Exhibit 99.1
Lawson Software Reports Second Quarter Fiscal 2007 Financial Results
ST. PAUL, Minn.--(BUSINESS WIRE)--Jan. 8, 2007--Lawson Software,
Inc. (Nasdaq:LWSN) today reported financial results for its second
quarter of fiscal 2007, the second full quarter of post-combination
results after its acquisition of Intentia International AB in April
2006. Lawson reported GAAP (generally accepted accounting principles)
revenues of $184.5 million for its fiscal 2007 second quarter ended
Nov. 30, 2006. This was an increase of 107 percent from revenues of
$89.0 million in its fiscal 2006 second quarter. The increase in
revenues is primarily attributable to the consolidation of revenues of
the former Intentia. Excluded from these results is $3.9 million of
deferred maintenance and service revenue that was written down under
the purchase accounting method used for the acquisition of Intentia.
GAAP net loss was $3.5 million, or $0.02 per share, compared with
GAAP net income of $6.6 million, or $0.06 per diluted share in the
same period last year. This decline is primarily attributable to the
consolidation of the former Intentia's costs and operating expenses as
well as a significant increase in the quarterly effective tax rate.
Also included in these results are pre-tax expenses totaling $10.4
million for amortization of acquired intangible assets, restructuring
charges, amortization of purchased maintenance contracts, and
integration related costs, and $1.6 million of non-cash stock-based
compensation as a result of adopting FAS 123(R) in the year. (Under
the FAS 123(R) method, stock-based employee compensation cost is
recognized using the fair-value based method for all unvested stock
options after June 1, 2006.) Including the written down maintenance
and service revenue and excluding these costs and expenses, the
non-GAAP net income would have been $5.4 million, or $0.03 per diluted
share.
"We've made good progress in our first two quarters following our
combination with Intentia," said Harry Debes, Lawson president and
chief executive officer. "Validation includes increased cross-selling
and Lawson M3 solution sales, high customer satisfaction and
retention, healthy maintenance and consulting services revenues, and
an increased pipeline. However, our license revenue is not where it
should be. As a result, we are recalibrating our guidance for the
second half of our fiscal year. It's also important to note that our
deferred license balance is increasing, which will be a net benefit to
license revenue in future quarters. In addition, we are moving forward
with our transformation plans to drive operational efficiencies
throughout our global operations."
For the six months ended Nov. 30, 2006, GAAP net loss was $19.3
million, or $0.10 per share, on total revenues of $346.3 million,
compared with GAAP net income of $10.7 million, or $0.10 per diluted
share, on total revenues of $177.0 million, in the comparable fiscal
2006 period. Excluded from these six-month results is $8.5 million of
deferred maintenance and service revenue that was written down under
the purchase accounting method used for the acquisition of Intentia.
Included in the six-month results is $25.5 million of pre-tax expenses
for amortization of acquired intangible assets, restructuring charges,
amortization of purchased maintenance contracts, and integration
related costs, and $3.7 million of non-cash stock-based compensation
as a result of adopting FAS 123(R) in this year. Including the written
down maintenance and service revenue and excluding certain expenses,
six month non-GAAP net income would have been $10.0 million, or $0.05
per diluted share.
Financial Guidance
For the third quarter of fiscal year 2007 ending February 28,
2007, the company is estimating GAAP revenue of $181 million to $189
million, excluding approximately $2 million of deferred maintenance
and services revenue written down under the purchase accounting method
used for the Intentia acquisition. Including this amount, the company
estimates non-GAAP revenues of $183 million to $191 million. License
contracting is estimated to be between $32 million and $38 million,
with estimated recognized license revenues between $20 million and $25
million. Estimated maintenance revenues are between $72 million and
$74 million, and estimated consulting revenues are between $91 million
and $92 million. The company anticipates a GAAP net loss of $0.01 to
break even at $0.00 per fully diluted share. Non-GAAP fully diluted
earnings per share is forecasted between $0.02 and $0.03, excluding
approximately $9.8 million of pre-tax expenses related to the
amortization of acquisition-related intangibles, amortization of
purchased maintenance contracts, stock-based compensation charges, and
integration costs. The non-GAAP effective tax rate in Q3 is
anticipated to be 55 percent.
