Lawson Software Reports Fourth Quarter Fiscal 2009 Financial Results
Q4 2009 GAAP EPS of $0.06 and non-GAAP EPS of $0.10
ST. PAUL, Minn.--(BUSINESS WIRE)-- Regulatory News:
Lawson Software, Inc. (Nasdaq: LWSN) today reported financial results for its
fourth quarter of fiscal year 2009, which ended May 31, 2009. Lawson reported
revenues of $186.2 million, down 20 percent from the fourth quarter of fiscal
2008, or 11 percent at constant currency. Currency fluctuations negatively
impacted revenues as foreign currencies weakened substantially over the past
year compared to the U.S. dollar. License fees declined 19 percent, or 12
percent adjusted for currency, principally from a lower level of software sales
to manufacturing customers in the Europe, Middle East and Africa region.
Consulting revenues declined 34 percent, or 25 percent adjusted for currency,
driven primarily by fewer billable consultants and reduced software license
sales throughout the year resulting in lower bookings for consulting and
implementation services. Maintenance revenues declined 4 percent due to
currency, but increased 4 percent on a constant currency basis.
Fourth quarter GAAP net income of $9.8 million, or $0.06 per diluted share
increased compared to net income of $3.7 million, or $0.02 per diluted share in
the fourth quarter of fiscal 2008, primarily driven by a $3.4 million benefit in
the provision for income taxes reflecting a reduction in the company's valuation
allowance against certain foreign tax assets. This adjustment increased net
earnings per diluted share by approximately $0.02. Other impacts on earnings per
share include the following:
Gross margin as a percent of revenues increased to 55 percent from 53 percent a
year ago as a higher mix of maintenance revenues to total revenues offset a
lower consulting margin.
Operating expenses, including research and development, sales and marketing,
general and administrative and amortization of acquired intangibles, declined by
$25.8 million but were partially offset by an $8.9 million restructuring charge
in the quarter.
Interest income declined $2.4 million, or 84 percent, due to lower earned
interest on investments, consistent with marketplace declines in interest rates.
Other expenses decreased as the fourth quarter of fiscal 2008 included a $6.1
million impairment charge for auction rate securities.
The company estimates currency fluctuations had a positive impact of
approximately $0.01 on net earnings per diluted share for the fourth quarter.
Included in GAAP net income and earnings per diluted share results are pre-tax
expenses of $14.9 million for restructuring, amortization of acquired intangible
assets, non-cash stock-based compensation, amortization of purchased maintenance
contracts, purchase accounting impact on consulting costs and pre-merger claims
reserve adjustment. Excluding these expenses and including $0.1 million of
revenue impacted by purchase accounting adjustments, non-GAAP net income for the
fourth quarter of fiscal 2009 was $17 million, or $0.10 per diluted share.
Non-GAAP net income per diluted share includes a non-GAAP provision for income
taxes based upon an estimated rate of 35 percent. The company estimates currency
fluctuations had no material impact on non-GAAP net earnings per diluted share
for the fourth quarter. Non-GAAP earnings per diluted share of $0.10 were flat
compared to the fourth quarter of fiscal 2008.
“Our fourth quarter completed a successful year given the environment,” said
Harry Debes, Lawson president and chief executive officer. “During our fiscal
year we invested in new products and services to help our customers get more
value out of their existing Lawson solutions. We redefined the user experience
with Lawson Smart Office and Lawson Enterprise Search. We continued to deepen
our focus on our vertical markets, and we successfully launched Lawson's
industry-specific solution for the Equipment Service Management and Rental
market. We also aligned our costs early in our fiscal year to respond to a
weakening global economy. All these efforts enabled Lawson to achieve an annual
non-GAAP operating margin of 12 percent and EPS of $0.35, both of which are the
highest in our public company history.”
