Lawson Software Reports Fourth Quarter 2010 Financial Results
Revenues from license fees increase 13 percent -- Total revenues
increase 6 percent -- Cash flow from operations increases 42 percent
-- GAAP EPS of $0.02; non-GAAP EPS of $0.12 -- Guidance for Q1 fiscal
2011: GAAP EPS of $0.01 - $0.02; Non-GAAP EPS of $0.08 - $0.09
-- Guidance for full-year fiscal 2011: GAAP EPS of $0.17 - $0.21;
Non-GAAP EPS of $0.47 - $0.51
Regulatory News:
Lawson Software, Inc. (Nasdaq: LWSN) today reported financial results
for its fourth quarter of fiscal year 2010, which ended May 31, 2010. As
reported under generally accepted accounting principles (GAAP), revenues
were $197 million with GAAP net income of $2.6 million, or diluted
earnings per share (EPS) of $0.02. These results compare to fourth
quarter of fiscal year 2009 GAAP revenues of $186.2 million with GAAP
net income of $8.6 million, or EPS of $0.05. A six percent increase in
revenues compared to the prior year resulted from growth in license fees
and maintenance services in part from the Healthvision acquisition which
was partially offset by contraction in consulting revenues. The earnings
benefit of increased revenues was partially offset by increased expenses
primarily related to higher employee costs in part from Healthvision's
operations and increased intangible asset amortization expense due to
the Healthvision acquisition. In addition, the income tax provision
increased $5.6 million compared to the same period last year, primarily
due to changes in the jurisdictional mix of global taxable income and a
fourth quarter tax benefit in 2009 based upon an increase in the amount
of benefits the company expected to realize from certain deferred tax
assets. As a result of these items, GAAP net income declined $6.0
million from the prior year. Currency exchange rate fluctuations had no
impact on the reported fourth quarter 2010 net earnings per diluted
share.
Non-GAAP net income for the fourth quarter of fiscal 2010 increased 16
percent to $19.9 million, or $0.12 per diluted share, compared to $17.1
million, or $0.10 per diluted share in the fourth quarter of fiscal year
2009. Fourth quarter non-GAAP net income and EPS includes $3.1 million
of revenues impacted by purchase accounting adjustments and excludes
$17.5 million of amortization expense, non-cash stock-based
compensation, integration expense and restructuring charges, partly
offset by a gain related to modifications of a Norwegian pension plan
benefit. Non-GAAP net income and EPS include a provision for income
taxes based upon a rate of 37 percent, which was applied consistently
throughout the year. Currency exchange rate fluctuations had no impact
on the fourth quarter 2010 non-GAAP net earnings per diluted share.
“Lawson delivered strong performance in our fourth quarter of fiscal
2010 to cap off a successful year,” said Harry Debes, president and
chief executive officer. “License revenues grew 13 percent during the
quarter, driven in large part by sales in our S3 and M3 strategic growth
markets. Organic license revenues grew eight percent, before the benefit
from our acquisition of Healthvision. We also generated a company record
of more than $161 million in cash flow from operations during the
quarter, further validating that we are executing very well against our
business strategy.”
Twelve Months Ended May 31, 2010
Total GAAP revenues for the 12 months ended May 31, 2010 were $736.4
million, compared to revenues of $757.3 million during the same fiscal
2009 period. GAAP net income was $13.0 million, or $0.08 per diluted
share, compared to GAAP net income of $14.2 million, or $0.08 per
diluted share in fiscal 2009. The company estimates currency
fluctuations had a negative impact of approximately $0.02 on net
earnings per diluted share for the 12-month period.
Included in the 12-month GAAP results are operating expenses of $54.1
million for restructuring, amortization of acquired intangible assets,
non-cash stock-based compensation, amortization of purchased maintenance
contracts, purchase accounting impact on consulting costs and pre-merger
claims reserve adjustments, partly offset by a gain related to
modifications of a Norwegian pension plan benefit. Excluding these
expenses and including $5.7 million of revenue impacted by purchase
accounting adjustments, non-GAAP net income for the 12 months ended May
31, 2010, was $68.6 million, or $0.42 per diluted share. Non-GAAP
earnings per diluted share of $0.42 increased year-over-year from $0.35
for the 12 months ended May 31, 2009. Fiscal 2010 non-GAAP net income
per diluted share includes a non-GAAP provision for income taxes based
upon an estimated rate of 37 percent compared to an estimated rate of 35
percent used for the non-GAAP provision for income taxes in fiscal 2009.
