EX-99.1 2 b63950lbexv99w1.htm EX-99.1 PRESS RELEASE DATED JANUARY 31, 2007 exv99w1
 

(LIGHTBRIDGE LOGO)
Lightbridge Announces Fourth Quarter and Year End 2006 Financial Results
Authorize.Net Fourth Quarter Revenue Grows 23% Year over Year
Net Merchant Adds of 8,400, up over 40% from Prior Year
Burlington, MA — (NOT FOR RELEASE) January 31, 2007— Lightbridge, Inc. (NASDAQ: LTBG), a leading e-commerce, analytics and decisioning company, today reported financial results for the quarter and year ended December 31, 2006.
Results
Revenue from continuing operations for the fourth quarter of 2006 was $20.6 million compared to $27.3 million for the fourth quarter of 2005. This represents a decrease of 25% compared to the prior year due to lower revenue from Telecom Decisioning Services (TDS) clients. Authorize.Net revenue for the fourth quarter of 2006 was a record $15.7 million, an increase of 23% over the $12.8 million reported in the fourth quarter of 2005.
Income from continuing operations was $22.0 million, or $0.77 per fully diluted share for the fourth quarter of 2006, versus $4.0 million, or $0.14 per fully diluted share, reported for the fourth quarter of 2005.
Income for the fourth quarter reflects a partial reversal of a valuation allowance against deferred tax assets. Based on achieving sustained profitability and an assessment of our expected future results, the Company concluded that, pursuant to Statement of Financial Accounting Standards No. 109, a portion of the valuation allowance should be released. As a result, the Company reduced its valuation allowance, resulting in recognition of a deferred tax asset of $20.3 million which had the effect of increasing the Company’s diluted earnings per share in the fourth quarter by $0.71 cents.
Fourth quarter 2006 results included share-based compensation expense of $539,000 reflecting the adoption of SFAS 123(R). Restructuring charges related to the Company’s decision to exit the TDS business were $1.8 million. There were no significant comparable charges in the fourth quarter of 2005. For the fourth quarter of 2006, income from continuing operations before share-based compensation expense, restructuring charges and the partial reversal of the valuation allowance for deferred tax assets (a non-GAAP financial measure) was $4.0 million, or $0.14 per fully diluted share. A detailed reconciliation of the GAAP and non-GAAP measures is included at the end of this release.

 

 

Lightbridge Announces Fourth Quarter 2006 Financial Results-Page 2
Total revenue from continuing operations for the full year 2006 was $95.6 million compared to $108.3 for the full year of 2005. Authorize.Net revenue for the full year 2006 was a record $57.5 million, an increase of 27% over the $45.3 million reported in the prior year. Income from continuing operations for the full year 2006 was $24.3 million, or $0.86 per fully diluted share, versus income from continuing operations of $8.8 million, or $0.32 per fully diluted share, for the full year 2005. The 2006 results include share-based compensation expense of $4.0 million, restructuring and asset impairment charges of $7.3 million, the NetMoneyIN, Inc. patent litigation settlement of $1.5 million and the partial reversal of the valuation allowance for deferred tax assets of $20.3 million. Included in the 2005 results were $0.4 million in share-based compensation expense and $1.3 million in restructuring and asset impairment charges.
For the full year ended December 31, 2006, income from continuing operations before share-based compensation expense, restructuring and asset impairment charges, the patent litigation settlement and the partial reversal of the valuation allowance for deferred tax assets (a non-GAAP financial measure) was $16.7 million, or $0.59 per fully diluted share. A detailed reconciliation of the GAAP and non-GAAP measures is included at the end of this release.
Stock Repurchase Program
The Company announced in November 2006 that, in line with its efforts to increase shareholder value and demonstrate confidence in the Company’s long-term prospects, the Company’s board of directors authorized a stock repurchase program for up to $15.0 million of its common stock. The repurchase program is in place through December 31, 2008. As of December 31, 2006, there were no purchases made through this program.
Business Perspective
“The fourth quarter capped an excellent year at Authorize.Net and marked the turning point for Lightbridge becoming a company solely focused on the payment processing industry,” said Robert Donahue, president and CEO. “We are pleased to report that Authorize.Net completed another strong quarter of revenue and profit performance. For the full year Authorize.Net’s performance was outstanding. We take tremendous pride in our ability as a team to have achieved attractive profit margins and cash flow performance. We delivered consistently strong revenues, accelerated growth in our merchant base and achieved solid growth across our key performance indicators.”
Donahue continued, “We made great strides in 2006 as we introduced new products and services to our ISO channel and merchant base and formed strategic partnerships with Card Present (CP) and Card Not Present (CNP) solution providers. These solution providers include shopping cart vendors, auction integration tools, web developers, and retail-based shopping applications.”