Total GAAP revenues for the fiscal year 2007 ending May 31, 2007
are estimated to be between $713 million and $733 million, excluding
approximately $12 million of deferred maintenance and services revenue
written down under the purchase accounting method used for the
Intentia acquisition. Including this amount, the company estimates
non-GAAP total revenues of $725 million to $745 million. The company
also anticipates fourth quarter non-GAAP operating margin of
mid-to-high single digits, and a non-GAAP effective annual tax rate of
58 percent.
Additional Second Quarter Fiscal 2007 Key Business Metrics:
-- Cash, cash equivalents and marketable securities were $278.8
million (including $13.5 million of restricted cash), compared
to $289 million in the fiscal 2007 first quarter. This decline
in cash was anticipated, driven primarily by the impact of the
company's change in U.S. maintenance contract renewal dates
-- Total license contracting was $30.2 million, an increase of
approximately 20 percent over the first quarter, driven by
increases in M3 contracting
-- Total revenues of $184.5 million increased 14 percent from
first quarter, primarily driven by license and consulting
revenue. Total license revenues of $22 million increased more
than 30 percent over first quarter, primarily due to the
increase in contracting
-- Total deferred revenues were $147 million. Deferred license
revenue was $28 million, which is up $8 million from the first
quarter
-- 307 total deals were signed at an average selling price of
$105,000, compared with 228 deals at an average selling price
of $113,000 in the first quarter
-- 27 new customer deals were signed at an average selling price
of $420,000, compared with 34 at an average selling price of
$352,000 in the first quarter
-- Three deals greater than $1 million and thirteen deals between
$500,000 and $1 million were signed in the second quarter,
compared to four deals greater than $1 million and six deals
in the $500,000 to $1 million range in the first quarter
-- Revenues from the Americas region represented 53 percent of
total revenue for the quarter; the Europe, Middle East, and
Africa region represented approximately 43 percent of total
revenue; and Asia-Pacific represented 4 percent of total
revenue
-- Gross margin increased one percent to approximately 46 percent
compared to the first quarter
-- Significant agreements were signed with Brooks Sports, Bucks
County Pennsylvania, ETS Caillaud, Fulton Paper, Haulotte
Group, Lisi Automotive, Manitou, Nebraska Methodist Health
System, Pulte Homes, WesternGeco and Zeppelin Baumaschinen
-- The company signed four new Lawson M3 deals with customers in
the Americas
-- Lawson continued to see good customer adoption of Lawson
System Foundation 9 with 111 customers purchasing in the
second quarter
Conference Call and Webcast
The company will host a conference call and webcast to discuss its
second quarter results and future outlook at 8:00 a.m. Eastern Time
(7:00 a.m. Central Time) on Jan. 9, 2007. Interested parties may
listen to the call by dialing 888-769-8514 (passcode Lawson 104) and
international callers 1-210-234-0001. 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 for one week. The
replay number is 866-436-9385 and international 1-203-369-1034. The
webcast will remain on www.lawson.com for approximately two weeks.
About Lawson Software
Lawson Software provides software and service solutions to
approximately 4,000 customers in manufacturing, distribution,
maintenance and service sector industries across 40 countries.
Lawson's solutions include Enterprise Performance Management, Supply
Chain Management, Enterprise Resource Planning, Customer Relationship
Management, Manufacturing Resource Planning, Enterprise Asset
Management and industry-tailored applications. Lawson solutions assist
customers in simplifying their businesses or organizations by helping
them streamline processes, 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.
