SOURCE: Lightbridge

July 27, 2005 16:01 ET

Lightbridge Announces Profitable Second Quarter 2005 Financial Results

Company Exceeds Revenue and EPS Guidance; Record Breaking Quarter for Authorize.Net; Company Completes Sale of INS Business to VeriSign, Inc.

BURLINGTON, MA -- (MARKET WIRE) -- July 27, 2005 -- Lightbridge, Inc. (NASDAQ: LTBG), a leading e-commerce, analytics and decisioning company, today reported financial results for the second quarter ended June 30, 2005.

The results discussed below exclude the Company's Intelligent Network Solutions (INS) Business results, which for the quarter have been reported as a discontinued operation. In connection with the sale of the INS Business, the Company recorded a gain of approximately $12.7 million.

Revenue from continuing operations for the second quarter of 2005 was $26.6 million compared to $32.1 million for the second quarter of 2004. This represents a decrease of 17% over the prior year due primarily to lower revenue from Telecom Decisioning Services (TDS) clients and Lightbridge's exit from its Fraud Centurion and RMS product lines. Authorize.Net revenue for the second quarter of 2005 was a record $10.7 million, an increase of 32% over the $8.1 million reported in the second quarter of 2004.

The Company reported net income including discontinued operations of $15.6 million, or $0.58 per diluted share, for the second quarter of 2005 versus net income including discontinued operations of $573,000, or $0.02 per diluted share, for the comparable period of 2004. Included in net income for the second quarter of 2005 is a gain of $12.7 million related to the sale of the INS Business. The Company reported net income from continuing operations of $2.3 million, or $0.08 per diluted share, for the second quarter of 2005, versus net income of $1.1 million, or $0.04 per diluted share, for the comparable period of 2004.

Total revenue from continuing operations for the first six months of 2005 was $53.7 million compared to $55.9 million for the first six months of 2004. Net income for the first six months of 2005 was $14.9 million, or $0.55, compared to a net loss of $168,000, or $(0.01), per diluted share, for the comparable period of 2004. Net income from continuing operations for the first six months of 2005 was $2.5 million, or $0.09, versus net income of $191,000, or $0.01, per diluted share, for the first six months of 2004.

Income from discontinued operations totaled $13.4 and $12.5 million for the quarter and six months ended June 30, 2005, respectively, versus losses of $525,000 and $359,000 for the comparable periods in the prior year. Included in the 2005 discontinued operations is an after tax gain of $12.7 million resulting from the sale of the INS Business.

"We are very pleased with the performance of our Authorize.Net and TDS businesses, our profitability, and our continued efforts to increase productivity and contain costs," said Bob Donahue, president and CEO of Lightbridge. "Authorize.Net's performance against key metrics exceeded our expectations and continues to reflect the strong growth in card-not-present (CNP) environments. We are seeing increasing interest in other transaction environments such as MO/TO, mobile commerce and brick and mortar retailers. As Authorize.Net's reach into these transaction environments grows through partnerships and solution integrations, we will be poised to accelerate our growth and take advantage of the foundation we are putting in place today."

Donahue continued, "As we enter the second half of 2005, we plan to continue to focus on execution of our growth strategy and delivering shareholder value."

Select Highlights

--  Lightbridge announced the launch of a new online integration center
    designed to help developers and third party solution providers integrate
    quickly to the Authorize.Net payment gateway.  The integration center
    consists of decision making criteria, application programming interface
    (API) documentation, sample code, automated tools for troubleshooting,
    frequently asked questions (FAQs) and more.
    
--  Lightbridge announced a partnership with AmbironTrustWave, a leading
    provider of information security and compliance management solutions, to
    offer Payment Card Industry (PCI) Data Security Standard compliance
    services to Authorize.Net's 124,000 merchants. The PCI Data Security
    Standard was launched in late 2004 to unify industry security requirements
    for storing, processing and transmitting cardholder data. The partnership
    provides our merchants with a suite of tools for validation of PCI
    compliance requirements.
    
