Lawson Software Reports Third Quarter 2010 Financial Results
License fees revenue increased 28 percent
GAAP EPS of $0.01; non-GAAP EPS of $0.11
Healthvision acquisition completed during the quarter
Company expects Q4 2010 GAAP EPS of $0.04 - $0.06; Non-GAAP EPS of $0.10 - $0.12
ST. PAUL, Minn.--(BUSINESS WIRE)-- Regulatory News:
Lawson Software, Inc. (Nasdaq: LWSN) today reported financial results for its
third quarter of fiscal year 2010, which ended Feb. 28, 2010. Total revenues
were $186.2 million with GAAP net income of $1.8 million, or diluted earnings
per share (EPS) of $0.01. These results compare to third quarter of fiscal year
2009 revenues of $173.8 million with GAAP net income of $6.2 million, or EPS of
$0.04. Revenue increased 7 percent; however it was offset by increased
amortization expense due to the Healthvision acquisition and increased operating
expenses primarily related to employee costs which resulted in a decline in GAAP
net income from the prior year. Healthvision's operations contributed $4.8
million in revenue and negatively impacted GAAP net income by $1.5 million or
$0.01 per diluted share.
Non-GAAP net income for the third quarter increased 8 percent to $17.8 million,
or $0.11 per diluted share, compared to $16.4 million, or $0.10 per diluted
share in the third quarter of fiscal year 2009. Healthvision's operations
contributed $7.3 million in revenue, $1.4 million to non-GAAP net income, or
$0.01 per diluted share. Third quarter non-GAAP net income and EPS includes $2.5
million of revenues impacted by purchase accounting adjustments and excludes
$17.7 million of amortization expense, non-cash stock-based compensation,
non-cash interest expense, integration expense and restructuring. Non-GAAP net
income and EPS include a provision for income taxes based upon an estimated rate
of 37 percent, which is applied consistently throughout the year.
“We are pleased with our third quarter results, which continue the positive
trend in our business performance,” said Harry Debes, president and chief
executive officer. “Driven by sales in our strategic growth markets, license
revenues grew 28 percent or 25 percent excluding the impact of the Healthvision
acquisition. Since closing the acquisition of Healthvision in January,
integration efforts are well underway and initial results are meeting all of our
expectations. In addition, we recently announced new Lawson Cloud Services
offerings available on the Amazon Elastic Compute Cloud infrastructure. This is
full-function ERP on Amazon that presents a compelling value proposition and
lower-cost deployment option to our customers."
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 $0.01 impact
on both GAAP and non-GAAP EPS.
Implementation of Accounting Guidance on Convertible Debt Securities (formerly
FSP APB 14-1)
Third quarter of fiscal 2010 GAAP net income includes $2.1 million of
incremental non-cash interest expense resulting from the implementation of an
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. Third quarter of fiscal 2009 GAAP net income includes $2
million of incremental non-cash interest expense.
Financial Guidance
For the fourth quarter of fiscal 2010, which ends May 31, 2010, the company
estimates total revenues in the range of $194 million to $198 million. Non-GAAP
total revenues are expected to be in the range of $196 million to $200 million,
including approximately $2 million of revenues impacted by purchase accounting
adjustments. The company anticipates GAAP EPS will be in the range of $0.04 to
$0.06. Non-GAAP EPS is forecasted to be in the range of $0.10 to $0.12,
excluding approximately $10 million of pre-tax adjustments for amortization
expense, non-cash stock-based compensation expense, non-cash interest expense
and a one-time gain related to the modification of a defined benefit pension
plan. The non-GAAP effective tax rate for the fourth quarter is estimated at 37
percent. Guidance for the fourth fiscal quarter is based on foreign exchange
rates as of the end of March.
Conference Call, Webcast and Key Metrics
The company will host a conference call and webcast to discuss its third quarter
results and future outlook at 5 p.m. EDT (4 p.m. CDT) April 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; Lawson's
ability to integrate the Healthvision acquisition successfully; 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.
