Lawson Software Reports First Quarter Fiscal 2008 Financial Results
Revenues increase 16 percent year-over-year
ST. PAUL, Minn.--(BUSINESS WIRE)--Oct. 4, 2007--Regulatory News:
Lawson Software, Inc. (Nasdaq:LWSN) today reported financial
results for its fiscal first quarter ended Aug. 31, 2007. Lawson
reported fiscal 2008 first quarter GAAP (generally accepted accounting
principles) revenues of $187.4 million, up 16 percent from revenues of
$161.8 million in its fiscal 2007 first quarter. Total revenues
increased in all three geographic regions. The company also reported
increases in all lines of revenues: license fee revenues increased 52
percent to $25.5 million, maintenance revenues rose 13 percent to
$78.5 million, and consulting revenues rose 11 percent to $83.4
million.
First quarter GAAP net income was $5.6 million, or $0.03 per
diluted share, compared with a net loss of $15.8 million, or $0.08 per
share, in the first quarter of fiscal 2007. The year-over-year
improvement in net income was primarily attributable to the 16 percent
increase in revenues combined with a modest 2 percent increase in
total cost of revenues and operating expenses. Net other income also
increased 36 percent, driven primarily by interest income earned on
cash and investments. Included in these GAAP net income and earnings
per share results are pre-tax expenses totaling $7.4 million for
amortization of acquired intangible assets, amortization of purchased
maintenance contracts, purchase accounting impact on consulting costs
and $2.0 million of non-cash stock-based compensation. Excluding these
expenses and including $0.6 million of maintenance and services
revenue impacted by purchase accounting adjustments made to the
opening deferred revenue balances acquired from Intentia, non-GAAP net
income was $12.6 million, or $0.07 per diluted share."Our financial results in the quarter demonstrate that we continue
to make solid progress," said Harry Debes, president and CEO. "The
first quarter showed strong year-over-year increases in revenue and
earnings. We met our guidance in every metric. These results, coupled
with a healthy pipeline, are evidence that we are on the right path
and that our future remains bright."
The U.S. dollar weakened relative to other major international
currencies in the three months ended Aug. 31, 2007, when compared with
rates in the corresponding period last year, contributing 3 percentage
points of the 16 percent year-over-year revenue growth. The currency
fluctuations also had the effect of increasing costs of revenues and
expenses as reported in U.S. dollars by approximately $6 million. The
company estimates that the net result of the currency impact was less
than a penny on net earnings per share.
Financial Guidance
For the second fiscal quarter 2008 ending Nov. 30, 2007, the
company estimates total GAAP revenues of $200 million to $205 million,
which includes license fee growth in the range of 20 percent to 30
percent over the previous year's comparable period. The company
anticipates GAAP fully diluted earnings per share to be in the range
of $0.02 to $0.04. Non-GAAP fully diluted earnings per share are
forecasted between $0.06 and $0.08, excluding approximately $9 million
of pre-tax expenses related to the amortization of acquisition-related
intangibles, amortization of purchased maintenance contracts and
stock-based compensation charges. The non-GAAP effective tax rate for
fiscal 2008 is anticipated to be in the range of 37 percent and 40
percent.
First Quarter Fiscal 2008 Key Metrics
-- Cash, cash equivalents and marketable securities at
quarter-end were $483.1 million (excluding $7.0 million of
restricted cash), compared to the May 31, 2007, balance of
$553.8 million (excluding $7.4 million of restricted cash).
-- The company repurchased 5.8 million shares of common stock in
the first quarter for $53.7 million at an average price of
$9.26 per share.
-- Total deferred revenues were $236.3 million, including $35.3
million of deferred license revenues, compared to the May 31,
2007, balance of $263.4 million, including $35.3 million of
deferred license revenue. Total deferred revenues declined
because of lower deferred maintenance revenue resulting from
the company's renewal dates now occurring in the third and
fourth quarters.
-- 294 total deals were signed at an average selling price of
$89,000, compared with 228 deals at an average selling price
of $113,000 in the first quarter fiscal 2007.
-- 27 new customer deals were signed at an average selling price
of $308,000, compared with 34 at an average selling price of
$352,000 in the prior year's quarter.
