Lawson Software Reports Preliminary Fourth Quarter of Fiscal 2011
Results
ST. PAUL, Minn.--(BUSINESS WIRE (http://www.businesswire.com/))--
Regulatory News:
Lawson Software, Inc. (Nasdaq: LWSN) today reported preliminary
financial results for its fourth quarter of fiscal year 2011, which
ended May 31, 2011.
Highlights of Lawson's preliminary Q4 financial results include:
· GAAP revenues of $208 - $212 million; non-GAAP revenues of $210 -
$214 million
· GAAP EPS of $0.06 - $0.07; non-GAAP EPS of $0.15 - $0.16
· Cash and cash equivalents balance of approximately $505 million
As reported under generally accepted accounting principles (GAAP),
preliminary fourth quarter fiscal 2011 revenues are anticipated to be in
the range of $208 to $212 million and fully diluted earnings per share
(EPS) are anticipated to be $0.06 to $0.07. These preliminary results
increased compared to fourth quarter of fiscal year 2010 revenues of
$197 million and fully diluted EPS of $0.02. With a strong ending cash
and cash equivalents balance, the company expects it will meet or exceed
its original guidance of $130 million of free cash flow in fiscal year
2011. Of the approximately $505 million of cash and cash equivalents
balance at year end, more than $300 million was available in the United
States.
Preliminary fourth quarter non-GAAP revenues are anticipated to be in
the range of $210 to $214 million and fully diluted EPS is anticipated
to be $0.15 to $0.16. These preliminary non-GAAP results increased
compared to fourth quarter of fiscal year 2010 non-GAAP revenues of $200
million and fully diluted EPS of $0.12.
These results are preliminary and may change as the company completes
its financial statement close process and year-end audit. Additionally,
if the pending transaction by GGC Software Holdings, Inc., an affiliate
of Golden Gate Capital and Infor, closes before the company completes
the audit, certain deal-related fees may be recorded for the period
ending May 31, 2011.
Preliminary fourth quarter non-GAAP revenues include the addition of
approximately $2 million of revenues impacted by purchase accounting
adjustments. Preliminary fourth quarter non-GAAP EPS includes the
addition of the revenues impacted by purchase accounting adjustments and
excludes $16 million of pre-tax expenses for amortization of acquired
intangibles, non-cash stock-based compensation and amortization of
purchased maintenance contracts. Non-GAAP EPS also excludes $4 million
of pre-tax non-operating expenses primarily related to non-cash
convertible note interest and includes a provision for income taxes
based upon a rate of 35 percent in fiscal 2011, which is applied
consistently throughout the year.
“Our preliminary fourth quarter results reflect our multi-year focus on
improving the operating performance of the company,” said Harry Debes,
president and chief executive officer. “We achieved nearly 20 percent
non-GAAP operating margin in the fourth quarter and we ended the fiscal
year with cash and cash equivalents exceeding $500 million. I would like
to thank our customers, partners and employees for their commitment to
Lawson and for their support over the years.”
Given the pending acquisition by GGC Software Holdings, Inc., an
affiliate of Golden Gate Capital and Infor, the company will not be
holding a conference call to discuss fourth quarter results and future
outlook.
About Lawson Software
Lawson Software is a global provider of enterprise software. We provide
business application software, maintenance and consulting to customers
primarily in specific services, trade and manufacturing/distribution
industries. We specialize in and target specific industries including
healthcare, services, public sector, equipment service management &
rental, manufacturing & distribution and consumer products industries.
