##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 COMMISSION FILE NUMBER 000-25674
 SKILLSOFT PUBLIC LIMITED COMPANY
  REPUBLIC OF IRELAND
(STATE OR OTHER JURISDICTION OF 
INCORPORATION OR ORGANIZATION)
    
    N/A
(I.R.S. EMPLOYER
IDENTIFICATION NO.)107 NORTHEASTERN BOULEVARD 
NASHUA, NEW HAMPSHIRE
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
    
    03062
(ZIP CODE)
  
 þ o
  Large accelerated filer þAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



PAGE NO.PART I  FINANCIAL INFORMATION
    
    
    3Item 1. Unaudited Condensed Consolidated Financial Statements:
    
    
    3Condensed Consolidated Balance Sheets as of April 30, 2008 and January 31, 2008
    
    
    3Condensed Consolidated Income Statements for the Three Months Ended April 30, 2008 and 2007
    
    
    4Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 30, 2008
and 2007
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    27PART II  OTHER INFORMATION
    
    
    27Item 1. Legal Proceedings
    
    
    27Item 1A. Risk Factors
    
    
    27Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 3. Defaults Upon Senior Securities
    
    
    37Item 4. Submission of Matters to a Vote of Security Holders
    
    
    37Item 5. Other Information
    
    
    37Item 6. Exhibits
    
    
    37SIGNATURE
    
    
    38EX-31.1 Certification of SkillSoft PLC's Chief Executive Officer, Section 302EX-31.2 Certification of SkillSoft PLC's Chief Financial Officer, Section 302EX-32.1 Certification of SkillSoft PLC's Chief Executive Officer, Section 906EX-32.2 Certification of SkillSoft PLC's Chief Financial Officer, Section 906
  2




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##### Table of Contents



APRIL 30,2008
    
    
    JANUARY 31,(Unaudited)
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    90,882
    
    
    $
    76,059Short-term investments
    
    
    13,893
    
    
    
    13,525Restricted cash
    
    
    4,030
    
    
    
    3,963Accounts receivable, net
    
    
    97,861
    
    
    
    171,708Prepaid expenses and other current assets
    
    
    26,491
    
    
    
    29,061Deferred tax assets
    
    
    11,189
    
    
    
    13,476Total current assets
    
    
    244,346
    
    
    
    307,792Property and equipment, net
    
    
    6,997
    
    
    
    7,210Intangible assets
    
    
    25,150
    
    
    
    29,887Goodwill
    
    
    260,343
    
    
    
    256,196Deferred tax assets
    
    
    86,528
    
    
    
    87,866Other assets
    
    
    5,002
    
    
    
    7,730Total assets
    
    $
    628,366
    
    
    $
    696,681LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current maturities of long term debt
    
    $
    1,758
    
    
    $
    2,000Accounts payable
    
    
    2,913
    
    
    
    2,139Accrued compensation
    
    
    13,429
    
    
    
    24,577Accrued expenses
    
    
    26,580
    
    
    
    29,507Deferred revenue
    
    
    185,569
    
    
    
    219,161Total current liabilities
    
    
    230,249
    
    
    
    277,384Long term debt
    
    
    172,742
    
    
    
    197,000Other long term liabilities
    
    
    8,620
    
    
    
    9,209Total long term liabilities
    
    
    181,362
    
    
    
    206,209Commitments and contingencies (Note 12)Stockholders equity:Ordinary
shares, 0.11 par value: 250,000,000 shares authorized;
112,889,816 and 111,663,813 shares
issued at April 30, 2008 and January
31, 2008, respectively
    
    
    12,609
    
    
    
    12,397Additional paid-in capital
    
    
    599,092
    
    
    
    591,303Treasury stock, at cost, 7,745,784
and 6,533,884 ordinary shares at
April 30, 2008 and January 31, 2008,
respectively
    
    
    (36,677
    )
    
    
    (24,524
    )Accumulated deficit
    
    
    (354,591
    )
    
    
    (361,663
    )Accumulated other comprehensive loss
    
    
    (3,678
    )
    