Twelve Months Ended May 31, 2009
Total revenues for the twelve months ended May 31, 2009 were $757.3 million,
down 11 percent, or 6 percent adjusted for currency, from revenues of $852
million during the same fiscal 2008 period. GAAP net income was $18.9 million,
or $0.11 per diluted share, increasing from net income of $13.7 million, or
$0.08 per diluted share in the comparable fiscal 2008 period. Other factors
impacting earnings per share include the following:
Gross margin as a percent of revenues increased to 52 percent from 51 percent in
fiscal 2008 due to a higher mix of maintenance revenues to total revenues and an
increase maintenance margin which offset a lower consulting margin.
Operating expenses, including research and development, sales and marketing,
general and administrative and amortization of acquired intangibles, declined by
$54.7 million but were partially offset by $20 million of restructuring expense.
Interest income declined $13.8 million, or 69 percent, due to lower earned
interest on investments, consistent with marketplace declines in interest rates.
Other expense decreased as fiscal 2008 included impairment charges of $18.4
million for auction rate securities.
The provision for income taxes declined 21 percent primarily because the prior
fiscal year had an impairment charge for auction rate securities with no
associated tax benefit recorded.
The company estimates currency fluctuations had a positive impact of
approximately $0.01 on net earnings per diluted share for the twelve-month
period.
Included in the twelve-month GAAP results are pre-tax expenses of $46.1 million
for restructuring, amortization of acquired intangible assets, non-cash
stock-based compensation, amortization of purchased maintenance contracts,
purchase accounting impact on consulting costs and pre-merger claims reserve
adjustments. Excluding these expenses and including $0.5 million of revenue
impacted by purchase accounting adjustments, non-GAAP net income for the twelve
months ended May 31, 2009, was $58.7 million, or $0.35 per diluted share. The
company estimates currency fluctuations had a positive impact of approximately
$0.01 on non-GAAP net earnings per diluted share for the twelve-month period.
Non-GAAP net income per diluted share includes a non-GAAP provision for income
taxes based upon an estimated rate of 35 percent. Non-GAAP earnings per diluted
share of $0.35 increased year-over-year from $0.33 for the twelve months ended
May 31, 2008.
Financial Guidance
For the first quarter of fiscal 2010, which ends Aug. 31, 2009, the company is
providing guidance using foreign exchange rates as of the end of June 2009. The
company estimates total revenues of $160 million to $165 million. The company
anticipates GAAP fully diluted earnings per share will be $0.01 to $0.03.
Non-GAAP fully diluted earnings per share are forecasted to be in the range of
$0.05, excluding approximately $9 million of pre-tax expenses related to the
amortization of acquired intangible assets, non-cash stock-based compensation,
incremental non-cash convertible note interest, and amortization of purchased
maintenance contracts. The company also forecasts total net other expense of
approximately $1.2 million per quarter. The non-GAAP effective tax rate for the
first quarter is estimated at 37 percent, which the company expects to apply
consistently throughout the fiscal year. The company is not providing financial
guidance for the full fiscal year ending May 31, 2010 but expects to modestly
improve non-GAAP operating margin over fiscal 2009.
Implementation of FSP APB 14-1
The anticipated first quarter GAAP earnings per diluted share include $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 interest is excluded from the company's non-GAAP results. For the
fiscal year the incremental non-cash interest expense related to the company's
convertible notes is anticipated to be $8.3 million.
Fourth Quarter Fiscal 2009 Key Metrics
Key customer wins:
Americas - Alternative Apparel; CML Healthcare; HealthEast Care System; Manitoba
Lotteries Corporation; Oklahoma State University Medical Center; United Radio,
Inc.; and Wheeler Machinery Co.
EMEA - K Lund Offshore AS and Reynolds Catering Supplies Ltd.
Asia-Pacific -Ryco Hydraulics; South Island Garment Sdn Bhd; and Teknicast Sdn
Bhd.
Additional key metrics are available on Lawson's investor website at
www.lawson.com/investor
Conference Call and Webcast
The company will host a conference call and webcast to discuss its fourth
quarter results and future outlook at 5:00 p.m. EDT (4:00 p.m. CDT) July 9,
2009. Interested parties may also listen to the call by dialing 1-888-790-3441
(or 1-312-470-0136) and using the passcode "LWSN." Interested parties should
access the webcast 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 1-800-294-2480 or 1-203-369-3227 for international callers. The
webcast will also remain on www.lawson.com/investor for approximately one week.
