License fees, which grew 23 percent, or 28 percent adjusted for currency, driven primarily by increases in healthcare, public sector and equipment service management & rental vertical markets. Contributing to the increase was the recognition of a larger amount of deferred license fees in the first quarter of fiscal 2010 as compared to the similar period last year as well as several significant deals signed and recognized in the current quarter.

Maintenance services, which declined 4 percent due to currency, but increased 1 percent adjusted for currency.

Consulting revenues in the quarter declined 29 percent, or 23 percent adjusted for currency, driven by fewer billable consultants. The company has reduced the size of its consulting staff as part of a strategy to move more implementation services to its partner channel as well as due to lower bookings for consulting and implementation services.

First quarter GAAP net income of $6 million, or $0.04 per diluted share increased compared to a net loss of $3.7 million, or $0.02 per share in the first quarter of fiscal 2009. The growth in net income was driven primarily by increased license fees revenues and reduced costs and expenses. Total costs and operating expenses declined 19 percent, or 13 percent adjusted for currency, compared to the decrease in total revenues of 11 percent, or 6 percent adjusted for currency. Operating income growth more than offset a $2.7 million, or 90 percent, decline in interest income which was consistent with marketplace declines in interest rates.

Results for the first quarter of fiscal 2010 include a reduction to net income of approximately $0.8 million for out-of-period adjustments. The provision for income taxes includes a $1.7 million charge to adjust for an under accrual in the fiscal 2009 provision. An additional adjustment was also recorded that decreased cost of services by $0.9 million, related to the reversal of a services reserve that should have been reversed in fiscal 2008. The company has determined these out-of period adjustments were immaterial to the first quarter of fiscal 2010 and are not expected to be material to fiscal 2010.

Non-GAAP net income for the first quarter of fiscal 2010 was $15.4 million, or $0.09 per diluted share, increasing from $8.7 million, or $0.05 in the first quarter of fiscal 2009. Non-GAAP net income and earnings per diluted share exclude $9.7 million of amortization, non-cash stock-based compensation, non-cash interest expense and restructuring. Non-GAAP net income and earnings per diluted share include a provision for income taxes based upon an estimated rate of 37 percent, which is applied consistently throughout the year.

The company's results were impacted by the reduced value of foreign currencies when compared to the U.S. dollar. Adjusted for currency, revenues would have been down 6 percent versus the 11 percent decline reported. The company estimates currency fluctuations had a positive impact of $0.01 on GAAP and non-GAAP net earnings per diluted share for the first quarter.

"We delivered strong software revenue and excellent earnings growth despite continued weakness in the global economy," said Harry Debes, Lawson president and chief executive officer. "Our vertical strategy is yielding growth in software revenues and our continued focus on internal efficiencies has significantly improved operating margin."

Implementation of FSP APB 14-1 First quarter of fiscal 2010 GAAP earnings per diluted share include $2.1 million of incremental non-cash interest expense resulting from the implementation of a new accounting standard related to the company's convertible notes. This non-cash interest expense is excluded from the company's non-GAAP results. Results for fiscal 2009 have been adjusted to reflect the retroactive implementation of this accounting standard. First quarter of fiscal 2009 GAAP earnings per diluted share include $2 million of incremental non-cash interest expense.

Financial Guidance For the second quarter of fiscal 2010, which ends Nov. 30, 2009, the company is providing guidance using foreign exchange rates as of the end of Sept. 2009. The company estimates total revenues of $175 million to $180 million. The company anticipates GAAP fully diluted earnings per share will be $0.01 to $0.03. Non-GAAP fully diluted earnings per share are forecasted to be $0.07 to $0.09, excluding approximately $14 million of pre-tax expenses for restructuring, amortization, non-cash interest expense and non-cash stock-based compensation. The non-GAAP effective tax rate for the second quarter is estimated at 37 percent, which the company expects to apply consistently throughout the fiscal year. Based on expected results for the first half of fiscal year 2010, the company now forecasts full year non-GAAP earnings per share to increase 8 to 10 percent compared to fiscal 2009.

Other Announcements The company also announced it is making a targeted reduction of approximately 75 positions primarily in consulting services in Europe. The reduction is a further refinement of the company's new vertical organization including a resizing of its services business to leverage its partner channel and in light of current demand for consulting and implementation services in Europe. The majority of personnel departures are expected to be completed by the end of the company's second quarter of fiscal 2010. The workforce reduction is expected to result in pre-tax charges in the second fiscal quarter of approximately $4 million for severance pay and related benefits. Annualized cost and expense savings from this action are estimated to be approximately $7 million. Please refer to the Form 8-K filed with the Securities and Exchange Commission for further details.

Conference Call, Webcast and Key Metrics The company will host a conference call and webcast to discuss its first quarter results and future outlook at 5:00 p.m. EDT (4:00 p.m. CDT) Sept. 30, 2009. Interested parties may also listen to the call by dialing 1-888-455-9644 (or 1-212-287-1631) and using the passcode "LWSN." Interested parties should access the webcast at www.lawson.com/investor or dial into the conference call approximately 10-15 minutes before the scheduled start time.

A replay will be available approximately one hour after the webcast and conference call concludes and will remain available for one week. To access the replay, dial 1-866-470-8786 or 1-203-369-1489 for international callers. The webcast will also remain on www.lawson.com/investor for approximately one week.

Additional key business metrics are available on Lawson's website at www.lawson.com/investor.

