Lawson Software Reports Second Quarter Fiscal 2011 Financial Results
GAAP operating income increases 55 percent year-over-year; non-GAAP
operating income increases 22 percent
GAAP EPS of $0.07 up 328 percent year-over-year; non-GAAP EPS of $0.12
up 27 percent
Q3 fiscal 2011 guidance: GAAP EPS of $0.06 - $0.08; Non-GAAP EPS of
$0.11 - $0.13
ST. PAUL, Minn.--(BUSINESS WIRE (http://www.businesswire.com/))--
Regulatory News:
Lawson Software, Inc. (Nasdaq: LWSN) today reported financial results
for its second quarter of fiscal year 2011, which ended Nov. 30, 2010.
As reported under generally accepted accounting principles (GAAP),
revenues were $187.5 million with operating income of $20.5 million and
net income of $12 million, or diluted earnings per share (EPS) of $0.07.
These results compare to second quarter of fiscal year 2010 GAAP
revenues of $184.4 million with operating income of $13.2 million and
net income of $2.8 million, or EPS of $0.02.
Non-GAAP operating income for the second quarter of fiscal 2011
increased to $32.5 million with net income $20.1 million, or $0.12 per
diluted share, compared to operating income of $26.6 million with net
income of $15.6 million, or $0.09 per diluted share in the second
quarter of fiscal year 2010. Second quarter non-GAAP operating income,
net income and EPS includes the addition of $1.5 million of revenues
impacted by purchase accounting adjustments and excludes $10.6 million
of pre-tax expenses for amortization of acquired intangibles, non-cash
stock-based compensation, and amortization of purchased maintenance
contracts, partly offset by a pre-merger claims reserve adjustment and
restructuring adjustments. Non-GAAP net income and EPS also exclude $2.3
million of pre-tax expense for non-cash convertible note interest.
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.
“We had strong bottom line performance with non-GAAP net income rising
29 percent year-over-year,” said Harry Debes, president and chief
executive officer. “Q2 software revenues increased led by robust growth
in maintenance services. Consulting revenues declined consistent with a
reduction in our billable consultants as we have recruited and enabled a
global network of services partners. This reduction in consulting was
planned and reflects the current economic reality, but more importantly,
it is a strategic decision to shift our consulting revenues to
approximately 30 percent of total revenues, which we believe is the
right level for our company.”
Debes added, “In our target markets, healthcare and human capital
management performed very well. HCM products were sold in 9 of the 11
largest deals in the quarter. HCM continues to be one of our fastest
growing businesses and we significantly enhanced our solution with the
acquisition of Enwisen in December.”
Financial Guidance
For the third quarter of fiscal 2011, which ends Feb. 28, 2011, the
company is providing guidance using average currency exchange rates
during December 2010. The company estimates total revenues of $188
million to $193 million. Non-GAAP total revenues are expected to be in
the range of $190 million to $195 million, including approximately $2
million of revenues impacted by purchase accounting adjustments. The
company anticipates GAAP EPS will be in the range of $0.06 to $0.08.
Non-GAAP EPS is forecasted to be in the range of $0.11 to $0.13,
including the revenues impacted by purchase accounting and excluding
approximately $14 million of pre-tax expenses related to the
amortization of acquired intangible assets, non-cash stock-based
compensation, incremental non-cash convertible note interest,
amortization of purchased maintenance contracts and acquisition
integration costs.
The company is also updating guidance for the fiscal year 2011, which
ends May 31, 2011. Total GAAP revenues are expected to be $764 million
to $774 million with GAAP EPS in the range of $0.28 to $0.30. Total
non-GAAP revenues are estimated at $770 million to $780 million,
including $6 million in revenues impacted by purchase accounting.
Non-GAAP EPS is forecasted to be in the range of $0.48 to $0.50,
including the purchase accounting impact on revenues and excluding
approximately $52 million of pre-tax expenses related to the
amortization of acquired intangible assets, non-cash stock-based
compensation, incremental non-cash convertible note interest,
amortization of purchased maintenance contracts and acquisition
integration costs. 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.
