Lightbridge Announces Third Quarter 2006 Financial Results
Authorize.Net Revenue Grows 24% over Prior Year and
Achieves Record Levels in Transaction Volumes and Dollars Processed
Company Announces $15 Million Stock Repurchase Program
Achieves Record Levels in Transaction Volumes and Dollars Processed
Company Announces $15 Million Stock Repurchase Program
Burlington, MA—Wednesday, November 1, 2006—Lightbridge, Inc. (NASDAQ: LTBG), a leading e-commerce, analytics and decisioning company, today reported financial results for the quarter ended September 30, 2006.
Results
Revenue from continuing operations for the third quarter of 2006 was $23.3 million compared to $27.2 million for the third quarter of 2005. This represents a decrease of 14% compared to the prior year due to lower revenue from Telecom Decisioning Services (TDS) clients. Authorize.Net revenue for the third quarter of 2006 was a record $14.5 million, an increase of 24% over the $11.7 million reported in the third quarter of 2005.
Income from continuing operations was $274,000, or $0.01 per fully diluted share, for the third quarter of 2006, versus $1.3 million, or $0.05 per fully diluted share, reported for the third quarter of 2005.
Third quarter 2006 results included share-based compensation expense of approximately $666,000 reflecting the adoption of SFAS 123(R). Restructuring and asset impairment charges were $3.2 million. This amount was comprised of $2.4 million for the impairment of assets related to the Company’s decision to exit the TDS business and $800,000 in restructuring and asset impairment charges related to the closing of the Company’s Liverpool, Nova Scotia contact center. Third quarter 2005 results included restructuring and asset impairments charges of $1.5 million. For the third quarter of 2006, income from continuing operations before share-based compensation expense, restructuring and asset impairment charges (a non-GAAP financial measure) was $4.1 million, or $0.15 per fully diluted share. A detailed reconciliation of the GAAP and non-GAAP measures is included at the end of this release.
Total revenue from continuing operations for the first nine months of 2006 was $75.0 million compared to $81.0 million for the first nine months of 2005. Income from continuing operations for the first nine months of 2006 was $2.3 million, or $0.08 per fully diluted share, versus income from continuing operations of $4.8 million, or $0.18 per fully diluted share, for the first nine months of 2005. The nine months ended September 30, 2006 results include share-based compensation expense of $3.4 million, restructuring and asset impairment charges of $5.5 million, and the NetMoneyIN, Inc. patent litigation settlement of $1.5 million in
Lightbridge Announces Third Quarter 2006 Financial Results—Page 2
the second quarter of 2006. Included in the first nine months of 2005 was $1.9 million in restructuring and asset impairment charges.
For the first nine months of 2006, income from continuing operations before share-based compensation expense, restructuring and asset impairment charges and the above-described patent litigation settlement (a non-GAAP financial measure) was $12.7 million, or $0.45 per fully diluted share. A detailed reconciliation of the GAAP and non-GAAP measures is included at the end of this release.
Stock Repurchase Program
The Company also announced today that in line with its efforts to increase shareholder value and demonstrate confidence in the Company’s long-term prospects, the Company’s board of directors has authorized a stock repurchase program for up to $15 million of its common stock. The terms of the repurchase program allow the Company, at its discretion, to make purchases in the open market or through private transactions from time to time depending on market conditions through December 31, 2008.
Business Perspective
“We are very pleased with our third quarter results, driven by another solid quarter of Authorize.Net revenue,” said Robert Donahue, president and CEO. “This is our ninth consecutive quarter of revenue growth at Authorize.Net with the business achieving record levels in transactions and dollars processed. Our confidence in Authorize.Net’s ability to achieve attractive revenue growth and profit margins remains high.”
Donahue continued, “In early October, we announced plans to exit our TDS business. We have devoted significant management attention to this business and, ultimately, when faced with the prospect of continuing operations without the Sprint Nextel business, decided it was in the best interest of our shareholders to exit the TDS business completely. This decision will allow us to fully focus on the payment processing business where outstanding growth opportunities exist.”
“We are also pleased to announce a stock repurchase program of up to $15 million. The board and the executive team have been evaluating measures to leverage our significant cash balance and maximize shareholder value. We believe this program further underscores our confidence that we can continue to profitably grow our business.”
Authorize.Net Metrics
• | Processed a record $7.7 billion of merchant transactions in the third quarter, up 30% compared to the same period in 2005. |
Lightbridge Announces Third Quarter 2006 Financial Results—Page 3
• | Processed a record 75.2 million transactions in the third quarter, a 21% increase over the comparable quarter last year. |
• | Gross merchant adds in the third quarter of 2006 were 17,411, with net merchant adds totaling 7,765, up 36% compared to the same period in 2005. |
• | Active merchants as of September 30, 2006 were a record 157,869, up 21% over the prior year. |
Cash and Short-Term Investments
At September 30, 2006, Lightbridge’s cash and short-term investment position was $105.8 million, compared to $84.8 million at December 31, 2005. This includes funds held for merchants of $8.5 million compared to $7.1 million at December 31, 2005.
