New Horizons Reports Third Quarter and Nine Months Ended September 30, 2008 Results

Business Wire, Nov 7, 2008

CONSHOHOCKEN, Pa. -- New Horizons Worldwide, Inc. (OTCBB: NEWH) today reported financial results for the third quarter and the nine months ended September 30, 2008.

Quarter Ended September 30, 2008 Highlights

* Operating income was $1.6 million for the third quarter of 2008, representing our seventh consecutive quarter of positive results.

* Net income was $1.2 million for the quarter ended September 30, 2008.

* System-wide revenue increased 1.1% for the three months ended September 30, 2008 over the comparable third quarter in the prior year.

Quarter Ended September 30, 2008 Results

Revenue for the quarter ended September 30, 2008 totaled $9.2 million, compared to $11.9 million in the comparable 2007 period. Franchising revenue increased to $6.2 million in the third quarter of 2008 as compared to $6.0 million in the third quarter of 2007. Royalty revenue was flat in the quarter ended September 30, 2008 compared to the same period last year at $5.1 million. Revenue from Company-owned training centers declined to $3.0 million in the quarter ended September 30, 2008 from $5.9 million in the comparable period of 2007, as a result of the disposal and re-franchising of one Company-owned training center in November 2007.

Operating income was flat in the quarter ended September 30, 2008 compared to the same period last year at $1.6 million. The Company defines operating income as income before gains (losses) from the sale of assets, interest and income taxes. The Company's net income was $1.2 million for the three months ended September 30, 2008 compared to a net income of $652,000 in the comparable 2007 period. The improvement primarily reflects lower income taxes in the 2008 period.

For the three months ended September 30, 2008, total system-wide revenue from all franchised and Company-owned training centers was $96.1 million compared to total system-wide revenue for the comparable 2007 period of $95.1 million, an increase of 1.1%.

Nine Months Ended September 30, 2008 Highlights

* Operating income was $4.6 million for the nine months ended September 30, 2008.

* Net income was $3.7 million for the nine months ended September 30, 2008.

* System-wide revenue increased 5.3% for the nine months ended September 30, 2008 over the comparable nine months in the prior year.

Nine Months Ended September 30, 2008 Results

Revenue for the nine months ended September 30, 2008 totaled $28.5 million, compared to $40.0 million in the comparable 2007 period. Total Franchising revenue increased to $18.8 million for the nine months ended September 30, 2008 as compared to $17.5 million for the nine months ended September 30, 2007. Within the Franchising segment, royalty revenue increased by $1.9 million in the nine months ended September 30, 2008 to $16.0 million from $14.1 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 $9.7 million in the nine months ended September 30, 2008 from $22.5 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 $4.6 million for the nine months ended September 30, 2008, compared to operating income of $4.0 million for the nine months ended September 30, 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 primarily in the Company-owned training centers segment. The Company's net income was $3.7 million for the nine months ended September 30, 2008 compared to a net income of $3.4 million in the comparable 2007 period. The nine months ended September 30, 2007 benefited from $960,000 of non-recurring gain on the sale of Company-owned training centers.

For the nine months ended September 30, 2008, total system-wide revenue from all franchised and Company-owned training centers was $301.9 million compared to total system-wide revenue for the comparable 2007 period of $286.6 million, an increase of 5.3%.

Current Outlook

Mark A. Miller, President and Chief Executive Officer of New Horizons, stated, "We are pleased with the results for the third quarter and the nine months ended September 30, 2008, especially during these volatile economic times both domestically and internationally."

Mr. Miller continued, "Network revenues in the third quarter were modestly higher than in the prior year period, resulting in operating income being flat with the prior year. Maintaining solid profitability in a period of economic uncertainty reflects our ongoing commitment to invest in revenue and profit increasing initiatives for our network and our emphasis on cost control at the Company. Year to date, we have seen good improvement in our operating income, reflecting a significant improvement in our Company-owned training center segment's profitability. Our 2008 net income has benefited from lower required income tax provisions both in the third quarter and on a year to date basis."