Currency exchange rate fluctuations had no impact on non-GAAP net
earnings per diluted share for the 12-month period.
Financial Guidance
For the first quarter of fiscal 2011, which ends Aug. 31, 2010, the
company is providing guidance using foreign exchange rates as of the end
of June 2010. The company estimates total revenues of $168 million to
$172 million. Non-GAAP total revenues are expected to be in the range of
$170 million to $174 million, including approximately $2 million of
revenues impacted by purchase accounting adjustments. The company
anticipates GAAP fully diluted earnings per share will be in the range
of $0.01 to $0.02. Non-GAAP fully diluted earnings per share are
forecasted to be in the range of $0.08 to $0.09, including $2 million of
revenues impacted by purchase accounting and excluding approximately $13
million of pre-tax expenses related to the amortization of acquired
intangible assets, non-cash stock-based compensation, incremental
non-cash convertible note interest, and amortization of purchased
maintenance contracts, partly offset by a gain related to modifications
of a Norwegian pension plan benefit. The non-GAAP effective tax rate for
the fiscal 2011 is estimated at 35 percent, which the company expects to
apply consistently throughout the fiscal year.
For the full fiscal year ending May 31, 2011 the company estimates total
revenues of $751 million to $766 million. Non-GAAP total revenues are
expected to be in the range of $755 million to $770 million, including
approximately $4 million of revenues impacted by purchase accounting
adjustments. The company anticipates GAAP fully diluted earnings per
share will be in the range of $0.17 to $0.21. Non-GAAP fully diluted
earnings per share are forecasted to be in the range of $0.47 to $0.51,
including approximately $4 million of revenues impacted by purchase
accounting and excluding approximately $55 million of pre-tax expenses
as noted above. The company expects to modestly improve non-GAAP
operating margin over fiscal 2010 driven primarily by increased levels
of software business in its S3 and M3 strategic growth verticals.
Implementation of Accounting Guidance on Convertible Debt Securities
(formerly FSP APB 14-1)
Fourth quarter of fiscal 2010 GAAP net income includes $2.1 million of
incremental non-cash interest expense resulting from the implementation
of an accounting standard related to the company's convertible notes.
This non-cash interest expense is excluded from the company's non-GAAP
results. Results for fiscal 2009 have been adjusted to reflect the
retroactive implementation of this accounting standard. Fourth quarter
of fiscal 2009 GAAP net income includes $2.0 million of incremental
non-cash interest expense.
Out of period adjustments
Results for fiscal 2010 include a reduction to GAAP net income of
approximately $0.8 million and an increase in non-GAAP net income of
approximately $0.6 million for out-of-period adjustments recorded in the
first quarter of fiscal 2010, as previously disclosed. The provision for
income taxes includes a $1.7 million charge to adjust for an under
accrual in the fiscal 2009 provision. An additional adjustment was also
recorded that decreased cost of services by $0.9 million, related to the
reversal of a services reserve that should have been reversed in fiscal
2008. The company has determined these out-of period adjustments were
immaterial to results in fiscal 2010.
Conference Call, Webcast and Key Metrics
The company will host a conference call and webcast to discuss its
fourth quarter results and future outlook at 5 p.m. EDT (4 p.m. CDT)
July 8, 2010. Interested parties may also listen to the call by dialing
1-888-928-9122 (or 1-773-756-4813) and using the passcode "LWSN."
Interested parties should access the webcast at
www.lawson.com/investor (http://www.lawson.com/investor) or dial into
the conference call approximately 10-15 minutes before the scheduled
start time.
A replay will be available approximately one hour after the webcast and
conference call concludes and will remain available for one week. To
access the replay, dial 1-800-216-4454 or 1-402-220-3883 for
international callers. The webcast will also remain on
www.lawson.com/investor (http://www.lawson.com/investor) for
approximately one week. Additional key business metrics are also
available at the Lawson Investor Relations web page.