    
    (4,425
    )Total stockholders equity
    
    
    216,755
    
    
    
    213,088Total liabilities and stockholders equity
    
    $
    628,366
    
    
    $
    696,681
  3




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##### Table of Contents



THREE MONTHS ENDEDApril 30,2008
    
    
    2007Revenue
    
    $
    81,643
    
    
    $
    57,140Cost of revenue (1)
    
    
    8,808
    
    
    
    6,828Cost of revenue  amortization of intangible assets
    
    
    1,740
    
    
    
    198Gross profit
    
    
    71,095
    
    
    
    50,114Operating expenses:Research and development (1)
    
    
    13,480
    
    
    
    10,242Selling and marketing (1)
    
    
    29,700
    
    
    
    22,548General and administrative (1)
    
    
    8,892
    
    
    
    7,128Amortization of intangible assets
    
    
    2,997
    
    
    
    579Merger and integration related expenses
    
    
    520
    
    
    
    Restructuring
    
    
    
    
    
    
    34SEC investigation
    
    
    62
    
    
    
    872Total operating expenses
    
    
    55,651
    
    
    
    41,403Operating income
    
    
    15,444
    
    
    
    8,711Other expense, net
    
    
    (687
    )
    
    
    (26
    )Interest income
    
    
    617
    
    
    
    1,501Interest expense
    
    
    (3,702
    )
    
    
    (51
    )Income before provision for income taxes from continuing operations
    
    
    11,672
    
    
    
    10,135Provision for income taxes
    
    
    4,506
    
    
    
    2,646Income from continuing operations
    
    $
    7,166
    
    
    $
    7,489Loss from discontinued operations, net of income tax benefit of $60
    
    
    (93
    )
    
    
    Net income
    
    $
    7,073
    
    
    $
    7,489Net income per share (Note 10):Basic  continuing operations
    
    $
    0.07
    
    
    $
    0.07Basic  discontinued operations
    
    $
    
    
    
    $
    $
    0.07
    
    
    $
    0.07Basic weighted average shares outstanding
    
    
    105,290,444
    
    
    
    103,277,076Diluted  continuing operations
    
    $
    0.07
    
    
    $
    0.07Diluted  discontinued operations
    
    $
    
    
    
    $
    $
    0.06
    
    
    $
    0.07Diluted weighted average shares outstanding
    
    
    109,937,385
    
    
    
    107,065,456
 
 (1)
    
    Stock-based compensation included in cost of revenue and operating expenses: THREE MONTHS ENDEDApril 30,2008
    
    2007Cost of revenue
    
    $
    44
    
    
    $
    17Research and development
    
    
    237
    
    
    
    208Selling and marketing
    
    
    578
    
    
    
    498General and administrative
    
    
    745
    
    
    
    633
  4




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##### Table of Contents



THREE MONTHS ENDEDAPRIL 30,2008
    
    
    2007Cash flows from operating activities from continuing operations:Income, continuing operations
    
    $
    7,166
    
    
    $
    7,489Adjustments to reconcile net income to net cash provided by operating activities:Stock-based compensation
    
    
    1,604
    
    
    
    1,356Depreciation and amortization
    
    
    1,476
    
    
    
    1,667Amortization of intangible assets
    
    
    4,737
    
    
    
    777Recovery of bad debts
    
    
    (123
    )
    
    
    (32
    )Provision for income tax  non-cash
    
    
    3,565
    
    
    
    1,875Non-cash interest expense
    
    
    284
    
    
    
    Changes in current assets and liabilities, net of acquisition:Accounts receivable, net
    
    
    71,508
    
    
    
    43,832Prepaid expenses and other current assets
    
    
    2,913
    
    
    
    2,705Accounts payable
    
    
    497
    
    
    
    (1,585
    )Accrued expenses, including long-term
    
    
    (13,039
    )
    
    
    (27,470
    )Deferred revenue
    
    
    (33,902
    )
    
    
    (24,861
    )Net cash provided by operating activities
    
    
    46,686
    
    
    