Conference Call, Webcast and Key Metrics
The company will host a conference call and webcast to discuss its
second quarter results and future outlook at 5 p.m. EDT (4 p.m. CDT)
Jan. 6, 2011. Interested parties may also listen to the call by dialing
1-888-810-4935 (or 1-312-470-0073) and using the passcode "LWSN."
Interested parties should access the webcast at
www.lawson.com/investor (http://cts.businesswire.com/ct/CT?id=smartlink&
url=http%3A%2F%2Fwww.lawson.com%2Finvestor&esheet=6564429&lan=en-US&anch
or=www.lawson.com%2Finvestor&index=1&md5=a15903d8f11fea5010a634f2cf63cba
a) 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 1-800-216-6080 or 1-402-220-3894 for
international callers. The webcast will also remain on
www.lawson.com/investor (http://cts.businesswire.com/ct/CT?id=smartlink&
url=http%3A%2F%2Fwww.lawson.com%2Finvestor&esheet=6564429&lan=en-US&anch
or=www.lawson.com%2Finvestor&index=2&md5=7cd36a3e5f5d9ef65cdc1dedcb14a8c
b) for approximately one week. Additional key business metrics are also
available at the Lawson Investor Relations web page.
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://cts.businesswire.com/ct/CT?id=smartlink&url=http%
3A%2F%2Fwww.lawson.com&esheet=6564429&lan=en-US&anchor=www.lawson.com&in
dex=3&md5=0ee407703051e74c18649b782a85788d). 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; 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 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.
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 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.
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.
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)
% Increase % Increase
Three Months Ended
(Decrease) (Decrease) at
November 30, 2010
November 30, 2009 as reported constant currency
Revenues:
License fees $ 26,362
$ 28,371 (7 %) (6 %)
Maintenance services 97,495
85,152 14 % 13 %
Software revenues 123,857
113,523 9 % 8 %
Consulting 63,605
70,899 (10 %) (9 %)
Total revenues 187,462
184,422 2 % 2 %
Costs of revenues:
Cost of license fees 6,104
5,407 13 % 11 %
Cost of maintenance services 17,556
16,922 4 % 5 %
Cost of software revenues 23,660
22,329 6 % 6 %
Cost of consulting 55,377
59,943 (8 %) (7 %)
Total costs of revenues 79,037
82,272 (4 %) (3 %)
Gross profit 108,425
102,150 6 % 5 %
Gross margin 58 %
55 %
Operating expenses:
Research and development 23,745
22,273 7 % 5 %
Sales and marketing 39,916
40,000 (0 %) 1 %
General and administrative 22,033
20,075 10 % 9 %
Restructuring (518 )
4,676 NA NA
Amortization of acquired intangibles 2,777
1,945 43 % 47 %
Total operating expenses 87,953
88,969 (1 %) (1 %)
Operating income 20,472
13,181 55 % 47 %
Operating margin 11 %
7 %
Other income (expense), net:
Interest income 420
245 71 % 72 %
Interest expense (4,171 )
(4,117 ) 1 % 1 %
Other income (expense), net (96 )
(62 ) 55 % ++ +
Total other income (expense), net (3,847 )
(3,934 ) (2 %) (1 %)
Income before income taxes 16,625
9,247 80 % 65 %
Provision for income taxes 4,648
6,493 (28 %) (28 %)
Net income $ 11,977
$ 2,754 335 % 227 %
Net income per share:
Basic $ 0.07
$ 0.02 329 % 223 %
Diluted $ 0.07
$ 0.02 328 % 221 %
Shares used in computing net income per share:
Basic 163,460
161,402 1 %
Diluted 167,902
165,164 2 %
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)
% Increase % Increase
Six Months Ended
(Decrease) (Decrease) at
November 30, 2010
November 30, 2009 as reported constant currency