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 First 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 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
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 FSP APB 14-1
from our non-GAAP results of operations beginning with the three-month period
ending August 31, 2009. This FSP 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 provide investors useful information relating to the cost
structure of our 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.
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.
Impairment of long-term investments - The liquidity and fair value of our
investments in marketable securities, including Auction Rate Securities (ARS),
were negatively impacted in fiscal 2008 by the uncertainty in the credit markets
and exposure to the financial condition of bond insurance companies. As a
result, during the second, third and fourth quarters of fiscal 2008 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.
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
May 31, 2009 May 31, 2008
Revenues:
License fee $ 33,616 $ 41,722 (19 %) (12 %)
Maintenance 85,204 88,930 (4 %) 4 %
Consulting 67,387 102,377 (34 %) (25 %)
Total revenues 186,207 233,029 (20 %) (11 %)
Cost of revenues:
Cost of license fees 7,509 8,646 (13 %) (4 %)
Cost of maintenance 15,476 17,006 (9 %) 2 %
Cost of consulting 60,710 83,826 (28 %) (17 %)
Total cost of revenues 83,695 109,478 (24 %) (13 %)
Gross profit 102,512 123,551 (17 %) (10 %)
Operating expenses:
Research and development 19,708 24,125 (18 %) (7 %)
Sales and marketing 39,295 51,560 (24 %) (16 %)
General and administrative 19,769 27,314 (28 %) (19 %)
Restructuring 8,934 (529 ) +++ +++
Amortization of acquired intangibles 2,017 3,591 (44 %)
(34 %)
Total operating expenses 89,723 106,061 (15 %) (6 %)
Operating income 12,789 17,490 (27 %) (33 %)
Other income (expense), net:
Interest income 446 2,829 (84 %) (84 %)
Interest expense (1,951 ) (1,980 ) (2 %) 0 %
Other income (expense), net (59 ) (5,210 ) (99 %) (99 %)
Total other income (expense), net (1,564 ) (4,361 ) (64 %)
(134 %)
Income before income taxes 11,225 13,129 (15 %) (23 %)
Provision for income taxes 1,380 9,453 (85 %) (84 %)
Net income $ 9,845 $ 3,676 168 % 65 %
Net income per share:
Basic $ 0.06 $ 0.02
Diluted $ 0.06 $ 0.02
Weighted average common shares outstanding:
Basic 162,520 173,272 (6 %)
Diluted 164,697 176,475 (7 %)
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.
LAWSON SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in USD thousands, except per share data)
(unaudited)
Twelve Months Ended % Increase
(Decrease)
as reported
% Increase
(Decrease)
at constant
currency
May 31, 2009 May 31, 2008
Revenues:
License fees $ 109,683 $ 132,156 (17 %) (12 %)
Maintenance 350,202 336,779 4 % 8 %
Consulting 297,443 382,991 (22 %) (17 %)
Total revenues 757,328 851,926 (11 %) (6 %)
Cost of revenues:
Cost of license fees 24,361 28,782 (15 %) (13 %)
Cost of maintenance 64,533 65,885 (2 %) 4 %
Cost of consulting 269,738 318,253 (15 %) (9 %)
Total cost of revenues 358,632 412,920 (13 %) (8 %)
Gross profit 398,696 439,006 (9 %) (5 %)
Operating expenses:
Research and development 82,377 85,374 (4 %) 4 %
Sales and marketing 162,975 189,336 (14 %) (10 %)
General and administrative 79,765 100,259 (20 %) (17 %)
Restructuring 19,954 (731 ) +++ +++
Amortization of acquired intangibles 8,892 13,690 (35 %)
(30 %)
Total operating expenses 353,963 387,928 (9 %) (4 %)
Operating income 44,733 51,078 (12 %) (15 %)
Other income (expense), net:
Interest income 6,282 20,086 (69 %) (68 %)
Interest expense (7,939 ) (8,844 ) (10 %) (10 %)
Other income (expense), net 532 (17,455 ) (103 %) (103 %)
Total other income (expense), net (1,125 ) (6,213 ) (82 %)
(84 %)
Income before income taxes 43,608 44,865 (3 %) (4 %)
Provision for income taxes 24,691 31,158 (21 %) (17 %)
Net income $ 18,917 $ 13,707 38 % 22 %
Net income per share:
Basic $ 0.12 $ 0.08
Diluted $ 0.11 $ 0.08
Weighted average common shares outstanding:
Basic 164,011 177,283 (7 %)
Diluted 166,393 180,580 (8 %)
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.
