R
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
FOR
THE QUARTERLY PERIOD ENDED OCTOBER 31, 2008
|
|
OR | |
£
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
FOR THE TRANSITION PERIOD FROM ________ TO ________ |
REPUBLIC
OF IRELAND
|
N/A
|
(STATE
OR OTHER JURISDICTION OF
|
(I.R.S.
EMPLOYER
|
INCORPORATION
OR ORGANIZATION)
|
IDENTIFICATION
NO.)
|
107
NORTHEASTERN BOULEVARD
|
|
NASHUA,
NEW HAMPSHIRE
|
03062
|
(ADDRESS
OF PRINCIPAL EXECUTIVE OFFICES)
|
(ZIP
CODE)
|
Large
accelerated filer R
|
Accelerated
filer £
|
||
Non-accelerated
filer £
|
Smaller
reporting company £
|
||
(Do not check if a smaller reporting company) |
|
PAGE NO.
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31
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31
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42
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42
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43
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43
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44
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45
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|
EX-31.1 Section 302 Certification of CEO | |
EX-32.2 Section 906 Certification of CFO |
OCTOBER
31, 2008 (Unaudited)
|
JANUARY
31, 2008
|
|||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 64,764 | $ | 76,059 | ||||
Short-term
investments
|
8,804 | 13,525 | ||||||
Restricted
cash
|
3,745 | 3,963 | ||||||
Accounts
receivable, net
|
72,546 | 171,708 | ||||||
Prepaid
expenses and other current assets
|
19,114 | 29,061 | ||||||
Deferred
tax assets
|
10,326 | 13,476 | ||||||
Total
current assets
|
179,299 | 307,792 | ||||||
Property
and equipment, net
|
7,914 | 7,210 | ||||||
Intangible
assets, net
|
16,242 | 29,887 | ||||||
Goodwill
|
256,606 | 256,196 | ||||||
Deferred
tax assets
|
75,005 | 87,866 | ||||||
Other
assets
|
3,702 | 7,730 | ||||||
Total
assets
|
$ | 538,768 | $ | 696,681 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Current
maturities of long term debt
|
$ | 1,455 | $ | 2,000 | ||||
Accounts
payable
|
1,772 | 2,139 | ||||||
Accrued
compensation
|
7,952 | 24,577 | ||||||
Accrued
expenses
|
19,528 | 29,507 | ||||||
Deferred
revenue
|
142,642 | 219,161 | ||||||
Total
current liabilities
|
173,349 | 277,384 | ||||||
Long-term
debt
|
142,242 | 197,000 | ||||||
Other
long-term liabilities
|
5,932 | 9,209 | ||||||
Total
long-term liabilities
|
148,174 | 206,209 | ||||||
Commitments
and contingencies (Note 12)
|
||||||||
Shareholders'
equity:
|
||||||||
Ordinary
shares, €0.11 par value: 250,000,000 shares authorized; 104,088,871 and
111,663,813 shares issued at October 31, 2008 and January 31, 2008,
respectively
|
11,342 | 12,397 | ||||||
Additional
paid-in capital
|
541,967 | 591,303 | ||||||
Treasury
stock, at cost, 657,100 and 6,533,884 ordinary shares at October 31, 2008
and January 31, 2008, respectively
|
(5,401 | ) | (24,524 | ) | ||||
Accumulated
deficit
|
(329,678 | ) | (361,663 | ) | ||||
Accumulated
other comprehensive loss
|
(985 | ) | (4,425 | ) | ||||
Total
stockholders' equity
|
217,245 | 213,088 | ||||||
Total
liabilities and stockholders' equity
|
$ | 538,768 | $ | 696,681 |
THREE
MONTHS ENDED
|
NINE
MONTHS ENDED
|
|||||||||||||||
OCTOBER
31,
|
OCTOBER
31,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Revenues
|
$ | 83,064 | $ | 75,124 | $ | 248,039 | $ | 203,733 | ||||||||
Cost
of revenues (1)
|
9,374 | 8,282 | 28,013 | 23,827 | ||||||||||||
Cost
of revenues - amortization of intangible assets
|
1,690 | 1,740 | 5,170 | 3,683 | ||||||||||||
Gross
