Princeton Review recorded its first profit in four years in 2003, generating net income of $4.3 million compared to a net loss of $1 million in 2002. Total revenue in the year rose 17.1%, to $104.5 million.
The company attributed the sales gain and return to profitability to the development of new products and services. While more than half of Princeton Review's sales still come from standardized test preparation services, 30% of sales in 2003 came from new products. The greatest gain was in the company's k—12 services segment, where sales jumped 115%, to $21.5 million, due primarily to an increase in sales from school districts for which Princeton Review provided such new services as professional development, benchmark testing, after-school supplemental programs as well as printed materials. The increased business with schools offset a $2-million decline in revenue in workbook development fees from McGraw-Hill. Princeton Review earned about $2 million in its agreement with M-H, which expired at the end of September and has not been renewed.
In its test preparation services unit, revenue increased 5.6%, to $71.7 million. The gain was due almost entirely to a sales increase at company-owned operations. Revenue in the admissions service segment was flat at $11.2 million.
In the company's year-end filing with the Securities and Exchange Commission, Princeton Review broke down revenue by format. Revenue from books, software and publications rose 55.2%, to $14.9 million. Revenue from courses increased 8.9%, to $67.2 million, while Web-based income increased to $5.3 million from $3.3 million. Royalty fees dipped to $4.1 million from $4.2 million.
During the year, Princeton Review earned $3.6 million from its publishing agreement with Random House under which Random publishes and distributes books and software written by Princeton Review. Revenue from Random in 2002 was $3.5 million. Princeton Review's most recent deal with Random, signed in 2002, calls for the publication of 55 new books.
Looking at 2004, the company expects sales to be between $130 million and $135 million, with earnings per share of 28 cents to 32 cents; EPS in 2003 was 16 cents.
