Lawson Software Reports Third Quarter Fiscal 2008 Financial Results
Software license revenues increase 21 percent year-over-year
ST. PAUL, Minn.--(BUSINESS WIRE)--April 3, 2008--Regulatory News:
Lawson Software, Inc. (Nasdaq: LWSN) today reported financial
results for its third quarter of fiscal year 2008, which ended Feb.
29, 2008. Lawson reported GAAP (generally accepted accounting
principles) revenues for the quarter of $212.9 million, up 11 percent
from revenues of $191.2 million in its fiscal 2007 third quarter. The
company reported double-digit increases in license fees and
maintenance: license fee revenues increased 21 percent to $32.0
million driven primarily by software sales to new customers, and
maintenance revenues rose 15 percent to $84.6 million driven by higher
renewal rates at standard annual price increases and customer adoption
of premium Total Care support offerings. Consulting revenues rose 5
percent to $96.3 million, driven primarily by third party revenues.
Consulting revenues were lower than planned due to lower consultant
utilization in certain regions.
Third quarter GAAP net income was $0.7 million, or less than $0.01
per diluted share, compared with a net loss of $9.8 million, or $0.05
per share loss, in the third quarter of fiscal 2007. The
year-over-year improvement in net income was primarily attributable to
growth in software license and maintenance revenues and reductions in
general and administrative expenses and restructuring charges. Revenue
gains and expense reductions were partially offset by associated tax
increases and by a non-operating impairment charge of $8.1 million
recorded in other expenses 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 $0.05 per diluted share.
Currency fluctuations had a nominal negative impact of less than one
penny 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 $3.4 million for amortization of
acquired intangible assets, amortization of purchased maintenance
contracts, purchase accounting impact on consulting costs, reductions
to pre-merger claim reserves and restructuring charges, the $8.1
million impairment charge for auction rate securities and $0.4 million
of non-cash stock-based compensation. Excluding these expenses and
including $0.2 million of maintenance 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 third quarter of fiscal 2008 was $13.7 million, or
$0.08 per diluted share."Our third quarter license revenues grew 21 percent, boosted by
software license sales to new customers," said Harry Debes, Lawson
president and CEO. "Software contracting in the quarter was strong in
all geographies and verticals. In fact, Q3 was the second strongest
quarter for software contracting in Lawson's history as a public
company, going back more than six years, exceeded only by our May 2007
quarter. We still have some challenges to address in our business, but
the progress we are making continues to be substantial. This sentiment
was also voiced by more than 5,000 customers and partners who attended
our annual Conference and User Exchange held in March, where we
showcased a robust new product lineup."
Nine-Months Ended Feb. 29, 2008
GAAP revenues for the nine months ended Feb. 29, 2008 were $618.9
million, up 15 percent from revenues of $537.5 million during the same
fiscal 2007 period. GAAP net income was $10.0 million, or $0.06 per
diluted share, improving from a net loss of $29.1 million, or $0.16
per share loss a year ago. The company estimates currency fluctuations
had a negative impact of $0.03 on net earnings per diluted share for
the nine-month period.
Included in the reported nine-month GAAP results are pre-tax
expenses of $18.5 million for amortization of acquired intangible
assets, amortization of purchased maintenance contracts, purchase
accounting impact on consulting costs, reductions to pre-merger claim
reserves and restructuring charges, the $12.3 million impairment
charges for auction rate securities, and $4.7 million of non-cash
stock-based compensation. Excluding these expenses and including $1.3
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 nine months ended Feb. 29, 2008, was $42.0 million, or
$0.23 per diluted share.
Financial Guidance
For the fourth quarter of fiscal 2008, which ends May 31, 2008,
the company estimates total revenues of $225 million to $230 million.
The company anticipates GAAP fully diluted earnings per share will be
$0.07 to $0.10, exclusive of further impairments in auction rate
securities, if any are deemed necessary. Non-GAAP fully diluted
earnings per share are forecasted to be between $0.08 and $0.11,
excluding approximately $10 million of pre-tax expenses related to the
amortization of acquisition-related intangibles, amortization of
purchased maintenance contracts, stock-based compensation charges and
any future impairment charges for auction rate securities if deemed
necessary. The non-GAAP effective tax rate for fiscal 2008 is
anticipated to be in the range of 37 percent and 40 percent.