LAWSON SOFTWARE, INC.
CONSOLIDATED BALANCE SHEETS
(in USD thousands)
(unaudited)
May 31, 2009 May 31, 2008
ASSETS
Current assets:
Cash and cash equivalents $ 414,815 $ 435,121
Restricted cash - current 9,208 746
Marketable securities - 5,453
Short term investments - 45,236
Trade accounts receivable, net 152,666 184,047
Income taxes receivable 4,242 10,309
Deferred income taxes - current 18,909 16,839
Prepaid expenses and other current assets 52,255 44,470
Total current assets 652,095 742,221
Restricted cash - non-current 1,786 2,038
Property and equipment, net 55,641 45,044
Goodwill 470,274 546,578
Other intangibles assets, net 91,701 120,194
Deferred income taxes - non-current 49,565 35,907
Other assets 13,903 18,614
Total assets $ 1,334,965 $ 1,510,596
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Long-term debt - current $ 4,591 $ 3,849
Accounts payable 14,018 23,481
Accrued compensation and benefits 73,976 89,733
Income taxes payable 4,513 8,860
Deferred income taxes - current 5,652 7,399
Deferred revenue - current 279,041 298,509
Other current liabilities 56,308 49,318
Total current liabilities 438,099 481,149
Long-term debt - non-current 243,355 244,734
Deferred income taxes - non-current 16,827 12,529
Deferred revenue - non-current 13,482 14,097
Other long-term liabilities 14,781 14,528
Total liabilities 726,544 767,037
Stockholders' equity:
Common stock 2,018 2,010
Additional paid-in capital 845,522 838,141
Treasury stock, at cost (324,651 ) (225,598 )
Retained earnings 50,379 31,462
Accumulated other comprehensive income 35,153 97,544
Total stockholders' equity 608,421 743,559
Total liabilities and stockholders' equity $ 1,334,965 $ 1,510,596
LAWSON SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in USD thousands)
(unaudited)
Three Months Ended Twelve Months Ended
May 31, 2009 May 31, 2008 May 31, 2009 May 31, 2008
Cash flows from operating activities:
Net income $ 9,845 $ 3,676 $ 18,917 $ 13,707
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 10,378 11,112 39,647 43,295
Amortization of debt issuance costs 321 322 1,284 1,288
Deferred income taxes (9,558 ) 7,919 (3,645 ) 8,599
Provision for doubtful accounts 411 3,354 1,489 1,110
Warranty provision 2,722 1,805 7,426 6,398
Impairment on long-term investments - 6,118 - 18,414
Net gain on disposal of assets - - - (311 )
Excess tax benefits from stock transactions (200 ) (103 ) (648 )
(2,128 )
Stock-based compensation expense 1,758 2,060 8,519 6,743
Amortization of discounts and premiums on marketable securities - - 6
(92 )
Changes in operating assets and liabilities:
Trade accounts receivable (5,953 ) 23,232 25,843 (6,432 )
Prepaid expenses and other assets (5,068 ) (7,638 ) (7,351 )
(19,498 )
Accounts payable 3,233 (50 ) (7,660 ) 73
Accrued expenses and other liabilities 14,629 (15,428 ) 6,731
(33,594 )
Income taxes payable/receivable 5,758 (1,485 ) 2,907 9,911
Deferred revenue 85,036 92,930 (22,177 ) 34,156
Net cash provided by operating activities 113,312 127,824
71,288 81,639
Cash flows from investing activities:
Cash paid in conjunction with acquisitions, net of cash acquired -
(20,253 ) - (20,253 )
Change in restricted cash 572 513 (8,105 ) 4,660
Purchases of marketable securities and investments - 3 - (205,095
)
Proceeds from maturities and sales of marketable securities and investments
(7 ) 53 50,657 216,393
Purchases of property and equipment (8,803 ) (7,145 )
(29,333 ) (22,992 )
Net cash provided by (used in) investing activities (8,238 ) (
26,829 ) 13,219 (27,287 )
Cash flows from financing activities:
Principal payments on long-term debt (524 ) (927 ) (1,747 )
(2,267 )
Payments on capital lease obligations (156 ) (355 ) (1,043 )
(1,379 )
Cash proceeds from exercise of stock options 574 420 2,531 6,910
Excess tax benefit from stock transactions 200 103 648 2,128
Cash proceeds from employee stock purchase plan 541 778 2,698
2,990
Repurchase of common stock from related parties (8,875 ) - (8,875 )
(36,800 )
Repurchase of common stock - other (3,163 ) - (94,129 )
(68,829 )
Net cash provided by (used in) financing activities (11,403 ) 19
(99,917 ) (97,247 )
Effect of exchange rate changes on cash and cash equivalents 12,906
1,333 (4,896 ) 4,053
Net increase (decrease) in cash and cash equivalents 106,577 102,347
(20,306 ) (38,842 )
Cash and cash equivalents at beginning of period 308,238 332,774
435,121 473,963
Cash and cash equivalents at end of period $ 414,815 $ 435,121
$ 414,815 $ 435,121
LAWSON SOFTWARE, INC.
RECONCILIATION OF CONSOLIDATED GAAP NET INCOME TO CONSOLIDATED NON-GAAP NET
INCOME
(in USD thousands)
Three Months Ended Twelve Months Ended
May 31, 2009 May 31, 2008 May 31, 2009 May 31, 2008
Net income, as reported $ 9,845 $ 3,676 $ 18,917 $ 13,707
Purchase accounting impact on revenue (1) 63 408 538 1,670
Purchase accounting impact on consulting cost 45 139 150 525
Amortization of purchased maintenance contracts 592 726 2,607
3,369
Stock-based compensation 1,758 2,059 8,519 6,741
Pre-merger claims reserve adjustment (1,134 ) - (5,021 ) (3,827
)
Restructuring 8,934 (529 ) 19,954 (731 )
Amortization 4,706 6,473 19,934 25,988
Impairment on long-term investments - 6,117 - 18,413
Tax provision (4) (7,786 ) (1,452 ) (6,910 ) (6,237
)
Non-GAAP net income $ 17,023 $ 17,617 $ 58,688 $
59,618
RECONCILIATION OF CONSOLIDATED GAAP TO CONSOLIDATED NON-GAAP PER SHARE EFFECT
Three Months Ended Twelve Months Ended
May 31, 2009 May 31, 2008 May 31, 2009 May 31, 2008
Net income, as reported (2) $ 0.06 $ 0.02 $ 0.11 $ 0.08
Purchase accounting impact on revenue (1) 0.00 0.00 0.00 0.01
Purchase accounting impact on consulting cost 0.00 0.00 0.00 0.00
Amortization of purchased maintenance contracts 0.00 0.00 0.02
0.02
Stock-based compensation 0.01 0.01 0.05 0.04
Pre-merger claims reserve adjustment (0.01 ) - (0.03 ) (0.02 )
Restructuring 0.05 (0.00 ) 0.12 0.00
Amortization 0.03 0.04 0.12 0.14
Impairment on long-term investments - 0.03 - 0.10
Tax provision (4) (0.05 ) (0.01 ) (0.04 ) (0.03 )
Non-GAAP net income per share (2)(3)
$ 0.10 $ 0.10 $ 0.35 $ 0.33
Weighted average shares - basic 162,520 173,272 164,011 177,283
Weighted average shares - diluted 164,697 176,475
166,393 180,580
SUMMARY OF NON-GAAP ITEMS
(in USD thousands)
Three Months Ended Twelve Months Ended
May 31, 2009 May 31, 2008 May 31, 2009 May 31, 2008
Purchase accounting impact on revenue (1) $ 63 $ 408 $ 538 $
1,670
Purchase accounting impact on consulting cost 45 139 150 525
Amortization of purchased maintenance contracts 592 726 2,607
3,369
Stock-based compensation 1,758 2,059 8,519 6,741
Pre-merger claims reserve adjustment (1,134 ) - (5,021 ) (3,827
)
Restructuring 8,934 (529 ) 19,954 (731 )
Amortization 4,706 6,473 19,934 25,988
Impairment on long-term investments - 6,117 -
18,413
subtotal pre-tax adjustments 14,964 15,393 46,681
52,148
Tax provision (4) (7,786 ) (1,452 ) (6,910 ) (6,237
)
Impact on net income $ 7,178 $ 13,941 $ 39,771 $
45,911
(1) For the purchase accounting impact on deferred revenues for three months
and twelve months ended May 31, 2009, $63,000 and $538,000, respectively,
relates to maintenance revenues.
