The following discussion and analysis is provided to increase the understanding of, and should be read in conjunction with, our unaudited condensed consolidated financial statements and notes included in this Quarterly Report on Form 10-Q and our consolidated financial statements and notes in our Annual Report on Form 10-K for the year ended October 3, 2008 (our "2008 10-K"). We use the terms "we," "our," and "us" to refer to Learning Tree International, Inc. and our subsidiaries.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can find many (but not all) of these statements by looking for words such as "approximates," "believes," "expects," "anticipates," "estimates," "intends," "plans" "would," "may" or other similar expressions in this report. We claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995. We caution investors that any forward-looking statements presented in this report, or which management may make orally or in writing from time to time, are based on the beliefs of, assumptions made by, and information currently available to management. Such statements are based on assumptions, and the actual outcome will be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Although we believe that our assumptions are reasonable, they are not guarantees of future performance, and some will inevitably prove to be incorrect. As a result, our actual future results may differ from our expectations, and those differences may be material. We are not undertaking any obligation to update any forward-looking statements. Accordingly, investors should use caution in relying on past forward-looking statements, which are based on known results and trends at the time they are made, to anticipate future results or trends.

Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include the following: risks associated with the timely development, introduction, and customer acceptance of Learning Tree's courses; competition; international operations, including currency fluctuations; changing economic and market conditions; technology development and new technology introduction; efficient delivery and scheduling of Learning Tree's courses; adverse weather conditions, strikes, acts of war or terrorism and other external events; and attracting and retaining qualified personnel. Please refer to the risk factors under "Item 1A. Risk Factors" beginning on page 11 and elsewhere in our 2008 10-K, as well as in our other filings with the Securities and Exchange Commission.

The risks included in our filings are not exhaustive, and additional factors could adversely affect our business and financial performance. We operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We do not undertake and specifically disclaim any obligation to update such forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements except as required by law.

OVERVIEW

We are a leading worldwide vendor-independent provider to business and government organizations for the training and education of their managers and information technology ("IT") professionals. Since our founding in 1974, we have provided high-quality training to nearly 1.9 million managers and IT professionals.

We develop our own proprietary courses to be highly interactive, and incorporate extensive hands-on exercises or case study workshops. Our vendor-independent IT courses provide participants an unbiased perspective regarding software and hardware products and the ability to compare and integrate multiple platforms and technologies from various vendors. Our management courses, while addressing core concepts and theories, focus heavily on providing skills, tools, and technologies that participants can apply immediately upon returning to their jobs. Our RealityPlus™ management courses utilize extensive "real-world" simulations to teach practical management techniques. This innovative, multi-media methodology provides an environment in which RealityPlus™ course participants learn entirely by doing. Throughout the courses, participants 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 workplace.

Based on their sophistication and quality, all our courses are recommended for one to two semester hours of college credit by the American Council on Education. We are also a trusted continuing professional education (CPE) provider of the International Information Systems Security Certification Consortium (ISC)2. In addition, we are on the National Association of State Boards of Accountancy National Registry of CPE sponsors and are a Registered Education Provider of the Project Management Institute (PMI).

After assessing market need, most of our courses are translated into French, Swedish and Japanese. We offer our proprietary courses through local operations in the United States, the United Kingdom, France, Canada, Sweden and Japan, and typically 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 instructors are not full time employees; rather, they are practicing professionals who apply the same IT and management skills they teach in our classrooms as independent consultants or full-time employees elsewhere when they are not teaching. On average, each expert instructor teaches about 11 courses per year on an "as needed" basis. This ensures that our instructors stay at the forefront of their respective disciplines, and also enables us to structure our business so the majority of course delivery costs are variable. In addition to the delivery of our courses in our state-of-the-art education centers, our infrastructure and logistical capabilities allow us to coordinate, plan and deliver our courses at hotels, conference facilities and customer sites worldwide.

