Lawson Software Reports Third Quarter Fiscal 2011 Financial Results
GAAP software revenues increase 9 percent year-over-year; non-GAAP
software revenues increase 7 percent
GAAP operating income rises 92 percent year-over-year; non-GAAP
operating income rises 24 percent
GAAP EPS of $0.13 up from $0.01 last year; non-GAAP EPS of $0.14 up 32
percent
ST. PAUL, Minn.--(BUSINESS WIRE (http://www.businesswire.com/))--
Regulatory News:
Lawson Software, Inc. (Nasdaq: LWSN) today reported financial results
for its third quarter of fiscal year 2011, which ended Feb. 28, 2011. As
reported under generally accepted accounting principles (GAAP) revenues
were $196 million with operating income of $22.3 million and net income
of $21.4 million, or diluted earnings per share (EPS) of $0.13. These
results increased compared to third quarter of fiscal year 2010 revenues
of $186 million with operating income of $11.6 million and net income of
$1.7 million, or EPS of $0.01.
GAAP operating income for the quarter rose 92 percent to $22.3 million
resulting primarily from a $12.8 million increase in gross profit. The
increase in gross profit was largely driven by a 9 percent increase in
software revenues. Net income increased to $21.4 million compared to
$1.7 million in fiscal 2010 due, in part, to the improvements in
operating income but also due to a gain of $3 million from the
settlement of a bankruptcy claim against Lehman Brothers OTC Derivatives
Inc. (Lehman OTC) and a gain of $1.2 million related to the sale of
marketable securities in the quarter. Net income was also favorably
impacted by a $4.7 million decrease in the provision for income taxes.
Non-GAAP results also increased compared to last year. Total non-GAAP
revenues for the third quarter of fiscal 2011 were $197.9 million with
operating income of $36.9 million and net income of $23.9 million, or
EPS of $0.14. These results increased compared to non-GAAP revenues of
$188.6 million, operating income of $29.9 million and net income of
$17.8 million, or EPS of $0.11 in the third quarter of fiscal year 2010.
Third quarter of fiscal 2011 non-GAAP results include $1.9 million of
revenues impacted by purchase accounting adjustments and exclude $12.7
million of pre-tax expenses for amortization of acquired intangibles,
non-cash share-based compensation, amortization of purchased maintenance
contracts, integration expenses and a pension gain adjustment, partly
offset by a restructuring adjustment. Non-GAAP net income and EPS also
exclude $2.3 million of pre-tax expense for non-cash convertible notes
interest and $3 million of pre-tax income resulting from the settlement
of a bankruptcy claim against Lehman OTC. Non-GAAP net income and EPS
include a provision for income taxes based upon a rate of 35 percent in
fiscal 2011, which is applied consistently throughout the year.
“Lawson delivered a strong third quarter and we are pleased with our
continued progress across both business segments during the period,”
said Harry Debes, president and chief executive officer. “The total
value of software license contracts signed in the quarter grew by 27
percent, led by robust sales in our Healthcare vertical. Non-GAAP
operating margin of nearly 19 percent improved year-over-year, driven by
increases in both S3 and M3 segment profitability. We completed the
annual maintenance renewal cycle for our international customers and
renewals rose to an estimated 94 percent. All of these items contributed
to a 68 percent increase in cash from operations to $73 million in the
quarter.”
Financial Guidance
On Mar. 11, 2011, Lawson issued a press release confirming that it had
received an unsolicited, non-binding proposal to acquire all of the
company's outstanding common stock at a price of $11.25 per share in
cash. In that statement, Lawson also announced that its board of
directors had retained Barclays Capital, Inc. as its financial advisor
to assist in evaluating the proposal, as well as other possible
strategic alternatives and that the company did not intend to comment
further regarding the matter unless and until an agreement is reached,
discussions have been terminated or the board concludes its strategic
review. In light of these developments, the company is not providing any
financial guidance at this time.
Supplemental Remarks in lieu of Conference Call
The company has canceled its conference call and webcast previously
scheduled for 5 p.m. EDT (4 p.m. CDT) Mar. 31, 2011.
