SOURCE: Lightbridge

May 04, 2006 16:01 ET

Lightbridge Announces First Quarter 2006 Financial Results

Authorize.Net Revenue Grows 33%; Achieves Record Revenue and Transaction Volumes

BURLINGTON, MA -- (MARKET WIRE) -- May 4, 2006 -- Lightbridge, Inc. (NASDAQ: LTBG), a leading e-commerce, analytics and decisioning company, today reported financial results for the quarter ended March 31, 2006.

Results

Revenue from continuing operations for the first quarter of 2006 was $26.5 million compared to $27.2 million for the first quarter of 2005. This represents a decrease of 2% compared to the prior year due to lower revenue from Telecom Decisioning Services (TDS) clients. Authorize.Net revenue for the first quarter of 2006 was a record $13.5 million, an increase of 33% over the $10.1 million reported in the first quarter of 2005.

The Company reported net income of $1.6 million, or $0.06 per fully diluted share, versus a loss of $1.1 million or ($0.04) per fully diluted share for the comparable period of 2005. Income from continuing operations was $1.2 million, or $0.04 per fully diluted share, during the first quarter of 2006, similar to the $1.2 million, or $0.04 per fully diluted share, reported for the first quarter of 2005. First quarter 2006 results included share-based compensation expense of approximately $1.6 million reflecting the adoption of SFAS 123(R) and a restructuring charge of $1.4 million. First quarter 2005 results included a restructuring charge of $400,000. For the first quarter of 2006, income from continuing operations before share-based compensation expense and the restructuring charge (a non-GAAP financial measure) was $4.2 million, or $0.15 per fully diluted share.

Business Perspective

"Lightbridge continues to experience strong growth in its Authorize.Net business, with services like our eCheck.Net® and IP enabled card present (CP) initiatives gaining momentum and our strong performance in the card not present (CNP) business," said Bob Donahue, president and CEO of Lightbridge. "We are focused on growing the business and continue to look for strategic opportunities to increase our market share."

Donahue continued, "Telecom Decisioning experienced a good quarter, hitting the high end of our revenue expectations. Our Enhanced Decision Management platform continues to receive positive feedback and acceptance as we successfully migrate customers to that platform. We remain disciplined in controlling costs and we expect that our restructuring efforts in the first quarter will be beneficial as we move through 2006."

Authorize.Net Metrics

--  Processed a record $7.2 billion of merchant transactions in the first
    quarter, up 37% compared to the same period in 2005.
--  Number of transactions processed in the first quarter increased to a
    record 72.8 million, a 30% increase over the comparable quarter last year.
--  Added 15,891 new merchants in the first quarter of 2006 with net new
    additions totaling 6,108.
--  Active Merchants as of March 31, 2006 were a record 142,000, up 20%
    over the prior year.
    

Selected Highlights

--  Announced the launch of a mobile wireless payment processing solution
    featuring AIRCHARGE® technology over the Authorize.Net payment  
    gateway.
--  Announced a multi year partnership with Comodo, Inc., a leading global
    provider of Identity and Trust Assurance services on the Internet, to
    provide Authorize.Net merchants with a highly secure connection to the
    Authorize.Net payment gateway for data transaction encryption and
    protection.
--  Announced the creation of three new Certified Partner Programs:
    Certified Solutions, Certified Developers and Certified Hosting Solutions.
    These programs help Authorize.Net's 142,000 merchants meet and maintain
    rigorous standards for quality and security.
--  Announced enhancements to the Authorize.Net Merchant Interface
    including a new look and layout as well as support for Multiple User
    Accounts.
    

Cash and Short-Term Investments

At March 31, 2006, Lightbridge's cash and short-term investment position was $90.5 million, compared to $84.8 million at December 31, 2005. This includes funds held for merchants of $8.2 million compared to $7.1 million at December 31, 2005.

Company Performance versus Previous Guidance - First Quarter 2006

Lightbridge's revenue of $26.5 million was at the high end of the Company's guidance of $25.5 to $26.5 million for the first quarter of 2006. The Company's guidance included revenue expectations for Authorize.Net of $13.0 to $13.6 million with actual results for this business reported at $13.5 million. Lightbridge's earnings per share of $0.06 was at the high end of issued guidance of $(0.01) to $0.07 for the first quarter of 2006.

