Lawson Software Reports Fourth Quarter Fiscal 2007 Financial Results
ST. PAUL, Minn.--(BUSINESS WIRE)--July 26, 2007--Regulatory News:
Lawson Software, Inc. (Nasdaq:LWSN) today reported financial
results for its fiscal fourth quarter, which ended May 31, 2007. The
May quarter also included the one-year anniversary of the company's
acquisition of Intentia International AB, which was completed on April
25, 2006.
Lawson reported fiscal 2007 fourth quarter GAAP (generally
accepted accounting principles) revenues of $212.9 million, up from
revenues of $126.1 million in its fiscal 2006 fourth quarter. Excluded
from the 2007 results is $1.1 million of deferred maintenance and
services revenue impact of purchase accounting adjustments made to the
opening deferred maintenance and services revenue balances acquired
from Intentia. Approximately 75 percent of the year-over-year increase
in revenues was due to the consolidation of a full quarter of revenues
of the former Intentia compared with five weeks in the same period
last year. Higher revenues from the legacy Lawson business accounted
for 25 percent of the year-over-year increase, with increases across
all revenue streams including consulting, maintenance and software
license fees. The year-over-year increase in legacy Lawson license
fees, an important financial metric, was driven by significant sales
of the Lawson System Foundation 9 technology platform product with
approximately 450 deals sold in the quarter. For more information on
fourth quarter sales of Lawson System Foundation 9, please refer to
the company's press release dated June 13, 2007.
Fourth quarter GAAP net income was $8.1 million, or $0.04 per
diluted share, compared with a $4.8 million, or $0.03 per share net
loss in the fourth quarter of fiscal 2006 that resulted from the
consolidation of the former Intentia's results from the April 25, 2006
acquisition date as well as the costs related to the acquisition. The
year-over-year increase in net income was primarily attributed to a
$13.3 million improvement in operating margin resulting from a 69
percent increase in revenues combined with a reduction in operating
expenses as a percentage of revenues. Included in these GAAP results
are pre-tax expenses totaling $8.9 million for amortization of
acquired intangible assets, restructuring charges, acquisition related
costs, purchase accounting impact on consulting costs, amortization of
purchased maintenance contracts, and $2.1 million of non-cash
stock-based compensation as a result of adopting FAS 123(R) in the
year. Under FAS 123(R), stock-based employee compensation cost is
recognized using the fair-value based method for all unvested stock
options after June 1, 2006. Excluding these expenses and including the
$1.1 million of purchase accounting adjustments to maintenance and
services revenues, non-GAAP net income was $14.6 million, or $0.08 per
diluted share. A lower non-GAAP effective tax rate of 42 percent
compared with a 51 percent forecasted rate favorably impacted the
non-GAAP earnings per share by $0.01 compared with the company's
preliminary estimates provided on June 13, 2007."Our fourth quarter financial results are another indication that
our strategy is sound and that our execution continues to improve,"
said Harry Debes, president and CEO. "Because of the Lawson-Intentia
combination in April 2006, fiscal 2007 was a year of significant
transition in our company. During the last 12 months we have
organically grown revenue in total and improved bottom line
performance in every quarter. We have created and delivered a
comprehensive product strategy, built an energized team of leaders,
sales account executives and employees around the world, built a
500-person facility in Manila and strengthened and streamlined global
operations. I am proud of our progress in 2007, and on this solid
foundation, I am confident about what we can achieve in the future."
Results for the 12-month Fiscal Period
For the fiscal year ended May 31, 2007, Lawson reported total GAAP
revenues of $750.4 million, compared with total revenues of $390.8
million in the fiscal 2006 year. Excluded from the 2007 results is
$11.4 million of deferred maintenance and services revenue impact of
purchase accounting adjustments made to the opening deferred
maintenance and services revenue balances acquired from Intentia. The
consolidation of the former Intentia business resulted in a 79 percent
increase in revenues. Organic growth in maintenance and consulting
revenues from the legacy Lawson business accounted for the remainder
of the year-over-year increase. Legacy Lawson software license fees
decreased slightly by 3 percent on a full year basis, primarily
attributable to lower revenue recognition rates based on specific
contract terms and conditions.