-- Six deals greater than $1 million and four deals between
$500,000 and $1 million were signed, compared to four deals
greater than $1 million and six deals in the $500,000 to $1
million range in the first quarter fiscal 2007.
-- The Americas region represented 55 percent of total revenue;
Europe, Middle East, and Africa region represented
approximately 41 percent of total revenue; and Asia-Pacific
represented 4 percent of total revenue.
-- Customer wins: Americas - American Public Media, Anne Arundel
County Public Schools, The City of Newport - Rhode Island, GCT
Global Container Terminals Inc., Heartland Health, MedAmerica,
Inc., and Public Health Foundation Enterprises, Inc.; EMEA -
Getinge AB, Helly Hanson and LR Health & Beauty Systems;
Asia-Pacific - NIDEC Corporation, Eagles Plumbing and
Lyttleton Port of Christchurch.
Conference Call and Webcast
The company will host a conference call and webcast to discuss its
first quarter results and future outlook at 4:30 p.m. Eastern Time
(3:30 p.m. Central Time) October 4, 2007. Interested parties should
dial 1-877-675-5901 (passcode Lawson104) and international callers
1-773-756-4803. A live webcast will be available on www.lawson.com.
Interested parties should access the conference call or webcast
approximately 10-15 minutes before the scheduled start time.
A replay will be available approximately one hour after the
conference call concludes and will remain available for one week. The
replay number is 1-866-411-1707 and international 1-203-369-0654. The
webcast will remain on www.lawson.com for approximately one week.
About Lawson Software
Lawson Software provides software and service solutions to
approximately 4,000 customers in manufacturing, distribution,
maintenance and service sector industries across 40 countries.
Lawson's solutions include Enterprise Performance Management, Supply
Chain Management, Enterprise Resource Planning, Customer Relationship
Management, Manufacturing Resource Planning, Enterprise Asset
Management and industry-tailored applications. Lawson solutions assist
customers in simplifying their businesses or organizations by helping
them streamline processes, reduce costs and enhance business or
operational performance. Lawson is headquartered in St. Paul, Minn.,
and has offices around the world. Visit Lawson online at
www.lawson.com.
Forward-Looking Statements
This press release contains forward-looking statements that
contain risks and uncertainties. These forward-looking statements
contain statements of intent, belief or current expectations of Lawson
Software and its management. Such forward-looking statements are not
guarantees of future results and involve risks and uncertainties that
may cause actual results to differ materially from the potentialresults discussed in the forward-looking statements. The company is
not obligated to update forward-looking statements based on
circumstances or events that occur in the future. Risks and
uncertainties that may cause such differences include but are not
limited to: uncertainties in Lawson's ability to realize synergies and
revenue opportunities anticipated from the Intentia International
acquisition; uncertainties in the software industry; uncertainties as
to when and whether the conditions for the recognition of deferred
revenue will be satisfied; global military conflicts; terrorist
attacks; pandemics, and any future events in response to these
developments; changes in conditions in the company's targeted
industries; increased competition and other risk factors listed in the
company's most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission. Lawson assumes no obligation to
update any forward-looking information contained in this press
release.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with
generally accepted accounting principles, or GAAP, Lawson Software
reports non-GAAP financial results. These non-GAAP results exclude
amortization of all acquisition-related intangibles, amortization of
purchased maintenance contracts, Intentia integration costs,
restructuring charges, certain stock-based compensation expenses and
other expenses. In addition, Lawson's non-GAAP financial results
include pro forma revenue for maintenance contracts acquired in the
Intentia acquisition for which the deferred revenue on Intentia's
balance sheet has been eliminated from GAAP results as part of the
purchase accounting for the acquisition. Lawson's management believes
the non-GAAP measures used in this press release are useful to
investors because they provide supplemental information that research
analysts frequently use to analyze software companies that have
recently made significant acquisitions. Management uses these non-GAAP
measures to evaluate its financial results, develop budgets and manage
expenditures. The method Lawson uses to produce non-GAAP results is
not computed according to GAAP, may differ from the methods used by
other companies, and should not be regarded as a replacement for
corresponding GAAP measures. Investors are encouraged to review the
reconciliation of these non-GAAP financial measures to the comparable
GAAP results, which is attached to this release.