Business Outlook

Guidance for the second quarter of 2006 is only current as of today, Thursday, May 4, 2006. The Company undertakes no obligation to update its estimates.

--  The Company anticipates revenue for the second quarter of 2006 to be
    in the range of $24.8 million to $26.5 million, with Authorize.Net expected
    to contribute in the range of $13.8 to $14.5 million.
--  The Company anticipates net income per diluted share for the second
    quarter of 2006 to be in the range of $0.07 to $0.14.  The Company
    anticipates share-based compensation expense in the second quarter of 2006
    associated with the expensing of stock options in accordance with SFAS 
    123(R) in the range of $800,000 to $1.0 million, or $0.03 to $0.04 per
    diluted share. The Company uses the modified prospective method to report
    compensation charges associated with the expensing of stock options.    
--  For the second quarter of 2006, net income per diluted share before
    share-based compensation expense (a non-GAAP financial measure), is
    anticipated to be in the range of $0.10 to $0.17.
    

Annual Meeting of Shareholders

Lightbridge will hold a Special Meeting of Stockholders in lieu of the Annual Meeting on Thursday, June 29 at 9:00AM ET at its corporate headquarters.

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 and the restructuring charge in the first quarter of 2006. 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, and 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, Thursday, May 4, 2006 at 5:00 pm (ET) 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 888-802-8576 or for international callers by dialing 973-935-8515. The replay will be available one hour after the call and can be accessed by dialing 877-519-4471 or for international callers by dialing 973-341-3080. The passcode number is 7268460. The replay will be available until Thursday, May 11, 2006.

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.

Note to Editors: LIGHTBRIDGE, AUTHORIZE.NET and eCheck.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 growing its payment processing business, controlling costs, and looking for strategic opportunities, the Company's belief that its presentation of non-GAAP financial measures is useful to investors, the benefits of past restructurings and the second quarter of 2006 financial guidance 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) dependence on a limited number of clients, (ii) the Company's revenue concentration in the wireless telecommunications business and the declining subscriber growth rate in that business, (iii) 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, (iv) current and future economic conditions generally and particularly in the telecommunications and payment processing industry, (v) 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 the acquisition of Authorize.Net, (vi) the impact of compensation expense, restructuring and other charges on the Company's business and operations, (vii) integration, employee retention, recognition of cost and other benefits and revenue synergies, and other risks associated with acquisitions including the acquisition of Authorize.Net, (viii) 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, governmental regulation and the application of existing laws to Authorize.Net's business and dependence on relationships with third party payment processors, (ix) 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. 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)

Restated for discontinued operations

                                                        Quarter
                                                         Ended
                                              --------- --------  --------
                                              March 31, December    March
                                                2006    31, 2005  31, 2005
                                              --------- --------  --------


Revenues                                      $  26,542 $ 27,309  $ 27,174

Cost of revenues                                 11,737   12,003    13,497
                                              --------- --------  --------

Gross profit                                     14,805   15,306    13,677
                                              --------- --------  --------

Operating expenses:
Engineering and development                       3,237    3,394     3,923
Sales and marketing                               4,771    4,696     4,471
General and administrative                        4,759    3,586     3,528
Restructuring charges and related asset
 impairments                                      1,393       (4)      384
                                              --------- --------  --------
Total operating expenses                         14,160   11,672    12,306

Income from operations                              645    3,634     1,371
                                              --------- --------  --------

Other income, net                                 1,010      856       262
                                              --------- --------  --------

Income from continuing operations before
 provision for income taxes                       1,655    4,490     1,633

Provision for income taxes                          491      496       479
                                              --------- --------  --------

Income from continuing operations                 1,164    3,994     1,154
                                              --------- --------  --------

Discontinued operations, net of income taxes:
     Discontinued operations                        468      (81)   (2,254)
                                              --------- --------  --------
Total discontinued operations, net of income
 taxes                                              468      (81)   (2,254)

Net income (loss)                             $   1,632 $  3,913  $ (1,100)
                                              ========= ========  ========


Net income (loss) per common share (basic):
     From continuing operations               $    0.04 $   0.15  $   0.04
     From discontinued operations                  0.02     0.00     (0.08)
                                              --------- --------  --------
Net income (loss) per common share (basic):   $    0.06 $   0.15  $  (0.04)
                                              ========= ========  ========


