Slide 1: Safe Harbor
Safe Harbor This presentation will contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding financial projections of the combined company and of S
Slide 2: Safe Harbor (cont.)
Safe Harbor (cont.) SmartForce intends to file a registration statement on Form S-4 in connection with the transaction, and SmartForce and SkillSoft intend to mail a joint proxy statement/prospectus to their respective stockholders in connection with the transaction. Investors and security holders o
Slide 3: Transaction Highlights
Transaction Highlights One of the World's Largest e-Learning Companies Customer Base of More than Half of Global 5000 Wells Fargo, US Army, Minolta, Procter & Gamble, IBM, Coca- Cola, Lockheed Strongest Sales Distribution 250+ Direct Sales People Growing Channel Strategy Critical Mass and Scale 2.8
Slide 4: The Market: The Training Function
The Market: The Training Function
Slide 5: Market Landscape: The Training Function
Market Landscape: The Training Function
Slide 6: The Market: Beyond Training
The Market: Beyond Training CALL CENTER MANAGEMENT CHANNEL MARKETING PRODUCT LAUNCH SkillSoft SmartForce.
Slide 7: Market Landscape: Beyond Training
Market Landscape: Beyond Training
Slide 8: Beyond Training: Solution Sets
Procure Design Develop Manufacture Move Distribute Promote Sell Support Fulfill Support Processes (Finance, HR, Training, etc.) Supplier Customer Beyond Training: Solution Sets New Product Introduction Customer Support Software Rollout Virtual Sales University
Slide 9: Transaction Summary
Transaction Summary Financial Terms Stock for Stock Merger: 19% Premium to SMTF Effective Price to SMTF: $6.31 Pro Forma Ownership: 58% SMTF / 42% SKIL Expected Closing Q3 CY2002 Financial Impact Fiscal Year End: Jan. 31 Accretive to SMTF Immediately Accretive to SKIL in CY03/FY04 A Leader in Corpor
Slide 10: Transaction Summary: Management and Board
Transaction Summary Management Greg Priest Chairman and Chief Strategy Officer (SMTF) Chuck Moran President and Chief Executive Officer (SKIL) Tom McDonald EVP and Chief Financial Officer (SKIL) 3 Additional EVPs from SMTF, 2 Additional from SKIL Board of Directors 3 Directors from Current SMTF Boar
Slide 11: Defined Leadership, Complementary Fit
Defined Leadership, Complementary Fit Content Sales Model Customer Penetration Technology Distribution Presence Expansive IT, CRM, Sales Library Leading Direct Sales Organization Strong Penetration in IT Function Leverageable Global Technology Platform Major International Presence Expansive Interper
Slide 12: A Leader in Soft Skills Content
: A Leader in Soft Skills Content Information Technology Business Skills Professional and Interpersonal Compliance and Safety Business Expertise IT and Digital Referenceware(r) Professional and Interpersonal Personal Development Communication Team Building Management Leadership Customer Svc Project
Slide 13: Combined Offering Is Unmatched
Combined Offering Is Unmatched Complete Employee Base and Life Cycle Coverage Sales and CRM Enterprise Apps Business Expertise Professional and Interpersonal Compliance and Safety Complete IT Digital Referenceware(r) 3,000+ Courses 8,000 Hours Advanced Simulations 25 Languages
Slide 14: One of the Industry's Strongest Distribution Platforms
One of the Industry's Strongest Distribution Platforms Global 2000 Buying Points Direct Sales Model Quota Carrying Reps Enterprise Account Focus Multi-Year Agreements Strong Renewal Rates Platform One of the Industry's Largest Field Sales Forces Blended Telesales and Support Strategy Presence in 65
Slide 15: Executive Suite: Touching All Purchase Points
Executive Suite Touching All Purchase Points of an Organization Global 2000 Buying Points Penetration Strategy Focus on Upgradeable Contracts to Reduce Sales Cycle Target Multiple Buying Points and Budgets Cross-Sell New Products Into Existing / New Client Relationships Financial Marketing HR R&D /
Slide 16: Strong Cross-Sell Opportunities
Strong Cross-Sell Opportunities Complementary Content Areas Minimal Customer Overlap Natural Process for Experienced Sales Reps New Product Introductions (Referenceware(r), Solution Sets) Natural Product Cross-Sale Professional Business IT