Authorize.Net Metrics
--  Added over 14,000 new merchants in the second quarter of 2005 with net
    new additions totaling over 6,400
--  124,000 active merchants using Authorize.Net as of June 30, 2005, up
    21% over the prior year
--  Number of transactions increased to a record 58.6 million, a 26%
    growth over the comparable quarter last year
--  Processed a record $5.6 billion of merchant transactions in the second
    quarter, up 41% year over year
    
Cash and Short-Term Investments

At June 30, 2005, Lightbridge's cash and short-term investment position was $71.8 million, compared to $52.2 million at December 31, 2004. This includes funds due to merchants of $6.4 million compared to $5.6 million at December 31, 2004.

Company Performance versus Previous Guidance - Second Quarter 2005

Lightbridge's revenue from continuing operations of $26.6 million was above the Company's previously issued guidance of $24.5 to $26.5 million for the second quarter of 2005. The Company's guidance included revenue expectations for Authorize.Net of $10.1 to $10.6 million, with actual results reported at $10.7 million.

Lightbridge's earnings per share from continuing operations of $0.08 for the second quarter of 2005 was better than its previously issued guidance range of ($0.05) to $0.01, due principally to higher revenue and lower than expected operating expenses.

Company Guidance - Third Quarter 2005

Lightbridge estimates total revenue will be in the range of $24.0 to $25.5 million, with Authorize.Net expected to contribute in the range of $10.5 to $11.0 million. Earnings per share is expected to be between $0.01 and $0.06. The Company's guidance is as of the date of this release.

Conference Call Information

Lightbridge will conduct a conference call today, Wednesday, July 27, 2005 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 6248649. The replay will be available until August 10, 2005.

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, FRAUD CENTURION and AUTHORIZE.NET are registered trademarks and the Lightbridge logo and RMS are trademarks 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 growth opportunities for the Company, the Company's position to accelerate growth for Authorize.Net, the Company's efforts, objectives, goals, plans and strategies for the future including, without limitation, the Company's efforts to increase productivity and contain costs, and the Company's plans to execute on its growth strategy and deliver shareholder value, and the third quarter of 2005 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 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) potential state, federal and international regulation of voice conferencing and related compliance and operating costs, regulatory assessments and potential suspensions of service pending compliance with such regulation, (x) the impact of the divestiture of the Company's INS business on its business and operations, and (xi) the factors disclosed in the Company's filings with the U.S. Securities and Exchange Commission including, without limitation, its 2004 Annual Report on Form 10- K and most recent Quarterly Report on Form 10-Q. The Company undertakes no obligation to update any forward-looking statements.




Lightbridge, Inc. and Subsidiaries
Unaudited, Condensed, Consolidated Income Statement

(in thousands, except per share data)

Restated for discontinued operations

                                             Quarter Ended

                             June 30, 2005  March 31, 2005  June 30, 2004
                             -------------  --------------  -------------


Revenues                     $      26,564  $       27,173  $      32,126

Cost of revenues                    12,529          13,811         15,365
                             -------------  --------------  -------------

Gross profit                        14,035          13,362         16,761
                             -------------  --------------  -------------

Operating expenses:
Engineering and development
 costs                               3,495           4,393          5,527
Sales and marketing                  4,429           4,554          5,533
General and administrative           4,152           3,547          4,045
Restructuring costs                     (8)            859              4
                             -------------  --------------  -------------
Total operating expenses            12,068          13,353         15,109

Income from operations               1,967               9          1,652
                             -------------  --------------  -------------

Other income, net                      328             262            143
                             -------------  --------------  -------------

Income from continuing
 operations before
 provision for income taxes          2,295             271          1,795

Provision for income taxes              34              70            697
                             -------------  --------------  -------------

Income from continuing
 operations                          2,261             201          1,098
                             -------------  --------------  -------------

Discontinued operations,
 net of income taxes:
     Gain on sale of INS
      assets                        12,689               -              -
     Discontinued operations           670            (893)          (525)
                             -------------  --------------  -------------
Total discontinued operations,
 net of income taxes                13,359            (893)          (525)

Net income (loss)            $      15,620   $        (692) $         573
                             =============  ==============  =============


Net income (loss) per common
 share (basic):
     From continuing
      operations             $        0.09  $         0.01  $        0.04
     From discontinued
      operations                      0.50           (0.04)         (0.02)
                             -------------  --------------  -------------
Net income (loss) per
 common share (basic):       $        0.59  $        (0.03) $        0.02
                             =============  ==============  =============