About Lawson Software
Lawson Software provides software and service solutions to customers in
equipment service management and rental, fashion, food & beverage,
healthcare, manufacturing & distribution, public sector (United States),
service industries, and strategic human capital management across 40
countries. Lawson Software is a global provider of enterprise software,
services and support to customers primarily in three sectors: services,
trade and manufacturing/distribution. Lawson's solutions include
Enterprise Performance Management, Human Capital Management, Supply
Chain Management, Enterprise Resource Planning, Customer Relationship
Management, Manufacturing Resource Planning, Enterprise Asset Management
and industry-tailored applications. Lawson solutions assist customers in
simplifying their businesses or organizations by helping them streamline
processes, reduce costs and enhance business or operational performance.
Lawson is headquartered in St. Paul, Minn., and has offices around the
world. Visit Lawson online at www.lawson.com (http://www.lawson.com/).
For Lawson's listing on the First North exchange in Sweden, Remium AB is
acting as the Certified Adviser.
Forward-Looking Statements
This press release contains forward-looking statements that contain
risks and uncertainties. These forward-looking statements contain
statements of intent, belief or current expectations of Lawson Software
and its management. Such forward-looking statements are not guarantees
of future results and involve risks and uncertainties that may cause
actual results to differ materially from the potential results discussed
in the forward-looking statements. The company is not obligated to
update forward-looking statements based on circumstances or events that
occur in the future. Risks and uncertainties that may cause such
differences include but are not limited to: uncertainties in 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 recession and
credit crisis; Lawson's ability to integrate the Healthvision
acquisition successfully; global military conflicts; terrorist attacks;
pandemics, and any future events in response to these developments;
changes in conditions in the company's targeted industries and other
risk factors listed in the company's most recent Quarterly Report on
Form 10-Q and Annual Report on Form 10-K filed with the Securities and
Exchange Commission. Lawson assumes no obligation to update any
forward-looking information contained in this press release.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with U.S.
generally accepted accounting principles, or U.S. GAAP, Lawson Software
reports non-GAAP financial results including non-GAAP revenues,
operating income, operating margin, net income (loss) and diluted net
earnings per share. We believe these non-GAAP measures provide
meaningful insight into our operating performance and an alternative
perspective of our results of operations. We use these non-GAAP measures
to assess our operating performance, 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. These non-GAAP financial measures
provide investors an enhanced understanding of our operations,
facilitate investors' analysis and comparisons of our current and past
results of operations, facilitate comparisons of our operating results
with those of our competitors and provide insight into the prospects of
our future performance. We also believe the non-GAAP measures are useful
to investors because they provide supplemental information that research
analysts frequently use to analyze software companies including those
that have recently made significant acquisitions.
The method we use to produce non-GAAP results is not in accordance with
U.S. GAAP and may differ from the methods used by other companies. These
non-GAAP results should not be regarded as a substitute for
corresponding U.S. GAAP measures but instead should be utilized as a
supplemental measure of operating performance in evaluating our
business. Non-GAAP measures do have limitations in they do not reflect
certain items that may have a material impact upon our reported
financial results. As such, these non-GAAP measures should be viewed in
conjunction with both our financial statements prepared in accordance
with U.S. GAAP and the reconciliation of the supplemental non-GAAP
financial measures to the comparable U.S. GAAP results provided for each
period presented, which are attached to this release.
Our primary non-GAAP reconciling items are as follows:
Purchase accounting impact on revenue - Lawson's non-GAAP financial
results include pro forma adjustments to increase maintenance and
consulting revenues that we would have recognized if we had not adjusted
acquired deferred revenues to their fair values as required by U.S.
GAAP. Certain deferred revenue for maintenance and consulting on the
acquired entity's balance sheet, at the time of the acquisition, was
eliminated from U.S. GAAP results as part of the purchase accounting for
the acquisition. As a result, our U.S. GAAP results do not, in
management's view, reflect all of our maintenance and consulting
activity. We believe the inclusion of the pro forma revenue adjustment
provides investors a helpful alternative view of Lawson's maintenance
and consulting operations.
Amortization of purchased maintenance contracts - We have excluded
amortization of purchased maintenance contracts from our non-GAAP
results. The purchase price related to these contracts is being
amortized based upon the proportion of future cash flows estimated to be
generated each period over the estimated useful lives of the contracts.