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 Lawson's ability to realize synergies and
revenue opportunities anticipated from the Intentia International
acquisition; uncertainties in the software industry; uncertainties as
to when and whether the conditions for the recognition of deferred
revenue will be satisfied; global military conflicts; terrorist
attacks; pandemics, and any future events in response to these
developments; changes in conditions in the company's targeted
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. Lawson assumes no obligation to
update any forward-looking information contained in this press
release.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with
generally accepted accounting principles, or GAAP, Lawson Software
reports non-GAAP financial results. These non-GAAP results exclude
amortization of all acquisition-related intangibles, amortization of
purchased maintenance contracts, Intentia integration costs,
restructuring charges, certain stock-based compensation expenses and
other expenses. In addition, Lawson's non-GAAP financial results
include pro forma revenue for maintenance contracts acquired in the
Intentia acquisition for which the deferred revenue on Intentia's
balance sheet has been eliminated from GAAP results as part of the
purchase accounting for the acquisition. Lawson's management believes
the non-GAAP measures used in this press release are useful to
investors because they provide supplemental information that research
analysts frequently use to analyze software companies that have
recently made significant acquisitions. Management uses these non-GAAP
measures to evaluate its financial results, develop budgets and manage
expenditures. The method Lawson uses to produce non-GAAP results is
not computed according to GAAP, may differ from the methods used by
other companies, and should not be regarded as a replacement for
corresponding GAAP measures. Investors are encouraged to review the
reconciliation of these non-GAAP financial measures to the comparable
GAAP results, which is attached to this release. Additional
information can be found on the investor relations page of Lawson's
website at www.lawson.com/investor.
LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months
Ended % Increase
-----------------
Nov 30, Nov 30,
2006 2005 (Decrease)
-------- -------- ----------
Revenues:
License fees $22,041 $18,121 22%
Maintenance 70,969 44,554 59%
Consulting 91,483 26,362 247%
-------- --------
Total revenues 184,493 89,037 107%
-------- --------
Cost of revenues:
Cost of license fees 5,850 2,774 111%
Cost of maintenance 13,997 7,358 90%
Cost of consulting 80,289 26,559 202%
-------- --------
Total cost of revenues 100,136 36,691 173%
-------- --------
Gross profit 84,357 52,346 61%
-------- --------
Operating expenses:
Research and development 22,530 14,050 60%
Sales and marketing 39,898 19,465 105%
General and administrative 22,215 10,039 121%
Restructuring (32) (5) +++
Amortization of acquired intangibles 2,400 357 +++
-------- --------
Total operating expenses 87,011 43,906 98%
-------- --------
Operating income (loss) (2,654) 8,440 ---
-------- --------
Other income:
Interest income 3,707 2,367 57%
Interest expense (378) (19) +++
Other income 3 - +++
-------- --------
Total other income 3,332 2,348 42%
-------- --------
Income (loss) before income taxes 678 10,788 (94%)
Provision for income taxes 4,187 4,232 (1%)
-------- --------
Net income (loss) $(3,509) $6,556 ---
======== ========
Net income (loss) per share:
Basic $(0.02) $0.06 ---
======== ========
Diluted $(0.02) $0.06 ---
======== ========
Shares used in computing net income
(loss) per share:
Basic 187,376 102,428 83%
======== ========
Diluted 187,376 107,134 75%
======== ========
Six Months
Ended % Increase
------------------
Nov 30, Nov 30,
2006 2005 (Decrease)
--------- -------- ----------
Revenues:
License fees $38,809 $36,725 6%
Maintenance 140,553 88,167 59%
Consulting 166,968 52,059 221%
--------- --------
Total revenues 346,330 176,951 96%
--------- --------
Cost of revenues:
Cost of license fees 10,892 5,195 110%
Cost of maintenance 28,685 14,706 95%
Cost of consulting 150,023 51,931 189%
--------- --------
Total cost of revenues 189,600 71,832 164%
--------- --------