The company reported a GAAP net loss of $20.9 million, or $0.11
per share for fiscal 2007, compared with net income of $16.0 million,
or $0.14 per diluted share for fiscal 2006. The decrease in net income
was primarily attributed to higher restructuring expenses and
amortization of acquired intangibles following the acquisition as well
as lower gross margin largely due to added 3rd party license costs in
the Lawson System Foundation product and a higher mix of lower-margin
consulting revenues. Included in the 12-month GAAP results are pre-tax
expenses totaling $55.9 million for amortization of acquired
intangible assets, restructuring charges, acquisition related costs,
purchase accounting impact on consulting costs, amortization of
purchased maintenance contracts, and $7.7 million of non-cash
stock-based compensation as a result of adopting FAS 123(R) in the
year. Excluding these costs and including the $11.4 million of
maintenance and services revenue impacted by purchase accounting,
12-month non-GAAP net income was $36.1 million, or $0.19 per diluted
share.
Financial Guidance
For the first fiscal quarter 2008 ending Aug. 31, 2007, the
company estimates total revenues of $183 million to $188 million.
License revenues are anticipated to be between $24 million and $27
million. Maintenance revenues are estimated to be between $78 million
and $79 million, and consulting revenues are estimated to be between
$80 million and $82 million. The company anticipates GAAP fully
diluted earnings per share to be in the range of $0.01 to $0.03.
Non-GAAP fully diluted earnings per share are forecasted between $0.04
and $0.06, excluding approximately $10 million of pre-tax expenses
related to the amortization of acquisition-related intangibles,
amortization of purchased maintenance contracts and stock-based
compensation charges.
For the fiscal year 2008 ending May 31, 2008, the company
estimates total revenues of $820 million to $830 million. The company
anticipates GAAP full diluted earnings per share results to be in the
range of $0.17 to $0.22. Non-GAAP fully diluted earnings per share are
forecasted to be between $0.30 and $0.34, excluding approximately $37
million of pre-tax expenses related to the amortization of
acquisition-related intangibles, amortization of purchased maintenance
contracts and stock-based compensation charges. The non-GAAP effective
tax rate for fiscal 2008 is anticipated to be between 42 and 45
percent. The anticipated full year GAAP and Non-GAAP EPS results
include approximately $15 million of pre-tax operating expenses
associated with various transformational initiatives, impacting
expected results by $0.03 to $0.04 per share. In addition, the company
expects to incur capital expenditures of $25 million to $30 million
for infrastructure and facility projects, which is $15 million higher
than historical expenditures. Cash flow from operations is anticipated
to be between $75 million and $95 million. Cash flow from operations
is negatively impacted by the increased $15 million of pre-tax
operating expenses.
Fourth Quarter Fiscal 2007 Key Metrics and Highlights
-- Cash, cash equivalents and marketable securities at year-end
were $553.8 million (excluding $7.4 million of restricted
cash).
-- Total deferred revenues increased 45 percent from the third
quarter to $263.4 million driven primarily by annual
maintenance renewals.
-- Deferred license revenues increased 8 percent from the third
quarter to $35.3 million.
-- 751 total deals were signed at an average selling price of
$57,000 compared with 354 deals at an average selling price of
$88,000 in the third quarter.
-- 40 new customer deals were signed at an average selling price
of $228,000 compared with 24 at an average selling price of
$373,000 in the third quarter.
-- Two deals greater than $1 million and seven deals between
$500,000 and $1 million were signed, compared to five deals
greater than $1 million and four deals in the $500,000 to $1
million range in the third quarter.
-- The Americas region represented 54 percent of total revenue;
the Europe, Middle East, and Africa region represented
approximately 43 percent of total revenue; and Asia-Pacific
represented 3 percent of total revenue.
-- Non-GAAP consulting services margins declined sequentially to
11.1 percent due primarily to higher 3rd party costs and
fourth quarter utilization incentives.
-- Customer wins: Americas -American Safety Insurance; Elsinore
Valley Municipal Water District; Physiotherapy Associates;
SUNY Downstate Medical Center; EMEA - Cardo AB; Metso
Automation Oy; Rivadis Laboratories; SUNEOR; W D Irwin & Sons
Ltd; Asia-Pacific -Rip Curl and Casella Wines.
-- The company signed five new Lawson M3 deals with customers in
the Americas.
