Except for historical statements, the matters addressed in the discussion which follows are forward-looking statements. Please do not put undue reliance on these forward-looking statements, since they are based on key assumptions about future risks and uncertainties. Although we believe that our assumptions are reasonable, inevitably some will prove to be incorrect. As a result, our actual future results can be expected to differ from those in the discussion that follows, and those differences may be material. We are not undertaking any obligation to update forward-looking statements.

RISK FACTORS

In order to help the reader assess the major risks in our business, we have identified what we believe to be the most significant risks in Item 1A. Please read it carefully.

OVERVIEW

Nature of the Business. Learning Tree International is a leading worldwide vendor-independent provider to business and government organizations for the training and education of their managers and information technology professionals. Since our founding in 1974, we have provided high-quality training to nearly 1.9 million managers and IT professionals. In fiscal year 2008 we trained 94,563 course participants from more than 11,500 organizations worldwide, including large national and multinational companies, government organizations, and small and medium-size companies.

As of October 3, 2008, we offered a broad proprietary library of intensive instructor-led courses from two to five days in length, comprising 185 different course titles representing 4,248 hours of training, including 131 information technology course titles and 54 management titles. Learning Tree courses provide both breadth and depth of education and training across a wide range of technical and management disciplines, including operating systems, databases, computer networks, computer and network security, web development, programming languages, software engineering, open source applications, project management, business skills, leadership and professional development.

We market and present our courses through local operations in the United States, the United Kingdom, France, Canada, Sweden and Japan, and generate over half of our revenues internationally. Each operating subsidiary is staffed by local personnel responsible for the sale and delivery of Learning Tree courses in that country. Our infrastructure and logistical capabilities allow us to coordinate, plan and deliver our courses at our own education centers, external hotel and conference facilities and customer sites worldwide. During fiscal year 2008, we presented courses in 43 countries.

We use a well-defined systematic approach to develop and update the Learning Tree course library so as to provide training that is immediately relevant to course participants working in a broad range of applications and industries. After assessing market need, courses are translated into French, Swedish and Japanese. Our proprietary course development process also allows us to customize our courses for delivery at our customers' sites.

We design our own vendor-independent IT courses to provide participants an unbiased perspective regarding software and hardware products and the ability to compare and integrate multiple platforms and technologies from various vendors. All Learning Tree courses are highly interactive, and incorporate extensive hands-on exercises or case study workshops. While addressing core concepts and theory, all of our technical and management courses focus primarily on providing skills, tools, and technologies that participants can apply immediately upon returning to their jobs. To accomplish this objective, many of our RealityPlus™ management courses utilize extensive multi-media simulations to teach practical management techniques. This innovative

methodology provides an environment in which RealityPlus™ course participants learn entirely by doing. Throughout these courses, they gain extensive experience applying new management skills in life-like, challenging situations, within the confines of the classroom and under the guidance of an expert instructor. As a result, RealityPlus™ course participants achieve greater mastery of effective management techniques as well as the confidence needed to apply them, and thus return to their jobs both ready and willing to immediately apply their expanded skills in their workplaces.

We had 640 instructors as of October 3, 2008, who are practicing professionals with expert subject knowledge, and who average over 24 years of "hands-on, real world" experience. Learning Tree instructors teach an average of approximately 11 course events per year on an "as-needed" basis. During the rest of the year they apply the skills that they teach, either as full-time employees for other companies or as independent consultants. When they are not teaching, Learning Tree instructors are using and honing their management and IT skills as either full-time employees for other companies or as independent consultants.

We offer our proprietary courses through wholly owned local subsidiaries in the United States, the United Kingdom, France, Canada, Sweden and Japan, and generate over half of our revenues internationally. Each operating subsidiary is staffed by local personnel responsible for the sale and delivery of our courses in that country. Our infrastructure and logistical capabilities allow us to coordinate, plan and deliver our courses at Learning Tree Education Centers, external hotel and conference facilities and customer sites worldwide. During fiscal year 2008, we presented courses in 43 countries.

