Lawson Software Reports Second Quarter Fiscal 2009 Financial Results
GAAP net income rises 13 percent
ST. PAUL, Minn.--(BUSINESS WIRE)-- Regulatory News:
Lawson Software, Inc. (Nasdaq: LWSN) today reported financial results for its
second quarter of fiscal year 2009, which ended Nov. 30, 2008. Lawson reported
revenues for the quarter of $206.4 million, down 6 percent from revenues of
$218.6 million in its fiscal 2008 second quarter. Currency fluctuations
negatively impacted GAAP and non-GAAP revenues by 5 percent as foreign
currencies weakened substantially in the quarter compared to the U.S. dollar.
License fees declined 9 percent, or 4 percent adjusted for currency, reflecting
a lower level of software sales driven by the global economic conditions.
Consulting revenues declined 15 percent, or 10 percent adjusted for currency,
due to fewer billable hours resulting from a reduced number of consultants
particularly in EMEA. Partially offsetting the decline in license fees and
consulting revenues was a 6 percent increase, or 10 percent adjusted for
currency, in maintenance revenues driven by customer renewals at higher average
prices.
Second quarter GAAP net income was $4.2 million, or $0.03 per diluted share,
compared to net income of $3.7 million, or $0.02 per diluted share, in the
second quarter of fiscal 2008. General and administrative expenses decreased
partially due to a $1.6 million favorable insurance settlement related to
pre-merger litigation claims. When combined with reductions in sales and
marketing and lower amortization expense for acquired intangibles these lower
operating expenses offset a $7.7 million restructuring charge. Interest income
declined due to lower investment balances and yields. Other income improved as
the second quarter of fiscal 2008 included a $4.2 million impairment charge for
auction rate securities. Net income also improved due to a decrease in the
provision for income taxes. The company estimates currency fluctuations had a
positive impact of less than $0.01 on net earnings per diluted share for the
second quarter.
Included in GAAP net income and earnings per diluted share results are pre-tax
expenses of $11.5 million for restructuring, amortization of acquired intangible
assets, amortization of purchased maintenance contracts and pre-merger claims
reserve adjustments as well as $2.9 million of non-cash stock-based
compensation. Excluding these expenses and including $0.2 million of revenue
impacted by purchase accounting adjustments, non-GAAP net income for the second
quarter of fiscal 2009 was $16.6 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 impact on non-GAAP net earnings per diluted share for the
second quarter. Non-GAAP earnings per diluted share of $0.10 increased
year-over-year from $0.09 in the second quarter of fiscal 2008.
“Lawson delivered solid results in the quarter despite the difficult economic
environment,” said Harry Debes, Lawson president and chief executive officer.
“We met our revenue guidance and the high-end of our earnings guidance. Our
primary goal for the quarter was to improve non-GAAP operating margin. We
accomplished that goal, and achieved the highest level of operating margin since
the merger with Intentia in April 2006.”
Six-Months Ended Nov. 30, 2008
Total revenues for the six months ended Nov. 30, 2008 were $397.3 million, down
2 percent from revenues of $406 million during the same fiscal 2008 period.
Currency fluctuations accounted for a minor portion of the GAAP and non-GAAP
revenue decline. GAAP net income was $1.7 million, or $0.01 per diluted share,
declining from net income of $9.3 million, or $0.05 per diluted share in the
comparable fiscal 2008 period. Decreases in sales and marketing, general and
administrative and amortization of intangible expenses were offset by $7.5
million of restructuring. Lower total other income and an increase in the
provision for income taxes were the primary reasons for the reduction in
year-to-date net income. The company estimates currency fluctuations had a
negative impact of less than $0.01 on net earnings per diluted share for the
six-month period. In addition, the six-month results include a reduction to GAAP
and non-GAAP net income of $2.1 million, primarily related to the $1.9 million
adjustment reported in the first quarter, associated with sales incentive
compensation expense that should have been recorded in the fourth quarter of
fiscal 2008 and earlier periods. The company has determined that these expenses
were immaterial to reported results for those periods. They are also expected to
be immaterial to fiscal 2009 results.
