 50,607 39,353
Deferred rent 2,473 2,327
Long-term debt 896 2,845
Series B-1 Preferred Stock, $0.01 par value; 10,000 shares authorized;
6,000 shares issued and outstanding at June 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; 27,574,512 and 27,572,172 276 276
issued and outstanding at June 30, 2006 and December 31, 2005, respectively
Additional paid-in capital 116,590 116,279
Accumulated deficit (69,020) (65,430)
Accumulated other comprehensive loss (304) (279)
-------------- ----------
Total stockholders' equity 47,542 50,846
-------------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 107,518 $ 105,371
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