We continue our tradition of excellence by always seeking to improve our core strengths: expert instructors, proprietary content library, state-of-the-art classrooms and worldwide course delivery systems. We believe that quality and customer satisfaction remain the underlying driving forces for our long-term success.

CURRENT ECONOMIC ISSUES

The current business environment is among the most challenging we have faced in our 34 year history, as businesses have been cutting back on spending of all kinds in response to the global economic crisis. As an indication of the effect this slowdown had on our business during our first quarter of fiscal year 2009, the number of course participants per available training week declined by approximately 12.0% compared with our first quarter of fiscal year 2008. Our overall reported revenues for our first quarter of fiscal year 2009 declined by 25.4% from those in our first quarter of fiscal year 2008. Changes in foreign exchange rates account for 9.2% of the decline.

We have already taken some steps to reconfigure our business to meet these challenges:

• In November, we eliminated 73 existing positions, representing approximately 14.0% of our approved positions, across a wide range of levels, functions and locations. We expect to see savings from this restructuring starting in our second quarter of fiscal year 2009, and we are continuing to evaluate our staffing levels as we strive to match the size of our infrastructure to our current business levels.

• We have focused on controlling our variable costs and maximizing our gross profit. As a result, although we cannot control certain fixed costs, such as the cost of our education centers, our gross profit percentage only decreased to 57.0% during our first quarter of fiscal year 2009 from 60.0% during our first quarter of fiscal year 2008.

• While we continue to believe that we can gain additional revenue by expanding our course library, we have somewhat scaled back our initiative to develop and offer increased numbers of new course titles, although we will continue to develop and introduce new course titles in response to market demand. Because of the many titles we had already started developing, and which are already well into the development pipeline, we expect the number of titles we will introduce during fiscal year 2009 to exceed the numbers introduced annually in the fiscal year 2006-2008 period.

• We have also instituted a variety of other cost-saving measures throughout our operations.

• We are looking hard at our sales and marketing expenses to find greater efficiencies, and focusing our sales and marketing investment on activities which we expect to provide a rapid positive return.

• Additionally, we are continuing to evaluate all aspects of our business, both to identify opportunities to cut costs and operate more efficiently, but also to evaluate opportunities to significantly reshape our processes and our business model with the ultimate goal of ensuring that Learning Tree is optimally positioned to deal with the challenges of today's economy.

KEY METRICS OF OUR FIRST QUARTER OF FISCAL YEAR 2009

As discussed in more detail throughout our Management's Discussion and Analysis of Financial Condition and Results of Operations, for the three months ended January 2, 2009:

• Revenues decreased to $38.0 million from $50.9 million, a decline of 25.4% from the same quarter of our prior fiscal year;

• Gross Profit decreased to 57.0% of revenues from 60.0% for the same quarter of our prior fiscal year;

• Operating Expenses include $0.4 million of costs associated with the potential sale of the Company;

• Operating Expenses include $0.4 million of costs associated with a restructuring that eliminated 73 existing positions worldwide;

• Operating Expenses increased to 50.0% of revenues from 43.3% for the same quarter of our prior fiscal year;

• Income from Operations was $2.7 million, a decrease of $5.8 million from the results for the same quarter of our prior fiscal year;

• Net income decreased to $1.8 million compared to $5.9 million in our first quarter of fiscal year 2008;

• The sum of cash and cash equivalents and current available for sale securities decreased $9.1 million to $61.6 million at January 2, 2009 compared with October 3, 2008;

• Net working capital (current assets minus current liabilities) decreased $1.5 million at January 2, 2009 compared with October 3, 2008;

• We purchased 353,195 shares of our common stock during the quarter for a total purchase price of $3.7 million; and

• We increased the $2.6 million ($1.6 million after tax) temporary impairment of our auction rate securities that we took in the fourth quarter of fiscal year 2008 by $2.0 million ($1.2 million after tax). This amount has been recorded in other comprehensive income and does not decrease our reported net income.

