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New York, NY, August 9, 2007 -- 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, 2007.
Second Quarter and Six-Month 2007 Financial Highlights
"The Company's performance in the last six months highlights The Princeton Review's continued ability to grow its revenue base," said Michael Perik, President and CEO. "The Company has been less successful in translating this growth into margin improvement and in containing its operating expenses, particularly at a corporate level. My main short-term objective is to deal with this challenge."
Mr. Stephen Richards, former COO and CFO of Houghton Mifflin Company, has agreed at the request of The Princeton Review's board to act as a consultant to management as the Company sharpens its focus on cost controls and margin improvement. Mr. Richards worked closely with Princeton Review's new sponsor, Bain Capital, during his tenure at Houghton Mifflin. He will help bring a discipline and focus to the Company's efforts over the next few months.
Mr. Stephen Melvin, the Acting CFO, will be leaving The Princeton Review by the end of the year. Mr Melvin took his present position in February 2007, and was instrumental in helping guide the Company through its recent financing with Bain Capital and Prides Capital. He has worked tirelessly and with great dedication to the success of The Princeton Review for the past ten years.
As part of the recent financing, Mr. Michael Krupka and Mr. Jeffrey Crisan, both Managing Directors of Bain Capital, and Mr. Perik joined The Princeton Review's board. Mr. Richard O'Donnell has resigned from the board, effective August 9, 2007.
"As the new CEO of The Princeton Review, I have a mandate from our Founder and Chairman, John Katzman, and the Company's full board, to deliver both profitable growth and to leverage our world class brand. I intend to move quickly to fulfill these tasks. My three main goals will be to drive down corporate costs, improve the margins of our K-12 business, and revitalize our core Test Prep Division through a careful and prudent program of investment," Mr. Perik said.
Test Preparation Services
For the second quarter, Test Preparation Services revenue increased by $5.0 million, or 22.1%, from $22.5 million in 2006 to $27.5 million in 2007. For the six months ended June 30, Test Preparation Services revenue increased by $6.2 million, or 12.8%, from $48.4 million in 2006 to $54.6 million in 2007. This growth was driven by strong gains in SES and tutoring revenues.
K-12 Services
For the second quarter, K-12 Services revenue decreased by $1.8 million, or 17.2%, from $10.7 million in 2006 to $8.9 million in 2007. For the six months ended June 30, K-12 Services revenue increased by $3.5 million, or 19.1%, from $18.4 million in 2006 to $21.9 million in 2007. Revenues in this division are dependent upon large institutional contracts and the timing of deliverables under the contract terms.
Admissions Services
In February 2007, The Princeton Review sold its web-based admissions and application management business. In April 2007, the only remaining business operated by its Admissions Services division, providing higher education marketing services to post secondary schools, was outsourced to Higher Edge Marketing, Inc. Financial results for its web-based admissions and application management business have been reclassified as discontinued operations. Financial results associated with admissions publications and marketing services, including any royalties from Higher Edge Marketing Services, Inc, have been reclassified into Test Preparation Services. Lastly, college counseling services previously reported in the Admissions Services division, have been reclassified into K-12 Services.
The Princeton Review will review its second quarter 2007 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) 457-2650 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 9032465, through August 13, 2007.
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 student's 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 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.
Contact:
Harriet Brand
The Princeton Review
(212) 874-8282 ext. 1091