Our software solutions include Enterprise Financial Management, Human
Capital Management, Business Intelligence, Asset Management, Enterprise
Performance Management, Supply Chain Management, Service Management,
Manufacturing Operations, Business Project Management and
industry-tailored applications. Our applications help automate and
integrate critical business processes, which enable our customers to
collaborate with their partners, suppliers and employees, 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 (http://cts.businesswire.com/ct/CT?id=smartlink&url=http%
3A%2F%2Fwww.lawson.com&esheet=6762273&lan=en-US&anchor=www.lawson.com&in
dex=1&md5=cc253600888bb6b5f2c45d588eead00b). For Lawson's listing on the
First North exchange in Sweden, Premium 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 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. Risks and uncertainties that may cause such
differences include but are not limited to: the risk that the pending
merger with GGC Software Holdings, Inc., an affiliate of Golden Gate
Capital and Infor, may not be completed on a timely basis, if at all;
the risk that the conditions to the consummation of the merger may not
be satisfied; the risk that the merger may involve unexpected costs,
liabilities or delays; the risk that expected benefits of the merger may
not materialize as expected; the risk that, prior to the completion of
the merger, Lawson's business may experience significant disruptions,
including loss of customers or employees, due to transaction-related
uncertainty or other factors; the fact that legal proceedings that have
been instituted and the possibility that additional legal proceedings
may be instituted against Lawson, its directors and/or others relating
to the merger and the outcome of such proceedings; the possible
occurrence of an event, change or other circumstance that could result
in termination of the merger agreement; uncertainties in the software
industry; uncertainties as to when and whether the conditions for the
recognition of deferred revenue will be satisfied; increased
competition; the impact of foreign currency exchange rate fluctuations;
changes in conditions in Lawson's targeted industries; the outcome of
pending litigation; the relief sought by Lawson with respect to the
judgment in the ePlus litigation might not be granted in whole or in
part; and other risk factors listed in Lawson's most recent Annual
Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q filed
with the Securities and Exchange Commission. Lawson assumes no
obligation to update any forward-looking information contained in this
press release.
Use of Non-GAAP Financial Measure Reconciliations
We believe our presentation of non-GAAP revenues, operating income,
operating margin, net income and diluted net income per share provide
meaningful insight into our operating performance and an alternative
perspective of our results of operations. We use these non-GAAP measures
to assess our operating performance, develop budgets, serve as a
measurement for incentive compensation awards and 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. These non-GAAP financial measures provide investors
an enhanced understanding of our operations, facilitate investors'
analysis and comparisons of our current and past results of operations,
facilitate comparisons of our operating results with those of our
competitors 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
U.S. GAAP and may differ from the methods used by other companies. These
non-GAAP results should not be regarded as a substitute for
corresponding U.S. 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 U.S. GAAP and the reconciliation of the supplemental non-GAAP
financial measures to the comparable U.S. GAAP results provided for each
period presented, which are attached to this release.
The non-GAAP adjustments we make to our reported U.S. GAAP results are
primarily related to purchase accounting and other acquisition matters,
significant non-cash accounting charges and restructuring charges.
Our primary non-GAAP reconciling items are as follows:
Purchase Accounting Impact on Revenue - Our non-GAAP financial results
include pro forma adjustments to increase maintenance and consulting
revenues that we would have recognized if we had not adjusted acquired
deferred revenues to their fair values as required by U.S.GAAP. Certain
deferred revenues for maintenance and consulting on the acquired
entity's balance sheet, at the time of the acquisition, were eliminated
from U.S. GAAP results as part of the purchase accounting for the
acquisition. As a result, our U.S. GAAP results do not, in management's
view, reflect all of our maintenance and consulting activity. We believe
the inclusion of the non-GAAP 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.
Share-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 options, 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 that we use to manage our business. 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 acquisition of Intentia, 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 this reserve was
established in purchase accounting, the original charge was not
reflected in our operating results. 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.
Transaction and Integration Costs - We have incurred various transaction
and integration costs related to our acquisitions and the potential
merger transaction with GGC Software Holdings, Inc, an affiliate of
Golden Gate Capital and Infor. The costs of integrating the operations
of acquired businesses and Lawson are incremental to our historical
costs and are charged to our U.S. GAAP results of operations in the
periods incurred. Beginning in fiscal 2010, acquisition related
transaction costs have also been charged to our U.S. GAAP results of
operations. 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 or other strategic alternatives. These costs
are generally reflected in general and administrative expenses in our
Consolidated Statements of Operations. In addition, these costs include
the change in the estimated fair value of the contingent consideration
we have recorded in conjunction with our acquisition of Enwisen in
December 2010 which is reflected in other income (expense), net. We
believe that the exclusion of the non-recurring acquisition related and
integration costs provides investors a useful alternative view of our
results of operations and facilitates comparisons of our results
period-over-period.