RESULTS OF OPERATIONS

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



                                               Three months ended
                                           January 2,     December 28,
                                              2009            2007
             Revenues                           100.0 %          100.0 %
             Cost of revenues                    43.0 %           40.0 %

             Gross profit                        57.0 %           60.0 %
             Operating expenses:
             Course development                   5.8 %            4.0 %
             Sales and marketing                 24.0 %           20.7 %
             General and administrative          20.2 %           18.6 %

             Total operating expenses            50.0 %           43.3 %

             Income from operations               7.0 %           16.7 %
             Other income (expense), net          1.0 %            1.8 %

             Income before taxes                  8.0 %           18.5 %
             Income tax provision                 3.1 %            6.9 %

             Net income                           4.9 %           11.6 %

THREE MONTHS ENDED JANUARY 2, 2009 COMPARED WITH DECEMBER 28, 2007

Revenues. Revenues for our first quarter of fiscal year 2009 decreased by 25.4% compared to the same quarter in fiscal year 2008. The decrease in revenues is primarily due to three factors: (a) 13.5% fewer attendee-days of training per available week; (b) changes in foreign exchange rates caused revenues to decrease by 9.2%; and (c) because of the timing of quarter ends and holidays, our first quarter of fiscal year 2009 had only 11 weeks during which we conducted classes, an effective reduction in available training time of approximately 8.0% compared to our first quarter of fiscal year 2008. These adverse affects were partially offset by the effects of price increases and changes in product mix.

During our first quarter of fiscal year 2009, we trained 21,414 course participants, a 19.3% decrease from the 26,551 course participants we trained in the first quarter of the prior fiscal year, reflecting in part the one less week available for training during the first quarter of fiscal year 2009. Average days per event decreased to 3.6 days per event in the first quarter of fiscal year 2009 from 3.7 days per event in the first quarter of fiscal year 2008.

During our first quarter of fiscal year 2009, we provided 77,162 attendee-days of training, a 20.7% decrease from 97,356 attendee-days in the same quarter in fiscal year 2008, due in part to having one less week available for training. In our management courses during our first quarter of fiscal year 2009, we provided 26,413 attendee-days of training, a 13.7% decrease from the 30,620 attendee-days in the corresponding period in fiscal year 2008. In our technology courses during our first quarter of fiscal year 2009, we provided 50,749 attendee-days of IT training, a 24.0% decrease from the 66,736 attendee-days in the corresponding period in fiscal year 2008. In our first quarter of fiscal year 2009, average revenue per participant was 7.9% lower than in the same quarter of the prior fiscal year due primarily to the negative effect of changes in foreign exchange rates and an increase in the relative proportion of participants in management courses which are shorter and have a lower average revenue per participant than IT courses. This was slightly offset by the effects of price increases (exclusive of the effects of foreign exchange rates) and a shift in the mix of single seat, voucher and passport attendees at courses held in our own education centers.

Cost of Revenues. Our cost of revenues primarily includes the costs of course instructors and their travel expenses, course materials, classroom facilities, equipment, freight and refreshments.

During our first quarter of fiscal year 2009, we presented 1,613 events compared to 1,969 events during the same period in fiscal year 2008. Our cost of revenues for our first quarter of fiscal year 2009 was $16.3 million compared to $20.3 million in the same period in fiscal year 2008. Our cost of revenues as a percentage of our revenues increased to 43.0% for our first quarter of fiscal year 2009 from 40.0% in the same quarter of the prior fiscal year. As a result, our gross profit percentage for the first quarter of fiscal year 2009 was 57.0% compared to 60.0% in the same quarter of the prior fiscal year. Changes in exchange rates do not materially affect gross profit percentages since exchange rates have essentially the same impact on both revenues and cost of revenues in any time period.