    5,753Cash flows from investing activities:Purchases of property and equipment
    
    
    (1,258
    )
    
    
    (433
    )Cash used in purchase of business, net of cash acquired
    
    
    (250
    )
    
    
    (3,933
    )Purchases of investments
    
    
    (9,750
    )
    
    
    Maturity of investments
    
    
    9,425
    
    
    
    24,619Release of restricted cash, net
    
    
    (65
    )
    
    
    15,865Net cash (used in) provided by investing activities
    
    
    (1,898
    )
    
    
    36,118Cash flows from financing activities:Exercise of stock options
    
    
    4,213
    
    
    
    4,106Proceeds from employee stock purchase plan
    
    
    2,185
    
    
    
    1,088Principal payment on long term debt
    
    
    (24,500
    )
    
    
    Acquisition of treasury stock
    
    
    (12,153
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    (30,255
    )
    
    
    5,194Change in cash from discontinued operations
    
    
    (33
    )
    
    
    Effect of exchange rate changes on cash and cash equivalents
    
    
    323
    
    
    
    972Net increase in cash and cash equivalents
    
    
    14,823
    
    
    
    48,037Cash and cash equivalents, beginning of period
    
    
    76,059
    
    
    
    48,612Cash and cash equivalents, end of period
    
    $
    90,882
    
    
    $
    96,649
  5




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Accounting for Certain Investments in Debt and Equity
Securities
 6




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##### Table of Contents



Software Revenue Recognition Revenue Arrangements with
Multiple Deliverables Revenue Recognition
 ®
      7




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##### Table of Contents



Income Statement Characterization
of Reimbursements Received for Out-of-Pocket Expenses Incurred
       WeightedAverage
    
    AggregateWeighted
    
    Remaining
    
    IntrinsicAverage
    
    Contractual
    
    ValueShare Options
    
    Shares
    
    Exercise Price
    
    Term (Years)
    
    (in thousands)Outstanding, January 31, 2008
    
    
    16,630,763
    
    
    $
    7.05
    
    
    
    4.76Granted
    
    
    20,000
    
    
    
    10.90Exercised
    
    
    (969,017
    )
    
    
    4.35Cancelled
    
    
    (16,511
    )
    
    
    17.00Outstanding, April 30, 2008
    
    
    15,665,235
    
    
    $
    7.22
    
    
    
    4.54
    
    
    $
    58,551Exercisable, April 30, 2008
    
    
    11,710,222
    
    
    $
    7.43
    
    
    
    4.16
    
    
    $
    44,803Vested and Expected to Vest, April 30, 2008 (1)
    
    
    15,050,371
    
    
    $
    7.24
    
    
    
    4.50
    
    
    $
    56,401
 
 (1)
    
    This represents the number of vested options as of April 30, 2008 plus the number of unvested
options as of April 30, 2008 that are expected to vest adjusted for an estimated forfeiture rate of
12.9%. The Company recognizes expense incurred under SFAS 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. 8




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##### Table of Contents



(a) NETg
  Business
Combinations"   Accounting in a Business Combination for Deferred Revenue of an Acquiree
   THREE MONTHSENDEDAPRIL 30, 2007(in thousands except pershare data)Revenue
    
    $
    88,390Net income/loss
    
    
    (16,941
    )Net income/loss per share  basic
    
    $
    (0.16
    )Net income/loss per share  diluted
    
    $
    (0.16
    )
  9




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##### Table of Contents



(a) Merger and Exit Costs Recognized as Liabilities in Purchase Accounting
 Recognition of Liabilities in
Connection with Purchase Business Combinations
    EMPLOYEESEVERANCE AND
    
    
    CLOSEDOWN OFRELATED COSTS
    
    
    FACILITIES
    
    
    OTHER
    
    
    TOTALMerger and exit accrual January 31, 2008
    
    $
    1,646
    
    
    $
    3,224
    
    
    $
    1,370
    
    
    $
    6,240Adjustment to provision for merger and
exit costs in connection with the
acquisition of NETg
    
    
    186
    
    
    