-- Lawson saw good customer adoption of Lawson System Foundation
9 with approximately 450 customers purchasing in the fourth
quarter an increase from 135 customers in the third quarter of
fiscal 2007.
-- The company repurchased 5.5 million shares of common stock in
the fourth quarter for $49 million at an average price of
$8.89 per share. In fiscal 2007, the company repurchased 6.4
million shares, or approximately 3 percent of total shares
outstanding, for $54.9 million at an average price of $8.61
per share.
Conference Call and Webcast
The company will host a conference call and webcast to discuss its
fourth quarter results and future outlook at 4:30 p.m. Eastern Time
(3:30 p.m. Central Time) July 26, 2007. Interested parties should dial
1-888-396-9185 (passcode Lawson 726) and international callers
1-210-839-8500. A live webcast will be available on www.lawson.com.
Interested parties should access the conference call or webcast
approximately 10-15 minutes before the scheduled start time.
A replay will be available approximately one hour after the
conference call concludes and will remain available for one week. The
replay number is 1-888-662-6633 and international 1-402-220-6409. The
webcast will remain on www.lawson.com for approximately one week.
About Lawson Software
Lawson Software provides software and service solutions to
approximately 4,000 customers in manufacturing, distribution,
maintenance and service sector industries across 40 countries.
Lawson's solutions include Enterprise Performance Management, Supply
Chain Management, Enterprise Resource Planning, Customer Relationship
Management, Manufacturing Resource Planning, Enterprise Asset
Management and industry-tailored applications. Lawson solutions assist
customers in simplifying their businesses or organizations by helping
them streamline processes, reduce costs and enhance business or
operational performance. Lawson is headquartered in St. Paul, Minn.,
and has offices around the world. Visit Lawson online at
www.lawson.com.
Forward-Looking Statements
This press release contains forward-looking statements that
contain risks and uncertainties. These forward-looking statements
contain statements of intent, belief or current expectations of Lawson
Software and its management. Such forward-looking statements are not
guarantees of future results and involve risks and uncertainties that
may cause actual results to differ materially from the potential
results discussed in the forward-looking statements. The company is
not obligated to update forward-looking statements based on
circumstances or events that occur in the future. Risks and
uncertainties that may cause such differences include but are not
limited to: uncertainties in Lawson's ability to realize synergies and
revenue opportunities anticipated from the Intentia International
acquisition; uncertainties in the software industry; uncertainties as
to when and whether the conditions for the recognition of deferred
revenue will be satisfied; global military conflicts; terrorist
attacks; pandemics, and any future events in response to these
developments; changes in conditions in the company's targeted
industries; increased competition and other risk factors listed in the
company's most recent Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission. Lawson assumes no obligation to
update any forward-looking information contained in this press
release.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with
generally accepted accounting principles, or GAAP, Lawson Software
reports non-GAAP financial results. These non-GAAP results exclude
amortization of all acquisition-related intangibles, amortization of
purchased maintenance contracts, Intentia integration costs,
restructuring charges, certain stock-based compensation expenses and
other expenses. In addition, Lawson's non-GAAP financial results
include pro forma revenue for maintenance contracts acquired in the
Intentia acquisition for which the deferred revenue on Intentia's
balance sheet has been eliminated from GAAP results as part of the
purchase accounting for the acquisition. Lawson's management believes
the non-GAAP measures used in this press release are useful to
investors because they provide supplemental information that research
analysts frequently use to analyze software companies that have
recently made significant acquisitions. Management uses these non-GAAP
measures to evaluate its financial results, develop budgets and manage
expenditures. The method Lawson uses to produce non-GAAP results is
not computed according to GAAP, may differ from the methods used by
other companies, and should not be regarded as a replacement for
corresponding GAAP measures. Investors are encouraged to review the
reconciliation of these non-GAAP financial measures to the comparable
GAAP results, which is attached to this release. Additional
information can be found on the investor relations page of Lawson's
website at www.lawson.com/investor.
