Learning Tree International Inc. is a leading worldwide provider of education and training to information technology professionals in business and government organizations. The company develops markets and delivers a broad proprietary library of instructor-led course titles focused on client/server systems internet/intranet technologies computer networks operating systems databases programming languages graphical user interfaces and object-oriented technology. Learning Tree International Inc. has a market cap of $145.37 million; its shares were traded at around $9 with a P/E ratio of 10.3 and P/S ratio of 0.8.
Highlight of Business Operations:General and Administrative Expenses. G&A expense during our first quarter of fiscal year 2009 was $7.7 million, a decrease of $1.8 million compared to $9.5 million in our first quarter of fiscal year 2008. Approximately $0.6 million of this was due to reductions in cash and equity incentive compensation expenses in the first quarter of fiscal year 2009. Additionally, our first quarters of both fiscal year 2009 and fiscal year 2008 included significant items not associated with current operations:
During the first quarter of fiscal year 2009, other income, net totaled $0.4 million compared to $0.9 million in the same period of fiscal year 2008. The net decrease was primarily due to a reduction in interest income of $0.6 million due to lower interest rates, partly offset by a decrease in foreign currency transaction losses of $0.1 million.
Cash Flows. Our cash and cash equivalents decreased $8.2 million to $43.6 million at January 2, 2009 from $51.8 million at October 3, 2008 (dollars in thousands).
Liquidity. During our first quarter of fiscal year 2009, the total of our cash and available for sale securities decreased by $11.1 million to $83.1 million at January 2, 2009 from $94.2 million at October 3, 2008. This decrease included the effects of $3.7 million of stock repurchases, $3.3 million from changes in foreign exchange rates and a $2.0 million non-cash charge for additional temporary impairment of our auction rate securities (ARS).
At January 2, 2009 our net working capital (current assets minus current liabilities) was $29.7 million, a $1.5 million decrease from our working capital balance at October 3, 2008 as a result of seasonality factors and the overall decline in revenues, partly offset by our net profit for the quarter. Current assets declined $13.1 million of which $5.0 million was due to the effect of changes in foreign exchange rates. Exclusive of the effects of changes in foreign rates, cash declined $4.7 million and accounts receivable declined $2.2 million. Declines in other current assets account for the remainder of the change. Current liabilities declined $11.6 million of which $3.8 million was due to the effect of changes in foreign exchange rates. Exclusive of the effects of foreign exchange rates, deferred revenues declined $4.0 million and accounts payable declined $3.1 million. Declines in other current liabilities account for the remainder of the change. The declines in accounts receivable and deferred liabilities are primarily due to lower revenues. The declines in accounts payable and the other working capital accounts are primarily due to lower levels of activity as evidenced by lower costs of revenues and lower operating costs.
At January 2, 2009 we had $26.1 million in face value of ARS. This compares to $29.3 million in ARS at October 3, 2008. Our ARS are long-term debt instruments backed by municipal bonds and student loans. None of our ARS are mortgage-backed debt. All of our ARS had credit ratings of AAA or AA when purchased. Historically, our ARS were highly liquid. As a result of liquidity issues in the global credit and capital markets, it has been difficult to sell ARS at their face value. However, we did sell $15.8 million of our ARS in fiscal year 2008 and an additional $3.2 million in the first quarter of fiscal year 2009, all at their stated value. We have signed a repurchase agreement with UBS under which we have the right to sell our remaining $26.1 million of ARS at their stated value at any time during the period from June 30, 2010 through July 2, 2012.
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