We believe 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 options, restricted stock, restricted stock units and share
purchases under our employee stock purchase plan. While the charges for
stock-based compensation are of a recurring nature, as we grant
stock-based awards to attract and retain quality employees and as an
incentive to help achieve financial and other corporate goals, we
exclude them from our results of operation in assessing our operating
performance. These charges are typically non-cash and are often the
result of complex calculations using an option pricing model that
estimates stock-based awards' fair value based on factors such as
volatility and risk-free interest rates that are beyond our control. The
expense related to stock-based awards is generally not controllable in
the short-term and can vary significantly based on the timing, size and
nature of awards granted. As such, we do not include such charges in our
operating plans that we use to manage our business. In addition, we
believe the exclusion of these charges facilitates comparisons of our
operating results with those of our competitors who may have different
policies regarding the use of stock-based awards.
Pre-merger claims reserve adjustment - We have excluded the adjustment
to our pre-merger claims reserve from our non-GAAP results. As part of
the purchase accounting relating to our Intentia acquisition in April
2006, we established a reserve for Intentia customer claims and disputes
that arose before the acquisition which originally resulted in an
increase in the acquired 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
U.S. 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 results. We believe 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.
Acquisition transaction and integration costs - We have incurred various
transaction and integration costs related to our acquisitions. The costs
of integrating the operations of acquired businesses and Lawson are
incremental to our historical costs and are charged to our U.S. GAAP
results of operations in the periods incurred. Beginning in fiscal 2010,
acquisition related transaction costs have also been charged to our U.S.
GAAP results of operations. We do not consider these costs in our
assessment of our operating performance. While these costs are not
recurring with respect to our past acquisitions, we may incur similar
costs in the future if we pursue other acquisitions. We believe the
exclusion of the non-recurring acquisition related transaction and
integration costs provides investors a useful alternative view of our
results of operations and facilitates comparisons of our results
period-over-period.
Pension Gain - We have implemented certain modifications to our pension
plan in Norway. These modifications resulted in a curtailment of
benefits under the plan and resulted in our recording a gain related to
the change in all active participants' projected benefit obligations
resulting from the curtailment. While this gain is non-recurring, we may
incur other gains related to these pension plan modifications in the
future, including a gain we expect in the first quarter of fiscal year
of 2011. We do not consider these gains in our assessment of our
operating performance. We believe the exclusion of the non-recurring
pension gains provide investors a useful alternative view of our results
of operations and facilitate 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 the exclusion of the
restructuring charges provides investors a useful alternative view of
the cost structure of our operations and facilitates comparisons with
the results of other periods that may not reflect such charges or may
reflect different levels of such charges.
Amortization of acquired intangibles - We have excluded amortization of
acquisition-related intangible assets including purchased technology,
client lists, customer relationships, trademarks, order backlog and
non-compete agreements from our non-GAAP results. The fair value of the
intangible assets, which was allocated to these assets through purchase
accounting, is amortized using accelerated or straight-line methods
which approximate the proportion of future cash flows estimated to be
generated each period over the estimated useful lives of the applicable
assets. While these non-cash amortization charges are recurring in
nature and the underlying assets benefit our operations, this
amortization expense can fluctuate significantly based on the nature,
timing and size of our past acquisitions and may be affected by future
acquisitions. This makes comparisons of our current and historic
operating performance difficult. Therefore, we exclude such expenses
when analyzing the results of our operations including those of acquired
entities. We believe the exclusion of the amortization expense of
acquired intangible assets provides investors useful information
facilitating comparison of our results period-over-period and with other
companies in the software industry as they each have their own
acquisition histories and related non-GAAP adjustments.
Non-cash interest expense related to convertible debt - We have excluded
the incremental non-cash interest expense related to our $240.0 million
2.5% senior convertible notes that we are required to recognize under
U.S. GAAP for convertible debt securities from our non-GAAP results of
operations for all periods presented. This accounting guidance requires
us to recognize significant additional non-cash interest expense based
on the market rate for similar debt instruments that do not contain a
comparable conversion feature. We have allocated a portion of the
proceeds from the issuance of the senior notes to the embedded
conversion feature resulting in a discount on our senior notes. The debt
discount is being amortized as additional non-cash interest expense over
the term of the notes using the effective interest method. These
non-cash interest charges are not included in our operating plans and
are not included in management's assessment of our operating
performance. We believe the exclusion of the non-cash interest charges
provides a useful alternative for investors to evaluate the cost
structure of our operations in a manner consistent with our internal
evaluation of our cost structure.