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LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended % Increase
-------------------------
Aug 31, 2007 Aug 31, 2006 (Decrease)
------------ ------------ ----------
Revenues:
License fees $ 25,460 $ 16,768 52%
Maintenance 78,514 69,584 13%
Consulting 83,434 75,485 11%
------------ ------------
Total revenues 187,408 161,837 16%
------------ ------------
Cost of revenues:
Cost of license fees 6,753 5,042 34%
Cost of maintenance 15,660 14,688 7%
Cost of consulting 71,226 69,734 2%
------------ ------------
Total cost of revenues 93,639 89,464 5%
------------ ------------
Gross profit 93,769 72,373 30%
------------ ------------
Operating expenses:
Research and development 17,286 20,325 (15%)
Sales and marketing 42,291 36,892 15%
General and administrative 25,723 25,990 (1%)
Restructuring (145) 3,392 ---
Amortization of acquired
intangibles 3,216 2,389 35%
------------ ------------
Total operating expenses 88,371 88,988 (1%)
------------ ------------
Operating income (loss) 5,398 (16,615)
------------ ------------
Other income:
Interest income 6,863 3,593 91%
Interest expense (2,604) (267) ---
Other income 322 40
------------ ------------
Total other income 4,581 3,366 36%
------------ ------------
Income (loss) before income taxes 9,979 (13,249)
Provision for income taxes 4,398 2,543 73%
------------ ------------
Net income (loss) $ 5,581 $(15,792)
============ ============
Net income (loss) per share:
Basic $ 0.03 $ (0.08)
============ ============
Diluted $ 0.03 $ (0.08)
============ ============
Shares used in computing net
income (loss) per share:
Basic 181,512 185,845 (2%)
============ ============
Diluted 185,116 185,845 (0%)
============ ============
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LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
August 31, 2007 May 31, 2007
--------------- ------------
ASSETS
------------------------------------------
Current assets:
Cash and cash equivalents $ 304,637 $ 473,963
Restricted cash 270 555
Marketable securities 171,916 74,995
Trade accounts receivable, net 135,413 162,947
Income taxes receivable 8,017 5,183
Deferred income taxes 17,224 17,431
Prepaid expenses and other current assets 40,573 28,196
--------------- ------------
Total current assets 678,050 763,270
--------------- ------------
Long-term marketable securities 6,536 4,878
Restricted cash 6,723 6,889
Property and equipment, net 31,723 30,879
Goodwill 488,089 483,060
Other intangibles assets, net 127,488 133,456
Deferred income taxes 36,829 36,889
Other assets 19 ,879 19 ,786
--------------- ------------
Total assets $1,395,317 $1,479,107
=============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------------
Current liabilities:
Current portion of long-term debt $ 3,409 $ 3,322
Accounts payable 15,698 21,475
Accrued compensation and benefits 77,527 85,144
Income taxes payable 4,815 3,535
Deferred income taxes 4,621 4,605
Deferred revenue 225,640 247,587
Other current liabilities 56,409 72,986
--------------- ------------
Total current liabilities 388,119 438,654
--------------- ------------
Long-term debt, less current portion 244,920 245,228
Uncertain tax position - non-current 4,656 -
Deferred income taxes 12,392 12,558
Deferred revenue - non-current 10,638 15,817
Other long-term liabilities 12,004 11,622
--------------- ------------
Total liabilities 672,729 723,879
--------------- ------------
Stockholders' equity:
Common stock 2,002 1,994
Additional paid-in capital 831,396 822,740
Treasury stock, at cost (176,826) (123,207)
Retained earnings 23,336 17,755
Accumulated other comprehensive income 42,680 35,946
--------------- ------------
Total stockholders' equity 722,588 755,228
--------------- ------------
Total liabilities and stockholders' equity $1,395,317 $1,479,107
=============== ============
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LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
-------------------------
Aug 31, 2007 Aug 31, 2006
------------ ------------
Cash flows from operating activities:
Net income (loss) $ 5,581 $(15,792)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization 10,200 9,718
Amortization of debt issuance cost 315 -
Deferred income taxes 45 52
Provision for doubtful accounts, net of
recoveries 447 1,955
Warranty provision 1,056 419