Company Performance versus Previous Guidance — Third Quarter 2006
Lightbridge’s revenue of $23.3 million was at the mid point of the Company’s guidance of $22.4 to $24.2 million for the third quarter of 2006. The Company’s guidance included revenue expectations for Authorize.Net of $13.9 to $14.7 million, with actual results for this business reported at $14.5 million.
Lightbridge’s previously issued guidance for earnings per fully diluted share of $0.03 to $0.11 excluded the non-cash asset impairment charge of $2.4 million or $0.08 per fully diluted share related to the decision to exit the TDS business. Fully diluted earnings per share were $0.01 for the third quarter of 2006, which, if adjusted for the impairment charge above, were at the high end of the adjusted earnings range. Earnings per fully diluted share before share-based compensation expense and restructuring and asset impairment charges (a non-GAAP financial measure) were $0.15, at the high end of the guided range of $0.08 to $0.16 for the third quarter of 2006.
Business Outlook
Guidance for the fourth quarter of 2006 is only current as of today, November 1, 2006. The Company undertakes no obligation to update its estimates.
• | The Company anticipates revenue for the fourth quarter of 2006 to be in the range of $19.3 to $21.1 million, reflecting reduced TDS revenue expectations. Authorize.Net expects to contribute in the range of $15.3 to $16.1 million. |
• | The Company anticipates net income (loss) per fully diluted share for the fourth quarter of 2006 to be in the range of ($0.03) to $0.05. The Company anticipates share-based compensation expense in the fourth |
Lightbridge Announces Third Quarter 2006 Financial Results—Page 4
quarter of 2006 associated with the expensing of stock options in accordance with SFAS 123(R) in the range of $400,000 to $600,000, or $0.01 to $0.02 per fully diluted share. The Company uses the modified prospective method to report compensation charges associated with the expensing of stock options. The Company expects to record restructuring charges in the range of $2.1 to $2.4 million or $0.07 to $0.08 per fully diluted share in the fourth quarter related to the decision to exit the TDS business. |
• | For the fourth quarter of 2006, net income per fully diluted share before share-based compensation expense and restructuring charges related to the decision to exit the TDS business (a non-GAAP financial measure) is anticipated to be in the range of $0.06 to $0.14. |
Non-GAAP Measures
In addition to reporting financial results in accordance with generally accepted accounting principles, (GAAP), the Company has provided non-GAAP financial measures which it believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. Such measures exclude share-based compensation expense, restructuring and asset impairment charges, and the NetMoneyIN, Inc. patent litigation settlement expense in the second quarter of 2006. The Company uses the modified prospective method to report compensation charges associated with the expensing of stock options. Results for prior periods have not been adjusted to reflect non-GAAP financial performance. Management believes these non-GAAP financial measures assist in providing a more complete understanding of the Company’s underlying operational results and trends and in allowing for a more comparable presentation of results in the reported period to those in prior periods that did not include SFAS 123(R) share-based compensation. Management uses these measures along with their corresponding GAAP financial measures to help manage the Company’s business and to help evaluate its performance compared to the marketplace. However, the presentation of non-GAAP financial measures is not meant to be considered in isolation or as superior to or as a substitute for financial information provided in accordance with GAAP. The non-GAAP financial measures used by the Company may be calculated differently from, and, therefore, may not be comparable to, similarly titled measures used by other companies. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to the comparable GAAP results, contained in the attached exhibits and found on the Company’s website at: www.lightbridge.com.
Conference Call Information
Lightbridge will conduct a conference call today, November 1 at 5:00 pm (ET) to discuss the information contained in this news release. Investors wishing to listen to a webcast of the conference call should link to the “Investor Relations” section of www.lightbridge.com at least 15 minutes prior to the broadcast and follow the instructions provided to assure the necessary audio applications are downloaded and installed. The call will be available online at the Company’s website for one week. The call can also be accessed live over the
Lightbridge Announces Third Quarter 2006 Financial Results—Page 5
phone by dialing 1-877-427-0636 or for international callers by dialing 973-935-2970. The replay will be available one hour after the call and can be accessed by dialing 877-519-4471 or for international callers by dialing 973-341-3080. The passcode number is 7923913. The replay will be available until Wednesday, November 15, 2006.
About Lightbridge
Lightbridge, Inc. (NASDAQ:LTBG) is a leading e-commerce, analytics and decisioning company that businesses trust to manage customer transactions. Lightbridge adds value to fraud screening, credit qualification, and payment authorization. Lightbridge solutions leverage intelligent automated systems and human expertise, delivered primarily through the efficiencies and cost savings of an outsourced business model. Businesses use Lightbridge to make smarter decisions, deliver better services, provide secure payments, reduce costs and enhance the lifetime value of their customers. For more information, visit www.lightbridge.com.