Third Quarter Fiscal 2008 Key Metrics
-- Cash, cash equivalents, marketable securities and long-term
investments at quarter-end were $390 million (including $3.3
million of restricted cash,) compared to the Nov. 30, 2007,
balance of $431.6 million (including $7.5 million of
restricted cash).
-- The company repurchased 5.5 million shares of common stock in
the third quarter for $48.9 million at an average price of
$8.96 per share. Since inception of the $200 million buyback
authorization in November 2006, the company has repurchased 18
million shares for $160.5 million at an average price of
$8.94, representing 9.6 percent of our shares outstanding as
of November 2006.
-- Total deferred revenues were $216.0 million, including $45.3
million of deferred license revenues, compared to the Nov. 30,
2007, balance of $176.5 million, including $36.1 million of
deferred license revenue. Total deferred revenues increased
primarily due to added deferred maintenance revenues resulting
from the company's January 1 annual contract renewal date for
its international customers.
-- Days sales outstanding (DSO) at quarter end were 85 compared
to the Nov. 30, 2007 balance of 65 days. The DSO increase was
due to higher accounts receivable resulting primarily from the
timing of the international maintenance billing process and
the complete deferral of a contact of significant size signed
in the third fiscal quarter of 2008.
-- The company signed 317 deals, compared to 354 deals in the
third quarter of fiscal 2007. Average selling price of all
deals increased from $88,000 to $133,000 year-over-year.
-- Twenty-seven new customer deals were signed, compared with 24
in the third quarter a year ago. Average selling price of new
customer deals was $646,000 compared to $373,000 a year ago.
-- Two deals greater than $1 million and 13 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 fiscal 2007.
-- The Americas region represented 50 percent of total revenue;
Europe, Middle East, and Africa region represented
approximately 46 percent of total revenue; and Asia-Pacific
represented 4 percent of total revenue.
-- Key customer wins: Americas - Finning International; Trimark
USA; West Penn Allegheny Health System; Skaggs Community
Health Center; Premier Health Partners; Unified Government of
Wyandotte County/Kansas City. EMEA - Fetim B.V.; LISI
Aerospace; Milko. Asia-Pacific - Monza Imports.
Impairment Charge for Auction Rate Securities
As of Feb. 29, 2008, the company had a total of $390 million in
cash and equivalents including $5.5 million in marketable securities
and $48.5 million in long-term investments which consists of
investments in auction rate securities. 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.
However, uncertainty in the credit markets has affected all of the
company's holdings in auction rate securities. While these investments
were still rated AA or higher as of the end of the period and all
scheduled interest payments were made, uncertainties in the credit
markets remained and the fair value of the Company's portfolio
continued to decline. The company recorded an additional permanent
impairment charge of $8.1 million as well as a temporary impairment
charge of $2.1 million to reduce the value of its auction rate
securities to their estimated fair value of $48.5 million as of Feb.
29, 2008 from a par value of $63.7 million. The company had previously
recorded a permanent impairment charge of $4.2 million and a temporary
impairment charge of $0.8 million in the quarter ending Nov. 30, 2007.
The permanent impairment charges have been recorded as non-operating
losses in other expense and the temporary impairment charges have been
recorded as unrealized losses in stockholders' 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 the impairment. There
is no assurance as to when the market for auction rate securities will
stabilize. The company will continue to monitor the fair value of its
auction rate securities and relevant market conditions and will record
additional impairment if future circumstances warrant such charges.
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) April 3, 2008. Interested parties should dial
888-791-1856 (passcode: Lawson Q3) 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 800-216-4437 or + 1-402-220-3876. 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; 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 including non-GAAP net income
(loss) and non-GAAP net income (loss) per share. We believe that these
non-GAAP measures provide meaningful insight into our operating
performance and an alternative perspective of our results of
operations. Our primary non-GAAP adjustments are described in detail
below. We use these non-GAAP measures to assess our operating
performance, to develop budgets, to serve as a measurement for
incentive compensation awards and to manage expenditures. Presentation
of these non-GAAP measures allows investors to review our results of
operations from the same perspective as management and our Board of
Directors. Lawson has historically reported similar non-GAAP financial
measures to provide investors an enhanced understanding of our
operations, facilitate investors' analysis and comparisons of our
current and past results of operations and provide insight into the
prospects of our future performance. We also believe that the non-GAAP
measures are useful to investors because they provide supplemental
information that research analysts frequently use to analyze software
companies including those that have recently made significant
acquisitions.