Included in the six-month GAAP results are pre-tax expenses of $15.4 million for
amortization of acquired intangible assets, restructuring charges, amortization
of purchased maintenance contracts and pre-merger claims reserve adjustments as
well as $4.7 million of non-cash stock-based compensation. Excluding these
expenses and including $0.4 million of revenue impacted by purchase accounting
adjustments, non-GAAP net income for the six months ended Nov. 30, 2008, was
$25.3 million, or $0.15 per diluted share. The company estimates currency
fluctuations had a negative impact of less than $0.01 on non-GAAP net earnings
per diluted share for the six-month period in fiscal 2009. 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 $0.15 were
flat year-over-year compared to results for the six months ended Nov. 30, 2007.
Financial Guidance
For the third quarter of fiscal 2009, which ends Feb. 28, 2009, the company is
providing guidance using foreign exchange rates as of the end of December 2008.
The company estimates total revenues of $183 million to $187 million. The
company anticipates GAAP fully diluted earnings per share will be $0.03 to
$0.06. Non-GAAP fully diluted earnings per share are forecasted to be between
$0.07 and $0.09, excluding approximately $9.5 million of pre-tax expenses
related to the amortization of acquisition-related intangibles, amortization of
purchased maintenance contracts, stock-based compensation charges and purchase
accounting adjustments for acquired deferred revenue balances. The non-GAAP
effective tax rate for fiscal 2009 is anticipated to be 35 percent which the
company expects to apply consistently throughout the fiscal year.
As a result of economic uncertainties the company is not providing updated
guidance for fiscal 2009, which ends May 31, 2009. Prior fiscal 2009 guidance
should no longer be relied upon.
Second Quarter Fiscal 2009 Key Metrics
Cash, cash equivalents, marketable securities and investments at quarter-end
were $312.7 million (including $12.2 million of restricted cash), compared with
$363.8 million (including $2.4 million of restricted cash) on Aug. 31, 2008. The
sequential decline was anticipated as the company generates the majority of its
cash during the fiscal third and fourth quarters from annual maintenance
renewals.
Total deferred revenues were $197.5 million, including $50.1 million of deferred
license revenues, compared with the Aug. 31, 2008, balance of $275.1 million,
including $57.8 million of deferred license revenue. Total deferred revenues
declined primarily due to deferred maintenance revenue as the company's renewal
dates occur in the fiscal third and fourth quarters. The deferred license
revenue balance declined due to fewer deals and a lower deferral rate on deals
signed in the quarter than deferred revenue recognized in the quarter.
The company signed 256 deals, compared with 331 in the second quarter of fiscal
2008. Average selling price of all deals was $96,000 compared with $107,000 a
year ago.
The company signed 240 existing customers deals, compared with 294 in the second
quarter a year ago. Average selling price of existing customer deals increased
to $83,000 compared with $72,000 a year ago.
Sixteen new customer deals were signed, compared with 37 in the second quarter a
year ago. Average selling price of new customer deals decreased to $292,000
compared with $373,000 a year ago.
Two deals greater than $1 million and nine deals between $500,000 and $1 million
were signed, compared with two deals greater than $1 million and eight deals
between $500,000 and $1 million in the second quarter of fiscal 2008.
Days sales outstanding (DSO) at quarter end were 59, compared with 68 on Aug.
31, 2008.
The Americas region represented 56 percent of total revenue; Europe, Middle
East, and Africa region represented 40 percent of total revenue; and
Asia-Pacific/Australia-New Zealand represented 4 percent of total revenue.
No shares were repurchased in the second quarter under the company's share
repurchase program. From the November 2006 inception of the program, the company
has repurchased 29.4 million shares for $251.5 million, reducing the shares
outstanding by approximately 16 percent compared with November 2006.
