Lawson Software Reports Second Quarter Fiscal 2008 Financial Results
Total revenues increase 18 percent year-over-year
ST. PAUL, Minn.--(BUSINESS WIRE)--Jan. 7, 2008--Regulatory News:
Lawson Software, Inc. (Nasdaq: LWSN) today reported financial
results for its second quarter of fiscal year 2008, which ended Nov.
30, 2007. Lawson reported GAAP (generally accepted accounting
principles) revenues for the quarter of $218.6 million, up 18 percent
from revenues of $184.5 million in its fiscal 2007 second quarter. The
company reported double-digit increases in all lines of revenues:
license fee revenues increased 50 percent to $33 million, maintenance
revenues rose 19 percent to $84.7 million, and consulting revenues
rose 10 percent to $100.9 million.
Second quarter GAAP net income was $3.7 million, or $0.02 per
diluted share, compared with a net loss of $3.5 million, or $0.02 per
share, in the second quarter of fiscal 2007. The year-over-year
improvement in net income was primarily attributable to growth in
software license and maintenance revenue. These revenue gains were
offset by a non-operating permanent impairment charge of $4.2 million
recorded in other income to reduce the fair value of auction-rate
securities held by the company, which is further described below. This
impairment charge impacted net earnings by $0.02 per diluted share.
The company estimates currency fluctuations also had a negative impact
of $0.01 on net earnings per share. Refer to Table 1 attached to this
release for a summary of the impact of currency fluctuation to
Lawson's year-over-year performance.
Included in the reported GAAP net income and earnings per share
results are pre-tax expenses totaling $7.7 million for amortization of
acquired intangible assets, amortization of purchased maintenance
contracts, purchase accounting impact on consulting costs and
restructuring charges, the $4.2 million permanent impairment charge
for auction rate securities and $2.2 million of non-cash stock-based
compensation. Excluding these expenses and including $0.4 million of
maintenance and services revenue impacted by purchase accounting
adjustments made to the opening deferred revenue balances acquired
from the former Intentia International AB, non-GAAP net income for the
second quarter of fiscal 2008 was $15.6 million, or $0.09 per diluted
share."Our second quarter results show that business was strong in all
regions and verticals," said Harry Debes, Lawson president and CEO."While there is always more to be done, we are making excellent
progress in our business and that is reflected in our year-over-year
growth in revenues and earnings."
Six-Months Ended Nov. 30, 2007
GAAP revenues for the six months ended Nov. 30, 2007 were $406
million, up 17 percent from revenues of $346.3 million during the same
fiscal 2007 period. GAAP net income was $9.3 million, or $0.05 per
diluted share, improving from a net loss of $19.3 million, or $0.10
per share. The company estimates currency fluctuations had a negative
impact of $0.02 on net earnings per diluted share for the six-month
period.
Included in the reported six-month GAAP results are pre-tax
expenses of $19.4 million for amortization of acquired intangible
assets, permanent impairment charge for auction rate securities,
amortization of purchased maintenance contracts, purchase accounting
impact on consulting costs and restructuring charges, and $4.3 million
of non-cash stock-based compensation. Excluding these expenses and
including $1 million of maintenance and services revenue impacted by
purchase accounting adjustments made to the opening deferred revenuebalances acquired from the former Intentia International AB, non-GAAP
net income for the six months ended Nov. 30, 2007, was $28.3 million,
or $0.15 per diluted share.
Financial Guidance
For the third quarter of fiscal year 2008, which ends Feb. 29,
2008, the company estimates total revenues of $216 million to $220
million, which includes license fee growth of approximately 20 percent
over the previous year's comparable period. The company anticipates
GAAP fully diluted earnings per share will be $0.03 to $0.04,
exclusive of further impairments in auction rate securities. Non-GAAP
fully diluted earnings per share are forecasted to be between $0.07
and $0.08, excluding approximately $9.5 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 in the range of 37 percent and 40 percent.
Second Quarter Fiscal 2008 Key Metrics
-- Cash, cash equivalents, marketable securities and long-term
investments at quarter-end were $424.1 million (excluding $7.5
million of restricted cash,) compared to the Aug. 31, 2007,
balance of $483.1 million (excluding $7 million of restricted
cash).
-- Total deferred revenues were $176.5 million, including $36.1
million of deferred license revenues, compared to the Aug. 31,
2007, balance of $236.3 million, including $35.3 million of
deferred license revenue. Total deferred revenues declined
because of lower deferred maintenance revenue resulting from
the company's renewal dates now occurring in the third and
fourth quarters.