The method we use to produce non-GAAP results is not in accordance
with GAAP and may differ from the methods used by other companies.
These non-GAAP results should not be regarded as a substitute for
corresponding GAAP measures but instead should be utilized as a
supplemental measure of operating performance in evaluating our
business. Non-GAAP measures do have limitations in that they do not
reflect certain items that may have a material impact upon our
reported financial results. As such, these non-GAAP measures should be
viewed in conjunction with both our financial statements prepared in
accordance with GAAP and the reconciliation of the supplemental
non-GAAP financial measures to the comparable GAAP results provided
for each period presented, which are attached to this release.
Our primary non-GAAP reconciling items are as follows: Purchase accounting impact on revenue - Lawson's non-GAAP
financial results include pro forma adjustments for deferred
maintenance and consulting revenues that we would have recognized
under GAAP but for the related purchase accounting. The deferred
revenue for maintenance and consulting on the acquired entity's
balance sheet, at the time of the acquisition, was eliminated from
GAAP results as part of the purchase accounting for the acquisition.
As a result, our GAAP results do not, in management's view, reflect
all of our maintenance and consulting activity. We believe the
inclusion of the pro forma revenue adjustment provides investors a
helpful alternative view of Lawson's maintenance and consulting
operations.
Integration related - We have incurred various integration related
expenses as part of our acquisitions. These costs of integrating the
operations of acquired businesses and Lawson are incremental to our
historical costs and were charged to GAAP results of operations in the
periods incurred. We do not consider these costs in our assessment of
our operating performance. While these costs are not recurring with
respect to our past acquisitions, we may incur similar costs in the
future if we pursue other acquisitions. We believe that the exclusion
of the non-recurring acquisition related integration costs provide
investors an appropriate alternative view of our results of operations
and facilitates comparisons of our results period-over-period.
Amortization of purchased maintenance contracts - We have excluded
amortization of purchased maintenance contracts from our non-GAAP
results. The purchase price related to these contracts is being
amortized based upon the proportion of future cash flows estimated to
be generated each period over the estimated useful lives of the
contracts. We believe that the exclusion of the amortization expense
related to the purchased maintenance contracts provides investors an
enhanced understanding of our results of operations.
Stock-based compensation - Expense related to stock-based
compensation has been excluded from our non-GAAP results of
operations. These charges consist of the estimated fair value of
share-based awards including stock option, restricted stock,
restricted stock units and share purchases under our employee stock
purchase plan. While the charges for stock-based compensation are of a
recurring nature, as we grant stock-based awards to attract and retain
quality employees and as an incentive to help achieve financial and
other corporate goals, we exclude them from our results of operation
in assessing our operating performance. These charges are typically
non-cash and are often the result of complex calculations using an
option pricing model that estimates stock-based awards' fair value
based on factors such as volatility and risk-free interest rates that
are beyond our control. The expense related to stock-based awards is
generally not controllable in the short-term and can vary
significantly based on the timing, size and nature of awards granted.
As such, we do not include such charges in our operating plans. We
believe that the exclusion of stock-based compensation provides
investors useful information facilitating the comparison of current
period results of operations and prior periods when such charges were
not required to be recorded in our financial statements. In addition,
we believe the exclusion of these charges facilitates comparisons of
our operating results with those of our competitors who may have
different policies regarding the use of stock-based awards.
Pre-merger claims reserve adjustment - We have excluded the
adjustment to our pre-merger claims reserve from our non-GAAP results.
