SmartForce also significantly increased its profitability during the quarter. The Company more than doubled its operating income before acquisition-related amortization from the first quarter of 2001. As a result, net income for the second quarter before acquisition-related amortization was $3.6 million, or $0.06 per share, exceeding the First Call consensus by 20 percent.

The results compare with a net loss before acquisition-related amortization of $7.6 million, or $0.15 per share, for the second quarter of 2000, representing a year-over-year earnings increase of $11.2 million. After including acquisition-related amortization, the Company reported net income for the quarter of $1.1 million, or $0.02 per share, compared to a net loss of $9.9 million, or $0.19 per share for the second quarter of 2000.

For the six-month period ended June 30, 2001, the Company recorded revenues of $127.4 million, representing an increase of 96% over revenues of $64.9 million for the six months ended June 30, 2000. Net income before acquisition-related amortization for the six months ended June 30, 2001 was $5.9 million, or $0.10 per share. This represents a year-over-year increase in profits of $23.6 million over a net loss before acquisition-related amortization for the six months ended June 30, 2000 of $17.7 million. On a reported basis, the Company recorded net income of $1.0 million for the six months ended June 30, 2001.

SmartForce also continued to deliver strong performance against its key operating metrics. During the quarter the Company’s average enterprise deal size increased to over $172,000 while the dollar renewal rate continued to exceed 150 percent. In addition, SmartForce once again significantly exceeded its target of signing five deals worth over $1 million for the quarter.

We are very pleased with our second quarter results, said Greg Priest, Chairman and CEO of SmartForce. We delivered another quarter of strong financial performance, exceeding our previous guidance for revenues and earnings and significantly increasing our operating cash flow. That we were able to achieve these results in the current difficult market environment is particularly gratifying. We continue to be confident in the market opportunity available to SmartForce and in our ability to execute against that opportunity.

SOURCE: COMPANY PRESS RELEASE