EX-99.1 2 ex-991.htm EX-99.1 ex-991.htm
 
FOR:
 SKILLSOFT PLC
   
 
 COMPANY CONTACT:
 
 Tom McDonald
 
 Chief Financial Officer
 
 (603) 324-3000, x4232
   
 
 INVESTOR CONTACT:
 
 Geoff Grande
 
 FD
 
 (617) 747-1721
 
 
SKILLSOFT REPORTS FIRST QUARTER FISCAL 2011 RESULTS

 
·
FIRST QUARTER REVENUE OF $76.9 MILLION AND NET INCOME OF $12.6 MILLION

 
·
FIRST QUARTER DILUTED EPS OF $0.13

 
·
FIRST QUARTER ADJUSTED EBITDA OF $29.4 MILLION

 
·
REDUCED DEBT BY $45.1 MILLION IN THE FIRST QUARTER

 
·
CASH, RESTRICTED CASH AND INVESTMENTS OF $92.5 MILLION

NASHUA, NH, May 20, 2010 - SkillSoft PLC (NASDAQ: SKIL), a leading Software as a Service (SaaS) provider of on-demand e-learning and performance support solutions for global enterprises, government, education and small to medium-sized businesses, today announced financial results for its first fiscal quarter of fiscal 2011.

FISCAL 2011 FIRST QUARTER RESULTS

The Company reported total revenue of $76.9 million for its first quarter ended April 30, 2010 of its fiscal year ending January 31, 2011 (fiscal 2011), which represented a 1% increase over the $76.4 million reported in its first quarter of the fiscal year ended April 30, 2009 (fiscal 2010).

On a US generally accepted accounting principles (US GAAP) basis, the Company’s net income was $12.6 million, or $0.13 per basic and diluted share, for the first quarter of fiscal 2011 as compared to net income of $18.8 million, or $0.19 per basic and diluted share, for the first quarter of fiscal 2010.

Gross margin increased slightly to 91% in the fiscal 2011 first quarter from 90% in the fiscal 2010 first quarter, primarily due to product mix.

Research and development expenses increased to $9.7 million in the fiscal 2011 first quarter from $9.0 million in the fiscal 2010 first quarter.  This increase was primarily due to additional outside service contractors and outsource partner expenses and an increase in compensation expense.  Research and development expenses were 13% of revenue for the fiscal 2011 first quarter as compared to 12% for the fiscal 2010 first quarter.

 
 
 
Sales and marketing expenses increased to $24.8 million in the fiscal 2011 first quarter from $22.4 million in the fiscal 2010 first quarter.  This increase was primarily due to the hiring of additional field sales personnel and an increase in demand generation marketing expenses. Sales and marketing expenses were 32% of revenue for the fiscal 2011 first quarter as compared to 29% for the fiscal 2010 first quarter.

General and administrative expenses increased to $8.5 million in the fiscal 2011 first quarter from $7.8 million in the fiscal 2010 first quarter.  The increase in general and administrative expenses was primarily due to an increase in professional expenses and compensation related expenses. General and administrative expenses were 11% of revenue for the fiscal 2011 first quarter as compared to 10% for the fiscal 2010 first quarter.

Acquisition related expenses for the fiscal 2011 first quarter were $5.3 million. These expenses related primarily to professional fees incurred in connection with the pending acquisition of the Company.

 The Company’s interest expense was $2.4 million for the fiscal 2011 first quarter and for the fiscal 2010 first quarter. Interest expense remained flat as a result of the additional principal payments on the Company’s long-term debt, which were offset by the accelerated non-cash debt amortization charges.   Additionally, on May 7, 2010 the Company paid the remaining outstanding debt balance of $39.3 million.

The Company’s effective tax rate was 31.7% for the fiscal 2011 first quarter, which consisted of a cash tax provision of approximately $2.1 million (11.5%) and a non-cash tax provision of approximately $3.7 million (20.1%).  This compares to a 22.6% effective tax rate for the fiscal 2010 first quarter, which consisted of a cash tax provision of approximately $2.2 million (9.0%) and a non-cash tax provision of approximately $3.3 million (13.6%). Included in the effective tax rate for the fiscal 2010 first quarter is approximately $0.4 million (1.6%) of discrete reductions to international tax based accruals.  The increase in the effective tax rate is primarily the result of increased year over year amortization of tax charges associated with the business realignment that took effect at the beginning of fiscal 2010.

An important leverage covenant included in our credit facility is adjusted EBITDA.  Adjusted EBITDA for the fiscal 2011 first quarter was $29.4 million as compared to $32.7 million for the fiscal 2010 first quarter.  For the fiscal 2011 first quarter, our trailing 12 month debt to adjusted EBITDA ratio was approximately 0.3. Adjusted EBITDA for the fiscal 2011 first quarter is calculated by taking net income ($12.6 million) and adding back depreciation and amortization ($1.1 million), amortization of intangible assets and capitalized software development costs ($0.9 million), acquisition related expense ($5.3 million), stock-based compensation ($1.4 million), interest expense ($2.4 million), provision for income taxes ($5.9 million), and deducting other income and interest income ($0.2 million).