Key customer wins: Americas - Idahoan Foods, LLC; Parkland Health and Hospital;
Republic Services, Inc.; University of Mississippi Medical Center; and Workers'
Compensation Board of Manitoba. EMEA - Government of Tanzania; J.Barbour & Sons
Ltd.; and Wema System AS. Asia-Pacific - Studio East Limited; and Wilcon
Builders Depot.
Conference Call and Webcast
The company will host a conference call and webcast to discuss its second
quarter results and future outlook at 4:30 p.m. Eastern Time (3:30 p.m. Central
Time) Jan. 8, 2009. Interested parties should dial 1-888-790-3441 (passcode:
LWSN) and international callers should dial +1-312-470-0136. A live webcast will
be available on www.lawson.com/investor. 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
1-800-756-6160 or +1-203-369-3595. The webcast will 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
manufacturing, distribution, maintenance, healthcare 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 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 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 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.
Integration related - We have incurred various integration related expenses as
part of our acquisitions. These 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 integration costs provide investors an
appropriate alternative view of our results of operations and facilitates
comparisons of our results period-over-period.
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.
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
Nov 30, 2008 Nov 30, 2007
Revenues:
License fees $ 30,061 $ 32,990 (9%) (4%)
Maintenance 90,083 84,705 6% 10%
Consulting 86,213 100,907 (15%) (10%)
Total revenues 206,357 218,602 (6%) (1%)
Cost of revenues:
Cost of license fees 6,648 6,616 0% 3%
Cost of maintenance 17,373 16,830 3% 8%
Cost of consulting 73,710 84,155 (12%) (7%)
Total cost of revenues 97,731 107,601 (9%) (4%)
Gross profit 108,626 111,001 (2%) 2%
Operating expenses:
Research and development 22,542 21,732 4% 10%
Sales and marketing 42,986 48,214 (11%) (6%)
General and administrative 22,165 25,839 (14%) (11%)
Restructuring 7,717 80 +++ +++
Amortization of acquired intangibles 2,358 3,352
(30%) (25%)
Total operating expenses 97,768 99,217 (1%) 3%
Operating income 10,858 11,784 (8%) (12%)
Other income (expense), net:
Interest income 1,987 5,882 (66%) (66%)
Interest expense (2,019 ) (2,142 ) (6%) (5%)
Other income (expense), net 201 (4,376 ) +++ +++
Total other income (expense), net 169 (636 ) +++
+++
Income before income taxes 11,027 11,148 (1%) (3%)
Provision for income taxes 6,819 7,425 (8%) (7%)
Net income $ 4,208 $ 3,723 13% 4%
Net income per share:
Basic $ 0.03 $ 0.02
Diluted $ 0.03 $ 0.02
Weighted average common shares outstanding:
Basic 162,456 178,453 (9%)
Diluted 164,527 181,941 (10%)
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)
Six Months Ended % Increase (Decrease) as reported
% Increase (Decrease) at constant currency
Nov 30, 2008 Nov 30, 2007
Revenues:
License fees $ 51,186 $ 58,450 (12%) (11%)
Maintenance 179,192 163,219 10% 9%
Consulting 166,895 184,341 (9%) (9%)
Total revenues 397,273 406,010 (2%) (2%)
Cost of revenues:
Cost of license fees 11,980 13,369 (10%) (13%)
Cost of maintenance 34,247 32,490 5% 5%
Cost of consulting 146,157 155,381 (6%) (6%)
Total cost of revenues 192,384 201,240 (4%) (4%)
