EXHIBIT 99.1
FOR: SKILLSOFT PLC
COMPANY CONTACT:
Tom McDonald
Chief Financial Officer
(603) 324-3000, x4232
FOR IMMEDIATE RELEASE
INVESTOR CONTACTS:
Michael Polyviou
Financial Dynamics
(212) 850-5748
SKILLSOFT UPDATES PREVIOUSLY REPORTED FISCAL 2004 RESULTS DUE TO THE
ANNOUNCED SETTLEMENT OF THE 2002 SECURITIES CLASS ACTION LAWSUITS
NASHUA, NH, APRIL 2, 2004 - SkillSoft PLC (NASDAQ: SKIL), a leading provider of
e-learning courseware and Referenceware(R) for business and IT professionals,
announced today that it is reporting revised financial results for the fiscal
year ended January 31, 2004. As previously announced, the Company agreed, after
issuing its fiscal 2004 press release, to settle the class action lawsuits filed
against it and certain of its former and current officers and directors in late
2002 alleging violations of the federal securities laws in connection with the
restatement of SmartForce PLC's historical financial statements. Under the terms
of the settlement, SkillSoft will pay a total of $30.5 million to the class,
with one-half payable shortly after preliminary approval (which may occur in the
next 30 days) and the balance in approximately one year. In addition, the
Company has incurred costs associated with the settlement of approximately $1.3
million to date in fiscal 2005. The Company's ongoing discussions with its
insurers will continue with hopes they will contribute a portion of the
settlement amount. The settlement is subject to court approval.
ACCOUNTING TREATMENT
In accordance with Financial Accounting Standard No. 5, "Accounting for
Contingencies" (FAS 5), when a contingency exists and is probable and measurable
before the issuance of a company's financial statements, the company is required
to accrue the loss contingency in the prior period in which the loss arose.
SkillSoft PLC's financial results for fiscal 2004 are considered to be issued
upon the filing of its Form 10-K, which is expected to be filed on or before the
required April 15, 2004 filing date. As a result, the Company is required to
include the settlement and related costs of $31.8 million in its operating
results for the fiscal year ended January 31, 2004. In the event that insurance
is recovered prior to the filing of SkillSoft PLC's Form 10-K, the Company would
be required, in accordance with FAS 5, to record the recoverable insurance in
the fiscal year ended January 31, 2004. In the event of this occurrence, the
Company would be required to update the public in the same manner as this
disclosure related to the costs associated with settling the 2002 class action
lawsuits.
REVISED FOURTH QUARTER RESULTS
As a result of settling the 2002 class action lawsuits, the Company is reporting
a net loss of $25.6 million or $0.25 per basic and diluted share for the quarter
ended January 31, 2004 as compared to its previously reported net income of $6.1
million or $0.06 per diluted share. Most of these costs are included in the
Company's litigation settlement expense, which increased $30.5 million due to
the settlement and $1.0 million due to costs associated with the settlement. In
addition, the Company recorded legal costs related to the settlement of $0.3
million in general and administrative expenses.
For the revised condensed consolidated statement of operations for the fiscal
quarter ended January 31, 2004, please refer to the attached schedule.
REVISED FISCAL YEAR RESULTS
As a result of settling the 2002 class action lawsuits, the Company is reporting
a net loss of $113.3 million or $1.13 per basic and diluted share for the fiscal
year ended January 31, 2004 as compared to its previously reported net loss of
$81.5 million or $0.81 per basic and diluted share. These costs are captured in
the Company's litigation settlement expense and general and administrative
expense, which increased $31.5 million to $93.8 million and $0.3 million to
$27.9 million, respectively, due to the settlement. For the revised condensed
consolidated statement of operations for the fiscal year ended January 31, 2004,
please refer to the attached schedule.
REVISED BALANCE SHEET AT JANUARY 31, 2004
As a result of the accrual of the costs associated with settling the 2002 class
action lawsuit, the Company increased accrued liabilities by $16.5 million to
$92.1 million from $75.6 million for the payments due within the next twelve
months. In addition, the Company increased long-term liabilities by $15.3
million to $23.6 million from $8.3 million for the payments due beyond twelve
months. For the revised condensed consolidated balance sheet at January 31,
2004, please refer to the attached schedule.
OUTLOOK
As previously stated in the press release dated March 29, 2004 the Company will
update its fiscal 2005 outlook when it releases the results for its fiscal first
quarter ending April 30, 2004.