    (78
    )
    
    
    (969
    )
    
    
    (861
    )Payments made during the three months
ended April 30, 2008
    
    
    (332
    )
    
    
    (461
    )
    
    
    (40
    )
    
    
    (833
    )Merger and exit accrual April 30, 2008
    
    $
    1,500
    
    
    $
    2,685
    
    
    $
    361
    
    
    $
    4,546
  Year ended January 31,
2009 (remaining 9 months)
    
    $
    1,6192010
    
    
    6032011
    
    
    2,324Total
    
    $
    4,546
 Accounting for Costs Associated with Exit or
Disposal Activities,
 10




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##### Table of Contents



(b) Discontinued Operations
   Financial

    
    
    NETg
    
    
    InteractCampus
    
    
    Press
    
    
    Now
    
    
    Wave
    
    
    TotalRevenues from
discontinued
operations
    
    $
    0
    
    
    $
    48
    
    
    $
    98
    
    
    $
    35
    
    
    $
    181(Loss) gain from
discontinued
operationsbefore income taxes
    
    
    (1
    )
    
    
    (66
    )
    
    
    (103
    )
    
    
    16
    
    
    
    (154
    )Income tax (benefit)
    
    
    (0
    )
    
    
    (26
    )
    
    
    (41
    )
    
    
    6
    
    
    
    (61
    )(Loss) gain from
discontinued
operations
    
    $
    (1
    )
    
    $
    (40
    )
    
    $
    (62
    )
    
    $
    10
    
    
    $
    (93
    )
 (c) Restructuring
  Total restructuring accrual as of January 31, 2008
    
    $
    961Payments made during the three months ended April 30, 2008
    
    
    (98
    )Restructuring charges incurred during the three months ended April 30, 2008
    
    
    Total restructuring accrual as of April 30, 2008
    
    $
    863
    APRIL 30, 2008
    
    
    JANUARY 31, 2008GROSS
    
    
    
    
    
    
    NET
    
    
    GROSS
    
    
    
    
    
    
    NETCARRYING
    
    
    ACCUMULATED
    
    
    CARRYING
    
    
    CARRYING
    
    
    ACCUMULATED
    
    
    CARRYINGAMOUNT
    
    
    AMORTIZATION
    
    
    AMOUNT
    
    
    AMOUNT
    
    
    AMORTIZATION
    
    
    AMOUNTInternally
developed software/
courseware
    
    $
    38,717
    
    
    $
    35,000
    
    
    $
    3,717
    
    
    $
    38,717
    
    
    $
    33,259
    
    
    $
    5,458Customer contracts
    
    
    36,848
    
    
    
    21,813
    
    
    
    15,035
    
    
    
    36,848
    
    
    
    19,846
    
    
    
    17,002Non-compete
agreement
    
    
    6,900
    
    
    
    2,760
    
    
    
    4,140
    
    
    
    6,900
    
    
    
    2,070
    
    
    
    4,830Trademarks and
trade names
    
    
    2,725
    
    
    
    1,367
    
    
    
    1,358
    
    
    
    2,725
    
    
    
    1,028
    
    
    
    1,697Books trademark
    
    
    900
    
    
    
    
    
    
    
    900
    
    
    
    900
    
    
    
    
    
    
    
    90086,090
    
    
    
    60,940
    
    
    
    25,150
    
    
    
    86,090
    
    
    
    56,203
    
    
    
    29,887Goodwill
    
    
    260,343
    
    
    
    
    
    
    
    260,343
    
    
    
    256,196
    
    
    
    
    
    
    
    256,196$
    346,433
    
    
    $
    60,940
    
    
    $
    285,493
    
    
    $
    342,286
    
    
    $
    56,203
    
    
    $
    286,083
 11




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TotalGross carrying amount of goodwill, January 31, 2008
    
    $
    256,196Payment of contingent TLC purchase price
    
    
    250Adjustments to allocation of purchase price for NETg acquisition
    
    
    3,897Gross carrying amount of goodwill, April 30, 2008
    
    $
    260,343
   AmortizationFiscal Year
    
    Expense2009 (remaining 9 months)
    
