Learning Tree International Inc. Reports Operating Results (10-K)

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Dec 18, 2012
Learning Tree International Inc. (LTRE, Financial) filed Annual Report for the period ended 2012-09-28.

Learning Tree International, Inc. has a market cap of $71.8 million; its shares were traded at around $5.41 with and P/S ratio of 0.5. Learning Tree International, Inc. had an annual average earning growth of 6.4% over the past 5 years.

Highlight of Business Operations:

Our fiscal year 2012 revenues decreased by 3.5% compared to fiscal year 2011. The decrease in revenues primarily resulted from a 4.1% reduction in average revenue per participant that was slightly offset by a 0.5% increase in the number of course participants. The decrease in revenues was situated in our international operations. Revenues in the United States of $64.9 million in fiscal 2012 remained flat for the year, compared to $64.7 million in fiscal year 2011. For US operations, average revenue per participant dropped 1.0% while the number of participants increased 1.5% year over year. Revenues from our international operations decreased 7.1% to $64.2 million in fiscal year 2012 from $69.1 million in fiscal year 2011. For international operations, average revenue per participant decreased 7.2% and the number of participants decreased 0.4%. The decrease in year over year average revenue per participant was the cumulative result of several factors including: a 2.5% adverse effect of changes in foreign exchange rates, an experimental program of promotional pricing for new customers in one of our international operating units, shorter duration for courses delivered, and a reduction in average price across most product lines.

The increase in cost of revenues as a percentage of revenues in fiscal year 2012 was due to the combined effects of a 7.5% reduction in revenue per event, the 4.2% increase in events presented year over year and a 2.2% reduction in the average cost per event. The reduction in revenue per event resulted from a 4.1% reduction in revenue per attendee and a 3.5% reduction in the number of attendees per event. Gross profit in the United States declined 5.3% to $32.4 million in fiscal 2012 from $34.2 million in fiscal year 2011. Gross profit from our international operations declined 10.8% to $33.8 million in fiscal year 2012 from $37.9 million in fiscal year 2011, primarily due to the decrease in our revenues from our international locations this year compared to fiscal year 2011, as discussed earlier.

Our sales and marketing expenses were 27.2% of revenues in fiscal 2012 compared to 23.1% of revenues in fiscal year 2011. Sales and marketing expenses increased to $35.1 million in fiscal year 2012 from $30.8 million in fiscal year 2011. The overall increase of $4.3 million was due to increases of: $2.8 million for increased direct mail and advertising expenses, $1.4 million for personnel and benefits partially offset by a $0.2 million decrease in severance costs, and $0.2 million for costs associated with the planned closure of the Los Angeles administrative offices. On a year over year basis, changes in foreign exchange rates caused our overall sales and marketing expenses to decrease by about 1.4%.

General and Administrative Expenses. Our general and administrative expenses were 22.8% of revenues in fiscal 2012 compared to 21.4% of revenues in fiscal year 2011. General and administrative expenses increased to $29.4 million in fiscal year 2012 from $28.6 million in fiscal year 2011. The overall increase of $0.8 million was due to increases of: $0.6 million for severance expense, $0.3 million for costs associated with the planned closure of the Los Angeles administrative offices, and $0.2 million for depreciation and amortization. These increases in general and administrative expenses were partially offset by a $0.3 million reduction in professional service costs.

Our sales and marketing expenses were 23.1% and 23.9% of revenues in fiscal years 2011 and 2010, respectively. Sales and marketing expenses increased to $30.8 million in fiscal year 2011 from $30.4 million in fiscal year 2010. The overall increase of $0.4 million was due to increases of: $1.6 million for personnel and benefits, $0.4 million for trade shows and advertising and $0.3 million for severance. These increases were offset by decreases of: catalog production costs of $0.5 million, sales commissions of $0.4 million, professional service fees of $0.2 million, recruiting fees of $0.2 million and various other expenses of $0.6 million. Changes in foreign exchange rates caused our overall sales and marketing expenses to increase by about 2.0%.

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