 

 

Lightbridge Announces Fourth Quarter 2006 Financial Results-Page 3
“The TDS business experienced a difficult year in terms of financial results due to the effects of industry consolidation and pricing pressures. In October 2006, we announced our decision to exit our TDS business, which will allow us to fully focus on the payment processing business. We are working diligently to transition the business in the best way possible for our clients as well as our shareholders including a possible sale of the business.”
“As I look forward, I am optimistic about the growth opportunities that exist for us, both in the short and long term. I believe Authorize.Net should be able to achieve attractive results in 2007, leveraging our resources to explore opportunities to accelerate growth. I am pleased with our Company’s accomplishments in 2006, excited about fulfilling our strategic vision of providing one-stop shopping for our merchants and remain positive about our outlook for the future.”
Authorize.Net Metrics
•   Processed a record $8.8 billion of merchant transactions in the fourth quarter, up 29% compared to the same period in 2005.
 
•   Processed a record 87.2 million transactions in the fourth quarter, a 21% increase over the comparable quarter last year.
 
•   Gross merchant adds in the fourth quarter of 2006 were a record 17,906, with net merchant adds totaling a record 8,411, up 31% and 43%, respectively, compared to the same period in 2005.
 
•   Active merchants as of December 31, 2006 were a record 166,280, up 22% over the prior year.
Cash and Short-Term Investments
At December 31, 2006, Lightbridge’s cash and short-term investment position was $116.2 million, compared to $84.8 million at December 31, 2005. This includes funds held for merchants of $8.8 million compared to $7.1 million at December 31, 2005.
Company Performance versus Previous Guidance — Fourth Quarter 2006
Lightbridge’s revenue of $20.6 million was toward the high end of the Company’s guidance of $19.3 million to $21.1 million for the fourth quarter of 2006. The Company’s guidance included revenue expectations for Authorize.Net of $15.3 to $16.1 million, with actual results for this business reported at $15.7 million.
Lightbridge’s previously issued guidance for earnings (loss) per fully diluted share was ($0.03) to $0.05, and did not anticipate the partial reversal of the valuation allowance for deferred tax assets that resulted in an

 

 

Lightbridge Announces Fourth Quarter 2006 Financial Results-Page 4
increase of $0.71 to the fourth quarter earnings per fully diluted share results. Fully diluted earnings per share were $0.77 for the fourth quarter of 2006, which, if adjusted for the valuation allowance described above, would be $0.06 (a non-GAAP financial measure), exceeding the high end of our guidance range. Earnings per fully diluted share before share-based compensation expense, restructuring charges and the partial reversal of the valuation allowance for deferred tax assets (a non-GAAP financial measure) were $0.14, at the high end of the guided range of $0.06 to $0.14 for the fourth quarter of 2006.
Business Outlook
Guidance for the first quarter is only current as of today, January 31, 2007. The Company undertakes no obligation to update its estimates.
•   The Company anticipates revenue for the first quarter of 2007 to be in the range of $17.6 to $18.8 million, reflecting reduced TDS revenue expectations as we wind down the business. Authorize.Net expects to contribute in the range of $15.9 to $16.7 million.
 
•   The Company anticipates net income (loss) per fully diluted share for the first quarter of 2007 to be in the range of ($0.03) to $0.05. The Company anticipates share-based compensation expense in the first quarter of 2007 associated with the expensing of stock options in accordance with SFAS 123(R) in the range of $400,000 to $600,000, or $0.01 to $0.02 per fully diluted share. The Company uses the modified prospective method to report compensation charges associated with the expensing of stock options. The Company expects to record restructuring and asset impairment charges in the range of $1.3 to $2.0 million or $0.05 to $0.07 per fully diluted share in the first quarter related to the decision to exit the TDS business.
 
•   For the first quarter of 2007, net income per fully diluted share before share-based compensation expense and restructuring and asset impairment charges related to the decision to exit the TDS business (a non-GAAP financial measure) is anticipated to be in the range of $0.06 to $0.14.
Non-GAAP Measures
In addition to reporting financial results in accordance with generally accepted accounting principles, (GAAP), the Company has provided non-GAAP financial measures, which it believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. Such measures exclude share-based compensation expense, restructuring and asset impairment charges, the NetMoneyIN, Inc. patent litigation settlement expense in the second quarter of 2006 and the partial reversal of the valuation allowance for deferred tax assets under the Statement of Financial Accounting Standards No.

