Legal and merger costs push Skillsoft loss higher

SkillSoft, the e-learning company that merged with Irish firm SmartForce last year, reported a larger-than-expected net loss yesterday due to litigation and merger-related costs.

The company, which earlier this week announced a €32 million settlement of a class-action lawsuit, reported a loss of $21.9 million (€18.1 million) for the third quarter, which ended October 31st.

This net loss included a charge of €16 million for the company's contribution toward the settlement of the class-action suit, which was filed against SmartForce in 1998.

The results also included expenses of $5.3 million for restructuring activities related to its restatement of SmartForce's historical financial statements.

SkillSoft reported a loss per share of 22 cents for the third quarter of 2003, up from a loss of 20 cents per share, in the third quarter of 2002.

SkillSoft generated total revenue of $50 million for its third quarter, an 11 per cent increase sequentially on the previous quarter's $45.1 million.

The revenue figures represents an increase of 71 per cent from the $29.3 million it generated in the third quarter 2002 - the first quarter that included combined revenues from SmartForce and SkillSoft.

Mr Chuck Moran, SkillSoft president and chief executive, said the firm was meeting its business plan as it put merger and litigation issues behind it.

"Despite the continued challenging business environment, we continue to move forward and meet or exceed our operational objectives," he added.

The company forecast that revenues for the fiscal year to the end of January 2004 would be at the upper end of its previous stated expectation of between $185-$190 million.

Net loss for fiscal 2004 will be between 83-84 cents per share, considerably more than its previous forecast of 66-67 cents per share, said SkillSoft.

At October 31st, SkillSoft had $84.3 million cash reserves.

SkillSoft employs more than 200 employees at its offices in Dublin, which act as the companies European headquarters.

Following the result's announcement yesterday, shares in SkillSoft closed up 28.9 US cents at $8.279 on the Nasdaq.