Lawson Software Operating Income Rises 26 Percent in Second Quarter Fiscal 2010
Company reports GAAP EPS of $0.02 and non-GAAP EPS of $0.09
ST. PAUL, Minn.--(BUSINESS WIRE)-- Regulatory News:
Lawson Software, Inc. (Nasdaq: LWSN) today reported financial results for its
second quarter of fiscal year 2010, which ended Nov. 30, 2009. Total revenues
were $184.4 million with GAAP net income of $2.8 million, or $0.02 per diluted
share. This compares to 2009 second quarter revenues of $206.4 million with GAAP
net income of $3 million, or $0.02 per diluted share.
Non-GAAP net income for the second quarter of fiscal 2010 was $15.6 million, or
$0.09 per diluted share, compared to $16.7 million, or $0.10 in the second
quarter of fiscal 2009. Second quarter fiscal 2010 non-GAAP net income and
earnings per diluted share exclude $15.5 million of amortization, restructuring,
non-cash stock-based compensation, non-cash interest expense and a pre-merger
claims reserve adjustment. Non-GAAP net income and earnings per diluted share
include a provision for income taxes based upon an estimated rate of 37 percent,
which is applied consistently throughout the year.
“Lawson's operating profit continued to improve in the second quarter,” said
Harry Debes, Lawson president and chief executive officer. “Our revenue results
exceeded our guidance and our non-GAAP earnings meet the high end of our
guidance range. While the economy remains challenging overall, our strategy of
focusing on targeted vertical markets is helping us achieve our performance
objectives.”
The company's results were impacted by a decline in the value of the U.S. dollar
relative to the value of foreign currencies as compared to the prior year
period. The company estimates currency fluctuations had a negative $0.02 impact
on GAAP net earnings per diluted share and no impact on non-GAAP net earnings
per diluted share for the second quarter.
Implementation of Accounting Guidance on Convertible Debt Securities (formerly
FSP APB 14-1)
Second quarter fiscal 2010 GAAP net income includes $2.1 million of incremental
non-cash interest expense resulting from the implementation of a new accounting
standard related to the company's convertible notes. This non-cash interest
expense is excluded from the company's non-GAAP results. Results for fiscal 2009
have been adjusted to reflect the retroactive implementation of this accounting
standard. Second quarter fiscal 2009 GAAP net income includes $2 million of
incremental non-cash interest expense.
Acquisition of Healthvision
Lawson Software also announced today its intent to acquire privately-held
Healthvision Solutions, Inc., a Dallas-based company providing integration and
application technology and related services to hospitals and large healthcare
organizations. The transaction is expected to close in January 2010 subject to
customary regulatory approvals. Please refer to the 8-K filed with the
Securities and Exchange Commission on Jan. 7, 2010 for further information on
the acquisition.
Financial Guidance
For the third quarter of fiscal 2010, which ends Feb. 28, 2010 the company is
providing guidance for Lawson only as the announced acquisition of Healthvision
has not closed. The company estimates total revenues of $174 million to $178
million. The company anticipates GAAP fully diluted earnings per share will be
$0.02 to $0.04. Non-GAAP fully diluted earnings per share are forecasted to be
$0.07 to $0.09, excluding approximately $11 million of pre-tax expenses for
amortization, non-cash interest expense and non-cash stock-based compensation.
The non-GAAP effective tax rate for the third quarter is estimated at 37
percent, which the company expects to apply consistently throughout the fiscal
year. Guidance for the third fiscal quarter uses foreign exchange rates as of
the end of December 2009.
Conference Call, Webcast and Key Metrics
The company will host a conference call and webcast to discuss its second
quarter results and future outlook at 5:00 p.m. EST (4:00 p.m. CST) Jan. 7,
2010. Interested parties may also listen to the call by dialing 1-888-455-9644
(or 1-212-287-1631) and using the passcode "LWSN." Interested parties should
access the webcast at www.lawson.com/investor or dial into the conference call
approximately 10-15 minutes before the scheduled start time.
A replay will be available approximately one hour after the webcast and
conference call concludes and will remain available for one week. To access the
replay, dial 1-866-512-0469 or 1-203-369-1969 for international callers. The
webcast will also remain on www.lawson.com/investor for approximately one week.
Additional key business metrics are also available at the Lawson Investor
Relations web page.
About Lawson Software
Lawson Software provides software and service solutions to 4,500 customers in
equipment service management and rental, fashion, food & beverage, healthcare,
manufacturing & distribution, public sector (United States), service industries,
and strategic human capital management across 40 countries. Lawson Software is a
global provider of enterprise software, services and support to customers
primarily in three sectors: services, trade and manufacturing/distribution.
