<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
<TABLE>
<C> <S>
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
</TABLE>
Commission file number: 000-21319
LIGHTBRIDGE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 04-3065140
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
</TABLE>
67 SOUTH BEDFORD STREET
BURLINGTON, MASSACHUSETTS 01803
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(781) 359-4000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes /X/ No / /
As of November 10, 1999, there were 16,464,656 shares of the registrant's
common stock, $.01 par value, outstanding.
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<PAGE>
LIGHTBRIDGE, INC.
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheets as of December 31, 1998 and September 30,
1999...................................................... 3
Income Statements for the Three Months Ended September 30,
1998
and September 30, 1999.................................... 4
Statements of Operations for the Nine Months Ended September
30, 1998
and September 30, 1999.................................... 5
Statements of Cash Flows for the Nine Months Ended September
30, 1998
and September 30, 1999.................................... 6
Notes to Unaudited Condensed Consolidated Financial
Statements................................................ 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 8
Item 3. QUANTITATIVE AND QUALITATIVE MARKET RISK DISCLOSURES........ 18
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K............................ 18
SIGNATURE............................................................ 19
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
LIGHTBRIDGE, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $16,436,995 $$25,751,574
Accounts receivable, net.................................. 18,831,962 20,771,916
Other current assets...................................... 1,399,196 1,794,221
----------- -----------
Total current assets.................................... 36,668,153 48,317,711
Property and equipment, net................................. 13,454,070 15,177,137
Acquired intangible assets, net............................. 4,024,811 2,911,261
Goodwill, net............................................... 2,145,313 1,725,537
Other assets, net........................................... 1,484,932 548,437
----------- -----------
Total assets........................................ $57,777,279 $68,680,083
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................. $ 9,507,670 $12,678,018
Short-term borrowings and current portion of notes
payable................................................. 652,770 500,000
Deferred revenues......................................... 1,460,636 2,986,532
----------- -----------
Total current liabilities............................... 11,621,076 16,164,550
Other long-term liabilities............................... 1,053,618 943,500
Notes payable............................................. 655,484 307,203
----------- -----------
Total liabilities....................................... 13,330,178 17,415,253
----------- -----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares
authorized; no shares issued or outstanding at
December 31, 1998 and September 30, 1999,
respectively............................................ -- --
Common stock, $.01 par value; 60,000,000 shares
authorized; 16,841,823 and 17,201,548 shares issued and
16,014,531 and 16,374,256 shares outstanding at
December 31, 1998 and September 30, 1999,
respectively............................................ 168,417 172,014
Additional paid-in capital................................ 54,285,766 55,662,370
Warrants.................................................. 598,875 442,625
Accumulated deficit....................................... (8,980,994) (3,387,216)
----------- -----------
Total................................................... 46,072,064 52,889,793
Less: treasury stock, at cost............................ (1,624,963) (1,624,963)
----------- -----------
Total stockholders' equity.............................. 44,447,101 51,264,830
----------- -----------
Total liabilities and stockholders' equity.......... $57,777,279 $68,680,083
=========== ===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
3
<PAGE>
LIGHTBRIDGE, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1998 1999
----------- -----------
<S> <C> <C>
Revenues:
Transaction............................................... $10,682,320 $15,225,402
Software licensing and maintenance........................ 2,498,841 5,313,696
Consulting services....................................... 2,422,648 3,276,846
----------- -----------
Total revenues.......................................... 15,603,809 23,815,944
----------- -----------
Cost of revenues:
Transaction............................................... 5,804,219 7,060,653
Software licensing and maintenance........................ 1,160,078 1,645,720
Consulting services....................................... 1,292,947 2,279,746
----------- -----------
Total cost of revenues.................................. 8,257,244 10,986,119
----------- -----------
Gross profit................................................ 7,346,565 12,829,825
----------- -----------
Operating expenses:
Development............................................... 2,327,608 3,309,686
Sales and marketing....................................... 1,609,761 1,703,103
General and administrative................................ 1,894,599 3,094,646
Amortization of goodwill and acquired workforce........... 745,557 348,256
----------- -----------
Total operating expenses................................ 6,577,525 8,455,691
----------- -----------
Income from operations...................................... 769,040 4,374,134
Other income (expense):
Interest income........................................... 102,374 180,920
Interest expense.......................................... (70,767) (29,121)
Other non-operating income................................ 85,919 36,622
