Lawson Software Reports Fourth Quarter Fiscal 2008 Financial Results

Company posts more than $100 million increase in annual revenues

ST. PAUL, Minn., July 10, 2008 – Lawson Software, Inc. (Nasdaq: LWSN) today reported financial results for its fourth quarter of fiscal year 2008, which ended May 31, 2008. Lawson reported GAAP (generally accepted accounting principles) revenues for the quarter of $233 million, up 9 percent from revenues of $212.9 million in its fiscal 2007 fourth quarter. The revenue increase was primarily driven by 14 percent growth in maintenance revenues resulting from high customer renewal rates at standard annual price increases and new customer contracts. License fees and consulting revenues also grew by 3 percent and 8 percent respectively. Currency fluctuations had a positive impact on all lines of revenue.

Fourth quarter GAAP net income was $3.7 million, or $0.02 per diluted share, compared with net income of $8.1 million, or $0.04 per diluted share, in the fourth quarter of fiscal 2007. Operating income of $17.5 million nearly doubled year-over-year, offset by a decrease in other income and an increase in the tax provision. Other income declined due to lower investment yields and a non operating impairment charge of $6.1 million recorded in other expenses to reduce the fair value of auction rate securities held by the company that have subsequently been sold, which is further described below. The impairment charge impacted net earnings by $0.03 per diluted share. Currency fluctuations had a nominal negative impact of less than $0.01 on net earnings per diluted share. Refer to Table 1 attached to this release for a summary of the impact of currency fluctuation to Lawson’s year-over-year performance.

Included in the reported GAAP net income and earnings per share results are pre-tax expenses of $6.8 million for amortization of acquired intangible assets, amortization of purchased maintenance contracts, purchase accounting impact on consulting costs, restructuring charges, the $6.1 million impairment charge for auction rate securities and $2.1 million of non-cash stock-based compensation. Excluding these expenses and including $0.4 million of maintenance and consulting revenue impacted by purchase accounting adjustments made to the opening deferred revenue balances acquired from the former Intentia International AB and other acquisitions, non-GAAP net income for the fourth quarter of fiscal 2008 was $17.6 million, or $0.10 per diluted share. Non-GAAP earnings per diluted share of $0.10 increased year over year from $0.08 in the fourth quarter of fiscal 2007.

“Our Q4 results once again demonstrate that Lawson is delivering on our commitments to customers and shareholders,” said Harry Debes, Lawson president and CEO. “Our company is getting stronger and the market is responding to our message. By focusing on our key verticals, we grew software contracting to more than $51 million for the quarter, the highest contracting for any quarter in company history. And for the year, we made substantial progress by introducing many new products and enhancements. We grew our license revenues by 25 percent while deferred license revenues also increased more than 50 percent. We substantially improved our profitability and we repurchased $106 million of our shares. We still have work to do to reach our best-in-class profitability targets, but we believe it’s clear that we’ve demonstrated that we are more than capable of reaching our goals by executing against our plans with consistency.”

12-Months Ended May 31, 2008
GAAP revenues for the 12 months ended May 31, 2008, were $851.9 million, up 14 percent from revenues of $750.4 million in fiscal 2007. GAAP net income was $13.7 million, or $0.08 per diluted share, improving from a net loss of $20.9 million, or $0.11 per share loss a year ago. The primary reason for the increase in net income in the 12-month period was revenue growth of $101.5 million, driven largely by organic growth in license fees and maintenance revenues and positive year-over-year impact due to currency fluctuations. Currency fluctuations also inflated expenses incurred outside the U.S. The company estimates currency fluctuations had a negative impact of $0.03 on net earnings per diluted share for the 12-month period.

Included in the reported 12-month GAAP results are pre-tax expenses of $25.3 million for amortization of acquired intangible assets, amortization of purchased maintenance contracts, purchase accounting impact on consulting costs, reductions to pre-merger claim reserves, restructuring charges, $18.4 million of impairment charges for auction rate securities and $6.7 million of non-cash stock-based compensation. Excluding these expenses and including $1.7 million of maintenance and services revenue impacted by purchase accounting adjustments made to the opening deferred revenue balances acquired from the former Intentia International AB and other acquisitions, non-GAAP net income for the 12 months ended May 31, 2008, was $59.6 million, or $0.33 per diluted share. Non-GAAP earnings per diluted share of $0.33 increased year over year from $0.19 in fiscal 2007.

Financial Guidance
For the first quarter of fiscal 2009, which ends Aug. 31, 2008, the company estimates total revenues of $195 million to $200 million. The company anticipates GAAP fully diluted earnings per share will be $0.02 to $0.04. Non-GAAP fully diluted earnings per share are forecasted to be between $0.06 and $0.07, excluding approximately $8 million of pre-tax expenses related to the amortization of acquisition-related intangibles, amortization of purchased maintenance contracts, stock-based compensation charges and purchase accounting adjustments for acquired deferred revenue balances.

For fiscal 2009, which ends May 31, 2009, the company estimates total revenues of $920 million to $925 million. The company anticipates GAAP fully diluted earnings per share of $0.28 to $0.32. Non-GAAP fully diluted earnings per share are forecasted to be between $0.43 and $0.47 excluding approximately $36 million of pre-tax expenses related to the amortization of acquisition-related intangibles, amortization of purchased maintenance contracts, stock-based compensation charges and purchase accounting adjustments for acquired deferred revenue balances. The non-GAAP effective tax rate for fiscal 2009 is anticipated to be between 36 and 39 percent.