Non-GAAP Tax Provision Adjustments - The non-GAAP tax provision
adjustments are made to reflect the fact that our annual global
effective non-GAAP tax rate is lower than our effective U.S. GAAP rate.
These differences in effective rate are due to the increase in non-GAAP
taxable income as compared to U.S. GAAP taxable income due to the
non-GAAP reconciling items detailed in the above table and the
jurisdictional mix of non-GAAP and U.S. GAAP taxable income. Our
non-GAAP taxable income outside the U.S. exceeds the U.S. GAAP taxable
income outside the U.S. This difference in jurisdictional mix leads to a
higher portion of our non-GAAP taxable income being taxed at
substantially lower non-U.S. tax rates and a reduction in foreign losses
for which no tax benefit can be taken. The non-GAAP tax provision
adjustments are made to reflect the annual global effective non-GAAP tax
rate for each period.
LAWSON SOFTWARE, INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
% Increase % Increase
(Decrease) (Decrease) at constant
May 31, 2010 May
31, 2009 as reported currency
Revenues:
License fees $ 38,016 $
33,616 13% 13%
Maintenance services 93,324
85,204 10% 7%
Software revenues 131,340
118,820 11% 9%
Consulting revenue 65,687
67,387 -3% -6%
Total revenues 197,027
186,207 6% 3%
Costs of revenues:
Cost of license fees 7,058
7,509 -6% -8%
Cost of maintenance 18,400
15,476 19% 16%
Cost of Software revenues 25,458
22,985 11% 8%
Cost of consulting 57,847
60,710 -5% -8%
Total costs of revenues 83,305
83,695 0% -4%
Gross profit 113,722
102,512 11% 9%
Operating expenses:
Research & development 24,617
19,708 25% 19%
Sales & marketing 43,449
39,295 11% 8%
General & administrative 22,910
19,769 16% 16%
Restructuring 7,249
8,934 -19% -18%
Amortization of acquired intangibles 2,948
2,017 46% 42%
Total operating expenses 101,173
89,723 13% 11%
Operating income 12,549
12,789 -2% -2%
Other income (expense):
Interest income 226
446 -49% -51%
Interest expense (1) (4,005 )
(3,873 ) 3% 3%
Other income (expense) 83
(59 ) NA NA
Total other income (expense) (3,696 )
(3,486 ) NA NA
Income before income taxes 8,853
9,303 -5% -3%
Provision for income taxes (1) 6,228
665 837% 529%
Net Income $ 2,625 $
8,638 -70% -68%
Net income per share:
Basic $ 0.02 $
0.05 -60% -68%
Diluted $ 0.02 $
0.05 -60% -68%
Shares used in computing net income per share:
Basic 161,840
162,520 0%
Diluted 166,386
164,697 1%
We disclose the percent change in the results from one period to another
using constant currency 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.
(1) 2009 Adjusted to reflect adoption of accounting guidance for
convertible debt securities.
LAWSON SOFTWARE, INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Twelve Months Ended
% Increase % Increase
(Decrease) (Decrease) at constant
May 31, 2010 May
31, 2009 as reported currency
Revenues:
License fees $ 124,126 $
109,683 13% 11%
Maintenance services 352,986
350,202 1% 2%
Software revenues 477,112
459,885 4% 4%
Consulting revenue 259,296
297,443 -13% -14%
Total revenues 736,408
757,328 -3% -3%
Costs of revenues:
Cost of license fees 23,987
24,361 -2% -5%
Cost of maintenance 68,233
64,533 6% 5%
Cost of Software revenues 92,220
88,894 4% 2%
Cost of consulting 228,874
269,738 -15% -16%
Total costs of revenues 321,094
358,632 -10% -12%
Gross profit 415,314
398,696 4% 5%
Operating expenses:
Research & development 90,268
82,377 10% 9%
Sales & marketing 162,245
162,975 0% -1%
General & administrative 84,306
79,765 6% 6%
Restructuring 13,154
19,954 -34% -38%
Amortization of acquired intangibles 9,472
8,892 7% 5%
Total operating expenses 359,445
353,963 2% 1%
Operating income 55,869
44,733 25% 37%
Other income (expense):
Interest income 917
6,282 -85% -85%
Interest expense (1) (16,238 )
(15,625 ) 4% 4%
Other income 88
532 NA NA
Total other income (expense) (15,233 )
(8,811 ) NA NA
Income before income taxes 40,636
35,922 13% 24%
Provision for income taxes (1) 27,612
21,731 27% 25%
Net Income $ 13,024 $
14,191 -8% 22%
Net income per share:
Basic $ 0.08 $
0.09 -11% 24%
Diluted $ 0.08 $
0.08 0% 22%
Shares used in computing net income per share:
Basic 161,442
164,011 -2%
Diluted 165,251
166,393 -1%
We disclose the percent change in the results from one period to another
using constant currency 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.
