Lawson Software Reports Third Quarter Fiscal 2009 Financial Results ST. PAUL, Minn.--(BUSINESS WIRE)-- Lawson Software, Inc. (Nasdaq: LWSN) today reported financial results for its third quarter of fiscal year 2009, which ended Feb. 28, 2009. Lawson reported revenues for the quarter of $173.8 million, down 18 percent from revenues of $212.9 million in the fiscal 2008 third quarter. Currency fluctuations negatively impacted GAAP and non-GAAP revenues by approximately 8 percent as foreign currencies weakened substantially over the past year compared to the U.S. dollar. License fees declined 22 percent, or 14 percent adjusted for currency, reflecting a lower level of software sales primarily to manufacturing customers driven by the global economic conditions. Consulting revenues declined 34 percent, or 26 percent adjusted for currency, driven primarily by reduced software license sales throughout the year resulting in lower demand for consulting and implementation services. Partially offsetting the decline in license fees and consulting revenues was a 1 percent increase, or 8 percent adjusted for currency, in maintenance revenues resulting from consistent renewals in maintenance contracts at higher average prices. Third quarter GAAP net income of $7.4 million, or $0.04 per diluted share, increased compared to net income of $0.7 million, or $0.00 per diluted share, in the third quarter of fiscal 2008. Lower cost of revenues, reduced operating expenses and a decline in net other expense offset lower revenues and reduced interest income, resulting in a 33 percent increase in income before taxes. • Gross margin as a percent of revenues of 52.5 percent increased slightly from 52 percent a year ago as a higher mix of maintenance revenues to total revenues and increases in license fee and maintenance margins offset a significantly lower consulting margin. • Decreases in research and development, sales and marketing, general and administrative and amortization of acquired intangible expenses were partially offset by $3.5 million of restructuring charges. • Interest income declined due to lower investment balances and yields. • Other expense decreased as the third quarter of fiscal 2008 included an $8.1 million impairment charge for auction rate securities. Net income also improved due to a decrease in the provision for income taxes and an 8 percent decrease in fully-diluted weighted-average shares outstanding. The company estimates currency fluctuations had a minimal positive impact of less than $0.01 on net earnings per diluted share for the third quarter. Included in GAAP net income and earnings per diluted share results are pre-tax expenses of $11.1 million for amortization of acquired intangible assets, restructuring, non-cash stock-based compensation and amortization of purchased maintenance contracts. Excluding these expenses and including $0.1 million of revenue impacted by purchase accounting adjustments, non-GAAP net income for the third quarter of fiscal 2009 was $16.4 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 a positive impact of approximately $0.01 on non-GAAP net earnings per diluted share for the third quarter. Non-GAAP earnings per diluted share of $0.10 increased year-over-year from $0.08 in the third quarter of fiscal 2008. “We are operating well in a challenging business environment,” said Harry Debes, Lawson president and chief executive officer. “During this fiscal year, revenues have been negatively impacted by reduced capital spending and weakening foreign currencies; things which are beyond our control. We can control how we react to economic conditions and our focus has been to preserve profitability. This