-- Total software license deal activity increased to 331 closed
deals, compared to 307 deals in the second quarter of fiscal
2007. Average selling price of all deals closed remained
relatively constant year-over-year.
-- Thirty-eight new customer deals were signed, compared with 27
in the second quarter a year ago. Average selling price of new
customer deals was $373,000, compared to $420,000 a year ago.
This trend is expected considering the smaller average deal
sizes for M3 sales outside of the Americas.
-- Two deals greater than $1 million and eight deals between
$500,000 and $1 million were signed, compared to three deals
greater than $1 million and 13 deals in the $500,000 to $1
million range in the second quarter fiscal 2007.
-- The Americas region represented 52 percent of total revenue;
Europe, Middle East, and Africa region represented
approximately 44 percent of total revenue; and Asia-Pacific
represented 4 percent of total revenue.
-- Key customer wins: Americas - Children's Hospital Central
California; City of Columbus, Ohio; City of Topeka, Kansas;
Marsh Supermarkets; Mosaic Sales Solutions; The Nebraska
Medical Center; Oldcastle and Scott County Minnesota; EMEA
-Boissons Glacieres Internationales; D2i Groupe Invicta;
Fletchers Bakeries; and Pork Farms Limited; Asia-Pacific -
Kumfs New Zealand; Sheppard Industries Limited; and THK,
Japan.
-- The company repurchased 331,766 shares of common stock in the
second quarter for $3.1 million at an average price of $9.29
per share. Since inception of the $200 million buyback
authorization in November 2006, the company has repurchased
12.5 million shares for $111.6 million at an average price of
$8.93, representing 6.7 percent of our shares outstanding as
of November 2006.
Impairment Charge for Auction Rate Securities
As of Nov. 30, 2007, the company had a total of $431.6 million in
cash and equivalents including $27.6 million in marketable securities
and $58.7 million in long-term investments. The company has a long
history of investing excess cash under a conservative corporate policy
that only allows investments in highly rated investment-grade
securities, with preservation of capital and liquidity as primary
objectives. The company's long-term investments at Nov. 30, 2007 were
held in auction rate securities that are currently rated AA or AAA and
are current on all obligations. However, the liquidity and fair value
of these securities has been impacted primarily by the uncertainty in
the credit markets and these securities' exposure to the financial
condition of the bond insurance companies. As a result, the company
believed it was prudent to record a permanent impairment charge of
$4.2 million as well as a temporary impairment charge of $0.8 million
to reduce the value of our auction rate securities to their estimated
fair value of $58.7 million as of Nov. 30, 2007, based in part on
market information provided by the broker-dealer managing our
investments. The permanent impairment charge is recorded as a
non-operating loss in other income which impacts GAAP fully diluted
earnings by $0.02 per share. The temporary impairment charge of $0.8
million is recorded as an unrealized loss in shareholders' equity. The
impairment charges represent future expected capital losses for which
the company currently does not have available capital gains to offset.
Accordingly, no tax benefits were recorded with this impairment. The
company has also classified the auction rate securities as long-term
investments at Nov. 30, 2007.
Conference Call and Webcast
The company will host a conference call and webcast to discuss its
second quarter results and future outlook at 4:30 p.m. Eastern Time
(3:30 p.m. Central Time) Jan. 7, 2008. Interested parties should dial
877-709-5339 (passcode: LWSN Q2) and international callers should dial
1-210-234-0000. 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 800-810-9526 and international 1-203-369-3344. The
webcast will remain on www.lawson.com for approximately one week.
About Lawson Software
Lawson Software provides software and service solutions to 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; increased competition; uncertainty
regarding potential future deterioration in the market for auction
rate securities which could result in additional permanent impairment
charges, global military conflicts; terrorist attacks; pandemics, and
any future events in response to these developments; changes in
conditions in the company's targeted industries and other risk factors
listed in the company's most recent Quarterly Report on Form 10-Q and
the most recent Annual Report on Form 10-K 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 and consulting 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.