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 the risk that the court will not approve
the settlement; that the Company will not reach an agreement with its insurers;
difficulties in integrating the organizations of SmartForce and SkillSoft,
competitive pressures, changes in customer 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 the date
of this release. 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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SkillSoft PLC and Subsidiaries
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Twelve Months Ended
January, 31 January, 31
--------------------------------- --------------------------------
2004 2003 2004 2003
------------- ------------- ------------- ------------
Revenues $ 54,761 $ 42,914 $ 193,475 $ 101,470
Cost of revenues 4,163 4,988 18,397 11,548
------------- ------------- ------------- ------------
Gross profit 50,598 37,926 175,078 89,922
Operating expenses:
Research and development 13,024 14,218 53,627 29,104
Selling and marketing 20,128 21,107 87,532 52,691
General and administrative 7,852 6,735 27,883 17,914
Litigation settlement 31,500 -- 93,750 --
Amortization of stock-based compensation 349 496 1,986 1,634
Amortization of intangible assets 2,574 2,696 10,072 4,683
Impairment charge -- 250,107 -- 250,107
Restructuring and other non-recurring items 1,403 12,679 18,228 19,286
------------- ------------- ------------- ------------
Total operating expenses 76,830 308,038 293,078 375,419
Other income (expense), net 514 (154) 786 (282)
Interest income, net 106 703 786 2,165
Gain on sale of investments, net -- 3,682
------------- ------------- ------------- ------------
Loss before provision for income taxes (25,612) (269,563) (112,746) (283,614)
Provision for income taxes -- 383 528 383
------------- ------------- ------------- ------------
Net loss $ (25,612) $ (269,946) $ (113,274) $ (283,997)
============= ============= ============= ============
Net loss, per share, basic $ (0.25) $ (2.71) $ (1.13) $ (4.40)
============= ============= ============= ============
Basic weighted average common shares outstanding 101,230,885 99,590,000 100,119,931 64,472,000
============= ============= ============= ============
Net loss, per share, diluted $ (0.25) $ (2.71) $ (1.13) $ (4.40)
============= ============= ============= ============
Diluted weighted average common shares outstanding 101,230,885 99,590,000 100,119,931 64,472,000
============= ============= ============= ============
Pro forma net income per share reconciliation
Net loss $ (25,612) $ (113,274)
Less: certain cash charges
R&D expenses - incremental assumed in merger (1) -- 10,373
R&D expenses - incremental strategic spend (2) 2,323 5,280
G&A litigation settlement (3) 31,500 93,750
Litigation expenses - other (4) 379 2,992
Restructuring expenses (5) 27 1,858
Restatement expenses (6) 1,376 16,371
Less: amortization expense 2,923 12,058
Less: depreciation expense 1,895 9,208
Add: gain on sale of investments -- (3,682)
------------- -------------
Pro forma net income $ 14,811 $ 34,934
============= =============
Diluted weighted average common shares outstanding 108,146,890 104,376,888
============= =============
Pro forma net income per share, diluted $ 0.14 $ 0.33
============= =============
Pro forma net income per share, basic $ 0.15 $ 0.35
============= =============
* The Company is providing pro forma net income as the Company believes that, by
excluding certain items incidental to the Company's operations, these figures
are helpful in allowing individuals to accurately assess the Company's
operations and provide individuals with additional information to more readily
compare the Company's results over multiple periods.
(1) costs related to repurposing SmartForce content, platform, and other
technology to be compliant with SkillSoft standards and practices
(2) costs related to a Company initiative for content offerings and
improvements and platform improvements
(3) Includes settlements and related costs for NETg, IPLearn, and the 1998 and
2002 Class Action Shareholder lawsuits
(4) expenses related to legal actions (discussed in number 3 above) against
the company
(5) includes post merger costs associated with the SmartForce PLC and
SkillSoft Corporation merger
(6) costs related to the restatement of the SmartForce PLC historical
financial statements, 2002 securities class action lawsuits and the SEC
investigation related to the restatement
SkillSoft PLC
Condensed Consolidated Balance Sheet
(Unaudited)
January 31, 2004 January 31, 2003
---------------- ----------------
ASSETS
CURRENT ASSETS:
Cash, cash equivalents and short term investments $ 61,340 $ 125,031
Restricted cash 25,044 --
Accounts receivable, net 72,775 66,892
Prepaid expenses and other current assets 24,759 19,401
------------ ------------
Total current assets 183,918 211,324
Property and equipment, net 6,447 11,964
Goodwill 125,878 119,427
Acquired intangible assets, net 25,745 34,290
Long term investments 266 633
Other assets 124 499
------------ ------------
Total assets $ 342,378 $ 378,137
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 6,588 $ 10,672
Accrued expenses 92,117 59,821
Deferred revenue 134,328 109,009
------------ ------------
Total current liabilities 233,033 179,502
Total long term liabilities 23,587 7,548
Total stockholder's equity 85,758 191,087
------------ ------------
Total liabilities and shareholders' equity $ 342,378 $ 378,137
============ ============