In lieu of the previously scheduled conference call and webcast, Lawson
is making available supplemental remarks to provide interested parties
with additional company commentary regarding its third quarter results.
The supplemental remarks are available on the company's Investor
Relations web page at
www.lawson.com/investor (http://www.lawson.com/investor).
About Lawson Software
Lawson Software is a global provider of enterprise software. We provide
business application software, maintenance and consulting to customers
primarily in specific services, trade and manufacturing/distribution
industries. We specialize in and target specific industries including
healthcare, services, public sector, equipment service management &
rental, manufacturing & distribution and consumer products industries.
Our software solutions include Enterprise Financial Management, Human
Capital Management, Business Intelligence, Asset Management, Enterprise
Performance Management, Supply Chain Management, Service Management,
Manufacturing Operations, Business Project Management and
industry-tailored applications. Our applications help automate and
integrate critical business processes, which enable our customers to
collaborate with their partners, suppliers and employees, 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; uncertainties
as to when and whether signed software license contracts will meet the
conditions for the recognition of revenue; uncertainty that a definitive
agreement with respect to a potential sale of Lawson will be reached or
the terms thereof; the ability to complete such a transaction on a
timely basis; the risk that, prior to the completion of any such
transaction, Lawson's business may experience significant disruptions,
including loss of customers or employees, due to transaction-related
uncertainty or other factors; the possibility that legal proceedings may
be instituted against Lawson and/or others relating to any such
transaction and the outcome of such proceedings; increased competition;
the impact of foreign currency exchange rate fluctuations; continuation
of the global recession and credit crisis; Lawson's ability to integrate
acquisitions successfully; changes in conditions in the company's
targeted industries; the impact of the earthquakes in Japan and New
Zealand on the business environment; the outcome of pending litigation
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 Measure Reconciliations
We believe our presentation of non-GAAP revenues, operating income,
operating margin, net income and diluted net income per share 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, develop budgets, serve as a
measurement for incentive compensation awards and 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 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
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 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 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.
The non-GAAP adjustments we make to our reported U.S. GAAP results are
primarily related to purchase accounting and other acquisition matters,
significant non-cash accounting charges and restructuring charges.
Our primary non-GAAP reconciling items are as follows:
Purchase Accounting Impact on Revenue - Our 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 revenues for maintenance and consulting on the acquired
entity's balance sheet, at the time of the acquisition, were 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 non-GAAP revenue adjustment provides investors a
helpful alternative view of Lawson's maintenance and consulting
operations.
Amortization of Purchased Maintenance Contracts - We have excluded
amortization of purchased maintenance contracts from our non-GAAP
results. The purchase price related to these contracts is being
amortized based upon the proportion of future cash flows estimated to be
generated each period over the estimated useful lives of the contracts.
We believe that the exclusion of the amortization expense related to the
purchased maintenance contracts provides investors an enhanced
understanding of our results of operations.
Share-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 acquisition of Intentia, 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 this reserve was
established in purchase accounting, the original charge was not
reflected in our operating results. 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.
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 that 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. In addition, these modifications led to
a settlement of active participants' projected benefit obligations and
resulted in our recording an additional gain related to the pension
settlement. We do not consider these gains in our assessment of our
operating performance. We believe that the exclusion of the
non-recurring pension gains provide investors a useful 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 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 that 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 additional non-cash interest expense based on the market
rate for similar debt instruments that do not contain a comparable
conversion feature. We have allocated a portion of the proceeds from the
issuance of the senior notes to the embedded conversion feature
resulting in a discount on our senior notes. The debt discount is being
amortized as additional non-cash interest expense over the term of the
notes using the effective interest method. These non-cash interest
charges are not included in our operating plans and are not included in
management's assessment of our operating performance. We believe that
the exclusion of the non-cash interest charges 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.
Bankruptcy Settlement - We have excluded the net gain we recorded on
settlement of certain claims that arose due to Lehman OTC's bankruptcy.
