Lawson Software Reports Third Quarter Fiscal 2007 Financial Results
Lawson Software, Inc. (Nasdaq:LWSN) today reported financial results for its third quarter of fiscal 2007, the third full quarter of post-combination results after its acquisition of Intentia International AB in April 2006.
ST. PAUL, Minn. (April 09, 2007) – Lawson Software, Inc. (Nasdaq:LWSN) today reported financial results for its third quarter of fiscal 2007, the third full quarter of post-combination results after its acquisition of Intentia International AB in April 2006. In the third quarter, Lawson substantially completed the purchase accounting review associated with its acquisition of Intentia. As a result of this review, Lawson increased the goodwill associated with the acquisition by $21.4 million, primarily related to adjustments for accrued liabilities. Lawson may have subsequent purchase accounting adjustments in the fiscal fourth quarter ending May 31, 2007, related to Value Added Taxes (VAT) items in Europe and refinement to reserves for pre-acquisition customer claims.
Lawson reported GAAP (generally accepted accounting principles) revenues of $191.2 million for its fiscal 2007 third quarter. This was an increase of 118 percent from revenues of $87.7 million in its fiscal 2006 third quarter, primarily attributed to the consolidation of revenues of the former Intentia. Excluded from these results is $1.8 million of deferred maintenance and services revenue that was written down under purchase accounting in the acquisition of Intentia.
GAAP net loss was $9.8 million, or $0.05 per share, compared with GAAP net income of $10 million, or $0.09 per diluted share, in the same period last year. This decline is primarily attributed to the consolidation of the former Intentia’s costs and operating expenses and a restructuring charge. The company incurred a restructuring charge of $11.5 million in the quarter for severance and related benefits for approximately 350 positions in the United States and Europe that will be eliminated over the next five quarters ending in May 2008 as work is shifted to a global support center in the Philippines.
Included in these GAAP results are pre-tax expenses totaling $9.9 million for amortization of acquired intangible assets, acquisition related costs, purchase accounting impact on consulting costs and amortization of purchased maintenance contracts, and $1.8 million of non-cash stock-based compensation as a result of adopting FAS 123(R) in the year. Under FAS 123(R), stock-based employee compensation cost is recognized using the fair-value based method for all unvested stock options after June 1, 2006. Excluding these expenses and the $11.5 million restructuring charge taken in the quarter, and including the $1.8 million of maintenance and services revenue written down under purchase accounting, non-GAAP net income would have been $11.4 million, or $0.06 per diluted share. Lower than expected effective tax rates favorably impacted the non-GAAP earnings per share by $0.02.
“We executed well on many levels during the third quarter,” said Harry Debes, president and CEO. “We met or exceeded our financial commitments for revenues, expenses and non-GAAP earnings per share. In addition, our maintenance renewals came in strong from our Lawson M3 (Make, Move, Maintain) customer base, our cash flow from operations improved, our consulting services margin improved, we outlined our transformation plans for our new global operations and began to execute those plans, and our sales pipeline grew for the fourth consecutive quarter. Although we still have more to work to do, we made strong progress on our customer commitments and company goals during the third quarter.”
Results for the Nine-month Period
For the nine months ended Feb. 28, 2007, GAAP net loss was $29.1 million, or $0.16 per share, on total revenues of $537.5 million, compared with GAAP net income of $20.7 million, or $0.19 per diluted share, on total revenues of $264.6 million, in the comparable fiscal 2006 period. Excluded from these results is $10.3 million of deferred maintenance and services revenue that was written down under purchase accounting in the acquisition of Intentia.
Included in the nine-month GAAP results are pre-tax expenses totaling $47 million for amortization of acquired intangible assets, acquisition related costs, purchase accounting impact on consulting costs, amortization of purchased maintenance contracts, restructuring charges, and $5.5 million of non-cash stock-based compensation as a result of adopting FAS 123(R) in this year. Excluding these costs and including the $10.3 million of maintenance and services revenue written down under purchase accounting, nine-month non-GAAP net income would have been $21.5 million, or $0.11 per diluted share.
Financial Guidance
For the fourth quarter of fiscal year 2007 ending May 31, 2007, the company is estimating GAAP revenues of $187 million to $195 million, excluding approximately $1 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 $188 million to $196 million. License revenues are estimated to be between $24 million and $28 million. Maintenance revenues are estimated to be between $74 million and $75 million, and consulting revenues are estimated to be between $90 million and $93 million. The company anticipates GAAP per share results to be in the range of a net loss of $0.02 to net earnings of $0.03 per fully diluted share. Non-GAAP fully diluted earnings per share is forecasted between $0.03 and $0.05, excluding approximately $8.8 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 the fourth quarter is anticipated to be 51 percent.
Third Quarter Fiscal 2007 Key Metrics and Highlights
— Cash, cash equivalents and marketable securities in the
quarter were $286 million (including $15 million of restricted
cash) – increasing $7 million from the second quarter.
— Total deferred revenues increased 24 percent from the second
quarter to $182.3 million.
— Deferred license revenues increased 11 percent from the second
quarter to $32.7 million.
— 354 total deals were signed at an average selling price of
$88,000, compared with 307 deals at an average selling price
of $105,000 in the second quarter.
— 24 new customer deals were signed at an average selling price
of $373,000, compared with 27 at an average selling price of
$420,000 in the second quarter.
— Five deals greater than $1 million and four deals between
$500,000 and $1 million were signed, compared to three deals
greater than $1 million and 13 deals in the $500,000 to $1
million range in the second quarter.
— The Americas region represented 54 percent of total revenue;
the Europe, Middle East, and Africa region represented
approximately 43 percent of total revenue; and Asia-Pacific
represented 3 percent of total revenue.
— Non-GAAP consulting services margin increased 240 basis points
to 17.7 percent.
— Customer wins: Americas – Pinnacle Airlines, First National
Bank of Omaha, Tacoma Public Schools, Holland Community
Hospital, Wentworth Douglas Hospital, Things Remembered,
Orchard Supply Hardware Stores and Koramsa; EMEA – Bygma,
Johannes Fog and Bunzl Vending Services Ltd; Asia-Pacific –
Quiksilver Japan, Belle Footwear and Swan Hardware and Staff.
— The company signed two new Lawson M3 deals with customers in
the Americas.
— Lawson continued to see good customer adoption of Lawson
System Foundation 9 with 135 customers purchasing in the third
quarter.
— The company repurchased 867,000 shares of common stock in the
quarter for $5.9 million at an average price of $6.80 per
share.
Conference Call and Webcast
The company will host a conference call and webcast to discuss its third quarter results and future outlook at 4:30 p.m. Eastern Time (3:30 p.m. Central Time) April 9, 2007. Interested parties should dial 1-888-677-1802 (passcode Lawson 49) and international callers 1-210-234-8402. A live webcast will be available on www.lawson.com. Interested parties should access the conference call or 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 1-866-446-5478 and international 1-203-369-1152. The webcast will remain on www.lawson.com for approximately one week.
Source: Lawson