Gross profit 204,889 204,770 0% 1%
Operating expenses:
Research and development 44,460 39,018 14% 15%
Sales and marketing 89,477 90,505 (1%) (1%)
General and administrative 41,454 51,562 (20%) (21%)
Restructuring 7,486 (65 ) +++ +++
Amortization of acquired intangibles 4,985 6,568
(24%) (25%)
Total operating expenses 187,862 187,588 0% 0%
Operating income 17,027 17,182 (1%) 4%
Other income (expense), net:
Interest income 5,035 12,745 (60%) (60%)
Interest expense (4,057 ) (4,746 ) (15%) (15%)
Other income (expense), net 273 (4,054 ) +++ +++
Total other income (expense), net 1,251 3,945 (68%)
(65%)
Income before income taxes 18,278 21,127 (13%) (9%)
Provision for income taxes 16,593 11,823 40% 41%
Net income $ 1,685 $ 9,304 (82%) (80%)
Net income per share:
Basic $ 0.01 $ 0.05
Diluted $ 0.01 $ 0.05
Weighted average common shares outstanding:
Basic 165,425 179,974 (8%)
Diluted 168,114 183,520 (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)
Nov 30, 2008 May 31, 2008
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 300,528 $ 435,121
Restricted cash - current 9,501 746
Marketable securities - 5,453
Short term investments - 45,236
Trade accounts receivable, net 135,453 184,047
Income taxes receivable 1,433 10,309
Deferred income taxes - current 14,146 16,839
Prepaid expenses and other current assets 40,804 44,470
Total current assets 501,865 742,221
Restricted cash - non-current 2,690 2,038
Property and equipment, net 46,920 45,044
Goodwill 448,553 546,578
Other intangibles assets, net 100,820 120,194
Deferred income taxes - non-current 43,396 35,907
Other assets 13,464 18,614
Total assets $ 1,157,708 $ 1,510,596
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Long-term debt - current $ 3,021 $ 3,849
Accounts payable 10,239 23,481
Accrued compensation and benefits 66,301 89,733
Income taxes payable 5,546 8,860
Deferred income taxes - current 6,041 7,399
Deferred revenue - current 183,682 298,509
Other current liabilities 41,672 49,318
Total current liabilities 316,502 481,149
Long-term debt - non current 243,163 244,734
Uncertain tax positions - non-current 6,799 5,757
Deferred income taxes - non-current 13,011 12,529
Deferred revenue - non-current 13,815 14,097
Other long-term liabilities 7,478 8,771
Total liabilities 600,768 767,037
Stockholders' equity:
Common stock 2,014 2,010
Additional paid-in capital 840,766 838,141
Treasury stock, at cost (314,184 ) (225,598 )
Retained earnings 33,147 31,462
Accumulated other comprehensive income (loss) (4,803 ) 97,544
Total stockholders' equity 556,940 743,559
Total liabilities and stockholders' equity $ 1,157,708 $
1,510,596
LAWSON SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in USD thousands)
(unaudited)
Three Months Ended
Six Months Ended
Nov 30, 2008
Nov 30, 2007
Nov 30, 2008 Nov 30, 2007
Cash flows from operating activities:
Net income $
4,208
$ 3,723 $ 1,685 $ 9,304
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization 9,510
10,966 19,770 21,166
Amortization of debt issuance costs 321
329 642 644
Deferred income taxes 2,764
429 3,669 1,429
Provision for doubtful accounts 318
(1,292 ) 68 (845 )
Warranty provision 1,923
1,744 3,180 2,800
Impairment on long-term investments - 4,229 - 4,229
Net gain on disposal of assets - (3 ) - (311 )
Excess tax benefits from stock transactions (19
) (700 ) (367 ) (1,721 )
Stock-based compensation expense 2,917
2,227 4,734 4,255