profit
|
72,000 | 65,102 | 214,856 | 176,223 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development (1)
|
12,138 | 13,710 | 38,136 | 35,315 | ||||||||||||
Selling
and marketing (1)
|
26,387 | 25,227 | 82,185 | 71,489 | ||||||||||||
General
and administrative (1)
|
9,130 | 9,449 | 27,454 | 25,572 | ||||||||||||
Amortization
of intangible assets
|
2,738 | 3,634 | 8,475 | 7,955 | ||||||||||||
Merger
and integration related expenses
|
- | 2,616 | 761 | 11,144 | ||||||||||||
SEC
investigation
|
- | 105 | 49 | 1,328 | ||||||||||||
Total
operating expenses
|
50,393 | 54,741 | 157,060 | 152,803 | ||||||||||||
Operating
income
|
21,607 | 10,361 | 57,796 | 23,420 | ||||||||||||
Other
income (expense), net
|
752 | (642 | ) | (282 | ) | (1,026 | ) | |||||||||
Interest
income
|
248 | 654 | 1,440 | 2,990 | ||||||||||||
Interest
expense
|
(3,103 | ) | (3,927 | ) | (10,116 | ) | (7,741 | ) | ||||||||
Income
before provision (benefit) for income taxes from continuing
operations
|
19,504 | 6,446 | 48,838 | 17,643 | ||||||||||||
Provision
(benefit) for income taxes
|
7,438 | 270 | 18,790 | (7,886 | ) | |||||||||||
Income
from continuing operations
|
12,066 | 6,176 | 30,048 | 25,529 | ||||||||||||
(Loss)
income from discontinued operations, net of income taxes
(2)
|
(37 | ) | (351 | ) | 1,937 | 173 | ||||||||||
Net
income
|
$ | 12,029 | $ | 5,825 | $ | 31,985 | $ | 25,702 | ||||||||
Net
income per share (Note 10):
|
||||||||||||||||
Basic
- continuing operations
|
$ | 0.12 | $ | 0.06 | $ | 0.29 | $ | 0.25 | ||||||||
Basic
- discontinued operations
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | 0.02 | $ | 0.00 | ||||||
$ | 0.12 | $ | 0.06 | $ | 0.31 | $ | 0.25 | |||||||||
Basic
weighted average common shares outstanding
|
104,182,736 | 104,789,720 | 104,779,876 | 104,165,555 | ||||||||||||
Diluted
- continuing operations
|
$ | 0.11 | $ | 0.06 | $ | 0.28 | $ | 0.24 | ||||||||
Diluted
- discontinued operations
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | 0.02 | $ | 0.00 | ||||||
$ | 0.11 | $ | 0.05 | † | $ | 0.29 | † | $ | 0.24 | |||||||
Diluted
weighted average common shares outstanding
|
107,500,272 | 108,552,456 | 108,656,388 | 108,018,673 |
(1)
|
Share-based
compensation included in cost of revenues and operating
expenses:
|
THREE
MONTHS ENDED OCTOBER 31,
|
NINE
MONTHS ENDED OCTOBER 31,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Cost
of revenues
|
$ | 52 | $ | 54 | $ | 163 | $ | 119 | ||||||||
Research
and development
|
227 | 226 | 695 | 659 | ||||||||||||
Selling
and marketing
|
412 | 442 | 1,434 | 1,309 | ||||||||||||
General
and administrative
|
731 | 657 | 2,212 | 1,921 |
(2)
|
Discontinued
operations:
|
Income
tax (benefit) expense
|
$ | (25 | ) | $ | (311 | ) | $ | 1,306 | $ | 76 |
NINE
MONTHS ENDED
|
|||||||
OCTOBER
31,
|
|||||||
2008
|
2007
|
||||||
Cash
flows from operating activities from continuing
operations:
|
|||||||
Income
from continuing operations
|
$ | 30,048 | $ | 25,529 | |||
Adjustments
to reconcile net income from continuing operations
|
|||||||
to
net cash provided by operating activities:
|
|||||||
Share-based
compensation
|
4,504 | 4,008 | |||||
Depreciation
and amortization
|
3,921 | 5,481 | |||||
Amortization
of intangible assets
|
13,645 | 11,638 | |||||
(Recovery
of) provision for bad debts
|
(187 | ) | 470 | ||||
Provision
(benefit) for income taxes - non-cash
|
15,727 | (8,986 | ) | ||||
Non-cash
interest expense
|
898 | 481 | |||||
Realized
loss on sale of assets, net
|
- | (58 | ) | ||||
Tax
benefit related to exercise of non-qualified stock options
|