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LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
-------------------
Nov 30, Nov 30, % Increase
2007 2006 (Decrease)
--------- ---------
Revenues:
License fees $ 32,990 $ 22,041 50%
Maintenance 84,705 70,969 19%
Consulting 100,907 91,483 10%
--------- ---------
Total revenues 218,602 184,493 18%
--------- ---------
Cost of revenues:
Cost of license fees 6,616 5,850 13%
Cost of maintenance 16,830 13,997 20%
Cost of consulting 84,155 80,289 5%
--------- ---------
Total cost of revenues 107,601 100,136 7%
--------- ---------
Gross profit 111,001 84,357 32%
--------- ---------
Operating expenses:
Research and development 21,732 22,530 (4%)
Sales and marketing 48,214 39,898 21%
General and administrative 25,839 22,215 16%
Restructuring 80 (32) +++
Amortization of acquired intangibles 3,352 2,400 40%
--------- ---------
Total operating expenses 99,217 87,011 14%
--------- ---------
Operating income (loss) 11,784 (2,654) +++
--------- ---------
Other income:
Interest income 5,882 3,707 59%
Interest expense (2,142) (378) +++
Other income (expense) (4,376) 3 ---
--------- ---------
Total other income (expense) (636) 3,332 ---
--------- ---------
Income (loss) before income taxes 11,148 678 +++
Provision for income taxes 7,425 4,187 77%
--------- ---------
Net income (loss) $ 3,723 $ (3,509) +++
========= =========
Net income (loss) per share:
Basic $ 0.02 $ (0.02) +++
========= =========
Diluted $ 0.02 $ (0.02) +++
========= =========
Shares used in computing net income
(loss) per share:
Basic 178,453 187,376 (5%)
========= =========
Diluted 181,941 187,376 (3%)
========= =========
Six Months Ended
-------------------
Nov 30, Nov 30, % Increase
2007 2006 (Decrease)
--------- ---------
Revenues:
License fees $ 58,450 $ 38,809 51%
Maintenance 163,219 140,553 16%
Consulting 184,341 166,968 10%
--------- ---------
Total revenues 406,010 346,330 17%
--------- ---------
Cost of revenues:
Cost of license fees 13,369 10,892 23%
Cost of maintenance 32,490 28,685 13%
Cost of consulting 155,381 150,023 4%
--------- ---------
Total cost of revenues 201,240 189,600 6%
--------- ---------
Gross profit 204,770 156,730 31%
--------- ---------
Operating expenses:
Research and development 39,018 42,855 (9%)
Sales and marketing 90,505 76,790 18%
General and administrative 51,562 48,205 7%
Restructuring (65) 3,360 ---
Amortization of acquired intangibles 6,568 4,789 37%
--------- ---------
Total operating expenses 187,588 175,999 7%
--------- ---------
Operating income (loss) 17,182 (19,269) +++
--------- ---------
Other income:
Interest income 12,745 7,300 75%
Interest expense (4,746) (645) +++
Other income (expense) (4,054) 43 +++
--------- ---------
Total other income (expense) 3,945 6,698 22%
--------- ---------
Income (loss) before income taxes 21,127 (12,571) +++
Provision for income taxes 11,823 6,730 76%
--------- ---------
Net income (loss) $ 9,304 $(19,301) +++
========= =========
Net income (loss) per share:
Basic $ 0.05 $ (0.10) +++
========= =========
Diluted $ 0.05 $ (0.10) +++
========= =========
Shares used in computing net income
(loss) per share:
Basic 179,974 186,610 (4%)
========= =========
Diluted 183,520 186,610 (2%)
========= =========
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LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Nov 30, 2007 May 31, 2007
------------ ------------
ASSETS
---------------------------------------------
Current assets:
Cash and cash equivalents $ 337,803 $ 473,963
Restricted cash - current 6,806 555
Marketable securities 25,829 74,995
Trade accounts receivable, net 158,535 162,947
Income taxes receivable 8,073 5,183
Deferred income taxes - current 18,090 17,431
Prepaid expenses and other current assets 37,698 28,196
------------ ------------
Total current assets 592,834 763,270
------------ ------------
Long-term marketable securities 1,809 4,878
Long-term investments 58,653 -
Restricted cash - non-current 697 6,889
Property and equipment, net 37,566 30,879
Goodwill 515,038 483,060
Other intangibles assets, net 122,983 133,456
Deferred income taxes - non-current 34,382 36,889
Other assets 19,137 19,786
------------ ------------
Total assets $1,383,099 $1,479,107
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
---------------------------------------------
Current liabilities:
Long-term debt - current $ 3,553 $ 3,322
Accounts payable 17,379 21,475