    $
    16,4152010
    
    
    8,2452011
    
    
    3,7122012
    
    
    615Total
    
    $
    28,987
   Reporting Comprehensive Income
 THREE MONTHS ENDEDAPRIL 30,2008
    
    
    2007Comprehensive income:Net income
    
    $
    7,073
    
    
    $
    7,489Other comprehensive income/(loss) 
Foreign currency adjustment
    
    
    390
    
    
    
    (150
    )Change in fair value of interest rate hedge
    
    
    370
    
    
    
    Unrealized losses on available-for-sale securities
    
    
    (15
    )
    
    
    (78
    )Comprehensive income
    
    $
    7,818
    
    
    $
    7,261
 12




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##### Table of Contents



AS OF
    
    
    AS OFAPRIL 30,
    
    
    JANUARY 31,2008
    
    
    2008Unrealized gains on available-for-sale securities
    
    $
    8
    
    
    $
    22Change in fair value of interest rate hedge
    
    
    (1,710
    )
    
    
    (2,080
    )Foreign currency adjustment
    
    
    (1,976
    )
    
    
    (2,366
    )Total accumulated other comprehensive loss
    
    $
    (3,678
    )
    
    $
    (4,424
    )
   THREE MONTHS ENDEDAPRIL 30,2008
    
    2007Basic weighted average shares outstanding
    
    
    105,290,444
    
    
    
    103,277,076Effect of dilutive shares outstanding
    
    
    4,646,941
    
    
    
    3,788,380Weighted average common shares outstanding, as adjusted
    
    
    109,937,385
    
    
    
    107,065,456
  THREE MONTHS ENDEDAPRIL 30,2008
    
    2007Options excluded
    
    
    2,985,551
    
    
    
    10,449,640
       13




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THREE MONTHS ENDEDAPRIL 30,2008
    
    
    2007Revenue:United States
    
    $
    59,052
    
    
    $
    43,819United Kingdom
    
    
    11,832
    
    
    
    6,941Canada
    
    
    3,492
    
    
    
    2,553Europe, excluding United Kingdom
    
    
    1,838
    
    
    
    393Australia/New Zealand
    
    
    3,883
    
    
    
    2,762Other
    
    
    1,546
    
    
    
    672Total revenue
    
    $
    81,643
    
    
    $
    57,140
  14




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##### Table of Contents



APRIL 30, 2008
    
    
    JANUARY 31, 2008Professional fees
    
    
    4,632
    
    
    
    5,308Sales tax payable/VAT payable
    
    
    869
    
    
    
    4,366Accrued royalties
    
    
    5,358
    
    
    
    6,892Other accrued liabilities
    
    
    15,721
    
    
    
    12,941Total accrued expenses
    
    $
    26,580
    
    
    $
    29,507
   APRIL 30, 2008
    
    
    JANUARY 31, 2008Note receivable  long term
    
    
    1,096
    
    
    
    3,507Debt financing cost  long term (See Note 18)
    
    
    3,824
    
    
    
    4,126Other
    
    
    82
    
    
    
    97Total other assets
    
    $
    5,002
    
    
    $
    7,730
   APRIL 30, 2008
    
    
    JANUARY 31, 2008Merger accrual  long term
    
    
    2,927
    
    
    
    2,914Interest rate swap liability (See Note 19)
    
    
    2,864
    
    
    
    3,467Other
    
    
    2,829
    
    
    
    2,828Total other long-term liabilities
    
    $
    8,620
    
    
    $
    9,209
  Fair Value
Measurements
  Application of FASB
Statement No. 157 to FASB Statement No. 13 and Its Related Interpretive Accounting Pronouncements
That Address Leasing Transactions Effective Date of
FASB Statement No. 157 Fair Value Measurements
 15




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##### Table of Contents




    
    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.
  Accounting for Derivative
Instruments and Hedging Activities.
  Quoted Prices in
    