(1,247 | ) | - | ||||
Changes
in current assets and liabilities, net of acquisitions:
|
|||||||
Accounts
receivable
|
92,756 | 36,344 | |||||
Prepaid
expenses and other current assets
|
7,907 | 14,145 | |||||
Accounts
payable
|
(858 | ) | (1,313 | ) | |||
Accrued
expenses, including long-term
|
(23,395 | ) | (45,563 | ) | |||
Deferred
revenue
|
(68,608 | ) | (33,707 | ) | |||
Deferred
tax asset
|
306 | - | |||||
Net
cash provided by operating activities from continuing
operations
|
75,417 | 8,469 | |||||
Cash
flows from investing activities from continuing
operations:
|
|||||||
Purchases
of property and equipment
|
(4,066 | ) | (2,321 | ) | |||
Cash
used in purchase of business, net of cash acquired
|
(250 | ) | (278,923 | ) | |||
Purchases
of investments
|
(18,545 | ) | (9,575 | ) | |||
Maturities
of investments
|
23,337 | 48,378 | |||||
Release
of restricted cash, net
|
218 | 16,183 | |||||
Net
cash provided by (used in) investing activities from continuing
operations
|
694 | (226,258 | ) | ||||
Cash
flows from financing activities from continuing
operations:
|
|||||||
Borrowings
under long term debt, net of debt financing costs
|
- | 194,133 | |||||
Exercise
of stock options
|
16,412 | 8,280 | |||||
Proceeds
from employee stock purchase plan
|
3,063 | 2,776 | |||||
Principal
payment on long term debt
|
(55,303 | ) | (500 | ) | |||
Acquisition
of treasury stock
|
(56,495 | ) | - | ||||
Tax
benefit related to exercise of non-qualified stock options
|
1,247 | - | |||||
Net
cash (used in) provided by financing activities from continuing
operations
|
(91,076 | ) | 204,689 | ||||
Change
in cash from discontinued operations
|
6,880 | (7,013 | ) | ||||
Effect
of exchange rate changes on cash and cash equivalents
|
(3,210 | ) | 1,864 | ||||
Net
increase in cash and cash equivalents
|
(11,295 | ) | (18,249 | ) | |||
Cash
and cash equivalents, beginning of period
|
76,059 | 48,612 | |||||
Cash
and cash equivalents, end of period
|
$ | 64,764 | $ | 30,363 |
Share
Options
|
Shares
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Contractual Term (Years)
|
Aggregate
Intrinsic Value (in thousands)
|
||||||||||||
Outstanding,
January 31, 2008
|
16,630,763 | $ | 7.05 | 4.76 | ||||||||||||
Granted
|
50,000 | 10.81 | ||||||||||||||
Exercised
|
(3,636,058 | ) | 4.51 | |||||||||||||
Cancelled
|
(69,420 | ) | 15.01 | |||||||||||||
Outstanding,
October 31, 2008
|
12,975,285 | $ | 7.74 | 4.13 | $ | 20,240 | ||||||||||
Exercisable,
October 31, 2008
|
9,757,981 | $ | 8.10 | 3.77 | $ | 16,255 | ||||||||||
Vested
and Expected to Vest, October 31, 2008 (1)
|
12,564,616 | $ | 7.77 | 4.09 | $ | 19,731 |
(1)
|
Represents
the number of vested options as of October 31, 2008 plus the number of
unvested options as of October 31, 2008 that are expected to vest adjusted
for an estimated forfeiture rate of 12.9%. The Company recognizes expense
incurred under SFAS No. 123(R) on a straight line basis. Due to the
Company’s vesting schedule, expense is incurred on options that have not
yet vested but which are expected to vest in a future period. The options
for which expense has been incurred but have not yet vested are included
above as options expected to vest.
|
NINE
MONTHS ENDED OCTOBER 31, 2007
|
||||
Revenue
|
$ | 266,233 | ||
Net
income (loss)
|
(18,800 | ) | ||
Net
income (loss) per share - basic
|
$ | (0.18 | ) | |
Net
income (loss) per share - diluted
|
$ | (0.17 | ) |
EMPLOYEE
SEVERANCE AND RELATED COSTS
|
CLOSEDOWN
OF FACILITIES
|
OTHER
|
TOTAL
|
|||||||||||||
Merger
and exit accrual January 31, 2008
|
$ | 1,646 | $ | 3,224 | $ | 1,370 | $ | 6,240 | ||||||||
