EXHIBIT 99.1
FOR: SKILLSOFT PLC
FOR IMMEDIATE RELEASE COMPANY CONTACT:
Tom McDonald
Chief Financial Officer
(603) 324-3000, x4232
INVESTOR CONTACTS:
Michael Polyviou/Kirin Smith
Financial Dynamics
(212) 850-5748
SKILLSOFT REPORTS FINANCIAL TARGETS FOR FY2005;
FY2005 REVENUE TARGETED AT $221 MILLION TO $225 MILLION,
WHICH REPRESENTS 15% GROWTH YEAR OVER YEAR;
GAAP NET INCOME TARGETED AT $21 MILLION TO $24
MILLION; PRO FORMA CASH NET INCOME TARGETED AT $40
MILLION TO $44 MILLION; FY2004 BACKLOG EXPECTED TO
REPRESENT 76% OF FY2005 REVENUE TARGET
SKILLSOFT ANNOUNCES CHANGES TO ITS BOARD OF DIRECTORS
NASHUA, NH, MARCH 12, 2004 - SkillSoft PLC (NASDAQ: SKIL), a leading provider of
e-learning courseware and Referenceware(R) for business and IT professionals,
today announced its fiscal 2004 outlook and financial targets for its fiscal
year ending January 31, 2005.
FISCAL 2004 OUTLOOK
For the fiscal year ended January 31, 2004 (fiscal 2004), SkillSoft expects that
revenue will slightly exceed its previously estimated range of between $185 and
$190 million. The Company expects fourth quarter revenue to slightly exceed its
previously estimated range of $51.0 to $53.0 million, primarily due to reseller
sell-thru seasonality coming in stronger than expected. The Company anticipates
that its net loss for fiscal 2004 will be slightly less than its previously
estimated range of between $0.83 and $0.84 per basic and diluted share. The
Company expects that it will modestly exceed its previously estimated range of
$0.04 and $0.05 net income per basic and diluted share in the fourth quarter of
fiscal 2004. The Company expects that it will announce its actual fourth quarter
and fiscal 2004 results on March 22, 2004, following the anticipated completion
of its audit. The Company is announcing estimated results due to its
participation in public speaking engagements that will take place prior to the
planned March 22, 2004 earnings release.
The Company estimates that its 12-month non-cancelable revenue backlog at
January 31, 2004 was approximately $170 million, which represents approximately
76% of the Company's midpoint revenue expectations for fiscal year 2005.
SkillSoft had approximately $86 million in cash and investments as of January
31, 2004.
On a net basis, which considers only receivable balances for which revenue has
been recorded, days sales outstanding (DSOs) are expected to be approximately 12
days in the fiscal 2004 fourth quarter. On a gross basis, which considers all
items billed as receivables, which includes deferred revenue, DSOs are expected
to be approximately 120 days in the fourth quarter of fiscal 2004.
For each of the previous four quarters ending January 31, 2004, the Company's
average annual contract length ranged from 18 to 24 months with an average of 20
months in the fourth quarter. For each of the previous four quarters, the
average annual contract value ranged from $66,000 to $153,000 with an
average of $131,000 in the fourth quarter of fiscal 2004. SkillSoft's average
contract value for the fiscal 2004 fourth quarter was $218,000, of which
$131,000 was the average annual contract value.
The Company's dollar weighted renewal rate was 65% for the year ended January
31, 2004. Customers also upgraded their annual dollar commitment to the Company
by an average of 121% for the year ended January 31, 2004.
"Although fiscal 2004 was a challenging year, we will all look back and agree
that this was a solid operational execution period for SkillSoft," commented
Chuck Moran, President and Chief Executive Officer, "SkillSoft has resolved many
legal issues relating to the past, completed the integration of the SmartForce
operations and team, invested in content and platform for competitive advantage,
established one of the strongest sales organizations in the industry and
enhanced its financial organization to prepare SkillSoft for an exciting and
profitable fiscal 2005."
FISCAL 2005 OUTLOOK
For the fiscal year ending January 31, 2005 (fiscal 2005), the Company is
currently anticipating revenue to grow approximately 15% over fiscal 2004 and be
in the range of $221 to $225 million. Quarterly revenue distribution for fiscal
2005, Q1 to Q4, is targeted at $51.5 to $52.5 million, $52.5 to $53.5 million,
$55.0 to $56.0 million, $62.0 to $63.0 million, respectively.
The Company currently anticipates its Generally Accepted Accounting Principles
(GAAP) net income for fiscal 2005 to be between $21.0 million and $24.0 million
or $0.20 to $0.22 per basic and diluted share. The Company anticipates 108
million to 112 million diluted shares outstanding for earnings per share (EPS)
calculation purposes. Quarterly net income distribution for fiscal 2005 based on
the midpoint of the range, Q1 to Q4, is targeted at 12%, 20%, 26% and 42% of the
annual range, respectively. The Company expects gross margin to be in the range
of 89% to 91% of revenue for fiscal year 2005. Research and development expenses
are expected to be in the range of $38.0 to $40.0 million. Sales and marketing
expenses are expected to be in the range of $91.5 to $93.5 million. General and
administrative expenses are expected to be in the range of $26.0 to $28.0
million which includes $2.5 to $3.0 million of legal expenses relating to the
continuing 2002 class action litigation and SEC investigation. Amortization of
intangibles and deferred compensation is expected to be $11.0 million. Provision
for income taxes is expected to be in the range of $9.0 to $10.5 million, or
approximately 28% to 32% of net income. Only $1.0 to $1.5 million of this amount
is expected to be represented by actual cash tax payments. The remainder of the
provision ($8.0 to $9.0 million) is non-cash due to the utilization of net
operating loss carryforwards. The non-cash portion of the provision for income
tax will reduce goodwill on the Company's balance sheet. Interest income is
expected to be in the range of $0.9 to $1.0 million. Additionally, capital
expenditures are expected to be in the range of $5.0 to $6.0 million, and
depreciation expense is expected to be in the range of $5.0 to $6.0 million,
thus offsetting the non-cash benefit of depreciation that is excluded from pro
forma cash net income and EPS.