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.
Transaction and integration expenses - We have incurred various transaction and
integration related expenses as part of our acquisitions. These transaction
costs and 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 transaction and integration costs provide
investors an appropriate alternative view of our results of operations and
facilitates comparisons of our results period-over-period.
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.
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.
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
Feb. 28, 2010 Feb. 28, 2009 (1)
(as adjusted)
Revenues:
License fees $ 31,873 $ 24,881 28 % 23 %
Maintenance 89,080 85,806 4 % 2 %
Software revenues 120,953 110,687 9 % 7 %
Consulting 65,267 63,161 3 % (3 %)
Total revenues 186,220 173,848 7 % 3 %
Cost of revenues:
Cost of license fees 6,595 4,872 35 % 26 %
Cost of maintenance 17,352 14,810 17 % 11 %
Cost of software revenues 23,947 19,682 22 % 15 %
Cost of consulting 59,249 62,871 (6 %) (12 %)
Total cost of revenues 83,196 82,553 1 % (6 %)
Gross profit 103,024 91,295 13 % 11 %
Operating expenses:
Research and development 22,760 18,209 25 % 19 %
Sales and marketing 42,919 34,203 25 % 19 %
General and administrative 21,224 18,542 14 % 11 %
Restructuring 1,154 3,534 (67 %) (69 %)
Amortization of acquired intangibles 2,699 1,890 43 % 32
%
Total operating expenses 90,756 76,378 19 % 13 %
Operating income 12,268 14,917 (18 %) (2 %)
Other income (expense), net:
Interest income 128 801 (84 %) (85 %)
Interest expense (4,514 ) (3,852 ) 17 % 16 %
Other income (expense), net 165 318 NA NA
Total other income (expense), net (4,221 ) (2,733 ) NA NA
Income before income taxes 8,047 12,184 (34 %) (20 %)
Provision for income taxes 6,224 5,967 4 % 3 %
Net income $ 1,823 $ 6,217 (71 %) (55 %)
Net income per share:
Basic $ 0.01 $ 0.04
Diluted $ 0.01 $ 0.04
Weighted average common shares outstanding:
Basic 161,412 162,675 (1 %)
Diluted 165,367 164,648 0 %
We disclose the percent change in the results from one period to another using
constant currency 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)
Nine Months Ended % Increase
(Decrease)
as reported
% Increase
(Decrease)
at constant currency
Feb.28, 2010 Feb. 28, 2009 (1)
(as adjusted)
Revenues:
License fees $ 86,179 $ 76,067 13 % 11 %
Maintenance 259,662 264,998 (2 %) 0 %
Software revenues 345,841 341,065 1 % 2 %
Consulting 193,793 230,056 (16 %) (17 %)
Total revenues 539,634 571,121 (6 %) (5 %)
Cost of revenues:
Cost of license fees 16,929 16,852 0 % (4 %)
Cost of maintenance 49,833 49,057 2 % 1 %
Cost of software revenues 66,762 65,909 1 % 0 %
Cost of consulting 171,027 209,028 (18 %) (19 %)
Total cost of revenues 237,789 274,937 (14 %) (14 %)
Gross profit 301,845 296,184 2 % 3 %
Operating expenses:
Research and development 65,651 62,669 5 % 5 %
Sales and marketing 118,796 123,680 (4 %) (4 %)
General and administrative 60,071 59,996 0 % 1 %
Restructuring 5,905 11,020 (46 %) (52 %)
Amortization of acquired intangibles 6,524 6,875 (5 %) (6
%)
Total operating expenses 256,947 264,240 (3 %) (3 %)
Operating income 44,898 31,944 41 % 60 %
Other income (expense), net:
Interest income 691 5,836 (88 %) (88 %)
Interest expense (13,558 ) (11,752 ) 15 % 15 %
Other income (expense), net 5 591 NA NA
Total other income (expense), net (12,862 ) (5,325 ) NA NA
Income before income taxes 32,036 26,619 20 % 36 %
Provision for income taxes 21,482 21,066 2 % 2 %
Net income $ 10,554 $ 5,553 90 % 316 %
Net income per share:
Basic $ 0.07 $ 0.03