These claims related to our business relationships with Lehman OTC,
including a convertible note hedge transaction and a warrant transaction
both entered into as part of the issuance of our senior convertible
notes and an accelerated share repurchase transaction. As a result of
the payments and collections related to the settlement of these
obligations, we recorded a net gain which we do not consider in our
assessment of our operating performance. We believe that the exclusion
of the net gain from this non-recurring bankruptcy settlement provides
investors a useful alternative view of our results of operations and
facilitates comparisons of our results period-over-period.
Non-GAAP Tax Provision Adjustments - The non-GAAP tax provision
adjustments are due to the increase in non-GAAP taxable income as
compared to U.S. GAAP taxable income resulting from the non-GAAP
reconciling items detailed in the below table and the jurisdictional mix
of non-GAAP and U.S. GAAP taxable income. The non-GAAP tax provision
adjustments are made to reflect the annual global effective non-GAAP tax
rate for each period.
LAWSON SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
February 28,
Percentage Change Percentage Change
2011
2010 as Reported at Constant Currency
Revenues:
License fees $ 33,766 $
31,804 6% 5%
Maintenance services 97,449
89,080 9% 9%
Software revenues 131,215
120,884 9% 8%
Consulting 64,798
65,083 (0%) (1%)
Total revenues 196,013
185,967 5% 5%
Costs of revenues:
Cost of license fees 6,166
6,595 (7%) (11%)
Cost of maintenance services 17,692
17,352 2% 1%
Cost of software revenues 23,858
23,947 (0%) (2%)
Cost of consulting 56,546
59,249 (5%) (5%)
Total cost of revenues 80,404
83,196 (3%) (5%)
Gross profit 115,609
102,771 12% 12%
Gross margin 59 %
55 %
Operating expenses:
Research and development 24,176
22,760 6% 3%
Sales and marketing 42,897
42,919 (0%) (1%)
General and administrative 23,115
21,665 7% 6%
Restructuring (233 )
1,154 (120%) (118%)
Amortization of acquired intangibles 3,400
2,699 26% 25%
Total operating expenses 93,355
91,197 2% 1%
Operating income 22,254
11,574 92% 106%
Operating margin 11 %
6 %
Other income (expense), net:
Interest income 407
128 218% 209%
Interest expense (4,121 )
(4,073 ) 1% 1%
Other income (expense), net 4,301
165 *NM *NM
Total other income (expense), net 587
(3,780 ) (116%) (117%)
Income before income taxes 22,841
7,794 193% 214%
Provision for income taxes 1,443
6,126 (76%) (78%)
Net income $ 21,398 $
1,668 *NM *NM
Net income per share:
Basic $ 0.13 $
0.01 *NM *NM
Diluted $ 0.13 $
0.01 *NM *NM
Weighted average common shares outstanding:
Basic 163,978
161,412 2%
Diluted 168,736
165,367 2%
*NM - Percentage not meaningful
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.
LAWSON SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Nine Months Ended
February 28,
Percentage Change Percentage Change
2011
2010 as Reported at Constant Currency
Revenues:
License fees $ 84,636 $
86,110 (2%) (2%)
Maintenance services 289,594
259,662 12% 10%
Software revenues 374,230
345,772 8% 7%
Consulting 183,905
193,609 (5%) (4%)
Total revenues 558,135
539,381 3% 3%
Costs of revenues:
Cost of license fees 18,144
16,929 7% 5%
Cost of maintenance services 52,267
49,833 5% 5%
Cost of software revenues 70,411
66,762 5% 5%
Cost of consulting 163,670
171,027 (4%) (4%)
Total cost of revenues 234,081
237,789 (2%) (1%)
Gross profit 324,054
301,592 7% 7%
Gross margin 58 %
56 %
Operating expenses:
Research and development 69,237
65,651 5% 4%
Sales and marketing 120,539
118,796 1% 2%
General and administrative 66,612
61,397 8% 9%
Restructuring (1,686 )
5,905 (129%) (128%)
Amortization of acquired intangibles 8,883
6,524 36% 39%
Total operating expenses 263,585
258,273 2% 2%
Operating income 60,469
43,319 40% 34%
Operating margin 11 %
8 %
Other income (expense), net:
Interest income 1,169
691 69% 69%
Interest expense (12,405 )
(12,232 ) 1% 2%
Other income (expense), net 4,155
5 *NM *NM
Total other income (expense), net (7,081 )
(11,536 ) (39%) (37%)
Income before income taxes 53,388
31,783 68% 58%
Provision for income taxes 10,377
21,384 (51%) (52%)
Net income $ 43,011 $
10,399 314% 247%
Net income per share:
Basic $ 0.26 $
0.06 308% 242%
Diluted $ 0.26 $
0.06 306% 240%
Weighted average common shares outstanding:
Basic 163,340
161,308 1%
Diluted 167,912
164,901 2%
*NM - Percentage not meaningful
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.