###
Contact:
Lynn Ricci
Director, Investor & Media Relations
Lightbridge, Inc.
781/359-4854
lricci@lightbridge.com
Director, Investor & Media Relations
Lightbridge, Inc.
781/359-4854
lricci@lightbridge.com
Note to Editors: LIGHTBRIDGE and AUTHORIZE.NET are registered trademarks and the Lightbridge logo is a trademark of Lightbridge, Inc. All other trademarks and registered trademarks are the properties of their respective owners.
Forward-looking Statements
Certain statements in this news release that are not historical facts, including, without limitation, those relating to the Company’s focus on the payment processing business where outstanding growth opportunities exist, high confidence in Authorize.Net’s ability to achieve attractive revenue growth and profit margins, confidence that it can continue to profitably grow its business, fourth quarter of 2006 financial guidance and belief that its presentation of non-GAAP financial measures is useful to investors are forward-looking statements that involve risks and uncertainties. Such statements are based upon the current beliefs and expectations of the management of the Company. Actual results may vary materially from those contained in forward-looking statements based on a number of factors including, without limitation, (i) the adverse impact that the Company’s decision to exit the TDS business will have on its revenues, net income, stock price, and future business and operations, (ii) risks and costs associated with the Company’s continuing commitments under TDS customer contracts and TDS related operating leases and the difficulty of transitioning TDS customers to other vendors and subleasing or exiting facilities, as the case may be, (iii) risks and costs associated with the termination of employees, (iv) dependence on a limited number of clients, (v) the Company’s revenue concentration in the wireless telecommunications business, (vi) continuing rapid change in the telecommunications industry, payment processing industry, and other markets in which the Company does business that may affect both the Company and its clients, (vii) current and future economic conditions generally and particularly in the telecommunications and payment processing industry, (viii) uncertainties about the Company’s ability to execute on, and about the impact on the Company’s business and operations of, its objectives, plans or strategies as a result of potential technological, market or competitive factors, or its decision to exit the TDS business, (ix) the impact of compensation expense, restructuring, asset impairment and other charges on the Company’s business and operations including, without limitation, those related to the Company’s decision to exit the TDS business, (x) integration, employee retention, recognition of cost and other benefits and revenue synergies, and other risks associated with acquisitions, (xi) the industry risks associated with Authorize.Net’s business and operations including, without limitation, illegal or improper uses of Authorize.Net’s payment system, unauthorized intrusions and attacks on Authorize.Net’s payment system that may impair the operation of its payment systems, changes in or failures to comply with credit card association rules and governmental regulations, changes in the application of existing laws and the impact of new laws, and dependence on relationships with resellers, certain financial institutions and third party payment processors, and (xii) the factors disclosed in the Company’s filings with the U.S. Securities and Exchange Commission including, without limitation, its 2005 Annual Report on Form 10-K, second quarter 2006 Quarterly Report on Form 10-Q and other public filings. The Company undertakes no obligation to update any forward-looking statements.
Lightbridge Announces Third Quarter 2006 Financial Results—Page 6
Lightbridge, Inc. and Subsidiaries
Unaudited, Condensed, Consolidated Income Statement (a)
(in thousands, except per share data)
Restated for discontinued operations
Unaudited, Condensed, Consolidated Income Statement (a)
(in thousands, except per share data)
Restated for discontinued operations
Three Months Ended | ||||||||||||
September 30, 2006 | June 30, 2006 | September 30, 2005 | ||||||||||
Revenues | $ | 23,275 | $ | 25,223 | $ | 27,232 | ||||||
Cost of revenues | 9,021 | 10,782 | 12,288 | |||||||||
Gross profit | 14,254 | 14,441 | 14,944 | |||||||||
Operating expenses: | ||||||||||||
Engineering and development | 2,726 | 2,946 | 3,502 | |||||||||
Sales and marketing | 4,863 | 4,939 | 4,461 | |||||||||
General and administrative | 3,254 | 5,781 | 4,113 | |||||||||
Restructuring charges and related asset impairments | 3,187 | 937 | 1,544 | |||||||||
Total operating expenses | 14,030 | 14,603 | 13,620 | |||||||||
Income (loss) from operations | 224 | (162 | ) | 1,324 | ||||||||
Other income, net | 1,269 | 1,099 | 489 | |||||||||
Income from continuing operations before provision for income taxes | 1,493 | 937 | 1,813 | |||||||||
Provision for income taxes | 1,219 | 83 | 558 | |||||||||
Income from continuing operations | 274 | 854 | 1,255 | |||||||||
Discontinued operations, net of income taxes: | ||||||||||||
Gain on sale of INS business | — | — | — | |||||||||
Discontinued operations | — | — | (268 | ) | ||||||||
Total discontinued operations, net of income taxes | — | — | (268 | ) | ||||||||
Net income | $ | 274 | $ | 854 | $ | 987 | ||||||
Net income (loss) per common share (basic): | ||||||||||||