We have structured our business so that the majority of our course delivery costs are variable and depend primarily upon the number of course events conducted. We schedule our course events throughout the year based on our assessment of demand. Since Learning Tree instructors typically work full-time or as consultants for other business and industry employers, or in the case of management instructors as industry consultants and facilitators, they teach our course events as needed and thus, our instructor-related costs are largely variable. However, expenses associated with our own education centers and course equipment are largely fixed.

We adjust our expenditures for sales and marketing depending on our strategic objectives, which generally include an assessment of our expectations for influencing future customer demand, market conditions and other factors. However, if our expectations regarding the results of our marketing efforts prove to be wrong, any significant revenue shortfall would have a material adverse effect on our results of operations.

During fiscal year 2008 we continued to make progress toward our goals of increasing revenue growth and profitability. Our growth plan includes a number of core growth initiatives, which were intended to increase our revenues and profitability by leveraging our fixed cost infrastructure. We began implementing these initiatives in late fiscal year 2007 and continued that implementation throughout fiscal year 2008.

Following is a summary of our core growth initiatives, and some information on our progress to date:

1 Significantly increase the rate of introduction of our new course titles. In fiscal year 2008 we began working to accelerate our revenue growth through the rapid expansion of our course library, which we believe will allow us to serve more customers by meeting a broader set of professional development needs. Performance of new titles has a well-established historical track record, and new titles typically grow to full revenue contribution levels approximately two years after introduction. In fiscal years 2006 and 2007 we introduced an average of 27 new titles each year. In fiscal year 2008, we introduced 34 new course titles. In fiscal year 2009 we now anticipate introducing approximately 53 new course titles, 22 of which we had started developing in fiscal year 2008.

2 Develop and provide blended learning solutions. While we remain firmly committed to the value of instructor-led classroom training as the center point of our business model, we believe there is an opportunity in certain situations to further increase the value of that training by integrating elements of e-Learning together with our classroom training in "blended learning" solutions. As a result, we believe that we can capture greater market share through offering these blended learning solutions to customers where

3 Continue to improve the effectiveness of our sales and marketing. In recent years, we have used our proprietary POST™ system of cutting-edge business intelligence techniques to improve the return on our investment in catalog-based direct marketing by 107% between fiscal years 2004 and 2008. We are now using our POST™ methods to continue improving the effectiveness of our telesales force, to evaluate our investments in marketing, and to identify productive ways to use our database to expand our marketing efforts.

4 Significantly grow our direct sales force. We continue to believe we have a substantial opportunity to increase our market share of courses held at customer locations, particularly for large, enterprise-level customers. During fiscal year 2008 we increased our sales force. We are now carefully monitoring the productivity and effectiveness of that investment in the current economic environment prior to making further sales staff increases. Provided that we see evidence of productivity from our staffing increases, we intend to continue our investments in this regard.

Recent Trends. As we have for the past 34 years, we continue to emphasize excellence in educating and training managers and IT professionals from government and commercial organizations around the world. We believe that quality is a significant differentiator in the eyes of our customers, and that Learning Tree's proven long-term record of exceptional performance is a reason for our clients' tremendous loyalty. It is worth noting that all of our top 100 customers from five years ago in our fiscal year 2003 were still Learning Tree customers five years later in fiscal year 2008. We continue our emphasis on excellence by focusing on our core strengths: our expert instructors, proprietary content library, state-of-the-art classrooms, application of technology to education, and worldwide course delivery systems. In fiscal years 2008 and 2007, course participants gave our instructors and courses their highest quality ratings in our history. Adjusting our course evaluation scale to a typical grading scale with a maximum possible of 100%, in fiscal years 2007 and 2008, our instructors received an average "grade" of over 96% from their participants.

Learning Tree customers have continued to respond positively to our increase in the breadth and depth of our management course offerings. At October 3, 2008, we offered 54 titles in our management curriculum representing 29.2% of our entire course library, compared to 47 titles, which represented 29.0% of the Learning Tree course library at the same point in fiscal year 2007. We intend to meet the demand for management education by continuing to develop additional management course titles, and by increasing the sales and marketing for our management course programs. In response to customer demand and the expressed need for management education that is more relevant to real-world business challenges, in fiscal year 2006 we introduced our Reality Plus™ line of management courses. We believe that these courses represent a significant advancement in providing state-of-the-art management education.