As part of the purchase accounting relating to the Intentia
transaction, we established a reserve for Intentia customer claims and
disputes that arose before the acquisition which were originally
recorded to goodwill. As we are outside the period in which
adjustments to such purchase accounting is allowed, adjustments to the
reserve are recorded in our general and administrative expenses under
GAAP. We do not consider the adjustments to this reserve established
under purchase accounting in our assessment of our operating
performance. Further, since the original reserve was established in
purchase accounting, the original charge was not reflected in our
operating statement. We believe that the exclusion of the pre-merger
claims reserve adjustment provides investors an appropriate
alternative view of our results of operations and facilitates
comparisons of our results period-over-period.
Restructuring - We have recorded various restructuring charges to
reduce our cost structure to enhance operating effectiveness and
improve profitability and to eliminate certain redundancies in
connection with acquisitions. These restructuring activities impacted
different functional areas of our operations in different locations
and were undertaken to meet specific business objectives in light of
the facts and circumstances at the time of each restructuring event.
These charges include costs related to severance and other termination
benefits as well as costs to exit leased facilities. These
restructuring charges are excluded from management's assessment of our
operating performance. We believe that the exclusion of the
non-recurring restructuring charges provide investors an enhanced view
of the cost structure of our operations and facilitates comparisons
with the results of other periods that may not reflect such charges or
may reflect different levels of such charges.
Amortization - We have excluded amortization of
acquisition-related intangible assets including purchased technology,
client lists, customer relationships, trademarks, order backlog and
non-compete agreements from our non-GAAP results. The fair value of
the intangible assets, which was allocated to these assets through
purchase accounting, is amortized using accelerated or straight-line
methods which approximate the proportion of future cash flows
estimated to be generated each period over the estimated useful lives
of the applicable assets. While these non-cash amortization charges
are recurring in nature and benefit our operations, this amortization
expense can fluctuate significantly based on the nature, timing and
size of our past acquisitions and may be affected by any future
acquisitions. This makes comparisons of our current and historic
operating performance difficult. Therefore, we exclude such accounting
expenses when analyzing the results of all our operations including
those of acquired entities. We believe that the exclusion of the
amortization expense of acquisition-related intangible assets provides
investors useful information facilitating comparison of our results
period-over-period and with other companies in the software industry
as they each have their own acquisition histories and related
adjustments.
Impairment on long-term investments - The liquidity and fair value
of our investments in marketable securities, including Auction Rate
Securities (ARS), have been negatively impacted by the uncertainty in
the credit markets and exposure to the financial condition of bond
insurance companies. As a result, we recorded impairment charges to
reduce the carrying value of our ARS investments. The impairment
charges related to our ARS investments have been excluded from our
non-GAAP results of operations. These impairment charges are excluded
from management's assessment of our operating performance. We believe
that the exclusion of these unique charges provide investors an
enhanced view of our operations and facilitates comparisons with the
results of other periods that do not reflect such charges.
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LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended % Increase
-------------------------
Feb 29, 2008 Feb 28, 2007 (Decrease)
------------ ------------ ----------
Revenues:
License fees $ 31,984 $ 26,434 21%
Maintenance 84,630 73,308 15%
Consulting 96,273 91,465 5%
------------ ------------
Total revenues 212,887 191,207 11%
------------ ------------