(1) 2009 Adjusted to reflect adoption of accounting guidance for
convertible debt securities.
LAWSON SOFTWARE, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
May 31, 2010 May
31, 2009
ASSETS
Current assets:
Cash and cash equivalents $ 375,917 $
414,815
Restricted cash -current 654
9,208
Trade accounts receivable, net 117,976
152,666
Income taxes receivable 4,664
4,242
Deferred income taxes -current 18,957
18,909
Prepaid expenses and other current assets 51,945
52,255
Total current assets 570,113
652,095
Restricted cash -non-current 10,070
1,786
Property and equipment, net 54,671
55,641
Goodwill 525,576
470,274
Other intangibles assets, net 159,665
91,701
Deferred income taxes -non-current (1) 38,144
39,835
Other assets (1) 13,805
13,149
Total assets $ 1,372,044 $
1,324,481
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Long-term debt-current $ 2,646 $
4,591
Accounts payable 12,085
14,018
Accrued compensation and benefits 76,102
73,976
Income taxes payable (1) 2,271
4,512
Deferred income taxes -current 5,605
5,652
Deferred revenue -current 319,797
279,041
Other current liabilities 36,573
56,308
Total current liabilities 455,079
438,098
Long-term debt - non-current (1) 224,143
217,333
Deferred income taxes - non-current 42,834
16,827
Deferred revenue - non-current 8,363
13,482
Other long-term liabilities 16,456
14,781
Total liabilities 746,875
700,521
Minority interest
Stockholders' equity:
Common stock 2,029
2,018
Additional paid-in capital (1) 887,349
870,722
Treasury stock, at cost (326,925 )
(324,651 )
Retained earnings (1) 53,742
40,718
Accumulated other comprehensive income 8,974
35,153
Total stockholders' equity 625,169
623,960
Total liabilities and stockholders' equity $ 1,372,044 $
1,324,481
(1) 2009 Adjusted to reflect adoption of accounting guidance for
convertible debt securities
LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
May 31, 2010 May 31, 2009 May 31, 2010 May 31,
2009
Cash flows from operating activities:
Net income
$ 2,625 $ 8,638 $ 13,024 $
14,191
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization
13,353 10,378 46,684
39,647
Amortization of debt issuance costs (1)
260 256 1,040 1,022
Amortization of debt discount (1)
2,121 1,987 8,486 7,948
Deferred income taxes (1)
276 (10,221 ) 6,141
(6,604 )
Provision for doubtful accounts
323 411 1,312 1,489
Warranty provision
1,333 2,255 4,877 6,959
Net gain on disposal of assets
1,115 - 1,122 -
Excess tax benefits from stock transactions
(356 ) (200 ) (850 ) (648
)
Stock- based compensation expense
3,770 1,758 17,028 8,519
Amortization of discounts (premiums) on marketable securities
- - - 6
Changes in operating assets and liabilities (net of acquisitions):
Trade accounts receivable
14,594 (5,953 ) 49,077
25,843
Prepaid expenses and other assets
(14,132 ) (5,068 ) 2,811
(7,351 )
Accounts payable
10,022 3,233 (3,724 )
(7,660 )
Accrued expenses and other liabilities
7,021 14,629 (20,720 ) 6,731
Income taxes payable/receivable (1)
(2,952 ) 5,706 597 2,906
Deferred revenue
122,097 85,503 26,134
(21,710 )
Net cash provided by operating activities
161,470 113,312 153,039
71,288
Cash flows from investing activities:
Cash paid in conjunction with acquisitions, net of cash acquired
- - (160,000 ) -
Change in restricted cash
203 572 230
(8,105 )
Proceeds from maturities and sales of marketable securities and
investments - (7 ) 4
50,657
Purchases of property and equipment
(5,042 ) (8,803 ) (18,991 )
(29,333 )
Net cash (used in) provided by investing activities
(4,839 ) (8,238 ) (178,757 )
13,219
Cash flows from financing activities
Principal payments on long-term debt
(231 ) (524 ) (1,462 )
(1,747 )
Payments on capital lease obligations
(213 ) (156 ) (2,257 )
(1,043 )
Cash proceeds from exercise of stock options
1,417 574 3,438 2,531
