Press Releases & Coverage

SkillSoft Reports First Quarter Fiscal 2005 Results:

First Quarter Revenue of $52.8 Million; EPS of $0.03

Cash Balance at $106.5 Million

Maintains Full Year Fiscal 2005 Financial Targets While Revising Quarterly Targets

NASHUA, N.H., June 3 /PRNewswire-FirstCall/ -- SkillSoft PLC (Nasdaq: SKIL), a leading provider of enterprise e-learning courseware and Referenceware(R) for business and IT professionals, today announced financial results for its fiscal first quarter ended April 30, 2004.

First Quarter Results

The Company reported total revenue of $52.8 million for the first quarter ended April 30, 2004 of the fiscal year ending January 31, 2005 (fiscal 2005), which represented a 21% increase over the $43.6 million reported in the fiscal 2004 first quarter. Gross margin was 90% for its fiscal 2005 first quarter compared to 87% for its first quarter of fiscal 2004.

The Company's net income was $3.2 million, or $0.03 per basic and diluted share, for its fiscal 2005 first quarter. First quarter net income includes restructuring and other non-recurring expenses of $0.6 million, or $0.01 per basic and diluted share, for costs incurred in connection with the re-filing of statutory tax returns as a result of the restatement of the historical SmartForce PLC financial statements, charges for the ongoing SEC investigation and costs associated with international restructuring activities. Non-cash charges included in the fiscal 2005 first quarter were $2.8 million, or $0.03 per diluted share, for amortization expense and the non-cash provision for income tax of $1.1 million, or $0.01 per diluted share. SkillSoft reported a net loss of $12.6 million, or $0.13 per basic and diluted share, for the fiscal 2004 first quarter which included restructuring and other non-recurring expenses of $6.6 million, or $0.07 per basic and diluted share, primarily for costs incurred due to the restatement of the historical SmartForce PLC financial statements.

"Our review of the sales forecasts for the remainder of the fiscal year indicates we will achieve our planned total annual booking number, although it will be more weighted to the second half of the year. In light of this shift in bookings we felt it prudent to factor that into our quarterly estimates going forward. With the benefit of having many of the operational distractions put behind us in fiscal 2004, we have and will continue to fully focus on sales growth opportunities and continue to explore ways to leverage our cost structure in the most efficient manner practicable," commented Chuck Moran, President and Chief Executive Officer.

Gross margins were 90% for the fiscal 2005 first quarter compared to 87% in the fiscal 2004 first quarter mainly due to efficiencies achieved as part of the Merger. Research and development expenses decreased to $9.4 million in the fiscal 2005 first quarter compared to $12.8 million in the fiscal 2004 first quarter due to the completion of merger-related research and development and incremental research and development regarding the Company's initiative for content and platform improvements. Sales and marketing expenses increased to $24.4 million in the fiscal 2005 first quarter from $23.3 million in the fiscal 2004 first quarter. This increase was primarily due to increased commission expense associated with higher revenues in the fiscal 2005 first quarter. General and administrative expenses decreased to $6.1 million in the fiscal 2005 first quarter compared to $8.9 million in the fiscal 2004 first quarter mainly due to lower litigation costs. Restructuring and other non-recurring charges decreased to $0.6 million in the fiscal 2005 first quarter as compared to $6.6 million in the fiscal 2004 first quarter. This expense decreased primarily due to the completion of the restatement of the SmartForce PLC historical financial statements in the fiscal year ended January 31, 2004. The expense reflected in the fiscal 2005 first quarter relates primarily to the re-filing of statutory tax returns as a result of the restatement of the SmartForce PLC historical financial statements, charges for the ongoing SEC investigation and costs associated with international restructuring activities.

SkillSoft had approximately $106.5 million in cash, cash equivalents and short-term investments as of April 30, 2004 compared to $86.4 million as of January 31, 2004 which reflects a strong cash collection first quarter and delay in paying the initial 2002 securities class action settlement payment of $16.0 million to the second quarter ending July 31, 2004.

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.

SkillSoft's DSOs were in the targeted range for the fiscal 2005 first quarter. On a net basis, which considers only receivable balances for which revenue has been recorded, DSOs were 12 days in the fiscal 2005 first quarter as compared to 14 days in the year ago period and 13 days in the fourth quarter of fiscal 2004. On a gross basis, which considers all items billed as receivables, DSOs were 76 days in the fiscal 2005 first quarter compared to 99 days in the year ago quarter and 122 days in the fourth quarter of fiscal 2004.

