ProsoftTraining.com to Acquire ComputerPREP

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ProsoftTraining.com to Acquire ComputerPREP

 
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ProsoftTraining.com to Acquire ComputerPREP
Deal Expands Prosoft's Revenue, Sales Force, Customer Base and Course Offerings
AUSTIN, Texas--(BUSINESS WIRE)--June 28, 2000--ProsoftTraining.com (Nasdaq: POSO - news) today announced that it has signed an agreement to acquire ComputerPREP, Inc. from the privately-held Drake International Technology Group.

ComputerPREP is one of the largest North American publishers and distributors of courseware for information technology, offering over 1,000 titles covering topics such as Certified Internet Webmaster (CIW) certification, A+ certification and Linux courses. CIW is an Internet skills program administered and branded by ProsoftTraining.com.

``This acquisition is strategic, tactical and accretive,'' said Jerry Baird, chairman and CEO of ProsoftTraining.com. ``The expansion of our product line and the addition of a sales force that is already one of the largest players in vendor-neutral certification will afford us broader market opportunity. The minimal account overlap with ComputerPREP will permit us to take full advantage of their strength in the corporate and academic markets. We are especially pleased with the strong market position for A+ certification courseware that this acquisition provides. In 1999, ComputerPREP had over $4 million in revenue attributable to the successful A+ vendor-neutral certification. We now have a more complete offering for our channel.''

Key benefits from the acquisition include:

Sales Force Expansion: The ComputerPREP acquisition expands Prosoft's sales force to more than 45 professionals who are trained to sell technology training courseware. The ComputerPREP sales force is already familiar with the CIW curriculum, which it has been selling under license since 1998.
Complementary Content: ComputerPREP offers courseware that complements Prosoft's existing suite of products and services, including vendor-neutral courseware covering A+ certification and Linux training, both of which fit well with Prosoft's vendor-neutral strategic focus.
Sales and Marketing Infrastructure and Processes: The acquisition of ComputerPREP adds sales and marketing infrastructure, including advanced sales force automation tools, a state-of-the-art call center, and customer and order tracking systems which Prosoft can leverage for future growth of its own products.
Expansion of Customer Base and Distribution Channels: With more than 3,500 active customers, ComputerPREP's customer base provides the opportunity for growth through cross-selling of additional content and services. ComputerPREP's established relationships include training providers, educational institutions and corporate in-house training departments that will expand Prosoft's customer base and distribution channels.
Prosoft will acquire ComputerPREP for $30 million, split equally between cash and stock. The cash portion of the purchase price will come from a private placement of common stock that was recently completed. Net proceeds to Prosoft will exceed the cash portion of the purchase consideration. The excess proceeds will be used for working capital and general corporate purposes. Outstanding shares of the company will increase by approximately 3.25 million as a result of both transactions. Drake International will also receive 600,000 warrants as part of the purchase consideration.

ComputerPREP's parent company, Drake International, is a global human resources company with over 95,000 employees. Drake provides training, placement, temporary staffing, and human resource consulting to clients in the United States, Europe, and Australia and throughout Asia. In 1991, a subsidiary of Drake created a business to provide proctored testing for information technology certifications. This business, which became Sylvan Prometric, was recently acquired by Thomson Learning and has become the market leader for certification testing for information technology professionals. Prometric currently provides tests for certifications from Microsoft, Oracle, A+ and CIW.

For the fiscal year ended October 1, 1999, ComputerPREP had audited revenue of $14.53 million and reported a loss of $.36 million. ComputerPREP operates two business units -- technology training publishing and online training software. According to ComputerPREP reports, its technology training publishing business unit had revenue in that period of $13.83 million and a profit of $1.03 million, while the software business unit had revenue of $.69 million and a loss of $1.39 million.

Unaudited results for six months ended March 31, 2000 reflect revenue of $7.63 million and an operating profit of $.05 million. On a business unit basis, technology training publishing had $7.06 million in revenue and a profit of $.68 million while the software business unit had $.57 million in revenue and a loss of $.63 million. Prosoft intends to discontinue the software business and focus sales efforts on ComputerPREP's most profitable technology training products. After also eliminating duplicate revenue items associated with CIW sales, Prosoft expects incremental revenue of approximately $11 million in fiscal 2001 as a result of the acquisition. Remaining technology training products are expected to generate average gross margins of 60%.

Annual payroll costs will immediately decline $2.5 million as a result of these changes. Prosoft believes that it will be able to realize additional cost savings from combining the sales and marketing efforts of the two companies.

Baird continued, ``We believe that the acquisition will be immediately accretive to earnings per share before amortization of goodwill and accretive to earnings per share including amortization for the full fiscal year.''

Pending government approval, Prosoft expects the transaction to close by the end of July.

About ProsoftTraining.com

ProsoftTraining.com is an e-learning company that sells education and certification programs for Internet and Linux professionals. The company's industry-leading CIW certification program creates and certifies the skills that today's workforce needs to support the growth of B2B and B2C applications. Prosoft education programs include Internet, Linux, security, and networking topics. Each topic is developed using a design methodology that allows courseware materials to be delivered in several online and classroom formats. Using a B2B model, the company distributes its products through one of the largest classroom and e-learning networks in the industry. Programs are offered worldwide through an extensive network of authorized training partners. The network includes leading educators on the Web and in the classroom. Prosoft's Internet certification programs have the endorsement of the 8,500-member Association of Internet Professionals and the 14,000-member International Webmasters Association. Certification testing is available through the Prometric and VUE testing networks. Learn more about Prosoft at www.prosofttraining.com. Learn more about the CIW program at www.CIWcertified.com.

Except for historical information contained herein, the matters discussed in this press release are statements of a forward-looking nature that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, without limitation, the Company's dependence on the timely development, introduction and acceptance of courses and products, the impact of competition and downward pricing pressures, the effect of changing economic conditions, the Company's ability to attract and retain key management and other personnel, risks in technology development, continued adoption of Internet technologies, and the other risks and uncertainties outlined in the Company's filings with the Securities and Exchange Commission, including but not limited to the Company's Annual Report on Form 10K. The Company undertakes no obligation to update this forward-looking information.



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