The increase in cost of revenues as a percentage of revenues in our first quarter of fiscal year 2009 reflects a 9.3% decrease in average revenue per event partly offset by a 2.0% decrease in average cost per event. The decrease in our average revenue per event, is the result of a 1.5% decrease in average attendees per event and the 7.9% decrease in average revenue per participant discussed earlier. The decrease in average cost per event principally results from the effect of changes in foreign exchange rates and the decrease in attendees per event, largely offset by proportionately higher fixed costs per event due to having fewer events in the quarter over which to allocate the expenses associated with our education centers.

Course Development Expenses. We maintain a disciplined process to develop new courses and update our existing courses. 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.

As part of our previously announced initiative to increase the rate at which we develop and introduce new course titles, we spent $2.2 million on course development during our first quarter of fiscal year 2009. However, because we reduced spending on other aspects of our course development processes, we only spent $0.1 million more than in the same quarter of fiscal year 2008. Largely due to the decline in our revenues, course development expense was 5.8% of revenues in our first quarter of fiscal year 2009 compared to 4.0% in the same quarter of fiscal year 2008.

In our first quarter of fiscal year 2009, we introduced six new IT course titles and six new management course titles. We retired one management and three IT course titles in the first quarter. As a result, our library of instructor-led courses numbered 193 titles at the end of our first quarter of fiscal year 2009 compared with 160 titles at the end of the same quarter of the prior fiscal year. At the end of our first quarter of this fiscal year, we had 59 management titles in our course library, compared with 45 titles at the end of the same quarter of the prior fiscal year. Our library of IT titles numbered 134 at the end of our first fiscal quarter, compared to 115 at the end of the same quarter of the prior fiscal year.

Sales and Marketing Expenses. Sales and marketing expenses include the cost of designing, producing and distributing direct mail and media advertisements, distributing marketing e-mails; maintaining and further developing 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 expenses, and in particular our expenditure on course catalogs, is one of our largest expenditures. We have adjusted the market sectors to which we mail our catalogs, and continue to evaluate additional ways to increase the efficiency of our marketing expenditures by spending less without materially reducing the response to that marketing, or while increasing the response to that marketing.

Sales and marketing expense in our first quarter of fiscal year 2009 was 24.0% of revenues, compared with 20.7% for the same quarter in the prior fiscal year. Sales and marketing expense was $9.1 million in our first quarter of fiscal year 2009, compared to $10.5 million during our first quarter of fiscal year 2008. The net decrease was primarily attributable to a reduction of $1.0 million in the expenses incurred for the production and mailing of our catalogs due to mailing fewer catalogs. The remaining difference is due to reductions in professional service fees and reductions in sales expense; partially offset by increases in advertising expense and personnel expense. Included in these figures, changes in foreign exchange rates caused sales and marketing expenses to decline by about 8.0%.

General and Administrative Expenses. G&A expense during our first quarter of fiscal year 2009 was $7.7 million, a decrease of $1.8 million compared to $9.5 million in our first quarter of fiscal year 2008. Approximately $0.6 million of this was due to reductions in cash and equity incentive compensation expenses in the first quarter of fiscal year 2009. Additionally, our first quarters of both fiscal year 2009 and fiscal year 2008 included significant items not associated with current operations:

• Our first quarter of fiscal year 2009 included $0.4 million for costs associated with exploring a potential sale of the company, including non-contingent transaction contribution bonuses for certain employees, principally in our finance and accounting department, as well as legal fees and special committee fees, and $0.4 million of restructuring costs incurred as a result of our November staff reductions.

• Our first quarter of fiscal year 2008 included $0.8 million in one-time professional service fees, $0.3 million related to lapsed stock options and $0.2 million for contingency accruals.

The remainder of the difference was due to various cost reduction actions.

Again, despite the reduction in our absolute expenditure on G&A, the reduction in revenues resulted in G&A expense in our first quarter of 20.2% of revenues compared with 18.6% in the same quarter of our prior year.