Gross profit 156,730 105,119 49%
--------- --------
Operating expenses:
Research and development 42,855 28,550 50%
Sales and marketing 76,790 38,437 100%
General and administrative 48,205 26,911 79%
Restructuring 3,360 5 +++
Amortization of acquired intangibles 4,789 731 +++
--------- --------
Total operating expenses 175,999 94,634 86%
--------- --------
Operating income (loss) (19,269) 10,485 ---
--------- --------
Other income:
Interest income 7,300 4,672 56%
Interest expense (645) (25) +++
Other income 43 - +++
--------- --------
Total other income 6,698 4,647 44%
--------- --------
Income (loss) before income taxes (12,571) 15,132 ---
Provision for income taxes 6,730 4,399 53%
--------- --------
Net income (loss) $(19,301) $10,733 ---
========= ========
Net income (loss) per share:
Basic $(0.10) $0.11 ---
========= ========
Diluted $(0.10) $0.10 ---
========= ========
Shares used in computing net income
(loss) per share:
Basic 186,610 101,790 83%
========= ========
Diluted 186,610 106,298 76%
========= ========
LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
Nov 30, 2006 May 31, 2006
------------ ------------
ASSETS
- --------------------------------------------
Current assets:
Cash and cash equivalents $183,201 $210,154
Marketable securities 81,934 90,348
Trade accounts receivable, net 162,635 159,933
Income taxes receivable 5,563 4,577
Deferred income taxes 21,626 21,465
Prepaid expenses and other current assets 26,947 28,085
------------ ------------
Total current assets 481,906 514,562
------------ ------------
Long-term marketable securities 244 6,079
Restricted Cash 13,468 -
Property and equipment, net 28,946 26,189
Goodwill 471,112 454,550
Other intangibles assets, net 147,247 154,695
Deferred income taxes 9,368 9,294
Other assets 7,192 5,283
------------ ------------
Total assets $1,159,483 $1,170,652
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- --------------------------------------------
Current liabilities:
Current portion of long-term debt $3,507 $3,475
Accounts payable 18,587 26,137
Accrued compensation and benefits 80,633 88,245
Income taxes payable 2,271 3,195
Deferred income taxes 4,408 4,221
Deferred revenue 140,678 146,206
Other current liabilities 76,436 74,882
------------ ------------
Total current liabilities 326,520 346,361
------------ ------------
Long-term debt, less current portion 5,620 4,275
Deferred income taxes 9,360 9,039
Deferred revenue - non-current 6,487 10,840
Other long-term liabilities 11,189 8,478
------------ ------------
Total liabilities 359,176 378,993
------------ ------------
Stockholders' equity:
Common stock 1,982 1,961
Additional paid-in capital 812,543 800,168
Treasury stock, at cost (68,826) (69,237)
Deferred stock-based compensation - (131)
Retained earnings 19,391 38,692
Accumulated other comprehensive income 35,217 20,206
------------ ------------
Total stockholders' equity 800,307 791,659
------------ ------------
Total liabilities and stockholders' equity $1,159,483 $1,170,652
============ ============
LAWSON SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
------------------- -------------------
Nov 30, Nov 30, Nov 30, Nov 30,
2006 2005 2006 2005
--------- --------- --------- ---------
Cash flows from operating
activities:
Net (loss) income $(3,509) $6,556 $(19,301) $10,733
Adjustments to reconcile net
(loss) income to net cash
(used in) provided by
operating activities:
Depreciation 2,321 1,413 4,685 2,954
Amortization 7,246 2,153 14,600 4,338
Deferred income taxes 284 - 336 65
Provision for doubtful
accounts (247) (371) 1,708 (1,104)
Tax benefit from stock
option transactions (704) - (1,033) -
Tax benefit from
stockholder transactions
for option activity 896 1,636 852 1,809
Amortization of stock-
based compensation 1,589 107 3,673 239
Stock-based compensation
expense - - - 6,368
Amortization of discounts
on notes payable - 5 - 18
Amortization of discounts
on marketable securities (84) (58) (235) (37)
Net gain on sale of assets 2 - 2 -
Changes in operating assets
and liabilities, net of
effect from acquisitions:
Trade accounts receivable (4,809) (4,043) 1,173 (4,921)
Prepaid expenses and other
assets 4,506 (1,723) 1,679 6,726
Accounts payable 622 401 (8,398) (1,541)
Accrued and other
liabilities (1,752) 1,514 (15,607) (1,045)
