Lionbridge Delivers Record Q3 Revenue of $108.0 Million, Reports GAAP EPS of ($0.02) and Adjusted Non-GAAP EPS of $0.03, Excluding Restructuring and F
7 November 2006
Lionbridge Technologies, Inc. (Nasdaq: LIOX) today announced financial results for the quarter ended September 30, 2006. Financial and business highlights for the quarter include:
* Revenue of $108.0 million, an increase of $49.5 million from the quarter
ended September 30, 2005.
* GAAP net loss of $933,000, or ($0.02) per share based on 59.1 million
weighted average common shares outstanding. This compares to a GAAP net
loss of $2.4 million, or ($0.05) per share in the third quarter of 2005.
GAAP net loss for the third quarter of 2006 includes $2.1 million of
restructuring and integration costs related to the Company's acquisition
of BGS and the closure of one of its Global Development and Testing
(GDT) European production centers. GAAP net loss also includes $994,000
of stock-based compensation expense related to the adoption of FAS 123
R.
* Non-GAAP adjusted net income of $2.1 million or $0.03 per share,
excluding restructuring and integration costs and excluding stock-based
compensation expense related to the adoption of FAS 123 R. (See the
section of this release entitled "Non-GAAP Financial Measures" and the
attached table for discussion of adjusted net income and reconciliation
of this measure to the comparable GAAP measure).
* Lionbridge repaid $9.5 million of its long term debt in the quarter,
resulting in an ending cash balance of $21.9 million. For the first
nine months of 2006, Lionbridge has repaid $14.3 million of its
long-term debt, reducing the Company's total long term debt balance to
$76.5 million.
* Cash flow from operations of approximately $2.0 million during the
quarter.
* The Company added more than 40 customers to its Freeway language
management platform during the quarter and continued to scale its
Logoport web based translation memory system.
* During the quarter the Company initiated its project management and
general ledger systems migration, as previously disclosed. While this
systems deployment negatively impacted productivity and gross margins
during the quarter, the Company expects that this migration will
simplify and automate processes while continuing to ensure an
appropriate and conservative policy for recognizing revenue.
For the first nine months of 2006, the Company delivered revenue of $317.6 million, an increase of $179.0 million from the same period of 2005. Non-GAAP earnings before interest, taxes, depreciation and amortization (EBITDA) was $22.4 million for the first nine months of 2006, an increase of $19.3 million from the first nine months of 2005. (See the section of this release entitled "Non- GAAP Financial Measures" and the attached table for discussion of EBITDA and reconciliation of this measure to the comparable GAAP measure)
"We have continued to scale our Freeway language management technology and offshore model. During Q3 we initiated the final step in the integration of Lionbridge and BGS; the migration of our operational project management systems. While the initial phase of this migration caused some productivity drain during the quarter, we expect our new systems and processes to drive added efficiencies throughout 2007," said Rory Cowan, CEO, Lionbridge. "We have secured large scale engagements with both new and existing customers. We have completed the final transformation of our GDT business to a fully enabled offshore model. And our end market demand is firm. All of these factors point to solid top line growth and margin expansion in 2007."
The Company provided an overview of its revenue expectations for the fourth quarter with estimated revenue of $100.0 to $104.0 million, reflecting the Company's traditional Q4 seasonality.
The Company will host a conference call today at 9:00 am ET regarding the content of this release and its business outlook. The conference call will be carried live on the Internet. Instructions for listening to the call over the Internet are available on the Investor's page of the Lionbridge web site at http://www.lionbridge.com/webcast/nov3/ . A replay will be available at this location for one week.