 

 

Lightbridge Announces Fourth Quarter 2006 Financial Results-Page 5
109. The Company uses the modified prospective method to report compensation charges associated with the expensing of stock options. Results for prior periods have not been adjusted to reflect non-GAAP financial performance. Management believes these non-GAAP financial measures assist in providing a more complete understanding of the Company’s underlying operational results and trends and in allowing for a more comparable presentation of results in the reported period to those in prior periods that did not include SFAS 123(R) share-based compensation. Management uses these measures along with their corresponding GAAP financial measures to help manage the Company’s business and to help evaluate its performance compared to the marketplace. However, the presentation of non-GAAP financial measures is not meant to be considered in isolation or as superior to or as a substitute for financial information provided in accordance with GAAP. The non-GAAP financial measures used by the Company may be calculated differently from, and, therefore, may not be comparable to, similarly titled measures used by other companies. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to the comparable GAAP results, contained in the attached exhibits and found on the Company’s website at: www.lightbridge.com.
Conference Call Information
 Lightbridge will conduct a conference call today, January 31 at 4:30 pm (EST) to discuss the information contained in this news release. Investors wishing to listen to a webcast of the conference call should link to the “Investor Relations” section of www.lightbridge.com at least 15 minutes prior to the broadcast and follow the instructions provided to assure the necessary audio applications are downloaded and installed. The call will be available online at the Company’s website for one week. The call can also be accessed live over the phone by dialing 1-877-427-0636. The replay will be available approximately one hour after the call and can be accessed by dialing 877-519-4471. The passcode number is 8315509. The replay will be available until Wednesday, February 14, 2007.
About Lightbridge
 Lightbridge, Inc. (NASDAQ:LTBG) is a leading e-commerce, analytics and decisioning company that businesses trust to manage customer transactions. Lightbridge adds value to fraud screening, credit qualification, and payment authorization. Lightbridge solutions leverage intelligent automated systems and human expertise, delivered primarily through the efficiencies and cost savings of an outsourced business model. Businesses use Lightbridge to make smarter decisions, deliver better services, provide secure payments, reduce costs and enhance the lifetime value of their customers. For more information, visit www.lightbridge.com.
###
Contact:
Lynn Ricci
Director, Investor & Media Relations
Lightbridge, Inc.
781/359-4854
lricci@lightbridge.com

 

 

Lightbridge Announces Fourth Quarter 2006 Financial Results-Page 6
Note to Editors: LIGHTBRIDGE and AUTHORIZE.NET are registered trademarks and the Lightbridge logo is a trademark of Lightbridge, Inc. All other trademarks and registered trademarks are the properties of their respective owners.
Forward-looking Statements
Certain statements in this news release that are not historical facts, including, without limitation, those relating to the Company’s focus on the payment processing business, optimism about growth opportunities, exploration of opportunities to accelerate growth, belief in Authorize.Net’s ability to achieve attractive results in 2007, positive outlook for the future, strategic vision of providing one stop shopping for our merchants, first quarter 2007 financial guidance and belief that its presentation of non-GAAP financial measures is useful to investors are forward-looking statements that involve risks and uncertainties. Such statements are based upon the current beliefs and expectations of the management of the Company. Actual results may vary materially from those contained in forward-looking statements based on a number of factors including, without limitation, (i) the adverse impact that the Company’s decision to exit the TDS business will have on its revenues, net income, stock price, and future business and operations, (ii) risks and costs associated with the Company’s continuing commitments under TDS customer contracts and TDS related operating leases and the difficulty of transitioning TDS customers to other vendors and subleasing or exiting facilities, as the case may be, (iii) risks and costs associated with the termination of employees, (iv) the Company’s revenue concentration in the wireless telecommunications business, (v) continuing rapid change in the telecommunications industry, payment processing industry, and other markets in which the Company does business that may affect both the Company and its clients, (vi) current and future economic conditions generally and particularly in the telecommunications and payment processing industry, (vii) uncertainties about the Company’s ability to execute on, and about the impact on the Company’s business and operations of, its objectives, plans or strategies as a result of potential technological, market or competitive factors, or its decision to exit the TDS business, (viii) the impact of compensation expense, restructuring, asset impairment and other charges on the Company’s business and operations including, without limitation, those related to the Company’s decision to exit the TDS business, (ix) integration, employee retention, recognition of cost and other benefits and revenue synergies, and other risks associated with acquisitions, (x) the industry risks associated with Authorize.Net’s business and operations including, without limitation, illegal or improper uses of Authorize.Net’s payment system, unauthorized intrusions and attacks on Authorize.Net’s payment system that may impair the operation of its payment systems, changes in or failures to comply with credit card association rules and governmental regulations, changes in the application of existing laws and the impact of new laws, dependence on relationships with resellers, certain financial institutions and third party payment processors, and unintended or unauthorized releases of personal consumer data, and (xi) the factors disclosed in the Company’s filings with the U.S. Securities and Exchange Commission including, without limitation, its 2005 Annual Report on Form 10-K, third quarter 2006 Quarterly Report on Form 10-Q and other public filings. The Company undertakes no obligation to update any forward-looking statements.