LAWSON SOFTWARE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
February 28,
May 31,
2011
2010
ASSETS
Current assets:
Cash and cash equivalents $ 302,189
$ 375,917
Restricted cash - current 9,127
654
Trade accounts receivable, net 113,361
117,976
Income taxes receivable 6,378
4,664
Deferred income taxes - current 21,371
18,957
Prepaid expenses and other current assets 35,963
51,945
Total current assets 488,389
570,113
Restricted cash - non-current 1,145
10,070
Property and equipment, net 50,880
54,671
Goodwill 634,729
525,576
Other intangibles assets, net 178,769
159,665
Deferred income taxes - non-current 40,384
38,144
Other assets 13,474
13,805
Total assets $ 1,407,770
$ 1,372,044
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Long-term debt - current $ 2,273
$ 2,646
Accounts payable 13,704
12,085
Accrued compensation and benefits 60,287
76,102
Income taxes payable 982
2,271
Deferred income taxes - current 7,422
5,605
Deferred revenue - current 220,180
319,797
Other current liabilities 29,919
36,573
Total current liabilities 334,767
455,079
Long-term debt - non-current 230,387
224,143
Deferred income taxes - non-current 59,580
42,834
Deferred revenue - non-current 10,263
8,363
Other long-term liabilities 13,784
16,456
Total liabilities 648,781
746,875
Stockholders’ equity:
Common stock 2,041
2,029
Additional paid-in capital 895,872
887,349
Treasury stock, at cost (324,774 )
(326,925 )
Retained earnings 96,753
53,742
Accumulated other comprehensive income 89,097
8,974
Total stockholders’ equity 758,989
625,169
Total liabilities and stockholders’ equity $ 1,407,770
$ 1,372,044
LAWSON SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Nine
Months Ended
February 28, February
28,
2011 2010 2011
2010
Cash flows from operating activities:
Net income
$ 21,398 $ 1,668 $ 43,011
$ 10,399
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization
14,713 12,553 42,447
33,331
Amortization of debt issuance costs
260 260 780
780
Amortization of debt discount
2,266 2,122 6,796
6,365
Deferred income taxes
3,399 974 5,862
5,865
Provision for doubtful accounts
(6 ) 522 (82
) 989
Warranty provision
1,103 1,191 2,927
3,544
Gain on sale of marketable securities
(1,193 ) - (1,193
) -
Net (gain) loss on disposal of assets
3 (3 ) 9
7
Excess tax benefits from stock transactions
(272 ) (191 ) (1,565
) (494 )
Share-based compensation expense
4,262 6,258 13,392
13,258
Changes in operating assets and liabilities (net of acquisitions):
Trade accounts receivable
1,315 116 11,498
34,483
Prepaid expenses and other assets
6,971 15,216 17,367
16,943
Accounts payable
5,844 (5,400 ) 867
(13,746 )
Accrued expenses and other liabilities
(3,602 ) 2,221
(39,112 ) (27,741 )
Income taxes payable/receivable
(1,774 ) (1,307 ) (8,233
) 3,549
Deferred revenue
18,626 7,514
(109,503 ) (95,963 )
Net cash provided by (used in) operating activities
73,313 43,714
(14,732 ) (8,431 )
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired
(70,000 ) (160,000 )
(70,000 ) (160,000 )
Change in restricted cash
(299 ) (785 ) (515
) 27
Purchases of marketable securities and investments
- - (3,006
) -
Proceeds from maturities and sales of marketable securities and
investments 4,199 4
4,199 4
Purchases of property and equipment
(3,543 ) (5,368 )
(13,092 ) (13,949 )
Net cash used in investing activities
(69,643 ) (166,149 )
(82,414 ) (173,918 )
Cash flows from financing activities:
Principal payments on long-term debt
(325 ) (340 ) (977
) (1,231 )
Payments on capital lease obligations
(274 ) (739 ) (898
) (2,044 )
Cash proceeds from exercise of stock options
3,250 544 5,811
2,021
Excess tax benefit from stock transactions
272 191 1,565
494
Cash proceeds from employee stock purchase plan
707 573 1,975
1,697
Repurchase of common stock
(2,383 ) (6,139 ) (4,113
) (7,423 )
Net cash provided by (used in) financing activities
1,247 (5,910 ) 3,363
(6,486 )
Effect of exchange rate changes on cash and cash equivalents
8,999 (5,772 ) 20,055
366
Net decrease in cash and cash equivalents
13,916 (134,117 )
(73,728 ) (188,469 )
Cash and cash equivalents at the beginning of the period
288,273 360,463
375,917 414,815
Cash and cash equivalents at the end of the period
$ 302,189 $ 226,346 $
302,189 $ 226,346
LAWSON SOFTWARE, INC.