Accrued compensation and benefits 84,616 85,144
Income taxes payable 7,977 3,535
Deferred income taxes - current 4,855 4,605
Deferred revenue 167,397 247,587
Other current liabilities 64,311 72,986
------------ ------------
Total current liabilities 350,088 438,654
------------ ------------
Long-term debt - non current 244,708 245,228
Uncertain tax position - non-current 4,464 -
Deferred income taxes - non-current 12,784 12,558
Long term deferred revenue 9,138 15,817
Other long-term liabilities 5,660 11,622
------------ ------------
Total liabilities 626,842 723,879
------------ ------------
Stockholders' equity:
Common stock 2,003 1,994
Additional paid-in capital 834,746 822,740
Treasury stock, at cost (178,981) (123,207)
Retained earnings 27,059 17,755
Accumulated other comprehensive income 71,430 35,946
------------ ------------
Total stockholders' equity 756,257 755,228
------------ ------------
Total liabilities and stockholders' equity $1,383,099 $1,479,107
============ ============
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LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
------------------ -------------------
Nov 30, Nov 30, Nov 30, Nov 30,
2007 2006 2007 2006
--------- -------- ---------- --------
Cash flows from operating
activities:
Net income (loss) $ 3,723 $ (3,509) $ 9,304 $(19,301)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation and
amortization 10,966 9,567 21,166 19,285
Amortization of debt
issuance costs 329 - 644 -
Deferred income taxes 429 284 1,429 336
Provision for doubtful
accounts (1,292) (247) (845) 1,708
Warranty provision 1,744 465 2,800 884
Impairment on long term
investments 4,229 - 4,229 -
Excess tax benefits from
stock transactions (700) (704) (1,721) (1,033)
Stock base compensation
expense 2,227 1,589 4,255 3,673
Amortization of discounts
on marketable securities (63) (84) (90) (235)
Net (gain) loss on sale of
assets (3) 2 (311) 2
Changes in operating assets
and liabilities, net of
effect from acquisitions:
Trade accounts receivable (12,900) (4,809) 15,472 1,173
Prepaid expenses and other
assets 2,948 4,506 (9,215) 1,679
Accounts payable 546 622 (5,495) (8,398)
Accrued compensation and
benefits and other
accrued liabilities 3,202 (856) (21,979) (14,755)
Income taxes
payable/receivable 3,885 (2,549) 8,632 (1,672)
Deferred revenue and
customer deposits (69,142) (18,252) (98,750) (14,333)
--------- --------- ---------- ---------
Net cash used in operating
activities (49,872) (13,975) (70,475) (30,987)
--------- --------- ---------- ---------
Cash flows from investing
activities:
Cash received (paid) in
conjunction with
acquisitions - - - (1,995)
Purchases of marketable
securities and investments (25,543) (44,718) (205,098) (73,749)
Proceeds from maturities and
sales of marketable
securities and investments 112,765 39,827 194,120 88,273
Restricted cash designated (510) (13,468) (59) (13,468)
Purchases of property and
equipment (7,921) (2,845) (10,822) (5,473)
--------- --------- ---------- ---------
Net cash provided by (used
in) investing activities 78,791 (21,204) (21,859) (6,412)
--------- --------- ---------- ---------
Cash flows from financing
activities:
Payments on long-term debt (475) (742) (881) (973)
Cash proceeds from
issuance of long-term
debt - 505 - 1,768
Payments on capital lease
obligations (341) (468) (676) (961)
Exercise of stock options 1,882 4,623 5,486 7,084
Excess tax benefit from
stock transactions 700 704 1,721 1,033
Proceeds received from
employee stock purchase
plan 743 639 1,445 1,329
Repurchase of common stock
from related parties - - (36,800) -
Repurchase of common stock (3,082) - (19,945) -
--------- --------- ---------- ---------
Net cash provided by (used
in) financing activities (573) 5,261 (49,650) 9,280
--------- --------- ---------- ---------
Effect of exchange rate
changes on cash and cash
equivalents 4,820 1,312 5,824 1,166
--------- --------- ---------- ---------
Increase (decrease) in cash
and cash equivalents 33,166 (28,606) (136,160) (26,953)
Cash and cash equivalents at
beginning of period 304,637 211,807 473,963 210,154
--------- --------- ---------- ---------
Cash and cash equivalents at
end of period $337,803 $183,201 $ 337,803 $183,201
========= ========= ========== =========
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TABLE 1
----------------------------------------------------------------------
LAWSON SOFTWARE, INC.