----------- -----------
Income before provision for income taxes.................... 886,566 4,562,555
Provision for income taxes.................................. 623,000 2,236,000
----------- -----------
Net income.................................................. $ 263,566 $ 2,326,555
=========== ===========
Basic earnings per common share............................. $ 0.02 $ 0.14
=========== ===========
Diluted earnings per common share........................... $ 0.02 $ 0.13
=========== ===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
4
<PAGE>
LIGHTBRIDGE, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1998 1999
----------- -----------
<S> <C> <C>
Revenues:
Transaction............................................... $27,667,653 $44,044,602
Software licensing and maintenance........................ 10,019,903 10,324,005
Consulting services....................................... 6,364,551 11,030,516
----------- -----------
Total revenues........................................ 44,052,107 65,399,123
----------- -----------
Cost of revenues:
Transaction............................................... 15,924,134 21,138,507
Software licensing and maintenance........................ 3,663,892 3,609,752
Consulting services....................................... 3,743,369 6,077,366
----------- -----------
Total cost of revenues................................ 23,331,395 30,825,625
----------- -----------
Gross profit................................................ 20,720,712 34,573,498
----------- -----------
Operating expenses:
Development............................................... 7,049,279 9,048,673
Sales and marketing....................................... 5,281,003 5,746,760
General and administrative................................ 6,360,256 8,666,264
Amortization of goodwill and acquired workforce........... 2,236,672 1,044,770
----------- -----------
Total operating expenses.............................. 20,927,210 24,506,467
----------- -----------
Income (loss) from operations............................... (206,498) 10,067,031
Other income (expense):
Interest income........................................... 501,555 500,005
Interest expense.......................................... (170,379) (103,181)
Other non-operating income................................ 209,252 505,923
----------- -----------
Income before provision for income taxes.................... 333,930 10,969,778
Provision for income taxes.................................. 952,000 5,376,000
----------- -----------
Net income (loss)........................................... $ (618,070) $ 5,593,778
=========== ===========
Basic earnings (loss) per common share...................... $ (0.04) $ 0.35
=========== ===========
Diluted earnings (loss) per common share.................... $ (0.04) $ 0.32
=========== ===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
5
<PAGE>
LIGHTBRIDGE, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1998 1999
----------- -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss)......................................... $ (618,070) $ 5,593,778
Gain on sale of investment................................ -- (414,725)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization........................... 7,728,080 6,583,868
Changes in assets and liabilities:
Accounts receivable and other current assets.......... (3,147,675) (2,334,976)
Other assets.......................................... (223,137) 375,086
Accounts payable and accrued liabilities.............. (2,429,894) 2,678,942
Deferred revenues..................................... 351,343 1,525,896
Other liabilities..................................... 958,898 399,875
----------- -----------
Net cash provided by operating activities................. 2,619,545 14,407,744
----------- -----------
Cash Flows From Investing Activities:
Principal payments--note receivable from officer........ 20,000 25,328
Purchases of property and equipment..................... (5,250,843) (6,320,611)
Proceeds from sale of investment........................ -- 550,378
----------- -----------
Net cash used in investing activities..................... (5,230,843) (5,744,905)
----------- -----------
Cash Flows From Financing Activities:
Principal payments on notes payable..................... (728,737) (527,769)
Principal payments under capital lease obligations...... (230,181) (44,440)
Proceeds from issuance of common stock.................. 436,720 1,067,699
Proceeds from exercise of warrants...................... -- 156,250
----------- -----------
Net cash (used in) provided by financing activities....... (522,198) 651,740
----------- -----------
Net (decrease) increase in cash and cash equivalents........ (3,133,496) 9,314,579
Cash and cash equivalents, beginning of period.............. 15,715,726 16,436,995
----------- -----------
Cash and cash equivalents, end of period.................... $12,582,230 $25,751,574
=========== ===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
6
<PAGE>
LIGHTBRIDGE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
The accompanying unaudited condensed consolidated financial statements
include the accounts of Lightbridge, Inc. and its subsidiaries ("Lightbridge").
Lightbridge believes that the unaudited condensed consolidated financial
statements reflect all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of Lightbridge's financial
position, results of operations and cash flows at the dates and for the periods
indicated. Although certain information and disclosures normally included in
Lightbridge's annual financial statements have been omitted, Lightbridge
believes that the disclosures provided are adequate to make the information
presented not misleading. Results of interim periods may not be indicative of
results for the full year or any future periods. These financial statements
should be read in conjunction with the consolidated financial statements and
related notes included in Lightbridge's Annual Report on Form 10-K for the year
ended December 31, 1998.
