Learning Tree International Inc. Reports Operating Results (10-Q)
Learning Tree International Inc. has a market cap of $158.5 million; its shares were traded at around $11.42 with a P/E ratio of 36.8 and P/S ratio of 1.2. LTRE is in the portfolios of Arnold Van Den Berg of Century Management.
Highlight of Business Operations: Sales and marketing expense in our first quarter of fiscal year 2010 was 21.0% of revenues, compared with 24.0% for the same quarter in fiscal year 2009. Sales and marketing expense was $6.8 million in our first quarter of fiscal year 2010, compared to $9.1 million during our first quarter of fiscal year 2009. During our first quarter of this fiscal year, we reduced the number of catalogs produced and mailed, lowering our expense by $1.1 million. Reductions of personnel and related benefits accounted for an additional reduction of $0.8 million. Other marketing reductions included $0.3 million of advertising expense, with other reductions of $0.1 million. Changes in foreign exchange rates included in these figures caused total sales and marketing expenses to increase by about 2.9%.
General and Administrative Expenses. G&A expense during our first quarter of fiscal year 2010 was $6.1 million, a decrease of $1.6 million compared to $7.7 million in our first quarter of fiscal year 2009. This decrease related primarily to $0.4 million of reductions in payroll and benefits (including increases in equity and incentive compensation of $0.1 million) and professional services of $0.4 million (primarily reductions in legal and auditing fees). Additionally, our first quarter of fiscal year 2009 included significant items not associated with current operations:
At January 1, 2010 our net working capital (current assets minus current liabilities) was $38.4 million, a $2.1 million increase from our working capital balance at October 2, 2009 as a result of a decrease in accounts payable of $2.3 million, a decrease in deferred revenues of $2.3 million, an increase of $0.5 million of available for sale securities, offset by a decrease in accounts receivable of $1.7 million and $1.5 million of tax payments.
Cash provided by operating activities increased by $2.6 million in the first three months of fiscal year 2010 compared to $0.7 million over the same period of fiscal year 2009. Cash provided by investing activities decreased by $1.8 million in the first three months of fiscal year 2010, due primarily to an increase of $1.4 in net purchases of available for sale securities and an increase in the purchases of equipment and other capital assets of $0.4 million. Cash used in financing activities decreased by $2.6 million due to repurchases of our common stock. Changes in exchange rates had minimal effect on cash and cash equivalents during our first quarter of fiscal year 2010.
Liquidity. During our first three months of fiscal year 2010, the total of our cash and cash equivalents decreased by $1.6 million to $42.7 million at January 1, 2010 from $44.3 million at October 2, 2009. This decrease included the effects of $1.0 million of stock repurchases, $0.8 million of capital expenditures and $0.5 million of net purchases of available for sale securities which were partially offset by $0.7 million in cash provided by operating activities.
At January 1, 2010 we had $16.5 million in face value of Auction Rate Securities (ARS). This compares to $17.0 million in ARS at October 2, 2009. 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 stated value. However, we sold $12.3 million of our ARS in fiscal year 2009, an additional $0.5 million in the first quarter of fiscal year 2010 and an additional $0.1 million after the first quarter, all at their stated value. We have a repurchase agreement with UBS under which we have the right to sell all of our remaining ARS at their stated value at any time during the period from June 30, 2010 through July 2, 2012.
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