From continuing operations | $ | 0.01 | $ | 0.03 | $ | 0.05 | ||||||
From discontinued operations | — | — | (0.01 | ) | ||||||||
Net income per common share (basic): | $ | 0.01 | $ | 0.03 | $ | 0.04 | ||||||
Net income (loss) per common share (diluted): | ||||||||||||
From continuing operations | $ | 0.01 | $ | 0.03 | $ | 0.05 | ||||||
From discontinued operations | — | — | (0.01 | ) | ||||||||
Net income per common share (diluted): | $ | 0.01 | $ | 0.03 | $ | 0.04 | ||||||
Basic weighted average shares | 27,322 | 27,243 | 26,678 | |||||||||
Diluted weighted average shares | 28,364 | 28,331 | 27,345 | |||||||||
(a) Share-based compensation expense is included in the above expense categories: | ||||||||||||
Cost of revenues | $ | 52 | $ | 51 | $ | — | ||||||
Engineering and development | 73 | 106 | — | |||||||||
Sales and marketing | 27 | 27 | — | |||||||||
General and administrative | 514 | 971 | 414 | |||||||||
$ | 666 | $ | 1,155 | $ | 414 | |||||||
(a): On January 1, 2006, Lightbridge, Inc. adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123(R)). Lightbridge, Inc.’s financial statements as of and for the three months ended March 31, 2006, June 30, 2006, and September 30, 2006 reflect the impact of SFAS 123(R). Prior to adoption of SFAS 123(R), Lightbridge Inc. accounted for stock compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). In accordance with APB 25, Lightbridge, Inc. accounted for stock-based awards using the intrinsic value method. Since Lightbridge, Inc. adopted the modified prospective transition method, results for prior period have not been restated under the fair value method. Therefore, for periods prior to January 1, 2006, no stock-based compensation expense had been recognized in Lightbridge, Inc.’s statement of operations when the exercise price of options granted equaled the estimated fair market value of the underlying stock at date of grant. Stock-based compensation of $0.4 million was recorded in the quarter ended September 30, 2005 related to the performance based vesting of certain executives’ stock options.
Lightbridge Announces Third Quarter 2006 Financial Results—Page 7
Lightbridge, Inc. and Subsidiaries
Unaudited, Condensed, Consolidated Income Statement (a)
(in thousands, except per share data)
Restated for discontinued operations
Unaudited, Condensed, Consolidated Income Statement (a)
(in thousands, except per share data)
Restated for discontinued operations
Nine Months Ended | ||||||||
September 30, 2006 | September 30, 2005 | |||||||
Revenues | $ | 75,040 | $ | 80,969 | ||||
Cost of revenues | 31,540 | 37,800 | ||||||
Gross profit | 43,500 | 43,169 | ||||||
Operating expenses: | ||||||||
Engineering and development | 8,909 | 10,978 | ||||||
Sales and marketing | 14,574 | 13,375 | ||||||
General and administrative | 13,794 | 11,734 | ||||||
Restructuring charges and related asset impairments | 5,517 | 1,920 | ||||||
Total operating expenses | 42,794 | 38,007 | ||||||
Income from operations | 706 | 5,162 | ||||||
Other income, net | 3,378 | 1,079 | ||||||
Income from continuing operations before provision for income taxes | 4,084 | 6,241 | ||||||
Provision for income taxes | 1,793 | 1,479 | ||||||
Income from continuing operations | 2,291 | 4,762 | ||||||
Discontinued operations, net of income taxes: | ||||||||
Gain on sale of INS business | — | 12,689 | ||||||
Discontinued operations | 468 | (2,352 | ) | |||||
Total discontinued operations, net of income taxes | 468 | 10,337 | ||||||
Net income | $ | 2,759 | $ | 15,099 | ||||
Net income per common share (basic): | ||||||||
From continuing operations | $ | 0.08 | $ | 0.18 | ||||
From discontinued operations | 0.02 | 0.39 | ||||||
Net income per common share (basic): | $ | 0.10 | $ | 0.57 | ||||
Net income per common share (diluted): | ||||||||
From continuing operations | $ | 0.08 | $ | 0.18 | ||||
From discontinued operations | 0.02 | 0.38 | ||||||
Net income per common share (diluted): | $ | 0.10 | $ | 0.56 | ||||
Basic weighted average shares | 27,197 | 26,631 | ||||||
Diluted weighted average shares | 28,158 | 27,120 | ||||||
(a) Share-based compensation expense is included in the above expense categories: | ||||||||
Cost of revenues | $ | 197 | $ | — | ||||
Engineering and development | 360 | — | ||||||
Sales and marketing | 96 | — | ||||||
General and administrative | 2,779 | 414 | ||||||
$ | 3,432 | $ | 414 | |||||
(a): On January 1, 2006, Lightbridge, Inc. adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123(R)). Lightbridge, Inc.’s financial statements as of and for the three months ended March 31, 2006, June 30, 2006, and September 30, 2006 reflect the impact of SFAS 123(R). Prior to adoption of SFAS 123(R), Lightbridge Inc. accounted for stock compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). In accordance with APB 25, Lightbridge, Inc. accounted for stock-based awards using the intrinsic value method. Since Lightbridge, Inc. adopted the modified prospective transition method, results for prior period have not been restated under the fair value method. Therefore, for periods prior to January 1, 2006, no stock-based compensation expense had been recognized in Lightbridge, Inc.’s statement of operations when the exercise price of options granted equaled the estimated fair market value of the underlying stock at date of grant. Stock-based compensation of $0.4 million was recorded in the quarter ended September 30, 2005 related to the performance based vesting of certain executives’ stock options.
