SkillSoft Reports Second Quarter Fiscal 2010 Results; SkillSoft Raises Full Year Fiscal 2010 EPS Targets
- Second Quarter Revenue of$78.9 Million and Net Income of$17.2 Million - Second Quarter Diluted EPS of$0.17 - Second Quarter Adjusted EBITDA of$30.8 Million - Reduced Debt by$10.3 Million in the Second Quarter and Repurchased 1.3 Million Shares for$10.5 Million - Cash, Restricted Cash and Investments of$71.7 Million
FISCAL 2010 SECOND QUARTER RESULTS
The Company reported total revenue of
On a US generally accepted accounting principles (US GAAP) basis, the
Company's net income was
Positive changes in foreign exchange rates during the second quarter of
fiscal 2010 as compared to the rates on
"We continue to focus on managing our cost structure to ensure meeting our
EPS, cash flow and adjusted EBITDA targets and are pleased that our fiscal
2010 second quarter results exceeded the EPS range we targeted in
Gross margin increased to 90% for the Company's fiscal 2010 second quarter
as compared to 86% for the fiscal 2009 second quarter. The increase in gross
margin for the fiscal 2010 second quarter includes a reduction in amortization
of intangible assets related to acquired technology and capitalized software
development costs of 2% of revenue, or
Research and development expenses decreased to
Sales and marketing expenses decreased to
General and administrative expenses remained constant at
The Company's interest income decreased to
The Company's effective tax rate from continuing operations was 24.2% for
the six month period ended
An important leverage covenant included in the Company's credit facility
is adjusted EBITDA. Adjusted EBITDA for the fiscal 2010 second quarter was
In order to adequately assess the Company's collection efforts, taking into account the seasonality of the Company's business, the Company believes that it is most useful to compare current period days sales outstanding (DSOs) to the prior year period. Given the quarterly seasonality of bookings, the deferral from revenue of subscription billings may increase or decrease the DSOs on sequential quarterly comparisons.
FISCAL 2010 AND FISCAL 2010 THIRD QUARTER OUTLOOK
As a result of reported revenues for the fiscal 2010 second quarter, the
Company now anticipates annual revenues to be in the range of
For the third quarter of fiscal 2010 ending
As a result of reported adjusted EBITDA for the first half of fiscal 2010
ending
The earnings outlook for fiscal 2010 and the third quarter of fiscal 2010
does not take into account the potential positive or negative impact from
changes in foreign exchange rates after
Supplemental financial information will be available on
Conference Call
In conjunction with the release, management will conduct a conference call
on
To participate in the conference call, interested parties can dial 800-322-9079 or 973-582-2717 and use the following passcode: 25442809. 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
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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 competitive
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under the heading "Risk Factors" in
SKILLSOFT PLC
COMPANY CONTACT:
Tom McDonald
Chief Financial Officer
(603)324-3000, x4232
INVESTOR CONTACT:
Geoff Grande
FD
(617)747-1721
SkillSoft PLC and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited, In thousands except share and per share data)
Three Months Ended Six Months Ended
July 31, July 31,
2009 2008 2009 2008
Revenues $78,926 $83,332 $155,365 $164,975
Cost of revenues (1) 7,524 9,830 14,997 18,639
Cost of revenues -
amortization of
intangible assets 32 1,740 64 3,480
Gross profit 71,370 71,762 140,304 142,856
Operating expenses:
Research and
development (1) 9,706 12,519 18,704 25,998
Selling and
marketing (1) 24,387 26,099 46,798 55,798
General and
administrative (1) 9,400 9,433 17,157 18,324
Amortization of
intangible assets 2,117 2,741 4,572 5,737
Merger and integration
related expenses - 240 - 761
Restructuring 4 - 56 -
Restatement - SEC
investigation - (13) - 49
Total operating expenses 45,614 51,019 87,287 106,667
Other (expense) income,
net (605) 6 (1,223) (397)
Interest income 68 575 138 1,192
Interest expense (2,032) (3,664) (4,477) (7,650)
Income before provision
for income taxes from
continuing operations 23,187 17,660 47,455 29,334
Provision for income
taxes - cash 2,658 1,024 4,859 1,965
Provision for income
taxes - non-cash 3,358 5,821 6,646 9,387