 

 

Lightbridge, Inc. and Subsidiaries
Unaudited, Condensed, Consolidated Income Statement (a)
(in thousands, except per share data)
                         
    Three Months Ended  
                   
    December 31, 2006     September 30, 2006     December 31, 2005  
Revenues
   $ 20,606     $ 23,275     $ 27,309  
 
                        
Cost of revenues
     7,255       9,021       12,003  
 
                  
 
                        
Gross profit
     13,351       14,254       15,306  
 
                  
 
                        
Operating expenses:
                        
Engineering and development
     2,350       2,726       3,394  
Sales and marketing
     4,997       4,863       4,696  
General and administrative
     3,756       3,254       3,586  
Restructuring charges and related asset impairments
     1,766       3,187       (4 )
 
                  
Total operating expenses
     12,869       14,030       11,672  
 
                        
Income from operations
     482       224       3,634  
 
                  
 
                        
Other income, net
     1,505       1,269       856  
 
                  
Income from continuing operations before provision for income taxes
     1,987       1,493       4,490  
 
                        
(Benefit) provision for income taxes
     (20,012 )     1,219       496  
 
                  
 
                        
Income from continuing operations
     21,999       274       3,994  
 
                  
 
                        
Discontinued operations, net of income taxes:
                        
Discontinued operations
     —       —       (81 )
 
                  
Total discontinued operations, net of income taxes
     —       —       (81 )
 
                        
Net income
   $ 21,999     $ 274     $ 3,913  
 
                  
 
                        
Net income per common share (basic):
                        
From continuing operations
   $ 0.80     $ 0.01     $ 0.16  
From discontinued operations
     —       —       (0.00 )
 
                  
Net income per common share (basic):
   $ 0.80     $ 0.01     $ 0.15  
 
                  
 
                        
Net income per common share (diluted):
                        
From continuing operations
   $ 0.77     $ 0.01     $ 0.14  
From discontinued operations
     —       —       (0.00 )
 
                  
Net income per common share (diluted):
   $ 0.77     $ 0.01     $ 0.14  
 
                  
 
                        
Basic weighted average shares
     27,399       27,322       26,786  
 
                  
 
                        
Diluted weighted average shares
     28,540       28,364       27,669  
 
                  
 
                        
(a) Share-based compensation expense is included in the above expense categories:
                        
 
                        
Cost of revenues
   $ 51     $ 52     $ —  
Engineering and development
     79       73       —  
Sales and marketing
     23       27       —  
General and administrative
     386       514       —  
 
                  
 
                        
 
   $ 539     $ 666     $ —  
 
                  
 
(a):   On January 1, 2006, Lightbridge, Inc. adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123(R)). Lightbridge, Inc.’s financial statements as of and for the three months ended March 31, 2006, June 30, 2006, September 30, 2006, and December 31, 2006 reflect the impact of SFAS 123(R). Prior to adoption of SFAS 123(R), Lightbridge Inc. accounted for stock compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). In accordance with APB 25, Lightbridge, Inc. accounted for stock-based awards using the intrinsic value method. Since Lightbridge, Inc. adopted the modified prospective transition method, results for prior period have not been restated under the fair value method. Therefore, for periods prior to January 1, 2006, no stock-based compensation expense had been recognized in Lightbridge, Inc.’s statement of operations when the exercise price of options granted equaled the estimated fair market value of the underlying stock at date of grant.

 

 

Lightbridge, Inc. and Subsidiaries
Unaudited, Condensed, Consolidated Income Statement (a)
(in thousands, except per share data)
                 
    Twelve Months Ended  
             
    December 31, 2006     December 31, 2005  
Revenues
   $ 95,646     $ 108,278  
 
                
Cost of revenues
     38,795       49,803  
 
            
 
                
Gross profit
     56,851       58,475  
 
            
 
                
Operating expenses:
                
Engineering and development
     11,259       14,375  
Sales and marketing
     19,571       18,072  
General and administrative
     17,550       15,974  
Restructuring charges and related asset impairments
     7,283       1,259  
 
            
Total operating expenses
     55,663       49,680  
 
                
Income from operations
     1,188       8,795  
 
            
 
