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The Princeton Review Reports First Quarter 2010 Financial Results
--Revenue increased 41% over 2009 to $63.2 million --Penn Foster acquisition contributes $26.4 million in revenue --Raised net proceeds of $44.4 million and paid off the second lien bridge financing facility in April 2010 --Finalized joint venture with the National Labor College and AFL-CIO
FRAMINGHAM, Mass., May 6, 2010 /PRNewswire via COMTEX News Network/ -- The Princeton Review, Inc. (Nasdaq: REVU), a leading provider of test preparation and online career education services, today announced a 41% increase in revenues to $63.2 million, up from $44.8 million in the same period a year ago, and a loss from continuing operations before taxes of $14.4 million for the quarter ended March 31, 2010. The Company reported income of $2.2 million for the comparable period of 2009.
The first quarter 2010 results include a restructuring charge and integration charges of $2.1 million relating to the acquisition of Penn Foster in December 2009, which compares to a restructuring charge of $2.9 million in the first quarter of 2009. The first quarter of 2010 also includes depreciation and amortization of $10.6 million compared to $1.5 million in the same period of 2009.
During the first quarter, The Princeton Review generated net cash from operating activities of $2.7 million compared to $4.4 million in the first quarter of 2009. Net cash from operating activities included interest payments of $4.4 million compared to $0.3 million in 2009.
CEO Comment
"Our financial performance in the first quarter demonstrates that we are continuing the transformation process for The Princeton Review. That momentum carried through into April when we successfully issued 16.1 million shares of common stock, raising sufficient proceeds to pay off our bridge facility relating to the Penn Foster acquisition," said Michael Perik, Chief Executive Officer of The Princeton Review. "The positive impact of these changes in our capital structure provides us with further financial flexibility to execute on our strategies, and to continue improving the growth characteristics of our core test prep and online career educational services businesses."
Test Preparation Services
For the quarter, Test Preparation Services division revenue decreased by $0.6 million, or 2%, to $26.8 million in 2010, from $27.4 million in the first quarter of 2009.
Operating income in the Test Preparation Services division was $3.0 million for the first quarter of 2010, compared to $3.5 million for the first quarter of 2009. The 2010 results include higher depreciation and amortization expense of $1.7 million in 2010 compared to $1.0 million in 2009
Penn Foster
For the first quarter, the Penn Foster online career educational services business, acquired in December 2009, contributed revenues of $26.4 million and an operating loss of $4.0 million. The operating loss includes depreciation and amortization charges of $5.5 million.
Supplementary Educational Services (SES)
For the first quarter of 2010, SES revenues decreased $7.5 million, or 43%, to $10.0 million compared to $17.5 million in the first quarter of 2009. As previously announced, due to significant changes in federal funding for these programs, the Company is placing less emphasis on this business and has scaled back activities accordingly. Consistent with this, the operating income in the SES division decreased by $3.5 million to $2.6 million for the first quarter of 2010 compared to $6.1 million in the first quarter of 2009.
Other Business Highlights
Subsequent to the end of the quarter, in April 2010 The Princeton Review completed an underwritten offering of shares of its common stock and received net proceeds of $44.4 million which were used to prepay the entirety of its second lien bridge facility.
Also in April 2010 the Company finalized its joint venture arrangement with the National Labor College and the AFL-CIO. The joint venture is expected to become operational in the second quarter of 2010 and anticipates enrolling its first students in September 2010.
Conference Call Details
The Princeton Review will review its first quarter 2010 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 (760) 666-3600 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 (800) 642-1687 or (706) 645-9291, passcode 72508298, through June 2, 2010.
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 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. The Company also owns and operates Penn Foster Education Group, a global leader in online education. Penn Foster provides career-focused degree and vocational programs in the fields of allied health, business, technology, education, and select trades. Nationally and regionally accredited Penn Foster High School and Penn Foster Career School (www.pennfoster.edu) are headquartered in Scranton, PA.
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.
REVU-e
- Tables to Follow -
THE PRINCETON REVIEW, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
(In thousands, except per share data)
Three Months Ended
March 31,
---------
2010 2009
---- ----
Revenue
Test Preparation Services $26,757 $27,363
SES 9,989 17,460
Penn Foster 26,439 -
Total revenue 63,185 44,823
------ ------
Operating expenses
Costs of goods and services sold
(exclusive of items below) 22,514 17,359
Selling, general and administrative 36,137 20,565
Depreciation and amortization 10,561 1,531
Restructuring 1,031 2,918
Acquisition expenses 1,023 -
Total operating expenses 71,266 42,373
Operating (loss) income from continuing
operations (8,081) 2,450
Interest expense (6,602) (329)
Interest income - 14
Other income 280 25
(Loss) income from continuing operations
before income taxes (14,403) 2,160
Provision for income taxes (1,186) (300)
(Loss) income from continuing operations (15,589) 1,860
Discontinued operations
Loss from discontinued operations (1,025) (138)
Gain from disposal of discontinued
operations - 969
Benefit for income taxes from
discontinued operations - 47
(Loss) income from discontinued
operations (1,025) 878
------ ---
Net (loss) income (16,614) 2,738
Dividends and accretion on preferred
stock (2,803) (1,207)
(Loss) income attributed to common
stockholders $(19,417) $1,531
======== ======
Earnings (loss) per share
Basic and diluted:
(Loss) income from continuing operations $(0.54) $0.02
(Loss) income from discontinued
operations (0.03) 0.03
Net (loss) income attributed to common
stockholders $(0.57) $0.05
====== =====
Weighted average shares used in computing
earnings (loss) per share
Basic 33,772 33,742
Diluted 33,772 33,858
THE PRINCETON REVIEW, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited)
(in thousands, except share data)
December
March 31, 31,
2010 2009
---- ----
ASSETS
Current assets:
Cash and cash equivalents $15,524 $10,075
Restricted cash and cash equivalents 446 626
Accounts receivable, net of allowance of $1,219
and $769, respectively 19,610 13,933
Other receivables, including $676 and $760,
respectively, from related parties 4,655 6,721
Inventory 7,080 7,997
Prepaid expenses and other current assets 5,229 5,883
Deferred tax assets 12,944 12,920
Total current assets 65,488 58,155
------ ------
Property, equipment and software development, net 32,566 33,310
Goodwill 187,015 186,518
Other intangibles, net 99,856 104,961
Other assets 6,765 6,863
Total assets $391,690 $389,807
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $7,958 $5,962
Accrued expenses 27,382 23,047
Current maturities of long-term debt 4,429 4,597
Deferred revenue 32,553 32,887
Total current liabilities 72,322 66,493
------ ------
Deferred rent 1,107 1,606
Long-term debt 143,461 142,072
Other liabilities 6,423 5,552
Deferred tax liability 31,776 31,499
Total liabilities 255,089 247,222
Series E Preferred Stock, $0.01 par value;
108,275 shares authorized; 108,275 and 98,275
shares issued and outstanding, respectively 109,569 97,326
Commitments and contingencies
Stockholders' equity
Common stock, $0.01 par value; 100,000,000 shares
authorized; 35,256,648 and 33,727,272 shares
issued and outstanding, respectively 353 337
Additional paid-in capital 173,109 174,935
Accumulated deficit (146,239) (129,625)
Accumulated other comprehensive loss (191) (388)
Total stockholders' equity 27,032 45,259
Total liabilities and stockholders' equity $391,690 $389,807
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SOURCE The Princeton Review, Inc.
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