10-Q

`

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)


	ANNUAL REPORT PERSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	FOR THE QUARTERLY PERIOD OCTOBER 31, 2013
OR
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
	FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 333-169857

SSI INVESTMENTS II LIMITED

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Republic of Ireland	None
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
107 Northeastern Boulevard	03062
Nashua, New Hampshire	(Zip Code)
(Address of Principal Executive Offices)

Registrant’s Telephone Number, Including Area Code: (603) 324-3000

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ¨ No þ

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer ¨	Accelerated filer ¨
	Non-accelerated filer þ	Smaller reporting company ¨
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ¨Noþ

SSI INVESTMENTS II LIMITED

FORM 10-Q

FOR THE QUARTER ENDED OCTOBER 31, 2013

INDEX

	PAGE NO.
PART I — FINANCIAL INFORMATION	1
Item 1. Unaudited Condensed Consolidated Financial Statements:	1
Condensed Consolidated Balance Sheets as of October 31, 2013 and January 31, 2013	1
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended October 31, 2013 and October 31, 2012	2
Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended October 31, 2013 and October 31, 2012	3
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 31, 2013 and October 31, 2012	4
Notes to Condensed Consolidated Financial Statements	5
PART II— OTHER INFORMATION	46
Item 1. Legal Proceedings	46
Item 1A. Risk Factors	46
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3. Defaults Upon Senior Securities	48
Item 4. Mine Safety Disclosures	48
Item 5. Other Information	48
Item 6. Exhibits	48
SIGNATURE	49
EXHIBIT INDEX	50

PART I

ITEM 1. — CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SSI INVESTMENTS II LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

		October 31, 2013		January 31, 2013
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	54,347	$	39,048
Restricted cash		102		136
Accounts receivable, net		97,368		188,682
Deferred tax assets		10,134		1,360
Prepaid expenses and other current assets		32,678		34,741
Total current assets		194,629		263,967
Property and equipment, net		13,595		13,654
Goodwill		635,890		637,524
Intangible assets, net		361,542		444,748
Deferred tax assets		-		10,090
Other assets		18,046		22,445
Total assets	$	1,223,702	$	1,392,428
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long term debt	$	3,433	$	3,311
Accounts payable		7,790		11,650
Accrued compensation		13,257		23,456
Accrued expenses		37,400		39,310
Deferred tax liabilities		7,589		15,153
Deferred revenue		186,698		262,452
Total current liabilities		256,167		355,332
Long term debt		717,960		755,034
Deferred tax liabilities		14,673		26,646
Other long term liabilities		11,354		10,016
Total long-term liabilities		743,987		791,696
Commitments and contingencies (Note 11)
Shareholders' equity
Ordinary shares, $1.00 par value: 1,000,000,000 shares authorized; 534,513,271 shares issued at October 31, 2013 and January 31, 2013		534,513		534,513
Additional paid-in capital		19,131		14,574
Accumulated deficit		(340,633)		(316,520)
Accumulated other comprehensive income		10,537		12,833
Total stockholders' equity		223,548		245,400
Total liabilities and stockholders' equity	$	1,223,702	$	1,392,428

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SSI INVESTMENTS II LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED, IN THOUSANDS)

	Three Months Ended October 31,				Nine Months Ended October 31,
		2013		2012		2013		2012
Revenues	$	105,025	$	95,733	$	307,147	$	278,792
Cost of revenues		9,696		9,001		28,459		28,147
Cost of revenues - amortization of intangible assets		13,576		13,952		41,169		46,486
Gross profit		81,753		72,780		237,519		204,159
Operating expenses:
Research and development		13,257		12,988		41,497		39,824
Selling and marketing		32,804		33,442		100,969		100,285
General and administrative		9,811		10,295		30,085		27,731
Amortization of intangible assets		13,806		15,790		41,296		46,496
Acquisition related expenses		35		3,177		434		3,576
Merger and integration related expenses		1,269		1,110		4,289		9,828
Restructuring		231		2,373		2,923		2,855
Total operating expenses		71,213		79,175		221,493		230,595
Operating income (loss)		10,540		(6,395)		16,026		(26,436)
Other (expense) income, net		(623)		(202)		(758)		(1,149)
Interest income		248		592		792		632
Interest expense		(16,907)		(16,491)		(48,618)		(49,759)
Loss before benefit for income taxes		(6,742)		(22,496)		(32,558)		(76,712)
Benefit for income taxes		(2,284)		(4,279)		(8,627)		(12,215)
Net loss from continuing operations	$	(4,458)	$	(18,217)	$	(23,931)	$	(64,497)
Loss from discontinued operations, net of an income tax benefit of $0 and $32 for the three months ended October 31, 2013 and 2012, respectively, and $0 and $390 for the nine months ended October 31, 2013 and 2012, respectively		-		(48)		(182)		(585)
Net loss	$	(4,458)	$	(18,265)	$	(24,113)	$	(65,082)

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

SSI INVESTMENTS II LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED, IN THOUSANDS)

	Three Months Ended October 31,				Nine Months Ended October 31,
		2013		2012		2013		2012
Comprehensive loss:
Net loss	$	(4,458)	$	(18,265)	$	(24,113)	$	(65,082)
Other comprehensive (loss) income — Foreign currency adjustment, net of tax		3,510		1,745		(2,296)		160
Comprehensive loss	$	(948)	$	(16,520)	$	(26,409)	$	(64,922)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SSI INVESTMENTS II LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED, IN THOUSANDS)

	Nine Months Ended October 31,
		2013		2012
Cash flows from operating activities:
Net loss	$	(24,113)	$	(65,082)
Adjustments to reconcile net loss to net cash provided by operating activities:
Share-based compensation		4,557		-
Depreciation and amortization		5,047		3,725
Amortization of intangible assets		82,465		92,982
Recovery of bad debts		(125)		(43)
Benefit for income taxes - non-cash		(17,954)		(15,485)
Non-cash interest expense		5,245		3,590
Non-cash loss on extinguishment of debt		-		254
Loss on disposition of assets		277		152
Changes in current assets and liabilities, net of acquisitions:
Accounts receivable		90,139		98,389
Prepaid expenses and other current assets		1,580		6,056
Accounts payable		(1,593)		(8,603)
Accrued expenses, including long-term		(9,920)		(12,166)
Deferred revenue		(74,281)		(65,957)
Net cash provided by operating activities		61,324		37,812
Cash flows from investing activities:
Purchases of property and equipment		(7,899)		(5,683)
Proceeds on disposition of assets		-		96
Acquisition of Mindleaders, net of cash received		-		(62,332)
Decrease (increase) in restricted cash, net		34		(33)
Net cash used in investing activities		(7,865)		(67,952)
Cash flows from financing activities:
Proceeds from issuance of Senior Credit Facilities, net of issuance costs and original issue discount		-		45,062
Payment received on note for sale of TCE		507		840
Principal payments on Senior Credit Facilities		(38,488)		(1,894)
Net cash used in financing activities		(37,981)		44,008
Effect of exchange rate changes on cash and cash equivalents		(179)		79
Net increase in cash and cash equivalents		15,299		13,947
Cash and cash equivalents, beginning of period		39,048		28,908
Cash and cash equivalents, end of period	$	54,347	$	42,855

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SSI INVESTMENTS II LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. THE COMPANY

On May 26, 2010, SSI Investments III Limited (“SSI III”), a wholly owned subsidiary of SSI Investments II Limited (“SSI II”), completed its acquisition of Skillsoft PLC (the “Acquisition”), which was subsequently re-registered as a private limited company and whose corporate name changed from Skillsoft PLC (the “Predecessor”) to Skillsoft Limited (“Skillsoft” or the “Successor”). Unless otherwise indicated or the context otherwise requires, as used in this discussion, the terms “the Company”, “we”, “us”, “our” and other similar terms refers to (a) prior to the Acquisition, the Predecessor and its subsidiaries and (b) from and after the Acquisition, SSI II and its subsidiaries, including Skillsoft.

2. BASIS OF PRESENTATION

The accompanying, unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such SEC rules and regulations. In the opinion of management, the condensed consolidated financial statements reflect all material adjustments (consisting only of those of a normal and recurring nature) which are necessary to present fairly the consolidated financial position of the Company as of October 31, 2013 and the results of its operations and cash flows for the three and ninemonths ended October 31, 2013. These condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2013, as filed with the SEC on April 30, 2013. The results of operations for the interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year.

The Company evaluates events occurring after the date of the accompanying unaudited condensed consolidated balance sheets for potential recognition or disclosure in the financial statements. The Company did not identify any material subsequent events requiring adjustment to the accompanying unaudited condensed consolidated financial statements (recognized subsequent events). Those items requiring disclosure (unrecognized subsequent events) in the financial statements have been disclosed accordingly.

3. CASH, CASH EQUIVALENTS, RESTRICTED CASH AND INVESTMENTS

The Company considers all highly liquid investments with original maturities of 90 days or less at the time of purchase to be cash equivalents. At October 31, 2013 and January 31, 2013, the Company did not have any cash equivalents or available for sale investments.

At October 31, 2013 and January 31, 2013, the Company had approximately $0.1 million of restricted cash held in certificates-of-deposits with a commercial bank pursuant to terms of certain facilities lease agreements.

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4. REVENUE RECOGNITION

The Company generates revenue primarily from the licensing of its products, providing professional services and from providing hosting/application service provider (ASP) services.

The Company follows the provisions of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 985-605 Software – Revenue Recognition and Staff Accounting Bulletin No. 104 to account for revenue derived pursuant to license agreements under which customers license the Company's products and services. The pricing for the Company's courses varies based upon the content offering selected by a customer, the number of users within the customer's organization and the term of the license agreement (generally one,  two or three years). License agreements permit customers to exchange course titles, generally on the contract anniversary date. Hosting services are sold separately for an additional fee. A license can provide customers access to a range of learning products including courseware, Referenceware®, simulations, mentoring and prescriptive assessment.

The Company offers discounts from its ordinary pricing, and purchasers of licenses for a larger number of courses, larger user bases or longer periods of time generally receive discounts. Generally, customers may amend their license agreements, for an additional fee, to gain access to additional courses or product lines and/or to increase the size of the user base. The Company also derives revenue from hosting fees for customers that use its solutions on an ASP basis and from the provision of professional services. In selected circumstances, the Company derives revenue on a pay-for-use basis under which some customers are charged based on the number of courses accessed by its users.

For arrangements subject to ASC 985-605 Software – Revenue Recognition, the Company recognizes revenue ratably over the license period if the number of courses that a customer has access to is not clearly defined, available, or selected at the inception of the contract, or if the contract has additional undelivered elements for which the Company does not have vendor specific objective evidence (VSOE) of the fair value of the various elements. This may occur if the customer does not specify all licensed courses at the outset, the customer chooses to wait for future licensed courses on a when and if available basis, the customer is given exchange privileges that are exercisable other than on the contract anniversaries, or the customer licenses all courses currently available and to be developed during the term of the arrangement.

Arrangements which include extranet hosting/ASP services are generally accounted for under Staff Accounting Bulletin No. 104. Revenue from these arrangements is recognized on a straight-line basis over the period the services are provided. Upfront professional service fees are recorded as revenue over the contract period in multiple element arrangements or over the expected customer relationship periods in arrangements where there is otherwise one unit of accounting.

Revenue from nearly all of the Company's contractual arrangements is recognized on a subscription or straight-line basis over the contractual period of service.

The Company generally bills the annual license fee for the first year of a multi-year license agreement in advance and license fees for subsequent years of multi-year license arrangements are billed on the anniversary date of the agreement. Occasionally, the Company bills customers on a quarterly basis. In some circumstances, the Company offers payment terms of up to six months from the initial shipment date or anniversary date for multi-year license agreements to its customers. To the extent that a customer is given extended payment terms (defined by the Company as greater than six months), revenue is recognized as payments become due, assuming all of the other elements of revenue recognition have been satisfied.

The Company typically recognizes revenue from resellers over the commitment period when both the sale to the end user has occurred and the collectability of cash from the reseller is probable. With respect to reseller agreements with minimum commitments, the Company recognizes revenue related to the portion of the minimum commitment that exceeds the end user sales at the expiration of the commitment period provided the Company has received payment. If a definitive service period can be determined, revenue is recognized ratably over the term of the minimum commitment period, provided that payment has been received or collectability is probable.

6

The Company provides professional services, including instructor led training, customized content development, website development/hosting and implementation services.

The Company applies the guidance of Accounting Standards Update (ASU) No. 2009-13 Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements, specifically for multiple element arrangements which are not accounted for under ASC 985-605 Software – Revenue Recognition (this is normally due to the inclusion of extranet hosting/ASP services). ASU No. 2009-13 affects accounting and reporting for all multiple-deliverable arrangements.

ASU No. 2009-13 establishes a selling price hierarchy for determining the selling price of a deliverable in a sale arrangement. The selling price for each deliverable is based on vendor-specific objective evidence (VSOE) if available, third-party evidence (TPE) if VSOE is not available, or the Company's best estimated selling price (BESP) if neither VSOE nor TPE are available. The amendments in ASU No. 2009-13 eliminate the residual method of allocation and require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price allocation method. The relative selling price method allocates any discount in the arrangement proportionately to each deliverable on the basis of the deliverable's estimated fair value.

For transactions entered into subsequent to the adoption of ASU No. 2009-13 that include multiple elements, arrangement consideration is allocated to each element based on the relative selling prices of all of the elements in the arrangement using the fair value hierarchy as required by ASU No. 2009-13. The Company limits the amount of revenue recognition for the software and content licenses and extranet hosting services (as a bundled unit) to the amount that is not contingent on the future delivery of products or services or future performance obligation. That amount is then recognized on a straight-line basis over the contractual term. Professional services, including instructor led training, customized content development, website development/hosting and implementation services, are sometimes included in the arrangements. If the Company determines that the professional services are not separable from an existing customer arrangement, revenue from these services is recognized over the existing contractual terms with the customer; otherwise the Company typically recognizes professional service revenue as the services are performed. The Company does not have VSOE for its professional service offerings. Therefore, fair value for these elements is based on TPE, which is determined based on competitor prices for similar elements when sold separately, or the BESP. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis. The Company determines BESP for a product or service by considering multiple factors including, but not limited to, pricing practices, geographies, customer classes and distribution channels.

Multiple contracts with a single customer or amendments to existing contracts with the same customer are evaluated as to whether they should be recognized as separate accounting arrangements from other contracts with the customer, based on an evaluation of several factors including, but not limited to, the timing of when contracts were negotiated and executed, whether the software is interdependent in terms of design, technology or function and whether payment terms coincide. If contracts are considered linked for accounting purposes and accounted for as one arrangement, fees are recognized over the longest service periods. If contracts are considered separable, fees in each arrangement are recognized over their respective service period.

The Company records reimbursable out-of-pocket expenses in both revenue and as a direct cost of revenue, as applicable. Out-of-pocket expenses were immaterial for both the three and ninemonths ended October 31, 2013 and October 31, 2012.

The Company records revenue net of applicable sales tax collected. Taxes collected from customers are recorded as part of accrued expenses on the balance sheet and are remitted to state and local taxing jurisdictions based on the filing requirements of each jurisdiction.

The Company records as deferred revenue amounts that have been billed in advance for products or services to be provided. Deferred revenue includes the unamortized portion of revenue associated with license fees for which the Company has received payment or for which amounts have been billed and are due for payment in 90 days or less for resellers and 180 days or less for direct customers.

 

7

The Company’s contracts often include an uptime guarantee for solutions hosted on the Company's servers whereby customers may be entitled to credits in the event of non-performance. The Company also retains the right to remedy any non-performance event prior to issuance of any credit. Furthermore, the Company’s contracts contain standard warranty and indemnification coverage to its customers. Historically, the Company has not incurred substantial costs relating to this guarantee and the Company currently accrues for such costs as they are incurred. The Company reviews these costs on a regular basis as actual experience and other information becomes available; and, should these costs become substantial, the Company would accrue an estimated exposure and consider the potential related effects of the timing of recording revenue on its license arrangements. The Company has not accrued any costs related to these warranties in the accompanying consolidated financial statements.  It is not possible to determine the maximum potential amount under these indemnification agreements due to the Company’s limited and infrequent history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement.

5. SHAREHOLDERS’ EQUITY

(a)Share-Based Compensation

On November 16, 2010, the Manager of SSILuxco II S.A. (“Luxco II”), a Luxembourg entity which is an indirect parent of the Company, adopted the SSILuxco II S.A. 2010 Equity Incentive Plan (the “2010 Plan”) to advance the interests of Luxco II and its subsidiaries by providing Luxco II with the right to grant equity-based awards to eligible participants (i.e., key employees and directors of, and consultants and advisors to, Luxco II and/or its subsidiaries). Awards under the 2010 Plan are intended to align the incentives of (i) the executives of Luxco II and its subsidiaries and (ii) its direct and indirect shareholders.

Share options granted to date become exercisable based on service-based conditions or a combination of service-, performance- and market-based conditions. Service conditions are based on the length of employment and become exercisable at certain time-based milestones, assuming continued employment of the holder by the Company. Performance conditions include the receipt of a dividend or sale of shares by the equity sponsors, an initial public offering or a change in control. Market conditions are based on the return received (or deemed received) by the equity sponsors on their initial equity investment in Luxco II and upon the occurrence of certain events, including a change in control of Luxco II. Options are priced at the fair market value on the date of grant, supported by a contemporaneous valuation of the ordinary shares of the Company using a combination of the discounted cash flow method and the guideline company method. Shares of Luxco II acquired upon the exercise of such share options are subject to both transfer restrictions and repurchase rights following a termination of employment. The share options expire on the tenth anniversary of the date of grant.

Any share-based compensation recognized in relation to share options granted under the 2010 Plan is recorded in the statement of operations for the subsidiaries for which those persons who received grants are employed.

No tax benefit was realized during the three and nine month periods ended October 31, 2013 and October 31, 2012, as no share options were exercised.

8

Share Options

A summary of share option activity under the 2010 Plan for the nine months ended October 31, 2013 is as follows:

Share Options	Shares	Exercise Price	Weighted Average Remaining Contractual Term (Years)
Outstanding, January 31, 2013	639,747	100.00 - 117.00	7.8
Granted	1,908	142.00	-
Exercised	-	-	-
Forfeited	(2,777)	100.00 - 117.00	-
Expired	-	-	-
Outstanding, October 31, 2013	638,878	100.00 - 142.00	7.1
Exercisable, October 31, 2013	158,755	100.00 - 142.00	7.1
Vested and expected to vest, October 31, 2013	638,878	100.00 - 142.00	7.1

Service-Based Vesting Options

Grants of share options which become exercisable based on service conditions vest over a period of 5 years (20% of the shares subject to the options vest on each of the first, second, third, fourth and fifth anniversaries of the earlier of the grant date or a pre-determined vesting commencement date) provided that the optionee is continuously employed by the Company or any of its subsidiaries, and vest immediately upon a change in control. The share options expire 10 years from the date of grant. Service-based vesting options were valued on the date of grant using the Black-Scholes option-pricing model.

Performance- and Market-Based Vesting Options

Luxco II also granted share options to purchase ordinary shares of Luxco II that vest based on the completion of a liquidity event that results in specified returns on the equity sponsors’ investment in Luxco II.

Such liquidity events would include, but not be limited to, an initial public offering of Luxco II, or a change-in-control transaction under which the investor group disposes of or sells more than 50 percent of the total voting power or economic interest in Luxco II to one or more third independent parties. These share options expire 10 years from the date of grant.

The fair value of the share options with market and performance conditions was estimated on the grant date using the Monte Carlo Simulation Approach.

Recognition of Share-Based Compensation Expense

Any shares received by the option holders upon exercise of such share options are subject to a repurchase feature by Luxco II in the event of termination of employment. The repurchase would generally be at fair value at the date of termination of employment in all instances except termination for cause or voluntary termination of employment by the employee without “good reason”. In those instances the repurchase would be at the lower of cost or fair market value as defined in the 2010 Plan. The repurchase feature would lapse only in the event of an initial public offering or change in control. The Company had previously concluded that this repurchase feature represented an additional performance condition and had not recorded any share-based compensation, as the performance condition was not deemed probable.

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The Company subsequently re-evaluated the accounting for its share options and determined that for all service-based vesting options, share-based compensation expense should be recorded over the shorter of the vesting period or the earliest period to retirement (for certain executive option holders who can voluntarily terminate their employment at a specified retirement age). In addition, the Company determined that for performance- and market-based awards to certain executive option holders who can voluntarily terminate their employment at a specified retirement age and be considered having resigned for “good reason”, the share options may vest prior to a liquidity event if specified returns on the equity sponsors’ investment are achieved at the time of retirement. As a result the Company determined that these awards do not include performance conditions and share-based compensation expense associated with these share options is recognized over the shortest requisite service date, which is typically the period from the date of grant through the earliest eligible retirement date.

In the fiscal year ended January 31, 2013, the Company recognized $14.2 million of share-based compensation expense, which includes $2.1 million and $6.0 million of share-based compensation attributable to services performed in prior periods which should have been recognized in the period from May 26, 2010 to January 31, 2011 and the fiscal year ended January 31, 2012, respectively. The error correction of cumulative share-based compensation expense to date in the fiscal year ended January 31, 2013 was not considered material to the Company’s prior consolidated financial statements.

In the three and nine months ended October 31, 2013, the Company recognized $1.5 million and $4.6 million of share-based compensation expense, respectively. Total unrecognized share-based compensation expense associated with all share options as of October 31, 2013 was $10.0 million.

(b)Share Capital

As of October 31, 2013, the Company's authorized share capital consisted of 1,000,000,000 ordinary shares of par value $1.00 each. As of October 31, 2013 and January 31, 2013,  534,513,271 ordinary shares were issued and outstanding.

Subject to the Articles of Association of the Company, at a general meeting of the Company, on a show of hands every holder of ordinary shares who (being an individual) is present in person or by proxy or (being a body corporate) is present by proxy or by a representative shall have one vote, and on a poll every holder of ordinary shares who is present in person or by a proxy or (being a body corporate) by proxy or by a representative shall have one vote for every ordinary share of which he is the holder. However, if and for so long as the Company is a single member company, all matters requiring a resolution of the Company in general meeting (except the removal of the auditors of the Company from office) may be validly dealt with by a decision of the sole member.

Subject to the Articles of Association of the Company, sums legally available to be distributed by the Company in or in respect of any financial period may (to the extent so resolved or recommended by the board of directors) be distributed amongst the holders of ordinary shares in proportion to the number of ordinary shares held by them.

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6. ACQUISITIONS

ThirdForce Group PLC (“MindLeaders”)

On September 25, 2012, Skillsoft Ireland Limited (the "Buyer"), an indirect subsidiary of SSI II, completed the first closing of the cash offer (the “Offer”) for the entire issued and to be issued share capital of MindLeaders, at which time it received acceptances from approximately 91.3% of the issued and outstanding shares of MindLeaders. The Offer remained open for acceptance until October 11, 2012 for any remaining shareholders to accept the Offer and receive their funds. For the remaining 1.8% of shareholders, which did not accept the Offer by that time, the Buyer served notice on those shareholders of its intention to compulsorily acquire their shares as allowed under Irish securities law, based on the same terms of the initial Offer. This notice represented a forward contract to purchase the remaining shares of MindLeaders at a fixed price which has been recorded as a liability on the accompanying balance sheet and resulted in the determination for accounting purposes that the Company controlled 100% of MindLeaders as of October 31, 2012. Accordingly, no non-controlling interest was recognized in the Company’s consolidated financial statements.

All remaining shares were legally acquired during November 2012.

The acquisition of MindLeaders was accounted for as a business combination under ASC 805, Business Combinations. Accordingly, the results of MindLeaders have been included in the Company's consolidated financial statements since the date of acquisition.

The cash purchase price of $64.3 million was preliminarily allocated based upon the fair value of the assets acquired and liabilities assumed at the date of acquisition using available information and certain assumptions management believed reasonable. The following table summarizes the purchase price allocation (in thousands):

Description		Amount
Current assets	$	7,927
Property and equipment		513
Goodwill		40,925
Amortizable intangible assets		27,703
Long term assets		575
Current liabilities		(7,857)
Deferred revenue		(1,484)
Long term liabilities		(3,986)
Total	$	64,316

The acquisition of MindLeaders resulted in allocations of the purchase price to goodwill and identified intangible assets of $40.9 million and $27.7 million, respectively. Intangible assets and their estimated useful lives consist of the following (in thousands):

Description		Amount	Life
Proprietary development software and courseware	$	3,258	3 years
Customer relationships		23,225	8 years
Backlog		1,220	4 years
Total	$	27,703

Values and useful lives assigned to intangible assets were based on estimated value and use of these assets by a market participant. The customer relationships were valued using the income approach and the proprietary developed software and courseware was valued using the cost approach.

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Goodwill represents the excess of the purchase price over the net identifiable tangible and intangible assets acquired. The Company determined that the acquisition of MindLeaders resulted in the recognition of goodwill primarily because the acquisition is expected to help the Company meet its long term operating profitability objectives through significant cost and service synergies. Goodwill is deductible for tax purposes.

The acquired intangible assets and goodwill are subject to review for impairment if indicators of impairment develop and otherwise at least annually.

The Company assumed certain liabilities in the acquisition of MindLeaders, including deferred revenue that was ascribed a fair value of $1.5 million using a cost-plus profit approach. The Company is amortizing deferred revenue over the period for which it is incurring costs to support the assumed customer obligations. In allocating the purchase price, the Company recorded an adjustment to reduce the carrying value of MindLeaders’ deferred revenue by $9.2 million. Approximately $0.3 million of acquired MindLeaders deferred revenue remained unamortized at October 31, 2013.  

The Company incurred acquisition related expenses, which primarily consisted of transaction fees, legal, accounting and other professional services, that are included in “Acquisition related expenses” in the accompanying condensed consolidated statements of operations.

The Company concluded that the acquisition of MindLeaders represented a material business combination for purposes of disclosure under ASC 805, Business Combinations. The following unaudited pro forma information presents the consolidated results of operations of the Company and MindLeaders for the three and ninemonths ended October 31, 2012, as if the acquisition had occurred as of the beginning of the annual period preceding the acquisition of MindLeaders, with pro forma adjustments to give effect to amortization of intangible assets, an increase in interest expense on acquisition financing, and certain other adjustments:

		Three Months Ended	Nine Months Ended
		October 31, 2012	October 31, 2012
Revenue	$	101,841	$	298,982
Net loss		(18,093)		(66,903)

The Company’s only significant non-recurring pro-forma adjustments impacting the periods shown above relate to purchase accounting adjustments to deferred revenue.

The unaudited pro forma results are not necessarily indicative of the results that the Company would have attained had the acquisition of MindLeaders occurred as of February 1, 2011.

7. RESTRUCTURING

In connection with the acquisitions of MindLeaders and the Element K business (“Element K”) in the fiscal year ending January 31, 2012, the Company’s management approved and initiated plans to integrate the businesses into its operations and to eliminate redundant headcount, reduce cost structure and better align operating expenses with existing economic conditions and the Company’s operating model. During the nine months ended October 31, 2013, the Company consolidated and reorganized the space utilized by MindLeaders in the United Kingdom and Ireland as well as the space utilized by Element K in Rochester, NY, and as a result incurred a $1.3 million restructuring charge, which is included in the condensed consolidated statements of operations as restructuring.

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In addition, the Company committed to an organizational change and a workforce reduction plan as a result of the acquisitions of Mindleaders and Element K in an effort to eliminate redundancies and positions not required by the combined businesses and to reduce the overall cost structure of the acquired business to better align our operating expenses with existing economic conditions, business requirements and our operating model. As a result of this reduction in force, the Company incurred additional restructuring charges during the nine months ended October 31, 2013 of $1.6million which related primarily to one-time termination benefits.

Activity in the Company’s restructuring accrual for the nine months ended October 31, 2013was as follows (in thousands):

		Employee Severance and Related Costs		Contractual Obligations		Total
Restructuring accrual as of January 31, 2013	$	837	$	878	$	1,715
Restructuring charges incurred		1,622		1,301		2,923
Payments made		(1,899)		(873)		(2,772)
Restructuring accrual as of October 31, 2013	$	560	$	1,306	$	1,866

8. DISCONTINUED OPERATIONS

Following the Element K acquisition, the Company decided to divest the Training Channel Enablement (“TCE”) business acquired as part of the Element K acquisition as the Company did not believe this business was consistent with the Company’s strategy and profit model. As a result, on March 21, 2012, the Company entered into an asset purchase agreement pursuant to which it agreed to sell to Logical Operations Inc. (“Logical Operations”) certain TCE assets. The closing of the sale of the TCE assets occurred on March 31, 2012. The Company also entered into a transitional services agreement with Logical Operations. The services provided under this agreement were completed within the fiscal year ended January 31, 2013 and the cash flows from this agreement were not material.

When TCE was classified as held for sale, the assets and liabilities were recorded at fair value less costs to sell. The assets held for sale included allocated goodwill of $5.1 million. The business was sold for $8.1 million, payable in installments as outlined in the asset purchase agreement. We continuously evaluate this note receivable for potential impairment through a review of its collectability. There was no gain or loss recognized on the sale.

The Company has accounted for TCE as discontinued operations and the components of discontinued operations are as follows (in thousands):

	Three Months Ended October 31,				Nine Months Ended October 31,
Statement of operations:	2013			2012	2013			2012
Revenue from discontinued operations	$	-	$	233	$	-	$	5,471
Loss from discontinued operations before income taxes		-		(80)		(182)		(975)
Income tax benefit		-		32		-		390
Loss from discontinued operations	$	-	$	(48)	$	(182)	$	(585)

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9. GOODWILL AND INTANGIBLE ASSETS

Intangible assets are as follows (in thousands):

	October 31, 2013						January 31, 2013
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Internally developed software/ courseware	$	268,732	$	212,213	$	56,519	$	268,678	$	170,933	$	97,745
Customer contracts/ relationships		295,984		136,637		159,347		297,109		102,839		194,270
Non-compete agreement		4,070		1,662		2,408		4,070		1,052		3,018
Trademarks and trade names		15,220		6,804		8,416		15,220		5,449		9,771
Backlog		59,000		54,048		4,952		59,000		48,956		10,044
Skillsoft trademark		129,900		-		129,900		129,900		-		129,900
	$	772,906	$	411,364	$	361,542	$	773,977	$	329,229	$	444,748

Amortization expense related to the existing finite-lived intangible assets is expected to be as follows (in thousands):

Fiscal Year		Amortization Expense
2014 (remaining three months)	$	27,040
2015		80,488
2016		42,236
2017		27,197
2018		21,102
2019		16,845
2020		13,440
2021		3,294
Total	$	231,642

In connection with the Acquisition, the Company concluded that its “Skillsoft” brand name is an indefinite lived intangible asset, as the brand has been in continuous use since 1999 and the Company has no plans to discontinue using the Skillsoft name.