                
Other income, net
     4,883       1,937  
 
            
 
                
Income from continuing operations before provision for income taxes
     6,071       10,732  
 
                
(Benefit) provision for income taxes
     (18,219 )     1,976  
 
            
 
                
Income from continuing operations
     24,290       8,756  
 
            
 
                
Discontinued operations, net of income taxes:
                
Gain on sale of INS business
     —       12,689  
Discontinued operations
     468       (2,433 )
 
            
Total discontinued operations, net of income taxes
     468       10,256  
 
                
Net income
   $ 24,758     $ 19,012  
 
            
 
                
Net income per common share (basic):
                
From continuing operations
   $ 0.89     $ 0.33  
From discontinued operations
     0.02       0.38  
 
            
Net income per common share (basic):
   $ 0.91     $ 0.71  
 
            
 
                
Net income per common share (diluted):
                
From continuing operations
   $ 0.86     $ 0.32  
From discontinued operations
     0.02       0.38  
 
            
Net income per common share (diluted):
   $ 0.88     $ 0.70  
 
            
 
                
Basic weighted average shares
     27,248       26,670  
 
            
 
                
Diluted weighted average shares
     28,245       27,282  
 
            
 
                
(a) Share-based compensation expense is included in the above expense categories:
                
 
                
Cost of revenues
   $ 249     $ —  
Engineering and development
     439       —  
Sales and marketing
     119       —  
General and administrative
     3,164       414  
 
            
 
                
 
   $ 3,971     $ 414  
 
            
 
(a):   On January 1, 2006, Lightbridge, Inc. adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123(R)). Lightbridge, Inc.’s financial statements as of and for the twelve months ended December 31, 2006 reflect the impact of SFAS 123(R). Prior to adoption of SFAS 123(R), Lightbridge Inc. accounted for stock compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). In accordance with APB 25, Lightbridge, Inc. accounted for stock-based awards using the intrinsic value method. Since Lightbridge, Inc. adopted the modified prospective transition method, results for prior period have not been restated under the fair value method. Therefore, for periods prior to January 1, 2006, no stock-based compensation expense had been recognized in Lightbridge, Inc.’s statement of operations when the exercise price of options granted equaled the estimated fair market value of the underlying stock at date of grant. Stock-based compensation of $0.4 million was recorded in the twelve months ended December 31, 2005 related to the performance based vesting of certain executives’ stock options.

 

 

Lightbridge, Inc. and Subsidiaries
Unaudited Segment Financial Information (a)
(in thousands, except percentage amounts)
                         
    Three Months Ended  
    December 31, 2006     September 30, 2006     December 31, 2005  
Revenues:
                        
TDS
   $ 4,902     $ 8,801     $ 14,542  
Payment Processing
     15,704       14,474       12,767  
 
                  
Total revenues
   $ 20,606     $ 23,275     $ 27,309  
 
                  
 
                        
Gross Profit:
                        
TDS
   $ 1,294     $ 2,881     $ 5,322  
Payment Processing
     12,108       11,425       9,984  
 
                  
Sub-total — Reportable segments
     13,402       14,306     $ 15,306  
Reconciling items (1)
     (51 )     (52 )     —  
 
                  
Total gross profit
   $ 13,351     $ 14,254     $ 15,306  
 
                  
 
                        
Gross Profit %:
                        
TDS
     26.4 %     32.7 %     36.6 %
Payment Processing
     77.1 %     78.9 %     78.2 %
 
                  
Sub-total — Reportable segments
     65.0 %     61.5 %     56.0 %
Reconciling items (1)
     -0.2 %     -0.2 %     0.0 %
 
                  
Total gross profit %
     64.8 %     61.2 %     56.0 %
 
                  
 
                        
Operating Income:
                        
TDS
   $ 149     $ 1,255     $ 2,727  
Payment Processing
     4,961       4,587       3,572  
 
                  
Sub-total — Reportable segments
     5,110       5,842       6,299  
Reconciling items (2)
     (4,628 )     (5,618 )     (2,665 )
 
                  
Consolidated total
   $ 482     $ 224     $ 3,634  
 
                  
 
(1)   — Represents share-based compensation unallocated to gross profit.
 