Cost of revenues:
Cost of license fees 6,767 5,950 14%
Cost of maintenance 16,389 15,815 4%
Cost of consulting 79,046 77,956 1%
------------ ------------
Total cost of revenues 102,202 99,721 2%
------------ ------------
Gross profit 110,685 91,486 21%
------------ ------------
Operating expenses:
Research and development 22,231 20,380 9%
Sales and marketing 47,271 39,744 19%
General and administrative 21,383 25,714 (17%)
Restructuring (137) 11,540 +++
Amortization of acquired
intangibles 3,531 2,465 43%
------------ ------------
Total operating expenses 94,279 99,843 (6%)
------------ ------------
Operating income (loss) 16,406 (8,357) +++
------------ ------------
Other income (expense), net:
Interest income 4,512 3,279 38%
Interest expense (2,118) (1,660) 28%
Impairment and other expense, net (8,191) (196) +++
------------ ------------
Total other income (expense),
net (5,797) 1,423 ----
------------ ------------
Income (loss) before income taxes 10,609 (6,934) +++
Provision for income taxes 9,882 2,834 249%
------------ ------------
Net income (loss) $ 727 $ (9,768) +++
============ ============
Net income (loss) per share:
Basic $ 0.00 $ (0.05) +++
============ ============
Diluted $ 0.00 $ (0.05) +++
============ ============
Shares used in computing net
income (loss) per share:
Basic 175,912 187,666 (6%)
============ ============
Diluted 178,805 187,666 (5%)
============ ============
Nine Months Ended % Increase
-------------------------
Feb 29, 2008 Feb 28, 2007 (Decrease)
------------ ------------ ----------
Revenues:
License fees $ 90,434 $ 65,243 39%
Maintenance 247,849 213,861 16%
Consulting 280,614 258,433 9%
------------ ------------
Total revenues 618,897 537,537 15%
------------ ------------
Cost of revenues:
Cost of license fees 20,136 16,842 20%
Cost of maintenance 48,879 44,500 10%
Cost of consulting 234,427 227,979 3% ------------ ------------
Total cost of revenues 303,442 289,321 5%
------------ ------------
Gross profit 315,455 248,216 27%
------------ ------------
Operating expenses:
Research and development 61,249 63,235 (3%)
Sales and marketing 137,776 116,534 18%
General and administrative 72,945 73,919 (1%)
Restructuring (202) 14,900 ---
Amortization of acquired
intangibles 10,099 7,254 39%
------------ ------------
Total operating expenses 281,867 275,842 2%
------------ ------------
Operating income (loss) 33,588 (27,626) +++
------------ ------------
Other income (expense), net:
Interest income 17,257 10,579 63%
Interest expense (6,864) (2,305) 198%
Impairment and other expense,
net (12,245) (153) +++
------------ ------------
Total other income (expense),
net ( 1,852) 8,121 ----
------------ ------------
Income (loss) before income taxes 31,736 (19,505) +++
Provision for income taxes 21,705 9,564 127%
------------ ------------
Net income (loss) $ 10,031 $(29,069) +++
============ ============
Net income (loss) per share:
Basic $ 0.06 $ (0.16) +++
============ ============
Diluted $ 0.06 $ (0.16) +++
============ ============
Shares used in computing net
income (loss) per share:
Basic 178,620 186,962 (4%)
============ ============
Diluted 181,949 186,962 (3%)
============ ============
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LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Feb 29, 2008 May 31, 2007
------------ ------------
ASSETS
---------------------------------------------
Current assets:
Cash and cash equivalents $ 332,774 $ 473,963
Restricted cash - current 780 555
Marketable securities 5,471 74,995
Trade accounts receivable, net 201,496 162,947
Income taxes receivable 2,973 5,183
Deferred income taxes - current 18,846 17,431
Prepaid expenses and other current assets 44,807 28,196
------------ ------------
Total current assets 607,147 763,270
Long-term marketable securities - 4,878
Long-term investments 48,486 -
Restricted cash - non-current 2,517 6,889
Property and equipment, net 40,225 30,879
Goodwill 533,531 483,060
Other intangibles assets, net 117,097 133,456
Deferred income taxes - non-current 33,578 36,889
Other assets 19,574 19,786
------------ ------------
Total assets $1,402,155 $1,479,107
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
---------------------------------------------
Current liabilities:
Long-term debt - current $ 3,798 $ 3,322
Accounts payable 22,166 21,475
Accrued compensation and benefits 87,759 85,144
Income taxes payable 5,825 3,535
Deferred income taxes - current 5,002 4,605
