NEW YORK, Aug. 7, 2008 /PRNewswire-FirstCall/ -- The Princeton Review,
Inc. (Nasdaq: REVU), a leading provider of test preparation and educational
support services, today announced financial results for the three months and
six months ended June 30, 2008.
Second Quarter Financial Highlights
For the second quarter ended June 30, 2008, revenue increased 8.6% to
$39.5 million from $36.4 million in the second quarter of 2007. The Company
reported income from continuing operations of $0.3 million as compared to a
loss from continuing operations of $3.8 million in the year-ago quarter.
Second quarter 2008 results include a restructuring charge of $2.6 million
relating to the previously announced cost reduction efforts, and the second
quarter of 2007 includes a charge of $3.7 million for an embedded derivative
settled later in 2007.
For the six month period ended June 30, 2008 revenue increased 5.7% to
$80.9 million from $76.6 million in the six month period ended June 30, 2007.
The Company's loss from continuing operations was $0.3 million in 2008
compared to a loss from continuing operations of $4.9 million in 2007. The
2008 loss includes a restructuring charge of $3.1 million, and 2007 includes a
charge of $3.8 million relating to the embedded derivative settled in 2007.
"Our second quarter highlights the progress we have made in our ongoing
initiative to return The Princeton Review to profitability and positive cash
flow," said Michael Perik, CEO and President. "We are pleased with the revenue
and margin performances of the Test Preparation and SES divisions in the
second quarter, and we are especially excited about the improvements in the
cash generating capabilities of our core operations."
Test Preparation Services
For the second quarter, Test Preparation Services revenue increased by
$3.2 million, or 12.8%, to $28.3 million in 2008, from $25.1 million in 2007.
For the six month period, Test Preparation Services revenue increased by $5.5
million, or 11.9%, to $51.4 million in 2008, from $45.9 million in 2007. For
the second quarter and six month period the revenues include the Test
Services, Inc. franchises acquired in March 2008.
Operating income in the Test Preparation division was $6.5 million for the
second quarter of 2008 compared to $4.9 million for the second quarter of
2007. For the six month period, operating income in the Test Preparation
division was $9.4 million in 2008 compared to $6.4 million in 2007. The
improvements are the result of improvements in gross margin and the addition
of Test Services, Inc.
Supplementary Educational Services (SES)
For the second quarter, SES revenues increased by $3.3 million, or 135.2%,
to $5.8 million in 2008 from $2.5 million in 2007. For the six month period
SES revenues increased by $9.7 million, or 111.6%, to $18.4 million in 2008
from $8.7 million in 2007.
Operating income in the SES division was $1.1 million for the second
quarter of 2008, compared to $0.5 million in 2007. For the six month period,
operating income in the SES division was $4.5 million in 2008, compared to
$2.5 million in 2007.
K-12 Educational Services
For the second quarter, K-12 Services revenue decreased by $3.4 million,
or 38.2%, to $5.5 million in 2008 from $8.9 million in 2007. For the six month
period K-12 Services revenue decreased by $10.8 million, or 49.4%, to $11.1
million in 2008 from $21.9 million in 2007. The decrease is primarily due to
the loss of a contract in 2007 and the timing of revenue recognition on
contracts that were delayed from 2006 to the first quarter of 2007.
Operating income in the K-12 Services division was $0.5 million for the
second quarter of 2008, compared to operating loss of $0.5 million in 2007.
For the six month period, operating loss in the K-12 division was $0.2 million
in 2008 compared to operating income of $1.3 million in 2007.
Other Business Highlights
During the first half of 2008 the Company's cash balances increased by
$3.4 million to $28.7 million. In the same period in 2007 the cash balances
increased by $0.4 million to $11.2 million at June 30, 2007. Cash balances at
June 30, 2008 and March 31, 2008 were $28.7 million and $15.6 million,
respectively.
As previously announced, on July 24, 2008 the Company completed the
acquisition of its Southern California franchises. Previously, on July 2,
2008, the Company received a term loan and a revolving credit facility from
Wells Fargo Foothill, LLC. The term loan proceeds were used to fund the
Southern California franchise acquisition.
The Princeton Review will review its second quarter 2008 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) 325-4887 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 6445903, through August 13, 2008.
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. 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 Form 10-K 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,
2008 2007 2008 2007
Revenue
Test Preparation Services $28,272 $25,074 $51,422 $45,937
SES Services 5,780 2,457 18,372 8,684
K-12 Services 5,476 8,854 11,105 21,935
Total revenue 39,528 36,385 80,899 76,556
Cost of revenue
Test Preparation Services 8,970 8,133 17,858 16,500
SES Services 2,392 787 8,055 3,632
K-12 Services 1,994 5,514 4,679 12,443
Total cost of revenue 13,356 14,434 30,592 32,575
Gross Profit 26,172 21,951 50,307 43,981
Operating expenses
Selling, general
and administrative 22,769 21,713 47,017 44,364
Restructuring 2,567 - 3,090 -
Total operating expenses 25,336 21,713 50,107 44,364
Income (loss) from operations 836 238 200 (383)
Interest income (expense), net 29 (497) 127 (841)
Other income (expense), net (2) (3,687) (40) (3,763)
Income (loss) from continuing
operations before income taxes 863 (3,946) 287 (4,987)
(Provision) benefit for
income taxes (556) 129 (634) 137
Income (loss) from continuing
operations 307 (3,817) (347) (4,850)
Discontinued operations
Net income (loss) from
discontinued operations (92) (246) 35 952
Gain from disposal of
discontinued operations - - - 4,539
(Provision) benefit for
income taxes 51 (394) - (572)
Net income (loss) from
discontinued operations (41) (640) 35 4,919
Net income (loss) 266 (4,457) (312) 69
Dividends and accretion on
Preferred Stock (1,150) (104) (2,298) (207)
Income (loss) attributed to
common stockholders $(884) $(4,561) $(2,610) $(138)
Earnings (loss) per share
Basic and diluted
Income (loss) from
continuing operations $(0.03) $(0.14) $(0.08) $(0.18)
Income (loss) from
discontinued operations 0.00 (0.02) 0.00 0.18
Net income (loss) attributed
to common shareholders (0.03) $(0.16) $(0.08) $0.00
Weighted average shares used
in computing income (loss)
per share 32,918 27,890 31,202 27,837
SOURCE The Princeton Review, Inc.
Stephen C. Richards of The Princeton Review, Inc., +1-508-663-5053,
srichards@review.com