-0-
*T
LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Twelve Months
Ended Ended
---------------- -----------------
May 31, May 31, % Increase May 31, May 31, % Increase
2007 2006 (Decrease) 2007 2006 (Decrease)
------- -------- ---------- --------- ------- ----------
Revenues:
License fees $40,618 $19,253 111% $105,861 $71,076 49%
Maintenance 77,796 54,565 43% 291,657 188,155 55%
Consulting 94,437 52,312 81% 352,870 131,545 168%
------- -------- --------- -------
Total
revenues 212,851 126,130 69% 750,388 390,776 92%
------- -------- --------- -------
Cost of
revenues:
Cost of
license fees 9,688 5,422 79% 26,530 13,344 99%
Cost of
maintenance 14,608 8,802 66% 59,108 30,365 95%
Cost of
consulting 85,703 50,183 71% 313,682 127,833 145%
------- -------- --------- -------
Total cost
of
revenues 109,999 64,407 71% 399.320 171,542 133%
------- -------- --------- -------
Gross profit 102,852 61,723 67% 351,068 219,234 60%
------- -------- --------- -------
Operating
expenses:
Research and
development 22,090 17,836 24% 85,325 60,711 41%
Sales and
marketing 44,017 27,101 62% 160,551 83,193 93%
General and
admini-
strative 24,344 18,272 33% 98,263 54,827 79%
Restructuring 583 1,820 (68%) 15,483 1,825 +++
Amortization
of acquired
intangibles 2,835 1,045 171% 10,089 2,122 +++
------- -------- --------- -------
Total
operating
expenses 93,869 66,074 42% 369,711 202,678 82%
------- -------- --------- -------
Operating
income (loss) 8,983 (4,351) +++ (18,643) 16,556 ---
------- -------- --------- -------
Other income:
Interest
income 4,921 3,283 50% 15,500 10,769 44%
Interest
expense (1,829) (27) --- (4,134) (54) +++
Other income 893 395 126% 740 396 87%
------- -------- --------- -------
Total other
income 3,985 3,651 9% 12,106 11,111 9%
------- -------- --------- -------
Income (loss)
before income
taxes 12,968 (700) +++ (6,537) 27,667 ---
Provision for
income taxes 4,836 4,081 19% 14,400 11,708 23%
------- -------- --------- -------
Net income
(loss) $8,132 $(4,781) +++ $(20,937) $15,959 ---
======= ======== ========= =======
Net income
(loss) per
share:
Basic $0.04 $(0.03) +++ $(0.11) $0.14 ---
======= ======== ========= =======
Diluted $0.04 $(0.03) +++ $(0.11) $0.14 ---
======= ======== ========= =======
Shares used in
computing net
income (loss)
per share:
Basic 184,566 136,829 35% 186,363 110,995 68%
======= ======== ========= =======
Diluted 187,846 136,829 37% 186,363 115,350 62%
======= ======== ========= =======
LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
May 31, 2007 May 31, 2006
------------ ------------
ASSETS
--------------------------------------------
Current assets:
Cash and cash equivalents $ 473,963 $ 210,154
Restricted cash 555 -
Marketable securities 74,995 90,348
Trade accounts receivable, net 162,947 141,001
Income taxes receivable 6,081 4,577
Deferred income taxes 17,431 21,465
Prepaid expenses and other current assets 25,266 47,017
------------ ------------
Total current assets 761,238 514,562
------------ ------------
Long-term marketable securities 4,878 6,079
Restricted Cash 6,889 -
Property and equipment, net 30,879 26,189
Goodwill 483,060 454,550
Other intangibles assets, net 133,456 154,695
Deferred income taxes 36,889 9,294
Other assets 19 ,786 5,283
------------ ------------
Total assets $1,477,075 $1,170,652
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------
Current liabilities:
Current portion of long-term debt $ 3,322 $ 3,475
Accounts payable 21,475 26,137
Accrued compensation and benefits 85,144 84,564
Income taxes payable 1,503 3,195
Deferred income taxes 4,605 4,221
Deferred revenue 247,587 146,206
Other current liabilities 72,986 78,563
------------ ------------
Total current liabilities 436,622 346,361
------------ ------------