The change in goodwill at October 31, 2013 from the amount recorded at January 31, 2013 is as follows:

Gross carrying amount of goodwill, January 31, 2013	$	637,524
Change in fair value assessment of MindLeaders		(56)
Foreign currency translation adjustment		(1,578)
Gross carrying amount of goodwill, October 31, 2013	$	635,890

The Company will be conducting its annual impairment test of goodwill for the fiscal year ending January 31, 2014 in the fourth quarter. There were no indicators of impairment identified in the third quarter of fiscal 2014.

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10. INCOME TAXES

The Company operates as a holding company with operating subsidiaries in several countries. Each subsidiary is taxed based on the laws of the jurisdictions in which it operates.

The Company has significant tax loss carryforwards mainly in Ireland and the United States. Some of the U.S. tax losses are subject to limitations based upon the change in control provisions of Section 382 of the United States Internal Revenue Code.

For the three and nine months ended October 31, 2013, the Company recorded an income tax benefit of $2.3 million and $8.6 million, respectively. The Company's effective tax rate for the three and nine months ended October 31, 2013 was 33.9% and 26.5%, respectively. The tax benefit for the three months ended October 31, 2013 consists of a cash tax provision of $3.0 million and a non-cash tax benefit of $5.3 million. For the nine months ended October 31, 2013, the tax benefit consists of a cash tax provision of $9.3 million and a non-cash tax benefit of $17.9 million.

The Company's gross unrecognized tax benefits, including interest and penalties, totaled $8.7 million at October 31, 2013, all of which, if recognized, would result in a reduction of the Company's effective tax rate. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of October 31, 2013, the Company had $1.1 million of accrued interest and penalties related to uncertain tax positions.

In the normal course of business, the Company and its subsidiaries are subject to examination by taxing authorities including those in its major jurisdictions of Ireland, the United States, the United Kingdom, Germany, Australia and Canada. With few exceptions, the Company is no longer subject to any national level income tax examinations for years before fiscal 2009.

During the fiscal year ended January 31, 2012, the Company was notified by the U.S. Internal Revenue Service (“IRS”) that its U.S. federal income tax return for the tax years ended January 31, 2010 and 2011 had been selected for examination.

During the three months ended October 31, 2013, the IRS completed its field examination of the Company’s U.S. federal income tax returns for the tax years ended January 31, 2010 and 2011.  On December 3, 2013, the IRS proposed certain adjustments relating to the value of intellectual property sold by the Company to an Irish affiliate during the Company’s tax year ended January 31, 2010. The proposed adjustments to its reported tax position would increase the Company’s cumulative tax liability, including interest and penalties, by approximately $92.4 million. The Company disagrees with the proposed adjustments. Based on the Company’s view of the merits of the position taken by the IRS in its proposed adjustments and on discussions with its tax advisors, the Company has concluded that recording a liability for these proposed adjustments is not currently required. The Company intends to contest the proposed adjustments and is working with its outside tax advisors and the IRS to resolve this dispute in a timely and effective manner. 

Although the Company believes that the estimates of income taxes payable included in its financial statements are reasonable, no assurance can be given that the Company will prevail in the final resolution of the proposed adjustments and, in addition, the Company may determine to settle the matter for business or other reasons for an amount in excess of any tax liability that the Company believes is owed.  As a result, the actual income taxes payable by the Company may differ from what is reflected in the Company’s historical income tax provisions and accruals and such differences could be material. If the IRS prevails or the Company determines to settle the matter, a cash payment could be required, thereby negatively and adversely impacting the Company’s financial condition, results of operations and cash flows.  The Company will continue to reassess the adequacy of its existing tax reserves as the matter progresses and, through that process, the Company may determine the need to increase its existing reserves by a material amount.

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11. COMMITMENTS AND CONTINGENCIES

From time to time, the Company is a party to or may be threatened with litigation in the ordinary course of its business. The Company regularly analyzes current information, including, as applicable, the Company's defense and insurance coverage and, as necessary, provides accruals for probable and estimable liabilities for the eventual disposition of these matters. The Company is presently not a party to any material legal proceedings.

The Company's software license arrangements and hosting services are typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable and substantially in accordance with the Company's product documentation under normal use and circumstances. The Company's arrangements also include certain provisions for indemnifying customers against liabilities if its products or services infringe a third party's intellectual property rights.

The Company has entered into service level agreements with some of its hosted application customers warranting certain levels of uptime reliability and such agreements permit those customers to receive credits against monthly hosting fees or terminate their agreements in the event that the Company fails to meet those levels for an agreed upon period of time.

To date, the Company has not incurred any material costs as a result of such indemnifications or commitments and has not accrued any liabilities related to such obligations in the accompanying consolidated financial statements. It is not possible to determine the maximum potential amount under these indemnification agreements due to the Company’s limited and infrequent history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement.

12.  DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The Company’s chief operating decision makers are the Chief Executive Officer, Chief Financial Officer and the Chief Operating Officer. The Company views its operations and manages its business as one segment, providing multi-modal, on-demand e-learning and performance support solutions for global enterprises, government, education and small to medium-sized businesses.

The Company attributes revenue to different geographical areas on the basis of the location of the customer. Revenues by geographical area were as follows (in thousands):

	Three Months Ended October 31,				Nine Months Ended  October 31,
		2013		2012		2013		2012
Revenue:
United States	$	78,835	$	72,994	$	232,938	$	216,175
United Kingdom		10,062		8,884		28,845		26,355
Canada		5,612		5,674		16,495		16,158
Europe, excluding United Kingdom		4,820		4,514		14,542		12,942
Australia/New Zealand		3,757		4,020		11,580		11,954
Other (Countries less than 5% individually, by region)		2,880		2,287		8,853		6,692
Purchase accounting adjustments		(941)		(2,640)		(6,106)		(11,484)
Total revenue	$	105,025	$	95,733	$	307,147	$	278,792

Long-lived tangible assets at international locations are not considered significant.

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13. ACCRUED EXPENSES

Accrued expenses in the accompanying condensed consolidated balance sheets consisted of the following (in thousands):

		October 31, 2013		January 31, 2013
Professional fees	$	3,605	$	3,602
Sales tax payable/VAT payable		2,772		7,350
Accrued royalties		1,906		2,568
Accrued tax		2,399		4,815
Interest payable		16,165		7,772
Other accrued liabilities		10,553		13,203
Total accrued expenses	$	37,400	$	39,310

14. OTHER ASSETS

Other assets in the accompanying condensed consolidated balance sheets consist of the following (in thousands):

		October 31, 2013		January 31, 2013
Debt financing cost – long term (See Note 16)	$	12,053	$	15,982
Other		1,631		2,013
Note receivable		4,362		4,450
Total other assets	$	18,046	$	22,445

15. OTHER LONG TERM LIABILITIES

Other long term liabilities in the accompanying condensed consolidated balance sheets consist of the following (in thousands):

		October 31, 2013		January 31, 2013
Uncertain tax positions; including interest and penalties – long term	$	7,415	$	7,619
Unfavorable lease commitments assumed in the acquisition of Element K		740		898
Other		3,199		1,499
Total other long-term liabilities	$	11,354	$	10,016

16. CREDIT FACILITIES AND DEBT

SENIOR CREDIT FACILITIES

On September 25, 2012, SSI Investments I Limited (“Holdings”) and Skillsoft Corporation (“Borrower”) entered into an amendment, (the “Incremental Amendment”), to an amended and restated credit agreement, dated as of May 26, 2010, among Holdings, Borrower (as successor in interests and obligations to Skillsoft Limited, as successor in interests and obligations to SSI Investments II Limited), Morgan Stanley Senior Funding, Inc., the lenders party thereto, and the other agents named therein (as so amended and as previously amended , the “Credit Agreement”).

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Pursuant to the Incremental Amendment, Morgan Stanley Senior Funding, Inc. agreed to provide an additional $50 million in new term loans (the “Additional Term Loans”) conditioned upon, among other things, the acquisition by Skillsoft Ireland Limited, an Irish private limited company and an indirect subsidiary of the Company, of at least 80% of the outstanding capital stock of MindLeaders (the “MindLeaders Acquisition”), substantially concurrently with the borrowing of such Additional Term Loans. The Incremental Amendment restricts the use of proceeds from such Additional Term Loans solely (i) to finance the MindLeaders Acquisition, (ii) repay any existing debt of MindLeaders and its subsidiaries and (iii) to pay fees and expenses in connection with the Incremental Amendment and the MindLeaders Acquisition. The Additional Term Loans have the same terms as the original term loans, including with respect to interest rate (including applicable margins), amortization, maturity date and optional and mandatory prepayments. In addition, prior to the MindLeaders Acquisition and the Incremental Amendment, Holdings, the Borrower and the lenders party thereto amended the Credit Agreement to permit the MindLeaders Acquisition under the Credit Agreement.

In addition, on September 28, 2012, Holdings and the Borrower completed a re-pricing of the Credit Agreement. The new interest rate on the term loans, including the Additional Term Loans, is LIBOR plus 3.75%, compared to the previous interest rate of LIBOR plus 4.75%. The new interest rate on the revolving loans is LIBOR plus 3.50%, compared to the previous interest rate of LIBOR plus 4.50%. The new LIBOR floor on the term loans, including the Additional Term Loans, and revolving loans is 1.25%, compared to the previous LIBOR floor of 1.75%.  On June  28, 2013, the Company elected its interest calculation to be based on adjusted LIBOR.

The re-pricing was accounted for as a modification for accounting purposes. Accordingly, unamortized deferred financing costs and original issuance discounts of $13.8 million and $2.1 million, respectively, and $4.0 million of fees paid to lenders in connection with the re-pricing, are being amortized as additional interest expense over the revised term of the senior credit facility.  

As of October 31, 2013, under the Credit Agreement, the Company had a $505 million senior secured credit facility comprised of a $465 million term loan facility and a $40 million revolving credit facility (collectively the “Senior Credit Facilities”). The revolving credit facility includes borrowing capacity available for letters of credit and for borrowings on same-day notice, referred to as the swingline loans. The revolving credit facility is available for general corporate purposes, including capital expenditures, subject to certain conditions. As of October 31, 2013, there were no amounts outstanding under the revolving credit facility.

Availability of the revolving credit facility is subject to the absence of any default under the Senior Credit Facilities, compliance with the financial covenant in certain circumstances and the accuracy in all material respect of certain representations and warranties. The revolving credit facility, including the letter of credit and swingline subfacilities, terminates on May 26, 2015, at which time all outstanding borrowings under the revolving credit facility are due.

The Company’s Senior Credit Facilities require it to prepay outstanding term loans, subject to certain exceptions, with:

· a percentage initially expected to be 50% (subject to reduction to 25% and 0% based upon the Company’s leverage ratio) of the Company’s excess cash flow, as defined in the Senior Credit Facilities, as determined at the end of each fiscal year;

· 100% of the net cash proceeds of certain asset sales and casualty and condemnation events, subject to reinvestment rights and certain other exceptions; and

· 100% of the net cash proceeds of any incurrence of certain debt, other than debt permitted under the Company’s Senior Credit Facilities.

The foregoing mandatory prepayments are applied to installments of the term loan facility in direct order of maturity.

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The Company may voluntarily repay outstanding loans under its Senior Credit Facilities at any time without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans and, with respect to outstanding term loans, a premium during the first three years following the closing date for voluntary prepayments, repricings or effective repricings of such term loans. The premium for voluntary prepayments, repricings or effective repricings of term loans was  2% in the second year and 1% in the third year, with a customary make-whole premium for prepayments during the first year of the term loan facility. Voluntary prepayments may be applied as directed by the Company.

The Company’s Senior Credit Facilities require scheduled quarterly payments on the term loan facility equal to 0.25% of the initial aggregate principal amount of the term loans made on the closing date, with the balance due at maturity. The Company’s scheduled quarterly payments are subject to change based on excess cash flow provisions as defined in the Senior Credit Facilities.

The Senior Credit Facilities are guaranteed by, subject to certain exceptions (including an exception for foreign subsidiaries of U.S. subsidiaries), each of the Company’s existing and future material wholly owned subsidiaries and its immediate parent. All obligations under the Company’s Senior Credit Facilities, and the guarantees of those obligations, will be secured by substantially all of the Company’s, its subsidiary guarantors' and its immediate parent's existing and future property and assets and by a pledge of the Company’s capital stock and the capital stock of, subject to certain exceptions, each of its material wholly owned restricted subsidiaries (or up to 65% of the capital stock of material first-tier foreign wholly owned restricted subsidiaries of its U.S. subsidiaries).

In addition, the Company’s Senior Credit Facilities require it to comply on a quarterly basis with a single financial covenant for the benefit of the revolving credit facility only. Such covenant requires the Company to maintain a maximum secured leverage ratio tested on the last day of each fiscal quarter (but failure to maintain the required ratio would not result in a default under the revolving credit facility so long as the revolving credit facility is undrawn at such time). The maximum secured leverage ratio will reduce over time, subject to increase in connection with certain material acquisitions. At October 31, 2013, the Company was in compliance with this financial covenant.

In addition, the Company’s Senior Credit Facilities include negative covenants that, subject to significant exceptions, limit the Company’s ability and the ability of its restricted subsidiaries to, among other things, incur additional indebtedness; create liens on assets; engage in mergers or consolidations; sell assets (including pursuant to sale and leaseback transactions); pay dividends and distributions or repurchase its capital stock; make investments, loans or advances; repay certain indebtedness (including the Senior Notes defined below); engage in certain transactions with affiliates; amend material agreements governing certain indebtedness (including the Senior Notes); and change its lines of business.

The Company’s Senior Credit Facilities include certain customary representations and warranties, affirmative covenants and events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy, certain events under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), material judgments, the invalidity of material provisions of the Senior Credit Facilities documentation, actual or asserted failure of the guarantees or security documents for the Company’s Senior Credit Facilities, and a change of control. If an event of default occurs, the lenders under the Company’s Senior Credit Facilities will be entitled to take various actions, including the acceleration of all amounts due under the Company’s Senior Credit Facilities and all actions permitted to be taken by a secured creditor. At October 31, 2013, the Company was in compliance with these covenants.

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During the three and nine months ended October 31, 2013, the Company recorded $2.3 million and $4.5 million, respectively, of amortized interest expense related to the capitalized debt financing costs and original issue discount. During the three and nine months ended October 31, 2012, the Company recorded $1.0 million and $2.8 million, respectively, of amortized interest expense related to the capitalized debt financing costs and original issue discount.  As of October 31, 2013, total unamortized debt financing costs of $2.8 million and $6.9 million are recorded within prepaid expenses and other current assets and non-current other assets, respectively, based on scheduled future amortization. During the three months ended October 31, 2013, the Company made a voluntary prepayment of $35.0 million which resulted in the acceleration of approximately $1.9 million of non-cash interest expense related to unamortized debt financing costs and original issue discount.

During the three and nine months ended October 31, 2013, the Company paid approximately $5.9 million and $17.2 million in interest, respectively. During the three and nine months ended October 31, 2012, the Company paid approximately $6.7 million and $20.1 million in interest, respectively.

Future scheduled minimum payments including estimated mandatory prepayments under theSenior Credit Facilities are as follows (in thousands):

Fiscal 2014	$	1,163
Fiscal 2015		4,650
Fiscal 2016		4,650
Fiscal 2017		4,650
Fiscal 2018		401,900
Total	$	417,013

SENIOR NOTES

On May 26, 2010, senior notes ("Senior Notes") were issued under an indenture among the Company, as issuer, SSI Co-Issuer LLC, a wholly owned subsidiary of SSI II, as co-issuer, Wilmington Trust FSB, as trustee, and the Guarantors in an aggregate principal amount of $310.0 million. The Senior Notes mature on June 1, 2018. Interest is payable semiannually (at 11.125% per annum) in cash to holders of Senior Notes of record at the close of business on the May 15 or November 15 immediately preceding the interest payment date, on June 1 and December 1 of each year, commencing December 1, 2010. Interest is paid on the basis of a 360-day year consisting of twelve 30-day months.

The Senior Notes are unsecured senior obligations of SSI II and SSI Co-Issuer LLC and are guaranteed on a senior unsecured basis by SSI III Limited and the restricted subsidiaries of Skillsoft (other than immaterial subsidiaries and certain other excluded subsidiaries) that guarantee the Company’s Senior Credit Facilities. The guarantees of the Senior Notes are joint and several and will terminate upon the following customary circumstances: (i) the sale, exchange, disposition or transfer (by merger or otherwise) of all of the capital stock of a Guarantor, or all or substantially all of its assets; (ii) the release or discharge of the guarantee of the other indebtedness which resulted in the creation of the guarantee by such Guarantor under the Indenture; (iii) the proper designation of a Guarantor as an “Unrestricted Subsidiary” and (iv) the legal defeasance, covenant defeasance, or satisfaction and discharge of the Indenture, in each such case specified in clauses (i) through (iv) above in accordance with the requirements therefore set forth in the Indenture.

The Company may redeem the Senior Notes, in whole or in part, at any time on or after June 1, 2014, at a redemption price equal to 100% of the principal amount of the senior notes plus a premium declining ratably to par plus accrued and unpaid interest (if any).

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The Company may also redeem any of the Senior Notes at any time prior to June 1, 2014 at a redemption price of 100% of their principal amount plus a make-whole premium and accrued and unpaid interest (if any). This option is required to be bifurcated for accounting purposes as an embedded derivative in the Company’s Senior Notes. The Company has estimated the value of this option to be nominal as of January 31, 2013 and October 31, 2013. This call feature will be marked to market over the period it is active.

If the Company experiences certain kinds of changes of control, it must offer to purchase the Senior Notes at 101% of their principal amount plus accrued and unpaid interest (if any). If the Company sells certain assets and does not reinvest the net proceeds as specified in the indenture governing the Senior Notes, it must offer to repurchase the Senior Notes at 100% of their principal amount plus accrued and unpaid interest (if any).

The indenture governing the Senior Notes contains covenants that, among other things, restrict, subject to certain exceptions, the Company’s ability and the ability of its restricted subsidiaries to: incur additional debt; pay dividends or distributions on its capital stock or repurchase its capital stock; issue preferred stock of subsidiaries; make certain investments; create liens on its assets to secure debt; enter into transactions with affiliates; merge or consolidate with another company; and sell or otherwise transfer assets. Subject to certain exceptions, the indenture governing the Senior Notes permits the Company and its subsidiaries to incur additional indebtedness, including secured indebtedness. At October 31, 2013, the Company was in compliance with these covenants.

In connection with the issuance of the Senior Notes, the Company incurred debt financing costs of $11.5 million. The Company capitalized these fees and is amortizing them to interest expense over the term of the Senior Notes using the effective interest method.During both the three months endedOctober 31, 2013and October 31, 2012,  the Company recorded $0.4 million of amortized interest expense related to these capitalized debt financing costs.During both the nine months endedOctober 31, 2013 andOctober 31, 2012, the Company recorded $1.1 million of interest expense related to the amortization of the capitalized debt financing costs. As of October 31, 2013, total unamortized debt financing costs of $1.4 million and $5.1 million are recorded within prepaid expenses and other current assets and non-current other assets, respectively, based on scheduled future amortization.

The Company paid its semi-annual interest payment of $17.2 million on June 1, 2013.

17. ACCUMULATED OTHER COMPREHENSIVE INCOME

Comprehensive income (loss) refers to revenues, expenses, gains and losses that under U.S. GAAP are included in other comprehensive income, but excluded from net income as these amounts are recorded directly as an adjustment to shareholders’ equity, net of tax. The Company’s accumulated other comprehensive income is composed primarily of foreign currency translation adjustments. The following is a summary of the components of accumulated other comprehensive income, net of tax, at October 31, 2013 (in thousands):

	Accumulated Other Comprehensive Income
Balance at January 31, 2013	$	12,833
Other comprehensive income (loss) from Foreign Currency Translation		(2,296)
Balance at October 31, 2013	$	10,537

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18. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. Under this standard, entities are required to disclose additional information with respect to changes in accumulated other comprehensive income (AOCI) balances by component and significant items reclassified out of AOCI. Expanded disclosures for presentation of changes in AOCI involve disaggregating the total change of each component of other comprehensive income as well as presenting separately for each such component the portion of the change in AOCI related to (1) amounts reclassified into income and (2) current-period other comprehensive income. Additionally, for amounts reclassified into income, disclosure in one location is required, based upon each specific AOCI component, of the amounts impacting individual income statement line items. Disclosure of the income statement line item impacts is required only for components of AOCI reclassified into income in their entirety. ASU No. 2013-02 is effective for fiscal years beginning after December 15, 2012. The Company adopted this amendment in the first quarter of fiscal 2014. The adoption did not have a material impact on the condensed consolidated financial statements for the three and ninemonths ended October 31, 2013.

19. FAIR VALUE MEASUREMENTS

FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) establishes a fair value hierarchy that prioritizes the inputs used to measure fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

The three levels of the fair value hierarchy established by ASC 820 in order of priority are as follows:

· Level 1:Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

· Level 2:Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

· Level 3:Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available.

The Company currently invests excess cash balances primarily in cash deposits held at major banks. The carrying amounts of cash deposits, trade receivables, trade payables and accrued liabilities, as reported on the consolidated balance sheet as of October 31, 2013 approximate their fair value because of the short maturity of those instruments. The carrying value of borrowings outstanding on the Senior Credit Facilities bear interest at a variable rate and are considered to approximate fair value.

22

Financial Instruments Not Recorded at Fair Value

The carrying values and fair values of financial instruments not recorded at fair value in the consolidated balance sheets as of October 31, 2013 were as follows (in thousands):

	October 31, 2013
		Current Value		Fair Value
Senior Notes	$	310,000	$	340,420

The fair value of the Senior Notes is determined by its trading price on October 31, 2013, representing a Level 1 valuation.

20. GUARANTORS

On May 26, 2010, in connection with the Acquisition, the Company completed an offering of $310.0 million aggregate principal amount of 11.125% Senior Notes due 2018 as described in Note 16. The Senior Notes are unsecured senior obligations of the Company and SSI Co-Issuer LLC, a wholly owned subsidiary of the Company, and are guaranteed on a senior unsecured basis by SSI III and the restricted subsidiaries of Skillsoft (other than immaterial subsidiaries and certain other excluded subsidiaries) that guarantee the Senior Credit Facilities described in Note 16. Each of the Guarantors is 100 percent owned, directly or indirectly, by the Company. The Guarantors also unconditionally guarantee the Senior Credit Facilities. All other subsidiaries of the Company, either direct or indirect, do not guarantee the Senior Notes (“Non-Guarantors”). The guarantees of the Senior Notes are joint and several and will terminate upon the following customary circumstances: (i) the sale, exchange, disposition or transfer (by merger or otherwise) of all of the capital stock of a Guarantor, or all or substantially all of its assets; (ii) the release or discharge of the guarantee of the other indebtedness which resulted in the creation of the guarantee by such Guarantor under the Indenture; (iii) the proper designation of a Guarantor as an “Unrestricted Subsidiary” and (iv) the legal defeasance, covenant defeasance, or satisfaction and discharge of the Indenture, in each such case specified in clauses (i) through (iv) above in accordance with the requirements therefore set forth in the Indenture.

The following condensed consolidated financial statements are presented for the information of the holders of the Senior Notes and present the Condensed Consolidated Balance Sheets as of October 31, 2013 and January 31, 2013 The Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended October 31, 2013 and October 31, 2012  and the Condensed Consolidated Statements of Cash Flows for the nine months ended October 31, 2013 and October 31, 2012, of the issuer of the Senior Notes, the Guarantors, the Non-Guarantors, the elimination entries necessary to consolidate and combine the issuer with the Guarantor and Non-Guarantor subsidiaries on a consolidated and combined basis.

Investments in subsidiaries are accounted for using the equity method for purposes of the consolidated and combined presentation. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. Separate financial statements and other disclosures with respect to the subsidiary guarantors have not been provided as management believes the following information is sufficient, as the guarantor subsidiaries are 100 percent owned by the parent and all guarantees are full and unconditional, subject to the customary automatic release provisions described above.

23

CONDENSED CONSOLIDATED BALANCE SHEETS

OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	89	$	40,274	$	13,984	$	-	$	54,347
Restricted cash		-		6		96		-		102
Accounts receivable, net		-		85,950		11,418		-		97,368
Intercompany receivables		-		429,297		-		(429,297)		-
Deferred tax assets		-		9,647		487		-		10,134
Prepaid expenses and other current assets		1,475		26,819		3,849		535		32,678
Total current assets		1,564		591,993		29,834		(428,762)		194,629
Property and equipment, net		-		13,355		240		-		13,595
Goodwill		-		610,920		24,970		-		635,890
Intangible assets, net		-		348,942		12,600		-		361,542
Investment in subsidiaries		962,523		1,370,696		4,166		(2,337,385)		-
Investment in, and advances to, nonconsolidated affiliates		-		535		-		(535)		-
Deferred tax assets		-		(268)		268		-		-
Other assets		5,111		12,320		615		-		18,046
Total assets	$	969,198	$	2,948,493	$	72,693	$	(2,766,682)	$	1,223,702
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long term debt	$	-	$	3,433	$	-	$	-	$	3,433
Accounts payable		-		7,735		55		-		7,790
Accrued compensation		-		12,197		1,060		-		13,257
Accrued expenses		14,429		21,512		1,859		(400)		37,400
Intercompany payable		422,589		832,341		47,260		(1,302,190)		-
Deferred tax liabilities		-		7,524		65		-		7,589
Deferred revenue		-		166,437		20,261		-		186,698
Total current liabilities		437,018		1,051,179		70,560		(1,302,590)		256,167
Long term debt		308,632		409,328		-		-		717,960
Deferred tax liabilities		-		11,294		3,379		-		14,673
Other long term liabilities		-		10,144		1,210		-		11,354
Total long-term liabilities		308,632		430,766		4,589		-		743,987
Total stockholders' equity		223,548		1,466,548		(2,456)		(1,464,092)		223,548
Total liabilities and stockholders' equity	$	969,198	$	2,948,493	$	72,693	$	(2,766,682)	$	1,223,702

24

CONDENSED CONSOLIDATED BALANCE SHEETS

JANUARY 31, 2013

(IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	85	$	22,543	$	16,420	$	-	$	39,048
Restricted cash		-		6		130		-		136
Accounts receivable, net		-		164,053		24,629		-		188,682
Intercompany receivables		-		410,573		-		(410,573)		-
Deferred tax assets		-		967		393		-		1,360
Prepaid expenses and other current assets		1,454		29,063		3,799		425		34,741
Total current assets		1,539		627,205		45,371		(410,148)		263,967
Property and equipment, net		-		13,652		2		-		13,654
Goodwill		-		611,192		26,332		-		637,524
Intangible assets, net		-		428,637		16,111		-		444,748
Investment in subsidiaries		954,971		1,364,497		4,167		(2,323,635)		-
Investment in, and advances to, nonconsolidated affiliates		-		425		-		(425)		-
Deferred tax assets		-		10,008		82		-		10,090
Other assets		6,192		15,543		710		-		22,445
Total assets	$	962,702	$	3,071,159	$	92,775	$	(2,734,208)	$	1,392,428
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long term debt	$	-	$	3,311	$	-	$	-	$	3,311
Accounts payable		-		11,557		93		-		11,650
Accrued compensation		-		21,310		2,146		-		23,456
Accrued expenses		5,798		29,444		4,468		(400)		39,310
Intercompany payable		403,038		864,535		48,197		(1,315,770)		-
Deferred tax liabilities		-		15,125		28		-		15,153
Deferred revenue		-		233,084		29,368		-		262,452
Total current liabilities		408,836		1,178,366		84,300		(1,316,170)		355,332
Long term debt		308,466		446,568		-		-		755,034
Deferred tax liabilities		-		22,506		4,140		-		26,646
Other long term liabilities		-		8,593		1,423		-		10,016
Total long-term liabilities		308,466		477,667		5,563		-		791,696
Total stockholders' equity		245,400		1,415,126		2,912		(1,418,038)		245,400
Total liabilities and stockholders' equity	$	962,702	$	3,071,159	$	92,775	$	(2,734,208)	$	1,392,428

25

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Revenues	$	-	$	100,322	$	10,903	$	(6,200)	$	105,025
Cost of revenues		-		9,660		6,236		(6,200)		9,696
Cost of revenues - amortization of intangible assets		-		13,576		-		-		13,576
Gross profit		-		77,086		4,667		-		81,753
Operating expenses:
Research and development		-		13,257		-		-		13,257
Selling and marketing		-		29,131		3,673		-		32,804
General and administrative		47		9,378		386		-		9,811
Amortization of intangible assets		-		12,914		892		-		13,806
Acquisition related expenses		-		35		-		-		35
Merger and integration related expenses		-		1,250		19		-		1,269
Restructuring		-		231		-		-		231
Total operating expenses		47		66,196		4,970		-		71,213
Operating (loss) income		(47)		10,890		(303)		-		10,540
Other (expense) income, net		-		11,531		(1,305)		(10,849)		(623)
Interest income		-		246		2		-		248
Interest expense		(9,815)		(7,092)		-		-		(16,907)
(Loss) income before benefit for income taxes		(9,862)		15,575		(1,606)		(10,849)		(6,742)
Equity in (losses) earnings of subsidiaries before taxes		3,120		(1,354)		-		(1,766)		-
(Benefit) provision for income taxes		(2,284)		(2,032)		(252)		2,284		(2,284)
Net loss from continuing operations	$	(4,458)	$	16,253	$	(1,354)	$	(14,899)	$	(4,458)
Income from discontinued operations		-		-		-		-		-
Net (loss) income	$	(4,458)	$	16,253	$	(1,354)	$	(14,899)	$	(4,458)

26

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Revenues	$	-	$	91,625	$	11,402	$	(7,294)	$	95,733
Cost of revenues		-		8,955		7,340		(7,294)		9,001
Cost of revenues - amortization of intangible assets		-		13,952		-		-		13,952
Gross profit		-		68,718		4,062		-		72,780
Operating expenses:
Research and development		-		12,988		-		-		12,988
Selling and marketing		-		29,705		3,737		-		33,442
General and administrative		51		9,892		352		-		10,295
Amortization of intangible assets		-		14,675		1,115		-		15,790
Acquisition related expenses		-		3,171		6		-		3,177
Merger and integration related expenses		-		653		457		-		1,110
Restructuring		-		2,296		77		-		2,373
Total operating expenses		51		73,380		5,744		-		79,175
Operating (loss) income		(51)		(4,662)		(1,682)		-		(6,395)
Other income (expense), net		-		8,537		2,029		(10,768)		(202)
Interest income		-		587		5		-		592
Interest expense		(9,494)		(6,997)		-		-		(16,491)
Loss before benefit for income taxes		(9,545)		(2,535)		352		(10,768)		(22,496)
Equity in (losses) earnings of subsidiaries before taxes		(12,999)		508		-		12,491		-
(Benefit) provision for income taxes		(4,279)		(4,126)		(153)		4,279		(4,279)
Net loss from continuing operations	$	(18,265)	$	2,099	$	505	$	(2,556)	$	(18,217)
Loss from discontinued operations, net of an income tax benefit of $58		-		(51)		3		-		(48)
Net (loss) income	$	(18,265)	$	2,048	$	508	$	(2,556)	$	(18,265)