The current economic climate is having an effect on our business, and many economists are predicting a long, challenging period for the global economy. We believe that effective training in information technology and management skills improves our customers' competitiveness, and many of our customers will continue to invest in training their personnel in these critical competencies. However, we also expect that some customers will reduce their spending on training services as part of their response to the current economic conditions. We therefore believe we must manage our business with the expectation that these conditions will adversely affect our revenues, an impact that will only be partially offset by the positive effects of the growth initiatives we instituted last year. However, there is no guarantee that these approaches will be successful. See Item 1A.

We follow a 52- or 53-week fiscal year. Our year-end and quarter-end dates are on the Friday nearest the end of the calendar quarter. Accordingly, our fiscal year 2006 ended on September 29, 2006, fiscal year 2007 ended on September 28, 2007, and fiscal year 2008 ended on October 3, 2008. Each of those years comprised 52 weeks, except fiscal year 2008, which was a 53-week fiscal year.

RESULTS OF OPERATIONS

The following table summarizes our consolidated statements of operations for the periods indicated expressed as percentages of revenues:

                                                             Fiscal Year Ended
                                         September 29,           September 28,          October 3,
                                             2006                    2007                  2008
Revenues                                         100.0 %                 100.0 %             100.0 %
Cost of revenues                                  49.4                    43.6                42.4

Gross profit                                      50.6                    56.4                57.6
Operating expenses:
Course development                                 6.6                     5.1                 5.3
Sales and marketing                               27.6                    24.6                24.0
General and administrative                        18.1                    18.0                18.5

Total operating expenses                          52.3                    47.7                47.8

Income (loss) from operations                     (1.7 )                   8.7                 9.8
Other income, net                                  2.2                     2.5                 2.2

Income before provision for
income taxes                                       0.5                    11.2                12.0
Provision for income taxes                         2.5                     1.0                 4.4

Net income (loss)                                 (2.0 )%                 10.2 %               7.6 %

FISCAL YEAR 2008 COMPARED WITH FISCAL YEAR 2007

In fiscal year 2008, our revenues increased by 8.4% to $181.3 million compared to $167.2 million in fiscal year 2007. Income from operations increased by 22.1% to $17.7 million in fiscal year 2008 compared to $14.5 million in fiscal year 2007. Net income for fiscal year 2008 decreased by 18.8% to $13.8 million compared to $17.0 million in fiscal year 2007.

Revenues. Our fiscal year 2008 revenues increased by 8.4% compared to fiscal year 2007. The increase in revenues is primarily due to a 5.2% increase in the number of participants in our courses, a 2.7% increase in average revenue per participant and a 0.5% increase due to higher classroom rental revenues than in fiscal year 2007. The increase in revenue per participant was primarily the result of a 3.4% effect of changes in foreign exchange rates and, to a lesser degree, price increases. These increases were partly offset by a higher percentage of participants at courses held at customer locations, where the average revenue per participant is lower than for courses held in our own education centers, and by a higher percentage of participants at our management courses, which have a shorter average length than our IT courses and accordingly a lower average revenue per participant.

During fiscal year 2008, we provided 345,615 attendee-days of training an increase of 1.8% from the 339,620 attendee-days in fiscal year 2007. In our management courses in fiscal year 2008, we provided 106,501 attendee-days of training, a 4.5% increase over the 101,960 attendee-days in fiscal year 2007. In our IT courses during fiscal year 2008, we provided 239,114 attendee-days of IT training, a 0.6% increase from the 237,660 attendee-days in fiscal year 2007. Because of our 52/53 week accounting convention, our fiscal year 2008 had 53 weeks, while fiscal year 2007 had 52.

Revenues in the United States increased from $74.7 million in fiscal year 2007 to $80.4 million in fiscal year 2008. Revenues from our international operations increased from $92.5 million in fiscal year 2007 to $100.9 million fiscal year 2008.