quarter we earned $0.10 of non-GAAP EPS and 15 percent non-GAAP operating margin. Both measures were improvements over last year and our entire company can take pride in this accomplishment.” Nine Months Ended Feb. 28, 2009 Total revenues for the nine months ended Feb. 28, 2009 were $571.1 million, down 8 percent, or 4 percent adjusted for currency, from revenues of $618.9 million during the same fiscal 2008 period. GAAP net income was $9.1 million, or $0.05 per diluted share, decreasing from net income of $10 million, or $0.06 per diluted share in the comparable fiscal 2008 period. Decreases in total cost of sales, sales and marketing, general and administrative and amortization of intangible expenses were offset by $11 million of restructuring and lower total revenues. The company estimates currency fluctuations had a negative impact of less than $0.01 on net earning per diluted share for the nine-month period. In addition, the nine-month results include a reduction to GAAP and non-GAAP net income of $2.1 million, related to adjustments reported in the first and second quarters, primarily 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 nine-month GAAP results are pre-tax expenses of $31.2 million for amortization of acquired intangible assets, restructuring, non-cash stock-based compensation, amortization of purchased maintenance contracts 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 nine months ended Feb. 28, 2009, was $41.7 million, or $0.25 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 nine-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 $0.25 increased year-over-year from $0.23 for the nine months ended Feb. 29, 2008. Financial Guidance For the fourth quarter of fiscal 2009, which ends May 31, 2009, the company is providing guidance using foreign exchange rates as of the end of March 2009. The company estimates total revenues of $175 million to $182 million. The company anticipates GAAP fully diluted earnings per share will be $0.04 to $0.07. Non-GAAP fully diluted earnings per share are forecasted to be between $0.08 and $0.10, excluding approximately $9 million of pre-tax expenses related to the amortization of acquired intangible assets, non-cash stock-based compensation, amortization of purchased maintenance contracts 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. Third Quarter Fiscal 2009 Key Metrics • Key customer wins: Americas - Appalachian Regional Healthcare, Inc; City of Roanoke; Northern Colorado Water Conservancy District, Inc.; PeaceHealth; Propper International, Inc.; and Rancho California Water District. EMEA - C.A. Metropolitan S.A.; De Stiho Groep BV; Gresvig ASA; and Massilly France. Asia-Pacific - General Milling Corporation and GWA International Limited. • 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 third quarter results and future outlook at 5:00 p.m. EDT (4:00 p.m. CDT) April 2, 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 1-866-436-9385 or +1-203-369-1034. 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 third, 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 Feb 28, 2009 Feb 29, 2008 Revenues: License fees $ 24,881 $ 31,984 (22%) (14%) Maintenance 85,806 84,630 1% 8% Consulting 63,161 96,273 (34%) (26%) Total revenues 173,848 212,887 (18%) (10%) Cost of revenues: Cost of license fees 4,872 6,767 (28%) (23%) Cost of maintenance 14,810 16,389 (10%) 1% Cost of consulting 62,871 79,046 (20%) (9%) Total cost of revenues 82,553 102,202 (19%) (9%) Gross profit 91,295 110,685 (18%) (11%) Operating expenses: Research and development 18,209 22,231 (18%) (8%) Sales and marketing 34,203 47,271 (28%) (21%) General and administrative 18,542 21,383 (13%) (5%) Restructuring 3,534 (137 ) +++ +++ Amortization of acquired intangibles 1,890 3,531 (46%) (37%) Total operating expenses 76,378 94,279 (19%) (11%) Operating income 14,917 16,406 (9%) (12%) Other income (expense), net: Interest income 801 4,512 (82%) (82%) Interest expense (1,931 ) (2,118 ) (9%) (7%) Other income (expense), net 318 (8,191 ) +++ +++ Total other income (expense), net (812 ) (5,797 ) (86%) (113%) Income before income taxes 14,105 10,609 33% 30% Provision for income taxes 6,718 9,882 (32%) (30%) Net income $ 7,387 $ 727 916% 495% Net income per share: Basic $ 0.05 $ 0.00 Diluted $ 0.04 $ 0.00 Weighted average common shares outstanding: Basic 162,675 175,912 (8%) Diluted 164,648 178,805 (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 STATEMENTS OF OPERATIONS (in USD thousands, except per share data) (unaudited) Nine Months Ended % Increase (Decrease) as reported % Increase (Decrease) at constant currency Feb 28, 2009 Feb 29, 2008 Revenues: License fees $ 76,067 $ 90,434 (16%) (12%) Maintenance 264,998 247,849 7% 9% Consulting 230,056 280,614 (18%) (14%) Total revenues 571,121 618,897 (8%) (4%) Cost of revenues: Cost of license fees 16,852 20,136 (16%) (16%) Cost of maintenance 49,057 48,879 0% 4% Cost of consulting 209,028 234,427 (11%) (7%) Total cost of revenues 274,937 303,442 (9%) (6%) Gross profit 296,184 315,455 (6%) (3%) Operating expenses: Research and development 62,669 61,249 2% 7% Sales and marketing 123,680 137,776 (10%) (7%) General and administrative 59,996 72,945 (18%) (16%) Restructuring 11,020 (202 ) +++ +++ Amortization of acquired intangibles 6,875 10,099 (32%) (29%) Total operating expenses 264,240 281,867 (6%) (3%) Operating income 31,944 33,588 (5%) (4%) Other income (expense), net: Interest income 5,836 17,257 (66%) (66%) Interest expense (5,988 ) (6,864 ) (13%) (13%) Other income (expense), net 591 (12,245 ) +++ +++ Total other income (expense), net 439 (1,852 ) +++ +++ Income before income taxes 32,383 31,736 2% 5% Provision for income taxes 23,311 21,705 7% 9% Net income $ 9,072 $ 10,031 (10%) (5%) Net income per share: Basic $ 0.06 $ 0.06 Diluted $ 0.05 $ 0.06 Weighted average common shares outstanding: Basic 164,508 178,620 (8%) Diluted 166,958 181,949 (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) Feb 28, 2009 May 31, 2008 (unaudited) ASSETS Current assets: Cash and cash equivalents $ 308,238 $ 435,121 Restricted cash - current 9,592 746 Marketable securities - 5,453 Short term investments - 45,236 Trade accounts receivable, net 142,961 184,047 Income taxes receivable 1,673 10,309 Deferred income taxes - current 13,806 16,839 Prepaid expenses and other current assets 42,736 44,470 Total current assets 519,006 742,221 Restricted cash - non-current 1,817 2,038 Property and equipment, net 46,940 45,044 Goodwill 430,471 546,578 Other intangibles assets, net 93,908 120,194 Deferred income taxes - non-current 39,657 35,907 Other assets 13,000 18,614 Total assets $ 1,144,799 $ 1,510,596 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Long-term debt - current $ 2,912 $ 3,849 Accounts payable 10,156 23,481 Accrued compensation and benefits 60,337 89,733 Income taxes payable 7,962 8,860 Deferred income taxes - current 5,739 7,399 Deferred revenue - current 187,435 298,509 Other current liabilities 40,225 49,318 Total current liabilities 314,766 481,149 Long-term debt - non-current 242,534 244,734 Deferred income taxes - non-current 11,174 12,529 Deferred revenue - non-current 13,522 14,097 Other long-term liabilities 13,106 14,528 Total liabilities 595,102 767,037 Stockholders' equity: Common stock 2,016 2,010 Additional paid-in capital 842,908 838,141 Treasury stock, at cost (313,139 ) (225,598 ) Retained earnings 40,534 31,462 Accumulated other comprehensive income (loss) (22,622 ) 97,544 Total stockholders' equity 549,697 743,559 Total liabilities and stockholders' equity $ 1,144,799 $ 1,510,596 LAWSON SOFTWARE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in USD thousands) (unaudited) Three Months Ended Nine Months Ended Feb 28, 2009 Feb 29, 2008 Feb 28, 2009 Feb 29, 2008 Cash flows from operating activities: Net income $ 7,387 $ 727 $ 9,072 $ 10,031 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 9,499 11,017 29,269 32,183 Amortization of debt issuance costs 321 322 963 966 Deferred income taxes 2,244 (749 ) 5,913 680 Provision for doubtful accounts 1,010 (1,399 ) 1,078 (2,244 ) Warranty provision 1,524 1,793 4,704 4,593 Impairment on long-term investments - 8,067 - 12,296 Net gain on disposal of assets - - - (311 ) Excess tax benefits from stock transactions (81 ) (304 ) (448 ) (2,025 ) Stock-based compensation expense 2,027 428 6,761 4,683 Amortization of discounts and premiums on marketable securities (9 ) (2 ) 6 (92 ) Changes in operating assets and liabilities: Trade accounts receivable (7,111 ) (45,136 ) 31,796 (29,664 ) Prepaid expenses and other assets (5,376 ) (2,645 ) (2,283 ) (11,860 ) Accounts payable 562 5,618 (10,893 ) 123 Accrued and other liabilities 182 3,813 (7,898 ) (18,166 ) Income taxes payable/receivable 2,312 2,764 (2,851 ) 11,396 Deferred revenue 1,366 39,976 (107,213 ) (58,774 ) Net cash provided by (used in) operating activities 15,857 24,290 (42,024 ) (46,185 ) Cash flows from investing activities: Change in restricted cash 730 4,206 (8,677 ) 4,147 Purchases of marketable securities and investments - - - (205,098 ) Proceeds from maturities and sales of marketable securities and investments (13 ) 22,220 50,664 216,340 Purchases of property and equipment (4,461 ) (5,025 ) (20,530 ) (15,847 ) Net cash provided by (used in) investing activities (3,744 ) 21,401 21,457 (458 ) Cash flows from financing activities: Principal payments on long-term debt (313 ) (459 ) (1,223 ) (1,340 ) Payments on capital lease obligations (270 ) (348 ) (887 ) (1,024 ) Cash proceeds from exercise of stock options 410 1,004 1,957 6,490 Excess tax benefit from stock transactions 81 304 448 2,025 Cash proceeds from employee stock purchase plan 629 767 2,157 2,212 Repurchase of common stock from related parties - - - (36,800 ) Repurchase of common stock - other - (48,884 ) (90,966 ) (68,829 ) Net cash provided by (used in) financing activities 537 (47,616 ) (88,514 ) (97,266 ) Effect of exchange rate changes on cash and cash equivalents (4,940 ) (3,104 ) (17,802 ) 2,720 Net increase (decrease) in cash and cash equivalents 7,710 (5,029 ) (126,883 ) (141,189 ) Cash and cash equivalents at beginning of period 300,528 337,803 435,121 473,963 Cash and cash equivalents at end of period $ 308,238 $ 332,774 $ 308,238 $ 332,774 LAWSON SOFTWARE, INC. RECONCILIATION OF CONSOLIDATED GAAP NET INCOME TO CONSOLIDATED NON-GAAP NET INCOME (in USD thousands) Three Months Ended Nine Months Ended Feb 28, 2009 Feb 29, 2008 Feb 28, 2009 Feb 29, 2008 Net income, as reported $ 7,387 $ 727 $ 9,072 $ 10,031 Purchase accounting impact on revenue (1) 58 221 474 1,263 Purchase accounting impact on consulting cost 39 131 105 387 Amortization of purchased maintenance contracts 631 821 2,015 2,643 Stock-based compensation 2,026 428 6,761 4,682 Pre-merger claims reserve adjustment (79 ) (3,827 ) (3,887 ) (3,827 ) Restructuring 3,534 (137 ) 11,020 (202 ) Amortization 4,918 6,371 15,228 19,514 Impairment on long-term investments - 8,067 - 12,296 Tax provision (4) (2,113 ) 938 876 (4,785 ) Non-GAAP net income $ 16,401 $ 13,740 $ 