Exhibit 99.1
Lawson Software Reports First Quarter FY05 Results and
Announces Restructuring Plan
ST. PAUL, Minn.--(BUSINESS WIRE)--Sept. 30, 2004--Lawson Software,
Inc. (Nasdaq:LWSN) today reported total revenues of $82.7 million for
its fiscal 2005 first quarter ended Aug. 31, 2004, compared with
revenues of $88.0 million for its fiscal 2004 first quarter. License
fee revenues were $13.3 million in the fiscal 2005 first quarter,
compared with $22.7 million in the fiscal 2004 first quarter. Services
revenues were $69.4 million in the fiscal 2005 first quarter, compared
with $65.3 million in the fiscal 2004 first quarter.
On a generally accepted accounting principles (GAAP) basis, the
company recorded a net loss of $417,000, or $0.00 per diluted share,
in the fiscal 2005 first quarter, compared with net income of $3.2
million, or $0.03 per diluted share, in the fiscal 2004 first quarter.
Based on non-GAAP financial measures, the company reported
non-GAAP net income of $916,000, or $0.01 per diluted share, in the
fiscal 2005 first quarter, compared with non-GAAP net income of $4.0
million in the fiscal 2004 first quarter, or $0.04 per diluted share.
Fiscal 2005 first quarter non-GAAP operating results exclude $2.1
million of items consisting of software and intangible amortization
related to acquisitions and acquired maintenance contracts, non-cash
stock-based compensation and a restructuring charge adjustment.
For the details on the company's GAAP reported results and the
reconciliation of GAAP operating results to non-GAAP financial
measures of net income, see the financial table accompanying this news
release - "SUPPLEMENTAL INFORMATION - RECONCILIATION OF GAAP OPERATING
(LOSS) INCOME TO NON-GAAP NET INCOME."
The company signed 122 deals in the quarter. Of total contracting
activity in the fiscal 2005 first quarter, 65 percent came from
existing customers and 35 percent from new customers. During the
quarter, the company signed 12 new customers at an average selling
price of $428,000, compared with 19 new customers at an average
selling price of $730,000 in the first quarter of fiscal 2004.
The company's cash, cash equivalents and marketable securities
were $184.5 million at Aug. 31, 2004, compared with $209.0 million at
May 31, 2004.
Days sales outstanding were 61, compared with 59 in the fiscal
2004 fourth quarter.
Deferred revenue and client deposits decreased $18.2 million from
the prior quarter, primarily because of a decrease in cash received on
support billings as a result of a change in client billing cycles and
other delayed collections. The change resulted in initially smaller
client invoices due to pro-rated billings in an effort to get
individual multiple client support billings to a common renewal date.
Deferred revenue levels impacted by this change are expected to be
restored in subsequent periods during this fiscal year as billing
cycles become synchronized and cash is collected.
The company also announced a plan designed to enhance operating
effectiveness and profitability. Under the plan, the company will
centralize structure, consolidate leadership and reduce long-term
costs to realign projected expenses with anticipated revenue levels.
The plan includes a reduction of approximately 100 employees in the
United States and the United Kingdom, which will result in a charge of
approximately $2.5 million in the second quarter ending Nov. 30, 2004.
The reduction includes employees who work in operations, marketing,
sales, research and development, support and services. All
terminations and related payments are expected to be completed during
fiscal 2005. The company is continuing to evaluate other cost
reduction opportunities that may result in additional charges in the
second quarter ending Nov. 30, 2004, and during the remainder of
fiscal 2005. Because management has not completed its evaluation and
plan, the nature, amount and timing of any additional charges are not
currently determinable.
"Despite our disappointment in the level of license fees in our
first quarter, we are pleased that we were able to minimize the impact
on our earnings per share," said Jay Coughlan, Lawson president and
chief executive officer. "There is a strong opportunity for Lawson as
a key enterprise application software provider in today's environment.
We remain committed to our vertical strategy and will focus on the
continued verticalization of our products to deliver greater value to
our clients. We also continue to make the appropriate investments in
our growth, even as we improve our efficiencies by managing our costs
and expenses."
Conference Call and Webcast
Lawson will host a conference call to discuss its first quarter
results and future outlook at 4:30 p.m. Eastern Time (3:30 p.m.
Central Time) Sept. 30, 2004.
Interested parties may listen to the call by dialing 888-603-9617
(passcode Lawson 930) and international callers 1-517-308-9002. A live
webcast will also be available on www.lawson.com. Interested parties
should dial into the conference call or access the webcast
approximately 10-15 minutes before the scheduled start time.
A replay will be available approximately one hour after the
conference call concludes and will remain available through Friday,
Oct. 8. The replay number is 888-568-0403 and international
1-402-530-7940. The webcast will remain on www.lawson.com for
approximately two weeks.
About Lawson Software
Lawson Software provides business application software and
services that put time on the side of services organizations in the
healthcare, retail, government and education, banking and insurance
and other markets. Lawson's software suites include enterprise
performance management, distribution, financials, human resources,
procurement, retail operations and service process optimization.
Headquartered in St. Paul, Minn., Lawson has offices and affiliates
serving North and South America, Europe, and Africa. Additional
information about Lawson is available at www.lawson.com.
Forward-Looking Statements
This press release contains forward-looking statements that
contain risks and uncertainties. These forward-looking statements
contain statements of intent, belief or current expectations of Lawson
Software, Inc., 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's ability to enhance operating effectiveness and profitability
requires that the company obtain cost savings from expense control
measures that have not yet been fully determined. The company is not
obligated to update forward-looking statements based on circumstances
or events that occur in the future. In addition to factors discussed
above, risks and uncertainties that may cause such differences include
but are not limited to: uncertainties in the software industry; global
military conflicts; terrorist attacks in the United States, and any
future events in response to these developments; changes in conditions
in the company's targeted service industries; increased competition
and other risk factors listed in the company's most recent Annual
Report on Form 10-K filed with the Securities and Exchange Commission
and as included in other documents the company files from time to time
with the Commission.
LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
(in thousands)
August 31, May 31,
2004 2004
---------- ---------
ASSETS
Current assets:
Cash and cash equivalents $112,075 $79,996
Marketable securities 65,032 120,465
Trade accounts receivable, net 55,920 65,236
Other current assets 35,946 35,761
---------- ---------
Total current assets 268,973 301,458
Long-term marketable securities 7,369 8,521
Property and equipment, net 15,978 17,235
Goodwill and other intangible assets, net 81,122 83,809
Other assets 12,378 12,575
---------- ---------
Total assets $385,820 $423,598
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $1,235 $1,652
Accounts payable and other accrued liabilities 38,101 51,375
Deferred revenue and client deposits 64,870 83,095
---------- ---------
Total current liabilities 104,206 136,122
Long-term debt, less current portion 996 990
Other long-term liabilities 3,438 3,600
---------- ---------
Total liabilities 108,640 140,712
---------- ---------
Stockholders' equity:
Preferred stock - -
Common stock 1,106 1,099
Additional paid-in capital 330,950 327,715
Treasury stock, at cost (74,240) (65,555)
Deferred stock-based compensation (499) (774)
Retained earnings 17,055 17,471
Accumulated other comprehensive income 2,808 2,930
---------- ---------
Total stockholders' equity 277,180 282,886
---------- ---------
Total liabilities and stockholders' equity $385,820 $423,598
========== =========
LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(in thousands, except per share data)
Three Months Ended
---------------------
August 31, August 31,
2004 2003
---------- ----------
Revenues:
License fees $13,251 $22,661
Services 69,434 65,341
---------- ----------
Total revenues 82,685 88,002
Cost of revenues:
Cost of license fees 2,375 4,091
Cost of services 36,456 32,101
---------- ----------
Total cost of revenues 38,831 36,192
---------- ----------
Gross profit 43,854 51,810
Operating expenses:
Research and development 15,647 14,935
Sales and marketing 20,957 22,998
General and administrative 8,250 9,225
Restructuring (75) (40)
Amortization of acquired intangibles 385 245
---------- ----------
Total operating expenses 45,164 47,363
---------- ----------
Operating (loss) income (1,310) 4,447
Other income:
Interest income 657 882
Interest expense (13) (18)
---------- ----------
Total other income 644 864
(Loss) income before income taxes (666) 5,311
(Benefit) provision for income taxes (249) 2,071
---------- ----------
Net (loss) income $(417) $3,240
========== ==========
Net (loss) income per share:
Basic $0.00 $0.03
========== ==========
Diluted $0.00 $0.03
========== ==========
Shares used in computing net (loss) income per
share:
Basic 98,294 98,465
========== ==========
Diluted 98,294 107,108
========== ==========
SUPPLEMENTAL INFORMATION - RECONCILIATION OF GAAP OPERATING (LOSS)
INCOME TO NON-GAAP NET INCOME (UNAUDITED)
(in thousands, except per share data)
Lawson provides non-GAAP results as supplemental information to GAAP
operating results. These non-GAAP results exclude certain expenses and
non-cash charges such as software and intangible amortization related
to acquisitions and acquired maintenance contracts, non-cash
stock-based compensation and restructuring. Lawson believes that this
presentation facilitates comparison by investors, analysts, and others
of our operating results with other companies in our peer group as
well as to Lawson's historical results. Management uses non-GAAP
operating results to evaluate short-term and long-term operating
trends in Lawson's core software operations. Non-GAAP operating
results are not prepared in accordance with GAAP and should not be
considered a substitute for or an alternative to operating results
determined in accordance with GAAP. Further, these non-GAAP financial
measures may not be comparable to similarly titled measures used by
other companies. The following table reconciles the GAAP operating
results to non-GAAP net income.
Three Months Ended
---------------------
August 31, August 31,
2004 2003
---------- ----------
GAAP operating (loss) income: $(1,310) $4,447
Adjustments for non-GAAP measures:
Software and intangible amortization related
to acquisitions 1,198 652
Acquired maintenance contracts intangible
amortization (1) 985 -
Non-cash stock-based compensation 22 699
Restructuring (75) (40)
---------- ----------
Non-GAAP operating income 820 5,758
Total other income 644 864
---------- ----------
Non-GAAP income before income taxes 1,464 6,622
Provision for income taxes 548 2,582
---------- ----------
Non-GAAP net income $916 $4,040
========== ==========
Non-GAAP net income per share:
Basic $0.01 $0.04
========== ==========
Diluted $0.01 $0.04
========== ==========
Shares used in computing non-GAAP net income per
share:
Basic 98,294 98,465
========== ==========
Diluted 104,866 107,108
========== ==========
Notes:
(1) This amount relates to acquired maintenance contracts intangible
amortization from Siemens Medical Solutions Services Corporation,
which is recorded in cost of services. Management believes that
the operating margins derived from providing maintenance services
for the acquired clients are comparable to its other maintenance
clients. If the amortization were included, the margins on
acquired contracts would be considerably less than the maintenance
margins on existing clients.
CONTACT: Lawson Software, St. Paul
Media Contact:
Terry Blake, 651-767-4766
terry.blake@lawson.com
or
Investor and Analyst Contact:
Barbara Doyle, 651-767-4385
barbara.doyle@lawson.com