Adjustment
to provision for merger and exit costs in connection with the acquisition
of NETg
|
212 | (139 | ) | (971 | ) | (898 | ) | |||||||||
Adjustment
to provision for merger and exit costs in connection with the acquisition
of SmartForce
|
(899 | ) | 266 | - | (633 | ) | ||||||||||
Payments
made during the nine months ended October 31, 2008
|
(959 | ) | (1,723 | ) | (164 | ) | (2,846 | ) | ||||||||
Merger
and exit accrual October 31, 2008
|
$ | - | $ | 1,628 | $ | 235 | $ | 1,863 |
Year
Ended January 31,
|
||||
2009
(remaining 3 months)
|
$ | 409 | ||
2010
|
452 | |||
2011
|
1,002 | |||
Total
|
$ | 1,863 |
THREE
MONTHS ENDED
|
NINE
MONTHS ENDED
|
|||||||||||||||
OCTOBER
31,
|
OCTOBER
31,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Revenue
from discontinued operations
|
$ | (64 | ) | $ | 3,134 | $ | 224 | $ | 6,760 | |||||||
(Loss)
gain from discontinued operations before income tax
|
(62 | ) | (662 | ) | 3,243 | 249 | ||||||||||
Income
tax (benefit) provision
|
(25 | ) | (311 | ) | 1,306 | 76 | ||||||||||
(Loss)
gain from discontinued operations
|
$ | (37 | ) | $ | (351 | ) | $ | 1,937 | $ | 173 |
Total
restructuring accrual as of January 31, 2008
|
$ | 961 | ||
Payments
made during the nine months ended October 31, 2008
|
(464 | ) | ||
Restructuring
charges incurred during the nine months ended October 31,
2008
|
- | |||
Total
restructuring accrual as of October 31, 2008
|
$ | 497 |
OCTOBER
31, 2008
|
JANUARY
31, 2008
|
|||||||||||||||||||||||
GROSS
|
NET
|
GROSS
|
NET
|
|||||||||||||||||||||
CARRYING
|
ACCUMULATED
|
CARRYING
|
CARRYING
|
ACCUMULATED
|
CARRYING
|
|||||||||||||||||||
AMOUNT
|
AMORTIZATION
|
AMOUNT
|
AMOUNT
|
AMORTIZATION
|
AMOUNT
|
|||||||||||||||||||
Internally
developed software/ courseware
|
$ | 38,717 | $ | 38,430 | $ | 287 | $ | 38,717 | $ | 33,259 | $ | 5,458 | ||||||||||||
Customer
contracts
|
36,848 | 25,231 | 11,617 | 36,848 | 19,846 | 17,002 | ||||||||||||||||||
Non-compete
|
6,900 | 4,140 | 2,760 | 6,900 | 2,070 | 4,830 | ||||||||||||||||||
Trademarks
and trade names
|
2,725 | 2,047 | 678 | 2,725 | 1,028 | 1,697 | ||||||||||||||||||
Books
trademark
|
900 | - | 900 | 900 | - | 900 | ||||||||||||||||||
$ | 86,090 | $ | 69,848 | $ | 16,242 | $ | 86,090 | $ | 56,203 | $ | 29,887 |
Gross
carrying amount of goodwill, January 31, 2008
|
$ | 256,196 | ||
Payment
of contingent purchase price of Targeted Learning
Corporation
|
250 | |||
Adjustments
to allocation of purchase price for NETg acquisition
|
953 | |||
Utilization
of acquired tax benefit
|
(793 | ) | ||
Gross
carrying amount of goodwill, October 31, 2008
|
$ | 256,606 |
THREE
MONTHS ENDED
|
NINE
MONTHS ENDED
|
|||||||||||||||
OCTOBER
31,
|
OCTOBER
31,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Comprehensive
income:
|
||||||||||||||||
Net
income
|
$ | 12,029 | $ | 5,825 | $ | 31,985 | $ | 25,702 | ||||||||
Other
comprehensive income (loss) — Foreign currency adjustment
|
2,013 | (701 | ) | 2,309 | (1,116 | ) | ||||||||||
Change
in fair value of interest rate hedge, net of tax
|
260 | (842 | ) | 1,155 | (1,074 | ) | ||||||||||
Unrealized
losses on available-for-sale securities
|
- | 22 | (24 | ) | (65 | ) | ||||||||||
Comprehensive
income
|
$ | 14,302 | $ | 4,304 | $ | 35,425 | $ | 23,447 |
NINE
MONTHS ENDED OCTOBER 31, 2008
|
YEAR
ENDED JANUARY 31, 2008
|
|||||||
Unrealized
(loss) gains on available-for-sale securities
|
$ | (2 | ) | $ | 22 | |||
Change
in fair value of interest rate hedge
|
(925 | ) | (2,080 | ) | ||||
Foreign
currency adjustment
|
(58 | ) | (2,367 | ) | ||||
Total
