Press Releases & Coverage

SkillSoft Updates Previously Reported Fiscal 2006 Results Due to Settlement of Litigation Matter

NASHUA, N.H., April 13 /PRNewswire-FirstCall/ -- SkillSoft PLC (Nasdaq: SKIL), a leading provider of content resources and complementary technologies for integrated enterprise learning, announced today that it is reporting revised financial results for the fiscal year ended January 31, 2006. SkillSoft has agreed, after issuing its press release dated March 10, 2006 covering fiscal 2006 financial results, to settle a lawsuit filed against it and certain of its former and current officers and directors in late 2004 related to the 2002 securities class action lawsuit. This lawsuit included substantially the same claims as those set forth in the previously settled 2002 securities class action lawsuit. Under the terms of the settlement, SkillSoft will pay a total of $1.79 million to the plaintiffs prior to April 17, 2006.

Accounting Treatment

In accordance with Financial Accounting Standard No. 5, "Accounting for Contingencies" (FAS 5), when a contingency exists as of the end of a fiscal year, in assessing whether a loss is probable and measurable and therefore should be recorded in its financial statements, the Company is required to take into consideration all information up to and including the date of issuance of its financial statements and, if appropriate, accrue the loss contingency as of the date of the financial statements. SkillSoft's financial results for fiscal 2006 are considered to be issued upon the filing of its Form 10-K with the SEC, which is required to be filed no later than April 17, 2006. Subsequent to the Company's earnings release of March 10, 2006, the Company and the plaintiffs agreed to a mediation which concluded with a settlement being reached on April 7, 2006. As a result of that settlement, the Company will include the $1.79 million settlement payment obligation -- which was not reflected in the March 10, 2006 earnings release -- in its financial statements for the fiscal year ended January 31, 2006 that are included in its Form 10-K filing.

Revised Fourth Quarter Results

As a result of settling the lawsuit, the Company is reporting net income of $4.1 million, or $0.04 per basic and diluted share, for the quarter ended January 31, 2006 as compared to its previously reported net income of $5.9 million, or $0.06 per basic and diluted share. The settlement costs are included in the Company's legal settlements expense, which increased $1.79 million due to the settlement. For the revised condensed consolidated statement of operations for the fiscal quarter ended January 31, 2006, please refer to the attached schedule.

Revised Fiscal Year Results

As a result of settling this lawsuit, the Company is reporting net income of $35.2 million, or $0.34 per basic and diluted share, for the fiscal year ended January 31, 2006 as compared to its previously reported net income of $37.0 million, or $0.36 per basic and diluted share. The settlement costs are included in the Company's legal settlements/(insurance recoveries) expense, which decreased from a $19.5 million benefit to a $17.7 million benefit due to the settlement. For the revised condensed consolidated statement of operations for the fiscal year ended January 31, 2006, please refer to the attached schedule.

Revised Balance Sheet at January 31, 2006

As a result of the accrual related to settling the lawsuit, the Company's accrued liabilities on its January 31, 2006 balance sheet increased by $1.79 million to $53.8 million from $52.0 million to reflect the payment due by April 17, 2006. For the revised condensed consolidated balance sheet at January 31, 2006, please refer to the attached schedule.

About SkillSoft

SkillSoft is a leading provider of comprehensive e-learning content and technology products for business and IT professionals within global enterprises. 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 content resources, learning management system, virtual classroom technology and support services.

Content offerings include SkillSoft's business, IT, desktop and compliance courseware collections and BusinessPro(TM), ITPro(TM), OfficeEssentials(TM), FinancePro(TM), EngineeringPro(TM), GovEssentials(TM), ExecSummaries(TM) and ExecBlueprints(TM) collections from Books24x7(R). SkillSoft's complementary technologies include SkillPort(R), the Company's learning management system with its powerful Search-and-Learn(TM) technology and premium add-on modules, and SkillSoft(R) Dialogue(TM) virtual classroom, a tool that allows customers to create and deliver effective blended learning programs using custom content and off-the-shelf learning resources. For more information, visit http://www.skillsoft.com.

SkillSoft, the SkillSoft logo, Ahead of the Learning Curve, SkillPort, Search-and-Learn, SkillChoice, Books24x7, Referenceware, ITPro, BusinessPro, OfficeEssentials, GovEssentials, EngineeringPro, FinancePro, ExecSummaries, ExecBlueprints, Express Guide and Dialogue are trademarks or registered trademarks of SkillSoft PLC in the United States and certain other countries. All other trademarks are the property of their respective owners.

SkillSoft courseware content described herein is for information purposes only and is subject to change without notice. SkillSoft has no obligation or commitment to develop or deliver any future release, upgrade, feature, enhancement or function described in this press release except as specifically set forth in a written agreement.