Lightbridge Announces Third Quarter 2006 Financial Results—Page 8
Lightbridge, Inc. and Subsidiaries
Unaudited Segment Financial Information (a)
Unaudited Segment Financial Information (a)
(in thousands, except percentage amounts)
Restated for discontinued operations
Three Months Ended | ||||||||||||
September 30, 2006 | June 30, 2006 | September 30, 2005 | ||||||||||
Revenues: | ||||||||||||
TDS | $ | 8,801 | $ | 11,306 | $ | 15,518 | ||||||
Payment Processing | 14,474 | 13,917 | 11,714 | |||||||||
Total revenues | $ | 23,275 | $ | 25,223 | $ | 27,232 | ||||||
Gross Profit: | ||||||||||||
TDS | $ | 2,881 | $ | 3,452 | $ | 5,776 | ||||||
Payment Processing | 11,425 | 11,040 | 9,168 | |||||||||
Sub-total — Reportable segments | 14,306 | 14,492 | 14,944 | |||||||||
Reconciling items (1) | (52 | ) | (51 | ) | — | |||||||
Total gross profit | $ | 14,254 | $ | 14,441 | $ | 14,944 | ||||||
Gross Profit %: | ||||||||||||
TDS | 32.7 | % | 30.5 | % | 37.2 | % | ||||||
Payment Processing | 78.9 | % | 79.3 | % | 78.3 | % | ||||||
Sub-total — Reportable segments | 61.5 | % | 57.5 | % | 54.9 | % | ||||||
Reconciling items (1) | -0.2 | % | -0.2 | % | 0.0 | % | ||||||
Total gross profit % | 61.2 | % | 57.3 | % | 54.9 | % | ||||||
Operating Income (loss): | ||||||||||||
TDS | $ | 1,255 | $ | 1,345 | $ | 2,859 | ||||||
Payment Processing | 4,587 | 4,180 | 3,255 | |||||||||
Sub-total — Reportable segments | 5,842 | 5,525 | 6,114 | |||||||||
Reconciling items (2) | (5,618 | ) | (5,687 | ) | (4,790 | ) | ||||||
Consolidated total | $ | 224 | $ | (162 | ) | $ | 1,324 | |||||
(1) — Represents share-based compensation unallocated to gross profit. | ||||||||||||
(2) — Reconciling items from segment operating income to consolidated operating income (loss) include the following: |
Three Months Ended | ||||||||||||
September 30, 2006 | June 30, 2006 | September 30, 2005 | ||||||||||
Restructuring costs | $ | (3,187 | ) | $ | (937 | ) | $ | (1,544 | ) | |||
Share-based compensation expense | (666 | ) (a) | (1,104 | )(a) | (414 | ) | ||||||
Litigation settlement, net | (1,500 | ) | — | |||||||||
Unallocated corporate and centralized marketing, general and administrative expenses | (1,765 | ) | (2,146 | ) | (2,832 | ) | ||||||
Total | $ | (5,618 | ) | $ | (5,687 | ) | $ | (4,790 | ) | |||
(a): On January 1, 2006, Lightbridge, Inc. adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123(R)). Lightbridge, Inc.’s financial statements as of and for the three months ended March 31, 2006, June 30, 2006, and September 30, 2006 reflect the impact of SFAS 123(R). Prior to adoption of SFAS 123(R), Lightbridge Inc. accounted for stock compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). In accordance with APB 25, Lightbridge, Inc. accounted for stock-based awards using the intrinsic value method. Since Lightbridge, Inc. adopted the modified prospective transition method, results for prior period have not been restated under the fair value method. Therefore, for periods prior to January 1, 2006, no stock-based compensation expense had been recognized in Lightbridge, Inc.’s statement of operations when the exercise price of options granted equaled the estimated fair market value of the underlying stock at date of grant. Stock-based compensation of $0.4 million was recorded in the quarter ended September 30, 2005 related to the performance based vesting of certain executives’ stock options.