Slide 17: The Result: A Clear Market Leader
The Result: A Clear Market Leader 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 10 10 10 10 10 10 10 10 10 10 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 2,800 Global Customers Balanced Sector Representation Cross Industry Appeal No Significant Customer Concentration Technology Financial Services Aerosp
Slide 18: Low Execution Risk
Low Execution Risk Detailed and Focused Integration Plan Experienced Management Teams and Deep Bench Complementary Strategic Fit with Minimal Product Overlap Direct Sales Model is the Key Driver for Both Organizations
Slide 19: Integration Plan
Integration Plan Integration Team Leaders Identified Functional Integration Plans Articulated Direct Reports Assigned Specific Responsibility Detailed Plans for Sales Integration and Synergies Realization Focus on Execution and Accountability Specific Timelines, Milestones and Internal Reporting
Slide 20: Strong Management Team
Strong Management Team Name Title Experience Greg Priest Chairman and Chief Strategy Officer 7 years Chuck Moran President and Chief Executive Officer 17 years Tom McDonald EVP and Chief Financial Officer 16 years Jerry Nine EVP, Content Solutions 12 years Jeff Newton EVP, Complex Solutions 12 years
Slide 21: Financial Highlights
Financial Highlights Accretive to SMTF Immediately Accretive to SKIL in CY2003 / FY2004 (1/31) Substantial Cost Synergies Identified Additional Revenue Upside Potential From Cross-Sell Opportunity, but not Assumed Well Positioned for Future Growth and Profitability
Slide 22: Standalone Guidance
Standalone Guidance * SMTF EPS Excludes Intangibles Amortization Revenue Range $72-75 $92-97 $180-185 $220-230 Midpoint $74 $95 $183 $225 EPS Range $0.54-0.57 $0.83-0.91 $(0.40)-(0.50)* $0.34-0.42* Midpoint $0.56 $0.87 $(0.45)* $0.38* SMTF Initiates Guidance FY03 FY04 SKIL Reaffirms Guidance CY02 CY
Slide 23: Accounting and Financial Reporting Impact
Accounting and Financial Reporting Impact SKIL to be Accounting Acquiror Under GAAP (FAS 141) Standardize Contract and Accounting Policies Up Front Software Licenses Converted to Subscription Provides Enhanced Visibility and Stability Purchase Accounting Impact (assumes 9/30/02 close) Loss of SMTF D
Slide 24: Combined Company Revenue Buildup
Combined Company Revenue Buildup SMTF Standalone $48 - 52 (Q4) $220 - 230 SKIL Standalone $72 - 75 $92 - 97 Pre-Adjusted Pro Forma (midpoint) $124 $320 Deferred Revenue ($13) ($25) (Purchase Accounting) Conform Accounting Practices ($8) ($22) Total Non-Cash Adjustments ($21) ($47) Impact of Business
Slide 25: Pro Forma Cost Synergies
Pro Forma Cost Synergies Estimated Total Cost Synergies: $70 Million to $75 Million (CY02/FY03 - CY03/FY04) Realization Horizon: Approx. 10% - CY02/FY03 Approx. 90% - CY03/FY04 Targeted Composition $40 Sales and Marketing $12 Research & Development $15 General & Administrative Overlap in Marketing E
Slide 26: Combined Company Profit Buildup
Combined Company Profit Buildup SMTF Standalone (midpoint) $1 (Q4) $24 SKIL Standalone (midpoint) $10 $18 Revenue Adjustments Accounting (Non-Cash) ($21) ($47) Business Realignment ($4) ($18) Cost Synergies $7 $66 Net Income Impact ($18) $1 Combined Net Income Guidance* ($7) $43 CY02 / FY03 CY03 / F
Slide 27: Combined Company Profit Buildup: EPS
* SMTF EPS Excludes Intangibles Amortization * * Excludes Transaction-Related Intangibles Amortization and One-Time Charge. Guidance Reflects Approximate Midpoint of Range Combined Company Profit Buildup Combined Net Income ($7) $43 SMTF Standalone EPS Guidance (midpoint)* ($0.45) $0.38 Pro Forma Co
Slide 28: The Combined Company: Operating Model Poised for Growth
The Combined Company: Operating Model Poised for Growth SKIL Last Quarter % Revenue 100 % 100 % 100 % 100 % GM 94 % 83 % 87 % 86-88 % R&D 25 % 20 % 19 % 17-18 % S&M 54 % 51 % 43 % 40-42 % G&A 13 % 8 % 8 % 6-7 % % Op. Income 2 % 3% 17 % 19-25 % SMTF Q4 2001 % CY03 / FY04 Combined % (est) Combined Lon