27

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Revenues	$	-	$	294,528	$	33,341	$	(20,722)	$	307,147
Cost of revenues		-		28,363		20,818		(20,722)		28,459
Cost of revenues - amortization of intangible assets		-		41,169		-		-		41,169
Gross profit		-		224,996		12,523		-		237,519
Operating expenses:
Research and development		-		41,497		-		-		41,497
Selling and marketing		-		89,891		11,078		-		100,969
General and administrative		174		28,783		1,128		-		30,085
Amortization of intangible assets		-		38,559		2,737		-		41,296
Acquisition related expenses		-		434		-		-		434
Merger and integration related expenses		-		4,270		19		-		4,289
Restructuring		-		2,923		-		-		2,923
Total operating expenses		174		206,357		14,962		-		221,493
Operating income (loss)		(174)		18,639		(2,439)		-		16,026
Other (expense) income, net		(2)		32,082		(410)		(32,428)		(758)
Interest income		1		786		5		-		792
Interest expense		(29,228)		(19,398)		(4)		12		(48,618)
Loss before benefit for income taxes		(29,403)		32,109		(2,848)		(32,416)		(32,558)
Equity in (losses) earnings of subsidiaries before taxes		(3,337)		(2,186)		-		5,523		-
(Benefit) provision of income taxes		(8,627)		(7,965)		(662)		8,627		(8,627)
Net loss from continuing operations	$	(24,113)	$	37,888	$	(2,186)	$	(35,520)	$	(23,931)
Loss from discontinued operations, net of an income tax benefit of $32		-		(182)		-		-		(182)
Net (loss) income	$	(24,113)	$	37,706	$	(2,186)	$	(35,520)	$	(24,113)

28

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Revenues	$	-	$	267,541	$	32,920	$	(21,669)	$	278,792
Cost of revenues		-		28,089		21,727		(21,669)		28,147
Cost of revenues - amortization of intangible assets		-		46,486		-		-		46,486
Gross profit		-		192,966		11,193		-		204,159
Operating expenses:
Research and development		-		39,464		360		-		39,824
Selling and marketing		-		89,442		10,843		-		100,285
General and administrative		128		26,117		1,486		-		27,731
Amortization of intangible assets		-		43,393		3,103		-		46,496
Acquisition related expenses		-		3,551		25		-		3,576
Merger and integration related expenses		-		9,362		466		-		9,828
Restructuring		-		2,807		48		-		2,855
Total operating expenses		128		214,136		16,331		-		230,595
Operating income (loss)		(128)		(21,170)		(5,138)		-		(26,436)
Other (expense) income, net		-		30,511		644		(32,304)		(1,149)
Interest income		-		604		28		-		632
Interest expense		(28,270)		(21,498)		9		-		(49,759)
Loss before benefit for income taxes		(28,398)		(11,553)		(4,457)		(32,304)		(76,712)
Equity in (losses) earnings of subsidiaries before taxes		(48,899)		(3,786)		-		52,685		-
Benefit for income taxes		(12,215)		(11,851)		(364)		12,215		(12,215)
Net loss from continuing operations	$	(65,082)	$	(3,488)	$	(4,093)	$	8,166	$	(64,497)
Loss from discontinued operations, net of an income tax benefit of $358		-		(893)		308		-		(585)
Net (loss) income	$	(65,082)	$	(4,381)	$	(3,785)	$	8,166	$	(65,082)

29

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Comprehensive loss:
Net (loss) income	$	(4,458)	$	16,253	$	(1,354)	$	(14,899)	$	(4,458)
Other comprehensive income (loss) - Foreign currency adjustment		-		2,303		54		1,153		3,510
Comprehensive (loss) income	$	(4,458)	$	18,556	$	(1,300)	$	(13,746)	$	(948)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Comprehensive loss:
Net (loss) income	$	(18,265)	$	2,048	$	508	$	(2,556)	$	(18,265)
Other comprehensive income (loss) - Foreign currency adjustment		-		1,170		575		-		1,745
Comprehensive (loss) income	$	(18,265)	$	3,218	$	1,083	$	(2,556)	$	(16,520)

30

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Comprehensive loss:
Net (loss) income	$	(24,113)	$	37,706	$	(2,186)	$	(35,520)	$	(24,113)
Other comprehensive income (loss) - Foreign currency adjustment		-		13		(4,128)		1,819		(2,296)
Comprehensive (loss) income	$	(24,113)	$	37,719	$	(6,314)	$	(33,701)	$	(26,409)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Comprehensive loss:
Net (loss) income	$	(65,082)	$	(4,381)	$	(3,785)	$	8,166	$	(65,082)
Other comprehensive income (loss) - Foreign currency adjustment		-		1,268		(1,108)		-		160
Comprehensive (loss) income	$	(65,082)	$	(3,113)	$	(4,893)	$	8,166	$	(64,922)

31

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Cash flows from operating activities:
Net cash (used in) provided by operating activities	$	(19,547)	$	113,305	$	(18)	$	(32,416)	$	61,324
Cash flows from investing activities:
Purchases of property and equipment		-		(7,641)		(258)		-		(7,899)
Decrease (increase) in restricted cash, net		-		-		34		-		34
Net cash used in investing activities		-		(7,641)		(224)		-		(7,865)
Cash flows from financing activities:
Proceeds from intercompany investment in subsidiaries		-		873		-		(873)		-
Proceeds from payments (on) intercompany loans		19,551		(51,215)		(1,871)		33,535		-
Payment received on note for sale of TCE		-		507		-		-		507
Principal payments on Senior Credit Facilities		-		(38,488)		-		-		(38,488)
Net cash provided by (used in) financing activities		19,551		(88,323)		(1,871)		32,662		(37,981)
Effect of exchange rate changes on cash and cash equivalents		-		390		(323)		(246)		(179)
Net (decrease) increase in cash and cash equivalents		4		17,731		(2,436)		-		15,299
Cash and cash equivalents, beginning of period		85		22,543		16,420		-		39,048
Cash and cash equivalents, end of period	$	89	$	40,274	$	13,984	$	-	$	54,347

32

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Cash flows from operating activities:
Net cash (used in) provided by operating activities	$	(18,571)	$	87,675	$	1,012	$	(32,304)	$	37,812
Cash flows from investing activities:
Purchases of property and equipment		-		(5,683)		-		-		(5,683)
Proceeds on disposition of assets		-		-		96		-		96
Acquisition of Mindleaders, net of cash received		-		1,306		678		(64,316)		(62,332)
Decrease (increase) in restricted cash, net		-		-		(33)		-		(33)
Net cash (used in) provided by investing activities		-		(4,377)		741		(64,316)		(67,952)
Cash flows from financing activities:
Proceeds from intercompany investment in subsidiaries		-		(64,316)		-		64,316		-
Proceeds from payments (on) intercompany loans		18,626		(54,470)		3,540		32,304		-
Payment received on note for sale TCE		-		840		-		-		840
Proceeds from issuance of Senior Credit Facilities, net of issuance costs and original issue discount		-		45,062		-		-		45,062
Principal payments on Senior Credit Facilities		-		(1,894)		-		-		(1,894)
Net cash provided by (used in) financing activities		18,626		(74,778)		3,540		96,620		44,008
Effect of exchange rate changes on cash and cash equivalents		-		106		(27)		-		79
Net (decrease) increase in cash and cash equivalents		55		8,626		5,266		-		13,947
Cash and cash equivalents, beginning of period		27		18,707		10,174		-		28,908
Cash and cash equivalents, end of period	$	82	$	27,333	$	15,440	$	-	$	42,855

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ITEM 2. — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

From time to time, including in this Quarterly Report on Form 10-Q, we may make forward-looking statements relating to, among other things, such matters as anticipated financial performance, business outlook and prospects, strategy, plans, regulatory, market and industry trends, expected levels of liquidity over the next 12 months and similar matters. The Private Securities Litigation Reform Act of 1995 and federal securities laws provides a safe harbor for forward-looking statements. We note that a variety of factors, including known and unknown risks and uncertainties as well as incorrect assumptions, could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. The factors that may affect the operations, performance, development and results of our business include those discussed under Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended January 31, 2013.

On May 26, 2010, SSI Investments III Limited (“SSI III”), a wholly owned subsidiary of SSI Investments II Limited (“SSI II”), completed its acquisition of Skillsoft PLC (the “Acquisition”), which was subsequently re-registered as a private limited company and whose corporate name changed from Skillsoft PLC (the “Predecessor”) to Skillsoft Limited (“Skillsoft” or the “Successor”). Unless otherwise indicated or the context otherwise requires, as used in this discussion, the terms “the Company”, “we”, “us”, “our” and other similar terms refers to (a) prior to the Acquisition, the Predecessor and its subsidiaries and (b) from and after the Acquisition, SSI II and its subsidiaries including Skillsoft.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and notes appearing elsewhere in this Quarterly Report on Form 10-Q.

OVERVIEW

We are a pioneer in the field of learning with a long history of innovation. We provide cloud based learning solutions for our customers worldwide, ranging from global enterprises, government, and education to mid-sized and small businesses. Our customer support teams draw on a wealth of in-house experience and a comprehensive learning e-library to develop off-the-shelf and custom learning programs tailored to cost-effectively meet customer needs. Our courses, books and videos have been developed by industry leading learning experts to ensure that they maximize business skills, performance, and talent development.

We generate revenue primarily from the licensing of our products, the provision of professional services and the provision of hosting and application services. The pricing for our courses varies based upon the content offering selected by a customer, the number of users within the customer's organization and the length of the license agreement (generally one, two or three years). Our agreements permit customers to exchange course titles, generally on the contract anniversary date. Hosting services can be sold separately for an additional fee, but are predominately bundled within our product offerings.

Cost of revenue includes the cost of materials (such as storage media), packaging, shipping and handling, CD duplication, custom content development, hosting services, royalties, certain infrastructure and occupancy expenses and share-based compensation. We generally recognize these costs as incurred. Also included in cost of revenue is amortization expense related to capitalized software development costs and intangible assets related to developed software and courseware acquired in business combinations.

We account for software development costs by capitalizing certain computer software development costs incurred after technological feasibility is established. No software development costs were incurred during the three and nine month periods ended October 31, 2013 that met the requirements for capitalization.

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Research and development expenses consist primarily of salaries and benefits, share-based compensation, certain infrastructure and occupancy expenses, fees to consultants and course content development fees. Selling and marketing expenses consist primarily of salaries and benefits, share-based compensation, commissions, advertising and promotion expenses, travel expenses and certain infrastructure and occupancy expenses. General and administrative expenses consist primarily of salaries and benefits, share-based compensation, consulting and service expenses, legal expenses, audit and tax preparation costs, regulatory compliance costs and certain infrastructure and occupancy expenses.

Amortization of intangible assets represents the amortization of customer value, trademarks and tradenames and backlog from the Acquisition, the acquisition of the Element K business (“Element K”), the acquisition of ThirdForce Group, plc (“MindLeaders”) and the acquisition of 50 Lessons Limited (“50 Lessons”).

Acquisition related expenses primarily consist of transaction fees, legal, accounting and other professional services related to our acquisitions.

Merger and integration related expenses primarily consist of salaries paid to MindLeaders and Element K employees for transitional work assignments and facility costs for leased space only expected to be utilized for a short term during the transition period. These costs are being incurred to support systems and process integration activities.

Restructuring expenses primarily consist of charges associated with the management approved and initiated plans to integrate Element K and MindLeaders into our operations and to eliminate redundant facilities and headcount.

We record tangible and intangible assets acquired and liabilities assumed in business combinations under the purchase method of accounting. Amounts paid for each acquisition are allocated to the assets acquired and liabilities assumed based on their fair values at the dates of acquisition. We then allocate the purchase price in excess of net tangible assets acquired to identifiable intangible assets based on detailed valuations that use information and assumptions provided by management. We allocate any excess purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed to goodwill.

Significant management judgments and assumptions are required in determining the fair value of acquired assets and liabilities, particularly acquired intangible assets. The valuation of purchased intangible assets is based upon (i) estimates of the future performance and cash flows from the acquired business (income approach) and (ii) estimates of the cost to purchase or replace an asset adjusted for obsolescence (cost approach). We have used the income approach to determine the estimated fair value of certain other identifiable intangible assets including tradenames, customer relationships, backlog, and deferred revenue. This approach determines fair value by estimating the after-tax cash flows attributable to an identified asset over its useful life and then discounting these after-tax cash flows back to a present value. Tradenames represent acquired product names that we intend to continue to utilize. Customer contracts and relationships represent established relationships with customers to whom we believe we may sell additional content and services. Backlog represents contracts that have been signed that represent a future projected revenue stream and deferred revenue represents billed customer contracts that will amortize into revenue at a future date. We have used the cost approach to determine the estimated fair value of our acquired technology, content, and publishing rights. Our technology represents patented and unpatented technology and know-how. Our content includes electronic media, text, video and executive summaries on various topics which is delivered online to our customers. Our publishing rights represent long term contractual relationships with certain publishers with the rights to digitize and offer textbook and referenceware material within our course library.

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BUSINESS OUTLOOK

In the three and nine months ended October 31, 2013, we generated revenue of $105.0 million and $307.1 million, respectively, as compared to $95.7 million and $278.8 million, respectively, in the three and nine months ended October 31, 2012.  We reported a net loss in the three and nine months ended October 31, 2013 of $4.5 million and $24.1 million, respectively, as compared to $18.3 million and  $65.1 million, respectively, in the three and nine months ended October 31, 2012.

The net loss in the three and nine months ended October 31, 2013 and October 31, 2012was primarily driven by the activities resulting from, and related to, the Acquisition, the acquisition of Element K and the acquisition of MindLeaders. The significant components related to the Acquisition, the acquisition of Element K and the acquisition of MindLeaders include the following (amounts in millions):

	Three Months Ended October 31,				Nine Months Ended October 31,
		2013		2012		2013		2012
Current period impact to reductions to deferred revenue in purchase accounting	$	0.9	$	2.6	$	6.1	$	11.5
Amortization of intangible assets related to content and technology		13.6		14.0		41.2		46.5
Current period impact to reductions to prepaid commissions in purchase accounting		-		(0.4)		(0.2)		(1.1)
Amortization of intangible assets		13.8		15.8		41.3		46.5
Acquisition related expenses		-		3.2		0.4		3.6
Merger and integration related expenses		1.3		1.1		4.3		9.8
Restructuring		0.2		2.4		2.9		2.9
Loss from discontinued operations		-		-		0.2		0.6
Interest expense from borrowings		16.9		16.5		48.6		49.8
Subtotal of acquisition and acquisition related activities	$	46.7	$	55.2	$	144.8	$	170.1

We continue to experience a cautious customer spending environment due to the current global economic climate. In addition, we continue to find ourselves in a challenging business environment due to (i) budgetary constraints on training and information technology (IT) spending by our current and potential customers, (ii) price competition and value-based competitive offerings from a broad array of competitors in the learning market and (iii) the relatively slow overall market adoption rate for elearning solutions. The challenging U.S. and global economic environment has placed further constraints on our customers' and potential customers' training budgets and spending. We have not yet seen signs of an improving customer environment, but we are also not experiencing continued deterioration. We continue to encounter sales cycles that include the impact of additional customer scrutiny on deals. This has given us less visibility into the overall timing of our sales cycles with new customers; and to a lesser extent, with our existing and renewing customers. Despite these challenges, our core business this fiscal year has performed generally in line with our expectations. In response to the cautious spending environment, we will continue to expand our sales resources to augment our customer base and increase our product and technology assets to enhance our value proposition.

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During the first nine months of and continuing through the fiscal year ending January 31, 2014, we will continue to focus on revenue generation primarily by:

· cross selling and up selling;

· evaluating new markets and expansion in existing markets;

· acquiring new customers;

· carefully managing our spending;

· continuing to execute on our new product and technologies and telesales distribution initiatives;

· continuing to evaluate merger and acquisition and possible partnership opportunities that could contribute to our long-term objectives;

· focusing more and improving on retaining existing customers; and

· making incremental investments in our infrastructure and products to support our customer base.

CRITICAL ACCOUNTING POLICIES

We believe that our critical accounting policies are those related to revenue recognition, amortization of intangible assets and impairment of goodwill, share-based compensation, deferral of commissions, restructuring charges, legal contingencies and income taxes. We believe these accounting policies are particularly important to an understanding of our financial position and results of operations and requires application of significant judgment by our management. In applying these policies, management uses its judgment in making certain assumptions and estimates. Our critical accounting policies are more fully described under the heading “Summary of Significant Accounting Policies” in Note 2 of the Notes to the Consolidated Financial Statements and under “Management’s Discussion and Analysis of Financial Conditions and Results of Operations – Critical Accounting Policies” in our Annual Report on Form 10-K as filed with the SEC on April 30, 2013. The policies set forth in our Form 10-K have not changed.

RESULTS OF OPERATIONS

THREE MONTHS ENDED OCTOBER 31, 2013 VERSUS THREE MONTHS ENDED OCTOBER 31, 2012

Revenue

	Three Months Ended October 31,					Dollar Increase/(Decrease)	Percent Change
		2013		2012
(In thousands, except percentages)
Revenue:
United States	$	78,835	$	72,994	$	5,841	8%
International		27,131		25,379		1,752	7%
Fair value adjustments to deferred revenue		(941)		(2,640)		1,699	(64%)
Total	$	105,025	$	95,733	$	9,292	10%

The increase in total revenue for the three months ended October 31, 2013 versus the three months ended October 31, 2012 was primarily the result of additional revenue we realized as a result of the acquisition of MindLeaders of approximately $5.2 million (including approximately $0.4 million of revenue generated from product offerings that will not be replaced). In addition, the increase in domestic and international revenue was primarily related to a higher level of subscription-based revenue from deferred revenue at the beginning of fiscal 2014 as compared to the same period in the fiscal 2013.

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Costs and Expenses

	Three Months Ended October 31,					Dollar Increase/(Decrease)	Percent Change
		2013		2012
(In thousands, except percentages)
Cost of revenue	$	9,696	$	9,001	$	695	8%
As a percentage of revenue		9%		9%
Cost of revenue – amortization of intangible assets		13,576		13,952		(376)	(3%)
As a percentage of revenue		13%		15%

The increase in cost of revenue for the three months ended October 31, 2013 versus the three months ended October 31, 2012 was primarily due to incremental royalties paid on increased revenue (which excludes the fair value adjustments to deferred revenue in purchase accounting related to the Element K acquisition and the MindLeaders acquisition). This increase was partially offset by transitional costs associated with Element K content development which was included in the three months ended October 31, 2012.

The decrease in cost of revenue - amortization of intangible assets for the three months ended October 31, 2013 versus the three months ended October 31, 2012 was primarily due to certain intangible assets related to the Acquisition becoming fully amortized, which was partially offset by the amortization of intangible assets acquired in the MindLeaders acquisition.

	Three Months Ended October 31,					Dollar Increase/(Decrease)	Percent Change
		2013		2012
(In thousands, except percentages)
Research and development	$	13,257	$	12,988	$	269	2%
As a percentage of revenue		13%		14%

The increase in research and development expense for the three months ended October 31, 2013 versus the three months ended October 31, 2012 was primarily due to increased compensation and benefits expense of $1.0 million (which includes $0.2 million of share-based compensation expense).This increase was partially offset by a reduction in outsourced software and content development costs of $0.8 million.

	Three Months Ended October 31,					Dollar Increase/(Decrease)	Percent Change
		2013		2012
(In thousands, except percentages)
Selling and marketing	$	32,804	$	33,442	$	(638)	(2%)
As a percentage of revenue		31%		35%

The decrease in selling and marketing expense for the three months ended October 31, 2013 versus the three months ended October 31, 2012 was primarily due to adecrease in marketinginitiatives of $0.7 million and a decrease in travel and office expense of $0.4 million. This decrease was partially offset by anincrease in commission fees of $0.7 million.

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	Three Months Ended October 31,					Dollar Increase/(Decrease)	Percent Change
		2013		2012
(In thousands, except percentages)
General and administrative	$	9,811	$	10,295	$	(484)	(5%)
As a percentage of revenue		9%		11%

The decrease in general and administrative expense for the three months ended October 31, 2013 versus the three months ended October 31, 2012 was primarily due to decrease in legal services expense of $1.8 million, which was partially offset byincreased compensation and benefits expense of $1.1 million (which includes $0.9 million of share-based compensation expense)

	Three Months Ended October 31,					Dollar Increase/(Decrease)	Percent Change
		2013		2012
(In thousands, except percentages)
Amortization of intangible assets	$	13,806	$	15,790	$	(1,984)	(13%)
As a percentage of revenue		13%		16%
Acquisition related expenses		35	$	3,177		(3,142)	(99%)
As a percentage of revenue		0%		3%
Merger and integration related expenses		1,269		1,110		159	14%
As a percentage of revenue		1%		1%
Restructuring		231		2,373		(2,142)	(90%)
As a percentage of revenue		0%		2%

The decrease in amortization of intangible assets for the three months ended October 31, 2013 versus the three months ended October 31, 2012was primarily due to the timing of the expected utilization of intangible assets acquired in the Acquisition as well as certain intangible assets acquired in the Acquisition becoming fully amortized. This decrease was partially offset by amortization of intangible assets acquired in the MindLeaders acquisitions.

In the three months ended October 31, 2012, we incurred approximately $3.2 million of acquisition related expenses primarily due to activity related to the acquisition of Mindleaders.

In the three months ended October 31, 2013,  we incurred approximately $1.3 million of merger and integration related expenses primarily as a result of efforts undertaken to integrate MindLeaders’ operations into ours. Included in these costs are salary and benefits for MindLeaders employees conducting transitional activities, consulting fees associated with the MindLeaders acquisition and transitional systems and process integration activities. We expect these integration efforts to be materially completed during the fiscal year ending January 31, 2014. In the three months ended October 31, 2012, we incurred approximately $1.1 million of merger and integration related expenses primarily as a result of efforts undertaken to integrate MindLeaders’ operations into ours.

In the three months ended October 31, 2012, we committed to a workforce reduction plan as a result of the acquisition of Mindleaders in an effort to eliminate redundancies and positions not required by the combined business and to reduce the overall cost structure of the acquired business to better align our operating expenses with existing economic conditions, business requirements and our operating model. As a result of this reduction in force, we incurred restructuring charges in the three months ended October 31, 2012 of $2.4 million which related primarily to one-time termination benefits.

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	Three Months Ended October 31,					Dollar Increase/(Decrease)	Percent Change
		2013		2012
(In thousands, except percentages)
Other (expense) income, net	$	(623)	$	(202)	$	421	*
As a percentage of revenue		(1%)		(0%)
Interest income		248	$	592		(344)	(58%)
As a percentage of revenue		0%		1%
Interest expense		(16,907)		(16,491)		416	(3%)
As a percentage of revenue		(16%)		(17%)

*           Not meaningful

The increase in other (expense), net for the three months ended October 31, 2013 versus the three months ended October 31, 2012 was primarily due to foreign currency fluctuations.

The decrease in interest income for the three months ended October 31, 2013 as compared to the three months ended October 31, 2012 was primarily due to the timing of interest income recognized in conjunction with the contractual payment terms related to the sale of TCE.

The increase in interest expense for the three months ended October 31, 2013 as compared to the three months ended October 31, 2012 was primarily due to the timing of the amortized interest expense related to the capitalized debt financing costs. This was partially offset by the re-pricing of our Senior Credit Facilities during the fiscal year ended January 31, 2013.

Provision for Income Taxes

	Three Months Ended October 31,					Dollar Increase/(Decrease)	Percent Change
		2013		2012
(In thousands, except percentages)
Benefit for income taxes	$	(2,284)	$	(4,279)	$	(1,995)	47%
As a percentage of revenue		(2%)		(4%)

For the three months ended October 31, 2013 and the three months ended October 31, 2012, our effective tax rates from continuing operations were 33.9% and 19.0%, respectively. The tax benefit recorded for the three months ended October 31, 2013 is attributable to the loss from operations and to a release of certain tax reserves. For the three months ended October 31, 2013 and the three months ended October 31, 2012, our effective tax rate differed from the Irish statutory rate of 12.5% due primarily to the tax benefit of losses reported in tax jurisdictions outside of Ireland and the impact of non-deductible interest expense incurred in connection with the Acquisition.

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NINE MONTHS ENDED OCTOBER 31, 2013 VERSUS NINE MONTHS ENDED OCTOBER 31, 2012

	Nine Months Ended October 31,					Dollar Increase/(Decrease)	Percent Change
		2013		2012
(In thousands, except percentages)
Revenue:
United States	$	232,938	$	216,175	$	16,763	8%
International		80,315		74,101		6,214	8%
Fair value adjustments to deferred revenue		(6,106)		(11,484)		5,378	47%
Total	$	307,147	$	278,792	$	28,355	10%

The increase in total revenue for the nine months ended October 31, 2013  versus the nine months ended October 31, 2012 was primarily the result of additional revenue we realized as a result of the MindLeadersacquisitionof approximately $15.9 million (including approximately $1.2 million of revenue generated from product offerings that will not be replaced). In addition, the increase in domestic and international revenue was primarily related to a higher level of subscription-based revenue from deferred revenue at the beginning of fiscal 2014as compared to the same period in the fiscal 2013.

Costs and Expenses

	Nine Months Ended October 31,					Dollar Increase/(Decrease)	Percent Change
		2013		2012
(In thousands, except percentages)
Cost of revenue	$	28,459	$	28,147	$	312	1%
As a percentage of revenue		9%		10%
Cost of revenue – amortization of intangible assets		41,169		46,486		(5,317)	(11%)
As a percentage of revenue		13%		17%

The increase in cost of revenue for the nine months ended October 31, 2013 versus the nine months ended October 31, 2012 was primarily due toincremental royalties paid on increased revenue (which excludes the fair value adjustments to deferred revenue in purchase accounting related to the Element K acquisition and the MindLeaders acquisition).  This increase was partially offset by transitional costs associated with Element K content development which were included in the nine months ended October 31, 2012.

The decrease in cost of revenue - amortization of intangible assets for the nine months ended October 31, 2013 compared to the nine months ended October 31, 2012 was primarily due to certain intangible assets related to the Acquisition becoming fully amortized, which was partially offset by the amortization of intangible assets acquired in the MindLeaders acquisition.

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	Nine Months Ended October 31,					Dollar Increase/(Decrease)	Percent Change
		2013		2012
(In thousands, except percentages)
Research and development	$	41,497	$	39,824	$	1,673	4%
As a percentage of revenue		14%		14%

The increase in research and development expense for the nine months ended October 31, 2013 versus the nine months ended October 31, 2012 was primarily due to increased compensation and benefits expense of $3.3 million (which includes $0.5 million of share-based compensation expense). This increase was partially offset by a reduction in outsourced software and content development costs of $1.8 million.

	Nine Months Ended October 31,					Dollar Increase/(Decrease)	Percent Change
		2013		2012
(In thousands, except percentages)
Selling and marketing	$	100,969	$	100,285	$	684	1%
As a percentage of revenue		33%		36%

The increase in selling and marketing expense for the nine months ended October 31, 2013  compared to the nine months ended October 31, 2012 was primarily due to increased compensation and benefits expense of $1.1 million (which includes $1.3 million of share-based compensation expense) and an increase in commission expense of $2.4 million. This increase was partially offset by a reduction in marketing initiatives of $1.5and a reduction of consulting fees of $0.7 million as a result of certain initiatives concluding in the prior period.

	Nine Months Ended October 31,					Dollar Increase/(Decrease)	Percent Change
		2013		2012
(In thousands, except percentages)
General and administrative	$	30,085	$	27,731	$	2,354	8%
As a percentage of revenue		10%		10%

The increase in general and administrative expense for the nine months ended October 31, 2013 as compared to the nine months ended October 31, 2012 was primarily due to increased compensation and benefits expense of $3.9 million (which includes $2.8 million of share-based compensation expense).This increase was partially offset by a decrease in legal and tax services of $0.6 million and a decrease in sales and use tax of $0.6 million.

	Nine Months Ended October 31,					Dollar Increase/(Decrease)	Percent Change
		2013		2012
(In thousands, except percentages)
Amortization of intangible assets	$	41,296	$	46,496	$	(5,200)	(11%)
As a percentage of revenue		13%		17%
Acquisition related expenses		434	$	3,576		(3,142)	(88%)
As a percentage of revenue		0%		1%
Merger and integration related expenses		4,289		9,828		(5,539)	(56%)
As a percentage of revenue		1%		4%
Restructuring		2,923		2,855		68	2%
As a percentage of revenue		1%		1%

The decrease in amortization of intangible assets for the nine months ended October 31, 2013 as compared to the nine months ended October 31, 2012 was primarily due to the timing of the expected utilization of intangible assets acquired in the Acquisition as well as certain intangible assets becoming fully amortized. This decrease was partially offset by the amortization of intangible assets acquired in the Element K and MindLeaders acquisitions.

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In the nine months ended October 31, 2013, we incurred approximately $0.4 million of acquisition related expenses primarily due to activity related to the acquisition of MindLeaders.  In the nine months ended October 31, 2012, we incurred approximately $3.6 million of acquisition related expenses primarily due to activity related to the acquisition of MindLeaders and Element K.

In the nine months ended October 31, 2013,  we incurred approximately $4.3 million of merger and integration related expenses as a result of efforts undertaken to integrate MindLeaders’ operations into ours. Included in these costs are salary and benefits for MindLeaders employees conducting transitional activities, consulting fees associated with the MindLeaders acquisition and transitional systems and process integration activities. We expect these integration efforts to be materially completed during the fiscal year ending January 31, 2014.  In the nine months ended October 31, 2012, we incurred approximately $9.8 million of merger and integration related expenses as a result of efforts undertaken to integrate Element K’s and MindLeaders operations into ours. The Element K integration efforts have now been completed.

In the nine months ended October 31, 2013, we initiated a plan to consolidate and reorganize the space utilized by MindLeaders in their  United Kingdom and Ireland operations. This consolidation of utilized space is a result of the workforce reduction plan we initiated in the fiscal year ended January 31, 2013. We accrued $1.3 million in accrued expense and other long term liabilities in our Condensed Consolidated Balance Sheets, representing the cost of vacated space less estimated future sub-lease assumptions. In addition, we committed to an organizational change and a workforce reduction plan as a result of the acquisition of Mindleaders and Element K in an effort to eliminate redundancies and positions not required by the combined business and to reduce the overall cost structure of the acquired business to better align our operating expenses with existing economic conditions, business requirements and our operating model. As a result of this reduction in force, we incurred restructuring charges in the nine months ended October 31, 2013 of $1.6 million, which related primarily to one-time termination benefits.