2. SIGNIFICANT ACCOUNTING POLICIES:
REVENUE RECOGNITION
Lightbridge generates revenues from processing qualification and activation
transactions, licensing software and related maintenance, and rendering services
(including business advisory, customization and integration, deployment, and
optimization services). Historically, hardware was sold in conjunction with
certain software licenses. Lightbridge's transaction processing agreements
typically provide for fees, payable based on the number of transactions
processed. Lightbridge's software license agreements typically provide for an
initial license fee and annual maintenance, as well as, in certain cases,
additional license and maintenance fees for net subscriber additions.
Lightbridge's consulting agreements typically are on a time and materials basis.
Revenues from processing of transactions generally are recognized in the
period in which services are performed. Revenues from software license sales are
recognized when persuasive evidence of an arrangement exists, delivery of the
product has been made, the fee is fixed and collectibility has been determined.
To the extent that obligations exist for other services, Lightbridge allocates
revenues between the license and the services based upon their relative fair
value. Revenues from maintenance support agreements are deferred and recognized
ratably over the term of the agreements. Revenues from consulting and other
services are recognized as those services are rendered.
EARNINGS PER SHARE
Basic earnings per share is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution that could
occur if outstanding dilutive options and warrants were exercised and resulted
in the issuance of common stock.
A reconciliation of the denominators of the basic and diluted earnings per
share computations is shown below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -----------------------
1998 1999 1998 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Shares for basic earnings per share........... 15,860,518 16,168,520 15,788,661 15,960,472
Effect of dilutive options and warrants....... 1,448,751 2,094,659 -- 1,588,664
---------- ---------- ---------- ----------
Shares for diluted earnings per share......... 17,309,269 18,263,179 15,788,661 17,549,136
========== ========== ========== ==========
</TABLE>
7
<PAGE>
Stock options and warrants convertible into common stock were excluded from
shares for diluted earnings per share for the nine months ended September 30,
1998 because they were anti-dilutive. Had such shares been included, shares for
dilutive earnings per share would have increased by approximately 1,800,000
shares for the nine months ended September 30, 1998.
No adjustments were made to net income in computing diluted earnings per
share.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1998, the AICPA released Statement of Position No. 98-9 ("SOP
98-9") "Modification of SOP 97-2 'Software Revenue Recognition' with Respect to
Certain Transactions" which Lightbridge adopted January 1, 1999. Retroactive
application is prohibited. The adoption of SOP 98-9 did not have a material
effect on its consolidated financial position or results of operations of
Lightbridge.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1998 financial statements to
conform with the 1999 presentation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THIS FORM 10-Q CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934. ANY STATEMENTS CONTAINED HEREIN THAT ARE NOT STATEMENTS OF
HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING
THE FOREGOING, THE WORDS "BELIEVES," "ANTICIPATES," "PLANS," "EXPECTS" AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THE
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS THAT MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE AND ACHIEVEMENTS OF
LIGHTBRIDGE, INC. TO DIFFER MATERIALLY FROM THOSE INDICATED BY THE
FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS MAY VARY SIGNIFICANTLY BASED ON A
NUMBER OF FACTORS, INCLUDING (A) CONTINUING RAPID CHANGE IN THE
TELECOMMUNICATIONS INDUSTRY THAT MAY AFFECT BOTH LIGHTBRIDGE AND ITS CLIENTS,
(B) UNCERTAINTIES ASSOCIATED WITH LIGHTBRIDGE'S ABILITY TO DEVELOP NEW PRODUCTS
AND TECHNOLOGIES, (C) MARKET ACCEPTANCE OF LIGHTBRIDGE'S NEW PRODUCTS AND
CONTINUING DEMAND FOR LIGHTBRIDGE'S PRODUCTS BY TELECOMMUNICATIONS COMPANIES,
(D) THE IMPACT OF COMPETITIVE PRODUCTS AND PRICING ON BOTH LIGHTBRIDGE AND ITS
CLIENTS AND (E) CHANGING ECONOMIC CONDITIONS. Unless the context otherwise
requires, "Lightbridge" and the "Company" refer collectively to Lightbridge and
its subsidiaries.
FRAUDBUSTER and LIGHTBRIDGE are registered trademarks of Lightbridge, and
ALIAS, @RISK, CUSTOMER ACQUISITION SYSTEM, the Lightbridge logo, and RETAIL
MANAGEMENT SYSTEM are trademarks of Lightbridge. All other trademarks or trade
names appearing in this Form 10-Q are the property of their respective owners.
OVERVIEW
Lightbridge develops, markets and supports a network of integrated products
and services that enable telecommunications carriers to improve their customer
acquisition, retention and fraud prevention processes.