Other Income (Expense), Net. Other income (expense), net consists primarily of interest income and foreign currency transaction gains and losses.

During the first quarter of fiscal year 2009, other income, net totaled $0.4 million compared to $0.9 million in the same period of fiscal year 2008. The net decrease was primarily due to a reduction in interest income of $0.6 million due to lower interest rates, partly offset by a decrease in foreign currency transaction losses of $0.1 million.

Income Taxes. Our income tax provision in the first quarter of fiscal year 2009 decreased to $1.2 million from $3.5 million in the first quarter of fiscal year 2008. The decrease in our fiscal year 2009 tax provision was due to a reduction in pre-tax income, partially offset by an increase in our effective tax rate. Our income tax provision for the first quarter of fiscal year 2009 reflects a 39.6% effective tax rate, compared with our income tax provision used in the first quarter of fiscal year 2008, which reflected a 37.3% effective tax rate. The increase in the fiscal year 2009 effective rate is due to a permanent difference associated with stock option compensation expense, a reduction in the amount of tax-exempt interest income and lower expected pre-tax income. The lower expected pre-tax income generally tends to increase the effective tax rate because unfavorable permanent differences have a more significant impact on the rate because they do not fluctuate as much with revenues.

Net Income. Our net income for the first quarter of fiscal year 2009 was $1.8 million compared to net income of $5.9 million for the first quarter of fiscal year 2008.

Effects of Foreign Exchange Rates. Although our consolidated financial statements are stated in U.S. dollars, all of our subsidiaries outside of the U.S. have functional currencies other than the U.S. dollar. Gains and losses arising from the translation of the balance sheets of our subsidiaries from the functional currencies to U.S. dollars are reported as adjustments to stockholders' equity. Fluctuations in exchange rates may also have an effect on our results of operations. Since both revenues and expenses are generally denominated in our subsidiaries' local currency, changes in exchange rates that have an adverse effect on our foreign revenues are partially offset by a favorable effect on our foreign expenses. The impact of future exchange rates on our results of operations cannot be accurately predicted. To date, we have not sought to hedge the risks associated with fluctuations in exchange rates and therefore we continue to be subject to such risks. Even if we undertake such hedging transactions in the future there can be no assurance that any hedging techniques we implement would be successful in eliminating or reducing the effects of currency fluctuations. See Item 1A "Risk Factors" in our 2008 10-K.

Recently Issued Accounting Pronouncements.

On October 4, 2008, we adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("SFAS 157"). SFAS 157 provides a common definition of fair value and establishes a framework to make the measurement of fair value in generally accepted accounting principles more consistent and comparable. SFAS 157 also requires expanded disclosures.

SFAS 157 does not require new fair value measurements but applies to other standards that require fair value measurement. In February 2008, the Financial Accounting Standards Board ("FASB") issued FASB Staff Position ("FSP") No. 157-2, Effective Date of FASB Statement No. 157. FSP 157-2 delays the effective date of SFAS 157 to fiscal years beginning after November 15, 2008 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We will adopt SFAS 157 for nonfinancial assets and nonfinancial liabilities beginning in the first quarter of fiscal year 2010 as allowed by FSP 157-2. We do not currently believe adoption will have a material impact on our consolidated financial statements.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115, ("SFAS 159"), which became effective for us October 4, 2008. SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. We chose not to elect the fair value option.

FLUCTUATIONS IN QUARTERLY RESULTS

Our quarterly results are affected by many factors, including the number of weeks during which courses can be conducted in a quarter, the nature and extent of our marketing, the timing of the introduction of new courses, competitive forces within the markets we serve, the mix of our course events between IT and management and customer site or education center venues, and currency fluctuations.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity include cash and cash equivalents on hand of $43.6 million at January 2, 2009. During the first quarter of fiscal year 2009, our total cash and cash equivalents decreased by $8.2 million. Our net working capital (current assets minus current liabilities) decreased $1.5 million during the same time period.

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