Exhibit 99.1
Lawson Software Reports Q3 FY05 Results;
Company Achieves High End of EPS Guidance Range
ST. PAUL, Minn.--(BUSINESS WIRE)--March 18, 2005--Lawson Software,
Inc. (Nasdaq:LWSN), today reported revenues of $82.7 million for its
fiscal 2005 third quarter ended Feb. 28, 2005, compared with revenues
of $91.6 million in its fiscal 2004 third quarter. License fee
revenues were $13.9 million in the third quarter, compared with $25.2
million in the fiscal 2004 third quarter. Services revenues were $68.8
million in the quarter, compared with $66.4 million in the fiscal 2004
third quarter, due to maintenance fees from support contracts
purchased in April 2004.
Net income was $2.8 million, or $0.03 per diluted share, compared
with $2.6 million, or $0.02 per diluted share in the fiscal 2004 third
quarter. Fiscal 2005 third quarter benefited from a reduction in
accounts receivable reserves due to significant collections and
recoveries which resulted in a $0.6 million favorable bad debt expense
reduction and a $0.7 million favorable adjustment to revenue to reduce
the product warranty provision. While operating income in the fiscal
2005 third quarter was $2.5 million compared with $3.4 million in the
fiscal 2004 third quarter, net income benefited from a reduced
provision for income taxes and increased interest income.
Fiscal 2005 third quarter operating results include $4.2 million
in pre-tax items consisting of $2.1 million in SEC legal investigation
costs, $1.0 million in amortization of acquired maintenance contracts
reflected in cost of services, $0.8 million in software amortization
reflected in cost of license fees, $0.4 million in intangible
amortization related to acquisitions, $0.1 million in non-cash
stock-based compensation, and ($0.2) million in restructuring
adjustments. There was also a ($0.4) million tax-related adjustment.
For the nine months ended Feb. 28, 2005, the company posted a net
loss of $677,000, or a loss of $0.01 per share, on total revenues of
$248.4 million, compared with net income of $4.5 million, or $0.04 per
diluted share, on total revenues of $263.9 million in the comparable
fiscal 2004 period.
Fiscal 2005 nine-month operating results include $14.6 million in
pre-tax items consisting of $5.2 million in restructuring charges,
$3.0 million in amortization of acquired maintenance contracts
reflected in cost of services, $2.6 million in SEC legal investigation
costs, $2.4 million in software amortization reflected in cost of
license fees, $1.2 million in intangible amortization related to
acquisitions, and $0.2 million in non-cash stock-based compensation.
There was also a ($0.6) million tax-related adjustment.
The company's cash, cash equivalents and marketable securities
increased to $221.9 million at Feb. 28, 2005, from $208.9 million at
Nov. 30, 2004. Days sales outstanding (DSO) were reduced to 46 during
the third quarter, compared with 52 in the fiscal 2005 second quarter.
Third Quarter Performance
"We are clearly seeing the benefit from our corporate
restructuring and strong cost and expense management," said Jay
Coughlan, Lawson president and chief executive officer. "Although our
business with current clients remains healthy, our software licensing
activity with new clients was affected by ongoing questions about the
direction of the software industry, which resulted in extended sales
cycles and some delayed purchasing decisions. We are continuing to
work on gaining prospects' confidence in selecting Lawson by focusing
on our key strengths: we are financially healthy, our solutions are
some of the best in the industry, we present strong value in the form
of low total cost of ownership, and we value every client who joins
the Lawson community."
The company signed 100 deals in the quarter, compared with 124 in
the second quarter. Of total contracting activity in the fiscal 2005
third quarter, approximately 64 percent came from existing clients and
approximately 36 percent from new clients.
During the quarter, the company signed 10 new clients at an
average selling price of $478,000, compared with 15 new clients at an
average selling price of $383,000 in the second quarter of fiscal
2005. The company signed four software licensing agreements valued at
more than $1 million: Safeway in the Retail market; Chicago Housing
Authority in the Government and Education market; and Mayo Clinic and
JPS Health Network in the Healthcare market.