Amortization of discounts and premiums on marketable securities 9
(63 ) 15 (90 )
Changes in operating assets and liabilities:
Trade accounts receivable 4,000 (12,900 ) 38,907 15,472
Prepaid expenses and other assets 8,455 2,948 3,093 (9,215 )
Accounts payable (3,338 ) 546 (11,455 ) (5,495 )
Accrued and other liabilities 10,924 3,202 (8,080 ) (21,979
)
Income taxes payable/receivable (10,348
)
3,885 (5,163 ) 8,632
Deferred revenue and customer deposits (74,948
)
(69,142 ) (108,579 ) (98,750 )
Net cash used in operating activities (43,304
)
(49,872 ) (57,881 ) (70,475 )
Cash flows from investing activities:
Change in restricted cash (9,808 ) (510 ) (9,407 ) (59 )
Purchases of marketable securities and investments - (25,543 ) -
(205,098 )
Proceeds from maturities and sales of marketable securities and investments
983 112,765 50,677 194,120
Purchases of property and equipment (9,123 ) (7,921 )
(16,069 ) (10,822 )
Net cash provided by (used in) investing activities (17,948 )
78,791 25,201 (21,859 )
Cash flows from financing activities:
Principal payments on long-term debt (328 ) (475 ) (910 )
(881 )
Payments on capital lease obligations (487 ) (341 ) (617 )
(676 )
Cash proceeds from exercise of stock options 114 1,882 1,547
5,486
Excess tax benefit from stock transactions 19 700 367 1,721
Cash proceeds from employee stock purchase plan 749
743 1,528 1,445
Repurchase of common stock from related parties - - - (36,800
)
Repurchase of common stock-other 9,075
(3,082 ) (90,966 ) (19,945 )
Net cash provided by (used in) financing activities 9,142
(573 ) (89,051 ) (49,650 )
Effect of exchange rate changes on cash and cash equivalents (7,730
)
4,820 (12,862 ) 5,824
Net increase (decrease) in cash and cash equivalents (59,840
)
33,166 (134,593 ) (136,160 )
Cash and cash equivalents at beginning of period 360,368
304,637 435,121 473,963
Cash and cash equivalents at end of period $
300,528
$ 337,803 $ 300,528 $ 337,803
LAWSON SOFTWARE, INC.
RECONCILIATION OF CONSOLIDATED GAAP NET INCOME TO CONSOLIDATED NON-GAAP NET
INCOME
(in USD thousands)
Three Months Ended Six Months Ended
Nov 30, 2008 Nov 30, 2007 Nov 30, 2008 Nov 30, 2007
Net income, as reported $ 4,208 $ 3,723 $ 1,685 $
9,304
Purchase accounting impact on revenue (1) 158 422 416 1,042
Purchase accounting impact on consulting cost 32 163 65 256
Amortization of purchased maintenance contracts 674 1,000 1,383
1,822
Stock-based compensation 2,917 2,226 4,734 4,254
Pre-merger claims reserve adjustment (2,001 ) - (3,808 ) -
Restructuring 7,717 80 7,486 (65 )
Amortization 5,033 6,472 10,309 13,143
Impairment on long term investments - 4,229 - 4,229
Tax provision (4) (2,126 ) (2,696 ) 2,991
(5,723 )
Non-GAAP net income $ 16,612 $ 15,619 $
25,261 $ 28,262
RECONCILIATION OF CONSOLIDATED GAAP TO CONSOLIDATED NON-GAAP PER SHARE EFFECT
Three Months Ended Six Months Ended
Nov 30, 2008 Nov 30, 2007 Nov 30, 2008 Nov 30, 2007
Net income, as reported (2) $ 0.03 $ 0.02 $ 0.01 $ 0.05
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 0.01 0.01
0.01
Stock-based compensation 0.02 0.01 0.03 0.02
Pre-merger claims reserve adjustment (0.01 ) - (0.02 ) -
Restructuring 0.05 0.00 0.04 0.00
Amortization 0.03 0.04 0.06 0.07
Impairment on long term investments - 0.02 - 0.02
Tax provision (4) (0.01 ) (0.01 ) 0.02
(0.03 )
Non-GAAP net income per share (2) (3)
$ 0.10 $ 0.09 $ 0.15 $ 0.15
Weighted average shares - basic 162,456 178,453 165,425
179,974
