SmartForce Announces Loss for First Quarter 2002

SmartForce, the world's largest e-Learning company, today announced preliminary financial results for the first quarter of 2002.

The Company expects to report revenues for the quarter of between $42 and $43 million. Due to the revenue shortfall, the Company expects to report a loss before acquisition-related amortisation and other acquisition costs of between $0.26 and $0.27 per share. These results are substantially lower than the Company’s targets.

The Company also expects to record an additional one-time charge with respect to costs associated with the merger that had been planned with Centra Software. Centra announced today preliminary financial results with respect to its first quarter, which were also substantially below its targets. SmartForce and Centra have mutually agreed to terminate their planned merger agreement, and the merger will not be consummated.

SmartForce will take a first quarter charge of between $2 and $2.5 million for costs associated with the transaction. “We are disappointed with our results for the quarter,” said Greg Priest, SmartForce’s chairman and chief executive officer. “This is a very difficult climate for enterprise software companies generally, and e-Learning companies in particular, and our close rates in the first quarter were substantially below our expectations. That said, there is substantial customer interest in SmartForce’s e-Learning offerings. Our pipeline of business that our sales force has identified and is pursuing today has more than doubled since the end of last year.”

“At the same time, we have a responsibility to our shareholders to run our business profitably,” continued Priest. “Accordingly, in light of our first quarter results and the continuing uncertainty of our market environment, we must reduce our operating costs substantially so that we can operate profitably until our market and our business begins to recover. We have therefore planned immediate, substantial reductions in our cost base. We expect to take a substantial restructuring charge in the second quarter of 2002 in connection with these reductions, and plan to use this as an opportunity to refocus our business on our core strategies and eliminate peripheral activities.”

“With regard to the termination of our proposed merger with Centra, while we continue to believe that there would have been a good, long-term strategic fit between the companies, we intend to make substantial and immediate operational changes to better position ourselves for the difficult current market environment. We believe it prudent to terminate our merger agreement and focus on implementing the changes that we are making at SmartForce,” Priest concluded.

April 3rd, 2002