    SignificantActive Markets
    
    Other
    
    Significantfor Identical
    
    Observable
    
    UnobservableApril 30, 2008
    
    Assets Level 1
    
    Inputs Level 2
    
    Inputs Level 3Financial Assets:Cash equivalents (1)
    
    $
    43,347
    
    
    $
    43,347
    
    
    $
    
    
    
    $
    Available for sale securities (2)
    
    $
    13,893
    
    
    $
    13,893
    
    
    $
    
    
    
    $
    Financial Liabilities:Interest rate swap agreement (Note 19)
    
    $
    2,864
    
    
    $
    
    
    
    $
    2,864
    
    
    $
    
 
 (1)
    
    Consists of high-grade commercial paper and federal agency notes with original and remaining
maturities of less than 90 days.(2)
    
    Consists of high-grade commercial paper, corporate debt securities, certificates of deposit and
federal agency notes with original maturities of 90 days or more and remaining maturities of less
than 365 days. 16




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##### Table of Contents



Fiscal 2009 (remaining 9 months)
    
    $
    1,319Fiscal 2010
    
    
    1,758Fiscal 2011
    
    
    1,758Fiscal 2012
    
    
    1,758Fiscal 2013
    
    
    1,758Thereafter
    
    
    166,149Total
    
    $
    174,500
      17




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The Fair Value Option for Financial Assets and
Financial Liabilities  Including an Amendment of FASB Statement No. 115
 Business Combinations
 Noncontrolling Interests in Consolidated Financial
Statements, an amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133 Accounting for Derivative Instruments and Hedging Activities
 
   18




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®
 20




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
    
    cross selling and up selling;
    
    looking at new markets;
    
    acquiring new customers;
    
    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 April 30,Percent ChangeIncrease/(Decrease)
    
    
    Increase/(Decrease)
    
    
    Percentage of Revenue2007/2008
    
    
    2007/2008
    
    
    2008
    
    
    2007(In thousands)Revenue
    
    $
    24,503
    
    
    
    43
    %
    
    
    100
    %
    
    
    100
    %Cost of revenue
    
    
    1,980
    
    
    
    29
    %
    
    
    11
    %
    
    
    12
    %Cost of revenue  amortization of
intangible assets
    
    
    1,542
    
    
    
    779
    %
    
    
    2
    %
    
    
    Gross profit
    
    
    20,981
    
    
    
    42
    %
    
    
    87
    %
    
    
    88
    %Research and development
    
    
    3,238
    
    
    
    32
    %
    
    
    17
    %
    
    
    18
    %Selling and marketing
    
    
    7,152
    
    
    
    32
    %
    
    
    36
    %
    
    
    39
    %General and administrative
    
    
    1,764
    
    
    
    25
    %
    
    
    11
    %
    
    
    12
    %Amortization of intangible assets
    
    
    2,418
    
    
    
    418
    %
    
    
    4
    %
    
    
    1
    %Merger related integration expenses
    
    
    520
    
    
    
    *
    
    
    
    1
    %
    
    
    Restructuring
    
    
    (34
    )
    
    
    (100
    )%
    
    
    
    
    
    
    SEC investigation
    
    
    (810
    )
    
    
    (93
    )%
    
    
    
    
    
    
    2
    %Total operating expenses
    
    
    14,248
    
    
    
    34
    %
    
    
    68
    %
    
    
    72
    %Operating income
    
    
    6,733
    
    
    
    77
    %
    
    
    19
    %
    
    
    15
    %Other income expense, net
    
    
    (661
    )
    
    
    2,542
    %
    
    
    (1
    )%
    
    
    Interest income
    
    
    (884
    )
    
    
    (59
    )%
    
    
    1
    %
    
    
    3
    %Interest expense
    
    
    (3,651
    )
    
    
    7,159
    %
    
    
    (5
    )%
    
    
    Income before income taxes
    
    
    1,537
    
    
    
    15
    %
    
    
    14
    %
    
    
    18
    %Provision for income taxes
    
    
    1,860
    
    
    
    70
    %
    
    
    6
    %
    
    
    5
    %Loss from continuing operations
    
    
    (323
    )
    