About Lawson Software Lawson Software provides software and service solutions to 4,500 customers in equipment service management & rental, fashion, food, general manufacturing & distribution, healthcare, public sector (United States), general service industries, and strategic human capital management across 40 countries. Lawson's solutions include Enterprise Performance Management, Human Capital 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. For Lawson's listing on the First North exchange in Sweden, Remium AB is acting as the Certified Adviser.

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 uncertainties in the software industry; uncertainties as to when and whether the conditions for the recognition of deferred revenue will be satisfied; increased competition; general economic conditions; the impact of foreign currency exchange rate fluctuations; continuation of the global credit crisis; global military conflicts; terrorist attacks; pandemics, and any future events in response to these developments; changes in conditions in the company's targeted industries and other risk factors listed in the company's most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K 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 including non-GAAP net income (loss) and non-GAAP net income (loss) per share. We believe that these non-GAAP measures provide meaningful insight into our operating performance and an alternative perspective of our results of operations. Our primary non-GAAP adjustments are described in detail below. We use these non-GAAP measures to assess our operating performance, to develop budgets, to serve as a measurement for incentive compensation awards and to manage expenditures. Presentation of these non-GAAP measures allows investors to review our results of operations from the same perspective as management and our Board of Directors. Lawson has historically reported similar non-GAAP financial measures to provide investors an enhanced understanding of our operations, facilitate investors' analysis and comparisons of our current and past results of operations and provide insight into the prospects of our future performance. We also believe that the non-GAAP measures are useful to investors because they provide supplemental information that research analysts frequently use to analyze software companies including those that have recently made significant acquisitions.

The method we use to produce non-GAAP results is not in accordance with GAAP and may differ from the methods used by other companies. These non-GAAP results should not be regarded as a substitute for corresponding GAAP measures but instead should be utilized as a supplemental measure of operating performance in evaluating our business. Non-GAAP measures do have limitations in that they do not reflect certain items that may have a material impact upon our reported financial results. As such, these non-GAAP measures should be viewed in conjunction with both our financial statements prepared in accordance with GAAP and the reconciliation of the supplemental non-GAAP financial measures to the comparable GAAP results provided for each period presented, which are attached to this release.

Our primary non-GAAP reconciling items are as follows: Purchase accounting impact on revenue - Lawson's non-GAAP financial results include pro forma adjustments for deferred maintenance and consulting revenues that we would have recognized under GAAP but for the related purchase accounting. The deferred revenue for maintenance and consulting on the acquired entity's balance sheet, at the time of the acquisition, was eliminated from GAAP results as part of the purchase accounting for the acquisition. As a result, our GAAP results do not, in management's view, reflect all of our maintenance and consulting activity. We believe the inclusion of the pro forma revenue adjustment provides investors a helpful alternative view of Lawson's maintenance and consulting operations.

Amortization of purchased maintenance contracts -- We have excluded amortization of purchased maintenance contracts from our non-GAAP results. The purchase price related to these contracts is being amortized based upon the proportion of future cash flows estimated to be generated each period over the estimated useful lives of the contracts. We believe that the exclusion of the amortization expense related to the purchased maintenance contracts provides investors an enhanced understanding of our results of operations.

Incremental non-cash interest related to convertible debt - We have excluded the incremental non-cash interest expense related to our $240.0 million in 2.5% senior convertible notes that we are required to recognize under FSP APB 14-1 from our non-GAAP results of operations for all periods presented, including a retrospective restatement of GAAP results upon our adoption of FSP APB 14-1 on June 1, 2009. This FSP requires us to recognize significant additional non-cash interest expense based on the market rate for similar debt instruments that do not contain a comparable conversion feature. We have allocated a portion of the proceeds from the issuance of the senior notes to the embedded conversion feature resulting in a discount on our senior notes. The debt discount is being amortized as additional non-cash interest expense over the term of the notes using the effective interest method. These non-cash interest charges are not included in our operating plans and are not included in management's assessment of our operating performance. We believe that the exclusion of the non-cash interest charges provide investors useful information relating to the cost structure of our operations.

Stock-based compensation - Expense related to stock-based compensation has been excluded from our non-GAAP results of operations. These charges consist of the estimated fair value of share-based awards including stock option, restricted stock, restricted stock units and share purchases under our employee stock purchase plan. While the charges for stock-based compensation are of a recurring nature, as we grant stock-based awards to attract and retain quality employees and as an incentive to help achieve financial and other corporate goals, we exclude them from our results of operation in assessing our operating performance. These charges are typically non-cash and are often the result of complex calculations using an option pricing model that estimates stock-based awards' fair value based on factors such as volatility and risk-free interest rates that are beyond our control. The expense related to stock-based awards is generally not controllable in the short-term and can vary significantly based on the timing, size and nature of awards granted. As such, we do not include such charges in our operating plans. In addition, we believe the exclusion of these charges facilitates comparisons of our operating results with those of our competitors who may have different policies regarding the use of stock-based awards.

Pre-merger claims reserve adjustment -- We have excluded the adjustment to our pre-merger claims reserve from our non-GAAP results. As part of the purchase accounting relating to the Intentia transaction, we established a reserve for Intentia customer claims and disputes that arose before the acquisition which were originally recorded to goodwill. As we are outside the period in which adjustments to such purchase accounting is allowed, adjustments to the reserve are recorded in our general and administrative expenses under GAAP. We do not consider the adjustments to this reserve established under purchase accounting in our assessment of our operating performance. Further, since the original reserve was established in purchase accounting, the original charge was not reflected in our operating statement.