Lightbridge Announces Third Quarter 2006 Financial Results—Page 9
Lightbridge, Inc. and Subsidiaries
Unaudited Segment Financial Information (a)
Unaudited Segment Financial Information (a)
(in thousands, except percentage amounts)
Restated for discontinued operations
Nine Months Ended | ||||||||
September 30, 2006 | September 30, 2005 | |||||||
Revenues: | ||||||||
TDS | $ | 33,195 | $ | 48,408 | ||||
Payment Processing | 41,845 | 32,561 | ||||||
Total revenues | $ | 75,040 | $ | 80,969 | ||||
Gross Profit: | ||||||||
TDS | $ | 10,644 | $ | 17,727 | ||||
Payment Processing | 33,054 | 25,442 | ||||||
Sub-total — Reportable segments | 43,698 | 43,169 | ||||||
Reconciling items (1) | (198 | ) | — | |||||
Total gross profit | $ | 43,500 | $ | 43,169 | ||||
Gross Profit %: | ||||||||
TDS | 32.1 | % | 36.6 | % | ||||
Payment Processing | 79.0 | % | 78.1 | % | ||||
Sub-total — Reportable segments | 58.2 | % | 53.3 | % | ||||
Reconciling items (1) | -0.3 | % | 0.0 | % | ||||
Total gross profit % | 58.0 | % | 53.3 | % | ||||
Operating Income: | ||||||||
TDS | $ | 4,908 | $ | 8,538 | ||||
Payment Processing | 12,948 | 7,805 | ||||||
Sub-total — Reportable segments | 17,856 | 16,343 | ||||||
Reconciling items (2) | (17,150 | ) | (11,181 | ) | ||||
Consolidated total | $ | 706 | $ | 5,162 | ||||
(1) — Represents share-based compensation unallocated to gross profit. | ||||||||
(2) — Reconciling items from segment operating income to consolidated operating income include the following: |
Nine Months Ended | ||||||||
September 30, 2006 | September 30, 2005 | |||||||
Restructuring costs | $ | (5,517 | ) | $ | (1,920 | ) | ||
Share-based compensation expense | (3,432 | ) (a) | (414 | ) | ||||
Litigation settlement, net | (1,500 | ) | — | |||||
Unallocated corporate and centralized marketing, general and administrative expenses | (6,701 | ) | (8,847 | ) | ||||
Total | $ | (17,150 | ) | $ | (11,181 | ) | ||
(a): On January 1, 2006, Lightbridge, Inc. adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123(R)). Lightbridge, Inc.’s financial statements as of and for the three months ended March 31, 2006, June 30, 2006, and September 30, 2006 reflect the impact of SFAS 123(R). Prior to adoption of SFAS 123(R), Lightbridge Inc. accounted for stock compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). In accordance with APB 25, Lightbridge, Inc. accounted for stock-based awards using the intrinsic value method. Since Lightbridge, Inc. adopted the modified prospective transition method, results for prior period have not been restated under the fair value method. Therefore, for periods prior to January 1, 2006, no stock-based compensation expense had been recognized in Lightbridge, Inc.’s statement of operations when the exercise price of options granted equaled the estimated fair market value of the underlying stock at date of grant. Stock-based compensation of $0.4 million was recorded in the quarter ended September 30, 2005 related to the performance based vesting of certain executives’ stock options.
