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Lawson reports marginal dip in H1 results
12
Jan '09
Lawson Software, Inc. today reported financial results for its second quarter of fiscal year 2009, which ended Nov. 30, 2008. Lawson reported revenues for the quarter of $206.4 million, down 6 percent from revenues of $218.6 million in its fiscal 2008 second quarter. Currency fluctuations negatively impacted GAAP and non-GAAP revenues by 5 percent as foreign currencies weakened substantially in the quarter compared to the U.S. dollar.

License fees declined 9 percent, or 4 percent adjusted for currency, reflecting a lower level of software sales driven by the global economic conditions. Consulting revenues declined 15 percent, or 10 percent adjusted for currency, due to fewer billable hours resulting from a reduced number of consultants particularly in EMEA. Partially offsetting the decline in license fees and consulting revenues was a 6 percent increase, or 10 percent adjusted for currency, in maintenance revenues driven by customer renewals at higher average prices.

Second quarter GAAP net income was $4.2 million, or $0.03 per diluted share, compared to net income of $3.7 million, or $0.02 per diluted share, in the second quarter of fiscal 2008. General and administrative expenses decreased partially due to a $1.6 million favorable insurance settlement related to pre-merger litigation claims. When combined with reductions in sales and marketing and lower amortization expense for acquired intangibles these lower operating expenses offset a $7.7 million restructuring charge.

Interest income declined due to lower investment balances and yields. Other income improved as the second quarter of fiscal 2008 included a $4.2 million impairment charge for auction rate securities. Net income also improved due to a decrease in the provision for income taxes. The company estimates currency fluctuations had a positive impact of less than $0.01 on net earnings per diluted share for the second quarter.

Included in GAAP net income and earnings per diluted share results are pre-tax expenses of $11.5 million for restructuring, amortization of acquired intangible assets, amortization of purchased maintenance contracts and pre-merger claims reserve adjustments as well as $2.9 million of non-cash stock-based compensation. Excluding these expenses and including $0.2 million of revenue impacted by purchase accounting adjustments, non-GAAP net income for the second quarter of fiscal 2009 was $16.6 million, or $0.10 per diluted share.

Non-GAAP net income per diluted share includes a non-GAAP provision for income taxes based upon an estimated rate of 35 percent. The company estimates currency fluctuations had no impact on non-GAAP net earnings per diluted share for the second quarter. Non-GAAP earnings per diluted share of $0.10 increased year-over-year from $0.09 in the second quarter of fiscal 2008.

"Lawson delivered solid results in the quarter despite the difficult economic environment," said Harry Debes, Lawson president and chief executive officer. "We met our revenue guidance and the high-end of our earnings guidance. Our primary goal for the quarter was to improve non-GAAP operating margin. We accomplished that goal, and achieved the highest level of operating margin since the merger with Intentia in April 2006."

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