Pension Gain - We have implemented certain modifications to our pension
plan in Norway. These modifications resulted in a curtailment of
benefits under the plan and resulted in our recording a gain related to
the change in all active participants' projected benefit obligations
resulting from the curtailment. In addition, these modifications led to
a settlement of active participants' projected benefit obligations and
resulted in our recording an additional gain related to the pension
settlement. We do not consider these gains in our assessment of our
operating performance. We believe that the exclusion of the
non-recurring pension gains provide investors a useful 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 restructuring charges provides investors a useful alternative
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 of Acquired Intangibles - 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 future
acquisitions. This makes comparisons of our current and historic
operating performance difficult. Therefore, we exclude such expenses
when analyzing the results of our operations including those of acquired
entities. We believe that the exclusion of the amortization expense of
acquired 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 non-GAAP adjustments.
Non-Cash Interest Expense Related to Convertible Debt - We have excluded
the incremental non-cash interest expense related to our $240.0 million
2.5% senior convertible notes that we are required to recognize under
U.S. GAAP for convertible debt securities from our non-GAAP results of
operations for all periods presented. This accounting guidance requires
us to recognize 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.
Bankruptcy Settlement - We have excluded the net gain we recorded on
settlement of certain claims that arose due to Lehman OTC's bankruptcy.
These claims related to our business relationships with Lehman OTC,
including a convertible note hedge transaction and a warrant transaction
both entered into as part of the issuance of our senior convertible
notes and an accelerated share repurchase transaction. As a result of
the payments and collections related to the settlement of these
obligations, we recorded a net gain which we do not consider in our
assessment of our operating performance. We believe that the exclusion
of the net gain from this non-recurring bankruptcy settlement provides
investors a useful alternative view of our results of operations and
facilitates comparisons of our results period-over-period.
Non-GAAP Tax Provision Adjustments - The non-GAAP tax provision
adjustments are due to the increase in non-GAAP taxable income as
compared to U.S. GAAP taxable income resulting from the non-GAAP
reconciling items detailed in the below table and the jurisdictional mix
of non-GAAP and U.S. GAAP taxable income. The non-GAAP tax provision
adjustments are made to reflect the annual global effective non-GAAP tax
rate for each period.
LAWSON SOFTWARE, INC.
RECONCILIATIONS OF SELECTED PRELIMINARY GAAP TO NON-GAAP FINANCIAL
MEASURES
(in thousands, except per share data)
(unaudited)
Reconciliation of GAAP revenues to equivalent non-GAAP measures
Three Months
Ended
May 31,
2011
2010
Low
High
GAAP revenue $ 208,000
$ 212,000 $ 197,027
Non-GAAP revenue adjustments:
Purchase accounting impact on maintenance revenues -
- 2,305
Purchase accounting impact on consulting revenues 2,000
2,000 779
Non-GAAP revenue adjustments 2,000
2,000 3,084
Non-GAAP revenue $ 210,000
$ 214,000 $ 200,111
Reconciliation of GAAP net income per diluted share to non-GAAP net
income per diluted share
Three Months
Ended
May 31,
2011
2010
Low
High
GAAP net income per diluted share $ 0.06
$ 0.07 $ 0.02
Purchase accounting impact on revenue 0.01
0.01 0.02
Pre-tax expenses 0.10
0.10 0.11
Non-cash interest expense & other 0.02
0.02 0.01
Tax provision adjustment(1) (0.04 )
(0.04 ) (0.03 )
Non-GAAP net income per diluted share (2) $ 0.15
$ 0.16 $ 0.12
(1) Based on a projected annual global effective tax rate analysis, the
non-GAAP tax provision was
calculated to be 35% for fiscal 2011 and 37% for fiscal 2010. Non-GAAP
tax provision is calculated
by reflecting the non-GAAP adjustments on a jurisdictional basis.
(2) Net income per share columns may not total due to rounding.
Lawson Software
Investor Contacts:
Barbara Doyle, +1-651-767-4385
investor@lawson.com (investor@lawson.com)
or
Heather Pribyl, +1-651-767-6459
investor@lawson.com (investor@lawson.com)
or
Media Contacts:
Terry Blake, +1-651-767-4766
terry.blake@us.lawson.com (terry.blake@us.lawson.com)
or
Joe Thornton, +1-651-767-6154
joe.thornton@us.lawson.com (joe.thornton@us.lawson.com)
Lawson Software Reports Preliminary Fourth Quarter of Fiscal 2011 Results
| Source: Lawson Software, Inc.
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