FISCAL 2005 OUTLOOK

For the fiscal year ending January 31, 2005 (fiscal 2005), the Company's annual outlook, as set forth in its press release issued on March 12, 2004, remains unchanged. The Company anticipates revenue to be in the range of $221 to $225 million. The Company continues to anticipate 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 experienced a shortfall in bookings in the first quarter and upon review of its sales pipeline for the remainder of fiscal 2005 the timing of bookings for the year now appears to be more weighted to the second half of the year. The first quarter booking shortfall did not materially affect first quarter revenue but will impact future quarterly revenue because of the Company's subscription revenue recognition model. The Company anticipates that the stronger bookings outlook for the second half of the fiscal year will offset weakness in the first half. As a result of these factors, the Company is adjusting its quarterly revenue and earnings targets for fiscal 2005 while maintaining the annual revenue and earnings targets. The Company's updated quarterly revenue targets for the second, third and fourth quarters of fiscal 2005 are $49.0 to $52.0 million, $52.0 to $56.0 million, and $64.0 to $67.0 million, respectively. This compares to the previous targets of $52.5 to $53.5 million, $55.0 to $56.0 million, and $62.0 to $63.0 million, respectively. The Company now anticipates its quarterly earnings per basic and diluted share for the second, third and fourth quarters of fiscal 2005 will be $0.01 to $0.025, $0.04 to $0.055, and $0.105 to $0.125, respectively. This compares to the previous targets of $0.04 to $0.044, $0.05 to $0.06, $0.08 to $0.09, respectively.

Separately, the Company now anticipates that annual capital expenditures are expected to be in the range of $7.5 to $8.5 million as compared to the previous range of $5.0 to $6.0 million due to additional hardware server requirements needed to support increased Skillport platform usage.

The Company is currently consolidating space in Ireland to fit the current needs of the business. When completed, this will result in a one-time charge to earnings and is expected to reduce the Company's operating expenses on a going-forward basis. In addition, the Company continues to work on resolving the insurance recovery matter pertaining to the 2002 securities class action lawsuit settled in the fourth quarter of fiscal 2004. Any insurance recovery less prior litigation resolution related costs would result in a one-time gain to earnings. Neither the facility consolidation nor the insurance recovery is reflected in the revised 2005 outlook.

The Company's outlook excludes the impact of 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 financing arrangements that could impact outstanding shares and thereby the Company's EPS outlook.

Conference Call

In conjunction with the release, management will conduct a conference call on Thursday, June 3, 2004 at 5:00 p.m. ET to discuss the Company's fiscal 2005 first quarter and fiscal 2005 outlook. 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 (703) 639-1212. The live conference call will be available via the Internet by accessing the SkillSoft Web site at http://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 8:00 p.m. ET on June 3, 2004 until 11:59 p.m. ET on June 10, 2004. The replay number is (703) 925-2533, passcode: 480571. A webcast replay will also be available on SkillSoft's Web site at http://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 http://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 customer demands or industry standards, adverse economic conditions, loss of key personnel, litigation and other risk factors disclosed under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" in SkillSoft's Annual Report on Form 10-K for the year ended January 31, 2004, 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 June 3, 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.

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

                                                        Three Months Ended
                                                             April, 30
                                                      2004               2003

    Revenues                                        $52,817           $43,613
    Cost of revenues                                  5,078             5,497
         Gross profit                                47,739            38,116

    Operating expenses:
         Research and development                     9,444            12,782
         Selling and marketing                       24,362            23,347
         General and administrative                   6,054             8,934
         Amortization of stock-based compensation       348               490
         Amortization of intangible assets            2,422             2,406
         Restructuring and other non-recurring
          items                                         585             6,552

    Total operating expenses                         43,215            54,511

    Other income / (expense), net                      (179)                4
    Interest income, net                                123               363
    Gain on sale of investments, net                      -             3,682
         Income / (loss) before provision for
          income taxes                                4,468           (12,346)

    Provision for income taxes - cash                   141               229
    Provision for income taxes - non-cash             1,124                 -

    Net income / (loss)                              $3,203          $(12,575)

    Net income / (loss), per share, basic             $0.03            $(0.13)

    Basic weighted average common shares
     outstanding                                103,163,380        99,599,477

    Net income / (loss), per share, diluted           $0.03            $(0.13)

    Diluted weighted average common
     shares outstanding                         110,392,610        99,599,477


                                SkillSoft PLC
                     Condensed Consolidated Balance Sheet
                                 (Unaudited)

                                           April 30, 2004    January 31, 2004

    ASSETS

    CURRENT ASSETS:
         Cash, cash equivalents and short
          term investments                     $81,480             $61,340
         Restricted cash                        25,000              25,044
         Accounts receivable, net               44,577              72,775
         Prepaid expenses and other
          current assets                        21,215              24,759

    Total current assets                       172,272             183,918

         Property and equipment, net             7,163               6,447
         Goodwill                              124,675             125,878
         Acquired intangible assets, net        23,323              25,745
         Long term investments                     261                 266
         Other assets                               73                 124

    Total assets                              $327,767            $342,378

    LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES:

         Accounts payable                       $5,061              $6,588
         Accrued expenses                       78,094              92,117
         Deferred revenue                      118,349             134,328

         Total current liabilities             201,504             233,033

         Total long term liabilities            22,510              23,587

         Total stockholders' equity            103,753              85,758

         Total liabilities and
          shareholders' equity                $327,767            $342,378

CONTACT:
Company - Tom McDonald
Chief Financial Officer of SkillSoft PLC
603-324-3000, ext. 4232

Investors - Michael Polyviou, or Kirin Smith
Both of Financial Dynamics for SkillSoft PLC
212-850-5748

"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.