Excess tax benefit from stock transactions
356 200 850 648
Cash proceeds from employee stock purchase plan
731 541 2,428 2,698
Repurchase of common stock from related parties
- (8,875 ) -
(8,875 )
Repurchase of common stock
- (3,163 ) (7,423 )
(94,129 )
Net cash (used in) provided by financing activities
2,060 (11,403 ) (4,426 )
(99,917 )
Effect of exchange rate changes on cash and cash equivalents
(9,120 ) 12,906 (8,754 )
(4,896 )
Increase (decrease) in cash and cash equivalents
149,571 106,577 (38,898 )
(20,306 )
Cash and cash equivalents at beginning of period
226,346 308,238 414,815
435,121
Cash and cash equivalents at end of period
$ 375,917 $ 414,815 $ 375,917 $
414,815
(1) 2009 Adjusted to reflect adoption of accounting guidance for
convertible debt securities
LAWSON SOFTWARE, INC.
RECONCILIATIONS OF SELECTED GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
Reconciliation of GAAP revenues, operating income, operating margin and
net income to equivalent Non-GAAP measures
Three Months
Ended Twelve Months Ended
May 31, 2010
May 31, 2009 May 31, 2010 May 31, 2009
GAAP revenue $ 197,027
$ 186,207 $ 736,408 $ 757,328
Non-GAAP revenue adjustments:
Purchase accounting impact on maintenance revenues 2,305
63 4,274 538
Purchase accounting impact on consulting revenues 779
- 1,473 -
Non-GAAP revenue adjustments 3,084
63 5,747 538
Non-GAAP revenue $ 200,111
$ 186,270 $ 742,155 $ 757,866
GAAP operating income $ 12,549
$ 12,789 $ 55,869 $ 44,733
GAAP operating margin 6.4
% 6.9 % 7.6 % 5.9 %
Non-GAAP revenue adjustments 3,084
63 5,747 538
Non-GAAP costs/operating expense adjustments:
Purchase accounting impact on consulting costs -
45 - 150
Amortization of purchased maintenance contracts 405
592 1,974 2,607
Stock-based compensation 3,768
1,758 17,026 8,519
Pre-merger claims reserve adjustment -
(1,134 ) (661 ) (5,021 )
Acquisition transaction and integration costs 417
- 1,571 -
Pension gain (1,850
) - (1,850 ) -
Restructuring 7,249
8,934 13,154 19,954
Amortization of acquired intangibles 7,468
4,706 22,877 19,934
Total Non-GAAP costs/operating expense adjustments 17,457
14,901 54,091 46,143
Non-GAAP operating income $ 33,090
$ 27,753 $ 115,707 $ 91,414
Non-GAAP operating margin 16.5
% 14.9 % 15.6 % 12.1 %
GAAP net income (1) $ 2,625
$ 8,638 $ 13,024 $ 14,191
Non-GAAP revenue adjustments 3,084
63 5,747 538
Non-GAAP costs/operating expense adjustments 17,457
14,901 54,091 46,143
Non-cash interest expense related to convertible debt 2,122
1,987 8,486 7,948
Tax provision adjustment (2) (5,433
) (8,521 ) (12,703 ) (9,962 )
Non-GAAP net income $ 19,855
$ 17,068 $ 68,645 $ 58,858
Reconciliation of GAAP net income per diluted share to Non-GAAP net
income per diluted share
Three Months
Ended Twelve Months Ended
May 31, 2010
May 31, 2009 May 31, 2010 May 31, 2009
GAAP net income per diluted share (1) $ 0.02
$ 0.05 $ 0.08 $ 0.08
Purchase accounting impact on revenue 0.02
0.00 0.03 0.00
Purchase accounting impact on consulting costs -
0.00 - 0.00
Amortization of purchased maintenance contracts 0.00
0.00 0.01 0.02
Stock-based compensation 0.02
0.01 0.10 0.05
Pre-merger claims reserve adjustment -
(0.01 ) (0.00 ) (0.03 )
Acquisition transaction and integration costs 0.00
- 0.01 -
Pension gain (0.01
) - (0.01 ) -
Restructuring 0.04
0.05 0.08 0.12
Amortization of acquired intangibles 0.04
0.03 0.14 0.12
Non-cash interest expense related to convertible debt 0.01
0.01 0.05 0.05
Tax provision adjustment (0.03
) (0.05 ) (0.08 ) (0.06 )
Non-GAAP net income per diluted share (3) $ 0.12
$ 0.10 $ 0.42 $ 0.35
Weighted average shares - basic 161,840
162,520 161,442 164,011
Weighted average shares - diluted 166,386
164,697 165,251 166,393
(1) 2009 Adjusted to reflect adoption of accounting guidance for
convertible debt securities.