Lightbridge Announces Third Quarter 2006 Financial Results—Page 10
Lightbridge, Inc. and Subsidiaries
Unaudited, Condensed, Consolidated Balance Sheets
Unaudited, Condensed, Consolidated Balance Sheets
(in thousands)
September 30, | December 31, | |||||||
2006 | 2005 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 104,630 | $ | 83,120 | ||||
Short-term investments | 1,123 | 1,688 | ||||||
Total cash and short term investments | 105,753 | 84,808 | ||||||
Accounts receivable, net | 8,418 | 11,911 | ||||||
Other current assets | 2,489 | 3,432 | ||||||
Total current assets | 116,660 | 100,151 | ||||||
Property and equipment, net | 5,585 | 10,804 | ||||||
Other assets, net | 561 | 438 | ||||||
Restricted cash | 2,100 | 2,100 | ||||||
Goodwill | 57,628 | 57,628 | ||||||
Intangible assets, net | 16,290 | 18,414 | ||||||
Total assets | $ | 198,824 | $ | 189,535 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 11,309 | $ | 14,375 | ||||
Deferred rent obligation | 622 | 656 | ||||||
Deferred revenues | 2,466 | 2,863 | ||||||
Funds due to merchants | 8,525 | 7,112 | ||||||
Reserve for restructuring | 877 | 989 | ||||||
Total current liabilities | 23,799 | 25,995 | ||||||
Deferred rent, less current portion | 2,101 | 2,548 | ||||||
Deferred tax liability | 4,468 | 3,074 | ||||||
Long-term liabilities | 1,461 | 965 | ||||||
Total liabilities | 31,829 | 32,582 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Common stock | 308 | 303 | ||||||
Additional paid-in capital | 176,855 | 169,648 | ||||||
Accumulated other comprehensive gain | 181 | 110 | ||||||
Retained earnings | 10,438 | 7,679 | ||||||
Total | 187,782 | 177,740 | ||||||
Less: treasury stock, at cost | (20,787 | ) | (20,787 | ) | ||||
Total stockholders’ equity | 166,995 | 156,953 | ||||||
Total liabilities and stockholders’ equity | $ | 198,824 | $ | 189,535 | ||||
Lightbridge Announces Third Quarter 2006 Financial Results—Page 11
Lightbridge, Inc. and Subsidiaries
Unaudited, Condensed, Consolidated Income Statement (a)
GAAP to Non-GAAP Reconciliation
Unaudited, Condensed, Consolidated Income Statement (a)
GAAP to Non-GAAP Reconciliation
(in thousands, except per share data)
Restated for discontinued operations
Three Months Ended | ||||||||||||
September 30, | Non-GAAP | September 30, | ||||||||||
2006 | Adjustments | 2006 | ||||||||||
Revenues | $ | 23,275 | $ | — | $ | 23,275 | ||||||
Cost of revenues | 9,021 | (52 | ) (b) | 8,969 | ||||||||
Gross profit | 14,254 | 52 | 14,306 | |||||||||
Operating expenses: | ||||||||||||
Engineering and development | 2,726 | (73 | ) (b) | 2,653 | ||||||||
Sales and marketing | 4,863 | (27 | ) (b) | 4,836 | ||||||||
General and administrative | 3,254 | (514 | ) (b) | 2,740 | ||||||||
Restructuring charges and related asset impairments | 3,187 | (3,187 | ) | — | ||||||||
Total operating expenses | 14,030 | (3,801 | ) | 10,229 | ||||||||
Income (loss) from operations | 224 | 3,853 | 4,077 | |||||||||
Other income, net | 1,269 | — | 1,269 | |||||||||
Income from continuing operations before provision for income taxes | 1,493 | 3,853 | 5,346 | |||||||||
Provision for income taxes | 1,219 | — | 1,219 | |||||||||
Income from continuing operations | 274 | 3,853 | 4,127 | |||||||||
Discontinued operations, net of income taxes: | ||||||||||||
Discontinued operations | — | — | — | |||||||||
Total discontinued operations, net of income taxes | — | — | — | |||||||||
Net income | $ | 274 | $ | 3,853 | $ | 4,127 | ||||||
Net income per common share (basic): | ||||||||||||
From continuing operations | $ | 0.01 | $ | 0.14 | $ | 0.15 | ||||||
From discontinued operations | — | — | — | |||||||||
Net income per common share (basic): | $ | 0.01 | $ | 0.14 | $ | 0.15 | ||||||
Net income per common share (diluted): | ||||||||||||
From continuing operations | $ | 0.01 | $ | 0.14 | $ | 0.15 | ||||||
From discontinued operations | — | — | — | |||||||||
Net income per common share (diluted): | $ | 0.01 | $ | 0.14 | $ | 0.15 | ||||||
Basic weighted average shares | 27,322 | 27,322 | 27,322 | |||||||||
Diluted weighted average shares | 28,364 | 28,364 | 28,364 | |||||||||
(a): On January 1, 2006, Lightbridge, Inc. adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123(R)). Lightbridge, Inc.’s financial statements as of and for the three months ended March 31, 2006, June 30, 2006, and September 30, 2006 reflect the impact of SFAS 123(R). Prior to adoption of SFAS 123(R), Lightbridge Inc. accounted for stock compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). In accordance with APB 25, Lightbridge, Inc. accounted for stock-based awards using the intrinsic value method. Since Lightbridge, Inc. adopted the modified prospective transition method, results for prior period have not been restated under the fair value method. Therefore, for periods prior to January 1, 2006, no stock-based compensation expense had been recognized in Lightbridge, Inc.’s statement of operations when the exercise price of options granted equaled the estimated fair market value of the underlying stock at date of grant. Stock-based compensation of $0.4 million was recorded in the quarter ended September 30, 2005 related to the performance based vesting of certain executives’ stock options.
(b): Represents share-based compensation expense.