Revenues:
License fees $ 50,870
$ 54,306 (6 %) (5 %)
Maintenance services 192,145
170,582 13 % 11 %
Software revenues 243,015
224,888 8 % 7 %
Consulting 119,107
128,526 (7 %) (6 %)
Total revenues 362,122
353,414 2 % 3 %
Costs of revenues:
Cost of license fees 11,978
10,334 16 % 15 %
Cost of maintenance services 34,575
32,481 6 % 8 %
Cost of software revenues 46,553
42,815 9 % 9 %
Cost of consulting 107,124
111,778 (4 %) (3 %)
Total costs of revenues 153,677
154,593 (1 %) 1 %
Gross profit 208,445
198,821 5 % 4 %
Gross margin 58 %
56 %
Operating expenses:
Research and development 45,061
42,891 5 % 4 %
Sales and marketing 77,642
75,877 2 % 4 %
General and administrative 43,497
39,732 9 % 10 %
Restructuring (1,453 )
4,751 NA NA
Amortization of acquired intangibles 5,483
3,825 43 % 49 %
Total operating expenses 170,230
167,076 2 % 2 %
Operating income 38,215
31,745 20 % 12 %
Operating margin 11 %
9 %
Other income (expense), net:
Interest income 762
563 35 % 37 %
Interest expense (8,284 )
(8,159 ) 2 % 2 %
Other income (expense), net (146 )
(160 ) (9 %) 289 %
Total other income (expense), net (7,668 )
(7,756 ) (1 %) 0 %
Income before income taxes 30,547
23,989 27 % 15 %
Provision for income taxes 8,934
15,258 (41 %) (40 %)
Net income $ 21,613
$ 8,731 148 % 86 %
Net income per share:
Basic $ 0.13
$ 0.05 145 % 84 %
Diluted $ 0.13
$ 0.05 143 % 83 %
Shares used in computing net income per share:
Basic 163,026
161,256 1 %
Diluted 167,558
164,635 2 %
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)
November
30, 2010 May 31, 2010
ASSETS
Current assets:
Cash and cash equivalents $ 288,273
$ 375,917
Restricted cash - current 635
654
Trade accounts receivable, net 109,195
117,976
Income taxes receivable 10,607
4,664
Deferred income taxes - current 19,326
18,957
Prepaid expenses and other current assets 45,288
51,945
Total current assets 473,324
570,113
Restricted cash - non-current 10,153
10,070
Property and equipment, net 52,638
54,671
Goodwill 562,489
525,576
Other intangibles assets, net 147,242
159,665
Deferred income taxes - non-current 36,614
38,144
Other assets 13,555
13,805
Total assets $
1,296,015 $ 1,372,044
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Long-term debt - current $ 2,464
$ 2,646
Accounts payable 7,369
12,085
Accrued compensation and benefits 58,084
76,102
Income taxes payable 2,331
2,271
Deferred income taxes - current 6,197
5,605
Deferred revenue - current 197,960
319,797
Other current liabilities 29,620
36,573
Total current liabilities 304,025
455,079
Long-term debt - non-current 228,090
224,143
Deferred income taxes - non-current 43,133
42,834
Deferred revenue - non-current 6,843
8,363
Other long-term liabilities 15,889
16,456
Total liabilities 597,980
746,875
Stockholders' equity:
Common stock 2,036
2,029
Additional paid-in capital 889,297
887,349
Treasury stock, at cost
(322,389 ) (326,925 )
Retained earnings 75,355
53,742
Accumulated other comprehensive income 53,736
8,974
Total stockholders' equity 698,035
625,169
Total liabilities and stockholders' equity $
1,296,015 $ 1,372,044
LAWSON SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
November 30, November 30, November 30,
November 30,
2010 2009 2010 2009
Cash flows from operating activities:
Net income
$ 11,977 $ 2,754 $ 21,613 $
8,731
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization
13,890 10,736 27,734
20,778
Amortization of debt issuance costs
260 260 520
520