Non-GAAP Financial Measures
In this release, the Company's EBITDA and adjusted net income disclosures are not presented in accordance with generally accepted accounting principles (GAAP) and are not intended to be used in lieu of GAAP presentations of results of operations or cash provided by operating activities. EBITDA represents GAAP earnings excluding interest, taxes, depreciation and amortization expenses. Adjusted net income represents GAAP earnings excluding restructuring and integration costs and excluding stock-based compensation expense related to the adoption of FAS 123 R. Adjusted net income and EBITDA are presented because management believes these numbers provide additional information with respect to both the performance of our fundamental business activities as well as the Company's ability to meet future debt service and working capital requirements. Management believes the adjusted net income and EBITDA information are useful to investors for these reasons. EBITDA and adjusted net income are each a non-GAAP financial measure and should not be viewed as an alternative to GAAP measures of performance. Management believes the most directly comparable GAAP financial measure to each non-GAAP financial measure is net income (loss) and has provided a reconciliation of EBITDA and adjusted net income to the Company's GAAP net income (loss) on the last page of this press release.
About Lionbridge
Lionbridge Technologies, Inc. (Nasdaq: LIOX) is a provider of globalization and offshoring services. Lionbridge combines global resources with proven program management methodologies to serve as an outsource partner throughout a client's product and content lifecycle -- from development to globalization, testing and maintenance. Global organizations rely on Lionbridge services to increase international market share, speed adoption of global products and content, and enhance their return on enterprise applications and IT system investments. Based in Waltham, Mass., Lionbridge maintains more than 40 solution centers in 25 countries and provides services under the Lionbridge and VeriTest brands. To learn more, visit http://www.lionbridge.com.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties, including expected financial performance of Lionbridge in the fourth quarter and fiscal year 2007; and the expected impact of systems and policy migration. Lionbridge's actual experiences, actions, financial and operating results may differ materially from those discussed in the forward-looking statements. Factors that might cause such a difference include the loss of a major client or customer; the termination of customer contracts prior to the end of their term; the size, timing and recognition of revenue from clients; Lionbridge's inability to successfully complete the integration of Bowne Global Solutions (BGS) into Lionbridge and achieve expected synergies; Lionbridge's ability to successfully complete operational systems deployment initiatives and related integration on a timely basis; the ability of Lionbridge to realize the expected benefits of its operational systems deployment initiatives; Lionbridge's ability to comply with Section 404 of the Sarbanes-Oxley Act with respect to BGS' internal controls over financial reporting; Lionbridge's ability to resolve taxation questions regarding the BGS business; changes in tax rates applicable to the Company and changes to the interpretations of applicable tax rates; the Company's dependence on clients' product releases and production schedules to generate revenues; Lionbridge's ability to accurately forecast the acquisition related restructuring costs and allocation of the purchase price, goodwill and other acquisition related intangibles and other asset adjustments, costs associated with and consequential to the acquisition; the timing and speed of customer and user acceptance of Freeway; customer delays or postponements of services using Freeway or Logoport; the failure of Freeway or Logoport to keep pace with technological changes or changing customer needs; Lionbridge's ability to expand or accelerate user adoption of Freeway; the impact of equity-based compensation expense associated with FAS 123R; the impact of foreign currency fluctuations on its operating results and profitability and the Company's ability to successfully manage this exposure through hedge instruments and other strategies; the size, timing and recognition of revenue from major clients; customer delays or postponements of services; costs associated with restructuring of certain European operations; risks associated with management of growth; the failure to keep pace with the rapidly changing requirements of its clients; Lionbridge's ability to attract and retain key personnel; Lionbridge being held liable for defects or errors in its service offerings; political, economic and business fluctuations; as well as risks of additional downturns in conditions generally, and in the information technology and software industries specifically, and risks associated with competition; and Lionbridge's ability to forecast revenue and operating results. For a more detailed description of the risk factors associated with Lionbridge, please refer to Lionbridge's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2006.
Contact:
Sara Buda
Lionbridge Technologies, Inc.