Fourth Quarter Fiscal 2008 Key Metrics
Cash, cash equivalents, marketable securities and investments at quarter-end were $488.6 million (including $2.8 million of restricted cash), compared with $390 million (including $3.3 million of restricted cash) on Feb. 29, 2008.
$105.6 million of cash was used to repurchase 11.6 million shares at an average price of $9.12 in fiscal 2008. No shares were repurchased in the fiscal 2008 fourth quarter. The repurchases in fiscal 2008 caused a decline in cash, cash equivalents, marketable securities and investments compared with $561.3 million (including $7.4 million of restricted cash) on May 31, 2007.
On July 10, 2008 the company announced a $200 million increase to its current share repurchase authorization, resulting in $239.5 million available for future stock repurchases as of July 10, 2008 (see press release dated July 10, 2008, for details).
Total deferred revenues were $312.6 million, including $54.6 million of deferred license revenues, compared with the Feb. 29, 2008, balance of $216 million, including $45.3 million of deferred license revenue. Total deferred revenues increased primarily due to added deferred maintenance revenues resulting from the company’s May 31 annual contract renewal date for its customers located in the Americas region. The increase in deferred license revenue was primarily driven by higher software contracting in the quarter.
Days sales outstanding (DSO) at quarter end were 71, compared with 85 on Feb. 29, 2008. The DSO decrease was due to increased receivables collections for maintenance contracts.
The company signed 603 deals, compared with 751 in the fourth quarter of fiscal 2007. Average selling price of all deals increased to $86,000 compared with $57,000 a year ago.
Thirty-eight new customer deals were signed, compared with 40 in the fourth quarter a year ago. Average selling price of new customer deals increased to $391,000 compared to $228,000 a year ago.
Four deals greater than $1 million and eight deals between $500,000 and $1 million were signed, compared with two deals greater than $1 million and seven deals between $500,000 and $1 million in the fourth quarter fiscal 2007.
The Americas region represented 52 percent of total revenue; Europe, Middle East, and Africa region represented 44 percent of total revenue; and Asia-Pacific represented 4 percent of total revenue.
Key customer wins: Americas - Community Medical Center; Central Grocers Cooperative, Inc.; Greenville County Schools; St. Alexius Medical Center; Total Wine & More; USC Care Medical Group, Inc. EMEA - Abel und Schafer GmbH & Co.; LaBrosse et Dupont SA; and Roller GmbH & Co. Asia-Pacific - Caspex Corporation Limited; and Walker Shop Footwear Limited

Sale of Auction Rate Securities
As of May 31, 2008, the company had a total of $488.6 million in cash and equivalents including $45.2 million in short-term investments which consist of investments in auction rate securities. These auction rate securities have a par value of $63.7 million. Subsequent to May 31, 2008 the company sold all of its investments in auction rate securities for cash proceeds of $45.2 million. During the fourth quarter, the company reclassified the auction rate securities from long-term investments to short-term investments and recorded an additional $6.1 million impairment charge on the securities, including $2.9 million which had previously been recorded as a temporary impairment as unrealized losses in stockholders’ equity. In total, the company has recorded impairment charges on its auction rate securities of $18.4 million as non-operating losses in other expenses. The impairment charges represent capital losses on the sale of the securities for which the company does not have available capital gains to offset. Accordingly, no tax benefits were recorded with the charge. Lawson has no other exposure to auction rate securities.

Conference Call and Webcast
The company will host a conference call and webcast to discuss its fourth quarter results and future outlook at 4:30 p.m. Eastern Time (3:30 p.m. Central Time) July 10, 2008. Interested parties should dial 800-988-0202 (passcode: LWSN) and international callers should dial +1-210-839-8501. 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 888-562-2895 or + 1-402-220-6516. The webcast will remain on www.lawson.com for approximately one week.

Lawson Software Announces $200 Million Increase in Share Repurchase Authorization

ST. PAUL, Minn., July 10, 2008 – Lawson Software, Inc. (Nasdaq: LWSN) today announced that its board of directors has approved an increase of $200 million to its current share repurchase authorization, resulting in a total available authorization of $239.5 million for future stock repurchases as of July 10, 2008. The original $100 million authorization was announced on Nov. 13, 2006 and subsequently increased to $200 million on Apr. 16, 2007. From the inception of the $400 million repurchase program through July 10, 2008, the company used $160.5 million to repurchase 18.0 million shares at an average price of $8.94 per share, representing 9.6 percent of total shares outstanding as of November 2006.

The share repurchase will be funded using the company’s existing cash balance and future cash flows. The share repurchases may occur through transactions structured through investment banking institutions, open market purchases, privately negotiated transactions and/or other mechanisms. The program allows the company to repurchase shares at its discretion and under various methods. Market conditions will influence the timing of the buyback and the number of shares repurchased.

At the end of fiscal year 2008 ended May 31, 2008; Lawson had cash, cash equivalents, marketable securities and short-term investments of $488.6 million and 173.8 million common shares outstanding.