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FRAMINGHAM, Mass., Aug 06, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- The Princeton Review, Inc. (Nasdaq: REVU), a leading provider of test preparation and supplemental educational services, today announced revenue of $76.3 million and operating income from continuing operations of $0.7 million for the six months ended June 30, 2009.
For the six months ended June 30, 2009, revenue increased 9.3% to $76.3 million, from $69.8 million in the six month period ended June 30, 2008. The Company's operating income from continuing operations was $0.7 million in 2009 compared to $1.8 million in 2008. The 2009 six month results include restructuring charges of $4.0 million compared to $1.8 million in 2008.
For the quarter ended June 30, 2009, revenue decreased 7.6% to $31.5 million, compared to $34.1 million in 2008. The Princeton Review reported an operating loss from continuing operations of $1.8 million compared to operating income of $1.6 million in 2008.
CEO Comment
"Our revenue growth for the six months ended June 30, 2009, while positive, has been negatively affected by continuing macro-economic challenges and industry pricing pressures. Despite this our earnings growth reflects the continued effective execution of our strategy. Both our test prep and supplemental educational services businesses are subject to seasonality and a greater proportion of our first half revenues fell in our first quarter this year as opposed to our second quarter. This was especially true for our SES division," said Michael Perik, CEO and President. "Our test prep enrollments are up, which we believe is an indicator that consumer awareness of The Princeton Review and our overall brand presence in the marketplace continues to grow."
Test Preparation Services
For the second quarter of 2009, Test Preparation Services division revenue decreased by $3.1 million, or 11%, to $25.2 million in 2009, from $28.3 million in the second quarter of 2008. For the six month period, Test Preparation Services revenue increased by $1.2 million, or 2.3%, to $52.6 million in 2009, from $51.4 million in 2008. Revenue for our second quarter and six month period include incremental revenue from our 2008 acquisitions of the Test Services, Inc. and Southern California franchises, which were completed in March and July 2008, respectively, which were offset by lower franchise fees and lower revenue per enrollment due to lower prices and shifts in product mix compared to 2008. The second quarter revenue is also impacted by earlier start dates for May and June SAT courses, which shifted some revenue from the second quarter to the first quarter of this year as compared to 2008.
Operating income in the Test Preparation Services division was $2.2 million for the second quarter of 2009, compared to $6.5 million for the second quarter of 2008. For the six month period, operating income in the Test Prep division was $5.7 million in 2009 compared to $9.4 million in 2008. Lower gross margin due to a decline in average revenue per enrollment and incremental amortization and depreciation due to 2008 acquisitions are the primary reasons for the decline in Test Preparation Services division operating income.
Supplemental Educational Services (SES)
For the second quarter of 2009, SES revenues increased by $0.5 million, or 8.6%, to $6.3 million compared to $5.8 million in the second quarter of 2008. For the six month period, SES revenue increased by $5.3 million, or 28.8%, to $23.7 million, from $18.4 million in 2008. The 2009 increases resulted from new market expansion.
Operating loss in the SES division was $0.4 million for the second quarter of 2009 compared to operating income of $1.1 million in the second quarter of 2008. The operating loss is due to lower student attendance and associated administrative expenses in new markets in 2009. For the six month period, SES division operating income was $5.7 million compared to $4.5 million in 2008 due to increased revenue from new market expansion.
Conference Call Details
The Princeton Review will review its second quarter 2009 financial results and provide additional business highlights on a conference call at 4:30 p.m. Eastern Daylight 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) 325-4943 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/events.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/events.cfm. Additionally, a replay of the call can be accessed by dialing either (888) 203-1112 or (719) 457-0820, passcode 3430511, through September 7, 2009.
About The Princeton Review, Inc.
The Princeton Review (Nasdaq: REVU) has been a pioneer and leader in helping students achieve their higher education goals for more than 25 years through college and graduate school test preparation and private tutoring. With more than 165 print and digital publications and a free website, www.PrincetonReview.com, the Company provides students and their parents with the resources to research, apply to, prepare for, and learn how to pay for higher education. The Princeton Review also partners with schools and guidance counselors throughout the U.S. to assist in college readiness, test preparation and career planning services, helping more students pursue postsecondary education.
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.
THE PRINCETON REVIEW, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
--------------------------------------
Revenue
Test Preparation Services $25,220 $28,272 $52,583 $51,422
SES Services 6,252 5,780 23,712 18,372
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Total revenue 31,472 34,052 76,295 69,794
--------------------------------------
Cost of revenue
Test Preparation Services 10,024 8,971 19,482 17,858
SES Services 3,661 2,392 11,562 8,055
--------------------------------------
Total cost of revenue 13,685 11,363 31,044 25,913
--------------------------------------
Gross Profit 17,787 22,689 45,251 43,881
--------------------------------------
Operating expenses
Selling, general and
administrative 18,451 19,747 40,547 40,341
Restructuring 1,130 1,316 4,048 1,751
--------------------------------------
Total operating expenses 19,581 21,063 44,595 42,092
--------------------------------------
Operating (loss) income from
continuing operations (1,794) 1,626 656 1,789
Interest (expense) income, net (198) 34 (513) 127
Other income (expense) 229 (2) 254 (2)
--------------------------------------
(Loss) income from continuing
operations before income taxes (1,763) 1,658 397 1,914
Benefit (provision) for income
taxes 179 (556) (121) (634)
--------------------------------------
(Loss) income from continuing
operations (1,584) 1,102 276 1,280
Discontinued operations
Loss from discontinued
operations (168) (888) (306) (1,592)
Gain (loss) from disposal of
discontinued operations (56) - 913 -
Benefit for income taxes 2 51 49 -
--------------------------------------
(Loss) income from discontinued
operations (222) (837) 656 (1,592)
Net (loss) income (1,806) 265 932 (312)
Dividends and accretion on
Preferred Stock (1,208) (1,149) (2,415) (2,298)
--------------------------------------
Net loss attributed to common
stockholders $(3,014) $ (884) $(1,483) $(2,610)
======================================
Earnings (loss) per share
Basic and diluted:
Loss from continuing
operations $ (0.08) $ - $ (0.06) $ (0.03)
Income (loss) from
discontinued operations (0.01) (0.03) 0.02 (0.05)
--------------------------------------
Loss attributable to common
shareholders $ (0.09) $ (0.03) $ (0.04) $ (0.08)
--------------------------------------
Weighted average shares used
in computing income
(loss) per share
Basic and diluted 33,719 32,918 33,730 31,202
--------------------------------------
SOURCE The Princeton Review, Inc.
http://www.PrincetonReview.com
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