New Horizons Reports Second Quarter and Six Months Ended June 30, 2008 Results
CONSHOHOCKEN, Pa.(BUSINESS WIRE) -- New Horizons Worldwide, Inc. (OTCBB: NEWH) today reported financial results for the second quarter and the six months ended June 30, 2008.
Quarter Ended June 30, 2008 Highlights
- Operating income was $1.5 million for the second quarter of 2008, representing our sixth consecutive quarter of positive results.
- Net income was $1.1 million for the quarter ended June 30, 2008.
- System-wide revenue increased 7.6% for the quarter ended June 30, 2008 over the comparable quarter in the prior year.
Quarter Ended June 30, 2008 Results
Revenue for the quarter ended June 30, 2008 totaled $9.9 million, compared to $13.3 million in the comparable 2007 period. Franchising revenue increased to $6.4 million in the second quarter of 2008 as compared to $6.0 million in the second quarter of 2007. Royalty revenue increased by $901,000 in the quarter ended June 30, 2008 to $5.8 million from $4.9 million in the comparable 2007 period, partially due to the re-franchising of Company-owned training centers. Revenue from Company-owned training centers declined to $3.5 million in the quarter ended June 30, 2008 from $7.3 million in the comparable period of 2007, as a result of the disposal and re-franchising of four Company-owned training centers during 2007.
The Company had operating income of $1.5 million in the second quarter of 2008, compared to an operating income of $1.4 million in the second quarter of 2007. The Company defines operating income as income before gains (losses) from the sale of assets, interest and income taxes. The improvement reflects increased margins in both the Company's Franchising segment and its Company-owned training centers segment. The Company's net income was $1.1 million for the three months ended June 30, 2008 compared to a net income of $1.5 million in the comparable 2007 period. The second quarter of 2007 benefited from $585,000 of non-recurring gain on the sale of a Company-owned training center.
For the three months ended June 30, 2008, total system-wide revenue from all franchised and Company-owned training centers was $105.5 million compared to total system-wide revenue for the comparable 2007 period of $98.1 million, an increase of 7.6%.
Six Months Ended June 30, 2008 Highlights
- Operating income was $3.0 million for the six months ended June 30, 2008.
- Net income was $2.5 million for the six months ended June 30, 2008.
- System-wide revenue increased 8.4% for the six months ended June 30, 2008 over the comparable six months in the prior year.
Six Months Ended June 30, 2008 Results
Revenue for the six months ended June 30, 2008 totaled $19.3 million, compared to $28.1 million in the comparable 2007 period. Franchising revenue increased to $12.6 million in the first half of 2008 as compared to $11.5 million in the first half of 2007. Royalty revenue increased by $1.9 million in the six months ended June 30, 2008 to $10.9 million from $9.0 million in the comparable 2007 period, partially due to the re-franchising of Company-owned training centers. Revenue from Company-owned training centers declined to $6.8 million in the six months ended June 30, 2008 from $16.6 million in the comparable period of 2007 as a result of the disposal and re-franchising of four Company-owned training centers during 2007.
The Company had operating income of $3.0 million in the first half of 2008, compared to operating income of $2.3 million in the first half of 2007. The Company defines operating income as income before gains (losses) from the sale of assets, interest and income taxes. The improvement reflects increased margins in both the Company's Franchising segment and its Company-owned training centers segment. The Company's net income was $2.5 million for the six months ended June 30, 2008 compared to a net income of $2.7 million in the comparable 2007 period. The first half of 2007 benefited from $1.1 million of non-recurring gain on the sale of Company-owned training centers.
For the six months ended June 30, 2008, total system-wide revenue from all franchised and Company-owned training centers was $205.8 million compared to total system-wide revenue for the comparable 2007 period of $189.9 million, an increase of 8.4%.
Current Outlook
Mark A. Miller, President and Chief Executive Officer of New Horizons, stated, "We are pleased with the continued strong results for the second quarter and the first half of 2008, driven by growth in both our domestic and international markets."
Mr. Miller continued, "During the quarter, we continued to execute on our growth strategy by becoming a Cisco Learning Solutions Partner in the United States and Canada and by making arrangements for our centers around the world to also participate in our Cisco relationship. Cisco Learning Solutions Partners (CLSP) and their sponsored organizations are the only companies that may provide authorized Cisco training. We also saw increased franchising activity as a result of a revitalized franchising program that was developed as part of our strategy."
Mr. Miller continued, "We have continued our approach of prudent financial management and we believe that we have ample liquidity to allow for continued investment in the future growth of our Company through the development of new products and services to assist in the on-going success of our franchisees and the continued progress of our Company-owned training centers.
"We appreciate the efforts of our employees, the partnership of our franchise owners and their staffs and the support of our industry partners in making our results possible."