(2)   — Reconciling items from segment operating income to consolidated operating income (loss) include the following:
                         
    Three Months Ended  
    December 31, 2006     September 30, 2006     December 31, 2005  
Restructuring costs
   $ (1,766 )   $ (3,187 )   $ 4  
Share-based compensation expense
     (539) (a)     (666) (a)        
Litigation settlement, net
                     —  
Unallocated corporate and centralized marketing, general and administrative expenses
     (2,323 )     (1,765 )     (2,669 )
 
                        
 
                  
Total
   $ (4,628 )   $ (5,618 )   $ (2,665 )
 
                  
 
(a):   On January 1, 2006, Lightbridge, Inc. adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123(R)). Lightbridge, Inc.’s financial statements as of and for the three months ended March 31, 2006, June 30, 2006, September 30, 2006, and December 31, 2006 reflect the impact of SFAS 123(R). Prior to adoption of SFAS 123(R), Lightbridge Inc. accounted for stock compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). In accordance with APB 25, Lightbridge, Inc. accounted for stock-based awards using the intrinsic value method. Since Lightbridge, Inc. adopted the modified prospective transition method, results for prior period have not been restated under the fair value method. Therefore, for periods prior to January 1, 2006, no stock-based compensation expense had been recognized in Lightbridge, Inc.’s statement of operations when the exercise price of options granted equaled the estimated fair market value of the underlying stock at date of grant.

 

 

Lightbridge, Inc. and Subsidiaries
Unaudited Segment Financial Information (a)
(in thousands, except percentage amounts)
                 
    Twelve Months Ended  
             
    December 31, 2006     December 31, 2005  
Revenues:
                
TDS
   $ 38,097     $ 62,950  
Payment Processing
     57,549       45,328  
 
            
Total revenues
   $ 95,646     $ 108,278  
 
            
 
                
Gross Profit:
                
TDS
   $ 11,938     $ 23,049  
Payment Processing
     45,162       35,426  
 
            
Sub-total — Reportable segments
     57,100       58,475  
Reconciling items (1)
     (249 )     —  
 
            
Total gross profit
   $ 56,851     $ 58,475  
 
            
 
                
Gross Profit %:
                
TDS
     31.3 %     36.6 %
Payment Processing
     78.5 %     78.2 %
 
            
Sub-total — Reportable segments
     59.7 %     54.0 %
Reconciling items (1)
     -0.3 %     0.0 %
 
            
Total gross profit %
     59.4 %     54.0 %
 
            
 
                
Operating Income:
                
TDS
   $ 5,057     $ 11,275  
Payment Processing
     17,909       11,378  
 
            
Sub-total — Reportable segments
     22,966       22,653  
Reconciling items (2)
     (21,778 )     (13,858 )
 
            
Consolidated total
   $ 1,188     $ 8,795  
 
            
 
(1)   — Represents share-based compensation unallocated to gross profit.
 
(2)   — Reconciling items from segment operating income to consolidated operating income include the following:
                 
    Twelve Months Ended  
    December 31, 2006     December 31, 2005  
Restructuring costs
   $ (7,283 )   $ (1,259 )
Share-based compensation expense
     (3,971) (a)     (414 )
Litigation settlement, net
     (1,500 )     —  
Unallocated corporate and centralized marketing, general and administrative expenses
     (9,024 )     (12,185 )
 
                
 
            
Total
   $ (21,778 )   $ (13,858 )
 
            
 
(a):   On January 1, 2006, Lightbridge, Inc. adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123(R)). Lightbridge, Inc.’s financial statements as of and for the twelve months ended December 31, 2006 reflect the impact of SFAS 123(R). Prior to adoption of SFAS 123(R), Lightbridge Inc. accounted for stock compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). In accordance with APB 25, Lightbridge, Inc. accounted for stock-based awards using the intrinsic value method. Since Lightbridge, Inc. adopted the modified prospective transition method, results for prior period have not been restated under the fair value method. Therefore, for periods prior to January 1, 2006, no stock-based compensation expense had been recognized in Lightbridge, Inc.’s statement of operations when the exercise price of options granted equaled the estimated fair market value of the underlying stock at date of grant. Stock-based compensation of $0.4 million was recorded in the twelve months ended December 31, 2005 related to the performance based vesting of certain executives’ stock options.

 

 

Lightbridge, Inc. and Subsidiaries
Unaudited, Condensed, Consolidated Balance Sheets
(in thousands)
                 
    December 31, 2006     December 31, 2005  
Assets
                
 
                
Current assets:
                
Cash and cash equivalents
   $ 116,172     $ 83,120  
Short-term investments
     —       1,688  
 
            
Total cash and short term investments
     116,172       84,808  
 
                
Accounts receivable, net
     5,010       11,911  
Deferred Tax Asset
     4,690       —  
Other current assets
     1,871       3,432  
 