Deferred revenue - current 205,793 247,587
Other current liabilities 63,280 72,986
------------ ------------
Total current liabilities 393,623 438,654
Long-term debt - non current 244,731 245,228
Uncertain tax position - non-current 4,562 -
Deferred income taxes - non-current 12,998 12,558
Deferred revenue - non-current 10,180 15,817
Other long-term liabilities 10,096 11,622
------------ ------------
Total liabilities 676,190 723,879
------------ ------------
Stockholders' equity:
Common stock 2,009 1,994
Additional paid-in capital 836,841 822,740
Treasury stock, at cost (227,450) (123,207)
Retained earnings 27,786 17,755
Accumulated other comprehensive income 86,779 35,946
------------ ------------
Total stockholders' equity 725,965 755,228
------------ ------------
Total liabilities and stockholders' equity $1,402,155 $1,479,107
============ ============
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LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
------------------- ---------------------
Feb 29, Feb 28, Feb 29, Feb 28,
2008 2007 2008 2007
--------- --------- ---------- ----------
Cash flows from operating
activities:
Net income (loss) $ 727 $ (9,768) $ 10,031 $ (29,069)
Adjustments to reconcile
net income (loss) to net
cash provided by (used in)
operating activities:
Depreciation and
amortization 11,017 9,914 32,183 29,199
Amortization of debt
issuance costs 322 - 966 -
Deferred income taxes (749) (1,158) 680 (822)
Provision for doubtful
accounts (1,399) 1,425 (2,244) 3,133
Warranty provision 1,793 (248) 4,593 636
Impairment on long-term
investments 8,067 - 12,296 -
Net (gain) loss on
disposal of assets - 135 (311) 137
Excess tax benefits from
stock transactions (304) (752) (2,025) (1,785)
Stock-base compensation
expense 428 1,840 4,683 5,513
Amortization of discounts
and premiums on
marketable securities (2) (140) (92) (375)
Changes in operating assets
and liabilities, net of
effect from acquisitions:
Trade accounts receivable (45,136) (10,665) (29,664) (9,492)
Prepaid expenses and
other assets (2,645) (6,965) (11,860) (5,286)
Accounts payable 5,618 6,325 123 (2,073)
Accrued and other
liabilities 3,813 3,254 (18,166) (11,501)
Income taxes
payable/receivable 2,764 542 11,396 (1,130)
Deferred revenue and
customer deposits 39,976 21,070 (58,774) 6,737
--------- --------- ---------- ----------
Net cash provided by (used
in) operating activities 24,290 14,809 (46,185) (16,178)
--------- --------- ---------- ----------
Cash flows from investing
activities:
Cash paid in conjunction
with acquisitions, net of
cash acquired - (1,580) - (3,575)
Change in restricted cash 4,206 (1,522) 4,147 (14,990)
Purchases of marketable
securities and investments - (26,671) (205,098) (100,420)
Proceeds from maturities
and sales of marketable
securities and investments 22,220 60,237 216,340 148,510
Purchases of property and
equipment (5,025) (5,204) (15,847) (10,677)
--------- --------- ---------- ----------
Net cash provided by (used
in) investing activities 21,401 25,260 (458) 18,848
--------- --------- ---------- ----------
Cash flows from financing
activities:
Principal payments on long-
term debt (459) (378) (1,340) (1,351)
Cash proceeds from issuance
of long-term debt - 1,454 - 3,222
Payments on capital lease
obligations (348) (445) (1,024) (1,406)
Cash proceeds from exercise
of stock options 1,004 2,971 6,490 10,055
Excess tax benefit from
stock transactions 304 752 2,025 1,785
Cash proceeds from employee
stock purchase plan 767 694 2,212 2,023
Repurchase of common stock
from related parties - - (36,800) -
Repurchase of common stock
- other (48,884) (5,900) (68,829) (5,900)
--------- --------- ---------- ----------
Net cash provided by (used
in) financing activities (47,616) (852) (97,266) 8,428
--------- --------- ---------- ----------
Effect of exchange rate
changes on cash and cash
equivalents (3,104) (115) 2,720 1,051
--------- --------- ---------- ----------
Net increase (decrease) in
cash and cash equivalents (5,029) 39,102 (141,189) 12,149
Cash and cash equivalents at
beginning of period 337,803 183,201 473,963 210,154
--------- --------- ---------- ----------
Cash and cash equivalents at
end of period $332,774 $222,303 $ 332,774 $ 222,303
========= ========= ========== ==========
*T
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*T
TABLE 1
----------------------------------------------------------------------
LAWSON SOFTWARE, INC.