Lawson's solutions include Enterprise Performance Management, Human Capital
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. For Lawson's listing on the Third North
exchange in Sweden, Remium AB is acting as the Certified Adviser.
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 uncertainties in
the software industry; uncertainties as to when and whether the conditions for
the recognition of deferred revenue will be satisfied; increased competition;
general economic conditions; the impact of foreign currency exchange rate
fluctuations; continuation of the global recession and credit crisis; 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 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.
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.
Incremental non-cash interest related to convertible debt - We have excluded the
incremental non-cash interest expense related to our $240.0 million in 2.5%
senior convertible notes that we are required to recognize under accounting
guidance for convertible debt securities from our non-GAAP results of operations
for all periods presented, including a retrospective restatement of GAAP results
upon our adoption of accounting guidance for convertible debt securities on June
1, 2009. This accounting guidance requires us to recognize significant
additional non-cash interest expense based on the market rate for similar debt
instruments that do not contain a comparable conversion feature. We have
allocated a portion of the proceeds from the issuance of the senior notes to the
embedded conversion feature resulting in a discount on our senior notes. The
debt discount is being amortized as additional non-cash interest expense over
the term of the notes using the effective interest method. These non-cash
interest charges are not included in our operating plans and are not included in
management's assessment of our operating performance. We believe that the
exclusion of the non-cash interest charges provides a useful alternative for
investors to evaluate the cost structure of our operations in a manner
consistent with our internal evaluation of our cost structure.
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. 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 related to
actions taken 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 the
underlying assets 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.
LAWSON SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in USD thousands, except per share data)
(unaudited)
Three Months Ended % Increase
(Decrease)
as reported
% Increase
(Decrease)
at constant currency
Nov. 30, 2009
Nov. 30, 2008 (1)
(as adjusted)
Revenues:
License fees $ 28,371 $ 30,061 (6%) (10%)
Maintenance 85,152 90,083 (5%) (3%)
Software revenues 113,523 120,144 (6%) (5%)
Consulting 70,899 86,213 (18%) (22%)
Total revenues 184,422 206,357 (11%) (12%)
Cost of revenues:
Cost of license fees 5,407 6,648 (19%) (26%)
Cost of maintenance 16,922 17,373 (3%) (6%)
Cost of Software revenues 22,329 24,021 (7%) (12%)
Cost of consulting 59,943 73,710 (19%) (22%)
Total cost of revenues 82,272 97,731 (16%) (19%)
Gross profit 102,150 108,626 (6%) (5%)
Operating expenses:
Research and development 22,273 22,542 (1%) (3%)
Sales and marketing 40,000 42,986 (7%) (9%)
General and administrative 19,598 22,165 (12%) (11%)
Restructuring 4,676 7,717 (39%) (47%)
Amortization of acquired intangibles 1,945 2,358 (18%)
(21%)
Total operating expenses 88,492 97,768 (9%) (12%)
Operating income 13,658 10,858 26% 90%
Other income (expense), net:
Interest income 245 1,987 (88%) (88%)
Interest expense (4,594 ) (3,940 ) 17% 16%
Other income (expense), net (62 ) 201 NA NA
Total other income (expense), net (4,411 ) (1,752 ) NA NA
Income before income taxes 9,247 9,106 2% 54%
Provision for income taxes 6,493 6,079 7% 5%
Net income $ 2,754 $ 3,027 (9%) +++
Net income per share:
Basic $ 0.02 $ 0.02
Diluted $ 0.02 $ 0.02
Weighted average common shares outstanding:
Basic 161,402 162,456 (1%)
Diluted 165,164 164,527 0%
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' financial results
for the prior year period that are reported in currencies other than the United
States dollar at the exchange rate in effect for the current period rather than
the previous period.
(1) Adjusted to reflect adoption of accounting guidance for convertible debt
securities.