Cost of Revenues. Our cost of revenues primarily includes the costs of course instructors and their travel expenses, course materials and equipment, freight, classroom facilities and refreshments. During fiscal year 2008, we presented 7,097 events compared to 7,023 events during fiscal year 2007. Our cost of revenues for fiscal year 2008 was $76.8 million compared to $72.9 million in fiscal year 2007. Our cost of revenues as a percentage of our revenues declined to 42.4% for fiscal year 2008 from 43.6% in fiscal year 2007.

Changes in exchange rates do not materially affect our gross profit percentages since exchange rates have essentially the same impact on both revenues and cost of revenues in any time period.

The decrease in cost of revenues as a percentage of revenues in fiscal year 2008 reflects a 7.7% increase in average revenue per event partly offset by a 4.8% increase in average cost per event. The increase in our average revenue per event, excluding the effect of exchange rates, is the result of a 4.9% increase in average participants per event and the increase in average revenue per participant discussed earlier. The increase in average cost per event is due primarily to the effect of changes in foreign exchange rates and the increase in participants per event.

Gross profit in the United States increased from $41.3 million in fiscal year 2007 to $44.1 million in fiscal year 2008. Gross profit from our international operations increased from $53.0 million in fiscal year 2007 to $60.4 million in fiscal year 2008.

Course Development Expenses. We maintain a disciplined process to develop new courses and update our existing courses. All costs incurred in that process, principally for internal product development staff and for subject matter experts, are expensed when incurred and are included in course development expenses.

In fiscal year 2008, we began a strategic initiative aimed at significantly increasing the rate at which we develop new course titles, and we began introducing new titles at an accelerated rate in the second quarter of that year. In fiscal year 2008 we introduced 34 new course titles, compared with 25 new course titles introduced in fiscal year 2007 of which 34 had their initial public offering during the year.

During fiscal year 2008, course development expenses were 5.3% of revenues compared to 5.1% during the prior fiscal year. In fiscal year 2008, we increased our overall spending on course development by 12.1% to $9.7 million compared with $8.6 million in fiscal year 2007. This increase reflects the costs associated with the development of the greater number of new titles in fiscal year 2008 compared to the prior fiscal year. We introduced 9 new management course titles in each of fiscal years 2008 and 2007. During fiscal year 2008 we introduced 25 new IT courses, compared with 16 in fiscal year 2007.

At the end of fiscal year 2008, the Learning Tree library of instructor-led courses numbered 185 titles, comprising over 4,248 hours of training, compared with 162 titles at the end of fiscal year 2007. The increase in the number of titles in fiscal year 2008 reflects the net effect of introducing 34 new titles and retiring 11 titles. In general, titles are retired when the profits they generate no longer justify the ongoing cost of marketing them and maintaining their content. Thus, we may or may not develop more titles than we retire in any period.

At October 3, 2008, we had 54 management titles in our course library, compared with 47 management titles at the same point a year earlier. Our library of IT titles numbered 131 as of October 3, 2008 compared to 115 titles at the end of fiscal year 2007.

Sales and Marketing Expenses. Sales and marketing expenses include the cost of designing, producing and distributing direct mail and media advertisements, marketing e-mails and our website; compensation and travel-related costs for sales and marketing personnel; and the cost of information systems to support these activities.

Our sales and marketing expense, and in particular our expenditure on course catalogs, is one of our largest expenditures. We have adjusted the market segments to which we mail our catalogs, and are presently evaluating a number of additional ways to increase the efficiency of our marketing expenditures by spending less without materially affecting the response to that marketing. At the same time, we have been increasing our sales staff in our operating units.

Our sales and marketing expenses were 24.0% and 24.6% of revenues in fiscal years 2008 and 2007, respectively. Sales and marketing expenses increased to $43.6 million in fiscal year 2008 compared to $41.1 million in fiscal year 2007. The increase in sales and marketing expenses compared to fiscal year 2007 included: $3.9 million in personnel-related expenses, $0.7 million in professional service fees; $0.6 million in advertising expense and $0.5 million for increases in travel and living, general office expenditures and other items. These increases were partially offset by a reduction of $3.2 million in costs associated with printing and mailing our catalogs.