(781) 434-6190
sara.buda@lionbridge.com
LIONBRIDGE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Amounts in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Revenue $ 107,964 $ 58,417 $ 317,612 $ 138,575
Operating expenses:
Cost of revenue
(excluding
depreciation and
amortization
shown separately
below) 72,445 38,211 209,219 90,718
Sales and marketing 7,274 5,136 22,463 13,135
General and
administrative 18,882 11,728 55,664 28,020
Research and
development 689 449 2,173 832
Depreciation and
amortization 1,323 916 4,228 2,144
Amortization of
acquisition-related
intangible assets 2,177 630 6,529 648
Merger, restructuring
and other charges 2,055 1,879 3,466 2,328
Total operating
expenses 104,845 58,949 303,742 137,825
Income (loss) from
operations 3,119 (532) 13,870 750
Interest expense:
Interest on outstanding
debt 1,984 629 5,890 629
Amortization of
deferred financing
costs and discount
on debt 257 64 717 64
Interest income 146 147 332 483
Other expense, net 1,091 246 2,236 468
Income (loss) before
income taxes (67) (1,324) 5,359 72
Provision for income taxes 866 1,120 4,297 1,347
Net income (loss) $(933) $(2,444) $1,062 $(1,275)
Net income (loss) per
share of common stock:
Basic $(0.02) $(0.05) $0.02 $(0.03)
Diluted $(0.02) $(0.05) $0.02 $(0.03)
Weighted average number
of common shares
outstanding:
Basic 59,062 50,362 58,931 48,135
Diluted 59,062 50,362 60,784 48,135
LIONBRIDGE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Amounts in thousands)
September 30, December 31,
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $21,877 $25,147
Accounts receivable, net of allowances of
$726 at September 30, 2006 and
December 31, 2005, respectively 66,743 68,017
Work in process 36,035 25,759
Other current assets 8,755 7,446
Total current assets 133,410 126,369
Property and equipment, net 13,178 14,002
Goodwill 130,949 130,982
Other intangible assets, net 39,061 45,590
Other assets 3,286 3,034
Total assets $319,884 $319,977
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt and current portion of
long-term debt $959 $1,195
Accounts payable 19,622 14,809
Accrued compensation and benefits 17,452 17,969
Other accrued expenses and current liabilities 29,053 26,637
Deferred revenue 5,750 8,577
Total current liabilities 72,836 69,187
Long-term debt, less current portion 76,523 90,268
Deferred income taxes, long-term 8,076 7,420
Other long-term liabilities 3,489 3,367
Total stockholders' equity 158,960 149,735
Total liabilities and stockholders' equity $319,884 $319,977
Reconciliation of GAAP Net Income (Loss) to Adjusted Net Income (Loss) -
Unaudited
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Net income (loss) $ (933) $(2,444) $ 1,062 $(1,275)
Items included in net
income above:
Merger, restructuring and
other charges 2,055 1,879 3,466 2,328
Stock-based compensation
for stock options impact
of FAS 123 R 994 -- 2,553 --
Adjusted net income
(loss) $2,116 $(565) $ 7,081 $1,053
Net income (loss) per
share of common stock:
Basic $0.04 $(0.01) $0.12 $0.02
Diluted $0.03 $(0.01) $0.12 $0.02
Weighted average number of
common shares outstanding:
Basic 59,062 50,362 58,931 48,135
Diluted 60,823 50,362 60,784 50,483
Reconciliation of GAAP Net Income (Loss) to EBITDA -Unaudited
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Net income (loss) $ (933) $(2,444) $ 1,062 $(1,275)
Depreciation and
amortization 1,323 916 4,228 2,144
Amortization of
acquisition-related
intangible assets 2,177 630 6,529 648
Provision for income taxes 866 1,120 4,297 1,347
Interest on outstanding
debt 1,984 629 5,890 629
Amortization of deferred
financing costs 257 64 717 64
Interest income 146 147 332 483
EBITDA 5,528 768 22,391 3,074
Items included in net
income (loss) above:
Merger, restructuring and
other charges 2,055 1,879 3,466 2,328
Stock-based compensation
for stock options impact
of FAS 123 R 994 -- 2,553 --
Adjusted EBITDA $ 8,577 $ 2,647 $ 28,410 $ 5,402
Source: prnewswire
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