	Nine Months Ended October 31,					Dollar Increase/(Decrease)	Percent Change
		2013		2012
(In thousands, except percentages)
Other (expense) income, net	$	(758)	$	(1,149)	$	391	(34%)
As a percentage of revenue		(0%)		(0%)
Interest income		792	$	632		160	25%
As a percentage of revenue		0%		0%
Interest expense		(48,618)		(49,759)		1,141	(2%)
As a percentage of revenue		(16%)		(18%)

The decrease in other (expense), net for the nine months ended October 31, 2013 as compared to the nine months ended October 31, 2012 was primarily due to foreign currency fluctuations.

The increase in interest income for the nine months ended October 31, 2013as compared to the nine months ended October 31, 2012 was primarily due to interest income recognized in conjunction with the contractual payment terms related to the sale of TCE.

The decrease in interest expense for the nine months ended October 31, 2013 as compared to the nine months ended October 31, 2012 was primarily due to the repricing of our Senior Credit Facilities during the fiscal year ended January 31, 2013. This was partially offset by incremental interest expense on borrowings related to the MindLeaders acquisition.

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Provision for Income Taxes

	Nine Months Ended October 31,					Dollar Increase/(Decrease)	Percent Change
		2013		2012
(In thousands, except percentages)
Benefit for income taxes	$	(8,627)	$	(12,215)	$	3,588	(29%)
As a percentage of revenue		(3%)		(4%)

For the nine months ended October 31, 2013 and for the nine months ended October 31, 2012, our effective tax rates were 26.5% and 15.9%, respectively. The tax benefit we recorded for the nine months ended October 31, 2013 is primarily attributable to the loss from operations, adjusted for certain permanently non-deductible expenses which were incurred in connection with the Acquisition. For the nine months ended October 31, 2013, our effective tax rate differed from the Irish statutory rate of 12.5% due primarily to the tax benefit of losses reported in tax jurisdictions outside of Ireland and the impact of certain non-deductible expenses incurred in connection with the Acquisition. For the nine months ended October 31, 2012, our effective tax rate differed from the Irish statutory rate due primarily to certain permanently non-deductible expenses incurred in connection with the Acquisition.

LIQUIDITY AND CAPITAL RESOURCES

	Nine Months Ended October 31,
	2013			2012
Net cash provided by operating activities	$	61,324	$	37,812
Net cash used in investing activities		(7,865)		(67,952)
Net cash provided by financing activities		(37,981)		44,008
Effect of exchange rate changes on cash and cash equivalents		(179)		79
Net (decrease) increase in cash and cash equivalents	$	15,299	$	13,947

At October 31, 2013, our principal source of liquidity was our cash and cash equivalents, which totaled $54.3 million, as compared to $39.0 million at January 31, 2013. In addition, we have $40.0 million available to borrow under the revolving credit facility of our Senior Credit Facilities.

Net cash provided by operating activities of $61.3 million for the nine months ended October 31, 2013 was primarily due to cash collections on accounts receivable, net of billings, of $90.1 million during the period. The movement in accounts receivable is primarily a result of the seasonality of our operations, with the third and fourth quarter of our fiscal year historically generating the most activity, including order intake and billing, and the first quarter of our fiscal year historically generating the most cash collections and realization of accounts receivable. This compares to cash collections on accounts receivable, net of billings, of $98.4 million for the nine months ended October 31, 2012. The change period over period is primarily due to the timing of collections. Net cash provided by operating activities for the nine months ended October 31, 2013 also includes our net loss of $24.4 million, which reflects the impact of non-cash expenses for depreciation and amortization of $87.5 million, share-based compensation expense of $4.6 million, non-cash interest expense of $5.2 million and a non-cash tax benefit of $(15.9) million. In addition, we had decreases in deferred revenue of $74.2 million and accrued expense of $10.5 million. These decreases are the result of the seasonality of our operations and the decrease in deferred revenues was further impacted by the effects of purchase accounting as a result of the Element K acquisition and the MindLeaders acquisition.

Net cash used in investing activities was $7.9 million for the nine months ended October 31, 2013, which is primarily due to purchases of property and equipment.

Net cash used in financing activities was $38.0 million for the nine months ended October 31, 2013, which is primarily due to principal payments made on our debt including a voluntary pre-payment of $35.0 million made in September 2013.

44

We had a working capital deficit of approximately $60.8 million as of October 31, 2013 as compared to working capital deficit of approximately $91.4 million as of January 31, 2013. The decrease in working capital deficit was primarily due to our net loss of $24.4 million, which reflects the impact of non-cash expenses for depreciation and amortization of $87.5 million, share-based compensation of $4.6 million, non-cash interest expense of $5.2 million and a non-cash tax benefit of ($15.9) million. This decrease in the working capital deficit was partially offset by $38.5 million of principal payments made on our Senior Credit Facilities, including a voluntary pre-payment of $35.0 million made in September 2013.

We lease our facilities and certain equipment and furniture under operating lease agreements that expire at various dates through March 2018. In addition, we have Senior Credit Facilities which will be paid out over the next four years and Senior Notes due in five years. Further, we have service and licensing agreements with minimum commitments that expire at various dates through the fiscal year ended January 31, 2017. Future minimum commitments and lease payments, net of estimated sub-rentals, under these agreements and the debt repayments schedule are as follows at October 31, 2013 (in thousands):

	Payments Due by Period
Contractual Obligation		Total		Less Than 1 Year		1 – 3 Years		3 – 5 Years		More Than 5 Years
Debt obligations principal	$	727,013	$	4,650	$	9,300	$	713,063	$	-
Debt obligations interest (1)		244,942		55,513		110,310		79,119		-
Operating lease obligations		11,924		3,435		5,634		2,714		141
Total obligations	$	983,879	$	63,598	$	125,244	$	794,896	$	141

We do not have any contingent consideration related to the Acquisition, the Element K acquisition or the MindLeaders acquisition, nor do we have any off-balance sheet arrangements, as defined under SEC rules, such as relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of facilitating transactions that are not required to be reflected on our balance sheet.

Cash provided by operating activities is our main source of liquidity. We plan to rely on a combination of our available cash and cash equivalents and cash provided by operating activities, supplemented as necessary from time to time by borrowings under our Senior Credit Facilities and other financing transactions, to service our cash requirements. Management expects our cash flows from operations, combined with availability under our Senior Credit Facilities, to provide sufficient liquidity to fund our current obligations, projected working capital requirements, debt service requirements and capital spending for a period that includes the next 12 months.

As a result of the Acquisition, the Element K acquisition and the MindLeaders acquisition, we are highly leveraged. As of October 31, 2013, we have outstanding $727.0 million in aggregate indebtedness, with an additional $40.0 million of borrowing capacity available under our revolving credit facility. As of October 31, 2013, the revolving credit facility was undrawn. Interest expense for the ninemonths ended October 31, 2013 was $48.6 million.

ITEM 3. — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of October 31, 2013, we did not use derivative financial instruments for speculative or trading purposes.

INTEREST RATE RISK

Our general investing policy is to limit the risk of principal loss and to ensure the safety of invested funds by limiting market and credit risk. All highly liquid investments with original maturities of three months or less are considered to be cash equivalents. Interest income is sensitive to changes in the general level of U.S. interest rates. Based on the short-term nature of our investments, we have concluded that there is no significant market risk exposure.

45

FOREIGN CURRENCY RISK

Due to our multinational operations, our business is subject to fluctuations based upon changes in the exchange rates between the currencies in which we collect revenue or pay expenses and the U.S. dollar. Our expenses are not necessarily incurred in the currency in which revenue is generated, and, as a result, we are required from time to time to convert currencies to meet our obligations. These currency conversions are subject to exchange rate fluctuations, in particular changes to the value of the euro, Canadian dollar, Australian dollar, New Zealand dollar, Singapore dollar, and pound sterling relative to the U.S. dollar, which could adversely affect our business and our results of operations. During the three month periods ended October 31, 2013 and October 31, 2012, we incurred foreign currency exchange gains (losses) of $(0.7) million and $0.1 million, respectively. During the nine month periods ended October 31, 2013 and October 31, 2012, we incurred foreign currency exchange losses of $0.6 million and $0.7 million, respectively.

ITEM 4. — CONTROLS AND PROCEDURES

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of October 31, 2013. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of October 31, 2013, our management, including our chief executive officer and chief financial officer, concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended October 31, 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1. — LEGAL PROCEEDINGS

From time to time, we may be party to or may be threatened with litigation in the ordinary course of business, but we are not currently a party to any pending or ongoing legal proceedings responsive to this item number. See Note 7(b) to our Consolidated Financial Statements, which are included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2013 as filed with the SEC on April 30, 2013, for more information regarding certain legal proceedings to which we are a party.

ITEM 1A. – RISK FACTORS

Other than as set forth below, there have been no material changes in the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2013 as filed with the SEC on April 30, 2013, but these are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may adversely affect our business, financial condition or operating results.

46

OUR TAX RETURNS AND POSITIONS ARE SUBJECT TO REVIEW AND AUDIT BY FOREIGN, FEDERAL, STATE AND LOCAL TAXING AUTHORITIES, AND ADVERSE OUTCOMES RESULTING FROM EXAMINATION OF OUR INCOME OR OTHER TAX RETURNS, INCLUDING THE ONGOING AUDIT BY THE INTERNAL REVENUE SERVICE OF OUR U.S. FEDERAL INCOME TAX RETURNS FOR THE TAX YEARS ENDED JANUARY 31, 2010 AND 2011, COULD EXPOSE US TO GREATER THAN ANTICIPATED TAX LIABILITIES, WHICH COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION, RESULTS OF OPERATIONS AND CASH FLOWS.

We are subject to income taxes in Ireland, the United States and other foreign jurisdictions. Significant judgment is required in determining our global provision for income taxes and other tax liabilities. In the ordinary course of a global business, there are many intercompany transactions and calculations where the ultimate tax determination is uncertain. Our tax returns are routinely subject to audit and review by applicable federal, state and foreign taxing authorities, and such audits and reviews may result in additional taxes, interest and penalties, which could adversely impact our financial condition, results of operations or cash flows. 

As described in Note 7 of the notes to our audited consolidated financial statements as of and for the fiscal year ended January 31, 2013 and Note 10 of the notes to our condensed consolidated financial statements as of and for the three and nine months ended October 31, 2013, in August 2011 we were notified by the U.S. Internal Revenue Service (“IRS”) that our U.S. federal income tax return for the tax year ended January 31, 2010 had been selected for examination, and in December 2011 the IRS added our tax return for the tax year ended January 31, 2011 to its examination. 

During the third quarter of fiscal 2014, the IRS completed its field examination of the Company’s U.S. federal income tax returns for the tax years ended January 31, 2010 and 2011. On December 3, 2013, the IRS proposed certain adjustments relating to the value of intellectual property sold by the Company to an Irish affiliate during the Company’s tax year ended January 31, 2010. The proposed adjustments to its reported tax positions would increase the Company’s cumulative tax liability, including interest and penalties by approximately $92.4 million. The Company disagrees with the proposed adjustments. Based on the Company’s view of the merits of the position taken by the IRS in its proposed adjustments and on discussions with its tax advisors, the Company has concluded that recording a liability for these proposed adjustments is not currently required.  The Company intends to contest the proposed adjustments and is working with its outside tax advisors and the IRS to resolve this dispute in a timely and effective manner. 

Although the Company believes that the estimates of income taxes payable included in its financial statements are reasonable, no assurance can be given that the Company will prevail in the final resolution of the proposed adjustments and, in addition, the Company may determine to settle the matter for business or other reasons for an amount in excess of any tax liability that the Company believes is owed.  As a result, the actual income taxes payable by the Company may differ from what is reflected in the Company’s historical income tax provisions and accruals and such differences could be material. If the IRS prevails or the Company determines to settle the matter, a cash payment could be required, thereby negatively and adversely impacting the Company’s financial condition, results of operations and cash flows.  The Company will continue to reassess the adequacy of its existing tax reserves as the matter progresses and, through that process, the Company may determine the need to increase its existing reserves by a material amount.

While we are unable to predict the outcome of this or any other tax audit or its potential impact on our operating results or financial position, we may incur substantial costs regardless of the outcome and the diversion of management time and attention resulting from the IRS examination could potentially have an adverse effect on our financial condition, results of operations and cash flows. We will continue to reassess the adequacy of our existing tax reserves as the examination progresses and, through that process, we may determine the need to increase our existing reserves by a material amount. 

47

ITEM 2. — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.  

None.

ITEM 3. — DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. — Mine Safety Disclosures

Not applicable

ITEM 5. — OTHER INFORMATION

None.

ITEM 6. — EXHIBITS

See the Exhibit Index attached hereto.

48

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SSI INVESTMENTS II LIMITED
Date: December13, 2013	By:	/s/ Thomas J. McDonald
		Thomas J. McDonald
		Chief Financial Officer

49

EXHIBIT INDEX

31.1	Certification of SSI Investments II Limited’s Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15(d)-14(a) under the Securities Exchange Act of 1934.
31.2	Certification of SSI Investments II Limited’s Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15(d)-14(a) under the Securities Exchange Act of 1934.
32.1	Certification of SSI Investments II Limited’s Chief Executive Officer pursuant to Rule 13a-14(b)/Rule 15d-14(b) under the Securities Exchange Act of 1934, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of SSI Investments II Limited’s Chief Financial Officer pursuant to Rule 13a-14(b)/Rule 15d-14(b) under the Securities Exchange Act of 1934, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

50

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Charles E. Moran, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of SSI Investments II Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	SSI INVESTMENTS II LIMITED
Date: December 13, 2013	By:	/s/ Charles E. Moran
		Charles E. Moran
		President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Thomas J. McDonald, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of SSI Investments II Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure

controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	SSI INVESTMENTS II LIMITED
Date: December 13, 2013	By:	/s/ Thomas J. McDonald
		Thomas J. McDonald
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of SSI Investments II Limited (the "Company") for the period ended October 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Charles E. Moran, Chief Executive Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, that, to his knowledge:

     (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	SSI INVESTMENTS II LIMITED
Date: December 13, 2013	By:	/s/ Charles E. Moran
		Charles E. Moran
		President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of SSI Investments II Limited (the "Company") for the period ended October 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Thomas J. McDonald, Chief Financial Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, that, to his knowledge:

     (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Une 13
	SSI INVESTMENTS II LIMITED
Date:  December 13, 2013	By:	/s/ Thomas J. McDonald
		Thomas J. McDonald
		Chief Financial Officer

XML

Income Taxes

9 Months Ended

Oct. 31, 2013

Income Taxes [Abstract]

Income Taxes

10. INCOME TAXES

The Company operates as a holding company with operating subsidiaries in several countries. Each subsidiary is taxed based on the laws of the jurisdictions in which it operates.

The Company has significant tax loss carryforwards mainly in Ireland and the United States. Some of the U.S. tax losses are subject to limitations based upon the change in control provisions of Section 382 of the United States Internal Revenue Code.

For the three and nine months ended October 31, 2013, the Company recorded an income tax benefit of $2.3 million and $8.6 million, respectively. The Company's effective tax rate for the three and nine months ended October 31, 2013 was 33.9% and 26.5%, respectively. The tax benefit for the three months ended October 31, 2013 consists of a cash tax provision of $3.0 million and a non-cash tax benefit of $5.3 million. For the nine months ended October 31, 2013, the tax benefit consists of a cash tax provision of $9.3 million and a non-cash tax benefit of $17.9 million.

The Company's gross unrecognized tax benefits, including interest and penalties, totaled $8.7 million at October 31, 2013, all of which, if recognized, would result in a reduction of the Company's effective tax rate. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of October 31, 2013, the Company had $1.1 million of accrued interest and penalties related to uncertain tax positions.

In the normal course of business, the Company and its subsidiaries are subject to examination by taxing authorities including those in its major jurisdictions of Ireland, the United States, the United Kingdom, Germany, Australia and Canada. With few exceptions, the Company is no longer subject to any national level income tax examinations for years before fiscal 2009.

During the fiscal year ended January 31, 2012, the Company was notified by the U.S. Internal Revenue Service (“IRS”) that its U.S. federal income tax return for the tax years ended January 31, 2010 and 2011 had been selected for examination.

During the three months ended October 31, 2013, the IRS completed its field examination of the Company’s U.S. federal income tax returns for the tax years ended January 31, 2010 and 2011.  On December 3, 2013, the IRS proposed certain adjustments relating to the value of intellectual property sold by the Company to an Irish affiliate during the Company’s tax year ended January 31, 2010. The proposed adjustments to its reported tax position would increase the Company’s cumulative tax liability, including interest and penalties, by approximately $92.4 million. The Company disagrees with the proposed adjustments. Based on the Company’s view of the merits of the position taken by the IRS in its proposed adjustments and on discussions with its tax advisors, the Company has concluded that recording a liability for these proposed adjustments is not currently required. The Company intends to contest the proposed adjustments and is working with its outside tax advisors and the IRS to resolve this dispute in a timely and effective manner. 

Although the Company believes that the estimates of income taxes payable included in its financial statements are reasonable, no assurance can be given that the Company will prevail in the final resolution of the proposed adjustments and, in addition, the Company may determine to settle the matter for business or other reasons for an amount in excess of any tax liability that the Company believes is owed.  As a result, the actual income taxes payable by the Company may differ from what is reflected in the Company’s historical income tax provisions and accruals and such differences could be material. If the IRS prevails or the Company determines to settle the matter, a cash payment could be required, thereby negatively and adversely impacting the Company’s financial condition, results of operations and cash flows.  The Company will continue to reassess the adequacy of its existing tax reserves as the matter progresses and, through that process, the Company may determine the need to increase its existing reserves by a material amount.

XML

Goodwill And Intangible Assets (Schedule Of Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2013	Jan. 31, 2013
Intangible Assets [Line Items]
Gross Carrying Amount	$ 772,906	$ 773,977
Accumulated Amortization; Finite-Lived	411,364	329,229
Net Carrying Amount	361,542	444,748
Net Carrying Amount; Finite-Lived	231,642
Internally Developed Software/Courseware [Member]
Intangible Assets [Line Items]
Gross Carrying Amount; Finite-Lived	268,732	268,678
Accumulated Amortization; Finite-Lived	212,213	170,933
Net Carrying Amount; Finite-Lived	56,519	97,745
Customer Relationships [Member]
Intangible Assets [Line Items]
Gross Carrying Amount; Finite-Lived	295,984	297,109
Accumulated Amortization; Finite-Lived	136,637	102,839
Net Carrying Amount; Finite-Lived	159,347	194,270
Non-Compete Agreement [Member]
Intangible Assets [Line Items]
Gross Carrying Amount; Finite-Lived	4,070	4,070
Accumulated Amortization; Finite-Lived	1,662	1,052
Net Carrying Amount; Finite-Lived	2,408	3,018
Trademark And Tradename [Member]
Intangible Assets [Line Items]
Gross Carrying Amount; Finite-Lived	15,220	15,220
Accumulated Amortization; Finite-Lived	6,804	5,449
Net Carrying Amount; Finite-Lived	8,416	9,771
Backlog [Member]
Intangible Assets [Line Items]
Gross Carrying Amount; Finite-Lived	59,000	59,000
Accumulated Amortization; Finite-Lived	54,048	48,956
Net Carrying Amount; Finite-Lived	4,952	10,044
Skillsoft Trademark [Member]
Intangible Assets [Line Items]
Carrying Amount; Indefinite-Lived	$ 129,900	$ 129,900

XML

Condensed Consolidated Statements Of Operations (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012
Condensed Consolidated Statements Of Operations [Abstract]
Revenues	$ 105,025	$ 95,733	$ 307,147	$ 278,792
Cost of revenues	9,696	9,001	28,459	28,147
Cost of revenues - amortization of intangible assets	13,576	13,952	41,169	46,486
Gross profit	81,753	72,780	237,519	204,159
Operating expenses:
Research and development	13,257	12,988	41,497	39,824
Selling and marketing	32,804	33,442	100,969	100,285
General and administrative	9,811	10,295	30,085	27,731
Amortization of intangible assets	13,806	15,790	41,296	46,496
Acquisition related expenses	35	3,177	434	3,576
Merger and integration related expenses	1,269	1,110	4,289	9,828
Restructuring	231	2,373	2,923	2,855
Total operating expenses	71,213	79,175	221,493	230,595
Operating income (loss)	10,540	(6,395)	16,026	(26,436)
Other (expense) income, net	(623)	(202)	(758)	(1,149)
Interest income	248	592	792	632
Interest expense	(16,907)	(16,491)	(48,618)	(49,759)
Loss before benefit for income taxes	(6,742)	(22,496)	(32,558)	(76,712)
Benefit for income taxes	(2,284)	(4,279)	(8,627)	(12,215)
Net loss from continuing operations	(4,458)	(18,217)	(23,931)	(64,497)
Loss from discontinued operations, net of an income tax benefit of $0 and $32 for the three months ended October 31, 2013 and 2012, respectively, and $0 and $390 for the nine months ended October 31, 2013 and 2012, respectively		(48)	(182)	(585)
Net loss	$ (4,458)	$ (18,265)	$ (24,113)	$ (65,082)

XML

Cash, Cash Equivalents, Restricted Cash And Investments

9 Months Ended

Oct. 31, 2013

Cash, Cash Equivalents, Restricted Cash And Investments [Abstract]

Cash, Cash Equivalents, Restricted Cash And Investments

3. CASH, CASH EQUIVALENTS, RESTRICTED CASH AND INVESTMENTS

The Company considers all highly liquid investments with original maturities of 90 days or less at the time of purchase to be cash equivalents. At October 31, 2013 and January 31, 2013, the Company did not have any cash equivalents or available for sale investments.

At October 31, 2013 and January 31, 2013, the Company had approximately $0.1 million of restricted cash held in certificates-of-deposits with a commercial bank pursuant to terms of certain facilities lease agreements.

XML

Accumulated Other Comprehensive Income

9 Months Ended

Oct. 31, 2013

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

17. ACCUMULATED OTHER COMPREHENSIVE INCOME

Comprehensive income (loss) refers to revenues, expenses, gains and losses that under U.S. GAAP are included in other comprehensive income, but excluded from net income as these amounts are recorded directly as an adjustment to shareholders’ equity, net of tax. The Company’s accumulated other comprehensive income is composed primarily of foreign currency translation adjustments. The following is a summary of the components of accumulated other comprehensive income, net of tax, at October 31, 2013 (in thousands):

	Accumulated Other Comprehensive Income
Balance at January 31, 2013	$	12,833
Other comprehensive income (loss) from Foreign Currency Translation		(2,296)
Balance at October 31, 2013	$	10,537

XML

Guarantors (Schedule Of Condensed Consolidated Statements Of Operations) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012
Revenues	$ 105,025	$ 95,733	$ 307,147	$ 278,792
Cost of revenues	9,696	9,001	28,459	28,147
Cost of revenues - amortization of intangible assets	13,576	13,952	41,169	46,486
Gross profit	81,753	72,780	237,519	204,159
Research and development	13,257	12,988	41,497	39,824
Selling and marketing	32,804	33,442	100,969	100,285
General and administrative	9,811	10,295	30,085	27,731
Amortization of intangible assets	13,806	15,790	41,296	46,496
Acquisition related expenses	35	3,177	434	3,576
Merger and integration related expenses	1,269	1,110	4,289	9,828
Restructuring	231	2,373	2,923	2,855
Total operating expenses	71,213	79,175	221,493	230,595
Operating income (loss)	10,540	(6,395)	16,026	(26,436)
Other (expense) income, net	(623)	(202)	(758)	(1,149)
Interest income	248	592	792	632
Interest expense	(16,907)	(16,491)	(48,618)	(49,759)
Loss before benefit for income taxes	(6,742)	(22,496)	(32,558)	(76,712)
Benefit for income taxes	(2,284)	(4,279)	(8,627)	(12,215)
Net loss from continuing operations	(4,458)	(18,217)	(23,931)	(64,497)
Income (loss) from discontinued operations, net of income tax benefit		(48)	(182)	(585)
Net loss	(4,458)	(18,265)	(24,113)	(65,082)
Issuer [Member]
General and administrative	47	51	174	128
Total operating expenses	47	51	174	128
Operating income (loss)	(47)	(51)	(174)	(128)
Other (expense) income, net			(2)
Interest income			1
Interest expense	(9,815)	(9,494)	(29,228)	(28,270)
Loss before benefit for income taxes	(9,862)	(9,545)	(29,403)	(28,398)
Equity in (losses) earnings of subsidiaries before taxes	3,120	(12,999)	(3,337)	(48,899)
Benefit for income taxes	(2,284)	(4,279)	(8,627)	(12,215)
Net loss from continuing operations	(4,458)	(18,265)	(24,113)	(65,082)
Net loss	(4,458)	(18,265)	(24,113)	(65,082)
Guarantor [Member]
Revenues	100,322	91,625	294,528	267,541
Cost of revenues	9,660	8,955	28,363	28,089
Cost of revenues - amortization of intangible assets	13,576	13,952	41,169	46,486
Gross profit	77,086	68,718	224,996	192,966
Research and development	13,257	12,988	41,497	39,464
Selling and marketing	29,131	29,705	89,891	89,442
General and administrative	9,378	9,892	28,783	26,117
Amortization of intangible assets	12,914	14,675	38,559	43,393
Acquisition related expenses	35	3,171	434	3,551
Merger and integration related expenses	1,250	653	4,270	9,362
Restructuring	231	2,296	2,923	2,807
Total operating expenses	66,196	73,380	206,357	214,136
Operating income (loss)	10,890	(4,662)	18,639	(21,170)
Other (expense) income, net	11,531	8,537	32,082	30,511
Interest income	246	587	786	604
Interest expense	(7,092)	(6,997)	(19,398)	(21,498)
Loss before benefit for income taxes	15,575	(2,535)	32,109	(11,553)
Equity in (losses) earnings of subsidiaries before taxes	(1,354)	508	(2,186)	(3,786)
Benefit for income taxes	(2,032)	(4,126)	(7,965)	(11,851)
Net loss from continuing operations	16,253	2,099	37,888	(3,488)
Income (loss) from discontinued operations, net of income tax benefit		(51)	(182)	(893)
Net loss	16,253	2,048	37,706	(4,381)
Non-Guarantor [Member]
Revenues	10,903	11,402	33,341	32,920
Cost of revenues	6,236	7,340	20,818	21,727
Gross profit	4,667	4,062	12,523	11,193
Research and development				360
Selling and marketing	3,673	3,737	11,078	10,843
General and administrative	386	352	1,128	1,486
Amortization of intangible assets	892	1,115	2,737	3,103
Acquisition related expenses		6		25
Merger and integration related expenses	19	457	19	466
Restructuring		77		48
Total operating expenses	4,970	5,744	14,962	16,331
Operating income (loss)	(303)	(1,682)	(2,439)	(5,138)
Other (expense) income, net	(1,305)	2,029	(410)	644
Interest income	2	5	5	28
Interest expense			(4)	9
Loss before benefit for income taxes	(1,606)	352	(2,848)	(4,457)
Benefit for income taxes	(252)	(153)	(662)	(364)
Net loss from continuing operations	(1,354)	505	(2,186)	(4,093)
Income (loss) from discontinued operations, net of income tax benefit		3		308
Net loss	(1,354)	508	(2,186)	(3,785)
Eliminations [Member]
Revenues	(6,200)	(7,294)	(20,722)	(21,669)
Cost of revenues	(6,200)	(7,294)	(20,722)	(21,669)
Other (expense) income, net	(10,849)	(10,768)	(32,428)	(32,304)
Interest expense			12
Loss before benefit for income taxes	(10,849)	(10,768)	(32,416)	(32,304)
Equity in (losses) earnings of subsidiaries before taxes	(1,766)	12,491	5,523	52,685
Benefit for income taxes	2,284	4,279	8,627	12,215
Net loss from continuing operations	(14,899)	(2,556)	(35,520)	8,166
Net loss	$ (14,899)	$ (2,556)	$ (35,520)	$ 8,166

XML

Income Taxes (Details) (USD $)	3 Months Ended		9 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012
Income Taxes [Abstract]
Income tax benefit	$ (2,284,000)	$ (4,279,000)	$ (8,627,000)	$ (12,215,000)
Effective tax rate	33.90%		26.50%
Cash tax provision	3,000,000		9,300,000
Non-cash tax benefit	5,300,000		17,900,000
Unrecognized tax benefits including interest and penalties	8,700,000		8,700,000
Accrued interest and penalties related to uncertain tax positions	1,100,000		1,100,000
Proposed increase to tax liability	$ 92,400,000

XML

Commitments And Contingencies

9 Months Ended

Oct. 31, 2013

Commitments And Contingencies [Abstract]

Commitments And Contingencies

11. COMMITMENTS AND CONTINGENCIES

From time to time, the Company is a party to or may be threatened with litigation in the ordinary course of its business. The Company regularly analyzes current information, including, as applicable, the Company's defense and insurance coverage and, as necessary, provides accruals for probable and estimable liabilities for the eventual disposition of these matters. The Company is presently not a party to any material legal proceedings.

The Company's software license arrangements and hosting services are typically warranted to perform in a manner consistent with general industry standards that are reasonably applicable and substantially in accordance with the Company's product documentation under normal use and circumstances. The Company's arrangements also include certain provisions for indemnifying customers against liabilities if its products or services infringe a third party's intellectual property rights.

The Company has entered into service level agreements with some of its hosted application customers warranting certain levels of uptime reliability and such agreements permit those customers to receive credits against monthly hosting fees or terminate their agreements in the event that the Company fails to meet those levels for an agreed upon period of time.

To date, the Company has not incurred any material costs as a result of such indemnifications or commitments and has not accrued any liabilities related to such obligations in the accompanying consolidated financial statements. It is not possible to determine the maximum potential amount under these indemnification agreements due to the Company’s limited and infrequent history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement.