Diluted $ 0.06 $ 0.03
Weighted average common shares outstanding:
Basic 161,308 164,508 (2 %)
Diluted 164,901 166,958 (1 %)
We disclose the percent change in the results from one period to another using
constant currency 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)
Feb. 28, 2010 May 31, 2009 (1)
(as adjusted)
ASSETS
Current assets:
Cash and cash equivalents $ 226,346 $ 414,815
Restricted cash - current 1,043 9,208
Trade accounts receivable, net 132,905 152,666
Income taxes receivable 198 4,242
Deferred income taxes - current 23,776 18,909
Prepaid expenses and other current assets 38,806 52,255
Total current assets 423,074 652,095
Restricted cash - non-current 10,011 1,786
Property and equipment, net 56,355 55,641
Goodwill 558,130 470,274
Other intangibles assets, net 169,098 91,701
Deferred income taxes - non-current 44,922 39,835
Other assets 13,947 13,149
Total assets $ 1,275,537 $ 1,324,481
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Long-term debt - current $ 2,537 $ 4,591
Accounts payable 2,163 14,018
Accrued compensation and benefits 69,146 73,976
Income taxes payable 3,013 4,512
Deferred income taxes - current 14,381 5,652
Deferred revenue - current 199,024 279,041
Other current liabilities 45,692 56,308
Total current liabilities 335,956 438,098
Long-term debt - non-current 222,333 217,333
Deferred income taxes - non-current 43,700 16,827
Deferred revenue - non-current 9,436 13,482
Other long-term liabilities 15,268 14,781
Total liabilities 626,693 700,521
Stockholders' equity:
Common stock 2,024 2,018
Additional paid-in capital 882,531 870,722
Treasury stock, at cost (327,684 ) (324,651 )
Retained earnings 51,272 40,718
Accumulated other comprehensive income 40,701 35,153
Total stockholders' equity 648,844 623,960
Total liabilities and stockholders' equity $ 1,275,537 $ 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 Nine Months Ended
Feb. 28, 2010
Feb. 28, 2009(1)
Feb. 28, 2010 Feb. 28, 2009(1)
(as adjusted) (as adjusted)
Cash flows from operating activities:
Net income (loss) $ 1,823 $ 6,217 $ 10,554 $ 5,553
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 12,553 9,499 33,331 29,269
Amortization of debt issuance costs 260 255 780 766
Amortization of debt discount 2,122 1,987 6,365 5,961
Deferred income taxes 994 1,479 5,885 3,617
Provision for doubtful accounts 366 1,010 833 1,078
Warranty provision 1,191 1,524 3,544 4,704
Net (loss) gain on disposal of assets (3 ) - 7 -
Excess tax benefits from stock transactions (191 ) (81 ) (494 )
(448 )
Stock-based compensation expense 6,258 2,027 13,258 6,761
Amortization of discounts and premiums on marketable securities - (9 )
- 6
Changes in operating assets and liabilities:
Trade accounts receivable (38 ) (7,111 ) 34,329 31,796
Prepaid expenses and other assets 15,255 (5,376 ) 16,982 (2,283
)
Accounts payable (5,402 ) 562 (13,748 ) (10,893 )
Accrued expenses and other liabilities 2,221 182 (27,741 ) (7,898
)
Income taxes payable/receivable (1,209 ) 2,326 3,647 (2,800 )
Deferred revenue 7,514 1,366 (95,963 ) (107,213
)
Net cash provided by (used in) operating activities 43,714 15,857
(8,431 ) (42,024 )
Cash flows from investing activities:
Cash paid in conjunction with acquisitions, net of cash acquired (160,000 )
- (160,000 ) -
Change in restricted cash (785 ) 730 27 (8,677 )
Proceeds from maturities and sales of marketable securities and
investments
4 (13 ) 4 50,664
Purchases of property and equipment (5,368 ) (4,461 )
(13,949 ) (20,530 )
Net cash (used in) provided by investing activities (166,149 )
(3,744 ) (173,918 ) 21,457
