Click2learn Announces Fourth Quarter and Year-End 2002 Results; Sequential Revenue Increases 24%; Revenue and Earnings Exceed Expectations on Strong Aspen Sales Growth

Business Wire, Feb 6, 2003

Business Editors

BELLEVUE, Wash.--(BUSINESS WIRE)--Feb. 6, 2003

Click2learn (Nasdaq:CLKS) today announced its results for the fourth quarter and fiscal year ended Dec. 31, 2002.

For the fourth quarter of 2002, Click2learn reported revenues of $8.6 million, up 24% sequentially from $6.9 million in the third quarter of 2002. Revenue growth was primarily the result of the continued positive market reaction to the company's highly acclaimed Aspen Enterprise Productivity Suite(TM), which fueled a sequential revenue increase of 34% in platform revenue over third quarter 2002.

The fourth quarter marked the first full shipping quarter of Aspen 2.0, the latest version of the Aspen platform, which is designed to improve business performance and workforce productivity. Aspen has already been recognized as the industry's most comprehensive platform offering, uniquely integrating a Learning Management System (LMS), a Learning Content Management System (LCMS) and a Virtual Classroom (VC) in a single, robust architecture.

"Our Aspen platform is clearly resonating with corporate buyers," said Kevin Oakes, chairman and CEO. "During the fourth quarter we booked 18 Aspen platform solutions at an average deal size of $443,000, up from $400,000 in the previous quarter. We finished the second half of 2002 strongly with combined Q3 and Q4 new business bookings of approximately $20 million. Since June 30 deferred revenue has grown 100%, and we have made significant improvements in reducing accounts receivable days outstanding. But, surpassing all of those positive metrics, was the significant milestone of achieving positive cash flow from operations during the fourth quarter."

Net loss for the fourth quarter was $757,000 or ($0.03) per share as compared to a net loss of $9.1 million or ($0.41) per share for the same period 2001. 2001 results included amortization and write-offs related to goodwill of $8.1 million. The results were better than the company's guidance of ($0.04) to ($0.05) per share and, factoring out increased reserves for bad debt and non-cash charges in the period such as depreciation and amortization, generated positive cash flows.

"While we have done a good job at keeping operating costs lean, we have also focused on making sure that customer success continues to remain our first priority," Oakes added. "We continue to expand Aspen into larger solutions for our current customer base, which now numbers almost 400 platform customers. This customer base represents a significant upside opportunity, and a clear advantage for us in the market, as we move from departmental to enterprise-wide engagements and introduce additional components of the Aspen suite."

In the fourth quarter, Aspen was purchased by new and current customers including Microsoft, American Express, AstraZeneca, Northeast Utilities, Medco Health, Cendant, Standard & Poor's, CompuCom Systems, Skandia and Deloitte Consulting, among others.

Recent Significant Events

-- Click2learn announced that the Microsoft Corporation (Nasdaq:MSFT) has selected the Aspen Enterprise Productivity Suite(TM) as its enterprise-wide learning platform. The Aspen Suite will help power a worldwide readiness initiative at Microsoft to help employees, partners and customers receive content across the globe.

-- Click2learn announced that it has been ranked a market leader in the newly released "Learning Management Systems Platforms METAspectrum Market Summary" from the META Group, a leading research and consulting firm, focusing on information technology and business transformation strategies.

-- Click2learn announced that New Horizons Computer Learning Centers, Inc., (Nasdaq:NEWH) the world's largest IT training company, will deploy the entire Aspen Productivity Suite to create, deliver and manage its groundbreaking Integrated Learning program. Aspen will power the Integrated Learning program in over 270 centers in 49 countries around the world, with a potential to reach more than 15 million corporate and individual users.

-- The company announced that the United States Army Recruiting Command (USAREC) has chosen the Aspen Learning Management System (LMS) to power an extensive distance learning initiative targeting a nationwide cadre of Army recruiters. The USAREC will utilize the Aspen LMS to provide training tools that will enable the Army's approximately 15,000 recruiting personnel to continue to meet and exceed their yearly recruiting goals.

-- Click2learn announced additional wins with Phoenix Life, Creo, Royal LePage and the Greek Ministry of Education.

-- Click2learn announced the appointment of Jonathan Morgan to its board of directors.

-- Click2learn completed the renewal and expansion of its credit line with Silicon Valley Bank to a 24-month, $10M working capital line of credit.

-- Click2learn opened up its first overseas development office in Hyderabad, India.

Fiscal Year 2002 Results

As a result of the discontinuation of the company's custom content development business in 2002, revenue and expenses associated with this category have been reclassified as discontinued operations. Total revenue from continuing operations for the year ended Dec. 31, 2002, was $30.5 million as compared to $31.2 million for the year ended Dec. 31, 2001. Net loss from continuing operations was $10.5 million in 2002 as compared to a loss of $19.9 million in 2001. 2001 net loss from continuing operations included $9.1 million of expenses related to amortization and write-offs of goodwill. Net loss, which includes discontinued operations, was $18.1 million or ($0.74) per share for 2002 as compared to a net loss of $19.6 million or ($0.99) per share for 2001.