LAWSON SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in USD thousands, except per share data)
(unaudited)
Six Months Ended % Increase
(Decrease)
as reported
% Increase
(Decrease)
at constant currency
Nov. 30, 2009
Nov. 30, 2008 (1)
(as adjusted)
Revenues:
License fees $ 54,306 $ 51,186 6% 5%
Maintenance 170,582 179,192 (5%) (1%)
Software revenues 224,888 230,378 (2%) 0%
Consulting 128,526 166,895 (23%) (22%)
Total revenues 353,414 397,273 (11%) (9%)
Cost of revenues:
Cost of license fees 10,334 11,980 (14%) (17%)
Cost of maintenance 32,481 34,247 (5%) (3%)
Cost of Software revenues 42,815 46,227 (7%) (7%)
Cost of consulting 111,778 146,157 (24%) (22%)
Total cost of revenues 154,593 192,384 (20%) (18%)
Gross profit 198,821 204,889 (3%) (1%)
Operating expenses:
Research and development 42,891 44,460 (4%) 0%
Sales and marketing 75,877 89,477 (15%) (13%)
General and administrative 38,847 41,454 (6%) (4%)
Restructuring 4,751 7,486 (37%) (45%)
Amortization of acquired intangibles 3,825 4,985 (23%)
(22%)
Total operating expenses 166,191 187,862 (12%) (10%)
Operating income 32,630 17,027 92% 109%
Other income (expense), net:
Interest income 563 5,035 (89%) (89%)
Interest expense (9,044 ) (7,899 ) 14% 15%
Other income (expense), net (160 ) 273 NA NA
Total other income (expense), net (8,641 ) (2,591 ) NA NA
Income before income taxes 23,989 14,436 66% 77%
Provision for income taxes 15,258 15,100 1% 1%
Net income (loss) $ 8,731 $ (664 ) +++ +++
Net income (loss) per share:
Basic $ 0.05 $ 0.00
Diluted $ 0.05 $ 0.00
Weighted average common shares outstanding:
Basic 161,256 165,425 (3%)
Diluted 164,635 165,425 (0%)
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' financial results
for the prior year period that are reported in currencies other than the United
States dollar at the exchange rate in effect for the current period rather than
the previous period.
(1) Adjusted to reflect adoption of accounting guidance for convertible debt
securities.
LAWSON SOFTWARE, INC.
CONSOLIDATED BALANCE SHEETS
(in USD thousands)
(unaudited)
Nov. 30, 2009
May 31, 2009 (1)
(as adjusted)
ASSETS
Current assets:
Cash and cash equivalents $ 360,463 $ 414,815
Restricted cash - current 9,400 9,208
Trade accounts receivable, net 120,169 152,666
Income taxes receivable 723 4,242
Deferred income taxes - current 19,085 18,909
Prepaid expenses and other current assets 51,829 52,255
Total current assets 561,669 652,095
Restricted cash - non-current 931 1,786
Property and equipment, net 54,764 55,641
Goodwill 502,572 470,274
Other intangibles assets, net 83,413 91,701
Deferred income taxes - non-current 39,288 39,835
Other assets 14,120 13,149
Total assets $ 1,256,757 $ 1,324,481
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Long-term debt - current $ 3,926 $ 4,591
Accounts payable 5,983 14,018
Accrued compensation and benefits 70,754 73,976
Income taxes payable 4,585 4,512
Deferred income taxes - current 8,019 5,652
Deferred revenue - current 181,904 279,041
Other current liabilities 40,041 56,308
Total current liabilities 315,212 438,098
Long-term debt - non-current 220,974 217,333
Deferred income taxes - non-current 17,549 16,827
Deferred revenue - non-current 11,536 13,482
Other long-term liabilities 14,648 14,781
Total liabilities 579,919 700,521
Stockholders' equity:
Common stock 2,023 2,018
Additional paid-in capital 878,296 870,722
Treasury stock, at cost (323,836 ) (324,651 )
Retained earnings 49,449 40,718
Accumulated other comprehensive income 70,906 35,153
Total stockholders' equity 676,838 623,960
Total liabilities and stockholders' equity $ 1,256,757 $ 1,324,481
(1) Adjusted to reflect adoption of accounting guidance for convertible debt
securities.