(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) The non-GAAP tax 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 Twelve Months Ended
May 31, 2009 May 31, 2008 May 31, 2009 May 31, 2008
Revenue items
Purchase accounting impact on maintenance $ 63 $ 366 $ 538 $
1,438
Purchase accounting impact on consulting - 42 -
232
Total revenue items 63 408 538 1,670
Cost of license items
Amortization of acquired software (2,689 ) (2,883 ) (11,043 )
(12,298 )
Stock-based compensation - (3 ) - (19 )
Total cost of license items (2,689 ) (2,886 ) (11,043 ) (12,317
)
Cost of maintenance items
Amortization of purchased maintenance contracts (592 ) (726 ) (2,607
) (3,369 )
Stock-based compensation (77 ) (40 ) (274 ) (119 )
Total cost of maintenance items (669 ) (766 ) (2,881 ) (3,488 )
Cost of consulting items
Purchased accounting impact on consulting cost (45 ) (139 ) (150 )
(525 )
Amortization - - 1 -
Stock-based compensation (293 ) (189 ) (758 ) (602
)
Total cost of consulting items (338 ) (328 ) (907 ) (1,127 )
Research and development items
Stock-based compensation (174 ) (127 ) (634 ) (452
)
Total research and development items (174 ) (127 ) (634 ) (452 )
Sales and marketing items
Stock-based compensation (164 ) (350 ) (1,617 )
(1,104 )
Total sales and marketing items (164 ) (350 ) (1,617 ) (1,104 )
General and administrative items
Pre-merger claims reserve adjustment 1,134 - 5,021 3,827
Stock-based compensation (1,050 ) (1,350 ) (5,236 )
(4,445 )
Total general and administrative items 84 (1,350 ) (215 ) (618 )
Restructuring (8,934 ) 529 (19,954 ) 731
Amortization of acquired intangibles (2,017 ) (3,590 ) (8,892 )
(13,690 )
Other income (expense), impairment on long-term investments - 6,117 -
18,413
Tax provision (1) (7,786 ) (1,452 ) (6,910 ) (6,237
)
Total adjustments $ 7,178 $ 13,941 $ 39,771 $ 45,911
(1) At the beginning of the fiscal year, the company computed an estimated
annual global effective non-GAAP tax rate of 35%. The non-GAAP tax rate is
calculated excluding non-GAAP adjustments on a jurisdictional basis. This
estimated 35% tax rate will be utilized each quarter throughout fiscal year
2009. The company's estimated fiscal year 2010 non-GAAP tax rate is 37%.
Lawson Software
Media:
Joe Thornton, +1-651-767-6154
joe.thornton@us.lawson.com
or
Investors and Analysts:
Barbara Doyle, +1-651-767-4835
barbara.doyle@us.lawson.com
or
Investors and Analysts:
Heather Pribyl, +1-651-767-6459
heather.pribyl@us.lawson.com
Lawson Software Reports Fourth Quarter Fiscal 2009 Financial Results
| Source: Lawson Software, Inc.
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