accumulated other comprehensive loss
|
$ | (985 | ) | $ | (4,425 | ) |
THREE
MONTHS ENDED
|
NINE
MONTHS ENDED
|
|||||||||||||||
OCTOBER
31,
|
OCTOBER
31,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Basic
weighted average shares outstanding
|
104,182,736 | 104,789,720 | 104,779,876 | 104,165,555 | ||||||||||||
Effect
of dilutive shares outstanding
|
3,317,536 | 3,762,736 | 3,876,512 | 3,853,118 | ||||||||||||
Weighted
average shares outstanding, as adjusted
|
107,500,272 | 108,552,456 | 108,656,388 | 108,018,673 |
THREE
MONTHS ENDED
|
NINE
MONTHS ENDED
|
|||||||||||||||
OCTOBER
31,
|
OCTOBER
31,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Options
to purchase shares
|
2,907,621 | 8,540,503 | 2,936,591 | 9,009,160 |
THREE
MONTHS ENDED
|
NINE
MONTHS ENDED
|
|||||||||||||||
OCTOBER
31,
|
OCTOBER
31,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Revenue:
|
||||||||||||||||
United
States
|
$ | 61,998 | $ | 59,076 | $ | 181,807 | $ | 160,161 | ||||||||
United
Kingdom (UK)
|
11,358 | 8,234 | 34,980 | 22,493 | ||||||||||||
Canada
|
3,047 | 2,726 | 9,831 | 7,855 | ||||||||||||
Europe,
excluding UK
|
1,758 | 1,036 | 5,438 | 2,055 | ||||||||||||
Australia/New
Zealand
|
3,343 | 3,290 | 11,306 | 9,128 | ||||||||||||
Other
|
1,560 | 762 | 4,677 | 2,041 | ||||||||||||
Total
revenue
|
$ | 83,064 | $ | 75,124 | $ | 248,039 | $ | 203,733 |
OCTOBER
31, 2008
|
JANUARY
31, 2008
|
|||||||
Professional
fees
|
3,555 | 5,308 | ||||||
Sales
tax payable/VAT payable
|
1,324 | 4,366 | ||||||
Accrued
royalties
|
2,246 | 6,892 | ||||||
Other
accrued liabilities
|
12,403 | 12,941 | ||||||
Total
accrued expenses
|
$ | 19,528 | $ | 29,507 |
OCTOBER
31, 2008
|
JANUARY
31, 2008
|
|||||||
Note
receivable – long term
|
- | 3,507 | ||||||
Debt
financing cost – long term (See Note 18)
|
3,498 | 4,126 | ||||||
Other
|
204 | 97 | ||||||
Total
other assets
|
$ | 3,702 | $ | 7,730 |
OCTOBER
31, 2008
|
JANUARY
31, 2008
|
|||||||
Merger
accrual – long term
|
1,597 | 2,914 | ||||||
Interest
rate swap liability (See Note 19)
|
1,542 | 3,467 | ||||||
Other
|
2,793 | 2,828 | ||||||
Total
other long-term liabilities
|
$ | 5,932 | $ | 9,209 |
·
|
Level
1: Quoted prices in active markets for identical assets as of the
reporting date.
|
·
|
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.
|
October
31, 2008
|
Quoted
Prices in Active Markets for Identical Assets Level 1
|
Significant
Other Observable Inputs Level 2
|
Significant
Unobservable Inputs Level 3
|
|||||||||||||
Financial
Assets:
|
||||||||||||||||
Cash
equivalents (1)
|
30,821 | $ | 15,625 | $ | 15,196 | $ | - | |||||||||
Available
for sale securities (2)
|
8,804 | $ | 6,505 | $ | 2,299 | $ | - | |||||||||
Financial
Liabilities:
|
||||||||||||||||
Interest
rate swap agreement (Note 19)
|
1,542 | $ | - | $ | 1,542 | $ | - |
Fiscal
2009 (remaining 3 months)
|
$ | 364 | ||
Fiscal
2010
|
1,455 | |||
Fiscal
2011
|
1,455 | |||
Fiscal
2012
|
1,455 | |||
Fiscal
2013
|
1,455 | |||
Thereafter
|
137,513 | |||
Total
|
$ | 143,697 |
•
|
evaluating
our current operating cost structure to determine where we can realize
cost efficiencies;
|
•
|
cross
selling and up selling;
|
•
|
looking
at new markets, which may include expanding or investing
internationally;
|
•
|
acquiring
new customers through our core sales team as well as through the recently
formed New Business Field Sales
team;
|
•
|
continuing
to execute on our new product and telesales distribution initiatives;
and
|
•
|
continuing
to evaluate merger and acquisition and possible partnership opportunities
that could contribute to our long-term
objectives.