Income taxes (2,549) 2,427 (1,672) 2,457
Deferred revenue and
customer deposits (17,787) (2,643) (13,449) (3,632)
--------- --------- --------- ---------
Net cash (used in) provided
by operating activities (13,975) 7,374 (30,987) 23,427
--------- --------- --------- ---------
Cash flows from investing
activities:
Cash paid in conjunction
with acquisitions - (1,320) (1,995) (2,407)
Purchases of marketable
securities (44,718) (80,789) (73,749) (92,721)
Maturities of marketable
securities 39,327 29,607 87,773 51,496
Sales of marketable
securities 500 - 500 -
Restricted cash designated (13,468) - (13,468) -
Purchases of property and
equipment (2,845) (689) (5,473) (1,112)
--------- --------- --------- ---------
Net cash used in investing
activities (21,204) (53,191) (6,412) (44,744)
--------- --------- --------- ---------
Cash flows from financing
activities
Principal payments on long-
term debt (742) - (973) (967)
Cash proceeds from long-term
debt 505 - 1,768 -
Payments on capital lease
obligations (468) - (961) -
Exercise of stock options 4,623 3,721 7,084 5,740
Excess tax benefit from
stock transactions 704 - 1,033 -
Issuance of treasury shares
for employee stock purchase
plan 639 - 1,329 1,497
--------- --------- --------- ---------
Net cash provided by
financing activities 5,261 3,721 9,280 6,270
--------- --------- --------- ---------
Effect of exchange rate
changes on cash and cash
equivalents 1,312 - 1,166 -
--------- --------- --------- ---------
Decrease in cash and cash
equivalents (28,606) (42,096) (26,953) (15,047)
Cash and cash equivalents at
beginning of period 211,807 214,793 210,154 187,744
--------- --------- --------- ---------
Cash and cash equivalents at
end of period $183,201 $172,697 $183,201 $172,697
========= ========= ========= =========
LAWSON SOFTWARE, INC.
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(in thousands, except per share data)
(unaudited)
Three Months Ended
---------------------------------------------------
Nov 30, 2006 Nov 30, 2005
Non- Non-
GAAP Adj. GAAP GAAP Adj. GAAP
------------------------- -------------------------
Revenues:
License fees $22,041 $- $22,041 $18,121 $- $18,121
Maintenance 70,969 2,811 73,780 44,554 - 44,554
Consulting 91,483 1,079 92,562 26,362 - 26,362
------------------------- -------------------------
Total revenues 184,493 3,890 188,383 89,037 - 89,037
Cost of revenues:
Cost of license
fees 5,850 (2,589) 3,261 2,774 (809) 1,965
Cost of
maintenance 13,997 (986) 13,011 7,358 (987) 6,371
Cost of
consulting 80,289 (1,911) 78,378 26,559 (189) 26,370
------------------------- -------------------------
Total cost of
revenues 100,136 (5,486) 94,650 36,691 (1,985) 34,706
------------------------- -------------------------
------------------------- -------------------------
Gross profit 84,357 9,376 93,733 52,346 1,985 54,331
------------------------- -------------------------
Operating
expenses:
Research and
development 22,530 (127) 22,403 14,050 (69) 13,981
Sales and
marketing 39,898 (976) 38,922 19,465 (419) 19,046
General and
administrative 22,215 (3,008) 19,207 10,039 (944) 9,095
Restructuring (32) 32 - (5) 5 -
Amortization of
acquired
intangibles 2,400 (2,400) - 357 (357) -
------------------------- -------------------------
Total operating
expenses 87,011 (6,479) 80,532 43,906 (1,784) 42,122
------------------------- -------------------------
------------------------- -------------------------
Operating Income
(loss) (2,654) 15,855 13,201 8,440 3,769 12,209
------------------------- -------------------------
Other income:
Interest income 3,707 - 3,707 2,367 - 2,367
Interest expense (378) - (378) (19) - (19)
Other income
(expense) 3 - 3 - - -
------------------------- -------------------------
Total other
income 3,332 - 3,332 2,348 - 2,348
------------------------- -------------------------
Income (loss)
before income
taxes 678 15,855 16,533 10,788 3,769 14,557
Provision
(benefit) for
income taxes 4,187 6,949 11,136 4,232 1,380 5,612
------------------------- -------------------------
Net income (loss) $(3,509) $8,906 $5,397 $6,556 $2,389 $8,945
======== ======= ======== ======== ======= ========
Weighted average
shares 187,376 190,682 107,134 107,134
Earnings per share $(0.02) $0.03 $0.06 $0.08
LAWSON SOFTWARE, INC.