RECONCILIATIONS OF SELECTED GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
(unaudited)
Reconciliation of GAAP revenues, operating income, operating margin and
net income to equivalent non-GAAP measures
Three
Months Ended Nine Months Ended
February
28, February 28,
2011
2010 2011 2010
GAAP revenue $ 196,013
$ 185,967 $ 558,135 $ 539,381
Non-GAAP revenue adjustments:
Purchase accounting impact on maintenance revenues 278
1,969 2,846 1,969
Purchase accounting impact on consulting revenues 1,657
694 2,522 694
Non-GAAP revenue adjustments 1,935
2,663 5,368 2,663
Non-GAAP revenue $ 197,948
$ 188,630 $ 563,503 $ 542,044
GAAP operating income $ 22,254
$ 11,574 $ 60,469 $ 43,319
GAAP operating margin 11
% 6 % 11 % 8 %
Non-GAAP revenue adjustments 1,935
2,663 5,368 2,663
Non-GAAP costs/operating expense adjustments:
Amortization of purchased maintenance contracts 375
473 1,165 1,570
Share-based compensation 4,261
6,258 13,391 13,255
Pre-merger claims reserve adjustment -
- (630 ) (661 )
Acquisition transaction and integration costs 347
1,153 346 1,153
Pension gain 25
- (1,886 ) -
Restructuring (233
) 1,154 (1,686 ) 5,905
Amortization of acquired intangibles 7,919
6,583 22,131 15,409
Total non-GAAP costs/operating expense adjustments 12,694
15,621 32,831 36,631
Non-GAAP operating income $ 36,883
$ 29,858 $ 98,668 $ 82,613
Non-GAAP operating margin 19
% 16 % 18 % 15 %
GAAP net income $ 21,398
$ 1,668 $ 43,011 $ 10,399
Non-GAAP revenue adjustments 1,935
2,663 5,368 2,663
Non-GAAP costs/operating expense adjustments 12,694
15,621 32,831 36,631
Non-cash interest expense related to convertible debt 2,265
2,122 6,796 6,365
Bankruptcy settlement (3,006
) - (3,006 ) -
Tax provision adjustment (1) (11,412
) (4,308 ) (23,005 ) (7,272 )
Non-GAAP net income $ 23,874
$ 17,766 $ 61,995 $ 48,786
Reconciliation of GAAP net income per diluted share to non-GAAP net
income per diluted share
Three
Months Ended Nine Months Ended
February
28, February 28,
2011
2010 2011 2010
GAAP net income per diluted share $ 0.13
$ 0.01 $ 0.26 $ 0.06
Purchase accounting impact on revenue 0.01
0.02 0.03 0.02
Amortization of purchased maintenance contracts 0.00
0.00 0.01 0.01
Share-based compensation 0.03
0.04 0.08 0.08
Pre-merger claims reserve adjustment -
- (0.00 ) (0.00 )
Acquisition transaction and integration costs 0.00
0.01 0.00 0.01
Pension gain 0.00
- (0.01 ) -
Restructuring (0.00
) 0.01 (0.01 ) 0.04
Amortization of acquired intangibles 0.05
0.04 0.13 0.09
Non-cash interest expense related to convertible debt 0.01
0.01 0.04 0.04
Bankruptcy settlement (0.02
) - (0.02 ) -
Tax provision adjustment (0.07
) (0.03 ) (0.14 ) (0.04 )
Non-GAAP net income per diluted share $ 0.14
$ 0.11 $ 0.37 $ 0.30
(2)
Weighted average shares - basic 163,978
161,412 163,340 161,308
Weighted average shares - diluted 168,736
165,367 167,912 164,901
(1) Based on a projected annual global effective tax rate analysis, the
non-GAAP tax provision was calculated to be 35% for fiscal 2011 and 37%
for fiscal 2010. Non-GAAP tax provision is calculated by reflecting the
non-GAAP adjustments on a jurisdictional basis.