Net income (loss) per
 common share (diluted):
     From continuing
      operations             $        0.08  $         0.01  $        0.04
     From discontinued
      operations                      0.50           (0.04)         (0.02)
                             -------------  --------------  -------------
Net income (loss) per
 common share (diluted):     $        0.58  $        (0.03) $        0.02
                             =============  ==============  =============


Basic weighted average
 shares                             26,623          26,562         26,639
                             =============  ==============  =============

Diluted weighted average
 shares                             27,014          26,919         26,678
                             =============  ==============  =============


Lightbridge, Inc. and Subsidiaries
Unaudited, Condensed, Consolidated Income Statement

(in thousands, except per share data)

Restated for discontinued operations
                                       6 Months Ended

                                    June 30,    June 30,
                                      2005        2004

Revenues                            $ 53,737    $ 55,934

Cost of revenues                      26,340      28,756
                                    --------    --------

Gross profit                          27,397      27,178
                                    --------    --------

Operating expenses:
Engineering and development costs      7,888      10,504
Sales and marketing                    8,983       8,268
General and administrative             7,699       7,397
Restructuring costs                      851         489
Purchased in-process research
 and development                           -         679
                                    --------    --------
Total operating expenses              25,421      27,337

Income (loss) from operations          1,976        (159)
                                    --------    --------

Other income, net                        590         300
                                    --------    --------

Income from continuing operations
 before provision for income taxes     2,566         141

Provision for (benefit from)
 income taxes                            104         (50)
                                    --------    --------

Income from continuing operations      2,462         191
                                    --------    --------

Discontinued operations,
 net of income taxes:
  Gain on sale of INS assets          12,689           -
  Discontinued operations               (223)       (359)
                                    --------    --------
Total discontinued operations,
 net of income taxes                  12,466        (359)

Net income (loss)                   $ 14,928    $   (168)
                                    ========    ========


Net income (loss) per common
 share (basic):
  From continuing operations        $   0.09    $   0.01
  From discontinued operations          0.47       (0.02)
                                    --------    --------
Net income (loss) per common
 share (basic):                     $   0.56    $  (0.01)
                                    ========    ========


Net income (loss) per common
 share (diluted):
  From continuing operations        $   0.09    $   0.01
  From discontinued operations          0.46       (0.02)
                                    --------    --------
Net income (loss) per common
 share (diluted):                   $   0.55    $  (0.01)
                                    ========    ========


Basic weighted average shares         26,592      26,794
                                    ========    ========

Diluted weighted average shares       26,963      26,918
                                    ========    ========


Lightbridge, Inc. and Subsidiaries
Unaudited Segment Financial Information

(in thousands, except percentage amounts)

Restated for discontinued operations
                                             Quarter Ended

                             June 30, 2005  March 31, 2005  June 30, 2004
                             -------------  --------------  -------------
Revenues:
        TDS                  $      15,817  $       17,073  $      23,606
        Payment Processing          10,747          10,100          8,138
        Instant Conferencing             -               -            382
                             -------------  --------------  -------------
        Total revenues       $      26,564  $       27,173  $      32,126
                             =============  ==============  =============

Gross Profit (Loss):
        TDS                  $       6,078  $        5,872  $      10,434
        Payment Processing           8,470           7,805          5,945
        Instant Conferencing          (513)           (315)           382
                             -------------  --------------  -------------
        Total gross profit   $      14,035  $       13,362  $      16,761
                             =============  ==============  =============

Gross Profit %:
        TDS                           38.4%           34.4%          44.2%
        Payment Processing            78.8%           77.3%          73.1%
        Instant Conferencing             -               -          100.0%
                             -------------  --------------  -------------
        Total gross profit %          52.8%           49.2%          52.2%
                             =============  ==============  =============

Operating Income (Loss):
        TDS                  $       3,204  $        2,475  $       4,867
        Payment Processing           2,453           2,097          1,341
        Instant Conferencing          (500)           (887)          (830)
                             -------------  --------------  -------------
        Sub-total --
         Reportable segments         5,157           3,685          5,378
        Reconciling items (1)       (3,190)         (3,676)        (3,726)
                             -------------  --------------  -------------
        Consolidated total   $       1,967  $            9  $       1,652
                             =============  ==============  =============


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

                                             Quarter Ended

                             June 30, 2005  March 31, 2005  June 30, 2004
                             -------------  --------------  -------------