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(in thousands, except per share data)
(unaudited)
Six Months Ended
-----------------------------------------------------
Nov 30, 2006 Nov 30, 2005
Non- Non-
GAAP Adj. GAAP GAAP Adj. GAAP
--------------------------- -------------------------
Revenues:
License fees $38,809 $- $38,809 $36,725 $- $36,725
Maintenance 140,553 5,858 146,411 88,167 - 88,167
Consulting 166,968 2,612 169,580 52,059 - 52,059
--------------------------- -------------------------
Total revenues 346,330 8,470 354,800 176,951 - 176,951
Cost of
revenues:
Cost of license
fees 10,892 (5,183) 5,709 5,195 (1,618) 3,577
Cost of
maintenance 28,685 (1,995) 26,690 14,706 (1,988) 12,718
Cost of
consulting 150,023 (4,903) 145,120 51,931 (241) 51,690
--------------------------- -------------------------
Total cost of
revenues 189,600 (12,081) 177,519 71,832 (3,847) 67,985
--------------------------- -------------------------
--------------------------- -------------------------
Gross profit 156,730 20,551 177,281 105,119 3,847 108,966
--------------------------- -------------------------
Operating
expenses:
Research and
development 42,855 (336) 42,519 28,550 (124) 28,426
Sales and
marketing 76,790 (2,313) 74,477 38,437 (879) 37,558
General and
administrative 48,205 (6,307) 41,898 26,911 (7,974) 18,937
Restructuring 3,360 (3,360) - 5 (5) -
Amortization of
acquired
intangibles 4,789 (4,789) - 731 (731) -
--------------------------- -------------------------
Total
operating
expenses 175,999 (17,105) 158,894 94,634 (9,713) 84,921
--------------------------- -------------------------
--------------------------- -------------------------
Operating Income
(loss) (19,269) 37,656 18,387 10,485 13,560 24,045
--------------------------- -------------------------
Other income:
Interest income 7,300 - 7,300 4,672 (357) 4,315
Interest
expense (645) - (645) (25) - (25)
Other income
(expense) 43 - 43 - - -
--------------------------- -------------------------
Total other
income 6,698 - 6,698 4,647 (357) 4,290
--------------------------- -------------------------
Income (loss)
before income
taxes (12,571) 37,656 25,085 15,132 13,203 28,335
Provision
(benefit) for
income taxes 6,730 8,265 14,995 4,399 6,856 11,255
--------------------------- -------------------------
Net income
(loss) $(19,301) $29,391 $10,090 $10,733 $6,347 $17,080
========= ======== ======== ======== ======= ========
Weighted average
shares 186,610 190,065 106,298 106,298
Earnings per
share $(0.10) $0.05 $0.10 $0.16
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with
generally accepted accounting principles, or GAAP, Lawson Software
reports non-GAAP financial results. These non-GAAP results exclude
amortization of all acquisition-related intangibles, amortization of
purchased maintenance contracts, Intentia integration costs,
restructuring charges, certain stock-based compensation expenses and
other expenses. In addition, Lawson's non-GAAP financial results
include pro forma revenue for maintenance contracts acquired in the
Intentia acquisition for which the deferred revenue on Intentia's
balance sheet has been eliminated from GAAP results as part of the
purchase accounting for the acquisition. Lawson's management believes
the non-GAAP measures used in this press release are useful to
investors because they provide supplemental information that research
analysts frequently use to analyze software companies that have
recently made significant acquisitions. Management uses these non-GAAP
measures to evaluate its financial results, develop budgets and manage
expenditures. The method Lawson uses to produce non-GAAP results is
not computed according to GAAP, may differ from the methods used by
other companies, and should not be regarded as a replacement for
corresponding GAAP measures. Investors are encouraged to review the
reconciliation of these non-GAAP financial measures to the comparable
GAAP results, which is attached to this release. Additional
information can be found on the investor relations page of Lawson's
website at www.lawson.com/investor.