Lightbridge's transaction revenues are derived primarily from the processing
of applications for qualification of subscribers for wireless telecommunications
services and the activation of service for those subscribers. Over time,
Lightbridge has expanded its offerings from credit evaluation services to
include screening for subscriber fraud, evaluating carriers' existing accounts,
interfacing with carrier and third-party systems and providing call center
services. These services are provided pursuant to contracts with carriers which
specify the services to be utilized and the markets to be served. Lightbridge's
clients are charged for these services on a per-transaction basis. Pricing
varies depending primarily on the volume of transactions, the type and number of
other products and services selected for integration with the services and the
term of the contract under which services are provided. The volume of processed
transactions
8
<PAGE>
varies depending on seasonal and retail trends, the success of the carriers
utilizing Lightbridge's services in attracting subscribers and the markets
served by Lightbridge's clients. Revenues generally are recognized in the period
in which the services are performed.
Lightbridge's software licensing and maintenance revenues consist of
revenues attributable to the licensing of Lightbridge's Channel Solutions and
Fraud Management software. Lightbridge's Channel Solutions products are designed
to assist customers in interfacing with Lightbridge's transaction processing
systems as well as to provide other point-of-sale and distribution channel
functionality. Lightbridge's Fraud Management products are designed to assist
carriers in monitoring subscriber accounts to identify activity that may
indicate fraud. While Lightbridge's software products are licensed as packaged
software products, each of these products generally requires insignificant
customization and integration with other products and systems to varying
degrees. Revenues are recognized when persuasive evidence of an arrangement
exists, delivery of the product has been made, the fee is fixed and
collectibility has been determined. Revenues from software maintenance contracts
are recognized ratably over the term of the maintenance agreement.
Prior to the second quarter of 1998, Lightbridge's consulting services
revenues were derived principally from providing consulting for customer
acquisition and retention. During the second quarter of 1998, Lightbridge
launched Lightbridge Consulting Services, which provides business advisory,
customization and integration, deployment, and optimization services in the
areas of customer acquisition and retention, fraud prevention and distribution
management. Revenues from consulting services are generally recognized as the
services are performed, using the percentage-of-completion method, measured by
labor hours.
During the first nine months of 1999, Lightbridge continued its efforts to
complete development of in-process technology obtained through Lightbridge's
acquisition of Coral Systems, Inc. in November 1997. Lightbridge is continuing
to develop a new version of FraudBuster that is expected to contain substantial
enhancements in performance, scalability and functionality and is currently
scheduled to be released in the fourth quarter of 1999. Lightbridge is also
continuing to develop Alias and @Risk, which will be complementary to
FraudBuster and will contain new subscription fraud detection tools. These
products are scheduled to be deployed in a phased introduction which began in
the third quarter of 1999 and which will continue through the first quarter of
2000. If Lightbridge is unsuccessful in completing these projects on schedule,
Lightbridge's business, financial condition, results of operations and cash
flows could be materially adversely affected.
Substantially all of Lightbridge's revenues historically have been derived
from clients located in the United States, and Lightbridge expects that domestic
sales will continue to account for more than 90% of its revenues during 1999.
9
<PAGE>
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
1998 1999 1998 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Transaction services............................... 68.5% 63.9% 62.8% 67.3%
Software licensing and maintenance................. 16.0 22.3 22.7 15.8
Consulting services................................ 15.5 13.8 14.5 16.9
----- ----- ----- -----
Total revenues..................................... 100.0 100.0 100.0 100.0
----- ----- ----- -----
Cost of revenues:
Transaction services............................... 37.2 29.6 36.2 32.3
Software licensing and maintenance................. 7.4 6.9 8.3 5.5
Consulting services................................ 8.3 9.6 8.5 9.3
----- ----- ----- -----
Total cost of revenues............................. 52.9 46.1 53.0 47.1
----- ----- ----- -----
Gross profit......................................... 47.1 53.9 47.0 52.9
----- ----- ----- -----
Operating expenses:
Development........................................ 14.9 13.9 16.0 13.8
Sales and marketing................................ 10.3 7.1 12.0 8.8
General and administrative......................... 12.2 13.0 14.4 13.3
Amortization of goodwill and acquired workforce.... 4.8 1.5 5.1 1.6
----- ----- ----- -----
Total operating expenses........................... 42.2 35.5 47.5 37.5
----- ----- ----- -----
Income (loss) from operations........................ 4.9 18.4 (0.5) 15.4
Other income, net.................................... 0.8 0.8 1.3 1.4
----- ----- ----- -----
Income before provision for income taxes............. 5.7 19.2 0.8 16.8
Provision for income taxes........................... 4.0 9.4 2.2 8.2
----- ----- ----- -----
Net income (loss).................................... 1.7% 9.8% (1.4)% 8.6%
===== ===== ===== =====
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 1998
REVENUES. Revenues increased by 52.6% to $23.8 million in the three months
ended September 30, 1999 from $15.6 million in the three months ended
September 30, 1998.