CURRENCY IMPACT SUMMARY
(in thousands)
(unaudited)
% Increase % Increase
Three (Decrease) (Decrease)
Months Ended as at constant
Nov 30, 2007 reported currency ------------ ---------- -----------
License fees $32,990 50% 42%
Maintenance 84,705 19% 15%
Consulting 100,907 10% 2%
------------
Total revenues 218,602 18% 12%
------------
Total cost of revenues 107,601 7% 0%
Total operating expenses $99,217 14% 8%
% Increase % Increase
Six (Decrease) (Decrease) at
Months Ended as constant
Nov 30, 2007 reported currency
------------ ---------- -------------
License fees $58,450 51% 45%
Maintenance 163,219 16% 13%
Consulting 184,341 10% 4%
------------
Total revenues 406,010 17% 12%
------------
Total cost of revenues 201,240 6% 0%
Total operating expenses $187,588 7% 2%
We provide the percent change in the results from one period to
another using constant currency disclosure to adjust year-over-year
measurements for impacts due to currency fluctuations. Constant
currency changes should be considered in addition to, and not as a
substitute for changes in revenues, expenses, income, or other
measures of financial performance prepared in accordance with US
GAAP. We calculate constant currency changes by converting entities
reporting in currencies other than the United States dollar at the
exchange rate in effect for the current period rather than the
previous period.
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TABLE 2
RECONCILIATION OF CONSOLIDATED GAAP NET INCOME (LOSS) TO CONSOLIDATED
NON-GAAP NET INCOME
----------------------------------------------------------------------
(in thousands)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
Nov 30, Nov 30, Nov 30, Nov 30,
2007 2006 2007 2006
Net income
(loss), as
reported $ 3,723 $ (3,509) $ 9,304 $ (19,301)
Purchase
accounting
impact on
revenue (1) 422 3,890 1,042 8,470
Purchase
accounting
impact on
consulting
cost 163 - 256 -
Integration
related (4) - 3,160 - 7,551
Amortization of
purchased
maintenance
contracts 1,000 891 1,822 1,848
Stock based
compensation 2,226 1,591 4,254 3,676
Restructuring 80 (32) (65) 3,360
Amortization 6,472 6,355 13,143 12,751
Impairment on
long term
investments 4,229 4,229
Tax (5) (2,696) (6,949) (5,723) (8,265)
------------ ------------ ---------- -----------
Non-GAAP net
income $ 15,619 $ 5,397 $ 28,262 $ 10,090
------------ ------------ ---------- -----------
TABLE 3
RECONCILIATION OF CONSOLIDATED GAAP TO CONSOLIDATED NON-GAAP PER SHARE
EFFECT
----------------------------------------------------------------------
(in thousands)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
Nov 30, Nov 30, Nov 30, Nov 30,
2007 2006 2007 2006
Net income
(loss) per
share, as
reported (2) $ 0.02 $ (0.02) $ 0.05 $ (0.10)
Purchase
accounting
impact on
revenue (1) 0.00 0.02 0.01 0.04
Purchase
accounting
impact on
consulting
cost 0.00 0.00 0.00 -
Integration
related (4) 0.00 0.02 0.00 0.04
Amortization of
purchased
maintenance
contracts 0.01 0.00 0.01 0.01
Stock based
compensation 0.01 0.01 0.02 0.02
Restructuring 0.00 0.00 0.00 0.02
Amortization 0.04 0.03 0.07 0.07
Impairment on
long term
investments 0.02 0.00 0.02 0.00
Tax (5) (0.01) (0.04) (0.03) (0.04)
------------ ------------ ---------- -----------
Non-GAAP net
income per
share (2) (3)$ 0.09 $ 0.03 $ 0.15 $ 0.05
------------ ------------ ---------- -----------
Weighted
average shares
- basic 178,453 187,376 179,974 186,610
Weighted
average shares
- diluted 181,941 190,682 183,520 190,065
TABLE 4
SUMMARY OF NON-GAAP ITEMS
----------------------------------------------------------------------
(in thousands)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
Nov 30, Nov 30, Nov 30, Nov 30,
2007 2006 2007 2006
Purchase
accounting
impact on
revenue (1) $ 422 $ 3,890 $ 1,042 $ 8,470
Purchase
accounting
impact on
consulting
cost (4) 163 - 256 -
Integration
related - 3,160 - 7,551
Amortization of
purchased
maintenance
contracts 1,000 891 1,822 1,848
Stock based
compensation 2,226 1,591 4,254 3,676
Restructuring 80 (32) (65) 3,360
Amortization 6,472 6,355 13,143 12,751
Impairment on
long term
investments 4,229 - 4,229 -
------------ ------------ ---------- -----------
subtotal pre-
tax
adjustments 14,592 15,855 24,681 37,656
------------ ------------ ---------- -----------
Tax provision (5) (2,696) (6,949) (5,723) (8,265)
------------ ------------ ---------- -----------
Impact on net
income $ 11,896 $ 8,906 $ 18,958 $ 29,391
============ ============ ========== ===========
(1) For the purchase accounting impact on deferred revenues for three
months ending November 30, 2007 and November 30, 2006, $350,000 and
$2,811,000, respectively, relates to maintenance revenue and $72,000
and $1,079,000, 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) Net income per share columns may not total due to rounding.