Amortization of debt discount
2,265 2,121 4,530
4,243
Deferred income taxes
735 1,659 2,463
4,891
Provision for doubtful accounts
(63 ) (174 ) (76 )
467
Warranty provision
1,003 1,351 1,824
2,353
Net loss on disposal of assets
(3 ) - 6 10
Excess tax benefits from stock transactions
(175 ) (135 ) (1,293 )
(303 )
Stock- based compensation expense
4,188 4,433 9,130
7,000
Changes in operating assets and liabilities (net of acquisition):
Trade accounts receivable
(6,656 ) 1,968 10,183
34,367
Prepaid expenses and other assets
2,069 (10,194 ) 10,396
1,727
Accounts payable
1,638 (2,462 ) (4,977 )
(8,346 )
Accrued expenses and other liabilities
(7,826 ) 5,971 (35,510 )
(29,962 )
Income taxes payable/receivable
(2,077 ) 16,376 (6,459 )
4,856
Deferred revenue
(70,926 ) (66,267 ) (128,129 )
(103,477 )
Net cash used in operating activities
(49,701 ) (31,603 ) (88,045 )
(52,145 )
Cash flows from investing activities:
Change in restricted cash
175 1,089 (216 )
812
Purchases of marketable securities and investments
- - (3,006 ) -
Purchases of property and equipment
(3,549 ) (4,223 ) (9,549 )
(8,581 )
Net cash used in investing activities
(3,374 ) (3,134 ) (12,771 )
(7,769 )
Cash flows from financing activities:
Principal payments on long-term debt
(307 ) (424 ) (652 )
(891 )
Payments on capital lease obligations
(299 ) (730 ) (624 )
(1,305 )
Cash proceeds from exercise of stock options
1,981 280 2,561
1,477
Excess tax benefit from stock transactions
175 135 1,293
303
Cash proceeds from employee stock purchase plan
654 574 1,268
1,124
Repurchase of common stock
- - (1,730 )
(1,284 )
Net cash provided by (used in) financing activities
2,204 (165 ) 2,116
(576 )
Effect of exchange rate changes on cash and cash equivalents
6,038 4,063 11,056
6,138
Net decrease in cash and cash equivalents
(44,833 ) (30,839 ) (87,644 )
(54,352 )
Cash and cash equivalents at the beginning of the period
333,106 391,302 375,917
414,815
Cash and cash equivalents at the end of the period
$ 288,273 $ 360,463 $ 288,273 $
360,463
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 Six Months Ended
November
30, 2010 November 30, 2009 November 30, 2010 November 30,
2009
GAAP revenue $
187,462 $ 184,422 $ 362,122 $
353,414
Non-GAAP revenue adjustments:
Purchase accounting impact on maintenance revenues 1,139
- 2,568 -
Purchase accounting impact on consulting revenues 346
- 866 -
Non-GAAP revenue adjustments 1,485
- 3,434 -
Non-GAAP revenue $
188,947 $ 184,422 $ 365,556 $
353,414
GAAP operating income $ 20,472
$ 13,181 $ 38,215 $ 31,745
GAAP operating margin 11
% 7 % 11 % 9 %
Non-GAAP revenue adjustments 1,485
- 3,434 -
Non-GAAP costs/operating expense adjustments:
Amortization of purchased maintenance contracts 395
530 790 1,097
Stock-based compensation 4,181
4,433 9,130 7,001
Pre-merger claims reserve adjustment (630
) (661 ) (630 ) (661 )
Pension gain -
- (1,912 ) -
Restructuring (518
) 4,676 (1,453 ) 4,751
Amortization of acquired intangibles 7,148
4,447 14,212 8,826
Total non-GAAP costs/operating expense adjustments 10,576
13,425 20,137 21,014
Non-GAAP operating income $ 32,533
$ 26,606 $ 61,786 $ 52,759
Non-GAAP operating margin 17
% 14 % 17 % 15 %
GAAP net income $ 11,977
$ 2,754 $ 21,613 $ 8,731
Non-GAAP revenue adjustments 1,485
- 3,434 -
Non-GAAP costs/operating expense adjustments 10,576
13,425 20,137 21,014
Non-cash interest expense related to convertible debt 2,265
2,122 4,530 4,243
Tax provision adjustment (1) (6,185