About New Horizons Computer Learning Centers
With over 300 centers in 60 countries, Conshohocken, Pennsylvania based New Horizons Worldwide, Inc. (OTC Bulletin Board: NEWH) is the world's largest independent IT training company. Through an integrated learning approach that ensures that new knowledge can be applied to real life situations, New Horizons delivers a full range of technology and business skills training from basic application and desktop productivity tools to complex and integrated business systems. New Horizons continues to expand its offerings, locations, and solutions to meet the growing demands placed on organizations and their employees. For more information, or to find a local New Horizons Computer Learning Center, visit www.newhorizons.com.
Certain matters discussed in this press release are forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and as such involve risks and uncertainties. Any statements about expectations, beliefs, plans, objectives, assumptions, future events or performance are not historical facts and are forward-looking statements. The forward-looking statements in this press release are based upon beliefs, assumptions and expectations of the Company's management as to the Company's future operations and economic performance, taking into account the information currently available and include comments regarding management's future outlook and financial performance of the Company. These statements are not statements of historical fact, and the Company's actual results may differ significantly from the results discussed in the forward-looking statements. Readers should not place undue reliance on these forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, achievements or transactions of the Company or the benefits of the proposed transaction to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements. Many of the factors which could impact the Company and the forward-looking statements contained herein are included in the Company's filings with the Securities and Exchange Commission.
NEW HORIZONS WORLDWIDE, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
June 30, December 31,
2008 2007
------------ ------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 2,237 $ 4,101
Accounts receivable, net 6,336 4,772
Prepaid expenses 748 650
Refundable income taxes 212 238
Other current assets 54 90
------------ ------------
Total current assets 9,587 9,851
Property and equipment, net 3,233 2,631
Restricted cash 514 513
Goodwill, net 11,408 11,408
Other assets 681 873
------------ ------------
Total assets $ 25,423 $ 25,276
============ ============
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 989 $ 2,305
Deferred revenue 4,005 4,169
Other current liabilities 7,540 8,416
------------ ------------
Total current liabilities 12,534 14,890
Long-term debt, excluding current portion 4,000 4,000
Deferred rent 605 737
Other long-term liabilities 240 235
------------ ------------
Total liabilities 17,379 19,862
------------ ------------
Commitments and contingencies - -
Shareholders' equity:
Convertible preferred stock Series C, no
par value, 200,000 shares authorized,
172,043 shares issued and outstanding at
June 30, 2008 and December 31, 2007.
Liquidation preference of $23.25 per
share. 3,802 3,802
Convertible preferred stock Series B, no
par value, 200,000 shares authorized,
174,693 shares issued and outstanding at
June 30, 2008 and December 31, 2007.
Liquidation preference of $37.50 per
share. 5,611 5,611
Common stock, $.01 par value, 30,000,000
shares authorized, 11,445,269 shares
issued; 11,260,269 shares outstanding at
June 30, 2008 and December 31, 2007. 114 114
Additional paid-in capital 49,646 49,498
Accumulated deficit (49,831) (52,313)
Treasury stock at cost - 185,000 shares
at June 30, 2008 and December 31, 2007 (1,298) (1,298)
------------ ------------
Total shareholders' equity 8,044 5,414
------------ ------------
Total liabilities and shareholders'
equity $ 25,423 $ 25,276
============ ============
NEW HORIZONS WORLDWIDE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
--------- -------- -------- --------
Revenues
Franchising
Franchise fees $ 182 $ 150 $ 449 $ 389
Royalties 5,769 4,868 10,859 9,022
Courseware sales and other 477 945 1,260 2,108
--------- -------- -------- --------
Total franchising revenues 6,428 5,963 12,568 11,519
Company-owned training center
revenues 3,481 7,346 6,750 16,628
--------- -------- -------- --------
Total revenues 9,909 13,309 19,318 28,147
Cost of revenues 3,690 6,231 7,417 13,631
Selling, general and
administrative expenses 4,735 5,723 8,915 12,185
--------- -------- -------- --------
Operating income 1,484 1,355 2,986 2,331
Other income/(loss) (4) - (4) -
Gain on sale of Company-owned
training centers - 585 - 1,140
Interest expense (107) (163) (213) (305)
Investment income 10 13 33 24
--------- -------- -------- --------
Income before provision for
income taxes 1,383 1,790 2,802 3,190
Provision for income taxes (261) (293) (320) (474)
--------- -------- -------- --------
Net income 1,122 1,497 2,482 2,716
Dividends payable on preferred
stock (171) - (342) -
--------- -------- -------- --------
Net income attributable to
common shareholders - basic $ 951 $ 1,497 $ 2,140 $ 2,716
Dividends payable addback 171 - 342 -
--------- -------- -------- --------
Net income attributable to
common shareholders - diluted $ 1,122 $ 1,497 $ 2,482 $ 2,716
========= ======== ======== ========
Net income per share:
Basic $ 0.08 $ 0.14 $ 0.19 $ 0.25
Diluted $ 0.05 $ 0.14 $ 0.11 $ 0.25
Weighted average shares
outstanding
Basic 11,260 10,757 11,260 10,751
Diluted 23,476 10,819 23,276 10,813
SOURCE: New Horizons Worldwide, Inc.
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