Gain on the disposal of assets (308) -
Excess tax benefits from stock
transactions (1,021) (329)
Tax benefit from stockholder transactions
for option activity (84) (44)
Amortization of stock-based compensation 2,028 2,084
Amortization of discount and accretion of
premium on marketable securities (27) (151)
Changes in operating assets and liabilities,
net of effect from acquisitions:
Trade accounts receivable 28,372 5,982
Prepaid expenses and other assets (12,163) (2,827)
Accounts payable (6,041) (9,020)
Accrued and other liabilities (25,097) (13,855)
Income taxes payable/receivable 5,702 877
Deferred revenue (29,608) 3,919
------------ ------------
Net cash used in operating activities (20,603) (17,012)
------------ ------------
Cash flows from investing activities:
Cash received (paid) in conjunction with
acquisitions, net of cash acquired - (1,995)
Restricted cash designated 451 -
Purchases of marketable securities (179,555) (29,031)
Maturities of marketable securities 81,002 48,446
Cash proceeds from sale of investment 353 -
Purchases of property and equipment (2,901) (2,628)
------------ ------------
Net cash (used in) provided by investing
activities (100,650) 14,792
------------ ------------
Cash flows from financing activities:
Principal payments on long-term debt (406) (231)
Cash proceeds from long-term debt - 1,263
Payments on capital lease obligations (335) (493)
Exercise of stock options 3,604 2,461
Excess tax benefit from stock transactions 1,021 329
Proceeds received from employee stock
purchase plan 702 690
Repurchase of common stock from related
parties (36,800) -
Repurchase of common stock (16,863) -
------------ ------------
Net cash (used in) provided by financing
activities (49,077) 4,019
------------ ------------
Effect of exchange rate changes on cash and
cash equivalents 1,004 (146)
------------ ------------
Increase (decrease) in cash and cash
equivalents (169,326) 1,653
Cash and cash equivalents at beginning of
period 473,963 210,154
------------ ------------
Cash and cash equivalents at end of period $ 304,637 $211,807
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LAWSON SOFTWARE, INC.
Reconciliation of Consolidated GAAP Net (Loss) Income to Consolidated
Non-GAAP Net Income
(in thousands)
Three Months Ended Three Months Ended
Aug 31, 2007 Aug 31, 2006
Net income (loss), as
reported 5,581 (15,792)
Purchase accounting
impact on revenue (1) $ 620 $ 4,580
Purchase accounting
impact on consulting $ 93 $ -
Integration related (4) $ - $ 4,391
Amortization of purchased
maintenance contracts $ 822 $ 957
Stock based compensation $ 2,028 $ 2,085
Restructuring $ (145) $ 3,392
Amortization $ 6,671 $ 6,396
Tax provision (5) $ (3,027) $ (1,316)
--------------------------------------
Non-GAAP net income $ 12,643 $ 4,693
--------------------------------------
Three Months Ended Three Months Ended
Aug 31, 2007 Aug 31, 2006
Net income (loss), as
reported (2) 0.03 ( 0.08)
Purchase accounting
impact on revenue (1) 0.00 0.02
Purchase accounting
impact on consulting 0.00 -
Integration related (4) - 0.02
Amortization of purchased
maintenance contracts 0.00 0.01
Stock based compensation 0.01 0.01
Restructuring 0.00 0.02
Amortization 0.04 0.03
Tax provision (5) (0.02) ( 0.01)
--------------------------------------
Non-GAAP net income (2),(3) $ 0.07 $ 0.03
--------------------------------------
Weighted average shares -
basic 181,512 185,845
Weighted average shares -
diluted 185,116 189,448
Three Months Ended Three Months Ended
Aug 31, 2007 Aug 31, 2006
Purchase accounting
impact on revenue (1) $ 620 $ 4,580
Purchase accounting
impact on consulting $ 93 $ -
Integration related (4) $ - $ 4,391
Amortization of purchased
maintenance contracts $ 822 $ 957
Stock based compensation $ 2,028 $ 2,085
Restructuring $ (145) $ 3,392
Amortization $ 6,671 $ 6,396
--------------------------------------
subtotal pre-tax
adjustments $ 10,089 $ 21,801
--------------------------------------
Tax provision (5) $ (3,027) $ (1,316)
--------------------------------------
Impact on net income $ 7,062 $ 20,485
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(1) For the purchase accounting impact on deferred revenues for three
months ending August 31, 2007 and August 31, 2006, $502,000 and
$3,047,000, respectively relates to maintenance revenue and $118,000
and $1,533,000, respectively relates to consulting revenue.