(2) 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 Nine Months Ended
February
28, February 28,
2011
2010 2011 2010
Revenue items
Purchase accounting impact on maintenance revenues $ 278
$ 1,969 $ 2,846 $ 1,969
Purchase accounting impact on consulting revenues 1,657
694 2,522 694
Total revenue items 1,935
2,663 5,368 2,663
Cost of license items
Amortization of acquired intangibles (4,045
) (3,883 ) (12,774 ) (8,885 )
Total cost of license items (4,045
) (3,883 ) (12,774 ) (8,885 )
Cost of maintenance items
Amortization of purchased maintenance contracts (375
) (473 ) (1,165 ) (1,570 )
Stock-based compensation (434
) (327 ) (1,020 ) (861 )
Total cost of maintenance items (809
) (800 ) (2,185 ) (2,431 )
Cost of consulting items
Amortization of acquired intangibles (474
) - (474 ) -
Stock-based compensation (1,095
) (1,649 ) (2,576 ) (2,914 )
Total cost of consulting items (1,569
) (1,649 ) (3,050 ) (2,914 )
Research and development items
Stock-based compensation (616
) (448 ) (1,650 ) (628 )
Total research and development items (616
) (448 ) (1,650 ) (628 )
Sales and marketing items
Stock-based compensation (1,103
) (2,947 ) (2,853 ) (5,797 )
Total sales and marketing items (1,103
) (2,947 ) (2,853 ) (5,797 )
General and administrative items
Pre-merger claims reserve adjustment -
- 630 661
Integration expenses (347
) (1,153 ) (346 ) (1,153 )
Pension gain (25
) - 1,886 -
Stock-based compensation (1,013
) (887 ) (5,292 ) (3,055 )
Total general and administrative items (1,385
) (2,040 ) (3,122 ) (3,547 )
Restructuring 233
(1,154 ) 1,686 (5,905 )
Amortization of acquired intangibles (3,400
) (2,700 ) (8,883 ) (6,524 )
Non-cash interest expense related to convertible debt (2,265
) (2,122 ) (6,796 ) (6,365 )
Bankruptcy Settlement 3,006
- 3,006 -
Tax provision adjustment (1) 11,412
4,308 23,005 7,272
Total non-GAAP Adjustments $ 2,476
$ 16,098 $ 18,984 $ 38,387
(1) Based on a projected annual global effective tax rate analysis, the
non-GAAP tax provision for fiscal 2011 was calculated to be 35% and was
37% for fiscal 2010. The non-GAAP tax provision is calculated by
reflecting the non-GAAP adjustments on a jurisdictional basis.
Contacts
Lawson Software
Media:
Joe Thornton, +1-651-767-6154
joe.thornton@us.lawson.com (joe.thornton@us.lawson.com)
or
Investors and Analysts:
Barbara Doyle, +1-651-767-4385
investor@lawson.com (investor@lawson.com)
or
Investors and Analysts:
Heather Pribyl, +1-651-767-4659
investor@lawson.com (investor@lawson.com)
Lawson Software Reports Third Quarter Fiscal 2011 Financial Results
| Source: Lawson Software, Inc.
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