) (2,681 ) (11,593 ) (2,963 )
Non-GAAP net income $ 20,118
$ 15,620 $ 38,121 $ 31,025
Reconciliation of GAAP net income per diluted share to Non-GAAP net
income per diluted share
Three
Months Ended Six Months Ended
November
30, 2010 November 30, 2009 November 30, 2010 November 30,
2009
GAAP net income per diluted share $ 0.07
$ 0.02 $ 0.13 $ 0.05
Purchase accounting impact on revenue 0.01
- 0.02 -
Amortization of purchased maintenance contracts 0.00
0.00 0.00 0.01
Stock-based compensation 0.02
0.03 0.05 0.04
Pre-merger claims reserve adjustment (0.00
) (0.00 ) (0.00 ) (0.00 )
Pension gain -
- (0.01 ) -
Restructuring (0.00
) 0.03 (0.01 ) 0.03
Amortization of acquired intangibles 0.04
0.03 0.08 0.05
Non-cash interest expense related to convertible debt 0.01
0.01 0.03 0.03
Tax provision adjustment (0.04
) (0.02 ) (0.07 ) (0.02 )
Non-GAAP net income per diluted share (2) $ 0.12
$ 0.09 $ 0.23 $ 0.19
Weighted average shares - basic
163,460 161,402 163,026
161,256
Weighted average shares - diluted
167,902 165,164 167,558
164,635
(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.
Non-GAAP tax provision is calculated by excluding 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 Six Months Ended
November
30, 2010 November 30, 209 November 30, 2010
November 30, 209
Revenue items
Purchase accounting impact on maintenance revenues $ 1,139
$ - $ 2,568 $ -
Purchase accounting impact on consulting revenues 346
- 866 -
Total revenue items 1,485
- 3,434 -
Cost of license items
Amortization of acquired intangibles (4,371
) (2,502 ) (8,729 )
(5,001 )
Total cost of license items (4,371
) (2,502 ) (8,729 )
(5,001 )
Cost of maintenance items
Amortization of purchased maintenance contracts (395
) (530 ) (790 )
(1,097 )
Stock-based compensation (214
) (394 ) (586 ) (535
)
Total cost of maintenance items (609
) (924 ) (1,376 )
(1,632 )
Cost of consulting items
Stock-based compensation (651
) (842 ) (1,481 )
(1,265 )
Total cost of consulting items (651
) (842 ) (1,481 )
(1,265 )
Research and development items
Stock-based compensation (479
) (52 ) (1,034 ) (182
)
Total research and development items (479
) (52 ) (1,034 ) (182
)
Sales and marketing items
Stock-based compensation (483
) (2,029 ) (1,750 )
(2,851 )
Total sales and marketing items (483
) (2,029 ) (1,750 )
(2,851 )
General and administrative items
Pre-merger claims reserve adjustment 630
661 630 661
Pension gain -
- 1,912 -
Stock-based compensation (2,354
) (1,116 ) (4,279 )
(2,168 )
Total general and administrative items (1,724
) (455 ) (1,737 )
(1,507 )
Restructuring 518
(4,676 ) 1,453
(4,751 )
Amortization of acquired intangibles (2,777
) (1,945 ) (5,483 )
(3,825 )
Non-cash interest expense related to convertible debt (2,265
) (2,122 ) (4,530 )
(4,243 )
Tax provision adjustment (1) 6,185
2,681 11,593 2,963
Total non-GAAP Adjustments $ 8,141
$ 12,866 $ 16,508 $
22,294
(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 excluding the non-GAAP
adjustments on a jurisdictional basis.
Lawson Software
Joe Thornton
Media
+1-651-767-6154
joe.thornton@us.lawson.com (joe.thornton@us.lawson.com)
or
Barbara Doyle
Investors and Analysts
+1-651-767-4385
investor@lawson.com (investor@lawson.com)
or
Heather Pribyl
Investors and Analysts
+1-651-767-4659
investor@lawson.com (investor@lawson.com)
Lawson Software Reports Second Quarter Fiscal 2011 Financial Results
| Source: Lawson Software, Inc.
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