LAWSON SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in USD thousands)
(unaudited)
Three Months Ended Six Months Ended
Nov. 30, 2009
Nov. 30, 2008 (1)
Nov. 30, 2009 Nov. 30, 2008 (1)
(as adjusted) (as adjusted)
Cash flows from operating activities:
Net income (loss) $ 2,754 $ 3,027 $ 8,731 $ (664 )
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 10,736 9,510 20,778 19,770
Amortization of debt issuance costs 260 256 520 511
Amortization of debt discount 2,121 1,987 4,243 3,974
Deferred income taxes 1,659 1,998 4,891 2,138
Provision for doubtful accounts (174 ) 318 467 68
Warranty provision 1,351 1,923 2,353 3,180
Net loss on disposal of assets - - 10 -
Excess tax benefits from stock transactions (135 ) (19 ) (303 )
(367 )
Stock-based compensation expense 4,433 2,917 7,000 4,734
Amortization of discounts and premiums on marketable securities - 9 -
15
Changes in operating assets and liabilities:
Trade accounts receivable 1,968 4,000 34,367 38,907
Prepaid expenses and other assets (10,194 ) 8,455 1,727 3,093
Accounts payable (2,462 ) (3,338 ) (8,346 ) (11,455 )
Accrued expenses and other liabilities 5,971 10,924 (29,962 )
(8,080 )
Income taxes payable/receivable 16,376 (10,323 ) 4,856 (5,126 )
Deferred revenue (66,267 ) (74,948 ) (103,477 )
(108,579 )
Net cash used in operating activities (31,603 ) (43,304 )
(52,145 ) (57,881 )
Cash flows from investing activities:
Change in restricted cash 1,089 (9,808 ) 812 (9,407 )
Proceeds from maturities and sales of marketable securities and investments
- 983 - 50,677
Purchases of property and equipment (4,223 ) (9,123 )
(8,581 ) (16,069 )
Net cash (used in) provided by investing activities (3,134 )
(17,948 ) (7,769 ) 25,201
Cash flows from financing activities:
Principal payments on long-term debt (424 ) (328 ) (891 ) (910 )
Payments on capital lease obligations (730 ) (487 ) (1,305 ) (617
)
Cash proceeds from exercise of stock options 280 114 1,477 1,547
Excess tax benefit from stock transactions 135 19 303 367
Cash proceeds from employee stock purchase plan 574 749 1,124
1,528
Repurchase of common stock - 9,075 (1,284 )
(90,966 )
Net cash (used in) provided by financing activities (165 ) 9,142
(576 ) (89,051 )
Effect of exchange rate changes on cash and cash equivalents 4,063
(7,730 ) 6,138 (12,862 )
Net increase (decrease) in cash and cash equivalents (30,839 ) (59,840 )
(54,352 ) (134,593 )
Cash and cash equivalents at beginning of period 391,302 360,368
414,815 435,121
Cash and cash equivalents at end of period $ 360,463 $ 300,528
$ 360,463 $ 300,528
(1) Adjusted to reflect adoption of accounting guidance for convertible debt
securities.
LAWSON SOFTWARE, INC.
RECONCILIATION OF CONSOLIDATED GAAP NET INCOME TO CONSOLIDATED NON-GAAP NET
INCOME
(in USD thousands)
Three Months Ended Six Months Ended
Nov. 30, 2009
Nov. 30, 2008 (1)
Nov. 30, 2009
Nov. 30, 2008 (1)
(as adjusted)
(as adjusted)
Net income (loss), as reported $ 2,754 $ 3,027 $ 8,731 $ (664 )
Purchase accounting impact on revenue (2) - 158 - 416
Purchase accounting impact on consulting - 32 - 65
Amortization of purchased maintenance contracts 530 674 1,097
1,383
Stock-based compensation 4,433 2,917 7,001 4,734
Pre-merger claims reserve adjustment (661 ) (2,001 ) (661 )
(3,808 )
Restructuring 4,676 7,717 4,751 7,486
Amortization 4,447 5,033 8,826 10,309
Amortization of debt discount 2,122 1,987 4,243 3,974
Tax provision (5) (2,681 ) (2,888 ) (2,963 ) 1,452
Non-GAAP net income $ 15,620 $ 16,656 $ 31,025 $
25,347
RECONCILIATION OF CONSOLIDATED GAAP TO CONSOLIDATED NON-GAAP PER SHARE EFFECT
Three Months Ended Six Months Ended
Nov. 30, 2009
Nov. 30, 2008 (1)
Nov. 30, 2009
Nov. 30, 2008 (1)
(as adjusted)
(as adjusted)
Net income (loss), as reported (3) $ 0.02 $ 0.02 $ 0.05 $ (0.00
)
Purchase accounting impact on revenue (2) - 0.00 - 0.00
Purchase accounting impact on consulting cost - 0.00 - 0.00
Amortization of purchased maintenance contracts 0.00 0.00 0.01
0.01
Stock-based compensation 0.03 0.02 0.04 0.03
Pre-merger claims reserve adjustment (0.00 ) (0.01 ) (0.00 )
(0.02 )
Restructuring 0.03 0.05 0.03 0.04
Amortization 0.03 0.03 0.05 0.06
Amortization of debt discount 0.01 0.01 0.03 0.02
Tax provision (5) (0.02 ) (0.02 ) (0.02 ) 0.01
Non-GAAP net income per share (3) (4) $ 0.09 $ 0.10 $ 0.19
$ 0.15
Weighted average shares - basic 161,402 162,456 161,256 165,425
Weighted average shares - diluted 165,164 164,527
164,635 168,114
SUMMARY OF NON-GAAP ITEMS
(in USD thousands)
Three Months Ended Six Months Ended
Nov. 30, 2009
Nov. 30, 2008 (1)
Nov. 30, 2009
Nov. 30, 2008 (1)
(as adjusted)
(as adjusted)
Purchase accounting impact on revenue (2) $ - $ 158 $ - $ 416
Purchase accounting impact on consulting cost - 32 - 65
Amortization of purchased maintenance contracts 530 674 1,097
1,383
Stock-based compensation 4,433 2,917 7,001 4,734
Pre-merger claims reserve adjustment (661 ) (2,001 ) (661 )
(3,808 )
Restructuring 4,676 7,717 4,751 7,486
Amortization 4,447 5,033 8,826 10,309
Amortization of debt discount 2,122 1,987 4,243
3,974
subtotal pre-tax adjustments 15,547 16,517 25,257
24,559
Tax provision (5) (2,681 ) (2,888 ) (2,963 ) 1,452
Impact on net income $ 12,866 $ 13,629 $ 22,294 $
26,011
(1) Adjusted to reflect adoption of accounting guidance for convertible debt
securities.