Long-term debt, less current portion 245,228 4,275
Deferred income taxes 12,558 9,039
Deferred revenue - non-current 15,817 10,840
Other long-term liabilities 11,622 8,478
------------ ------------
Total liabilities 721,847 378,993
------------ ------------
Stockholders' equity:
Common stock 1,994 1,961
Additional paid-in capital 822,740 800,168
Treasury stock, at cost (123,207) (69,237)
Deferred stock-based compensation - (131)
Retained earnings 17,755 38,692
Accumulated other comprehensive income 35,946 20,206
------------ ------------
Total stockholders' equity 755,228 791,659
------------ ------------
Total liabilities and stockholders' equity $1,477,075 $1,170,652
============ ============
LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
------------------- ---------------------
May 31, May 31, May 31, May 31,
2007 2006 2007 2006
--------- --------- ---------- ----------
Cash flows from operating
activities:
Net (loss) income $ 8,132 $( 4,781) $ (20,937) $ 15,959
Adjustments to reconcile
net income (loss) to net
cash provided by operating
activities:
Minority Interest (176) (176)
Write -off of intangible
assets 268 268
Depreciation &
Amortization, excluding
amortization of debt
issuance 10,303 5,658 39,502 16,231
Amortization of debt
issuance costs 133 - 133 -
Deferred income taxes 3,289 (500) 2,467 (1,602)
Provision for doubtful
accounts (268) 149 3,501 (1,154)
Tax benefit from stock
option transactions (672) - (2,457) -
Tax benefit from
stockholder transactions
for option activity 1,135 (239) 2,569 4,016
Amortization of stock-
based compensation 2,139 98 7,652 6,803
Amortization of discounts
on notes payable - (4) - 13
Amortization of discounts
on marketable securities (68) (279) (443) (590)
Net gain on sale of
assets (6) - 131 -
Changes in operating assets
and liabilities, net of
effect from acquisitions:
Trade accounts receivable 23,576 15,852 14,084 10,215
Prepaid expenses and
other assets 13,286 18,414 8,000 22,042
Accounts payable (3,776) (355) (5,849) (1,290)
Accrued compensation and
benefits and other
accrued liabilities (19,176) (5,374) (32,111) (6,560)
Income taxes (4,327) (3,281) (5,457) 1,046
Deferred revenue and
customer deposits 81,021 12,411 87,758 11,265
--------- --------- ---------- ----------
Net cash provided by
operating activities 114,721 37,861 98,543 76,486
--------- --------- ---------- ----------
Cash flows from investing
activities:
Cash received (paid) in
conjunction with
acquisitions - 33,066 (3,575) 30,137
Purchases of marketable
securities (77,112) (40,701) (177,532) (157,126)
Maturities of marketable
securities 46,069 35,028 194,082 107,801
Sales of marketable
securities - 337 497 337
Restricted cash designated 7,546 - (7,444) -
Purchases of property and
equipment (6,839) (1,940) (17,516) (4,907)
--------- --------- ---------- ----------
Net cash provided by (used
in) investing activities (30,336) 25,790 (11,488) (23,758)
--------- --------- ---------- ----------
Cash flows from financing
activities
Principal payments on long-
term debt (427) (41,501) (1,778) (43,185)
Cash proceeds from long-
term debt 241,271 - 244,493 -
Payments on debt issuance
costs (6,289) - (6,289) -
Proceeds from sales of
stock warrants 34,176 - 34,176 -
Payment on purchase of call
options (57,697) - (57,697) -
Payments on capital lease
obligations (422) (112) (1,828) (112)
Exercise of stock options 2,332 (2,168) 12,387 7,098
Excess tax benefit from
stock transactions 672 - 2,457 -
Proceeds received from
employee stock purchase
plan 692 817 2,715 3,554
Repurchase of common stock (48,970) - (54,870) -
--------- --------- ---------- ----------
Net cash provided by (used
in) financing activities 165,338 (42,964) 173,766 (32,645)
--------- --------- ---------- ----------
Effect of exchange rate