Income from continuing
operations 17,171 10,815 35,950 17,982
Income from discontinued
operations net of income
tax expense of $1.4
million and $1.3 million
for the three and six
months ended July 31,
2008 - 2,067 - 1,974
Net income $17,171 $12,882 $35,950 $19,956
Net income, per share,
basic - continuing
operations $0.18 $0.10 $0.37 $0.17
Net income, per share,
basic - discontinued
operations $- $0.02 $- $0.02
$0.18 $0.12 $0.37 $0.19
Basic weighted average
common shares
outstanding 96,395,118 104,877,548 97,056,558 105,081,727
Net income, per share,
diluted - continuing
operations $0.17 $0.10 $0.36 $0.16
Net income, per share,
diluted - discontinued
operations $- $0.02 $- $0.02
$0.17 $0.12 $0.36 $0.18
Diluted weighted average
common shares
outstanding 98,381,904 108,712,224 98,622,364 109,231,394
(1) The following
summarizes
the departmental
allocation of
the stock-based
compensation
Cost of revenues $28 $67 $49 $111
Research and
development 247 231 516 468
Selling and
marketing 604 444 1,239 1,022
General and
administrative 711 736 1,407 1,481
$1,590 $1,478 $3,211 $3,082
SkillSoft PLC
Condensed Consolidated Balance Sheets
(Unaudited, In thousands)
July 31, January 31,
2009 2009
ASSETS
CURRENT ASSETS:
Cash, cash equivalents and short-term
investments $67,775 $38,952
Restricted cash 3,907 3,790
Accounts receivable, net 62,930 146,362
Deferred tax assets 31,976 26,444
Prepaid expenses and other current assets 15,897 18,286
Total current assets 182,485 233,834
Property and equipment, net 6,522 7,661
Goodwill 238,550 238,550
Intangible assets, net 8,836 13,472
Deferred tax assets 61,862 78,223
Other assets 7,809 3,360
Total assets $506,064 $575,100
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long term debt $968 $1,253
Accounts payable 1,636 5,648
Accrued expenses 26,280 37,273
Deferred revenue 155,245 201,518
Total current liabilities 184,129 245,692
Long term debt 93,856 122,131
Other long term liabilities 3,168 3,221
Total long-term liabilities 97,024 125,352
Total stockholders' equity 224,911 204,056
Total liabilities and stockholders'
equity $506,064 $575,100
SkillSoft PLC
Condensed Consolidated Statements of Cash Flows
(Unaudited, In thousands)
Six Months Ended
July 31,
2009 2008
Cash flows from operating activities:
Net income $35,950 $19,956
Adjustments to reconcile net income to net
cash provided by operating activities:
Stock-based compensation 3,211 3,082
Depreciation and amortization 2,598 2,862
Amortization of intangible assets 4,636 9,217
Recovery of bad debts 529 48
Provision for income taxes - non-cash 6,646 9,386
Gain on sale of discontinued operations - (3,386)
Non-cash interest expense 576 636
Tax benefit related to exercise of non-qualified
stock options (22) (673)
Changes in current assets and liabilities, net of
acquisitions
Accounts receivable 85,900 88,805
Prepaid expenses and other current assets 2,769 (965)
Accounts payable (4,039) 1,091
Accrued expenses (including long-term) (12,005) (17,400)
Deferred revenue (51,980) (52,959)
Net cash provided by operating activities 74,769 59,700
Cash flows from investing activities:
Purchases of property and equipment (1,432) (2,687)
Cash paid for business acquisitions - (250)
Purchases of investments (5,512) (9,745)
Maturity of investments 2,350 15,237
(Increase) decrease in restricted cash (117) 5
Cash received from sale of discontinued operations - 6,903
Net cash (used in) provided by investing activities (4,711) 9,463
Cash flows from financing activities:
Exercise of stock options 361 7,769
Proceeds from employee stock purchase plan 1,164 2,012
Principal payments on long term debt (28,560) (54,940)
Acquisition of treasury stock (19,896) (27,171)
Tax benefit related to exercise of non-qualified
stock options 22 673
Net cash used in financing activities (46,909) (71,657)
Effect of exchange rate changes on cash and cash
equivalents 2,508 304
Net increase (decrease) in cash and cash
equivalents 25,657 (2,190)
Cash and cash equivalents, beginning of period 37,853 76,059
Cash and cash equivalents, end of period $63,510 $73,869
SOURCESkillSoft PLC -0-08/20/2009 /CONTACT: Company,Tom McDonald , Chief Financial Officer ofSkillSoft PLC , +1-603-324-3000, x4232, or Investors, Geoff Grande of FD, +1-617-747-1721/ /Web Site: http://www.skillsoft.com / (SKIL) CO:SkillSoft PLC ST:New Hampshire IN: CPR STW SU: ERP ERN CCA PR -- NY64243 -- 424308/20/2009 16:01 EDT http://www.prnewswire.com
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