LAWSON SOFTWARE, INC.
SUPPLEMENTAL NON-GAAP MEASURES
INCREASE (DECREASE) IN GAAP AMOUNTS REPORTED
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
------------------ ----------------
Nov 30, Nov 30, Nov 30, Nov 30,
2006 2005 2006 2005
---------- ---------------- -------
Revenue items
Purchase accounting impact on
maintenance $2,811 $- $5,858 $-
Purchase accounting impact on
consulting 1,079 - 2,612 -
---------- ------- -------- -------
Total revenue items 3,890 - 8,470 -
Cost of license items
Amortization of acquired
software (2,575) (809) (5,169) (1,618)
Non-cash stock-based
compensation (14) - (14) -
---------- ------- -------- -------
Total cost of license items (2,589) (809) (5,183) (1,618)
Cost of maintenance items
Amortization of purchased
maintenance contracts (891) (987) (1,848) (1,988)
Integration related (1) (18) - (70) -
Non-cash stock-based
compensation (77) - (77) -
---------- ------- -------- -------
Total cost of maintenance
items (986) (987) (1,995) (1,988)
Cost of consulting items
Amortization (1,380) (2,793)
Integration related (1) (410) (188) (1,753) (238)
Non-cash stock-based
compensation (121) (1) (357) (3)
---------- ------- -------- -------
Total cost of consulting
items (1,911) (189) (4,903) (241)
Research and development items
Integration related (1) 15 (68) (18) (117)
Non-cash stock-based
compensation (142) (1) (318) (7)
---------- ------- -------- -------
Total research and
development items (127) (69) (336) (124)
Sales and marketing items
Integration related (1) (616) (416) (1,542) (865)
Non-cash stock-based
compensation (360) (3) (771) (14)
---------- ------- -------- -------
Total sales and marketing
items (976) (419) (2,313) (879)
General and administrative items
Integration related (1) (2,131) (941) (4,168) (1,695)
Non-cash stock-based
compensation (3) (877) (3) (2,139) (6,279)
---------- ------- -------- -------
Total general and
administrative (3,008) (944) (6,307) (7,974)
Restructuring 32 5 (3,360) (5)
Amortization of acquired
intangibles (2,400) (357) (4,789) (731)
Other income (expense) - - - (357)
Tax provision (2) (6,949) (1,380) (8,265) (6,856)
Total Adjustments $8,906 $2,389 $29,391 $6,347
========== ======= ======== =======
(1) Represents integration related expenses relating to the merger
with Intentia International. Included in integration related costs
for the three and six month period ended November 30, 2006 were
approximately $1.4 million and $2.1 million, respectively, of costs
to third parties associated with Sarbanes readiness efforts for
Intentia International. The remaining integration related activity
primarily relates to costs associated with initial internal
leadership meetings and external meetings with significant clients,
analysts and other third parties to discuss the strategy of the
merger and plans for the new organization as well as employee travel
costs associated with developing integration plans during the first
quarter of fiscal 2007.
(2) Based on a projected annual global effective tax rate analysis,
non-GAAP Q2 tax provision was calculated to be 69.6%. This high
computed tax rate is due to the effect of not recording tax benefits
for losses in jurisdictions with a history of losses, and for which
there is no expected provision on a non-GAAP basis.
(3) Non-cash stock-based compensation from 2005 relates to a stock
option modification resulting in $6.3M in expense under APB 25.
CONTACT: Lawson Software, Inc.
Media:
Terry Blake, 651-767-4766
terry.blake@us.lawson.com
or
Investors and Analysts:
Barbara Doyle, 651-767-4385
barbara.doyle@us.lawson.com