        Restructuring costs  $           8  $         (859) $          (4)
        Unallocated corporate
         and centralized
         marketing, general
         and administrative
         expenses                   (3,198)         (2,817)        (3,722)
                             -------------  --------------  -------------

        Total                $      (3,190) $       (3,676) $      (3,726)
                             =============  ==============  =============



Lightbridge, Inc. and Subsidiaries
Unaudited Segment Financial Information

(in thousands, except percentage amounts)

Restated for discontinued operations

                                       6 Months Ended

                                    June 30,    June 30,
                                      2005        2004
                                    --------    --------

Revenues:
  TDS                               $ 32,890    $ 47,414
  Payment Processing                  20,847       8,138
  Instant Conferencing                     -         382
                                    --------    --------
  Total revenues                    $ 53,737    $ 55,934
                                    ========    ========

Gross Profit (Loss):
  TDS                               $ 11,950    $ 20,867
  Payment Processing                  16,275       5,945
  Instant Conferencing                  (828)        366
                                    --------    --------
  Total gross profit                $ 27,397    $ 27,178
                                    ========    ========

Gross Profit (Loss) %:
  TDS                                   36.3%       44.0%
  Payment Processing                    78.1%       73.1%
  Instant Conferencing                     -        95.8%
                                    --------    --------
  Total gross profit %                  51.0%       48.6%
                                    ========    ========

Operating Income (Loss):
  TDS                               $  5,679    $  8,903
  Payment Processing                   4,550         662
  Instant Conferencing                (1,387)     (1,902)
                                    --------    --------
  Sub-total -- Reportable segments     8,842       7,663
  Reconciling items (1)               (6,866)     (7,822)
                                    --------    --------
  Consolidated total                $  1,976    $   (159)
                                    ========    ========

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

                                       6 Months Ended
                                    June 30,    June 30,
                                      2005        2004
                                    --------    --------

  Restructuring costs               $   (851)   $   (489)
  Unallocated corporate and
   centralized marketing, general
   and administrative expenses        (6,015)     (7,333)
                                    --------    --------

  Total                             $ (6,866)   $ (7,822)
                                    ========    ========


Lightbridge, Inc. and Subsidiaries
Unaudited, Condensed, Consolidated Balance Sheets

(in thousands)

Restated for discontinued operations

                                    June 30,   December 31,
                                      2005        2004
                                    --------    --------
               Assets

Current assets:
  Cash and cash equivalents         $ 64,302    $ 39,036
  Short-term investments               5,295      12,589
  Restricted cash                      2,200         600
                                    --------    --------
    Total cash and short term
     investments                      71,797      52,225

  Accounts receivable, net            13,206      14,368
  Other current assets                 1,834       2,214
  Current assets of discontinued
   operations                          5,313       5,490
                                    --------    --------
    Total current assets              92,150      74,297

Property and equipment, net           14,117      16,293
Other assets, net                        154         268
Goodwill                              57,628      57,628
Intangible assets, net                19,831      21,247
Non-current assets of
 discontinued operations                 300         753
                                    --------    --------

      Total assets                  $184,180    $170,486
                                    ========    ========

  Liabilities and Stockholders' Equity

Current liabilities:
  Accounts payable and accrued
   liabilities                      $ 12,676    $ 13,386
  Deferred rent obligation             1,816       1,592
  Deferred revenues                    2,825       2,331
  Funds due to merchants               6,440       5,558
  Reserve for restructuring            1,117       2,479
  Current liabilities of
   discontinued operations             2,562       5,354
                                    --------    --------
    Total current liabilities         27,436      30,700
Deferred rent, less current portion    2,350       2,709
Long-term liabilities                    950         149
Non-current liabilities of
 discontinued operations                 766           -
                                    --------    --------
    Total liabilities                 31,502      33,558
                                    --------    --------

Commitments and contingencies

Stockholders' equity:
  Common stock                           301         300
  Additional paid-in capital         168,267     167,465
  Warrants                                 -         206
  Currency translation                    41        (184)
  Retained earnings                    4,856     (10,072)
                                    --------    --------
    Total                            173,465     157,715
  Less: treasury stock, at cost      (20,787)    (20,787)
                                    --------    --------
    Total stockholders' equity       152,678     136,928
                                    --------    --------

      Total liabilities and
       stockholders' equity         $184,180    $170,486
                                    ========    ========

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