|
THREE
MONTHS ENDED OCTOBER 31, 2008
|
DOLLAR
INCREASE/(DECREASE)
|
PERCENT
CHANGE
|
||||||||||||
2008
|
2007
|
|||||||||||||
(In
thousands, except percentages)
|
||||||||||||||
Revenues
|
$ | 83,064 | $ | 75,124 | $ | 7,940 | 11 | % | ||||||
Operating
income
|
21,607 | 10,361 | 11,246 | 109 | % |
THREE
MONTHS ENDED OCTOBER 31,
|
||||||||||||
(In
thousands)
|
2008
|
2007
|
CHANGE
|
|||||||||
Revenue:
|
||||||||||||
United
States
|
$ | 61,998 | $ | 59,076 | $ | 2,922 | ||||||
International
|
21,066 | 16,048 | 5,018 | |||||||||
Total
|
$ | 83,064 | $ | 75,124 | $ | 7,940 |
THREE
MONTHS ENDED OCTOBER 31, 2008
|
DOLLAR
INCREASE/(DECREASE)
|
PERCENT
CHANGE
|
|||||||||||||
2008
|
2007
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||
Cost
of revenues
|
$ | 9,374 | $ | 8,282 | $ | 1,092 | 13 | % | |||||||
As
a percentage of revenue
|
11 | % | 11 | % | |||||||||||
Cost
of revenues - amortization of intangible assets
|
1,690 | 1,740 | (50 | ) | (3 | )% | |||||||||
As
a percentage of revenue
|
2 | % | 2 | % |
THREE
MONTHS ENDED OCTOBER 31, 2008
|
DOLLAR
INCREASE/(DECREASE)
|
PERCENT
CHANGE
|
|||||||||||||
2008
|
2007
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||
Research
and development
|
$ | 12,138 | $ | 13,710 | $ | (1,572 | ) | (11 | )% | ||||||
As
a percentage of revenue
|
15 | % | 18 | % |
THREE
MONTHS ENDED OCTOBER 31, 2008
|
DOLLAR
INCREASE/(DECREASE)
|
PERCENT
CHANGE
|
|||||||||||||
2008
|
2007
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||
Selling
and marketing
|
$ | 26,387 | $ | 25,227 | $ | 1,160 | 5 | % | |||||||
As
a percentage of revenue
|
32 | % | 34 | % |
THREE
MONTHS ENDED OCTOBER 31, 2008
|
DOLLAR
INCREASE/(DECREASE)
|
PERCENT
CHANGE
|
|||||||||||||
2008
|
2007
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||
General
and administrative
|
$ | 9,130 | $ | 9,449 | $ | (319 | ) | (3 | )% | ||||||
As
a percentage of revenue
|
11 | % | 13 | % |
THREE
MONTHS ENDED OCTOBER 31, 2008
|
DOLLAR
INCREASE/(DECREASE)
|
PERCENT
CHANGE
|
|||||||||||||
2008
|
2007
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||
Other
income (expense), net
|
$ | 752 | $ | (642 | ) | $ | 1,394 | * | |||||||
As
a percentage of revenue
|
1 | % | (1 | )% | |||||||||||
Interest
income
|
248 | 654 | (406 | ) | (62 | )% | |||||||||
As
a percentage of revenue
|
0 | % | 1 | % | |||||||||||
Interest
expense
|
(3,103 | ) | (3,927 | ) | (824 | ) | (21 | )% | |||||||
As
a percentage of revenue
|
(4 | )% | (5 | )% |
THREE
MONTHS ENDED OCTOBER 31, 2008
|
DOLLAR
INCREASE/(DECREASE)
|
PERCENT
CHANGE
|
|||||||||||||
2008
|
2007
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||
Provision
(benefit) for income taxes
|
$ | 7,438 | $ | 270 | $ | 7,168 | 2,655 | % | |||||||
As
a percentage of revenue
|
9 | % | 0 | % |
NINE
MONTHS ENDED OCTOBER 31, 2008
|
DOLLAR
INCREASE/(DECREASE)
|
PERCENT
CHANGE
|
|||||||||||||
2008
|
2007
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||
Revenues
|
$ | 248,039 | $ | 203,733 | $ | 44,306 | 22 | % | |||||||
Operating
income
|
57,796 | 23,420 | 34,376 | 147 | % |
NINE
MONTHS ENDED OCTOBER 31,
|
||||||||||||
(In
thousands)
|
2008
|
2007
|
CHANGE
|
|||||||||
Revenue:
|
||||||||||||
United
States
|
$ | 181,807 | $ | 160,161 | $ | 21,646 | ||||||
International
|
66,232 | 43,572 | 22,660 | |||||||||
Total
|
$ | 248,039 | $ | 203,733 | $ | 44,306 |
NINE
MONTHS ENDED OCTOBER 31, 2008
|
DOLLAR
INCREASE/(DECREASE)
|
PERCENT
CHANGE
|
|||||||||||||
2008
|
2007
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||
Cost
of revenues
|
$ | 28,013 | $ | 23,827 | $ | 4,186 | 18 | % | |||||||
As
a percentage of revenue
|
11 | % | 12 | % | |||||||||||
Cost
of revenues - amortization of intangible assets
|
5,170 | 3,683 | 1,487 | 40 | % | ||||||||||
As
a percentage of revenue
|
2 | % | 2 | % |
NINE
MONTHS ENDED OCTOBER 31, 2008
|
DOLLAR
INCREASE/(DECREASE)
|
PERCENT
CHANGE
|
|||||||||||||