SkillSoft had approximately $92.5 million in cash, cash equivalents, short-term investments and restricted cash as of April 30, 2010 as compared to $83.0 million as of January 31, 2010.  This increase is primarily due to cash provided by operations of $49.9 million, proceeds from the exercise of stock options of $3 million and proceeds from the employee stock purchase plan of $1.7 million.  The increase was partially offset by principal payments on long term debt of $45.1 million.

In order to adequately assess the Company’s collection efforts, taking into account the seasonality of the Company’s business, the Company believes that it is most useful to compare current period days sales outstanding (DSOs) to the prior year period.  Given the quarterly seasonality of bookings, the deferral from revenue of subscription billings may increase or decrease the DSOs on sequential quarterly comparisons.

 
 
 
 
SkillSoft’s DSOs were in the targeted range for the fiscal 2011 first quarter.  On a net basis, which considers only receivable balances for which revenue has been recorded; DSOs were 5 days in the fiscal 2011 first quarter as compared to 6 days in the year ago period and 11 days in the fourth quarter of fiscal 2010.  On a gross basis, which considers all items billed as receivables, DSOs were 77 days in both the fiscal 2011 and the fiscal 2010 first quarter and 160 days in the fourth quarter of fiscal 2010.  The slight decrease in net basis DSOs is due to improvements in customer collection efforts.

FISCAL 2011 OUTLOOK

As a reminder, since February 12, SkillSoft has been in an "offer period" for the purposes of the Irish Takeover Rules.  During the offer period, SkillSoft is subject to restrictions on the making of public statements.  If SkillSoft publishes any financial guidance which enables the calculation of future profits or losses, the Irish Takeover Rules require the preparation and publication of onerous reports from SkillSoft's auditors and financial advisers.  The preparation of such reports would have resulted in a delay to the issue of our earnings release.  Consequently, the Company will not be providing guidance with respect to fiscal 2011 or its second quarter of fiscal 2011 ending July 31, 2010.
 
Supplemental financial information is available on SkillSoft’s web site www.skillsoft.com.
 
Conference Call

 Management will not conduct a conference call to discuss the Company’s fiscal 2011 first quarter financial and operating results and the financial outlook for fiscal 2011.

About SkillSoft
 
SkillSoft PLC (NASDAQ: SKIL) is a leading SaaS provider of on-demand e-learning and performance support solutions for global enterprises, government, education and small to medium-sized businesses. SkillSoft enables business organizations to maximize business performance through a combination of comprehensive e- learning content, online information resources, flexible learning technologies and support services.
 
Content offerings include business, IT, desktop, compliance and consumer/SMB courseware collections, as well as complementary content assets such as Leadership Development Channel video products, KnowledgeCenter(TM) portals, virtual instructor-led training services and online mentoring services. SkillSoft’s Books24x7(R) product offering includes access to more than 25,000 digitized IT and business books, as well as book summaries and executive reports. Technology offerings include the SkillPort(R) learning management system, Search-and-Learn(R), SkillSoft(R) Dialogue(TM) and virtual classroom.
 
SkillSoft courseware content described herein is for information purposes only and is subject to change without notice. SkillSoft has no obligation or commitment to develop or deliver any future release, upgrade, feature, enhancement or function described in this press release except as specifically set forth in a written agreement.
 
SkillSoft, the SkillSoft logo, SkillPort, Search-and-Learn, SkillChoice, Books24x7, ITPro, BusinessPro, OfficeEssentials, GovEssentials, EngineeringPro, FinancePro, AnalystPerspectives, ExecSummaries, ExecBlueprints, Express Guide Dialogue and inGenius are trademarks or registered trademarks of SkillSoft PLC in the United States and certain other countries. All other trademarks are the property of their respective owners, countries.
 


 
###
 
 
 
 
 
SkillSoft PLC and Subsidiaries
            
Condensed Consolidated Statements of Income
            
 (Unaudited, In thousands except share and per share data)            
 
              
               
         
     
Three Months Ended
  
     
April 30,
  
     
2010
    
2009
  
               
Revenues
   $ 76,918     $ 76,439  
Cost of revenues (1)
     7,083  
 
 
   7,473  
Cost of revenues - amortization of intangible assets
     32       32  
                   
 
Gross profit
     69,803       68,934  
                   
Operating expenses:
                
 
Research and development (1)
     9,669       8,998  
 
Selling and marketing (1)
     24,804       22,411  
 
General and administrative (1)
     8,493       7,757  
 
Amortization of intangible assets
     896       2,455  
 
Acquisition related expenses
     5,322       -  
 
Restructuring
     -       52  
                   
Total operating expenses
     49,184       41,673  
                   
                   
Other (expense) income, net
     111       (618 )
Interest income
     82       70  
Interest expense
     (2,370 )     (2,445 )
                   