Net income (loss) per common share (diluted):
     From continuing operations               $    0.04 $   0.14  $   0.04
     From discontinued operations                  0.02     0.00     (0.08)
                                              --------- --------  --------
Net income (loss) per common share (diluted): $    0.06 $   0.14  $  (0.04)
                                              ========= ========  ========


Basic weighted average shares                    27,023   26,786    26,562
                                              ========= ========  ========

Diluted weighted average shares                  27,561   27,669    26,919
                                              ========= ========  ========


(a) Share-based compensation expense is
    included in the above expense categories:

Cost of revenues                              $      95 $      -  $      -
Engineering and development                         181        -         -
Sales and marketing                                  42        -         -
General and administrative                        1,293        -         -
                                              --------- --------  --------

                                              $   1,611 $      -  $      -
                                              ========= ========  ========


(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 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 as 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)

Restated for discontinued operations

                                                        Quarter
                                                          Ended
                                              --------  --------  --------
                                                March   December    March
                                              31, 2006  31, 2005  31, 2005
                                              --------  --------  --------

Revenues:
   TDS                                        $ 13,089  $ 14,542  $ 17,074
   Payment Processing                           13,453    12,767    10,100
                                              --------  --------  --------
   Total revenues                             $ 26,542  $ 27,309  $ 27,174
                                              ========  ========  ========


Gross Profit (Loss):
   TDS                                        $  4,310  $  5,322  $  5,872
   Payment Processing                           10,590     9,984     7,805
                                              --------  --------  --------
   Sub-total -- Reportable segments             14,900    15,306    13,677
   Reconciling items (1)                           (95)        -         -
                                              --------  --------  --------
   Total gross profit                         $ 14,805  $ 15,306  $ 13,677
                                              ========  ========  ========


Gross Profit %:
   TDS                                            32.9%     36.6%     34.4%
   Payment Processing                             78.7%     78.2%     77.3%
                                              --------  --------  --------
   Sub-total -- Reportable segments               56.1%     56.0%     50.3%
   Reconciling items (1)                          -0.4%      0.0%      0.0%
                                              --------  --------  --------
   Total gross profit %                           55.8%     56.0%     50.3%
                                              ========  ========  ========


Operating Income:
   TDS                                        $  2,195  $  2,727  $  2,475
   Payment Processing                            3,989     3,572     2,097
                                              --------  --------  --------
   Sub-total -- Reportable segments              6,184     6,299     4,572
   Reconciling items (2)                        (5,539)   (2,665)   (3,201)
                                              --------  --------  --------
   Consolidated total                         $    645  $  3,634  $  1,371
                                              ========  ========  ========



(1)  Represents share-based compensation unallocated to gross profit.


(2)  Reconciling items from segment operating income to consolidated
operating loss include the following:


                                                   Quarter
                                                    Ended
                                    --------      --------  --------
                                      March        December   March
                                    31, 2006       31, 2005  31, 2005
                                    --------      --------  --------

   Restructuring costs              $ (1,393)     $      4  $   (384)
   Share-based compensation expense   (1,516)(a)         -         -
   Unallocated corporate and
    centralized marketing, general
    and administrative expenses       (2,630)       (2,669)   (2,817)

                                    --------      --------  --------
   Total                            $ (5,539)     $ (2,665) $ (3,201)
                                    ========      ========  ========



(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 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 as 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 Balance Sheets

(in thousands)

                                                      March 31,  December
                                                        2006     31, 2005
                                                      ---------  ---------
                       Assets

Current assets:
     Cash and cash equivalents                        $  88,738  $  83,120
     Short-term investments                               1,790      1,688
                                                      ---------  ---------
             Total cash and short term investments       90,528     84,808

     Accounts receivable, net                            12,890     11,911
     Other current assets                                 3,300      3,432
                                                      ---------  ---------
          Total current assets                          106,718    100,151

Property and equipment, net                              10,156     10,804
Other assets, net                                           680        438
Restricted cash                                           2,100      2,100
Goodwill                                                 57,628     57,628
Intangible assets, net                                   17,706     18,414
                                                      ---------  ---------

               Total assets                           $ 194,988  $ 189,535
                                                      =========  =========