2008
|
2007
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||
Research
and development
|
$ | 38,136 | $ | 35,315 | $ | 2,821 | 8 | % | |||||||
As
a percentage of revenue
|
15 | % | 17 | % |
NINE
MONTHS ENDED OCTOBER 31, 2008
|
DOLLAR
INCREASE/(DECREASE)
|
PERCENT
CHANGE
|
|||||||||||||
2008
|
2007
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||
Selling
and marketing
|
$ | 82,185 | $ | 71,489 | $ | 10,696 | 15 | % | |||||||
As
a percentage of revenue
|
33 | % | 35 | % |
NINE
MONTHS ENDED OCTOBER 31, 2008
|
DOLLAR
INCREASE/(DECREASE)
|
PERCENT
CHANGE
|
|||||||||||||
2008
|
2007
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||
General
and administrative
|
$ | 27,454 | $ | 25,572 | $ | 1,882 | 7 | % | |||||||
As
a percentage of revenue
|
11 | % | 13 | % |
NINE
MONTHS ENDED OCTOBER 31, 2008
|
DOLLAR
INCREASE/(DECREASE)
|
PERCENT
CHANGE
|
||||||||||||||
2008
|
2007
|
|||||||||||||||
(In
thousands, except percentages)
|
||||||||||||||||
Other
expense, net
|
$ | (282 | ) | $ | (1,026 | ) | $ | (744 | ) | (73 | )% | |||||
As
a percentage of revenue
|
(0 | )% | (1 | )% | ||||||||||||
Interest
income
|
1,440 | 2,990 | (1,550 | ) | (52 | )% | ||||||||||
As
a percentage of revenue
|
1 | % | 1 | % | ||||||||||||
Interest
expense
|
(10,116 | ) | (7,741 | ) | 2,375 | 31 | % | |||||||||
As
a percentage of revenue
|
(4 | )% | (4 | )% |
NINE
MONTHS ENDED OCTOBER 31, 2008
|
DOLLAR
INCREASE/(DECREASE)
|
PERCENT
CHANGE
|
|||||||||||||
2008
|
2007
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||
Provision
(benefit) for income taxes
|
$ | 18,790 | $ | (7,886 | ) | $ | 26,676 | (338 | )% | ||||||
As
a percentage of revenue
|
8 | % | (4 | )% |
Payments
Due By Period
|
||||||||||||||||||||
Less
Than
|
1
- 3
|
3
- 5
|
More
Than
|
|||||||||||||||||
Contractual
Obligations
|
Total
|
1
Year
|
Years | Years |
5
Years
|
|||||||||||||||
Operating
Lease Obligations
|
$ | 13,185 | $ | 4,442 | $ | 5,504 | $ | 3,239 | $ | - | ||||||||||
Debt
Obligations
|
143,697 | 1,455 | 2,910 | 139,332 | - | |||||||||||||||
Total
Obligations
|
$ | 156,882 | $ | 5,897 | $ | 8,414 | $ | 142,571 | $ | - |
|
•
|
the
size and timing of new/renewal agreements and
upgrades;
|
|
•
|
royalty
rates;
|
|
•
|
the
announcement, introduction and acceptance of new products, product
enhancements and technologies by us and our
competitors;
|
|
•
|
the
mix of sales between our field sales force, our other direct sales
channels and our telesales
channels;
|
|
•
|
general
conditions in the U.S. or the international
economy;
|
|
•
|
the
loss of significant customers;
|
|
•
|
delays
in availability of new products;
|
|
•
|
product
or service quality problems;
|
|
•
|
seasonality
— due to the budget and purchasing cycles of our customers, we expect our
revenue and operating results will generally be strongest in the second
half of our fiscal year and weakest in the first half of our fiscal
year;
|
|
•
|
the
spending patterns of our customers;
|
|
•
|
litigation
costs and expenses;
|
|
•
|
non-recurring
charges related to acquisitions;
|
|
•
|
growing
competition that may result in price reductions;
and
|
|
•
|
currency
fluctuations.
|
|
•
|
difficulties
in integrating the technologies, operations, financial controls and
personnel of the acquired company;
|
|
•
|
difficulties
in retaining or transitioning customers and employees of the acquired
company;
|
|
•
|
diversion
of management time and focus;
|
|
•
|
incurrence
of unanticipated expenses associated with the acquisition or the
assumption of unknown liabilities or unanticipated financial, accounting
or other problems of the acquired company;
and
|
|
•
|
accounting
charges related to the acquisition, including restructuring charges,
write-offs of in-process research and development costs, and subsequent
impairment charges relating to goodwill or other intangible assets
acquired in the transaction.