Conference Call and Webcast
The company will host a conference call to discuss its third
quarter results and future outlook at 8:15 a.m. Eastern Time (7:15
a.m. Central Time), Friday, March 18, 2005.
Interested parties may listen to the call by dialing 888-391-3141
(passcode Lawson 318) and international callers 1-517-308-9004. 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, March 25. The
replay number is 866-383-3161 and international 1-203-369-0384. 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 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; 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 Quarterly Report on
Form 10-Q 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)
February 28,
2005 May 31, 2004
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $73,128 $72,396
Marketable securities 146,732 128,065
Trade accounts receivable, net 42,299 65,236
Other current assets 39,149 35,761
------------ ------------
Total current assets 301,308 301,458
Long-term marketable securities 2,006 8,521
Property and equipment, net 14,817 17,235
Goodwill and other intangible assets, net 77,718 83,809
Other assets 12,275 12,575
------------ ------------
Total assets $408,124 $423,598
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $1,344 $1,652
Accounts payable and other accrued
liabilities 43,679 51,375
Deferred revenue and client deposits 74,376 83,095
------------ ------------
Total current liabilities 119,399 136,122
Long-term debt, less current portion - 990
Other long-term liabilities 3,354 3,600
------------ ------------
Total liabilities 122,753 140,712
------------ ------------
Stockholders' equity:
Preferred stock - -
Common stock 1,122 1,099
Additional paid-in capital 337,250 327,715
Treasury stock, at cost (73,448) (65,555)
Deferred stock-based compensation (132) (774)
Retained earnings 16,794 17,471
Accumulated other comprehensive income 3,785 2,930
------------ ------------
Total stockholders' equity 285,371 282,886
------------ ------------
Total liabilities and stockholders'
equity $408,124 $423,598
============ ============
LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(in thousands, except per share data)
Three Months Ended Nine Months Ended
------------------------- -------------------------
February 28, February 29, February 28, February 29,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Revenues:
License fees $13,924 $25,195 $40,370 $65,169
Services 68,790 66,411 208,028 198,704
------------ ------------ ------------ ------------
Total revenues 82,714 91,606 248,398 263,873
Cost of revenues:
Cost of license
fees 2,232 3,911 7,511 11,990
Cost of services 34,260 34,258 107,764 100,090
------------ ------------ ------------ ------------
Total cost of
revenues 36,492 38,169 115,275 112,080
------------ ------------ ------------ ------------
Gross profit 46,222 53,437 133,123 151,793
Operating
expenses:
Research and
development 15,527 16,940 46,828 47,132
Sales and
marketing 17,681 23,615 58,216 68,111
General and
administrative 10,325 9,090 26,486 28,400
Restructuring (153) - 5,237 2,210
Amortization of
acquired
intangibles 391 346 1,160 912
------------ ------------ ------------ ------------
Total
operating
expenses 43,771 49,991 137,927 146,765
------------ ------------ ------------ ------------
Operating income
(loss) 2,451 3,446 (4,804) 5,028
Other income:
Interest income 1,281 797 2,845 2,459
Interest expense (11) (18) (39) (56)
------------ ------------ ------------ ------------
Total other
income 1,270 779 2,806 2,403
Income (loss)
before income
taxes 3,721 4,225 (1,998) 7,431
Provision
(benefit) for
income taxes 961 1,648 (1,321) 2,898
------------ ------------ ------------ ------------
Net income (loss) $2,760 $2,577 $(677) $4,533
============ ============ ============ ============
Net income (loss)
per share:
Basic $0.03 $0.03 $(0.01) $0.05
============ ============ ============ ============
Diluted $0.03 $0.02 $(0.01) $0.04
============ ============ ============ ============
Shares used in
computing net
income (loss) per
share:
Basic 99,342 98,650 98,651 98,472
============ ============ ============ ============
Diluted 104,899 107,510 98,651 107,339
============ ============ ============ ============
CONTACT: Lawson Software, Inc., St. Paul
Media contact:
Terry Blake, 651-767-4766
terry.blake@lawson.com
or
Investors and analysts contact:
Barbara Doyle, 651-767-4385
barbara.doyle@lawson.com