(2) Non-GAAP tax provision is calculated by excluding the non-GAAP
adjustments on a jurisdictional basis.
(3) Net income per share columns may not total due to rounding.
LAWSON SOFTWARE, INC.
SUPPLEMENTAL NON-GAAP MEASURES
INCREASE (DECREASE) IN GAAP AMOUNTS REPORTED
(in thousands)
(unaudited)
Three Months
Ended Twelve Months Ended
May 31, 2010
May 31, 2009 May 31, 2010 May 31, 2009
Revenue items
Purchase accounting impact on maintenance revenues $ 2,305
$ 63 $ 4,274 $ 538
Purchase accounting impact on consulting revenues 779
- 1,473 -
Total revenue items 3,084
63 5,747 538
Cost of license items
Amortization of acquired intangibles (4,520 )
(2,689 ) (13,405 ) (11,043 )
Total cost of license items (4,520 )
(2,689 ) (13,405 ) (11,043 )
Cost of maintenance items
Amortization of purchased maintenance contracts (405 )
(592 ) (1,974 ) (2,607 )
Stock-based compensation (256 )
(77 ) (1,118 ) (274 )
Total cost of maintenance items (661 )
(669 ) (3,092 ) (2,881 )
Cost of consulting items
Purchase accounting impact on consulting -
(45 ) - (150 )
Amortization of acquired intangibles -
- - 1
Stock-based compensation (611 )
(293 ) (3,525 ) (758 )
Total cost of consulting items (611 )
(338 ) (3,525 ) (907 )
Research and development items
Stock-based compensation (403 )
(174 ) (1,032 ) (634 )
Total research and development items (403 )
(174 ) (1,032 ) (634 )
Sales and marketing items
Stock-based compensation (961 )
(164 ) (6,760 ) (1,617 )
Total sales and marketing items (961 )
(164 ) (6,760 ) (1,617 )
General and administrative items
Acquisition transaction and integration expenses (417 )
- (1,571 ) -
Pre-merger claims reserve adjustment -
1,134 661 5,021
Pension gain 1,850
- 1,850 -
Stock-based compensation (1,537 )
(1,050 ) (4,591 ) (5,236 )
Total general and administrative items (104 )
84 (3,651 ) (215 )
Restructuring (7,249 )
(8,934 ) (13,154 ) (19,954 )
Amortization of acquired intangibles (2,948 )
(2,017 ) (9,472 ) (8,892 )
Non-cash interest expense related to convertible debt (2,122 )
(1,987 ) (8,486 ) (7,948 )
Tax provision adjustment (1) 5,433
8,521 12,703 9,962
Total non-GAAP Adjustments $ 17,230
$ 8,430 $ 55,621 $ 44,667
(1) - Based on a projected annual global effective tax rate analysis,
the non- GAAP tax provision for fiscal 2010 was calculated to be 37.0%
for fiscal 2010. The non-GAAP tax provision is calculated by excluding
the non-GAAP adjustments on a jurisdictional basis
Lawson Software, Inc.
Media:
Joe Thornton, 651-767-6154
joe.thornton@us.lawson.com (joe.thornton@us.lawson.com)
or
Investors and Analysts:
Barbara Doyle, 651-767-4385
investor@lawson.com (investor@lawson.com)
Lawson Software Reports Fourth Quarter 2010 Financial Results
| Source: Lawson Software, Inc.
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