changes on cash and cash
equivalents 1,937 2,327 2,988 2,327
--------- --------- ---------- ----------
Increase in cash and cash
equivalents 251,660 23,014 263,809 22,410
Cash and cash equivalents at
beginning of period 222,303 187,140 210,154 187,744
--------- --------- ---------- ----------
Cash and cash equivalents at
end of period $ 473,963 $ 210,154 $ 473,963 $ 210,154
========= ========= ========== ==========
Reconciliation of Consolidated GAAP Net Income (Loss) to Consolidated
Non-GAAP Net Income
(in thousands)
Twelve Twelve
Three Months Three Months Months Months
Ended Ended Ended Ended
May 31, May 31,
May 31, 2007 May 31, 2006 2007 2006
Net income (loss),
as reported 8,132 (4,781) (20,937) 15,959
Purchase accounting
impact on revenue (1) $1,142 $2,342 $11,430 $2,342
Purchase accounting
impact on
consulting cost (4) $284 $- $898 $-
Acquisition of
Intentia $536 $2,403 $9,892 $6,068
Purchased
maintenance
contracts $844 $981 $3,555 $3,950
Stock based
compensation $2,139 $- $7,654 $6,303
Restructuring $583 $1,820 $15,483 $1,825
Numbercraft write
-off $- $1,143 $- $1,143
Amortization $6,663 $2,513 $26,054 $6,013
Other $- $- $- $(357)
Tax $(5,675) $653 $(17,899) $(9,228)
------------ ------------ ----------- ----------
Non-GAAP Net income $14,648 $7,074 $36,130 $34,018
------------ ------------ ----------- ----------
Reconciliation of Consolidated GAAP to Consolidated Non-GAAP per Share
Effect
(in thousands)
Three Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
May 31, May 31, May 31, May 31,
2007 2006 2007 2006
Net income, as
reported (2) 0.04 ( 0.03) (0.11) 0.14
Purchase accounting
impact on revenue (1) 0.01 0.02 0.06 0.02
Purchase accounting
impact on consulting
cost (4) 0.00 - 0.00 -
Acquisition of
Intentia 0.00 0.02 0.05 0.05
Purchased maintenance
contracts 0.00 0.01 0.02 0.04
Stock based
compensation 0.01 - 0.04 0.06
Restructuring 0.00 0.01 0.08 0.02
Amortization 0.04 0.02 0.14 0.05
Other - - - (0.00)
Tax (0 .03) 0.00 (0.10) (0.08)
---------- ---------- --------- ----------
Non-GAAP net income (2) (3) $0.08 $0.05 $0.19 $0.29
---------- ---------- --------- ----------
Weighted average
shares - basic 184,566 136,829 186,363 110,995
Weighted average
shares - diluted 187,846 140,764 189,692 115,350
Summary of Non-GAAP Items
(in thousands)
Three Three Months Twelve Months Twelve Months
Months Ended Ended Ended
Ended
May 31, May 31, May 31, May 31,
2007 2006 2007 2006
Purchase
accounting
impact on
revenue (1) 1,142 2,342 11,430 2,342
Purchase
accounting
impact on
consulting
cost (4) 284 $- 898 $-
Acquisition of
Intentia - pre-
tax 536 2,403 9,892 6,303
Purchased
maintenance
contracts - pre-
tax 844 981 3,555 3,950
Stock based
compensation -
pre-tax 2,139 $- 7,654 6,285
Restructuring -
pre-tax 583 1,820 15,483 1,825
Numbercraft write
-off $- 1,143 $- 1,143
Amortization 6,663 2,513 26,054 6,013
Other $- $- $- (357)
-----------------------------------------------------
subtotal pre-
tax
adjustments 12,191 11,202 74,966 27,287
-----------------------------------------------------
Tax provision (5,675) 653 (17,899) (9,228)
-----------------------------------------------------
Impact on net
income 6,516 11,855 57,067 18,059
=====================================================
(1) For the purchase accounting impact on deferred revenues for Three
Months and Twelve Months ended, $888 and $8,100, respectively,
relates to maintenance revenue and $254 and $3,330, respectively,
relates to consulting revenue
(2) For calculation of EPS, basic weighted average shares are used
with a net loss and diluted weighted average shares are used with net
income
(3) May not total due to rounding
(4) Purchase accounting impact on cost of consulting is a cumulative
adjustment for fiscal year 2007
LAWSON SOFTWARE, INC.