(4) Represents integration related expenses relating to the
acquisition of Intentia International AB.
(5) Non-GAAP tax provision is calculated by excluding the non-GAAP
adjustments on a jurisdictional basis.
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TABLE 5
LAWSON SOFTWARE, INC.
---------------------------------------------------------------------- SUPPLEMENTAL NON-GAAP MEASURES
INCREASE (DECREASE) IN GAAP AMOUNTS REPORTED
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
------------------ -----------------
Nov 30, Nov 30, Nov 30, Nov 30,
2007 2006 2007 2006
--------- -------- -------- --------
Revenue items
Purchase accounting impact on
maintenance $ 350 $ 2,811 $ 852 $ 5,858
Purchase accounting impact on
consulting 72 1,079 190 2,612
--------- -------- -------- --------
Total revenue items 422 3,890 1,042 8,470
Cost of license items
Amortization of acquired
software (3,120) (2,575) (6,575) (5,169)
Non-cash stock-based
compensation (6) (14) (13) (14)
--------- -------- -------- --------
Total cost of license items (3,126) (2,589) (6,588) (5,183)
Cost of maintenance items
Amortization of purchased
maintenance contracts (1,000) (891) (1,822) (1,848)
Integration related (1) - ( 18) - (70)
Non-cash stock-based
compensation (26) (77) (67) (77)
--------- -------- -------- --------
Total cost of maintenance
items (1,026) (986) (1,889) (1,995)
Cost of consulting items
Purchase accounting impact on
consulting (163) - (256) -
Amortization - (1,380) - (2,793)
Integration related (1) - (410) - (1,753)
Non-cash stock-based
compensation (215) ( 121) (433) (357)
--------- -------- -------- --------
Total cost of consulting
items (378) (1,911) (689) (4,903)
Research and development items
Integration related (1) - 15 - (18)
Non-cash stock-based
compensation (127) (142) (291) (318)
--------- -------- -------- --------
Total research and
development items (127) (127) (291) (336)
Sales and marketing items
Integration related (1) - (616) - (1,542)
Non-cash stock-based
compensation (370) (360) (736) (771)
--------- -------- -------- --------
Total sales and marketing
items (370) (976) (736) (2,313)
General and administrative items
Integration related (1) - (2,131) - (4,168)
Non-cash stock-based
compensation (1,482) (877) (2,714) (2,139)
--------- -------- -------- --------
Total general and
administrative (1,482) (3,008) (2,714) (6,307)
Restructuring (80) 32 65 (3,360)
Amortization of acquired
intangibles (3,352) (2,400) (6,568) (4,789)
Other income (expense) 4,229 - 4,229 -
Tax provision (2) (2,696) (6,949) (5,723) (8,265)
Total Adjustments $11,896 $ 8,906 $18,958 $29,391
========= ======== ======== ========
(1) Represents integration related expenses relating to the
acquisition of Intentia International AB.
(2) Based on a projected annual global effective tax rate analysis,
non-GAAP Q2 tax provision was calculated to be 39.3%. Based on a
projected annual global effective tax rate analysis, the non-GAAP tax
provision was calculated to be 38.3% for the six month period. The
non-GAAP tax provision is calculated excluding the non-GAAP
adjustments in a jurisdictional basis.
*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, and other
expenses. In addition, Lawson's non-GAAP financial results include pro
forma revenue for maintenance and consulting 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.
Lawson Software, Inc.
Media
Joe Thornton, +1-651-767-6154
joe.thornton@us.lawson.com
or
Investors and Analysts
Barbara Doyle, +1-651-767-4385
barbara.doyle@us.lawson.com
Lawson Software Reports Second Quarter Fiscal 2008 Financial Results
| Source: Lawson Software, Inc.
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