Cash flows from financing activities:
Principal payments on long-term debt (340 ) (313 ) (1,231 )
(1,223 )
Payments on capital lease obligations (739 ) (270 ) (2,044 ) (887
)
Cash proceeds from exercise of stock options 544 410 2,021 1,957
Excess tax benefit from stock transactions 191 81 494 448
Cash proceeds from employee stock purchase plan 573 629 1,697
2,157
Repurchase of common stock (6,139 ) - (7,423 )
(90,966 )
Net cash (used in) provided by financing activities (5,910 ) 537
(6,486 ) (88,514 )
Effect of exchange rate changes on cash and cash equivalents (5,772 )
(4,940 ) 366 (17,802 )
Net (decrease) increase in cash and cash equivalents (134,117 ) 7,710
(188,469 ) (126,883 )
Cash and cash equivalents at beginning of period 360,463 300,528
414,815 435,121
Cash and cash equivalents at end of period $ 226,346 $ 308,238
$ 226,346 $ 308,238
(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 Nine Months Ended
Feb. 28, 2010 Feb. 28, 2009(1)
Feb. 28, 2010 Feb.28, 2009(1)
(as adjusted) (as adjusted)
Net income, as reported $ 1,823 $ 6,217 $ 10,554 $ 5,553
Purchase accounting impact on revenue (2 ) 2,479 58 2,479 474
Purchase accounting impact on consulting costs - 39 - 105
Amortization of purchased maintenance contracts 473 631 1,570
2,015
Stock-based compensation 6,258 2,026 13,255 6,761
Pre-merger claims reserve adjustment - (79 ) (661 ) (3,887 )
Integration expenses 1,153 - 1,153 -
Restructuring 1,154 3,534 5,905 11,020
Amortization of intangible assets 6,582 4,918 15,409 15,228
Amortization of debt discount 2,122 1,987 6,365 5,961
Tax provision (5 ) (4,235 ) (2,887 ) (7,197 )
(1,438 )
Non-GAAP net income $ 17,809 $ 16,444 $ 48,832 $
41,792
.
RECONCILIATION OF CONSOLIDATED GAAP TO CONSOLIDATED NON-GAAP PER SHARE EFFECT
Three Months Ended Nine Months Ended
Feb. 28, 2010 Feb. 28, 2009(1)
Feb. 28, 2010 Feb.28, 2009(1)
(as adjusted) (as adjusted)
Net income, as reported (3 ) $ 0.01 $ 0.04 $ 0.06 $ 0.03
Purchase accounting impact on revenue (2 ) 0.01 0.00 0.02 0.00
Purchase accounting impact on consulting costs - 0.00 - 0.00
Amortization of purchased maintenance contracts 0.00 0.00 0.01
0.01
Stock-based compensation 0.04 0.01 0.08 0.04
Pre-merger claims reserve adjustment - (0.00 ) (0.00 ) (0.02 )
Restructuring 0.01 - 0.01 -
Integration expenses 0.01 0.02 0.04 0.07
Amortization of intangible assets 0.04 0.03 0.09 0.09
Amortization of debt discount 0.01 0.01 0.04 0.04
Tax provision (5 ) (0.03 ) (0.02 ) (0.04 ) (0.01
)
Non-GAAP net income per share (3 ) (4) $ 0.11 $ 0.10 $ 0.30
$ 0.25
Weighted average shares - basic 161,412 162,675 161,308 164,508
Weighted average shares - diluted 165,367 164,648
164,901 168,114
SUMMARY OF NON-GAAP ITEMS (in USD thousands)
Three Months Ended Nine Months Ended
Feb. 28, 2010 Feb. 28, 2009(1)
Feb. 28, 2010 Feb. 28, 2009(1)
(as adjusted) (as adjusted)
Purchase accounting impact on revenue (2 ) $ 2,479 $ 58 $ 2,479
$ 474
Purchase accounting impact on consulting costs - 39 - 105
Amortization of purchased maintenance contracts 473 631 1,570
2,015
Stock-based compensation 6,258 2,026 13,255 6,761
Pre-merger claims reserve adjustment - (79 ) (661 ) (3,887 )
Integration expenses 1,153 - 1,153 -
Restructuring 1,154 3,534 5,905 11,020
Amortization of intangible assets 6,582 4,918 15,409 15,228
Amortization of debt discount 2,122 1,987 6,365
5,961
subtotal pre-tax adjustments 20,221 13,114 45,475
37,677
Tax provision (5 ) (4,235 ) (2,887 ) (7,197 )
(1,438 )
Impact on net income $ 15,986 $ 10,227 $ 38,278 $
36,239
(1) Adjusted to reflect adoption of accounting guidance for convertible debt
securities.