XML

Acquisitions (Schedule Of Consolidated Results Of Operations) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Oct. 31, 2012	Oct. 31, 2012
Acquisitions [Abstract]
Revenue	$ 101,841	$ 298,982
Net loss	$ (18,093)	$ (66,903)

XML

Disclosures About Segments Of An Enterprise (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013 segment	Oct. 31, 2012
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of segments			1
Purchase accounting adjustments	$ (941)	$ (2,640)	$ (6,106)	$ (11,484)
Revenues	105,025	95,733	307,147	278,792
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	78,835	72,994	232,938	216,175
United Kingdom [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	10,062	8,884	28,845	26,355
Canada [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	5,612	5,674	16,495	16,158
Europe, Excluding United Kingdom [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	4,820	4,514	14,542	12,942
Australia/New Zealand [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	3,757	4,020	11,580	11,954
Other [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 2,880	$ 2,287	$ 8,853	$ 6,692

XML

Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Oct. 31, 2013

Accumulated Other Comprehensive Income [Abstract]

Schedule Of Accumulated Other Comprehensive Income

	Accumulated Other Comprehensive Income
Balance at January 31, 2013	$	12,833
Other comprehensive income (loss) from Foreign Currency Translation		(2,296)
Balance at October 31, 2013	$	10,537

XML

Guarantors

9 Months Ended

Oct. 31, 2013

Guarantors [Abstract]

Guarantors

20. GUARANTORS

On May 26, 2010, in connection with the Acquisition, the Company completed an offering of $310.0 million aggregate principal amount of 11.125% Senior Notes due 2018 as described in Note 16. The Senior Notes are unsecured senior obligations of the Company and SSI Co-Issuer LLC, a wholly owned subsidiary of the Company, and are guaranteed on a senior unsecured basis by SSI III and the restricted subsidiaries of Skillsoft (other than immaterial subsidiaries and certain other excluded subsidiaries) that guarantee the Senior Credit Facilities described in Note 16. Each of the Guarantors is 100 percent owned, directly or indirectly, by the Company. The Guarantors also unconditionally guarantee the Senior Credit Facilities. All other subsidiaries of the Company, either direct or indirect, do not guarantee the Senior Notes (“Non-Guarantors”). The guarantees of the Senior Notes are joint and several and will terminate upon the following customary circumstances: (i) the sale, exchange, disposition or transfer (by merger or otherwise) of all of the capital stock of a Guarantor, or all or substantially all of its assets; (ii) the release or discharge of the guarantee of the other indebtedness which resulted in the creation of the guarantee by such Guarantor under the Indenture; (iii) the proper designation of a Guarantor as an “Unrestricted Subsidiary” and (iv) the legal defeasance, covenant defeasance, or satisfaction and discharge of the Indenture, in each such case specified in clauses (i) through (iv) above in accordance with the requirements therefore set forth in the Indenture.

The following condensed consolidated financial statements are presented for the information of the holders of the Senior Notes and present the Condensed Consolidated Balance Sheets as of October 31, 2013 and January 31, 2013 The Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended October 31, 2013 and October 31, 2012  and the Condensed Consolidated Statements of Cash Flows for the nine months ended October 31, 2013 and October 31, 2012, of the issuer of the Senior Notes, the Guarantors, the Non-Guarantors, the elimination entries necessary to consolidate and combine the issuer with the Guarantor and Non-Guarantor subsidiaries on a consolidated and combined basis.

Investments in subsidiaries are accounted for using the equity method for purposes of the consolidated and combined presentation. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. Separate financial statements and other disclosures with respect to the subsidiary guarantors have not been provided as management believes the following information is sufficient, as the guarantor subsidiaries are 100 percent owned by the parent and all guarantees are full and unconditional, subject to the customary automatic release provisions described above.

CONDENSED CONSOLIDATED BALANCE SHEETS

OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	89	$	40,274	$	13,984	$	-	$	54,347
Restricted cash		-		6		96		-		102
Accounts receivable, net		-		85,950		11,418		-		97,368
Intercompany receivables		-		429,297		-		(429,297)		-
Deferred tax assets		-		9,647		487		-		10,134
Prepaid expenses and other current assets		1,475		26,819		3,849		535		32,678
Total current assets		1,564		591,993		29,834		(428,762)		194,629
Property and equipment, net		-		13,355		240		-		13,595
Goodwill		-		610,920		24,970		-		635,890
Intangible assets, net		-		348,942		12,600		-		361,542
Investment in subsidiaries		962,523		1,370,696		4,166		(2,337,385)		-
Investment in, and advances to, nonconsolidated affiliates		-		535		-		(535)		-
Deferred tax assets		-		(268)		268		-		-
Other assets		5,111		12,320		615		-		18,046
Total assets	$	969,198	$	2,948,493	$	72,693	$	(2,766,682)	$	1,223,702
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long term debt	$	-	$	3,433	$	-	$	-	$	3,433
Accounts payable		-		7,735		55		-		7,790
Accrued compensation		-		12,197		1,060		-		13,257
Accrued expenses		14,429		21,512		1,859		(400)		37,400
Intercompany payable		422,589		832,341		47,260		(1,302,190)		-
Deferred tax liabilities		-		7,524		65		-		7,589
Deferred revenue		-		166,437		20,261		-		186,698
Total current liabilities		437,018		1,051,179		70,560		(1,302,590)		256,167
Long term debt		308,632		409,328		-		-		717,960
Deferred tax liabilities		-		11,294		3,379		-		14,673
Other long term liabilities		-		10,144		1,210		-		11,354
Total long-term liabilities		308,632		430,766		4,589		-		743,987
Total stockholders' equity		223,548		1,466,548		(2,456)		(1,464,092)		223,548
Total liabilities and stockholders' equity	$	969,198	$	2,948,493	$	72,693	$	(2,766,682)	$	1,223,702

CONDENSED CONSOLIDATED BALANCE SHEETS

JANUARY 31, 2013

(IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	85	$	22,543	$	16,420	$	-	$	39,048
Restricted cash		-		6		130		-		136
Accounts receivable, net		-		164,053		24,629		-		188,682
Intercompany receivables		-		410,573		-		(410,573)		-
Deferred tax assets		-		967		393		-		1,360
Prepaid expenses and other current assets		1,454		29,063		3,799		425		34,741
Total current assets		1,539		627,205		45,371		(410,148)		263,967
Property and equipment, net		-		13,652		2		-		13,654
Goodwill		-		611,192		26,332		-		637,524
Intangible assets, net		-		428,637		16,111		-		444,748
Investment in subsidiaries		954,971		1,364,497		4,167		(2,323,635)		-
Investment in, and advances to, nonconsolidated affiliates		-		425		-		(425)		-
Deferred tax assets		-		10,008		82		-		10,090
Other assets		6,192		15,543		710		-		22,445
Total assets	$	962,702	$	3,071,159	$	92,775	$	(2,734,208)	$	1,392,428
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long term debt	$	-	$	3,311	$	-	$	-	$	3,311
Accounts payable		-		11,557		93		-		11,650
Accrued compensation		-		21,310		2,146		-		23,456
Accrued expenses		5,798		29,444		4,468		(400)		39,310
Intercompany payable		403,038		864,535		48,197		(1,315,770)		-
Deferred tax liabilities		-		15,125		28		-		15,153
Deferred revenue		-		233,084		29,368		-		262,452
Total current liabilities		408,836		1,178,366		84,300		(1,316,170)		355,332
Long term debt		308,466		446,568		-		-		755,034
Deferred tax liabilities		-		22,506		4,140		-		26,646
Other long term liabilities		-		8,593		1,423		-		10,016
Total long-term liabilities		308,466		477,667		5,563		-		791,696
Total stockholders' equity		245,400		1,415,126		2,912		(1,418,038)		245,400
Total liabilities and stockholders' equity	$	962,702	$	3,071,159	$	92,775	$	(2,734,208)	$	1,392,428

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Revenues	$	-	$	100,322	$	10,903	$	(6,200)	$	105,025
Cost of revenues		-		9,660		6,236		(6,200)		9,696
Cost of revenues - amortization of intangible assets		-		13,576		-		-		13,576
Gross profit		-		77,086		4,667		-		81,753
Operating expenses:
Research and development		-		13,257		-		-		13,257
Selling and marketing		-		29,131		3,673		-		32,804
General and administrative		47		9,378		386		-		9,811
Amortization of intangible assets		-		12,914		892		-		13,806
Acquisition related expenses		-		35		-		-		35
Merger and integration related expenses		-		1,250		19		-		1,269
Restructuring		-		231		-		-		231
Total operating expenses		47		66,196		4,970		-		71,213
Operating (loss) income		(47)		10,890		(303)		-		10,540
Other (expense) income, net		-		11,531		(1,305)		(10,849)		(623)
Interest income		-		246		2		-		248
Interest expense		(9,815)		(7,092)		-		-		(16,907)
(Loss) income before benefit for income taxes		(9,862)		15,575		(1,606)		(10,849)		(6,742)
Equity in (losses) earnings of subsidiaries before taxes		3,120		(1,354)		-		(1,766)		-
(Benefit) provision for income taxes		(2,284)		(2,032)		(252)		2,284		(2,284)
Net loss from continuing operations	$	(4,458)	$	16,253	$	(1,354)	$	(14,899)	$	(4,458)
Income from discontinued operations		-		-		-		-		-
Net (loss) income	$	(4,458)	$	16,253	$	(1,354)	$	(14,899)	$	(4,458)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Revenues	$	-	$	91,625	$	11,402	$	(7,294)	$	95,733
Cost of revenues		-		8,955		7,340		(7,294)		9,001
Cost of revenues - amortization of intangible assets		-		13,952		-		-		13,952
Gross profit		-		68,718		4,062		-		72,780
Operating expenses:
Research and development		-		12,988		-		-		12,988
Selling and marketing		-		29,705		3,737		-		33,442
General and administrative		51		9,892		352		-		10,295
Amortization of intangible assets		-		14,675		1,115		-		15,790
Acquisition related expenses		-		3,171		6		-		3,177
Merger and integration related expenses		-		653		457		-		1,110
Restructuring		-		2,296		77		-		2,373
Total operating expenses		51		73,380		5,744		-		79,175
Operating (loss) income		(51)		(4,662)		(1,682)		-		(6,395)
Other income (expense), net		-		8,537		2,029		(10,768)		(202)
Interest income		-		587		5		-		592
Interest expense		(9,494)		(6,997)		-		-		(16,491)
Loss before benefit for income taxes		(9,545)		(2,535)		352		(10,768)		(22,496)
Equity in (losses) earnings of subsidiaries before taxes		(12,999)		508		-		12,491		-
(Benefit) provision for income taxes		(4,279)		(4,126)		(153)		4,279		(4,279)
Net loss from continuing operations	$	(18,265)	$	2,099	$	505	$	(2,556)	$	(18,217)
Loss from discontinued operations, net of an income tax benefit of $58		-		(51)		3		-		(48)
Net (loss) income	$	(18,265)	$	2,048	$	508	$	(2,556)	$	(18,265)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Revenues	$	-	$	294,528	$	33,341	$	(20,722)	$	307,147
Cost of revenues		-		28,363		20,818		(20,722)		28,459
Cost of revenues - amortization of intangible assets		-		41,169		-		-		41,169
Gross profit		-		224,996		12,523		-		237,519
Operating expenses:
Research and development		-		41,497		-		-		41,497
Selling and marketing		-		89,891		11,078		-		100,969
General and administrative		174		28,783		1,128		-		30,085
Amortization of intangible assets		-		38,559		2,737		-		41,296
Acquisition related expenses		-		434		-		-		434
Merger and integration related expenses		-		4,270		19		-		4,289
Restructuring		-		2,923		-		-		2,923
Total operating expenses		174		206,357		14,962		-		221,493
Operating income (loss)		(174)		18,639		(2,439)		-		16,026
Other (expense) income, net		(2)		32,082		(410)		(32,428)		(758)
Interest income		1		786		5		-		792
Interest expense		(29,228)		(19,398)		(4)		12		(48,618)
Loss before benefit for income taxes		(29,403)		32,109		(2,848)		(32,416)		(32,558)
Equity in (losses) earnings of subsidiaries before taxes		(3,337)		(2,186)		-		5,523		-
(Benefit) provision of income taxes		(8,627)		(7,965)		(662)		8,627		(8,627)
Net loss from continuing operations	$	(24,113)	$	37,888	$	(2,186)	$	(35,520)	$	(23,931)
Loss from discontinued operations, net of an income tax benefit of $32		-		(182)		-		-		(182)
Net (loss) income	$	(24,113)	$	37,706	$	(2,186)	$	(35,520)	$	(24,113)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Revenues	$	-	$	267,541	$	32,920	$	(21,669)	$	278,792
Cost of revenues		-		28,089		21,727		(21,669)		28,147
Cost of revenues - amortization of intangible assets		-		46,486		-		-		46,486
Gross profit		-		192,966		11,193		-		204,159
Operating expenses:
Research and development		-		39,464		360		-		39,824
Selling and marketing		-		89,442		10,843		-		100,285
General and administrative		128		26,117		1,486		-		27,731
Amortization of intangible assets		-		43,393		3,103		-		46,496
Acquisition related expenses		-		3,551		25		-		3,576
Merger and integration related expenses		-		9,362		466		-		9,828
Restructuring		-		2,807		48		-		2,855
Total operating expenses		128		214,136		16,331		-		230,595
Operating income (loss)		(128)		(21,170)		(5,138)		-		(26,436)
Other (expense) income, net		-		30,511		644		(32,304)		(1,149)
Interest income		-		604		28		-		632
Interest expense		(28,270)		(21,498)		9		-		(49,759)
Loss before benefit for income taxes		(28,398)		(11,553)		(4,457)		(32,304)		(76,712)
Equity in (losses) earnings of subsidiaries before taxes		(48,899)		(3,786)		-		52,685		-
Benefit for income taxes		(12,215)		(11,851)		(364)		12,215		(12,215)
Net loss from continuing operations	$	(65,082)	$	(3,488)	$	(4,093)	$	8,166	$	(64,497)
Loss from discontinued operations, net of an income tax benefit of $358		-		(893)		308		-		(585)
Net (loss) income	$	(65,082)	$	(4,381)	$	(3,785)	$	8,166	$	(65,082)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Comprehensive loss:
Net (loss) income	$	(4,458)	$	16,253	$	(1,354)	$	(14,899)	$	(4,458)
Other comprehensive income (loss) - Foreign currency adjustment		-		2,303		54		1,153		3,510
Comprehensive (loss) income	$	(4,458)	$	18,556	$	(1,300)	$	(13,746)	$	(948)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Comprehensive loss:
Net (loss) income	$	(18,265)	$	2,048	$	508	$	(2,556)	$	(18,265)
Other comprehensive income (loss) - Foreign currency adjustment		-		1,170		575		-		1,745
Comprehensive (loss) income	$	(18,265)	$	3,218	$	1,083	$	(2,556)	$	(16,520)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Comprehensive loss:
Net (loss) income	$	(24,113)	$	37,706	$	(2,186)	$	(35,520)	$	(24,113)
Other comprehensive income (loss) - Foreign currency adjustment		-		13		(4,128)		1,819		(2,296)
Comprehensive (loss) income	$	(24,113)	$	37,719	$	(6,314)	$	(33,701)	$	(26,409)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Comprehensive loss:
Net (loss) income	$	(65,082)	$	(4,381)	$	(3,785)	$	8,166	$	(65,082)
Other comprehensive income (loss) - Foreign currency adjustment		-		1,268		(1,108)		-		160
Comprehensive (loss) income	$	(65,082)	$	(3,113)	$	(4,893)	$	8,166	$	(64,922)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Cash flows from operating activities:
Net cash (used in) provided by operating activities	$	(19,547)	$	113,305	$	(18)	$	(32,416)	$	61,324
Cash flows from investing activities:
Purchases of property and equipment		-		(7,641)		(258)		-		(7,899)
Decrease (increase) in restricted cash, net		-		-		34		-		34
Net cash used in investing activities		-		(7,641)		(224)		-		(7,865)
Cash flows from financing activities:
Proceeds from intercompany investment in subsidiaries		-		873		-		(873)		-
Proceeds from payments (on) intercompany loans		19,551		(51,215)		(1,871)		33,535		-
Payment received on note for sale of TCE		-		507		-		-		507
Principal payments on Senior Credit Facilities		-		(38,488)		-		-		(38,488)
Net cash provided by (used in) financing activities		19,551		(88,323)		(1,871)		32,662		(37,981)
Effect of exchange rate changes on cash and cash equivalents		-		390		(323)		(246)		(179)
Net (decrease) increase in cash and cash equivalents		4		17,731		(2,436)		-		15,299
Cash and cash equivalents, beginning of period		85		22,543		16,420		-		39,048
Cash and cash equivalents, end of period	$	89	$	40,274	$	13,984	$	-	$	54,347

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Cash flows from operating activities:
Net cash (used in) provided by operating activities	$	(18,571)	$	87,675	$	1,012	$	(32,304)	$	37,812
Cash flows from investing activities:
Purchases of property and equipment		-		(5,683)		-		-		(5,683)
Proceeds on disposition of assets		-		-		96		-		96
Acquisition of Mindleaders, net of cash received		-		1,306		678		(64,316)		(62,332)
Decrease (increase) in restricted cash, net		-		-		(33)		-		(33)
Net cash (used in) provided by investing activities		-		(4,377)		741		(64,316)		(67,952)
Cash flows from financing activities:
Proceeds from intercompany investment in subsidiaries		-		(64,316)		-		64,316		-
Proceeds from payments (on) intercompany loans		18,626		(54,470)		3,540		32,304		-
Payment received on note for sale TCE		-		840		-		-		840
Proceeds from issuance of Senior Credit Facilities, net of issuance costs and original issue discount		-		45,062		-		-		45,062
Principal payments on Senior Credit Facilities		-		(1,894)		-		-		(1,894)
Net cash provided by (used in) financing activities		18,626		(74,778)		3,540		96,620		44,008
Effect of exchange rate changes on cash and cash equivalents		-		106		(27)		-		79
Net (decrease) increase in cash and cash equivalents		55		8,626		5,266		-		13,947
Cash and cash equivalents, beginning of period		27		18,707		10,174		-		28,908
Cash and cash equivalents, end of period	$	82	$	27,333	$	15,440	$	-	$	42,855

XML

Fair Value Measurements

9 Months Ended

Oct. 31, 2013

Fair Value Measurements [Abstract]

Fair Value Measurements

19. FAIR VALUE MEASUREMENTS

FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) establishes a fair value hierarchy that prioritizes the inputs used to measure fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

The three levels of the fair value hierarchy established by ASC 820 in order of priority are as follows:

· Level 1:Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

· Level 2:Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

· Level 3:Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available.

The Company currently invests excess cash balances primarily in cash deposits held at major banks. The carrying amounts of cash deposits, trade receivables, trade payables and accrued liabilities, as reported on the consolidated balance sheet as of October 31, 2013 approximate their fair value because of the short maturity of those instruments. The carrying value of borrowings outstanding on the Senior Credit Facilities bear interest at a variable rate and are considered to approximate fair value.

Financial Instruments Not Recorded at Fair Value

The carrying values and fair values of financial instruments not recorded at fair value in the consolidated balance sheets as of October 31, 2013 were as follows (in thousands):

	October 31, 2013
		Current Value		Fair Value
Senior Notes	$	310,000	$	340,420

The fair value of the Senior Notes is determined by its trading price on October 31, 2013, representing a Level 1 valuation.

XML

Acquisitions (Schedule Of Purchase Price Allocation ) (Details) (ThirdForce Group PLC (“Mindleaders”) [Member], USD $) In Thousands, unless otherwise specified	Oct. 31, 2013
ThirdForce Group PLC (“Mindleaders”) [Member]
Current assets	$ 7,927
Property and equipment	513
Goodwill	40,925
Amortizable intangible assets	27,703
Long term assets	575
Current liabilities	(7,857)
Deferred revenue	(1,484)
Long term assets liabilities	(3,986)
Total	$ 64,316

XML

Accrued Expenses (Tables)

9 Months Ended

Oct. 31, 2013

Accrued Expenses [Abstract]

Schedule Of Accrued Expenses

		October 31, 2013		January 31, 2013
Professional fees	$	3,605	$	3,602
Sales tax payable/VAT payable		2,772		7,350
Accrued royalties		1,906		2,568
Accrued tax		2,399		4,815
Interest payable		16,165		7,772
Other accrued liabilities		10,553		13,203
Total accrued expenses	$	37,400	$	39,310

XML

Guarantors (Tables)

9 Months Ended

Oct. 31, 2013

Guarantors [Abstract]

Schedule Of Condensed Consolidated Balance Sheets

CONDENSED CONSOLIDATED BALANCE SHEETS

OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	89	$	40,274	$	13,984	$	-	$	54,347
Restricted cash		-		6		96		-		102
Accounts receivable, net		-		85,950		11,418		-		97,368
Intercompany receivables		-		429,297		-		(429,297)		-
Deferred tax assets		-		9,647		487		-		10,134
Prepaid expenses and other current assets		1,475		26,819		3,849		535		32,678
Total current assets		1,564		591,993		29,834		(428,762)		194,629
Property and equipment, net		-		13,355		240		-		13,595
Goodwill		-		610,920		24,970		-		635,890
Intangible assets, net		-		348,942		12,600		-		361,542
Investment in subsidiaries		962,523		1,370,696		4,166		(2,337,385)		-
Investment in, and advances to, nonconsolidated affiliates		-		535		-		(535)		-
Deferred tax assets		-		(268)		268		-		-
Other assets		5,111		12,320		615		-		18,046
Total assets	$	969,198	$	2,948,493	$	72,693	$	(2,766,682)	$	1,223,702
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long term debt	$	-	$	3,433	$	-	$	-	$	3,433
Accounts payable		-		7,735		55		-		7,790
Accrued compensation		-		12,197		1,060		-		13,257
Accrued expenses		14,429		21,512		1,859		(400)		37,400
Intercompany payable		422,589		832,341		47,260		(1,302,190)		-
Deferred tax liabilities		-		7,524		65		-		7,589
Deferred revenue		-		166,437		20,261		-		186,698
Total current liabilities		437,018		1,051,179		70,560		(1,302,590)		256,167
Long term debt		308,632		409,328		-		-		717,960
Deferred tax liabilities		-		11,294		3,379		-		14,673
Other long term liabilities		-		10,144		1,210		-		11,354
Total long-term liabilities		308,632		430,766		4,589		-		743,987
Total stockholders' equity		223,548		1,466,548		(2,456)		(1,464,092)		223,548
Total liabilities and stockholders' equity	$	969,198	$	2,948,493	$	72,693	$	(2,766,682)	$	1,223,702

CONDENSED CONSOLIDATED BALANCE SHEETS

JANUARY 31, 2013

(IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	85	$	22,543	$	16,420	$	-	$	39,048
Restricted cash		-		6		130		-		136
Accounts receivable, net		-		164,053		24,629		-		188,682
Intercompany receivables		-		410,573		-		(410,573)		-
Deferred tax assets		-		967		393		-		1,360
Prepaid expenses and other current assets		1,454		29,063		3,799		425		34,741
Total current assets		1,539		627,205		45,371		(410,148)		263,967
Property and equipment, net		-		13,652		2		-		13,654
Goodwill		-		611,192		26,332		-		637,524
Intangible assets, net		-		428,637		16,111		-		444,748
Investment in subsidiaries		954,971		1,364,497		4,167		(2,323,635)		-
Investment in, and advances to, nonconsolidated affiliates		-		425		-		(425)		-
Deferred tax assets		-		10,008		82		-		10,090
Other assets		6,192		15,543		710		-		22,445
Total assets	$	962,702	$	3,071,159	$	92,775	$	(2,734,208)	$	1,392,428
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long term debt	$	-	$	3,311	$	-	$	-	$	3,311
Accounts payable		-		11,557		93		-		11,650
Accrued compensation		-		21,310		2,146		-		23,456
Accrued expenses		5,798		29,444		4,468		(400)		39,310
Intercompany payable		403,038		864,535		48,197		(1,315,770)		-
Deferred tax liabilities		-		15,125		28		-		15,153
Deferred revenue		-		233,084		29,368		-		262,452
Total current liabilities		408,836		1,178,366		84,300		(1,316,170)		355,332
Long term debt		308,466		446,568		-		-		755,034
Deferred tax liabilities		-		22,506		4,140		-		26,646
Other long term liabilities		-		8,593		1,423		-		10,016
Total long-term liabilities		308,466		477,667		5,563		-		791,696
Total stockholders' equity		245,400		1,415,126		2,912		(1,418,038)		245,400
Total liabilities and stockholders' equity	$	962,702	$	3,071,159	$	92,775	$	(2,734,208)	$	1,392,428

Schedule Of Condensed Consolidated Statements Of Operations

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Revenues	$	-	$	100,322	$	10,903	$	(6,200)	$	105,025
Cost of revenues		-		9,660		6,236		(6,200)		9,696
Cost of revenues - amortization of intangible assets		-		13,576		-		-		13,576
Gross profit		-		77,086		4,667		-		81,753
Operating expenses:
Research and development		-		13,257		-		-		13,257
Selling and marketing		-		29,131		3,673		-		32,804
General and administrative		47		9,378		386		-		9,811
Amortization of intangible assets		-		12,914		892		-		13,806
Acquisition related expenses		-		35		-		-		35
Merger and integration related expenses		-		1,250		19		-		1,269
Restructuring		-		231		-		-		231
Total operating expenses		47		66,196		4,970		-		71,213
Operating (loss) income		(47)		10,890		(303)		-		10,540
Other (expense) income, net		-		11,531		(1,305)		(10,849)		(623)
Interest income		-		246		2		-		248
Interest expense		(9,815)		(7,092)		-		-		(16,907)
(Loss) income before benefit for income taxes		(9,862)		15,575		(1,606)		(10,849)		(6,742)
Equity in (losses) earnings of subsidiaries before taxes		3,120		(1,354)		-		(1,766)		-
(Benefit) provision for income taxes		(2,284)		(2,032)		(252)		2,284		(2,284)
Net loss from continuing operations	$	(4,458)	$	16,253	$	(1,354)	$	(14,899)	$	(4,458)
Income from discontinued operations		-		-		-		-		-
Net (loss) income	$	(4,458)	$	16,253	$	(1,354)	$	(14,899)	$	(4,458)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Revenues	$	-	$	91,625	$	11,402	$	(7,294)	$	95,733
Cost of revenues		-		8,955		7,340		(7,294)		9,001
Cost of revenues - amortization of intangible assets		-		13,952		-		-		13,952
Gross profit		-		68,718		4,062		-		72,780
Operating expenses:
Research and development		-		12,988		-		-		12,988
Selling and marketing		-		29,705		3,737		-		33,442
General and administrative		51		9,892		352		-		10,295
Amortization of intangible assets		-		14,675		1,115		-		15,790
Acquisition related expenses		-		3,171		6		-		3,177
Merger and integration related expenses		-		653		457		-		1,110
Restructuring		-		2,296		77		-		2,373
Total operating expenses		51		73,380		5,744		-		79,175
Operating (loss) income		(51)		(4,662)		(1,682)		-		(6,395)
Other income (expense), net		-		8,537		2,029		(10,768)		(202)
Interest income		-		587		5		-		592
Interest expense		(9,494)		(6,997)		-		-		(16,491)
Loss before benefit for income taxes		(9,545)		(2,535)		352		(10,768)		(22,496)
Equity in (losses) earnings of subsidiaries before taxes		(12,999)		508		-		12,491		-
(Benefit) provision for income taxes		(4,279)		(4,126)		(153)		4,279		(4,279)
Net loss from continuing operations	$	(18,265)	$	2,099	$	505	$	(2,556)	$	(18,217)
Loss from discontinued operations, net of an income tax benefit of $58		-		(51)		3		-		(48)
Net (loss) income	$	(18,265)	$	2,048	$	508	$	(2,556)	$	(18,265)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Revenues	$	-	$	294,528	$	33,341	$	(20,722)	$	307,147
Cost of revenues		-		28,363		20,818		(20,722)		28,459
Cost of revenues - amortization of intangible assets		-		41,169		-		-		41,169
Gross profit		-		224,996		12,523		-		237,519
Operating expenses:
Research and development		-		41,497		-		-		41,497
Selling and marketing		-		89,891		11,078		-		100,969
General and administrative		174		28,783		1,128		-		30,085
Amortization of intangible assets		-		38,559		2,737		-		41,296
Acquisition related expenses		-		434		-		-		434
Merger and integration related expenses		-		4,270		19		-		4,289
Restructuring		-		2,923		-		-		2,923
Total operating expenses		174		206,357		14,962		-		221,493
Operating income (loss)		(174)		18,639		(2,439)		-		16,026
Other (expense) income, net		(2)		32,082		(410)		(32,428)		(758)
Interest income		1		786		5		-		792
Interest expense		(29,228)		(19,398)		(4)		12		(48,618)
Loss before benefit for income taxes		(29,403)		32,109		(2,848)		(32,416)		(32,558)
Equity in (losses) earnings of subsidiaries before taxes		(3,337)		(2,186)		-		5,523		-
(Benefit) provision of income taxes		(8,627)		(7,965)		(662)		8,627		(8,627)
Net loss from continuing operations	$	(24,113)	$	37,888	$	(2,186)	$	(35,520)	$	(23,931)
Loss from discontinued operations, net of an income tax benefit of $32		-		(182)		-		-		(182)
Net (loss) income	$	(24,113)	$	37,706	$	(2,186)	$	(35,520)	$	(24,113)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Revenues	$	-	$	267,541	$	32,920	$	(21,669)	$	278,792
Cost of revenues		-		28,089		21,727		(21,669)		28,147
Cost of revenues - amortization of intangible assets		-		46,486		-		-		46,486
Gross profit		-		192,966		11,193		-		204,159
Operating expenses:
Research and development		-		39,464		360		-		39,824
Selling and marketing		-		89,442		10,843		-		100,285
General and administrative		128		26,117		1,486		-		27,731
Amortization of intangible assets		-		43,393		3,103		-		46,496
Acquisition related expenses		-		3,551		25		-		3,576
Merger and integration related expenses		-		9,362		466		-		9,828
Restructuring		-		2,807		48		-		2,855
Total operating expenses		128		214,136		16,331		-		230,595
Operating income (loss)		(128)		(21,170)		(5,138)		-		(26,436)
Other (expense) income, net		-		30,511		644		(32,304)		(1,149)
Interest income		-		604		28		-		632
Interest expense		(28,270)		(21,498)		9		-		(49,759)
Loss before benefit for income taxes		(28,398)		(11,553)		(4,457)		(32,304)		(76,712)
Equity in (losses) earnings of subsidiaries before taxes		(48,899)		(3,786)		-		52,685		-
Benefit for income taxes		(12,215)		(11,851)		(364)		12,215		(12,215)
Net loss from continuing operations	$	(65,082)	$	(3,488)	$	(4,093)	$	8,166	$	(64,497)
Loss from discontinued operations, net of an income tax benefit of $358		-		(893)		308		-		(585)
Net (loss) income	$	(65,082)	$	(4,381)	$	(3,785)	$	8,166	$	(65,082)

Schedule Of Condensed Consolidated Statements Of Comprehensive Loss

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Comprehensive loss:
Net (loss) income	$	(4,458)	$	16,253	$	(1,354)	$	(14,899)	$	(4,458)
Other comprehensive income (loss) - Foreign currency adjustment		-		2,303		54		1,153		3,510
Comprehensive (loss) income	$	(4,458)	$	18,556	$	(1,300)	$	(13,746)	$	(948)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Comprehensive loss:
Net (loss) income	$	(18,265)	$	2,048	$	508	$	(2,556)	$	(18,265)
Other comprehensive income (loss) - Foreign currency adjustment		-		1,170		575		-		1,745
Comprehensive (loss) income	$	(18,265)	$	3,218	$	1,083	$	(2,556)	$	(16,520)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Comprehensive loss:
Net (loss) income	$	(24,113)	$	37,706	$	(2,186)	$	(35,520)	$	(24,113)
Other comprehensive income (loss) - Foreign currency adjustment		-		13		(4,128)		1,819		(2,296)
Comprehensive (loss) income	$	(24,113)	$	37,719	$	(6,314)	$	(33,701)	$	(26,409)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Comprehensive loss:
Net (loss) income	$	(65,082)	$	(4,381)	$	(3,785)	$	8,166	$	(65,082)
Other comprehensive income (loss) - Foreign currency adjustment		-		1,268		(1,108)		-		160
Comprehensive (loss) income	$	(65,082)	$	(3,113)	$	(4,893)	$	8,166	$	(64,922)

Schedule Of Condensed Consolidated Statements Of Cash Flows

20. GUARANTORS

On May 26, 2010, in connection with the Acquisition, the Company completed an offering of $310.0 million aggregate principal amount of 11.125% Senior Notes due 2018 as described in Note 16. The Senior Notes are unsecured senior obligations of the Company and SSI Co-Issuer LLC, a wholly owned subsidiary of the Company, and are guaranteed on a senior unsecured basis by SSI III and the restricted subsidiaries of Skillsoft (other than immaterial subsidiaries and certain other excluded subsidiaries) that guarantee the Senior Credit Facilities described in Note 16. Each of the Guarantors is 100 percent owned, directly or indirectly, by the Company. The Guarantors also unconditionally guarantee the Senior Credit Facilities. All other subsidiaries of the Company, either direct or indirect, do not guarantee the Senior Notes (“Non-Guarantors”). The guarantees of the Senior Notes are joint and several and will terminate upon the following customary circumstances: (i) the sale, exchange, disposition or transfer (by merger or otherwise) of all of the capital stock of a Guarantor, or all or substantially all of its assets; (ii) the release or discharge of the guarantee of the other indebtedness which resulted in the creation of the guarantee by such Guarantor under the Indenture; (iii) the proper designation of a Guarantor as an “Unrestricted Subsidiary” and (iv) the legal defeasance, covenant defeasance, or satisfaction and discharge of the Indenture, in each such case specified in clauses (i) through (iv) above in accordance with the requirements therefore set forth in the Indenture.