            
Total current assets
     127,743       100,151  
 
                
Property and equipment, net
     4,907       10,804  
Other assets, net
     459       438  
Restricted cash
     500       2,100  
Goodwill
     57,628       57,628  
Intangible assets, net
     15,582       18,414  
Deferred Tax Asset
     15,655       —  
 
            
 
                
Total assets
   $ 222,474     $ 189,535  
 
            
 
                
Liabilities and Stockholders’ Equity
                
 
                
Current liabilities:
                
Accounts payable and accrued liabilities
   $ 10,258     $ 14,375  
Deferred rent obligation
     606       656  
Deferred revenues
     2,395       2,863  
Funds due to merchants
     8,751       7,112  
Reserve for restructuring
     1,767       989  
 
            
Total current liabilities
     23,777       25,995  
Deferred rent, less current portion
     1,957       2,548  
Deferred tax liability
     4,754       3,074  
Long-term liabilities
     1,671       965  
 
            
Total liabilities
     32,159       32,582  
 
            
 
                
Commitments and contingencies
                
 
                
Stockholders’ equity:
                
Common stock
     309       303  
Additional paid-in capital
     178,196       169,648  
Accumulated other comprehensive gain
     171       110  
Retained earnings
     32,437       7,679  
 
            
Total
     211,113       177,740  
Less: treasury stock, at cost
     (20,798 )     (20,787 )
 
            
Total stockholders’ equity
     190,315       156,953  
 
            
 
                
Total liabilities and stockholders’ equity
   $ 222,474     $ 189,535  
 
            

 

 

Lightbridge, Inc. and Subsidiaries
Unaudited, Condensed, Consolidated Income Statement (a)
GAAP to Non-GAAP Reconciliation
(in thousands, except per share data)
                         
            Three Months Ended        
                   
    December 31, 2006     Non-GAAP
Adjustments		     December 31, 2006  
 
                        
Revenues
   $ 20,606     $ —     $ 20,606  
 
                        
Cost of revenues
     7,255       (51) (b)     7,204  
 
                  
 
                        
Gross profit
     13,351       51       13,402  
 
                  
 
                        
Operating expenses:
                        
Engineering and development
     2,350       (79) (b)     2,271  
Sales and marketing
     4,997       (23) (b)     4,974  
General and administrative
     3,756       (386) (b)     3,370  
Restructuring charges and related asset impairments
     1,766       (1,766 )     —  
 
                  
Total operating expenses
     12,869       (2,254 )     10,615  
 
                        
Income from operations
     482       2,305       2,787  
 
                  
 
                        
Other income, net
     1,505       —       1,505  
 
                  
 
                        
Income from continuing operations before provision for income taxes
     1,987       2,305       4,292  
 
                        
(Benefit) provision for income taxes
     (20,012 )     20,345 (c)     333  
 
                  
 
                        
Income from continuing operations
     21,999       (18,040 )     3,959  
 
                  
 
                        
Discontinued operations, net of income taxes:
                        
Discontinued operations
     —       —       —  
 
                  
Total discontinued operations, net of income taxes
     —       —       —  
 
                        
Net income
   $ 21,999     $ (18,040 )   $ 3,959  
 
                  
 
                        
Net income per common share (basic):
                        
From continuing operations
   $ 0.80     $ (0.66 )   $ 0.14  
From discontinued operations
     —       —       —  
 
                  
Net income per common share (basic):
   $ 0.80     $ (0.66 )   $ 0.14  
 
                  
 
                        
Net income per common share (diluted):
                        
From continuing operations
   $ 0.77     $ (0.63 )   $ 0.14  
From discontinued operations
     —       —       —  
 
                  
Net income per common share (diluted):
   $ 0.77     $ (0.63 )   $ 0.14  
 
                  
 
                        
Basic weighted average shares
     27,399       27,399       27,399  
 
                  
 
                        
Diluted weighted average shares
     28,540       28,540       28,540  
 
                  
 
(a):   On January 1, 2006, Lightbridge, Inc. adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123(R)). Lightbridge, Inc.’s financial statements as of and for the three months ended March 31, 2006, June 30, 2006, September 30, 2006 and December 31, 2006 reflect the impact of SFAS 123(R). Prior to adoption of SFAS 123(R), Lightbridge Inc. accounted for stock compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). In accordance with APB 25, Lightbridge, Inc. accounted for stock-based awards using the intrinsic value method. Since Lightbridge, Inc. adopted the modified prospective transition method, results for prior period have not been restated under the fair value method. Therefore, for periods prior to January 1, 2006, no stock-based compensation expense had been recognized in Lightbridge, Inc.’s statement of operations when the exercise price of options granted equaled the estimated fair market value of the underlying stock at date of grant.
 