(2) The purchase accounting impact on revenues for the three months ended
February 28, 2010 and February 28, 2009, $2,479,000 and $58,000, and for the
nine months ended February 28, 2010 and February 28, 2009 $2,479,000 and
$474,000 respectively.
(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 Nine Months Ended
Feb.28, 2010 Feb. 28, 2009(1)
Feb. 28, 2010 Feb. 28, 2009(1)
(as adjusted) (as adjusted)
Revenue items
Purchase accounting impact on maintenance 1,969 - 1,969 -
Purchase accounting impact on services $ 510 $ 58 $ 510
$ 474
Total revenue items 2,479 58 2,479 474
Cost of license items
Amortization of acquired software (3,883 ) (3,028 ) (8,885
) (8,354 )
Total cost of license items (3,883 ) (3,028 ) (8,885 ) (8,354 )
Cost of maintenance items
Amortization of purchased maintenance contracts (473 ) (631 ) (1,570
) (2,015 )
Stock-based compensation (327 ) (80 ) (861 ) (197
)
Total cost of maintenance items (800 ) (711 ) (2,431 ) (2,212 )
Cost of consulting items
Purchased accounting impact on consulting costs - (39 ) - (105
)
Amortization of intangible assets - - - 1
Stock-based compensation (1,649 ) (290 ) (2,914 )
(465 )
Total cost of consulting items (1,649 ) (329 ) (2,914 ) (569 )
Research and development items
Stock-based compensation (448 ) (162 ) (628 ) (460
)
Total research and development items (448 ) (162 ) (628 ) (460
)
Sales and marketing items
Stock-based compensation (2,947 ) (453 ) (5,797 )
(1,453 )
Total sales and marketing items (2,947 ) (453 ) (5,797 ) (1,453
)
General and administrative items
Integration expenses (1,153 ) - (1,153 ) -
Pre-merger claims reserve adjustment - 79 661 3,887
Stock-based compensation (887 ) (1,041 ) (3,055 )
(4,186 )
Total general and administrative items (2,040 ) (962 ) (3,547 )
(299 )
Restructuring (1,154 ) (3,534 ) (5,905 ) (11,020 )
Amortization of acquired intangibles (2,699 ) (1,890 ) (6,524 )
(6,875 )
Amortization of debt discount (2,122 ) (1,987 ) (6,365 ) (5,961
)
Tax provision
(2)
4,235 2,887 7,197 1,438
Total adjustments $ 15,986 $ 10,227 $ 38,278 $
36,239
(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
Media
+1-651-767-6154
joe.thornton@us.lawson.com
or
Barbara Doyle
Investors and Analysts
+1-651-767-4385
investor@lawson.com
Lawson Software Reports Third Quarter 2010 Financial Results
| Source: Lawson Software, Inc.
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