The following condensed consolidated financial statements are presented for the information of the holders of the Senior Notes and present the Condensed Consolidated Balance Sheets as of October 31, 2013 and January 31, 2013 The Condensed Consolidated Statements of Operations and the Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended October 31, 2013 and October 31, 2012  and the Condensed Consolidated Statements of Cash Flows for the nine months ended October 31, 2013 and October 31, 2012, of the issuer of the Senior Notes, the Guarantors, the Non-Guarantors, the elimination entries necessary to consolidate and combine the issuer with the Guarantor and Non-Guarantor subsidiaries on a consolidated and combined basis.

Investments in subsidiaries are accounted for using the equity method for purposes of the consolidated and combined presentation. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions. Separate financial statements and other disclosures with respect to the subsidiary guarantors have not been provided as management believes the following information is sufficient, as the guarantor subsidiaries are 100 percent owned by the parent and all guarantees are full and unconditional, subject to the customary automatic release provisions described above.

CONDENSED CONSOLIDATED BALANCE SHEETS

OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	89	$	40,274	$	13,984	$	-	$	54,347
Restricted cash		-		6		96		-		102
Accounts receivable, net		-		85,950		11,418		-		97,368
Intercompany receivables		-		429,297		-		(429,297)		-
Deferred tax assets		-		9,647		487		-		10,134
Prepaid expenses and other current assets		1,475		26,819		3,849		535		32,678
Total current assets		1,564		591,993		29,834		(428,762)		194,629
Property and equipment, net		-		13,355		240		-		13,595
Goodwill		-		610,920		24,970		-		635,890
Intangible assets, net		-		348,942		12,600		-		361,542
Investment in subsidiaries		962,523		1,370,696		4,166		(2,337,385)		-
Investment in, and advances to, nonconsolidated affiliates		-		535		-		(535)		-
Deferred tax assets		-		(268)		268		-		-
Other assets		5,111		12,320		615		-		18,046
Total assets	$	969,198	$	2,948,493	$	72,693	$	(2,766,682)	$	1,223,702
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long term debt	$	-	$	3,433	$	-	$	-	$	3,433
Accounts payable		-		7,735		55		-		7,790
Accrued compensation		-		12,197		1,060		-		13,257
Accrued expenses		14,429		21,512		1,859		(400)		37,400
Intercompany payable		422,589		832,341		47,260		(1,302,190)		-
Deferred tax liabilities		-		7,524		65		-		7,589
Deferred revenue		-		166,437		20,261		-		186,698
Total current liabilities		437,018		1,051,179		70,560		(1,302,590)		256,167
Long term debt		308,632		409,328		-		-		717,960
Deferred tax liabilities		-		11,294		3,379		-		14,673
Other long term liabilities		-		10,144		1,210		-		11,354
Total long-term liabilities		308,632		430,766		4,589		-		743,987
Total stockholders' equity		223,548		1,466,548		(2,456)		(1,464,092)		223,548
Total liabilities and stockholders' equity	$	969,198	$	2,948,493	$	72,693	$	(2,766,682)	$	1,223,702

CONDENSED CONSOLIDATED BALANCE SHEETS

JANUARY 31, 2013

(IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	85	$	22,543	$	16,420	$	-	$	39,048
Restricted cash		-		6		130		-		136
Accounts receivable, net		-		164,053		24,629		-		188,682
Intercompany receivables		-		410,573		-		(410,573)		-
Deferred tax assets		-		967		393		-		1,360
Prepaid expenses and other current assets		1,454		29,063		3,799		425		34,741
Total current assets		1,539		627,205		45,371		(410,148)		263,967
Property and equipment, net		-		13,652		2		-		13,654
Goodwill		-		611,192		26,332		-		637,524
Intangible assets, net		-		428,637		16,111		-		444,748
Investment in subsidiaries		954,971		1,364,497		4,167		(2,323,635)		-
Investment in, and advances to, nonconsolidated affiliates		-		425		-		(425)		-
Deferred tax assets		-		10,008		82		-		10,090
Other assets		6,192		15,543		710		-		22,445
Total assets	$	962,702	$	3,071,159	$	92,775	$	(2,734,208)	$	1,392,428
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long term debt	$	-	$	3,311	$	-	$	-	$	3,311
Accounts payable		-		11,557		93		-		11,650
Accrued compensation		-		21,310		2,146		-		23,456
Accrued expenses		5,798		29,444		4,468		(400)		39,310
Intercompany payable		403,038		864,535		48,197		(1,315,770)		-
Deferred tax liabilities		-		15,125		28		-		15,153
Deferred revenue		-		233,084		29,368		-		262,452
Total current liabilities		408,836		1,178,366		84,300		(1,316,170)		355,332
Long term debt		308,466		446,568		-		-		755,034
Deferred tax liabilities		-		22,506		4,140		-		26,646
Other long term liabilities		-		8,593		1,423		-		10,016
Total long-term liabilities		308,466		477,667		5,563		-		791,696
Total stockholders' equity		245,400		1,415,126		2,912		(1,418,038)		245,400
Total liabilities and stockholders' equity	$	962,702	$	3,071,159	$	92,775	$	(2,734,208)	$	1,392,428

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Revenues	$	-	$	100,322	$	10,903	$	(6,200)	$	105,025
Cost of revenues		-		9,660		6,236		(6,200)		9,696
Cost of revenues - amortization of intangible assets		-		13,576		-		-		13,576
Gross profit		-		77,086		4,667		-		81,753
Operating expenses:
Research and development		-		13,257		-		-		13,257
Selling and marketing		-		29,131		3,673		-		32,804
General and administrative		47		9,378		386		-		9,811
Amortization of intangible assets		-		12,914		892		-		13,806
Acquisition related expenses		-		35		-		-		35
Merger and integration related expenses		-		1,250		19		-		1,269
Restructuring		-		231		-		-		231
Total operating expenses		47		66,196		4,970		-		71,213
Operating (loss) income		(47)		10,890		(303)		-		10,540
Other (expense) income, net		-		11,531		(1,305)		(10,849)		(623)
Interest income		-		246		2		-		248
Interest expense		(9,815)		(7,092)		-		-		(16,907)
(Loss) income before benefit for income taxes		(9,862)		15,575		(1,606)		(10,849)		(6,742)
Equity in (losses) earnings of subsidiaries before taxes		3,120		(1,354)		-		(1,766)		-
(Benefit) provision for income taxes		(2,284)		(2,032)		(252)		2,284		(2,284)
Net loss from continuing operations	$	(4,458)	$	16,253	$	(1,354)	$	(14,899)	$	(4,458)
Income from discontinued operations		-		-		-		-		-
Net (loss) income	$	(4,458)	$	16,253	$	(1,354)	$	(14,899)	$	(4,458)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Revenues	$	-	$	91,625	$	11,402	$	(7,294)	$	95,733
Cost of revenues		-		8,955		7,340		(7,294)		9,001
Cost of revenues - amortization of intangible assets		-		13,952		-		-		13,952
Gross profit		-		68,718		4,062		-		72,780
Operating expenses:
Research and development		-		12,988		-		-		12,988
Selling and marketing		-		29,705		3,737		-		33,442
General and administrative		51		9,892		352		-		10,295
Amortization of intangible assets		-		14,675		1,115		-		15,790
Acquisition related expenses		-		3,171		6		-		3,177
Merger and integration related expenses		-		653		457		-		1,110
Restructuring		-		2,296		77		-		2,373
Total operating expenses		51		73,380		5,744		-		79,175
Operating (loss) income		(51)		(4,662)		(1,682)		-		(6,395)
Other income (expense), net		-		8,537		2,029		(10,768)		(202)
Interest income		-		587		5		-		592
Interest expense		(9,494)		(6,997)		-		-		(16,491)
Loss before benefit for income taxes		(9,545)		(2,535)		352		(10,768)		(22,496)
Equity in (losses) earnings of subsidiaries before taxes		(12,999)		508		-		12,491		-
(Benefit) provision for income taxes		(4,279)		(4,126)		(153)		4,279		(4,279)
Net loss from continuing operations	$	(18,265)	$	2,099	$	505	$	(2,556)	$	(18,217)
Loss from discontinued operations, net of an income tax benefit of $58		-		(51)		3		-		(48)
Net (loss) income	$	(18,265)	$	2,048	$	508	$	(2,556)	$	(18,265)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Revenues	$	-	$	294,528	$	33,341	$	(20,722)	$	307,147
Cost of revenues		-		28,363		20,818		(20,722)		28,459
Cost of revenues - amortization of intangible assets		-		41,169		-		-		41,169
Gross profit		-		224,996		12,523		-		237,519
Operating expenses:
Research and development		-		41,497		-		-		41,497
Selling and marketing		-		89,891		11,078		-		100,969
General and administrative		174		28,783		1,128		-		30,085
Amortization of intangible assets		-		38,559		2,737		-		41,296
Acquisition related expenses		-		434		-		-		434
Merger and integration related expenses		-		4,270		19		-		4,289
Restructuring		-		2,923		-		-		2,923
Total operating expenses		174		206,357		14,962		-		221,493
Operating income (loss)		(174)		18,639		(2,439)		-		16,026
Other (expense) income, net		(2)		32,082		(410)		(32,428)		(758)
Interest income		1		786		5		-		792
Interest expense		(29,228)		(19,398)		(4)		12		(48,618)
Loss before benefit for income taxes		(29,403)		32,109		(2,848)		(32,416)		(32,558)
Equity in (losses) earnings of subsidiaries before taxes		(3,337)		(2,186)		-		5,523		-
(Benefit) provision of income taxes		(8,627)		(7,965)		(662)		8,627		(8,627)
Net loss from continuing operations	$	(24,113)	$	37,888	$	(2,186)	$	(35,520)	$	(23,931)
Loss from discontinued operations, net of an income tax benefit of $32		-		(182)		-		-		(182)
Net (loss) income	$	(24,113)	$	37,706	$	(2,186)	$	(35,520)	$	(24,113)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Revenues	$	-	$	267,541	$	32,920	$	(21,669)	$	278,792
Cost of revenues		-		28,089		21,727		(21,669)		28,147
Cost of revenues - amortization of intangible assets		-		46,486		-		-		46,486
Gross profit		-		192,966		11,193		-		204,159
Operating expenses:
Research and development		-		39,464		360		-		39,824
Selling and marketing		-		89,442		10,843		-		100,285
General and administrative		128		26,117		1,486		-		27,731
Amortization of intangible assets		-		43,393		3,103		-		46,496
Acquisition related expenses		-		3,551		25		-		3,576
Merger and integration related expenses		-		9,362		466		-		9,828
Restructuring		-		2,807		48		-		2,855
Total operating expenses		128		214,136		16,331		-		230,595
Operating income (loss)		(128)		(21,170)		(5,138)		-		(26,436)
Other (expense) income, net		-		30,511		644		(32,304)		(1,149)
Interest income		-		604		28		-		632
Interest expense		(28,270)		(21,498)		9		-		(49,759)
Loss before benefit for income taxes		(28,398)		(11,553)		(4,457)		(32,304)		(76,712)
Equity in (losses) earnings of subsidiaries before taxes		(48,899)		(3,786)		-		52,685		-
Benefit for income taxes		(12,215)		(11,851)		(364)		12,215		(12,215)
Net loss from continuing operations	$	(65,082)	$	(3,488)	$	(4,093)	$	8,166	$	(64,497)
Loss from discontinued operations, net of an income tax benefit of $358		-		(893)		308		-		(585)
Net (loss) income	$	(65,082)	$	(4,381)	$	(3,785)	$	8,166	$	(65,082)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Comprehensive loss:
Net (loss) income	$	(4,458)	$	16,253	$	(1,354)	$	(14,899)	$	(4,458)
Other comprehensive income (loss) - Foreign currency adjustment		-		2,303		54		1,153		3,510
Comprehensive (loss) income	$	(4,458)	$	18,556	$	(1,300)	$	(13,746)	$	(948)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Comprehensive loss:
Net (loss) income	$	(18,265)	$	2,048	$	508	$	(2,556)	$	(18,265)
Other comprehensive income (loss) - Foreign currency adjustment		-		1,170		575		-		1,745
Comprehensive (loss) income	$	(18,265)	$	3,218	$	1,083	$	(2,556)	$	(16,520)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Comprehensive loss:
Net (loss) income	$	(24,113)	$	37,706	$	(2,186)	$	(35,520)	$	(24,113)
Other comprehensive income (loss) - Foreign currency adjustment		-		13		(4,128)		1,819		(2,296)
Comprehensive (loss) income	$	(24,113)	$	37,719	$	(6,314)	$	(33,701)	$	(26,409)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Comprehensive loss:
Net (loss) income	$	(65,082)	$	(4,381)	$	(3,785)	$	8,166	$	(65,082)
Other comprehensive income (loss) - Foreign currency adjustment		-		1,268		(1,108)		-		160
Comprehensive (loss) income	$	(65,082)	$	(3,113)	$	(4,893)	$	8,166	$	(64,922)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2013

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Cash flows from operating activities:
Net cash (used in) provided by operating activities	$	(19,547)	$	113,305	$	(18)	$	(32,416)	$	61,324
Cash flows from investing activities:
Purchases of property and equipment		-		(7,641)		(258)		-		(7,899)
Decrease (increase) in restricted cash, net		-		-		34		-		34
Net cash used in investing activities		-		(7,641)		(224)		-		(7,865)
Cash flows from financing activities:
Proceeds from intercompany investment in subsidiaries		-		873		-		(873)		-
Proceeds from payments (on) intercompany loans		19,551		(51,215)		(1,871)		33,535		-
Payment received on note for sale of TCE		-		507		-		-		507
Principal payments on Senior Credit Facilities		-		(38,488)		-		-		(38,488)
Net cash provided by (used in) financing activities		19,551		(88,323)		(1,871)		32,662		(37,981)
Effect of exchange rate changes on cash and cash equivalents		-		390		(323)		(246)		(179)
Net (decrease) increase in cash and cash equivalents		4		17,731		(2,436)		-		15,299
Cash and cash equivalents, beginning of period		85		22,543		16,420		-		39,048
Cash and cash equivalents, end of period	$	89	$	40,274	$	13,984	$	-	$	54,347

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED OCTOBER 31, 2012

(UNAUDITED, IN THOUSANDS)

		Issuer		Guarantor		Non-Guarantor		Eliminations		Consolidated
Cash flows from operating activities:
Net cash (used in) provided by operating activities	$	(18,571)	$	87,675	$	1,012	$	(32,304)	$	37,812
Cash flows from investing activities:
Purchases of property and equipment		-		(5,683)		-		-		(5,683)
Proceeds on disposition of assets		-		-		96		-		96
Acquisition of Mindleaders, net of cash received		-		1,306		678		(64,316)		(62,332)
Decrease (increase) in restricted cash, net		-		-		(33)		-		(33)
Net cash (used in) provided by investing activities		-		(4,377)		741		(64,316)		(67,952)
Cash flows from financing activities:
Proceeds from intercompany investment in subsidiaries		-		(64,316)		-		64,316		-
Proceeds from payments (on) intercompany loans		18,626		(54,470)		3,540		32,304		-
Payment received on note for sale TCE		-		840		-		-		840
Proceeds from issuance of Senior Credit Facilities, net of issuance costs and original issue discount		-		45,062		-		-		45,062
Principal payments on Senior Credit Facilities		-		(1,894)		-		-		(1,894)
Net cash provided by (used in) financing activities		18,626		(74,778)		3,540		96,620		44,008
Effect of exchange rate changes on cash and cash equivalents		-		106		(27)		-		79
Net (decrease) increase in cash and cash equivalents		55		8,626		5,266		-		13,947
Cash and cash equivalents, beginning of period		27		18,707		10,174		-		28,908
Cash and cash equivalents, end of period	$	82	$	27,333	$	15,440	$	-	$	42,855

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Restructuring (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 231	$ 2,373	$ 2,923	$ 2,855
Employee Severance And Related Costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges			1,622
Contractual Obligations [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges			$ 1,301

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Discontinued Operations (Tables)

9 Months Ended

Oct. 31, 2013

Discontinued Operations [Abstract]

Schedule Of Discontinued Operations

	Three Months Ended October 31,				Nine Months Ended October 31,
Statement of operations:	2013			2012	2013			2012
Revenue from discontinued operations	$	-	$	233	$	-	$	5,471
Loss from discontinued operations before income taxes		-		(80)		(182)		(975)
Income tax benefit		-		32		-		390
Loss from discontinued operations	$	-	$	(48)	$	(182)	$	(585)

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Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2013
Fair Value Measurements [Abstract]
Senior Notes, Current Value	$ 310,000
Senior Notes, Fair Value	$ 340,420

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Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Oct. 31, 2013
Accumulated Other Comprehensive Income [Abstract]
Balance at January 31, 2013	$ 12,833
Other comprehensive income (loss) from Foreign Currency Translation	(2,296)
Balance at October 31, 2013	$ 10,537

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Shareholders' Equity (Narrative) (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012	Jan. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Tax benefit from exercise of options	$ 0	$ 0	$ 0	$ 0
Options exercised	0	0	0	0
Share-based compensation expense	1.5		4.6		14.2
Total unrecognized expense associated with all stock options	10.0		10.0
Authorized share capital, ordinary shares	1,000,000,000		1,000,000,000		1,000,000,000
Authorized share capital, ordinary shares, par value	$ 1.00		$ 1.00		$ 1.00
Ordinary shares, issued	534,513,271		534,513,271		534,513,271
Ordinary shares, outstanding	534,513,271		534,513,271		534,513,271
Share-Based Compensation Expense, Period 1 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation expense recognized relating to prior periods					2.1
Share-Based Compensation Expense, Period 2 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation expense recognized relating to prior periods					$ 6.0
Service-Based Vesting Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options vesting period			5 years
Options vesting each year on anniversary of grant date, percentage			20.00%
Number of years until options expire from date of grant			10 years
Performance And Market-Based Vesting Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of years until options expire from date of grant			10 years
Options vest after sale of voting power, percentage			50.00%

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Guarantors (Schedule Of Condensed Consolidated Statements Of Cash Flows) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Oct. 31, 2013	Oct. 31, 2012
Net cash (used in) provided by operating activities	$ 61,324	$ 37,812
Purchases of property and equipment	(7,899)	(5,683)
Proceeds on disposition of assets		96
Acquisition of Mindleaders, net of cash received		(62,332)
Decrease (increase) in restricted cash, net	34	(33)
Net cash used in investing activities	(7,865)	(67,952)
Payment received on note for sale of TCE	507	840
Proceeds from issuance of Senior Credit Facilities, net of issuance costs and original issue discount		45,062
Principal payments on Senior Credit Facilities	(38,488)	(1,894)
Net cash used in financing activities	(37,981)	44,008
Effect of exchange rate changes on cash and cash equivalents	(179)	79
Net increase in cash and cash equivalents	15,299	13,947
Cash and cash equivalents, beginning of period	39,048	28,908
Cash and cash equivalents, end of period	54,347	42,855
Issuer [Member]
Net cash (used in) provided by operating activities	(19,547)	(18,571)
Proceeds from payments (on) intercompany loans	19,551	18,626
Net cash used in financing activities	19,551	18,626
Net increase in cash and cash equivalents	4	55
Cash and cash equivalents, beginning of period	85	27
Cash and cash equivalents, end of period	89	82
Guarantor [Member]
Net cash (used in) provided by operating activities	113,305	87,675
Purchases of property and equipment	(7,641)	(5,683)
Acquisition of Mindleaders, net of cash received		1,306
Net cash used in investing activities	(7,641)	(4,377)
Proceeds from intercompany investment in subsidiaries	873	(64,316)
Proceeds from payments (on) intercompany loans	(51,215)	(54,470)
Payment received on note for sale of TCE	507	840
Proceeds from issuance of Senior Credit Facilities, net of issuance costs and original issue discount		45,062
Principal payments on Senior Credit Facilities	(38,488)	(1,894)
Net cash used in financing activities	(88,323)	(74,778)
Effect of exchange rate changes on cash and cash equivalents	390	106
Net increase in cash and cash equivalents	17,731	8,626
Cash and cash equivalents, beginning of period	22,543	18,707
Cash and cash equivalents, end of period	40,274	27,333
Non-Guarantor [Member]
Net cash (used in) provided by operating activities	(18)	1,012
Purchases of property and equipment	(258)
Proceeds on disposition of assets		96
Acquisition of Mindleaders, net of cash received		678
Decrease (increase) in restricted cash, net	34	(33)
Net cash used in investing activities	(224)	741
Proceeds from payments (on) intercompany loans	(1,871)	3,540
Net cash used in financing activities	(1,871)	3,540
Effect of exchange rate changes on cash and cash equivalents	(323)	(27)
Net increase in cash and cash equivalents	(2,436)	5,266
Cash and cash equivalents, beginning of period	16,420	10,174
Cash and cash equivalents, end of period	13,984	15,440
Eliminations [Member]
Net cash (used in) provided by operating activities	(32,416)	(32,304)
Acquisition of Mindleaders, net of cash received		(64,316)
Net cash used in investing activities		(64,316)
Proceeds from intercompany investment in subsidiaries	(873)	64,316
Proceeds from payments (on) intercompany loans	33,535	32,304
Net cash used in financing activities	32,662	96,620
Effect of exchange rate changes on cash and cash equivalents	$ (246)

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Recently Issued Accounting Pronouncements

9 Months Ended

Oct. 31, 2013

Recently Issued Accounting Pronouncements [Abstract]

Recently Issued Accounting Pronouncements

18. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. Under this standard, entities are required to disclose additional information with respect to changes in accumulated other comprehensive income (AOCI) balances by component and significant items reclassified out of AOCI. Expanded disclosures for presentation of changes in AOCI involve disaggregating the total change of each component of other comprehensive income as well as presenting separately for each such component the portion of the change in AOCI related to (1) amounts reclassified into income and (2) current-period other comprehensive income. Additionally, for amounts reclassified into income, disclosure in one location is required, based upon each specific AOCI component, of the amounts impacting individual income statement line items. Disclosure of the income statement line item impacts is required only for components of AOCI reclassified into income in their entirety. ASU No. 2013-02 is effective for fiscal years beginning after December 15, 2012. The Company adopted this amendment in the first quarter of fiscal 2014. The adoption did not have a material impact on the condensed consolidated financial statements for the three and nine months ended October 31, 2013.

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Condensed Consolidated Statements Of Comprehensive Loss (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012
Condensed Consolidated Statements Of Comprehensive Loss [Abstract]
Net loss	$ (4,458)	$ (18,265)	$ (24,113)	$ (65,082)
Other comprehensive (loss) income — Foreign currency adjustment, net of tax	3,510	1,745	(2,296)	160
Comprehensive loss	$ (948)	$ (16,520)	$ (26,409)	$ (64,922)

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The Company

9 Months Ended

Oct. 31, 2013

The Company [Abstract]

The Company

1. THE COMPANY

On May 26, 2010, SSI Investments III Limited (“SSI III”), a wholly owned subsidiary of SSI Investments II Limited (“SSI II”), completed its acquisition of Skillsoft PLC (the “Acquisition”), which was subsequently re-registered as a private limited company and whose corporate name changed from Skillsoft PLC (the “Predecessor”) to Skillsoft Limited (“Skillsoft” or the “Successor”). Unless otherwise indicated or the context otherwise requires, as used in this discussion, the terms “the Company”, “we”, “us”, “our” and other similar terms refers to (a) prior to the Acquisition, the Predecessor and its subsidiaries and (b) from and after the Acquisition, SSI II and its subsidiaries, including Skillsoft.

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Revenue Recognition

9 Months Ended

Oct. 31, 2013

Revenue Recognition [Abstract]

Revenue Recognition

4. REVENUE RECOGNITION

The Company generates revenue primarily from the licensing of its products, providing professional services and from providing hosting/application service provider (ASP) services.

The Company follows the provisions of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 985-605 Software – Revenue Recognition and Staff Accounting Bulletin No. 104 to account for revenue derived pursuant to license agreements under which customers license the Company's products and services. The pricing for the Company's courses varies based upon the content offering selected by a customer, the number of users within the customer's organization and the term of the license agreement (generally one,  two or three years). License agreements permit customers to exchange course titles, generally on the contract anniversary date. Hosting services are sold separately for an additional fee. A license can provide customers access to a range of learning products including courseware, Referenceware®, simulations, mentoring and prescriptive assessment.

The Company offers discounts from its ordinary pricing, and purchasers of licenses for a larger number of courses, larger user bases or longer periods of time generally receive discounts. Generally, customers may amend their license agreements, for an additional fee, to gain access to additional courses or product lines and/or to increase the size of the user base. The Company also derives revenue from hosting fees for customers that use its solutions on an ASP basis and from the provision of professional services. In selected circumstances, the Company derives revenue on a pay-for-use basis under which some customers are charged based on the number of courses accessed by its users.

For arrangements subject to ASC 985-605 Software – Revenue Recognition, the Company recognizes revenue ratably over the license period if the number of courses that a customer has access to is not clearly defined, available, or selected at the inception of the contract, or if the contract has additional undelivered elements for which the Company does not have vendor specific objective evidence (VSOE) of the fair value of the various elements. This may occur if the customer does not specify all licensed courses at the outset, the customer chooses to wait for future licensed courses on a when and if available basis, the customer is given exchange privileges that are exercisable other than on the contract anniversaries, or the customer licenses all courses currently available and to be developed during the term of the arrangement.

Arrangements which include extranet hosting/ASP services are generally accounted for under Staff Accounting Bulletin No. 104. Revenue from these arrangements is recognized on a straight-line basis over the period the services are provided. Upfront professional service fees are recorded as revenue over the contract period in multiple element arrangements or over the expected customer relationship periods in arrangements where there is otherwise one unit of accounting.

Revenue from nearly all of the Company's contractual arrangements is recognized on a subscription or straight-line basis over the contractual period of service.

The Company generally bills the annual license fee for the first year of a multi-year license agreement in advance and license fees for subsequent years of multi-year license arrangements are billed on the anniversary date of the agreement. Occasionally, the Company bills customers on a quarterly basis. In some circumstances, the Company offers payment terms of up to six months from the initial shipment date or anniversary date for multi-year license agreements to its customers. To the extent that a customer is given extended payment terms (defined by the Company as greater than six months), revenue is recognized as payments become due, assuming all of the other elements of revenue recognition have been satisfied.

The Company typically recognizes revenue from resellers over the commitment period when both the sale to the end user has occurred and the collectability of cash from the reseller is probable. With respect to reseller agreements with minimum commitments, the Company recognizes revenue related to the portion of the minimum commitment that exceeds the end user sales at the expiration of the commitment period provided the Company has received payment. If a definitive service period can be determined, revenue is recognized ratably over the term of the minimum commitment period, provided that payment has been received or collectability is probable.

The Company provides professional services, including instructor led training, customized content development, website development/hosting and implementation services.

The Company applies the guidance of Accounting Standards Update (ASU) No. 2009-13 Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements, specifically for multiple element arrangements which are not accounted for under ASC 985-605 Software – Revenue Recognition (this is normally due to the inclusion of extranet hosting/ASP services). ASU No. 2009-13 affects accounting and reporting for all multiple-deliverable arrangements.

ASU No. 2009-13 establishes a selling price hierarchy for determining the selling price of a deliverable in a sale arrangement. The selling price for each deliverable is based on vendor-specific objective evidence (VSOE) if available, third-party evidence (TPE) if VSOE is not available, or the Company's best estimated selling price (BESP) if neither VSOE nor TPE are available. The amendments in ASU No. 2009-13 eliminate the residual method of allocation and require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price allocation method. The relative selling price method allocates any discount in the arrangement proportionately to each deliverable on the basis of the deliverable's estimated fair value.

For transactions entered into subsequent to the adoption of ASU No. 2009-13 that include multiple elements, arrangement consideration is allocated to each element based on the relative selling prices of all of the elements in the arrangement using the fair value hierarchy as required by ASU No. 2009-13. The Company limits the amount of revenue recognition for the software and content licenses and extranet hosting services (as a bundled unit) to the amount that is not contingent on the future delivery of products or services or future performance obligation. That amount is then recognized on a straight-line basis over the contractual term. Professional services, including instructor led training, customized content development, website development/hosting and implementation services, are sometimes included in the arrangements. If the Company determines that the professional services are not separable from an existing customer arrangement, revenue from these services is recognized over the existing contractual terms with the customer; otherwise the Company typically recognizes professional service revenue as the services are performed. The Company does not have VSOE for its professional service offerings. Therefore, fair value for these elements is based on TPE, which is determined based on competitor prices for similar elements when sold separately, or the BESP. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis. The Company determines BESP for a product or service by considering multiple factors including, but not limited to, pricing practices, geographies, customer classes and distribution channels.