General and Administrative Expenses. Our general and administrative expenses in fiscal year 2008 increased by $3.5 million over the prior fiscal year, from $30.0 million to $33.5 million and represented 18.5% of revenues compared to 18.0% in fiscal year 2007. The increase in General and Administrative expenses was due to increases in professional service fees of $1.2 million including amounts for tax assistance in conjunction with the implementation of FIN 48 ($0.5 million), financial advisory services ($0.4 million) and additional legal fees ($0.3 million); and increases of $1.0 million in personnel-related costs including compensation and benefits ($0.9 million), one-time charges related to employee compensation for gains on expired stock options ($0.3 million), increases in stock compensation expense ($0.2 million), and an increase in severance expense ($0.1 million), offset by decreases in incentive compensation ($0.5 million).

For fiscal year 2008, total expenses associated with share based compensation in accordance with Financial Accounting Standards Board ("FASB") Statement No. 123 (revised 2004)-Share-Based Payment ("SFAS 123(R)") were $1.1 million, compared to $1.0 million in fiscal year 2007. In fiscal year 2008, $0.9 million of SFAS 123(R) expense was recorded to general and administrative expense, compared to $0.7 million in fiscal year 2007. The remainder of our SFAS 123(R) expense is apportioned among other expense categories, based on where we record the compensation costs for the individuals with whom the stock option compensation expense is associated.

Included in general and administrative expenses for fiscal year 2008 was $1.0 million associated with a process to explore the potential sale of the company including: employee non-contingent-transaction contribution bonuses ($0.6 million), and legal, investment banker and board fees ($0.4 million). We initiated that process on May 28, 2008 and terminated it on October 14, 2008.

Other Income (Expense), Net. Other income (expense), net in fiscal year 2008 decreased by $0.2 million over the prior fiscal year, from $4.2 million to $4.0 million. These changes included foreign currency exchange losses as opposed to prior year gains ($0.6 million) and a decrease in proceeds from the liquidation in fiscal year 2007 of our Investment in Collegis, Inc. ($0.2 million), partly offset by a decrease in loss on disposal of assets ($0.4 million) and reductions in interest expense ($0.2 million).

Income Taxes. In fiscal year 2008, our income tax provision was $7.9 million compared to $1.8 million in fiscal year 2007. Our effective rate for fiscal year 2008 is 36% compared to 9% in fiscal year 2007. The low effective rate for fiscal year 2007 was attributable to the reversal of the valuation allowance related to our U.S. deferred tax assets (which reduced our tax provision by $2.8 million) and $3.2 million from favorable adjustments from an audit of our Canadian subsidiary.

As of the end of our fourth quarter of fiscal year 2008, we reversed the valuation allowance for certain state deferred tax assets because we determined it was more likely than not that these deferred tax assets were

recoverable because of the improved financial performance in the relevant jurisdictions. The reversal of the valuation allowance resulted in a net benefit of approximately $0.2 million. As of October 3, 2008, we continued to maintain valuation allowances in the U.S. related to foreign tax credit carryovers, and we continued to maintain valuation allowances for our deferred tax assets in a foreign jurisdiction. We intend to maintain these valuation allowances until sufficient positive evidence exists to support their reversal. Profits and losses incurred in the U.S. and in the foreign jurisdiction will affect the ongoing amount of the valuation allowances.

As of the beginning of fiscal year 2008, we adopted the provisions of FIN 48. The cumulative effect of the adoption was a $1.2 million reduction to retained earnings. As of the date of adoption, the amount of unrecognized tax benefits was $1.4 million, all of which would have an impact on our effective tax rate if recognized. Our continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. As of the date of adoption, we had $0.6 million accrued for interest and $0.6 million accrued for penalties.

We have not provided for U.S. federal income and foreign withholding taxes of international subsidiaries' undistributed earnings as of October 3, 2008, because such earnings are intended to be reinvested indefinitely. The undistributed earnings were approximately $43.5 million as of October 3, 2008. If these earnings were distributed, we would incur approximately $0.3 million of foreign withholding taxes. Because of the availability of U.S. foreign tax credits, it is not practicable to determine the U.S. federal income tax liability that would be payable if such earnings were not reinvested.

FISCAL YEAR 2007 COMPARED WITH FISCAL YEAR 2006

In fiscal year 2007, our revenues were $167.2 million compared to $154.0 million . . .