        Liabilities and Stockholders' Equity

Current liabilities:
     Accounts payable and accrued liabilities         $  12,012  $  14,375
     Deferred rent obligation                               645        656
     Deferred revenues                                    3,352      2,863
     Funds due to merchants                               8,224      7,112
     Reserve for restructuring                            1,145        989
                                                      ---------  ---------
          Total current liabilities                      25,378     25,995
Deferred rent, less current portion                       2,428      2,548
Deferred tax liability                                    3,494      3,074
Long-term liabilities                                       975        965
                                                      ---------  ---------
          Total liabilities                              32,275     32,582
                                                      ---------  ---------

Commitments and contingencies

Stockholders' equity:
     Common stock                                           306        303
     Additional paid-in capital                         173,777    169,648
     Accumulated other comprehensive gain/(loss)            106        110
     Retained earnings                                    9,311      7,679
                                                      ---------  ---------
          Total                                         183,500    177,740
     Less:  treasury stock, at cost                     (20,787)   (20,787)
                                                      ---------  ---------
          Total stockholders' equity                    162,713    156,953
                                                      ---------  ---------

               Total liabilities and stockholders'
                equity                                $ 194,988  $ 189,535
                                                      =========  =========


Lightbridge, Inc. and Subsidiaries
Unaudited, Condensed, Consolidated Income Statement (a)
GAAP to Non-GAAP Reconciliation

(in thousands, except per share data)

Restated for discontinued operations
                                                        Quarter
                                                         Ended
                                              --------  -------    --------
                                                        
                                                GAAP     Non-GAAP     
                                               March     Adjust    March
                                              31, 2006   ments     31, 2005
                                              --------  -------    --------


Revenues                                      $ 26,542  $     -    $ 26,542

Cost of revenues                                11,737      (95)(b)  11,642
                                              --------  -------    --------

Gross profit                                    14,805       95      14,900
                                              --------  -------    --------

Operating expenses:

Engineering and development                      3,237     (181)(b)   3,056
Sales and marketing                              4,771      (42)(b)   4,729
General and administrative                       4,759   (1,293)(b)   3,466
Restructuring charges and related asset
 impairments                                     1,393   (1,393)          -
                                              --------  -------    --------
Total operating expenses                        14,160   (2,909)     11,251

Income from operations                             645    3,004       3,649
                                              --------  -------    --------

Other income, net                                1,010        -       1,010
                                              --------  -------    --------

Income from continuing operations before
 provision for income taxes                      1,655    3,004       4,659

Provision for income taxes                         491        -         491
                                              --------  -------    --------

Income from continuing operations                1,164    3,004       4,168
                                              --------  -------    --------

Discontinued operations, net of income
 taxes:
     Discontinued operations                       468        -         468
                                              --------  -------    --------
Total discontinued operations, net of income
 taxes                                             468        -         468

Net income (loss)                             $  1,632  $ 3,004    $  4,636
                                              ========  =======    ========


Net income (loss) per common share (basic):
     From continuing operations               $   0.04  $  0.11    $   0.15
     From discontinued operations                 0.02        -        0.02
                                              --------  -------    --------
Net income (loss) per common share (basic):   $   0.06  $  0.11    $   0.17
                                              ========  =======    ========


Net income (loss) per common share
 (diluted):
     From continuing operations               $   0.04  $  0.11    $   0.15
     From discontinued operations                 0.02        -        0.02
                                              --------  -------    --------
Net income (loss) per common share
 (diluted):                                   $   0.06  $  0.11    $   0.17
                                              ========  =======    ========


Basic weighted average shares                   27,023   27,023      27,023
                                              ========  =======    ========

Diluted weighted average shares                 27,561   27,561      27,561
                                              ========  =======    ========



(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 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 as 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.




Lightbridge, Inc.
Q2 2006 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.



                                                              Guidance to
                                                             Three months
                                                                 ending
                                                             June 30, 2006
                                                             --------------

Revenues                                                     $ 24.8 -$ 26.5

Net income per diluted share                                 $ 0.07 -$ 0.14

Share-based compensation expense                             $  0.8 -$ 1.0

Net income per diluted share before
 share-based compensation expense (a)
                                                             $ 0.10 -$ 0.17




(a) : Represents a non-GAAP financial measure


Contact Information

  • Contacts:
    Lynn Ricci
    Director, Investor & Media Relations
    Lightbridge, Inc.
    781/359-4854
    Email Contact