    
    (4
    )%
    
    
    9
    %
    
    
    13
    %Loss from discontinued operations,
net of income tax
    
    
    (93
    )
    
    
    *
    
    
    
    
    
    
    
    Net income
    
    $
    (416
    )
    
    
    (6
    )%
    
    
    9
    %
    
    
    13
    %
 
 *
    
    Not meaningful
    
    Does not add due to rounding. 21




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Revenue
  QUARTERS ENDED APRIL 30,(IN THOUSANDS)
    
    2008
    
    
    2007
    
    
    CHANGERevenue:United States
    
    $
    59,052
    
    
    $
    43,819
    
    
    $
    15,233International
    
    
    22,591
    
    
    
    13,321
    
    
    
    9,270Total
    
    $
    81,643
    
    
    $
    57,140
    
    
    $
    24,503
   Costs and Expenses
    22




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Other Expense, Net
  Interest Income
  Interest Expense
  Provision for Income Taxes
  23




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Payments Due by PeriodLess Than
    
    
    1-3
    
    
    3-5
    
    
    More ThanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 YearsOperating Lease Obligations
    
    $
    19,644
    
    
    $
    5,454
    
    
    $
    4,952
    
    
    $
    2,958
    
    
    $
    6,280Debt Obligations
    
    
    174,500
    
    
    
    1,758
    
    
    
    3,516
    
    
    
    3,516
    
    
    
    165,710Total Obligations
    
    $
    194,144
    
    
    $
    7,212
    
    
    $
    8,468
    
    
    $
    6,474
    
    
    $
    171,990
         25




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SEC Investigations
  
   RISKS RELATED TO THE OPERATION OF OUR BUSINESS
    27




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
    
    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;
 28




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
    
    the 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.
  29




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
    
    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;
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
    
    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.
    RISKS RELATED TO LEGAL PROCEEDINGS
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RISKS RELATED TO OUR ADSs
     
    (c)Total Number of
    
    
    (d)(a)
    
    
    
    
    
    
    Shares Purchased as
    
    
    Maximum Number ofTotal Number of
    
    
    (b)
    
    
    Part of Publicly
    
    
    Shares that May YetShares Purchased
    
    
    Average Price Paid
    
    
    Announced or
    
    
    Be Purchased UnderPeriod
    
    (1)
    
    
    per Share $
    
    
    Program (2)
    
    
    the ProgramFebruary 1, 2008  February 29, 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    March 1, 2008  March 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    April 1, 2008  April 30, 2008
    
    
    1,211,900
    
    
    
    10.0
    
    
    
    1,211,900
    
    
    
    8,788,100Total
    
    
    1,211,900
    
    
    $
    10.0
    
    
    
    1,211,900
    
    
    
    8,788,100
 
 (1)
    
    We repurchased 1,211,900 of our ADSs pursuant to a share
repurchase program that was approved by our shareholders on April 8, 2008.(2)
    
    Our shareholders approved the repurchase by us of up to 10,000,000 ADSs at a per share
purchase price which complies with the requirements of Rule 10b-18. Unless terminated earlier by
resolution of our Board of Directors, the repurchase program will expire on October 7, 2009 or when
we have repurchased all shares authorized for repurchase thereunder. 36




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Votes FOR
    
    AGAINST
    
    ABSTAINOrdinary Shareholders
    
    
    4
    
    
    
    0
    
    
    
    0ADS Holders
    
    
    110,347,003
    
    
    
    214
    
    
    
    103,286
 
   
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SKILLSOFT PUBLIC LIMITED COMPANYDate: June 6, 2007
    By:
    /s/ Thomas J. McDonaldThomas J. McDonaldChief Financial Officer 38




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10.1
    
    Summary of Fiscal 2009 Executive Cash Incentive Compensation Program
(incorporated by reference to Exhibit 99.1 of SkillSoft PLCs
Current Report on Form 8-K as filed with the Securities and Exchange
Commission as of April 17, 2008 (File No. 000-25674)).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.
 39