Weighted average shares - diluted 164,527 181,941
168,114 183,520
SUMMARY OF NON-GAAP ITEMS
(in USD thousands)
Three Months Ended Six Months Ended
Nov 30, 2008 Nov 30, 2007 Nov 30, 2008 Nov 30, 2007
Purchase accounting impact on revenue (1) $ 158 $ 422 $ 416 $
1,042
Purchase accounting impact on consulting cost 32 163 65 256
Amortization of purchased maintenance contracts 674 1,000 1,383
1,822
Stock-based compensation 2,917 2,226 4,734 4,254
Pre-merger claims reserve adjustment (2,001 ) - (3,808 ) -
Restructuring 7,717 80 7,486 (65 )
Amortization 5,033 6,472 10,309 13,143
Impairment on long term investments - 4,229
- 4,229
subtotal pre-tax adjustments 14,530 14,592
20,585 24,681
Tax provision (4) (2,126 ) (2,696 ) 2,991
(5,723 )
Impact on net income $ 12,404 $ 11,896 $
23,576 $ 18,958
(1) For the purchase accounting impact on deferred revenues for three months and
six months ended November 30, 2008, $158,000 and $416,000, respectively, relates
to maintenance revenues and $0 and $0, respectively, relates to consulting
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 Six Months Ended
Nov 30, 2008 Nov 30, 2007 Nov 30, 2008 Nov 30, 2007
Revenue items
Purchase accounting impact on maintenance $ 158 $ 350 $ 416 $ 852
Purchase accounting impact on consulting - 72 -
190
Total revenue items 158 422 416 1,042
Cost of license items
Amortization of acquired software (2,675 ) (3,120 ) (5,325 )
(6,575 )
Non-cash stock-based compensation - (6 ) - (13
)
Total cost of license items (2,675 ) (3,126 ) (5,325 ) (6,588 )
Cost of maintenance items
Amortization of purchased maintenance contracts (674 ) (1,000 )
(1,383 ) (1,822 )
Non-cash stock-based compensation (65 ) (26 ) (117 )
(67 )
Total cost of maintenance items (739 ) (1,026 ) (1,500 ) (1,889
)
Cost of consulting items
Purchased accounting impact on consulting cost (32 ) (163 ) (65 )
(256 )
Amortization - - 1 -
Non-cash stock-based compensation (164 ) (215 ) (175 )
(433 )
Total cost of consulting items (196 ) (378 ) (239 ) (689 )
Research and development items
Non-cash stock-based compensation (164 ) (127 ) (298 )
(291 )
Total research and development items (164 ) (127 ) (298 ) (291 )
Sales and marketing items
Non-cash stock-based compensation (544 ) (370 ) (1,000 )
(736 )
Total sales and marketing items (544 ) (370 ) (1,000 ) (736 )
General and administrative items
Pre-merger claims reserve adjustment 2,001 - 3,808 -
Non-cash stock-based compensation (1,980 ) (1,482 ) (3,144
) (2,714 )
Total general and administrative items 21 (1,482 ) 664 (2,714 )
Restructuring (7,717 ) (80 ) (7,486 ) 65
Amortization of acquired intangibles (2,358 ) (3,352 ) (4,985 )
(6,568 )
Other income (expense), impairment on long-term investments - 4,229 -
4,229
Tax provision (1) (2,126 ) (2,696 ) 2,991 (5,723
)
Total adjustments $ 12,404 $ 11,896 $ 23,576 $ 18,958(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. In the first quarter of fiscal year 2010, the company will reassess the
non-GAAP tax rate for fiscal year 2010.
Contacts
Lawson Software
Joe Thornton, +1-651-767-6154
Media
joe.thornton@us.lawson.com
or
Barbara Doyle, +1-651-767-4835
Investors and Analysts
barbara.doyle@us.lawson.com
or
Heather Pribyl, +1-651-767-6459
Investors and Analysts
heather.pribyl@us.lawson.com
Lawson Software Reports Second Quarter Fiscal 2009 Financial Results
| Source: Lawson Software, Inc.
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