The Company's outlook excludes the potential negative impact of the resolution
of litigation matters and potential restructuring charges, as well as the
potential impact of any future acquisitions or divestitures, including potential
non-recurring acquisition related expenses and the amortization of any purchased
intangibles and deferred compensation charges resulting from an acquisition
transaction. The outlook also excludes the effect of a public offering or other
financing arrangements that could impact outstanding shares and thereby the
Company's EPS outlook.
The following table itemizes significant non-cash expenses reflected in the
Company's expectations for fiscal 2005 net income of between $0.20 and $0.22 per
diluted share.
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Category Total ($ in millions) Per Share
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GAAP Net Income $ 21.0-$ 24.0 $ 0.20-$0.22
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Amortization & Deferred Comp $ 11.0 $ 0.10
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Non-Cash Income Tax Provision $ 8.0-$ 9.0 $ 0.07-$ 0.08
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Pro Forma Cash Net Income $ 40.0-$ 44.0 $ 0.37-$ 0.40
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The Company is reporting net income and net income per share targets for fiscal
2005 in accordance with GAAP and on a pro forma basis because it believes the
pro forma presentation provides investors with a useful view of the Company's
operating results by isolating significant non-cash charges and describing the
Company's performance without them.
SKILLSOFT ANNOUNCES RESIGNATION OF WILLIAM COLEMAN FROM ITS BOARD OF DIRECTORS
AND APPOINTMENT OF WILLIAM F. MEAGHER, JR.
Effective January 31, 2004, Mr. William Coleman resigned as a member of the
Board of Directors to focus his time and energies on his new company, Cassatt
Corporation, a provider of enterprise software that helps companies realize the
benefits of utility computing. Mr. Coleman joined the Board of SkillSoft
Corporation shortly before its initial public offering and became a member of
the SkillSoft PLC Board in connection with the merger between SkillSoft
Corporation and SmartForce PLC. The Board and the Company are grateful for Mr.
Coleman's continued support and his contributions to the Company's success over
the last four and one-half years.
SkillSoft also announced that Mr. William F. Meagher, Jr. has been appointed to
fill the vacancy on the Board. Mr. Meagher was the Managing Partner of the
Boston Office at Arthur Andersen LLP for 13 years prior to his retirement in
1998 and spent a total of 38 years with Andersen. He was a member of the
American Institute of Certified Public Accountants and the Massachusetts Society
of Certified Public Accountants. Mr. Meagher is presently a Director of All
Seasons Services, Inc., a trustee of Beth Israel Deaconess Hospital-Needham
Campus, Dana Farber Cancer Institute, the Greater Boston YMCA. Given Mr.
Meagher's experience and background, the Board of Directors has also appointed
him to serve as Chairman of its Audit Committee, replacing Mr. James Krzywicki
as Chairman of that Committee.
CONFERENCE CALL
In conjunction with the release, management will conduct a conference call on
Friday, March 12th at 10:00 A.M. ET to discuss the Company's expectations for
financial performance in FY05. Chuck Moran, President and Chief Executive
Officer, and Tom McDonald, Chief Financial Officer, will host the call.
To participate in the conference call, local and international callers can dial
(706) 634-7038. The live conference call will be available via the Internet by
accessing the SkillSoft Web site at www.skillsoft.com. Please go to the Web site
at least fifteen minutes prior to the call to register, download and install any
necessary audio software.
A replay will be available from 1:00 p.m. ET on March 12th, until 11:59 p.m. ET
on March 19, 2004. The replay number is (706) 645-9291, passcode: 6029523. A
webcast replay will also be available on SkillSoft's Web site at
www.skillsoft.com.
ABOUT SKILLSOFT
SkillSoft is a leading global provider of e-learning content and technology
products for business and information technology (IT) professionals within the
Global 2000. SkillSoft's multi-modal learning solutions support and enhance the
speed and effectiveness of both formal and informal learning processes and
integrate SkillSoft's in-depth courseware, learning management platform
technology and support services.
Content offerings include SkillSoft's Business Skills Library and IT Skills and
Certification Library; ITPro, BusinessPro, FinancePro, and OfficeEssentials
Referenceware(R) collections by Books24x7; and health and safety compliance
courseware by GoTrain.
For more information, visit www.skillsoft.com
This release includes information that constitutes forward-looking statements
made pursuant to the safe harbor provision of the Private Securities Litigation
Reform Act of 1995. Any such forward-looking statements involve risk and
uncertainties that could cause actual results to differ materially from those
indicated by such forward-looking statements. Factors that could cause or
contribute to such differences include difficulties in integrating the
organizations of SmartForce and SkillSoft, competitive pressures, changes in cus
tomer demands or industry standards, adverse economic conditions, loss of key
personnel, litigation and other matters disclosed under the heading "Future
Operating Results" in SkillSoft's Quarterly Report on Form 10-Q for the quarter
ended October 31, 2003, as filed with the Securities and Exchange Commission.
The forward-looking statements provided by the Company in this press release
represent the Company's views as of March 12, 2004. The Company anticipates that
subsequent events and developments may cause the Company's views to change.
However, while the Company may elect to update these forward-looking statements
at some point in the future, the Company specifically disclaims any obligation
to do so. These forward-looking statements should not be relied upon as
representing the Company's views as of any date subsequent to the date of this
release.
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