Lightbridge Announces Third Quarter 2006 Financial Results—Page 12
Lightbridge, Inc. and Subsidiaries
Unaudited, Condensed, Consolidated Income Statement (a)
GAAP to Non-GAAP Reconciliation
Unaudited, Condensed, Consolidated Income Statement (a)
GAAP to Non-GAAP Reconciliation
(in thousands, except per share data)
Restated for discontinued operations
Nine Months Ended | ||||||||||||
September 30, | Non-GAAP | September 30, | ||||||||||
2006 | Adjustments | 2006 | ||||||||||
Revenues | $ | 75,040 | $ | — | $ | 75,040 | ||||||
Cost of revenues | 31,540 | (197 | ) (b) | 31,343 | ||||||||
Gross profit | 43,500 | 197 | 43,697 | |||||||||
Operating expenses: | ||||||||||||
Engineering and development | 8,909 | (360 | ) (b) | 8,549 | ||||||||
Sales and marketing | 14,574 | (96 | ) (b) | 14,478 | ||||||||
General and administrative | 13,794 | (4,279 | ) (c) | 9,515 | ||||||||
Restructuring charges and related asset impairments | 5,517 | (5,517 | ) | — | ||||||||
Total operating expenses | 42,794 | (10,252 | ) | 32,542 | ||||||||
Income from operations | 706 | 10,449 | 11,155 | |||||||||
Other income, net | 3,378 | — | 3,378 | |||||||||
Income from continuing operations before provision for income taxes | 4,084 | 10,449 | 14,533 | |||||||||
Provision for income taxes | 1,793 | — | 1,793 | |||||||||
Income from continuing operations | 2,291 | 10,449 | 12,740 | |||||||||
Discontinued operations, net of income taxes: | ||||||||||||
Discontinued operations | 468 | — | 468 | |||||||||
Total discontinued operations, net of income taxes | 468 | — | 468 | |||||||||
Net income | $ | 2,759 | $ | 10,449 | $ | 13,208 | ||||||
Net income per common share (basic): | ||||||||||||
From continuing operations | $ | 0.08 | $ | 0.38 | $ | 0.47 | ||||||
From discontinued operations | 0.02 | — | 0.02 | |||||||||
Net income per common share (basic): | $ | 0.10 | $ | 0.38 | $ | 0.49 | ||||||
Net income per common share (diluted): | ||||||||||||
From continuing operations | $ | 0.08 | $ | 0.37 | $ | 0.45 | ||||||
From discontinued operations | 0.02 | — | 0.02 | |||||||||
Net income per common share (diluted): | $ | 0.10 | $ | 0.37 | $ | 0.47 | ||||||
Basic weighted average shares | 27,197 | 27,197 | 27,197 | |||||||||
Diluted weighted average shares | 28,158 | 28,158 | 28,158 | |||||||||
(a): On January 1, 2006, Lightbridge, Inc. adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123(R)). Lightbridge, Inc.’s financial statements as of and for the three months ended March 31, 2006, June 30, 2006, and September 30, 2006 reflect the impact of SFAS 123(R). Prior to adoption of SFAS 123(R), Lightbridge Inc. accounted for stock compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). In accordance with APB 25, Lightbridge, Inc. accounted for stock-based awards using the intrinsic value method. Since Lightbridge, Inc. adopted the modified prospective transition method, results for prior period have not been restated under the fair value method. Therefore, for periods prior to January 1, 2006, no stock-based compensation expense had been recognized in Lightbridge, Inc.’s statement of operations when the exercise price of options granted equaled the estimated fair market value of the underlying stock at date of grant. Stock-based compensation of $0.4 million was recorded in the quarter ended September 30, 2005 related to the performance based vesting of certain executives’ stock options.
(b): Represents share-based compensation expense.
(c): Represents share-based compensation expense of $2,779 and a litigation settlement expense of $1,500.
Lightbridge Announces Third Quarter 2006 Financial Results—Page 13
Lightbridge, Inc. and Subsidiaries
Q4 2006 Guidance Summary
GAAP to Non-GAAP Reconciliation
(in millions, except per share data)
Q4 2006 Guidance Summary
GAAP to Non-GAAP Reconciliation
(in millions, except per share data)
Lightbridge’s future performance involves risks and uncertainties, and the Company’s actual results could differ materially from such performance. Some of the factors that could affect the Company’s operating results are set forth under the caption “Forward-Looking Statements” above in this press release. Additional information about factors that could affect Lightbridge’s operating results is included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in its most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q.
Guidance to | ||||
Three months ending | ||||
December 31, 2006 | ||||
Revenues | $19.3-$21.1 | |||
Net income (loss) per diluted share | ($0.03) - $0.05 | |||
Share-based compensation expense | $0.4-$0.6 | |||
Restructuring charges | $2.1-$2.4 | |||
Net income per diluted share before share-based compensation expense and restructuring charges (a) | $0.06-$0.14 |
(a) : Represents a non-GAAP financial measure