SUPPLEMENTAL NON-GAAP MEASURES
INCREASE (DECREASE) IN GAAP AMOUNTS REPORTED
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
--------------------------------------
May 31, May 31, May 31, May 31, 2007 2006 2007 2006
-------- --------- --------- ---------
Revenue items
Purchase accounting impact on
maintenance $ 888 $ 1,335 $ 8,100 $ 1,335
Purchase accounting impact on
consulting 254 1,007 3,330 1,007
-------- -------- --------- ---------
Total revenue items 1, 142 2,342 11,430 2,342
Cost of license items
Amortization of acquired
software (2,844) (1,468) (10,748) (3,891)
Non-cash stock-based
compensation (7) - (28) -
-------- -------- --------- ---------
Total cost of license
items (2,851) (1,468) (10,776) (3,891)
Cost of maintenance items
Amortization of purchased
maintenance contracts (844) (981) (3,555) (4,425)
Integration related (1) 48 ( 475) (22) -
Non-cash stock-based
compensation (38) - (148) -
-------- -------- --------- ---------
Total cost of maintenance
items (834) (1,456) (3,725) (4,425)
Cost of consulting items
Purchase accounting impact on
consulting (284) - (898) -
Amortization (984) - (5,217) -
Integration related (1) 4 (94) (1,708) (356)
Non-cash stock-based
compensation (229) - (835) (3)
-------- -------- --------- ---------
Total cost of consulting
items (1,493) (94) (8,658) (359)
Research and development items
Integration related (1) - (43) (74) (222)
Non-cash stock-based
compensation (167) - (635) (7)
-------- -------- --------- ---------
Total research and
development items (167) (43) (709) (229)
Sales and marketing items
Integration related (1) 42 (191) (1,447) (1,091)
Non-cash stock-based
compensation (418) - (1,510) (14)
-------- -------- --------- ---------
Total sales and marketing
items (376) (191) (2,957) (1105)
General and administrative items
Integration related (1) (630) (1,600) (6,641) (3,924)
Numbercraft Write- Off (1,143) - (1,143)
Non-cash stock-based
compensation (3) (1,280) - (4,498) (6,279)
-------- -------- --------- ---------
Total general and
administrative (1,910) (2,743) (11,139) (11,346)
Restructuring (583) (1,820) (15,483) (1,825)
Amortization of acquired
intangibles (2,835) (1,045) (10,089) (2,122)
Other income (expense) - - - (357)
Tax provision (2) (5,675) 653 (17,899) (9,228)
Total Adjustments $ 6,516 $ 11,855 $ 57,067 $ 18,059
======== ======== ========= =========
(1) Represents integration related expenses and true-ups there of
relating to the merger with Intentia International.
(2) Based on a projected annual global effective tax rate analysis,
non-GAAP Q4 tax provision was calculated to be 41.8%.
(3) Non-cash stock-based compensation from 2005 relates to a stock
option modification resulting in $6.3M in expense under APB 25.
*T
Use of Non-GAAP Financial Information
Use of Non-GAAP Financial Information In addition to reporting
financial results in accordance with generally accepted accounting
principles, or GAAP, Lawson Software reports non-GAAP financial
results. These non-GAAP results exclude amortization of all
acquisition-related intangibles, Intentia integration costs,
restructuring charges, certain stock-based compensation expenses and
other expenses. In addition, Lawson's non-GAAP financial results
include pro forma revenue for maintenance contracts acquired in the
Intentia acquisition for which the deferred revenue on Intentia's
balance sheet has been eliminated from GAAP results as part of the
purchase accounting for the acquisition. Lawson's management believes
the non-GAAP measures used in this press release are useful to
investors because they provide supplemental information that research
analysts frequently use to analyze software companies that have
recently made significant acquisitions. Management uses these non-GAAP
measures to evaluate its financial results, develop budgets and manage
expenditures. The method Lawson uses to produce non-GAAP results is
not computed according to GAAP, may differ from the methods used by
other companies, and should not be regarded as a replacement for
corresponding GAAP measures. Investors are encouraged to review the
reconciliation of these non-GAAP financial measures to the comparable
GAAP results, which is attached to this release. Additional
information can be found on the investor relations page of Lawson's
website at www.lawson.com/investor.
CONTACT: Lawson Software, Inc.
Media:
Joe Thornton, 651-767-6154
joe.thornton@us.lawson.com
or
Investors and Analysts:
Barbara Doyle, 651-767-4385
barbara.doyle@us.lawson.com
Lawson Software Reports Fourth Quarter Fiscal 2007 Financial Results
| Source: Lawson Software, Inc.
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