CURRENCY IMPACT SUMMARY
(in thousands)
(unaudited)
% Increase % Increase
Three (Decrease) (Decrease) at
Months Ended as constant
Feb 29, 2008 reported currency
------------ ----------- --------------
License fees $31,984 21% 17%
Maintenance 84,630 15% 11%
Consulting 96,273 5% (2%)
------------ ----------- --------------
Total revenues 212,887 11% 6%
------------ ----------- --------------
Total cost of revenues 102,202 2% (3%)
Total operating expenses $94,279 (6%) (10)%
% Increase
Nine % Increase (Decrease) at
Months Ended (Decrease) as constant
Feb 29, 2008 reported currency
-------------- -------------- ---------------
License fees $90,434 39% 34%
Maintenance 247,849 16% 12%
Consulting 280,614 9% 2%
-------------- -------------- ---------------
Total revenues 618,897 15% 10%
-------------- -------------- ---------------
Total cost of revenues 303,442 5% (1%)
Total operating expenses $281,867 2% (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.
*T
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*T
TABLE 2
RECONCILIATION OF CONSOLIDATED GAAP NET INCOME (LOSS) TO CONSOLIDATED
NON-GAAP NET INCOME
----------------------------------------------------------------------
(in thousands)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
---------- --------- --------- ---------
Feb 29, Feb 28, Feb 29, Feb 28,
2008 2007 2008 2007
---------- --------- --------- ---------
Net income (loss), as
reported $727 $(9,768) $10,031 $(29,069)
Purchase accounting
impact on revenue (1) 221 1,818 1,263 10,288
Purchase accounting
impact on consulting 131 614 387 614
Integration related (4) - 1,804 - 9,356
Amortization of
purchased maintenance
contracts 821 863 2,643 2,711
Stock-based
compensation 428 1,839 4,682 5,515
Pre-merger claims
reserve adjustment (3,827) - (3,827) -
Restructuring (137) 11,540 (202) 14,900
Amortization 6,371 6,640 19,514 19,391
Impairment on long-
term investments 8,067 - 12,296 -
Tax (5) 938 (3,959) (4,785) (12,224)
-------------------- -------------------
Non-GAAP net income $13,740 $11,391 $42,002 $21,482
-------------------- -------------------
TABLE 3
RECONCILIATION OF CONSOLIDATED GAAP TO CONSOLIDATED NON-GAAP PER SHARE
EFFECT
----------------------------------------------------------------------
(in thousands)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
---------- --------- --------- ---------
Feb 29, Feb 28, Feb 29, Feb 28,
2008 2007 2008 2007
---------- --------- --------- ---------
Net income (loss), as
reported (2) $0.00 $(0.05) $0.06 $(0.16)
Purchase accounting
impact on revenue (1) 0.00 0.01 0.01 0.06
Purchase accounting
impact on consulting 0.00 0.00 0.00 -
Integration related (4) 0.00 0.01 0.00 0.05
Amortization of
purchased maintenance
contracts 0.00 0.00 0.01 0.01
Stock-based
compensation 0.00 0.01 0.03 0.03
Pre-merger claims
reserve adjustment (0.02) 0.00 (0.02) 0.00
Restructuring 0.00 0.06 0.00 0.08
Amortization 0.04 0.04 0.11 0.10
Impairment on long-
term investments 0.05 0.00 0.07 0.00
Tax (5) 0.01 (0.02) (0.03) (0.07)
-------------------- -------------------
Non-GAAP net income
per share (2) (3) $0.08 $0.06 $0.23 $0.11
-------------------- -------------------
Weighted average
shares - basic 175,912 187,666 178,620 186,962
Weighted average
shares - diluted 178,805 190,790 181,949 190,307
TABLE 4
SUMMARY OF NON-GAAP ITEMS
----------------------------------------------------------------------
(in thousands)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
---------- --------- --------- ---------
Feb 29, Feb 28, Feb 29, Feb 28,
2008 2007 2008 2007
---------- --------- --------- ---------
Purchase accounting
impact on revenue (1) $221 $1,818 $1,263 $10,288
Purchase accounting
impact on consulting
cost (4) 131 614 387 614
Integration related - 1,804 - 9,356
Amortization of
purchased maintenance
contracts 821 863 2,643 2,711
Stock-based
compensation 428 1,839 4,682 5,515
Pre-merger claims
reserve adjustment (3,827) - (3,827) -
Restructuring (137) 11,540 (202) 14,900
Amortization 6,371 6,640 19,514 19,391
8,067 - 12,296 -
-------------------- -------------------
Impairment on long-
term investments
subtotal pre-tax
adjustments 12,075 25,118 36,756 62,775
-------------------- -------------------
Tax provision (5) 938 (3,959) (4,785) (12,224)
-------------------- -------------------
Impact on net income $13,013 $21,159 $31,971 $50,551
==================== ===================
*T
(1) For the purchase accounting impact on deferred revenues for
three months ending February 29, 2008 and February 28, 2007, $221,000
and $1,354,000, respectively, relates to maintenance revenue and $0
and $464,000, 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.