41,664 $ 42,002 RECONCILIATION OF CONSOLIDATED GAAP TO CONSOLIDATED NON-GAAP PER SHARE EFFECT Three Months Ended Nine Months Ended Feb 28, 2009 Feb 29, 2008 Feb 28, 2009 Feb 29, 2008 Net income, as reported (2) $ 0.04 $ 0.00 $ 0.05 $ 0.06 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 0.01 0.01 Stock-based compensation 0.01 0.00 0.04 0.03 Pre-merger claims reserve adjustment 0.00 (0.02 ) (0.02 ) (0.02 ) Restructuring 0.02 (0.00 ) 0.07 0.00 Amortization 0.03 0.04 0.09 0.11 Impairment on long-term investments - 0.05 - 0.07 Tax provision (4) (0.01 ) 0.01 0.01 (0.03 ) Non-GAAP net income per share (2) (3) $ 0.10 $ 0.08 $ 0.25 $ 0.23 Weighted average shares - basic 162,675 175,912 164,508 178,620 Weighted average shares - diluted 164,648 178,805 166,958 181,949 SUMMARY OF NON-GAAP ITEMS (in USD thousands) Three Months Ended Nine Months Ended Feb 28, 2009 Feb 29, 2008 Feb 28, 2009 Feb 29, 2008 Purchase accounting impact on revenue (1) $ 58 $ 221 $ 474 $ 1,263 Purchase accounting impact on consulting cost 39 131 105 387 Amortization of purchased maintenance contracts 631 821 2,015 2,643 Stock-based compensation 2,026 428 6,761 4,682 Pre-merger claims reserve adjustment (79 ) (3,827 ) (3,887 ) (3,827 ) Restructuring 3,534 (137 ) 11,020 (202 ) Amortization 4,918 6,371 15,228 19,514 Impairment on long-term investments - 8,067 - 12,296 subtotal pre-tax adjustments 11,127 12,075 31,716 36,756 Tax provision (4) (2,113 ) 938 876 (4,785 ) Impact on net income $ 9,014 $ 13,013 $ 32,592 $ 31,971 (1) For the purchase accounting impact on deferred revenues for three months and nine months ended February 28, 2009, $58,000 and $474,000, 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 Nine Months Ended Feb 28, 2009 Feb 29, 2008 Feb 28, 2009 Feb 29, 2008 Revenue items Purchase accounting impact on maintenance $ 58 $ 221 $ 474 $ 1.073 Purchase accounting impact on consulting - - - 190 Total revenue items 58 221 474 1,263 Cost of license items Amortization of acquired software (3,028 ) (2,840 ) (8,354 ) (9,415 ) Stock-based compensation - (3 ) - (16 ) Total cost of license items (3,028 ) (2,843 ) (8,354 ) (9,431 ) Cost of maintenance items Amortization of purchased maintenance contracts (631 ) (821 ) (2,015 ) (2,643 ) Stock-based compensation (80 ) (12 ) (197 ) (79 ) Total cost of maintenance items (711 ) (833 ) (2,212 ) (2,722 ) Cost of consulting items Purchased accounting impact on consulting cost (39 ) (131 ) (105 ) (387 ) Amortization - - 1 - Stock-based compensation (290 ) 19 (465 ) (414 ) Total cost of consulting items (329 ) (112 ) (569 ) (801 ) Research and development items Stock-based compensation (162 ) (34 ) (460 ) (325 ) Total research and development items (162 ) (34 ) (460 ) (325 ) Sales and marketing items Stock-based compensation (453 ) (17 ) (1,453 ) (753 ) Total sales and marketing items (453 ) (17 ) (1,453 ) (753 ) General and administrative items Pre-merger claims reserve adjustment 79 3,827 3,887 3,827 Stock-based compensation (1,041 ) (381 ) (4,186 ) (3,095 ) Total general and administrative items (962 ) 3,446 (299 ) 732 Restructuring (3,534 ) 137 (11,020 ) 202 Amortization of acquired intangibles (1,890 ) (3,531 ) (6,875 ) (10,099 ) Other income (expense), impairment on long-term investments - 8,067 - 12,296 Tax provision (1) (2,113 ) 938 876 (4,785 ) Total adjustments $ 9,014 $ 13,013 $ 32,592 $ 31,971 (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. 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 Heather Pribyl, +1-651-767-6459 heather.pribyl@us.lawson.com
Lawson Software Reports Third Quarter Fiscal 2009 Financial Results
| Source: Lawson Software, Inc.
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