(2) The purchase accounting impact on deferred revenues for the three months
ended November 30, 2009 and November 30, 2008, $0 and $158,000, and for the six
months ended November 30, 2009 and November 30, 2008 $0 and $416,000
respectively, relates to maintenance revenues.
(3) For calculation of EPS, basic weighted average shares are used with a net
loss and diluted weighted average shares are used with net income.
(4) Net income per share columns may not total due to rounding.
(5) The non-GAAP provision is calculated excluding the non-GAAP adjustments on
a jurisdictional basis.
LAWSON SOFTWARE, INC.
SUPPLEMENTAL NON-GAAP MEASURES
INCREASE (DECREASE) IN GAAP AMOUNTS REPORTED
(in USD thousands)
(unaudited)
Three Months Ended Six Months Ended
Nov. 30, 2009
Nov. 30, 2008 (1)
Nov. 30, 2009
Nov. 30, 2008 (1)
(as adjusted)
(as adjusted)
Revenue items
Purchase accounting impact on maintenance $ - $ 158 $ -
$ 416
Total revenue items - 158 - 416
Cost of license items
Amortization of acquired software (2,502 ) (2,675 ) (5,001
) (5,325 )
Total cost of license items (2,502 ) (2,675 ) (5,001 ) (5,325 )
Cost of maintenance items
Amortization of purchased maintenance contracts (530 ) (674 ) (1,097
) (1,383 )
Stock-based compensation (394 ) (65 ) (535 ) (117
)
Total cost of maintenance items (924 ) (739 ) (1,632 ) (1,500 )
Cost of consulting items
Purchased accounting impact on consulting - (32 ) - (65 )
Amortization - - - 1
Stock-based compensation (842 ) (164 ) (1,265 )
(175 )
Total cost of consulting items (842 ) (196 ) (1,265 ) (239 )
Research and development items
Stock-based compensation (52 ) (164 ) (182 ) (298
)
Total research and development items (52 ) (164 ) (182 ) (298 )
Sales and marketing items
Stock-based compensation (2,029 ) (544 ) (2,851 )
(1,000 )
Total sales and marketing items (2,029 ) (544 ) (2,851 ) (1,000
)
General and administrative items
Pre-merger claims reserve adjustment 661 2,001 661 3,808
Stock-based compensation (1,116 ) (1,980 ) (2,168 )
(3,144 )
Total general and administrative items (455 ) 21 (1,507 ) 664
Restructuring (4,676 ) (7,717 ) (4,751 ) (7,486 )
Amortization of acquired intangibles (1,945 ) (2,358 ) (3,825 )
(4,985 )
Amortization of debt discount (2,122 ) (1,987 ) (4,243 ) (3,974
)
Tax provision (2) (2,681 ) (2,888 ) (2,963 ) 1,452
Total adjustments $ 12,866 $ 13,629 $ 22,294 $ 26,011
(1) Adjusted to reflect adoption of accounting guidance for convertible debt
securities.
(2) At the beginning of the fiscal year, the company computed an estimated
annual global effective non-GAAP tax rate of 37%. The non-GAAP tax rate is
calculated excluding non-GAAP adjustments on a jurisdictional basis. This
estimated 37% tax rate will be utilized each quarter throughout fiscal year
2010.
Lawson Software
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
or
Heather Pribyl, +1-651-767-6459
Investors and Analysts
heather.pribyl@us.lawson.com
Lawson Software Operating Income Rises 26 Percent in Second Quarter Fiscal 2010
| Source: Lawson Software, Inc.
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