-0-
*T
TABLE 5
LAWSON SOFTWARE, INC.
----------------------------------------------------------------------
SUPPLEMENTAL NON-GAAP MEASURES
INCREASE (DECREASE) IN GAAP AMOUNTS REPORTED
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
--------------------------------------
Feb 29, Feb 28, Feb 29, Feb 28,
2008 2007 2008 2007
-------- --------- --------- ---------
Revenue items
Purchase accounting impact on
maintenance $ 221 $ 1,354 $ 1,073 $ 7,212
Purchase accounting impact on
consulting - 464 190 3,076
-------- --------- --------- ---------
Total revenue items 221 1,818 1,263 10,288
Cost of license items
Amortization of acquired
software (2,840) (2,735) (9,415) (7,904)
Non-cash stock-based
compensation (3) (7) (16) (21)
-------- --------- --------- ---------
Total cost of license
items (2,843) (2,742) (9,431) (7,925)
Cost of maintenance items
Amortization of purchased
maintenance contracts (821) (863) (2,643) (2,711)
Integration related (1) - - - (70)
Non-cash stock-based
compensation (12) (33) (79) (110)
-------- --------- --------- ---------
Total cost of maintenance
items (833) (896) (2,722) (2,891)
Cost of consulting items
Purchase accounting impact on
consulting (131) (614) (387) (614)
Amortization - (1,440) - (4,233)
Integration related (1) - 39 - (1,712)
Non-cash stock-based
compensation 19 ( 249) (414) (606)
-------- --------- --------- ---------
Total cost of consulting
items (112) (2,264) (801) (7,165)
Research and development items
Integration related (1) - (56) - (74)
Non-cash stock-based
compensation (34) (150) (325) (468)
-------- --------- --------- ---------
Total research and
development items (34) (206) (325) (542)
Sales and marketing items
Integration related (1) - 53 - (1,489)
Non-cash stock-based
compensation (17) (321) (753) (1,092)
-------- --------- --------- ---------
Total sales and marketing
items (17) (268) (753) (2,581)
General and administrative items
Integration related (1) - (1,840) - (6,011)
Pre-merger claims reserve
adjustment 3,827 - 3,827 -
Non-cash stock-based
compensation (381) (1,079) (3,095) (3,218)
-------- --------- --------- ---------
Total general and
administrative 3,446 (2,919) 732 (9,229)
Restructuring 137 (11,540) 202 (14,900)
Amortization of acquired
intangibles (3,531) (2,465) (10,099) (7,254)
Other income (expense),
impairment on long-term
investments 8,067 - 12,296 -
Tax provision (2) 938 (3,959) (4,785) (12,224)
-------- --------- --------- ---------
Total Adjustments $13,013 $ 21,159 $ 31,971 $ 50,551
======== ========= ========= =========
(1) Represents integration related expenses relating to the
acquisition of Intentia International AB.
(2) Based on a projected annual global effective tax rate analysis,
the non-GAAP Q308 tax provision was calculated to be 39.4%. Based on
a projected annual global effective tax rate analysis, the non-GAAP
tax provision was calculated to be 38.7% for the nine month period of
fiscal 2008. The non-GAAP tax provision is calculated excluding the
non-GAAP adjustments in a jurisdictional basis.
*T
CONTACT: Lawson Software, Inc.
Joe Thornton, +1-651-767-6154
Media
joe.thornton@us.lawson.com
or
Barbara Doyle, +1-651-767-4385
Investors and Analysts
barbara.doyle@us.lawson.com
Lawson Software Reports Third Quarter Fiscal 2008 Financial Results
| Source: Lawson Software, Inc.
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