(b):     Represents share-based compensation expense.
 
(c):     Represents the partial reversal of the valuation allowance for deferred tax assets.

 

 

Lightbridge, Inc. and Subsidiaries
Unaudited, Condensed, Consolidated Income Statement (a)
GAAP to Non-GAAP Reconciliation
(in thousands, except per share data)
                         
    Twelve Months Ended  
                   
    December 31, 2006     Non-GAAP
Adjustments		     December 31, 2006  
 
                        
Revenues
   $ 95,646     $ —     $ 95,646  
 
                        
Cost of revenues
     38,795       (249) (b)     38,546  
 
                  
 
                        
Gross profit
     56,851       249       57,100  
 
                  
 
                        
Operating expenses:
                        
Engineering and development
     11,259       (439) (b)     10,820  
Sales and marketing
     19,571       (119) (b)     19,452  
General and administrative
     17,550       (4,664) (c)     12,886  
Restructuring charges and related asset impairments
     7,283       (7,283 )     —  
 
                  
Total operating expenses
     55,663       (12,505 )     43,158  
 
                        
Income from operations
     1,188       12,754       13,942  
 
                  
 
                        
Other income, net
     4,883       —       4,883  
 
                  
 
                        
Income from continuing operations before provision for income taxes
     6,071       12,754       18,825  
 
                        
(Benefit) provision for income taxes
     (18,219 )     20,345 (d)     2,126  
 
                  
 
                        
Income from continuing operations
     24,290       (7,591 )     16,699  
 
                  
 
                        
Discontinued operations, net of income taxes:
                        
Discontinued operations
     468       —       468  
 
                  
Total discontinued operations, net of income taxes
     468       —       468  
 
                        
Net income
   $ 24,758     $ (7,591 )   $ 17,167  
 
                  
 
                        
Net income per common share (basic):
                        
From continuing operations
   $ 0.89     $ (0.28 )   $ 0.61  
From discontinued operations
     0.02       —       0.02  
 
                  
Net income per common share (basic):
   $ 0.91     $ (0.28 )   $ 0.63  
 
                  
 
                        
Net income per common share (diluted):
                        
From continuing operations
   $ 0.86     $ (0.27 )   $ 0.59  
From discontinued operations
     0.02       —       0.02  
 
                  
Net income per common share (diluted):
   $ 0.88     $ (0.27 )   $ 0.61  
 
                  
 
                        
Basic weighted average shares
     27,248       27,248       27,248  
 
                  
 
                        
Diluted weighted average shares
     28,245       28,245       28,245  
 
                  
 
(a):   On January 1, 2006, Lightbridge, Inc. adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123(R)). Lightbridge, Inc.’s financial statements as of and for the twelve months ended December 31, 2006 reflect the impact of SFAS 123(R). Prior to adoption of SFAS 123(R), Lightbridge Inc. accounted for stock compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). In accordance with APB 25, Lightbridge, Inc. accounted for stock-based awards using the intrinsic value method. Since Lightbridge, Inc. adopted the modified prospective transition method, results for prior period have not been restated under the fair value method. Therefore, for periods prior to January 1, 2006, no stock-based compensation expense had been recognized in Lightbridge, Inc.’s statement of operations when the exercise price of options granted equaled the estimated fair market value of the underlying stock at date of grant. Stock-based compensation of $0.4 million was recorded in the twelve months ended December 31, 2005 related to the performance based vesting of certain executives’ stock options.
 
(b):     Represents share-based compensation expense.
 
(c):     Represents share-based compensation expense of $3,164 and a litigation settlement expense of $1,500.
 
(d):     Represents the partial reversal of the valuation allowance for deferred tax assets.

 

 

Lightbridge, Inc. and Subsidiaries
Q1 2007 Guidance Summary
GAAP to Non-GAAP Reconciliation
(in millions, except per share data)
Lightbridge’s future performance involves risks and uncertainties, and the Company’s actual results could differ materially from such performance. Some of the factors that could affect the Company’s operating results are set forth under the caption “Forward-Looking Statements” above in this press release. Additional information about factors that could affect Lightbridge’s operating results is included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in its most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q.
     
    Guidance to
    Three months ending
    March 31, 2007
Total Revenues
  $17.6 to $18.8
 
    
Net income (loss) per diluted share
  ($0.03) to $0.05
 
    
Share-based compensation expense
  $0.4 - $0.6
 
    
Restructuring and asset impairment charges
  $1.3 to $2.0
 
    
Net income per diluted share before share-based compensation expense and restructuring and asset impairment charges (a)
  $0.06 to $0.14
 
(a):   Represents a non-GAAP financial measure