Multiple contracts with a single customer or amendments to existing contracts with the same customer are evaluated as to whether they should be recognized as separate accounting arrangements from other contracts with the customer, based on an evaluation of several factors including, but not limited to, the timing of when contracts were negotiated and executed, whether the software is interdependent in terms of design, technology or function and whether payment terms coincide. If contracts are considered linked for accounting purposes and accounted for as one arrangement, fees are recognized over the longest service periods. If contracts are considered separable, fees in each arrangement are recognized over their respective service period.

The Company records reimbursable out-of-pocket expenses in both revenue and as a direct cost of revenue, as applicable. Out-of-pocket expenses were immaterial for both the three and nine months ended October 31, 2013 and October 31, 2012.

The Company records revenue net of applicable sales tax collected. Taxes collected from customers are recorded as part of accrued expenses on the balance sheet and are remitted to state and local taxing jurisdictions based on the filing requirements of each jurisdiction.

The Company records as deferred revenue amounts that have been billed in advance for products or services to be provided. Deferred revenue includes the unamortized portion of revenue associated with license fees for which the Company has received payment or for which amounts have been billed and are due for payment in 90 days or less for resellers and 180 days or less for direct customers.

 

The Company’s contracts often include an uptime guarantee for solutions hosted on the Company's servers whereby customers may be entitled to credits in the event of non-performance. The Company also retains the right to remedy any non-performance event prior to issuance of any credit. Furthermore, the Company’s contracts contain standard warranty and indemnification coverage to its customers. Historically, the Company has not incurred substantial costs relating to this guarantee and the Company currently accrues for such costs as they are incurred. The Company reviews these costs on a regular basis as actual experience and other information becomes available; and, should these costs become substantial, the Company would accrue an estimated exposure and consider the potential related effects of the timing of recording revenue on its license arrangements. The Company has not accrued any costs related to these warranties in the accompanying consolidated financial statements. It is not possible to determine the maximum potential amount under these indemnification agreements due to the Company’s limited and infrequent history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement.

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Basis Of Presentation

9 Months Ended

Oct. 31, 2013

Basis Of Presentation [Abstract]

Basis Of Presentation

2. BASIS OF PRESENTATION

The accompanying, unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such SEC rules and regulations. In the opinion of management, the condensed consolidated financial statements reflect all material adjustments (consisting only of those of a normal and recurring nature) which are necessary to present fairly the consolidated financial position of the Company as of October 31, 2013 and the results of its operations and cash flows for the three and nine months ended October 31, 2013. These condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2013, as filed with the SEC on April 30, 2013. The results of operations for the interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year.

The Company evaluates events occurring after the date of the accompanying unaudited condensed consolidated balance sheets for potential recognition or disclosure in the financial statements. The Company did not identify any material subsequent events requiring adjustment to the accompanying unaudited condensed consolidated financial statements (recognized subsequent events). Those items requiring disclosure (unrecognized subsequent events) in the financial statements have been disclosed accordingly.

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Cash, Cash Equivalents, Restricted Cash And Investments (Details) (USD $) In Millions, unless otherwise specified	Oct. 31, 2013	Jan. 31, 2013
Cash, Cash Equivalents, Restricted Cash And Investments [Abstract]
Restricted cash	$ 0.1	$ 0.1

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Shareholders' Equity (Tables)

9 Months Ended

Oct. 31, 2013

Shareholders' Equity [Abstract]

Schedule Of Stock Option Activity

Share Options	Shares	Exercise Price	Weighted Average Remaining Contractual Term (Years)
Outstanding, January 31, 2013	639,747	100.00 - 117.00	7.8
Granted	1,908	142.00	-
Exercised	-	-	-
Forfeited	(2,777)	100.00 - 117.00	-
Expired	-	-	-
Outstanding, October 31, 2013	638,878	100.00 - 142.00	7.1
Exercisable, October 31, 2013	158,755	100.00 - 142.00	7.1
Vested and expected to vest, October 31, 2013	638,878	100.00 - 142.00	7.1

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Goodwill And Intangible Assets (Tables)

9 Months Ended

Oct. 31, 2013

Goodwill And Intangible Assets [Abstract]

Schedule Of Intangible Assets

	October 31, 2013						January 31, 2013
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Internally developed software/ courseware	$	268,732	$	212,213	$	56,519	$	268,678	$	170,933	$	97,745
Customer contracts/ relationships		295,984		136,637		159,347		297,109		102,839		194,270
Non-compete agreement		4,070		1,662		2,408		4,070		1,052		3,018
Trademarks and trade names		15,220		6,804		8,416		15,220		5,449		9,771
Backlog		59,000		54,048		4,952		59,000		48,956		10,044
Skillsoft trademark		129,900		-		129,900		129,900		-		129,900
	$	772,906	$	411,364	$	361,542	$	773,977	$	329,229	$	444,748

Schedule Of Amortization Expense Related To Finite-Lived Intangible Assets

Fiscal Year		Amortization Expense
2014 (remaining three months)	$	27,040
2015		80,488
2016		42,236
2017		27,197
2018		21,102
2019		16,845
2020		13,440
2021		3,294
Total	$	231,642

Schedule Of Change In Goodwill

Gross carrying amount of goodwill, January 31, 2013	$	637,524
Change in fair value assessment of MindLeaders		(56)
Foreign currency translation adjustment		(1,578)
Gross carrying amount of goodwill, October 31, 2013	$	635,890

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Credit Facilities And Debt (Tables)

9 Months Ended

Oct. 31, 2013

Credit Facilities And Debt [Abstract]

Schedule Of Future Scheduled Minimum Payments

Fiscal 2014	$	1,163
Fiscal 2015		4,650
Fiscal 2016		4,650
Fiscal 2017		4,650
Fiscal 2018		401,900
Total	$	417,013

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Goodwill And Intangible Assets (Schedule Of Change In Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Oct. 31, 2013
Goodwill And Intangible Assets [Abstract]
Gross carrying amount of goodwill, January 31, 2013	$ 637,524
Change in fair value assessment of MindLeaders	(56)
Foreign currency translation adjustment	(1,578)
Gross carrying amount of goodwill, October 31, 2013	$ 635,890

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Restructuring (Schedule Of Restructuring Accrual) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012
Restructuring Cost and Reserve [Line Items]
Restructuring accrual as of January 31, 2013			$ 1,715
Restructuring charges incurred	231	2,373	2,923	2,855
Payments made			(2,772)
Restructuring accrual as of October 31, 2013	1,866		1,866
Employee Severance And Related Costs [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring accrual as of January 31, 2013			837
Restructuring charges incurred			1,622
Payments made			(1,899)
Restructuring accrual as of October 31, 2013	560		560
Contractual Obligations [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring accrual as of January 31, 2013			878
Restructuring charges incurred			1,301
Payments made			(873)
Restructuring accrual as of October 31, 2013	$ 1,306		$ 1,306

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Acquisitions (Narrative) (Details) (ThirdForce Group PLC (“Mindleaders”) [Member], USD $)	Oct. 31, 2013
ThirdForce Group PLC (“Mindleaders”) [Member]
Percentage of issued and outstanding shares of Mindleaders accepted	91.30%
Percentage of shareholders declining offer	1.80%
Ownership percentage of Mindleaders by company	100.00%
Cash paid	$ 64,316,000
Goodwill	40,925,000
Amortizable intangible assets	27,703,000
Deferred revenue	1,484,000
Adjustment to reduce carrying value of deferred revenue	9,200,000
Remaining unamortized deferred revenue	$ 300,000

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Oct. 31, 2013	Jan. 31, 2013
Condensed Consolidated Balance Sheets [Abstract]
Common stock, par value	$ 1.00	$ 1.00
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	534,513,271	534,513,271

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Restructuring

9 Months Ended

Oct. 31, 2013

Restructuring [Abstract]

Restructuring

7. RESTRUCTURING

In connection with the acquisitions of MindLeaders and the Element K business (“Element K”) in the fiscal year ending January 31, 2012, the Company’s management approved and initiated plans to integrate the businesses into its operations and to eliminate redundant headcount, reduce cost structure and better align operating expenses with existing economic conditions and the Company’s operating model. During the nine months ended October 31, 2013, the Company consolidated and reorganized the space utilized by MindLeaders in the United Kingdom and Ireland as well as the space utilized by Element K in Rochester, NY, and as a result incurred a $1.3 million restructuring charge, which is included in the condensed consolidated statements of operations as restructuring.

In addition, the Company committed to an organizational change and a workforce reduction plan as a result of the acquisitions of Mindleaders and Element K in an effort to eliminate redundancies and positions not required by the combined businesses and to reduce the overall cost structure of the acquired business to better align our operating expenses with existing economic conditions, business requirements and our operating model. As a result of this reduction in force, the Company incurred additional restructuring charges during the nine months ended October 31, 2013 of $1.6million which related primarily to one-time termination benefits.

Activity in the Company’s restructuring accrual for the nine months ended October 31, 2013was as follows (in thousands):

		Employee Severance and Related Costs		Contractual Obligations		Total
Restructuring accrual as of January 31, 2013	$	837	$	878	$	1,715
Restructuring charges incurred		1,622		1,301		2,923
Payments made		(1,899)		(873)		(2,772)
Restructuring accrual as of October 31, 2013	$	560	$	1,306	$	1,866

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Condensed Consolidated Statements Of Operations (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012
Condensed Consolidated Statements Of Operations [Abstract]
Discontinued operations, benefit for tax	$ 0	$ 32	$ 0	$ 390

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Accrued Expenses (Details) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2013	Jan. 31, 2013
Accrued Expenses [Abstract]
Professional fees	$ 3,605	$ 3,602
Sales tax payable/VAT payable	2,772	7,350
Accrued royalties	1,906	2,568
Accrued tax	2,399	4,815
Interest payable	16,165	7,772
Other accrued liabilities	10,553	13,203
Total accrued expenses	$ 37,400	$ 39,310

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Oct. 31, 2013	Jan. 31, 2013
Current assets:
Cash and cash equivalents	$ 54,347	$ 39,048
Restricted cash	102	136
Accounts receivable, net	97,368	188,682
Deferred tax assets	10,134	1,360
Prepaid expenses and other current assets	32,678	34,741
Total current assets	194,629	263,967
Property and equipment, net	13,595	13,654
Goodwill	635,890	637,524
Intangible assets, net	361,542	444,748
Deferred tax assets		10,090
Other assets	18,046	22,445
Total assets	1,223,702	1,392,428
Current liabilities:
Current maturities of long term debt	3,433	3,311
Accounts payable	7,790	11,650
Accrued compensation	13,257	23,456
Accrued expenses	37,400	39,310
Deferred tax liabilities	7,589	15,153
Deferred revenue	186,698	262,452
Total current liabilities	256,167	355,332
Long term debt	717,960	755,034
Deferred tax liabilities	14,673	26,646
Other long term liabilities	11,354	10,016
Total long-term liabilities	743,987	791,696
Commitments and contingencies (Note 11)
Shareholders' equity
Ordinary shares, $1.00 par value: 1,000,000,000 shares authorized; 534,513,271 shares issued at October 31, 2013 and January 31, 2013	534,513	534,513
Additional paid-in capital	19,131	14,574
Accumulated deficit	(340,633)	(316,520)
Accumulated other comprehensive income	10,537	12,833
Total stockholders' equity	223,548	245,400
Total liabilities and stockholders' equity	$ 1,223,702	$ 1,392,428

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Discontinued Operations (Narrative) (Details) (USD $) In Millions, unless otherwise specified	Oct. 31, 2013
Discontinued Operations [Abstract]
Goodwill, assets held for sale	$ 5.1
Price of business sold	8.1
Gain (loss) recognized on sale of TCE	$ 0

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Acquisitions (Tables)

9 Months Ended

Oct. 31, 2013

Acquisitions [Abstract]

Schedule Of Purchase Price Allocation

Description		Amount
Current assets	$	7,927
Property and equipment		513
Goodwill		40,925
Amortizable intangible assets		27,703
Long term assets		575
Current liabilities		(7,857)
Deferred revenue		(1,484)
Long term liabilities		(3,986)
Total	$	64,316

Schedule Of Intangible Assets And Estimated Useful Lives

Description		Amount	Life
Proprietary development software and courseware	$	3,258	3 years
Customer relationships		23,225	8 years
Backlog		1,220	4 years
Total	$	27,703

Schedule Of Consolidated Results Of Operations

		Three Months Ended	Nine Months Ended
		October 31, 2012	October 31, 2012
Revenue	$	101,841	$	298,982
Net loss		(18,093)		(66,903)

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Credit Facilities And Debt

9 Months Ended

Oct. 31, 2013

Credit Facilities And Debt [Abstract]

Credit Facilities And Debt

16. CREDIT FACILITIES AND DEBT

SENIOR CREDIT FACILITIES

On September 25, 2012, SSI Investments I Limited (“Holdings”) and Skillsoft Corporation (“Borrower”) entered into an amendment, (the “Incremental Amendment”), to an amended and restated credit agreement, dated as of May 26, 2010, among Holdings, Borrower (as successor in interests and obligations to Skillsoft Limited, as successor in interests and obligations to SSI Investments II Limited), Morgan Stanley Senior Funding, Inc., the lenders party thereto, and the other agents named therein (as so amended and as previously amended , the “Credit Agreement”).

Pursuant to the Incremental Amendment, Morgan Stanley Senior Funding, Inc. agreed to provide an additional $50 million in new term loans (the “Additional Term Loans”) conditioned upon, among other things, the acquisition by Skillsoft Ireland Limited, an Irish private limited company and an indirect subsidiary of the Company, of at least 80% of the outstanding capital stock of MindLeaders (the “MindLeaders Acquisition”), substantially concurrently with the borrowing of such Additional Term Loans. The Incremental Amendment restricts the use of proceeds from such Additional Term Loans solely (i) to finance the MindLeaders Acquisition, (ii) repay any existing debt of MindLeaders and its subsidiaries and (iii) to pay fees and expenses in connection with the Incremental Amendment and the MindLeaders Acquisition. The Additional Term Loans have the same terms as the original term loans, including with respect to interest rate (including applicable margins), amortization, maturity date and optional and mandatory prepayments. In addition, prior to the MindLeaders Acquisition and the Incremental Amendment, Holdings, the Borrower and the lenders party thereto amended the Credit Agreement to permit the MindLeaders Acquisition under the Credit Agreement.

In addition, on September 28, 2012, Holdings and the Borrower completed a re-pricing of the Credit Agreement. The new interest rate on the term loans, including the Additional Term Loans, is LIBOR plus 3.75%, compared to the previous interest rate of LIBOR plus 4.75%. The new interest rate on the revolving loans is LIBOR plus 3.50%, compared to the previous interest rate of LIBOR plus 4.50%. The new LIBOR floor on the term loans, including the Additional Term Loans, and revolving loans is 1.25%, compared to the previous LIBOR floor of 1.75%.  On June 28, 2013, the Company elected its interest calculation to be based on adjusted LIBOR.

The re-pricing was accounted for as a modification for accounting purposes. Accordingly, unamortized deferred financing costs and original issuance discounts of $13.8 million and $2.1 million, respectively, and $4.0 million of fees paid to lenders in connection with the re-pricing, are being amortized as additional interest expense over the revised term of the senior credit facility.  

As of October 31, 2013, under the Credit Agreement, the Company had a $505 million senior secured credit facility comprised of a $465 million term loan facility and a $40 million revolving credit facility (collectively the “Senior Credit Facilities”). The revolving credit facility includes borrowing capacity available for letters of credit and for borrowings on same-day notice, referred to as the swingline loans. The revolving credit facility is available for general corporate purposes, including capital expenditures, subject to certain conditions. As of October 31, 2013, there were no amounts outstanding under the revolving credit facility.

Availability of the revolving credit facility is subject to the absence of any default under the Senior Credit Facilities, compliance with the financial covenant in certain circumstances and the accuracy in all material respect of certain representations and warranties. The revolving credit facility, including the letter of credit and swingline subfacilities, terminates on May 26, 2015, at which time all outstanding borrowings under the revolving credit facility are due.

The Company’s Senior Credit Facilities require it to prepay outstanding term loans, subject to certain exceptions, with:

· a percentage initially expected to be 50% (subject to reduction to 25% and 0% based upon the Company’s leverage ratio) of the Company’s excess cash flow, as defined in the Senior Credit Facilities, as determined at the end of each fiscal year;

· 100% of the net cash proceeds of certain asset sales and casualty and condemnation events, subject to reinvestment rights and certain other exceptions; and

· 100% of the net cash proceeds of any incurrence of certain debt, other than debt permitted under the Company’s Senior Credit Facilities.

The foregoing mandatory prepayments are applied to installments of the term loan facility in direct order of maturity.

The Company may voluntarily repay outstanding loans under its Senior Credit Facilities at any time without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans and, with respect to outstanding term loans, a premium during the first three years following the closing date for voluntary prepayments, repricings or effective repricings of such term loans. The premium for voluntary prepayments, repricings or effective repricings of term loans was  2% in the second year and 1% in the third year, with a customary make-whole premium for prepayments during the first year of the term loan facility. Voluntary prepayments may be applied as directed by the Company.

The Company’s Senior Credit Facilities require scheduled quarterly payments on the term loan facility equal to 0.25% of the initial aggregate principal amount of the term loans made on the closing date, with the balance due at maturity. The Company’s scheduled quarterly payments are subject to change based on excess cash flow provisions as defined in the Senior Credit Facilities.

The Senior Credit Facilities are guaranteed by, subject to certain exceptions (including an exception for foreign subsidiaries of U.S. subsidiaries), each of the Company’s existing and future material wholly owned subsidiaries and its immediate parent. All obligations under the Company’s Senior Credit Facilities, and the guarantees of those obligations, will be secured by substantially all of the Company’s, its subsidiary guarantors' and its immediate parent's existing and future property and assets and by a pledge of the Company’s capital stock and the capital stock of, subject to certain exceptions, each of its material wholly owned restricted subsidiaries (or up to 65% of the capital stock of material first-tier foreign wholly owned restricted subsidiaries of its U.S. subsidiaries).

In addition, the Company’s Senior Credit Facilities require it to comply on a quarterly basis with a single financial covenant for the benefit of the revolving credit facility only. Such covenant requires the Company to maintain a maximum secured leverage ratio tested on the last day of each fiscal quarter (but failure to maintain the required ratio would not result in a default under the revolving credit facility so long as the revolving credit facility is undrawn at such time). The maximum secured leverage ratio will reduce over time, subject to increase in connection with certain material acquisitions. At October 31, 2013, the Company was in compliance with this financial covenant.

In addition, the Company’s Senior Credit Facilities include negative covenants that, subject to significant exceptions, limit the Company’s ability and the ability of its restricted subsidiaries to, among other things, incur additional indebtedness; create liens on assets; engage in mergers or consolidations; sell assets (including pursuant to sale and leaseback transactions); pay dividends and distributions or repurchase its capital stock; make investments, loans or advances; repay certain indebtedness (including the Senior Notes defined below); engage in certain transactions with affiliates; amend material agreements governing certain indebtedness (including the Senior Notes); and change its lines of business.

The Company’s Senior Credit Facilities include certain customary representations and warranties, affirmative covenants and events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy, certain events under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), material judgments, the invalidity of material provisions of the Senior Credit Facilities documentation, actual or asserted failure of the guarantees or security documents for the Company’s Senior Credit Facilities, and a change of control. If an event of default occurs, the lenders under the Company’s Senior Credit Facilities will be entitled to take various actions, including the acceleration of all amounts due under the Company’s Senior Credit Facilities and all actions permitted to be taken by a secured creditor. At October 31, 2013, the Company was in compliance with these covenants.

During the three and nine months ended October 31, 2013, the Company recorded $2.3 million and $4.5 million, respectively, of amortized interest expense related to the capitalized debt financing costs and original issue discount. During the three and nine months ended October 31, 2012, the Company recorded $1.0 million and $2.8 million, respectively, of amortized interest expense related to the capitalized debt financing costs and original issue discount.  As of October 31, 2013, total unamortized debt financing costs of $2.8 million and $6.9 million are recorded within prepaid expenses and other current assets and non-current other assets, respectively, based on scheduled future amortization. During the three months ended October 31, 2013, the Company made a voluntary prepayment of $35.0 million which resulted in the acceleration of approximately $1.9 million of non-cash interest expense related to unamortized debt financing costs and original issue discount.

During the three and nine months ended October 31, 2013, the Company paid approximately $5.9 million and $17.2 million in interest, respectively. During the three and nine months ended October 31, 2012, the Company paid approximately $6.7 million and $20.1 million in interest, respectively.

Future scheduled minimum payments including estimated mandatory prepayments under the Senior Credit Facilities are as follows (in thousands):

Fiscal 2014	$	1,163
Fiscal 2015		4,650
Fiscal 2016		4,650
Fiscal 2017		4,650
Fiscal 2018		401,900
Total	$	417,013

SENIOR NOTES

On May 26, 2010, senior notes ("Senior Notes") were issued under an indenture among the Company, as issuer, SSI Co-Issuer LLC, a wholly owned subsidiary of SSI II, as co-issuer, Wilmington Trust FSB, as trustee, and the Guarantors in an aggregate principal amount of $310.0 million. The Senior Notes mature on June 1, 2018. Interest is payable semiannually (at 11.125% per annum) in cash to holders of Senior Notes of record at the close of business on the May 15 or November 15 immediately preceding the interest payment date, on June 1 and December 1 of each year, commencing December 1, 2010. Interest is paid on the basis of a 360-day year consisting of twelve 30-day months.

The Senior Notes are unsecured senior obligations of SSI II and SSI Co-Issuer LLC and are guaranteed on a senior unsecured basis by SSI III Limited and the restricted subsidiaries of Skillsoft (other than immaterial subsidiaries and certain other excluded subsidiaries) that guarantee the Company’s Senior Credit Facilities. The guarantees of the Senior Notes are joint and several and will terminate upon the following customary circumstances: (i) the sale, exchange, disposition or transfer (by merger or otherwise) of all of the capital stock of a Guarantor, or all or substantially all of its assets; (ii) the release or discharge of the guarantee of the other indebtedness which resulted in the creation of the guarantee by such Guarantor under the Indenture; (iii) the proper designation of a Guarantor as an “Unrestricted Subsidiary” and (iv) the legal defeasance, covenant defeasance, or satisfaction and discharge of the Indenture, in each such case specified in clauses (i) through (iv) above in accordance with the requirements therefore set forth in the Indenture.

The Company may redeem the Senior Notes, in whole or in part, at any time on or after June 1, 2014, at a redemption price equal to 100% of the principal amount of the senior notes plus a premium declining ratably to par plus accrued and unpaid interest (if any).

The Company may also redeem any of the Senior Notes at any time prior to June 1, 2014 at a redemption price of 100% of their principal amount plus a make-whole premium and accrued and unpaid interest (if any). This option is required to be bifurcated for accounting purposes as an embedded derivative in the Company’s Senior Notes. The Company has estimated the value of this option to be nominal as of January 31, 2013 and October 31, 2013. This call feature will be marked to market over the period it is active.

If the Company experiences certain kinds of changes of control, it must offer to purchase the Senior Notes at 101% of their principal amount plus accrued and unpaid interest (if any). If the Company sells certain assets and does not reinvest the net proceeds as specified in the indenture governing the Senior Notes, it must offer to repurchase the Senior Notes at 100% of their principal amount plus accrued and unpaid interest (if any).

The indenture governing the Senior Notes contains covenants that, among other things, restrict, subject to certain exceptions, the Company’s ability and the ability of its restricted subsidiaries to: incur additional debt; pay dividends or distributions on its capital stock or repurchase its capital stock; issue preferred stock of subsidiaries; make certain investments; create liens on its assets to secure debt; enter into transactions with affiliates; merge or consolidate with another company; and sell or otherwise transfer assets. Subject to certain exceptions, the indenture governing the Senior Notes permits the Company and its subsidiaries to incur additional indebtedness, including secured indebtedness. At October 31, 2013, the Company was in compliance with these covenants.

In connection with the issuance of the Senior Notes, the Company incurred debt financing costs of $11.5 million. The Company capitalized these fees and is amortizing them to interest expense over the term of the Senior Notes using the effective interest method.During both the three months ended October 31, 2013and October 31, 2012,  the Company recorded $0.4 million of amortized interest expense related to these capitalized debt financing costs.During both the nine months endedOctober 31, 2013 andOctober 31, 2012, the Company recorded $1.1 million of interest expense related to the amortization of the capitalized debt financing costs. As of October 31, 2013, total unamortized debt financing costs of $1.4 million and $5.1 million are recorded within prepaid expenses and other current assets and non-current other assets, respectively, based on scheduled future amortization.

The Company paid its semi-annual interest payment of $17.2 million on June 1, 2013.

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Shareholders' Equity (Schedule Of Stock Option Activity) (Details) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012	Jan. 31, 2013
Shares, Outstanding, January 31, 2013			639,747
Shares, Granted			1,908
Shares, Exercised	0	0	0	0
Shares, Forfeited			(2,777)
Shares, Outstanding, October 31, 2013	638,878		638,878		639,747
Shares, Exercisable, October 31, 2013	158,755		158,755
Shares, Vested and expected to vest, October 31, 2013	638,878		638,878
Exercise Price, Granted			$ 142.00
Weighted Average Remaining Contractual Term (Years), Outstanding, January 31, 2013			7 years 1 month 6 days		7 years 9 months 18 days
Weighted Average Remaining Contractual Term (Years), Outstanding, October 31, 2013			7 years 1 month 6 days		7 years 9 months 18 days
Weighted Average Remaining Contractual Term (Years), Exercisable, October 31, 2013			7 years 1 month 6 days
Weighted Average Remaining Contractual Term (Years), Vested and expected to vest, October 31, 2013			7 years 1 month 6 days
Minimum [Member]
Excercise Price, Outstanding, January 31, 2013			$ 100.00
Exercise Price, Forfeited			$ 100.00
Excercise Price, Outstanding, October 31, 2013	$ 100.00		$ 100.00
Exercise Price, Exercisable, October 31, 2013	$ 100.00		$ 100.00
Exercise Price, Vested and expected to vest, October 31, 2013	$ 100.00		$ 100.00
Maximum [Member]
Excercise Price, Outstanding, January 31, 2013			$ 117.00
Exercise Price, Forfeited			$ 117.00
Excercise Price, Outstanding, October 31, 2013	$ 142.00		$ 142.00
Exercise Price, Exercisable, October 31, 2013	$ 142.00		$ 142.00
Exercise Price, Vested and expected to vest, October 31, 2013	$ 142.00		$ 142.00

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Goodwill And Intangible Assets (Schedule Of Amortization Expense Related To Finite-Lived Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2013
Goodwill And Intangible Assets [Abstract]
2014 (remaining three months)	$ 27,040
2015	80,488
2016	42,236
2017	27,197
2018	21,102
2019	16,845
2020	13,440
2021	3,294
Total	$ 231,642

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Guarantors (Narrative) (Details) (USD $)	9 Months Ended
	Oct. 31, 2013	May 26, 2010
Wholly owned guarantor subsidiaries percentage	100.00%
Senior Notes [Member]
Aggregate principal amount		$ 310.0
Interest rate percentage		11.125%
Maturity date	Jun. 01, 2018

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Fair Value Measurements (Tables)

9 Months Ended

Oct. 31, 2013

Fair Value Measurements [Abstract]

Schedule Of Financial Instruments Not Recorded At Fair Value

	October 31, 2013
		Current Value		Fair Value
Senior Notes	$	310,000	$	340,420

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Other Assets (Tables)

9 Months Ended

Oct. 31, 2013

Other Assets [Abstract]

Schedule Of Other Assets

		October 31, 2013		January 31, 2013
Debt financing cost – long term (See Note 16)	$	12,053	$	15,982
Other		1,631		2,013
Note receivable		4,362		4,450
Total other assets	$	18,046	$	22,445

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Other Long Term Liabilities (Tables)

9 Months Ended

Oct. 31, 2013

Other Long Term Liabilities [Abstract]

Schedule Of Other Long Term Liabilities

		October 31, 2013		January 31, 2013
Uncertain tax positions; including interest and penalties – long term	$	7,415	$	7,619
Unfavorable lease commitments assumed in the acquisition of Element K		740		898
Other		3,199		1,499
Total other long-term liabilities	$	11,354	$	10,016

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Acquisitions

9 Months Ended

Oct. 31, 2013

Acquisitions [Abstract]

Acquisitions

6. ACQUISITIONS

ThirdForce Group PLC (“MindLeaders”)

On September 25, 2012, Skillsoft Ireland Limited (the "Buyer"), an indirect subsidiary of SSI II, completed the first closing of the cash offer (the “Offer”) for the entire issued and to be issued share capital of MindLeaders, at which time it received acceptances from approximately 91.3% of the issued and outstanding shares of MindLeaders. The Offer remained open for acceptance until October 11, 2012 for any remaining shareholders to accept the Offer and receive their funds. For the remaining 1.8% of shareholders, which did not accept the Offer by that time, the Buyer served notice on those shareholders of its intention to compulsorily acquire their shares as allowed under Irish securities law, based on the same terms of the initial Offer. This notice represented a forward contract to purchase the remaining shares of MindLeaders at a fixed price which has been recorded as a liability on the accompanying balance sheet and resulted in the determination for accounting purposes that the Company controlled 100% of MindLeaders as of October 31, 2012. Accordingly, no non-controlling interest was recognized in the Company’s consolidated financial statements.

All remaining shares were legally acquired during November 2012.

The acquisition of MindLeaders was accounted for as a business combination under ASC 805, Business Combinations. Accordingly, the results of MindLeaders have been included in the Company's consolidated financial statements since the date of acquisition.

The cash purchase price of $64.3 million was preliminarily allocated based upon the fair value of the assets acquired and liabilities assumed at the date of acquisition using available information and certain assumptions management believed reasonable. The following table summarizes the purchase price allocation (in thousands):

Description		Amount
Current assets	$	7,927
Property and equipment		513
Goodwill		40,925
Amortizable intangible assets		27,703
Long term assets		575
Current liabilities		(7,857)
Deferred revenue		(1,484)
Long term liabilities		(3,986)
Total	$	64,316

The acquisition of MindLeaders resulted in allocations of the purchase price to goodwill and identified intangible assets of $40.9 million and $27.7 million, respectively. Intangible assets and their estimated useful lives consist of the following (in thousands):

Description		Amount	Life
Proprietary development software and courseware	$	3,258	3 years
Customer relationships		23,225	8 years
Backlog		1,220	4 years
Total	$	27,703

Values and useful lives assigned to intangible assets were based on estimated value and use of these assets by a market participant. The customer relationships were valued using the income approach and the proprietary developed software and courseware was valued using the cost approach.

