New Horizons Reports Fourth Quarter and Full Year 2007 Results

Business Wire, March 28, 2008

ANAHEIM, Calif. -- New Horizons Worldwide, Inc. (Pink Sheets:NEWH) today reported financial results for the fourth quarter and year ended December 31, 2007.

Fourth Quarter 2007 Highlights

* Operating income was $272,000 for the fourth quarter of 2007, representing the fourth consecutive quarter of positive results, and operating income was $4.2 million for the year ended December 31, 2007.

* Net income was $2.0 million and $5.3 million for the quarter and year ended December 31, 2007, respectively.

* Net income per share attributable to common shareholders on a fully diluted basis was $0.08 and $0.13 for the quarter and year ended December 31, 2007, respectively.

* System-wide revenue increased 9% for the quarter ended December 31, 2007 over the comparable quarter in the prior year and increased 5% for the year ended December 31, 2007 as compared to the prior year.

* Consistent with the strategy to reposition the Company as a franchisor, eleven Company-owned training centers have been sold and re-franchised since March 2006.

Fourth Quarter 2007 Results

Revenue for the quarter ended December 31, 2007 totaled $11.6 million, compared to $15.1 million in the comparable 2006 period. Revenue from Company-owned training centers declined to $5.1 million in the quarter ended December 31, 2007 from $9.0 million in the comparable period of 2006, primarily as a result of the disposal and re-franchising of four Company-owned training centers during 2007. Franchising revenue increased to $6.5 million in the fourth quarter of 2007 as compared to $6.1 million in the fourth quarter of 2006. Royalty revenue increased by $802,000 in the quarter ended December 31, 2007 to $5.1 million from $4.3 million in the comparable 2006 period, partially due to the re-franchising of Company-owned training centers.

The Company had operating income of $272,000 in the fourth quarter of 2007, compared to an operating loss of $696,000 in the fourth quarter of 2006. The Company defines operating income (loss) as income (loss) before gains (losses) from the sale of assets, interest and income taxes. The improvement primarily reflects increased margins in the Company-owned training centers segment. The Company's net income was $2.0 million for the three months ended December 31, 2007 compared to a net loss of $1.9 million in the comparable 2006 period.

For the three months ended December 31, 2007, total system-wide revenue from all franchised and Company-owned training centers was $95.7 million compared to total system-wide revenue for the comparable 2006 period of $87.8 million, an increase of 9%.

Full Year 2007 Results

Revenue for the year ended December 31, 2007 totaled $51.6 million compared to $76.7 million for the year ended December 31, 2006. Revenue from Company-owned training centers declined to $27.6 million for the year ended December 31, 2007 from $48.7 million in the prior year, primarily as a result of the disposal and re-franchising of four Company-owned training centers during 2007. Franchising revenue declined to $24.0 million in the current year, as compared to $28.0 million for the prior year as a result of the cancellation of the Company's courseware reseller contract with Microsoft in July 2006. Royalty revenue increased to $19.2 million for the year ended December 31, 2007 from $16.7 million for the year ended December 31, 2006, partially due to the re-franchising of Company-owned training centers.

The Company had operating income of $4.2 million for the year ended December 31, 2007 compared to an operating loss of $2.4 million in the prior year. The improvement is the result of increased margins in both the franchising and Company-owned training centers segments due to cost reductions and improved cost controls and to the disposal and re-franchising of Company-owned training centers. The Company's net income was approximately $5.3 million for the year ended December 31, 2007 compared to a net loss of $2.0 million for the year ended December 31, 2006.

Dividends payable and deemed dividends on preferred stock totaled $3.6 million for the year ended December 31, 2007 compared to $204,000 in the prior year. The 2007 amount includes $3.0 million of non-cash deemed dividends resulting from the sale of preferred stock. Net income attributable to common shareholders on a fully diluted basis for the year ended December 31, 2007 was $2.4 million, or $0.17 per share, compared to a loss of $2.2 million, or ($0.21) per share in the prior year.

For the year ended December 31, 2007, total system-wide revenue from all franchised and Company-owned training centers was $382.1 million compared to total system-wide revenue for the year ended December 31, 2006 of $363.3 million, an increase of 5%.

Current Outlook

Mark A. Miller, President and Chief Executive Officer of New Horizons, stated, "The year 2007 was a successful one for New Horizons with improved operations and a strengthening franchise network. Over the past year we completed the repositioning of our business model to focus primarily on serving our network as a world class franchisor. We will continue to enhance our infrastructure and undertake strategic initiatives that will allow us to expand our product base and brand recognition in partnership with our franchise owners. As always, we appreciate the efforts of our employees, our franchisees and everyone in the New Horizons network in making our results possible."