Income before provision for income taxes
     18,442       24,268  
                   
Provision for income taxes - cash
     2,130       2,201  
Provision for income taxes - non-cash
     3,709       3,288  
                   
Net income
   $ 12,603     $ 18,779  
                   
                   
Basic income per share
   $ 0.13     $ 0.19  
Diluted income pershare
   $ 0.13     $ 0.19  
                   
Basic weighted average common shares outstanding
     95,064,748       97,740,295  
Diluted weighted average common shares outstanding
     99,097,950       99,095,854  
                   
(1)
The following summarizes the departmental allocation of the stock-based compensation
                
                   
 
Cost of revenues
   $ 13     $ 21  
 
Research and development
     201       269  
 
Selling and marketing
     523       635  
 
General and administrative
     705       696  
      $ 1,442     $ 1,621  
 
 
 
 
 
 
SkillSoft PLC
            
 Condensed Consolidated Balance Sheets            
(Unaudited, In thousands)
            
             
   
April 30, 2010
    
January 31, 2010
  
             
ASSETS
            
             
CURRENT ASSETS:
            
Cash, cash equivalents and short-term investments
   $ 89,722     $ 80,241  
Restricted cash
     2,767       2,786  
Accounts receivable, net
     67,827       141,828  
Deferred tax assets
     18,881       28,902  
Prepaid expenses and other current assets
     23,435       23,447  
                 
Total current assets
     202,632       277,204  
                 
Property and equipment, net
     5,877       6,288  
Goodwill
     238,550       238,550  
Intangible assets, net
     4,300       5,227  
Deferred tax assets
     57,142       49,127  
Other assets
     9,951       9,835  
                 
Total assets
   $ 518,452     $ 586,231  
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
                 
CURRENT LIABILITIES:
                
                 
Current maturities of long term debt
   $ 404     $ 865  
Accounts payable
     3,095       4,519  
Accrued expenses
     27,118       41,386  
Deferred revenue
     172,786       200,369  
                 
Total current liabilities
     203,403       247,139  
                 
Long term debt
     38,860       83,500  
Other long term liabilities
     6,016       4,432  
Total long-term liabilities
     44,876       87,932  
                 
Total stockholders' equity
     270,173       251,160  
                 
Total liabilities and stockholders' equity
   $ 518,452     $ 586,231  
 
 
 
 
 
 
SkillSoft PLC
            
 Condensed Consolidated Statements of Cash Flows            
(Unaudited, In thousands)
            
             
       
   
Three Months Ended
  
   
April 30,
  
   
2010
    
2009
  
             
Cash flows from operating activities:
            
             
Net income
   $ 12,603     $ 18,779  
     Adjustments to reconcile net income to net cash provided by operating activities:
                
     Share-based compensation
     1,442       1,621  
     Depreciation and amortization
     1,070       1,283  
     Amortization of intangible assets
     928       2,487  
     Provision for (recovery) of bad debts
     109       (37 )
     Provision for income taxes - non-cash
     3,709       3,288  
     Non-cash interest expense
     1,822       297  
     Tax effect related to exercise of non-qualified stock options
     (323 )     (5 )
Changes in current assets and liabilities, net of acquisitions
                
     Accounts receivable
     73,768       81,169  
     Prepaid expenses, other current assets and other assets
     307       985  
     Accounts payable
     (1,424 )     (3,429 )
     Accrued expenses and other long-term liabilities
     (16,671 )     (12,271 )
     Deferred revenue
     (27,399 )     (29,183 )
                 
Net cash provided by operating activities
     49,941       64,984  
                 
Cash flows from investing activities:
                
                 
Purchases of property and equipment
     (230 )     (986 )
Purchases of investments
     (2,553 )     (600 )
Maturity of investments
     1,850       1,100  
Decrease (increase) in restricted cash
     19       (38 )
                 
Net cash used in investing activities
     (914 )     (524 )
                 
Cash flows from financing activities:
                
                 
Exercise of stock options
     2,990       269  
Proceeds from employee stock purchase plan
     1,666       1,164  
Principal payments on long term debt
     (45,101 )     (18,293 )
Acquisition of treasury stock
     -       (9,399 )
Tax effect related to exercise of non-qualified stock options
     323       5  
                 
Net cash used in financing activities
     (40,122 )     (26,254 )
                 
Effect of exchange rate changes on cash and cash equivalents
     (130 )     730  
                 
Net increase in cash and cash equivalents
     8,775       38,936  
Cash and cash equivalents, beginning of period
     76,682       37,853  
                 
Cash and cash equivalents, end of period
   $ 85,457     $ 76,789