                                   SkillSoft PLC and Subsidiaries
                           Condensed Consolidated Statements of Operations
                                             (Unaudited)


                           Three Months Ended           Fiscal Year Ended
                              January 31,                  January 31,
                           2006         2005            2006         2005

    Revenues             $54,734      $56,351        $215,567     $212,300
    Cost of revenues       6,645        5,792          25,307       21,724

       Gross profit       48,089       50,559         190,260      190,576

    Operating expenses:
       Research and
        development        9,804       12,987          38,985       45,575
       Selling and
        marketing         22,635       24,019          87,764       93,486
       General and
        administrative     7,238        6,538          25,745       25,162
       Legal
        settlements /
        (recoveries)       1,790            -         (17,710)           -
       Amortization of
        stock-based
        compensation         217          247             892        1,191
       Amortization of
        intangible
        assets and FAS
        86 assets          2,275        2,373           9,113        9,575
       Impairment
        charge                 -       19,268               -       19,268
       Restructuring        (171)      13,046             641       13,361
       Restatement:
         SEC
          investigation      397          363           1,988        2,182
         Professional
          fees
          - restatement
          of SmartForce
          historical
          financial
          statements           -          (17)              -          320

    Total operating
     expenses             44,185       78,824         147,418      210,120

    Other income /
     (expense), net           37         (556)            155         (692)
    Interest income,
     net                     476          302           1,348          754

       Income / (loss)
        before
        provision for
        income taxes       4,417      (28,519)         44,345      (19,482)

    Provision for
     income taxes -
     cash                    228          169           1,208          305
    Provision for
     income taxes -
     non-cash                 69          100           7,922          326

    Net income / (loss)   $4,120     $(28,788)        $35,215     $(20,113)


    Net income /
     (loss), per share,
     basic                $ 0.04     $  (0.27)        $  0.34     $  (0.19)

    Basic weighted
     average common
     shares
     outstanding     100,706,520  105,972,880     102,473,128  105,133,730

    Net income /
     (loss), per share,
     diluted              $ 0.04     $  (0.27)        $  0.34     $  (0.19)

    Diluted weighted
     average common
     shares
     outstanding     102,438,849  105,972,880     103,352,001  105,133,730



                                SkillSoft PLC
                    Condensed Consolidated Balance Sheets
                                 (Unaudited)

                                          January 31, 2006  January 31, 2005

    ASSETS

    CURRENT ASSETS:
         Cash, cash equivalents and
          short-term investments           $        73,339  $         54,927
         Restricted cash                             5,039               994
         Accounts receivable, net                   85,681            87,030
         Prepaid expenses and other
          current assets                            22,006            22,659

    Total current assets                           186,065           165,610

         Property and equipment, net                10,231             9,137
         Goodwill                                   93,929           103,576
         Intangible assets, net                      8,711            16,171
         Long-term investments                         230             8,943
         Deferred tax assets                           694               -
         Other assets                                   42                60

    Total assets                           $       299,902  $        303,497


    LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES:

         Accounts payable                  $         3,819  $          5,361
         Accrued expenses                           53,795            66,995
         Deferred revenue                          136,699           140,008

    Total current liabilities                      194,313           212,364

    Total long-term liabilities                      3,317             6,214

    Total stockholders' equity                     102,272            84,919

    Total liabilities and stockholders'
     equity                                $       299,902  $        303,497



                                SkillSoft PLC
               Condensed Consolidated Statements of Cash Flows
                                 (Unaudited)


                                                       Fiscal Year Ended
                                                           January 31,
                                                     2006              2005

    Cash flows from operating activities:

         Net income / (loss)                      $35,215           $(20,113)
         Adjustments to reconcile net
          income to net
          cash provided by / (used in)
          operating activities---
         Stock-based compensation                     893              1,191
         Depreciation and amortization              5,224              4,779
         Impairment charge                            -               19,268
         Amortization of acquired
          intangibles and FAS 86 assets             9,113              9,575
         Provision for bad debts                     (593)               335
         Loss on disposition                          585                -
         Provision for income taxes -
          non-cash                                  7,922                326
         Accelerated vesting of unvested
          stock options                                89                -
         Changes in current assets and
          liabilities, net of
          acquisitions
            Accounts receivable                       784            (14,062)
            Prepaid expenses and other
             current assets                           407              2,406
            Accounts payable                       (1,935)            (1,220)
            Accrued expenses
             (including long-term):
               Accrued merger                      (4,124)            (3,547)
               Accrued restructuring               (7,381)             9,284
               Accrued other                       (1,354)           (46,595)
            Deferred revenue                       (2,693)             4,743

         Net cash provided by / (used
          in) operating activities                 42,152            (33,630)

    Cash flows from investing activities:

         Purchases of property and
          equipment                                (6,423)            (7,594)
         Purchases of FAS 86 assets                (1,652)
         Purchases of investments                 (20,048)           (52,456)
         Maturity of investments                   27,219             42,063
         Sale of investments                          -                  -
         (Designation) / release of
          restricted cash                          (4,045)            24,943

         Net cash (used in) / provided
          by investing activities                  (4,949)             6,956

    Cash flows from financing activities:

         Exercise of stock options                    848             17,950
         Proceeds from employee stock
          purchase plan                             2,210              3,050
         Payments to acquire treasury
          stock                                   (22,000)            (2,523)

         Net cash (used in) / provided
          by financing activities                 (18,942)            18,477

         Effect of exchange rate changes
          on cash and cash equivalents             (1,230)             1,174

         Net increase in cash and cash
          equivalents                              17,031             (7,023)
         Cash and cash equivalents,
          beginning of period                      34,906             41,929

         Cash and cash equivalents, end
          of period                               $51,937            $34,906
SOURCE  SkillSoft PLC
    -0-                             04/13/2006
    /CONTACT:  Tom McDonald, Chief Financial Officer, +1-603-324-3000 ext
4232, Investor Contacts - Michael Polyviou or Peter Schmidt, both of Financial
Dynamics for SkillSoft PLC, +1-212-850-5600 /
    /Web site:  http://www.skillsoft.com /

 

 
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding SkillSoft Corporation's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.