|
|
•
|
third-party
suppliers of instructor-led information technology, business, management
and professional skills education and
training;
|
|
•
|
technology
companies that offer learning courses covering their own technology
products;
|
|
•
|
suppliers
of computer-based training and e-learning
solutions;
|
|
•
|
internal
education, training departments and HR outsourcers of potential customers;
and
|
|
•
|
value-added
resellers and network integrators.
|
|
•
|
difficulties
or delays in developing and supporting non-English language versions of
our products and services;
|
|
•
|
political
and economic conditions in various
jurisdictions;
|
|
•
|
difficulties
in staffing and managing foreign subsidiary
operations;
|
|
•
|
longer
sales cycles and account receivable payment
cycles;
|
|
•
|
multiple,
conflicting and changing governmental laws and
regulations;
|
|
•
|
foreign
currency exchange rate
fluctuations;
|
|
•
|
protectionist
laws and business practices that may favor local
competitors;
|
|
•
|
difficulties
in finding and managing local
resellers;
|
|
•
|
potential
adverse tax consequences; and
|
|
•
|
the
absence or significant lack of legal protection for intellectual property
rights.
|
|
•
|
our
need to educate potential customers about the benefits of our
products;
|
|
•
|
competitive
evaluations by customers;
|
|
•
|
the
customers’ internal budgeting and approval
processes;
|
|
•
|
the
fact that many customers view training products as discretionary spending,
rather than purchases essential to their business;
and
|
|
•
|
the
fact that we target large companies, which often take longer to make
purchasing decisions due to the size and complexity of the
enterprise.
|
(c)
|
||||||||||||||||
Total
|
(d)
|
|||||||||||||||
Number
of
|
Maximum
|
|||||||||||||||
Shares
|
Number
of
|
|||||||||||||||
(a)
|
Purchased
|
Shares
that
|
||||||||||||||
Total
|
(b)
|
as
Part of
|
May
Yet Be
|
|||||||||||||
Number
of
|
Average
|
Publicly
|
Purchased
|
|||||||||||||
Shares
|
Price
Paid
|
Announced
|
Under
the
|
|||||||||||||
Period
|
Purchased
(1)
|
Per
Share $
|
or
Program (2)
|
Program
|
||||||||||||
August
1, 2008 - August 31, 2008
|
985,680 | $ | 10.18 | 985,680 | 6,290,601 | |||||||||||
September
1, 2008 - September 30, 2008
|
1,000,000 | 10.40 | 1,000,000 | 20,290,601 | ||||||||||||
October
1, 2008 - October 31, 2008
|
1,000,000 | 8.60 | 1,000,000 | 19,290,601 | ||||||||||||
Total
|
2,985,680 | $ | 9.73 | 2,985,680 | 19,290,601 |
|
(1)
|
Receipt
and consolidation of the consolidated financial statements for the fiscal
year ended January 31, 2008 and the Report of Directors and Auditors
thereon.
|
Votes
“FOR”
|
“AGAINST”
|
“ABSTAIN”
|
||||||||||
Ordinary
Shareholders
|
4 | 0 | 0 | |||||||||
ADS
Holders
|
115,152,262 | 646 | 41,158 |
Votes
“FOR”
|
“AGAINST”
|
“ABSTAIN”
|
||||||||||
Ordinary
Shareholders
|
4 | 0 | 0 | |||||||||
ADS
Holders
|
114,701,478 | 477,706 | 14,882 |
Votes
“FOR”
|
“AGAINST”
|
“ABSTAIN”
|
||||||||||
Ordinary
Shareholders
|
4 | 0 | 0 | |||||||||
ADS
Holders
|
114,824,744 | 355,760 | 13,562 |
Votes
“FOR”
|
“AGAINST”
|
“ABSTAIN”
|
||||||||||
Ordinary
Shareholders
|
4 | 0 | 0 | |||||||||
ADS
Holders
|
115,048,481 | 140,108 | 5,477 |
Votes
“FOR”
|
“AGAINST”
|
“ABSTAIN”
|
||||||||||
Ordinary
Shareholders
|
4 | 0 | 0 | |||||||||
ADS
Holders
|
114,997,249 | 22,799 | 174,018 |
SKILLSOFT PUBLIC LIMITED COMPANY | |||
Date:
December 9, 2008
|
By:
|
/s/ Thomas J. McDonald | |
Thomas J. McDonald | |||
Chief Financial Officer | |||
31.1
|
Certification
of SkillSoft PLC’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 SkillSoft PLC’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 SkillSoft PLC’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 SkillSoft PLC’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.
|