Goodwill represents the excess of the purchase price over the net identifiable tangible and intangible assets acquired. The Company determined that the acquisition of MindLeaders resulted in the recognition of goodwill primarily because the acquisition is expected to help the Company meet its long term operating profitability objectives through significant cost and service synergies. Goodwill is deductible for tax purposes.

The acquired intangible assets and goodwill are subject to review for impairment if indicators of impairment develop and otherwise at least annually.

The Company assumed certain liabilities in the acquisition of MindLeaders, including deferred revenue that was ascribed a fair value of $1.5 million using a cost-plus profit approach. The Company is amortizing deferred revenue over the period for which it is incurring costs to support the assumed customer obligations. In allocating the purchase price, the Company recorded an adjustment to reduce the carrying value of MindLeaders’ deferred revenue by $9.2 million. Approximately $0.3 million of acquired MindLeaders deferred revenue remained unamortized at October 31, 2013.  

The Company incurred acquisition related expenses, which primarily consisted of transaction fees, legal, accounting and other professional services, that are included in “Acquisition related expenses” in the accompanying condensed consolidated statements of operations.

The Company concluded that the acquisition of MindLeaders represented a material business combination for purposes of disclosure under ASC 805, Business Combinations. The following unaudited pro forma information presents the consolidated results of operations of the Company and MindLeaders for the three and nine months ended October 31, 2012, as if the acquisition had occurred as of the beginning of the annual period preceding the acquisition of MindLeaders, with pro forma adjustments to give effect to amortization of intangible assets, an increase in interest expense on acquisition financing, and certain other adjustments:

		Three Months Ended	Nine Months Ended
		October 31, 2012	October 31, 2012
Revenue	$	101,841	$	298,982
Net loss		(18,093)		(66,903)

The Company’s only significant non-recurring pro-forma adjustments impacting the periods shown above relate to purchase accounting adjustments to deferred revenue.

The unaudited pro forma results are not necessarily indicative of the results that the Company would have attained had the acquisition of MindLeaders occurred as of February 1, 2011.

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Credit Facilities And Debt (Schedule Of Future Scheduled Minimum Payments) (Details) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2013
Credit Facilities And Debt [Abstract]
Fiscal 2014	$ 1,163
Fiscal 2015	4,650
Fiscal 2016	4,650
Fiscal 2017	4,650
Fiscal 2018	401,900
Total	$ 417,013

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Restructuring (Tables)

9 Months Ended

Oct. 31, 2013

Restructuring [Abstract]

Schedule Of Restructuring Accrual

		Employee Severance and Related Costs		Contractual Obligations		Total
Restructuring accrual as of January 31, 2013	$	837	$	878	$	1,715
Restructuring charges incurred		1,622		1,301		2,923
Payments made		(1,899)		(873)		(2,772)
Restructuring accrual as of October 31, 2013	$	560	$	1,306	$	1,866

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Revenue Recognition (Details)	9 Months Ended
	Oct. 31, 2013
Minimum [Member]
License agreement term	1 year
Median [Member]
License agreement term	2 years
Maximum [Member]
License agreement term	3 years

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Goodwill And Intangible Assets

9 Months Ended

Oct. 31, 2013

Goodwill And Intangible Assets [Abstract]

Goodwill And Intangible Assets

9. GOODWILL AND INTANGIBLE ASSETS

Intangible assets are as follows (in thousands):

	October 31, 2013						January 31, 2013
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Internally developed software/ courseware	$	268,732	$	212,213	$	56,519	$	268,678	$	170,933	$	97,745
Customer contracts/ relationships		295,984		136,637		159,347		297,109		102,839		194,270
Non-compete agreement		4,070		1,662		2,408		4,070		1,052		3,018
Trademarks and trade names		15,220		6,804		8,416		15,220		5,449		9,771
Backlog		59,000		54,048		4,952		59,000		48,956		10,044
Skillsoft trademark		129,900		-		129,900		129,900		-		129,900
	$	772,906	$	411,364	$	361,542	$	773,977	$	329,229	$	444,748

Amortization expense related to the existing finite-lived intangible assets is expected to be as follows (in thousands):

Fiscal Year		Amortization Expense
2014 (remaining three months)	$	27,040
2015		80,488
2016		42,236
2017		27,197
2018		21,102
2019		16,845
2020		13,440
2021		3,294
Total	$	231,642

In connection with the Acquisition, the Company concluded that its “Skillsoft” brand name is an indefinite lived intangible asset, as the brand has been in continuous use since 1999 and the Company has no plans to discontinue using the Skillsoft name.

The change in goodwill at October 31, 2013 from the amount recorded at January 31, 2013 is as follows:

Gross carrying amount of goodwill, January 31, 2013	$	637,524
Change in fair value assessment of MindLeaders		(56)
Foreign currency translation adjustment		(1,578)
Gross carrying amount of goodwill, October 31, 2013	$	635,890

The Company will be conducting its annual impairment test of goodwill for the fiscal year ending January 31, 2014 in the fourth quarter. There were no indicators of impairment identified in the third quarter of fiscal 2014.

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Shareholders' Equity

9 Months Ended

Oct. 31, 2013

Shareholders' Equity [Abstract]

Shareholders' Equity

5. SHAREHOLDERS’ EQUITY

(a)Share-Based Compensation

On November 16, 2010, the Manager of SSILuxco II S.A. (“Luxco II”), a Luxembourg entity which is an indirect parent of the Company, adopted the SSILuxco II S.A. 2010 Equity Incentive Plan (the “2010 Plan”) to advance the interests of Luxco II and its subsidiaries by providing Luxco II with the right to grant equity-based awards to eligible participants (i.e., key employees and directors of, and consultants and advisors to, Luxco II and/or its subsidiaries). Awards under the 2010 Plan are intended to align the incentives of (i) the executives of Luxco II and its subsidiaries and (ii) its direct and indirect shareholders.

Share options granted to date become exercisable based on service-based conditions or a combination of service-, performance- and market-based conditions. Service conditions are based on the length of employment and become exercisable at certain time-based milestones, assuming continued employment of the holder by the Company. Performance conditions include the receipt of a dividend or sale of shares by the equity sponsors, an initial public offering or a change in control. Market conditions are based on the return received (or deemed received) by the equity sponsors on their initial equity investment in Luxco II and upon the occurrence of certain events, including a change in control of Luxco II. Options are priced at the fair market value on the date of grant, supported by a contemporaneous valuation of the ordinary shares of the Company using a combination of the discounted cash flow method and the guideline company method. Shares of Luxco II acquired upon the exercise of such share options are subject to both transfer restrictions and repurchase rights following a termination of employment. The share options expire on the tenth anniversary of the date of grant.

Any share-based compensation recognized in relation to share options granted under the 2010 Plan is recorded in the statement of operations for the subsidiaries for which those persons who received grants are employed.

No tax benefit was realized during the three and nine month periods ended October 31, 2013 and October 31, 2012, as no share options were exercised.

Share Options

A summary of share option activity under the 2010 Plan for the nine months ended October 31, 2013 is as follows:

Share Options	Shares	Exercise Price	Weighted Average Remaining Contractual Term (Years)
Outstanding, January 31, 2013	639,747	100.00 - 117.00	7.8
Granted	1,908	142.00	-
Exercised	-	-	-
Forfeited	(2,777)	100.00 - 117.00	-
Expired	-	-	-
Outstanding, October 31, 2013	638,878	100.00 - 142.00	7.1
Exercisable, October 31, 2013	158,755	100.00 - 142.00	7.1
Vested and expected to vest, October 31, 2013	638,878	100.00 - 142.00	7.1

Service-Based Vesting Options

Grants of share options which become exercisable based on service conditions vest over a period of 5 years (20% of the shares subject to the options vest on each of the first, second, third, fourth and fifth anniversaries of the earlier of the grant date or a pre-determined vesting commencement date) provided that the optionee is continuously employed by the Company or any of its subsidiaries, and vest immediately upon a change in control. The share options expire 10 years from the date of grant. Service-based vesting options were valued on the date of grant using the Black-Scholes option-pricing model.

Performance- and Market-Based Vesting Options

Luxco II also granted share options to purchase ordinary shares of Luxco II that vest based on the completion of a liquidity event that results in specified returns on the equity sponsors’ investment in Luxco II.

Such liquidity events would include, but not be limited to, an initial public offering of Luxco II, or a change-in-control transaction under which the investor group disposes of or sells more than 50 percent of the total voting power or economic interest in Luxco II to one or more third independent parties. These share options expire 10 years from the date of grant.

The fair value of the share options with market and performance conditions was estimated on the grant date using the Monte Carlo Simulation Approach.

Recognition of Share-Based Compensation Expense

Any shares received by the option holders upon exercise of such share options are subject to a repurchase feature by Luxco II in the event of termination of employment. The repurchase would generally be at fair value at the date of termination of employment in all instances except termination for cause or voluntary termination of employment by the employee without “good reason”. In those instances the repurchase would be at the lower of cost or fair market value as defined in the 2010 Plan. The repurchase feature would lapse only in the event of an initial public offering or change in control. The Company had previously concluded that this repurchase feature represented an additional performance condition and had not recorded any share-based compensation, as the performance condition was not deemed probable.

The Company subsequently re-evaluated the accounting for its share options and determined that for all service-based vesting options, share-based compensation expense should be recorded over the shorter of the vesting period or the earliest period to retirement (for certain executive option holders who can voluntarily terminate their employment at a specified retirement age). In addition, the Company determined that for performance- and market-based awards to certain executive option holders who can voluntarily terminate their employment at a specified retirement age and be considered having resigned for “good reason”, the share options may vest prior to a liquidity event if specified returns on the equity sponsors’ investment are achieved at the time of retirement. As a result the Company determined that these awards do not include performance conditions and share-based compensation expense associated with these share options is recognized over the shortest requisite service date, which is typically the period from the date of grant through the earliest eligible retirement date.

In the fiscal year ended January 31, 2013, the Company recognized $14.2 million of share-based compensation expense, which includes $2.1 million and $6.0 million of share-based compensation attributable to services performed in prior periods which should have been recognized in the period from May 26, 2010 to January 31, 2011 and the fiscal year ended January 31, 2012, respectively. The error correction of cumulative share-based compensation expense to date in the fiscal year ended January 31, 2013 was not considered material to the Company’s prior consolidated financial statements.

In the three and nine months ended October 31, 2013, the Company recognized $1.5 million and $4.6 million of share-based compensation expense, respectively. Total unrecognized share-based compensation expense associated with all share options as of October 31, 2013 was $10.0 million.

(b)Share Capital

As of October 31, 2013, the Company's authorized share capital consisted of 1,000,000,000 ordinary shares of par value $1.00 each. As of October 31, 2013 and January 31, 2013,  534,513,271 ordinary shares were issued and outstanding.

Subject to the Articles of Association of the Company, at a general meeting of the Company, on a show of hands every holder of ordinary shares who (being an individual) is present in person or by proxy or (being a body corporate) is present by proxy or by a representative shall have one vote, and on a poll every holder of ordinary shares who is present in person or by a proxy or (being a body corporate) by proxy or by a representative shall have one vote for every ordinary share of which he is the holder. However, if and for so long as the Company is a single member company, all matters requiring a resolution of the Company in general meeting (except the removal of the auditors of the Company from office) may be validly dealt with by a decision of the sole member.

Subject to the Articles of Association of the Company, sums legally available to be distributed by the Company in or in respect of any financial period may (to the extent so resolved or recommended by the board of directors) be distributed amongst the holders of ordinary shares in proportion to the number of ordinary shares held by them.

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Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Oct. 31, 2013	Oct. 31, 2012
Cash flows from operating activities:
Net loss	$ (24,113)	$ (65,082)
Adjustments to reconcile net loss to net cash provided by operating activities:
Share-based compensation	4,557
Depreciation and amortization	5,047	3,725
Amortization of intangible assets	82,465	92,982
Recovery of bad debts	(125)	(43)
Benefit for income taxes - non-cash	(17,954)	(15,485)
Non-cash interest expense	5,245	3,590
Non-cash loss on extinguishment of debt		254
Loss on disposition of assets	277	152
Changes in current assets and liabilities, net of acquisitions:
Accounts receivable	90,139	98,389
Prepaid expenses and other current assets	1,580	6,056
Accounts payable	(1,593)	(8,603)
Accrued expenses, including long-term	(9,920)	(12,166)
Deferred revenue	(74,281)	(65,957)
Net cash provided by operating activities	61,324	37,812
Cash flows from investing activities:
Purchases of property and equipment	(7,899)	(5,683)
Proceeds on disposition of assets		96
Acquisition of Mindleaders, net of cash received		(62,332)
Decrease (increase) in restricted cash, net	34	(33)
Net cash used in investing activities	(7,865)	(67,952)
Cash flows from financing activities:
Proceeds from issuance of Senior Credit Facilities, net of issuance costs and original issue discount		45,062
Payment received on note for sale of TCE	507	840
Principal payments on Senior Credit Facilities	(38,488)	(1,894)
Net cash used in financing activities	(37,981)	44,008
Effect of exchange rate changes on cash and cash equivalents	(179)	79
Net increase in cash and cash equivalents	15,299	13,947
Cash and cash equivalents, beginning of period	39,048	28,908
Cash and cash equivalents, end of period	$ 54,347	$ 42,855

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Discontinued Operations (Schedule Of Discontinued Operations) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012
Discontinued Operations [Abstract]
Revenue from discontinued operations	$ 233		$ 5,471
Loss from discontinued operations before income taxes	(80)	(182)	(975)
Income tax benefit	32		390
Loss from discontinued operations	$ (48)	$ (182)	$ (585)

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Acquisitions (Schedule Of Intangible Assets And Estimated Useful Lives) (Details) (ThirdForce Group PLC (“Mindleaders”) [Member], USD $) In Thousands, unless otherwise specified	9 Months Ended
	Oct. 31, 2013
Acquired Finite-Lived Intangible Assets [Line Items]
Amount	$ 27,703
Proprietary Development Software And Courseware [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Amount	3,258
Life	3 years
Customer Relationships [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Amount	23,225
Life	8 years
Backlog [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Amount	$ 1,220
Life	4 years

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Disclosures About Segments Of An Enterprise (Tables)

9 Months Ended

Oct. 31, 2013

Disclosures About Segments Of An Enterprise [Abstract]

Schedule Of Revenues By Geographical Area

	Three Months Ended October 31,				Nine Months Ended  October 31,
		2013		2012		2013		2012
Revenue:
United States	$	78,835	$	72,994	$	232,938	$	216,175
United Kingdom		10,062		8,884		28,845		26,355
Canada		5,612		5,674		16,495		16,158
Europe, excluding United Kingdom		4,820		4,514		14,542		12,942
Australia/New Zealand		3,757		4,020		11,580		11,954
Other (Countries less than 5% individually, by region)		2,880		2,287		8,853		6,692
Purchase accounting adjustments		(941)		(2,640)		(6,106)		(11,484)
Total revenue	$	105,025	$	95,733	$	307,147	$	278,792

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Guarantors (Schedule Of Condensed Consolidated Balance Sheets) (Details) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2013	Jan. 31, 2013	Oct. 31, 2012	Jan. 31, 2012
Cash and cash equivalents	$ 54,347	$ 39,048	$ 42,855	$ 28,908
Restricted cash	102	136
Accounts receivable, net	97,368	188,682
Deferred tax assets	10,134	1,360
Prepaid expenses and other current assets	32,678	34,741
Total current assets	194,629	263,967
Property and equipment, net	13,595	13,654
Goodwill	635,890	637,524
Intangible assets, net	361,542	444,748
Deferred tax assets		10,090
Other assets	18,046	22,445
Total assets	1,223,702	1,392,428
Current maturities of long term debt	3,433	3,311
Accounts payable	7,790	11,650
Accrued compensation	13,257	23,456
Accrued expenses	37,400	39,310
Deferred tax liabilities	7,589	15,153
Deferred revenue	186,698	262,452
Total current liabilities	256,167	355,332
Long term debt	717,960	755,034
Deferred tax liabilities	14,673	26,646
Other long term liabilities	11,354	10,016
Total long-term liabilities	743,987	791,696
Total stockholders' equity	223,548	245,400
Total liabilities and stockholders' equity	1,223,702	1,392,428
Issuer [Member]
Cash and cash equivalents	89	85	82	27
Prepaid expenses and other current assets	1,475	1,454
Total current assets	1,564	1,539
Investment in subsidiaries	962,523	954,971
Other assets	5,111	6,192
Total assets	969,198	962,702
Accrued expenses	14,429	5,798
Intercompany payable	422,589	403,038
Total current liabilities	437,018	408,836
Long term debt	308,632	308,466
Total long-term liabilities	308,632	308,466
Total stockholders' equity	223,548	245,400
Total liabilities and stockholders' equity	969,198	962,702
Guarantor [Member]
Cash and cash equivalents	40,274	22,543	27,333	18,707
Restricted cash	6	6
Accounts receivable, net	85,950	164,053
Intercompany receivables	429,297	410,573
Deferred tax assets	9,647	967
Prepaid expenses and other current assets	26,819	29,063
Total current assets	591,993	627,205
Property and equipment, net	13,355	13,652
Goodwill	610,920	611,192
Intangible assets, net	348,942	428,637
Investment in subsidiaries	1,370,696	1,364,497
Investment in, and advances to, nonconsolidated affiliates	535	425
Deferred tax assets	(268)	10,008
Other assets	12,320	15,543
Total assets	2,948,493	3,071,159
Current maturities of long term debt	3,433	3,311
Accounts payable	7,735	11,557
Accrued compensation	12,197	21,310
Accrued expenses	21,512	29,444
Intercompany payable	832,341	864,535
Deferred tax liabilities	7,524	15,125
Deferred revenue	166,437	233,084
Total current liabilities	1,051,179	1,178,366
Long term debt	409,328	446,568
Deferred tax liabilities	11,294	22,506
Other long term liabilities	10,144	8,593
Total long-term liabilities	430,766	477,667
Total stockholders' equity	1,466,548	1,415,126
Total liabilities and stockholders' equity	2,948,493	3,071,159
Non-Guarantor [Member]
Cash and cash equivalents	13,984	16,420	15,440	10,174
Restricted cash	96	130
Accounts receivable, net	11,418	24,629
Deferred tax assets	487	393
Prepaid expenses and other current assets	3,849	3,799
Total current assets	29,834	45,371
Property and equipment, net	240	2
Goodwill	24,970	26,332
Intangible assets, net	12,600	16,111
Investment in subsidiaries	4,166	4,167
Deferred tax assets	268	82
Other assets	615	710
Total assets	72,693	92,775
Accounts payable	55	93
Accrued compensation	1,060	2,146
Accrued expenses	1,859	4,468
Intercompany payable	47,260	48,197
Deferred tax liabilities	65	28
Deferred revenue	20,261	29,368
Total current liabilities	70,560	84,300
Deferred tax liabilities	3,379	4,140
Other long term liabilities	1,210	1,423
Total long-term liabilities	4,589	5,563
Total stockholders' equity	(2,456)	2,912
Total liabilities and stockholders' equity	72,693	92,775
Eliminations [Member]
Intercompany receivables	(429,297)	(410,573)
Prepaid expenses and other current assets	535	425
Total current assets	(428,762)	(410,148)
Investment in subsidiaries	(2,337,385)	(2,323,635)
Investment in, and advances to, nonconsolidated affiliates	(535)	(425)
Total assets	(2,766,682)	(2,734,208)
Accrued expenses	(400)	(400)
Intercompany payable	(1,302,190)	(1,315,770)
Total current liabilities	(1,302,590)	(1,316,170)
Total stockholders' equity	(1,464,092)	(1,418,038)
Total liabilities and stockholders' equity	$ (2,766,682)	$ (2,734,208)

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Other Assets (Details) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2013	Jan. 31, 2013
Other Assets [Abstract]
Debt financing cost – long term (See Note 16)	$ 12,053	$ 15,982
Other	1,631	2,013
Note receivable	4,362	4,450
Total other assets	$ 18,046	$ 22,445

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Disclosures About Segments Of An Enterprise

9 Months Ended

Oct. 31, 2013

Disclosures About Segments Of An Enterprise [Abstract]

Disclosures About Segments Of An Enterprise

12. DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The Company’s chief operating decision makers are the Chief Executive Officer, Chief Financial Officer and the Chief Operating Officer. The Company views its operations and manages its business as one segment, providing multi-modal, on-demand e-learning and performance support solutions for global enterprises, government, education and small to medium-sized businesses.

The Company attributes revenue to different geographical areas on the basis of the location of the customer. Revenues by geographical area were as follows (in thousands):

	Three Months Ended October 31,				Nine Months Ended  October 31,
		2013		2012		2013		2012
Revenue:
United States	$	78,835	$	72,994	$	232,938	$	216,175
United Kingdom		10,062		8,884		28,845		26,355
Canada		5,612		5,674		16,495		16,158
Europe, excluding United Kingdom		4,820		4,514		14,542		12,942
Australia/New Zealand		3,757		4,020		11,580		11,954
Other (Countries less than 5% individually, by region)		2,880		2,287		8,853		6,692
Purchase accounting adjustments		(941)		(2,640)		(6,106)		(11,484)
Total revenue	$	105,025	$	95,733	$	307,147	$	278,792

Long-lived tangible assets at international locations are not considered significant.

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Discontinued Operations

9 Months Ended

Oct. 31, 2013

Discontinued Operations [Abstract]

Discontinued Operations

8. DISCONTINUED OPERATIONS

Following the Element K acquisition, the Company decided to divest the Training Channel Enablement (“TCE”) business acquired as part of the Element K acquisition as the Company did not believe this business was consistent with the Company’s strategy and profit model. As a result, on March 21, 2012, the Company entered into an asset purchase agreement pursuant to which it agreed to sell to Logical Operations Inc. (“Logical Operations”) certain TCE assets. The closing of the sale of the TCE assets occurred on March 31, 2012. The Company also entered into a transitional services agreement with Logical Operations. The services provided under this agreement were completed within the fiscal year ended January 31, 2013 and the cash flows from this agreement were not material.

When TCE was classified as held for sale, the assets and liabilities were recorded at fair value less costs to sell. The assets held for sale included allocated goodwill of $5.1 million. The business was sold for $8.1 million, payable in installments as outlined in the asset purchase agreement. We continuously evaluate this note receivable for potential impairment through a review of its collectability. There was no gain or loss recognized on the sale.

The Company has accounted for TCE as discontinued operations and the components of discontinued operations are as follows (in thousands):

	Three Months Ended October 31,				Nine Months Ended October 31,
Statement of operations:	2013			2012	2013			2012
Revenue from discontinued operations	$	-	$	233	$	-	$	5,471
Loss from discontinued operations before income taxes		-		(80)		(182)		(975)
Income tax benefit		-		32		-		390
Loss from discontinued operations	$	-	$	(48)	$	(182)	$	(585)

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Guarantors (Schedule Of Condensed Consolidated Statements Of Comprehensive Loss) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Oct. 31, 2013	Oct. 31, 2012	Oct. 31, 2013	Oct. 31, 2012
Net (loss) income	$ (4,458)	$ (18,265)	$ (24,113)	$ (65,082)
Other comprehensive income (loss) - Foreign currency adjustment	3,510	1,745	(2,296)	160
Comprehensive loss	(948)	(16,520)	(26,409)	(64,922)
Issuer [Member]
Net (loss) income	(4,458)	(18,265)	(24,113)	(65,082)
Comprehensive loss	(4,458)	(18,265)	(24,113)	(65,082)
Guarantor [Member]
Net (loss) income	16,253	2,048	37,706	(4,381)
Other comprehensive income (loss) - Foreign currency adjustment	2,303	1,170	13	1,268
Comprehensive loss	18,556	3,218	37,719	(3,113)
Non-Guarantor [Member]
Net (loss) income	(1,354)	508	(2,186)	(3,785)
Other comprehensive income (loss) - Foreign currency adjustment	54	575	(4,128)	(1,108)
Comprehensive loss	(1,300)	1,083	(6,314)	(4,893)
Eliminations [Member]
Net (loss) income	(14,899)	(2,556)	(35,520)	8,166
Other comprehensive income (loss) - Foreign currency adjustment	1,153		1,819
Comprehensive loss	$ (13,746)	$ (2,556)	$ (33,701)	$ 8,166

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Other Long Term Liabilities

9 Months Ended

Oct. 31, 2013

Other Long Term Liabilities [Abstract]

Other Long Term Liabilities

15. OTHER LONG TERM LIABILITIES

Other long term liabilities in the accompanying condensed consolidated balance sheets consist of the following (in thousands):

		October 31, 2013		January 31, 2013
Uncertain tax positions; including interest and penalties – long term	$	7,415	$	7,619
Unfavorable lease commitments assumed in the acquisition of Element K		740		898
Other		3,199		1,499
Total other long-term liabilities	$	11,354	$	10,016

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Accrued Expenses

9 Months Ended

Oct. 31, 2013

Accrued Expenses [Abstract]

Accrued Expenses

13. ACCRUED EXPENSES

Accrued expenses in the accompanying condensed consolidated balance sheets consisted of the following (in thousands):

		October 31, 2013		January 31, 2013
Professional fees	$	3,605	$	3,602
Sales tax payable/VAT payable		2,772		7,350
Accrued royalties		1,906		2,568
Accrued tax		2,399		4,815
Interest payable		16,165		7,772
Other accrued liabilities		10,553		13,203
Total accrued expenses	$	37,400	$	39,310

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Document And Entity Information	9 Months Ended
	Oct. 31, 2013
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 31, 2013
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2014
Entity Registrant Name	SSI Investments II Ltd
Entity Central Index Key	0001501919
Current Fiscal Year End Date	--01-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding	0

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Other Assets

9 Months Ended

Oct. 31, 2013

Other Assets [Abstract]

Other Assets

14. OTHER ASSETS

Other assets in the accompanying condensed consolidated balance sheets consist of the following (in thousands):

		October 31, 2013		January 31, 2013
Debt financing cost – long term (See Note 16)	$	12,053	$	15,982
Other		1,631		2,013
Note receivable		4,362		4,450
Total other assets	$	18,046	$	22,445

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Credit Facilities And Debt (Narrative) (Details) (USD $)	3 Months Ended	9 Months Ended			9 Months Ended			3 Months Ended		9 Months Ended					9 Months Ended		3 Months Ended		9 Months Ended				9 Months Ended
	Oct. 31, 2013	Oct. 31, 2013	Sep. 28, 2012 Term Loan Facility [Member]	Sep. 28, 2012 Revolving Credit Facility [Member]	Oct. 31, 2013 Minimum [Member]	Sep. 28, 2012 Previous [Member] Term Loan Facility [Member]	Sep. 28, 2012 Previous [Member] Revolving Credit Facility [Member]	Oct. 31, 2013 Senior Notes [Member]	Oct. 31, 2012 Senior Notes [Member]	Oct. 31, 2013 Senior Notes [Member]	Oct. 31, 2012 Senior Notes [Member]	May 26, 2010 Senior Notes [Member]	Oct. 31, 2013 Senior Notes [Member] Prepaid Expenses And Other Current Assets [Member]	Oct. 31, 2013 Senior Notes [Member] Other Non-Current Assets [Member]	Oct. 31, 2013 Senior Notes [Member] On Or After June 1, 2014 [Member]	Oct. 31, 2013 Senior Notes [Member] Prior To June 1, 2014 [Member]	Oct. 31, 2013 Senior Credit Facility [Member]	Oct. 31, 2012 Senior Credit Facility [Member]	Oct. 31, 2013 Senior Credit Facility [Member]	Oct. 31, 2012 Senior Credit Facility [Member]	Oct. 31, 2013 Senior Credit Facility [Member] Term Loan Facility [Member]	Oct. 31, 2013 Senior Credit Facility [Member] Revolving Credit Facility [Member]	Oct. 31, 2013 Senior Credit Facility [Member] Minimum [Member]	Oct. 31, 2013 Senior Credit Facility [Member] Maximum [Member]	Oct. 31, 2013 Senior Credit Facility [Member] Prepaid Expenses And Other Current Assets [Member]	Oct. 31, 2013 Senior Credit Facility [Member] Other Non-Current Assets [Member]
Debt Instrument [Line Items]
Additional borrowing amount		$ 50,000,000
Ownership interest requirement of conditional debt					80.00%
Margin percentage			3.75%	3.50%		4.75%	4.50%
Base rate percentage, floor			1.25%			1.75%
Debt financing costs		13,800,000								11,500,000															2,800,000	6,900,000
Original issue discount	2,100,000	2,100,000
Fees paid to lenders		4,000,000
Amount of credit facility																	505,000,000		505,000,000		465,000,000	40,000,000
Credit facility, amount outstanding																	0		0
Maturity date										Jun. 01, 2018									May 26, 2015
Percentage of expected excess cash flow to be exempt from prepayment of term loan																			50.00%
Percentage reduction of expected excess cash flow to be exempt from prepayment of term loan																							0.00%	25.00%
Percentage of cash proceeds of certain asset sales and casualty and condemnation events, to be exempt from prepayment of term loan																			100.00%
Percentage of cash proceeds of any incurrence of certain debt, other than debt permitted under Senior Credit Facilities, to be exempt from prepayment of term loan																			100.00%
Percentage of voluntary repayments in the second year																			2.00%
Percentage of voluntary prepayments in the third year																			1.00%
Percentage of initial aggregate principal amount paid on a quarterly basis																			0.25%
Percentage of capital stock of foreign subsidiaries that are required to guarantee credit facility																			65.00%
Amortized interest expense								400,000	400,000	1,100,000	1,100,000						2,300,000	1,000,000	4,500,000	2,800,000
Unamortized amount of debt issuance costs													1,400,000	5,100,000
Early repayment of credit facility	35,000,000
Non-cash interest expense resulting from early repayment	1,900,000
Interest paid										17,200,000							5,900,000	6,700,000	17,200,000	20,100,000
Aggregate principal amount												$ 310.0
Interest rate percentage												11.125%
Percentage of redemption price of principal amount that may be redeemed															100.00%	100.00%
Percentage of principal amount that must be offered for purchase if changes in control occur										101.00%
Percentage of principal amount that must be offered for repurchase if assets are sold and not reinvested										100.00%

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Other Long Term Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Oct. 31, 2013	Jan. 31, 2013
Other Long Term Liabilities [Abstract]
Uncertain tax positions; including interest and penalties – long term	$ 7,415	$ 7,619
Unfavorable lease commitments assumed in the acquisition of Element K	740	898
Other	3,199	1,499
Total other long-term liabilities	$ 11,354	$ 10,016