(2) For calculation of EPS, basic weighted average shares are used
with a net loss and diluted weighted average shares are used with net
income.
(3) Three months ending August 31, 2007, and August 31, 2006 do not
total due to rounding.
(4) Represents integration expenses related to the merger with
Intentia International.
(5) Non-GAAP tax provision is calculated excluding the non-GAAP
adjustments on a jurisdictional basis.
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LAWSON SOFTWARE, INC.
SUPPLEMENTAL NON-GAAP MEASURES
INCREASE (DECREASE) IN GAAP AMOUNTS REPORTED
(in thousands)
(unaudited)
Three Months Ended
---------------------
August 31, August 31,
2007 2006
---------- ----------
Revenue items
Purchase accounting impact on maintenance $ 502 $ 3,047
Purchase accounting impact on consulting 118 1,533
---------- ----------
Total revenue items 620 4,580
Cost of license items
Amortization of acquired software (3,455) (2,594)
Non-cash stock-based compensation (7) -
---------- ----------
Total cost of license items (3,462) (2,594)
Cost of maintenance items
Amortization of purchased maintenance
contracts (822) (957)
Integration related (1) - ( 52)
Non-cash stock-based compensation (41) - ---------- ----------
Total cost of maintenance items (863) (1,009)
Cost of consulting items
Purchase accounting impact on consulting (93) -
Amortization - (1,413)
Integration related (1) - (1,343)
Non-cash stock-based compensation (218) (236)
---------- ----------
Total cost of consulting items (311) (2,992)
Research and development items
Integration related (1) - (33)
Non-cash stock-based compensation (164) (176)
---------- ----------
Total research and development items (164) (209)
Sales and marketing items
Integration related (1) - (926)
Non-cash stock-based compensation (366) (411)
---------- ----------
Total sales and marketing items (366) (1,337)
General and administrative items
Integration related (1) - (2,037)
Non-cash stock-based compensation (1,232) (1,262)
---------- ----------
Total general and administrative (1,232) (3,299)
Restructuring 145 (3,392)
Amortization of acquired intangibles (3,216) (2,389)
Tax provision (2) 3,027 1,316
Total Adjustments $ 7,062 $20,485
========== ==========
(1) Represents integration expenses related to the merger with
Intentia International.
(2) Based on a projected annual global effective tax rate analysis,
non GAAP Q1 tax provision was calculated to be 37%. Non- GAAP tax
provision is calculated excluding the non-GAAP adjustments in a
jurisdictional basis.
Use of Non-GAAP Financial Information
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. These non-GAAP results exclude amortization of all
acquisition-related intangibles, Intentia integration costs,
restructuring charges, certain stock-based compensation expenses and
other expenses. In addition, Lawson's non-GAAP financial results
include pro forma revenue for maintenance contracts acquired in the
Intentia acquisition for which the deferred revenue on Intentia's
balance sheet has been eliminated from GAAP results as part of the
purchase accounting for the acquisition. Lawson's management believes
the non-GAAP measures used in this press release are useful to
investors because they provide supplemental information that research
analysts frequently use to analyze software companies that have
recently made significant acquisitions. Management uses these non-
GAAP measures to evaluate its financial results, develop budgets and
manage expenditures. The method Lawson uses to produce non-GAAP
results is not computed according to GAAP, may differ from the
methods used by other companies, and should not be regarded as a
replacement for corresponding GAAP measures. Investors are encouraged
to review the reconciliation of these non-GAAP financial measures to
the comparable GAAP results, which is attached to this release.
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CONTACT: Lawson Software, Inc.
Media
Joe Thornton, 651-767-6154
joe.thornton@us.lawson.com
or
Investors and Analysts
Barbara Doyle, 651-767-4385
barbara.doyle@us.lawson.com
Lawson Software Reports First Quarter Fiscal 2008 Financial Results
| Source: Lawson Software, Inc.
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