Transaction revenues increased by 42.5% to $15.2 million in the three months
ended September 30, 1999 from $10.7 million in the three months ended
September 30, 1998, while decreasing as a percentage of total revenues to 63.9%
from 68.5%. The dollar increase in transaction revenues for the three months
ended September 30, 1999 was primarily due to increased volume of qualification
and activation transactions processed for carrier clients. Lightbridge believes
that its transaction-based activities benefited directly from client promotional
activities generally attributable to the current competitive market for wireless
services. The decrease in transaction revenues as a percentage of total revenues
for the three months ended September 30, 1999 principally resulted from the
increase in consulting services and software licensing and maintenance revenues
during the period.
Lightbridge believes that its transaction revenues for the remainder of 1999
and 2000 will not increase at the same rate as they did in 1998. Lightbridge's
transaction revenues will continue to reflect in large part the industry's rate
of growth of new subscribers as well as the rate of switching among carriers by
subscribers (subscriber churn). Lightbridge believes, based in part on reports
of wireless telecommunication industry analysts, that the rate of subscriber
growth will slow in upcoming years and that the rate of subscriber churn will
remain fairly constant. The rate of growth in Lightbridge's transaction revenues
in 1998 reflected revenues from a number of major PCS carriers that began
operating in late 1997
10
<PAGE>
and in 1998; Lightbridge does not expect that revenues from these PCS carriers
will continue to increase at the same rate as they did in 1998.
Software licensing and maintenance revenues increased by 112.6% to
$5.3 million in the three months ended September 30, 1999 from $2.5 million in
the three months ended September 30, 1998, while increasing as a percentage of
total revenues to 22.3% from 16.0%. Both the dollar increase and the increase as
a percentage of total revenues in software licensing and maintenance revenues
were principally a result of the increase in revenues attributable to
Lightbridge's Retail Management System product.
Lightbridge currently anticipates that its software licensing and
maintenance revenues in 1999 will slightly exceed those in 1998 and that these
revenues will be modestly higher in 2000 compared to 1999, as Lightbridge
continues to integrate its Fraud Management products with its other offerings
and to build its international sales capability. See "Overview" above. Actual
results for 1999 and 2000 will, however, be subject to a number of
uncertainties, some of which are not within Lightbridge's control. In
particular, Lightbridge believes that software licensing revenues at least
through 2000 will be subject to fluctuation and will be more difficult to
anticipate than Lightbridge's other types of revenues, principally due to the
relatively large dollar magnitude and relatively long sales cycles of the
software licenses. The sales cycles for domestic software licenses generally
extend from three to six months and may extend as long as twelve months; sales
cycles for software licenses sold to international clients often are longer. The
predictability of software licensing revenue is further impeded because
Lightbridge's licensed software is a discretionary purchase for most customers.
As a result of the foregoing, a small number of licensing transactions may have
a significant effect on Lightbridge's software licensing revenues in a quarter.
Consulting services revenues increased by 35.3% to $3.3 million in the three
months ended September 30, 1999 from $2.4 million in the three months ended
September 30, 1998, while decreasing as a percentage of total revenues to 13.8%
from 15.5%. The dollar increase in consulting services revenues for the three
months ended September 30, 1999 was principally due to increased demand for the
consulting services offered by Lightbridge. The decrease in consulting services
revenue as a percentage of total revenues for the three months ended
September 30, 1999 principally resulted from an increase in transaction services
and software licensing revenues for the same period. The consulting business
continues to be less concentrated than in 1998, with consulting work being
performed on approximately 65 projects for approximately 40 clients during the
three months ended September 30, 1999. Lightbridge currently anticipates that
its consulting services revenue will be significantly lower in the fourth
quarter of 1999 as a result of clients' focus on higher seasonal demand and year
2000 requirements. Consulting services revenues are currently anticipated to
grow modestly in 2000 over 1999 levels as Lightbridge continues to standardize
its consulting services offerings and to build its consulting capabilities.
In the year ended December 31, 1998, three customers each accounted for 10%
or more of Lightbridge's total revenues. During the quarter ended September 30,
1999 two customers each accounted for 10% or more of total revenues. Lightbridge
believes that its relationships with these customers are good and continues to
make efforts to diversify its customer base.
COST OF REVENUES. Cost of revenues consists primarily of personnel costs,
costs of maintaining systems and networks used in processing qualification and
activation transactions (including depreciation and amortization of systems and
networks) and amortization of capitalized software and acquired technology. Cost
of revenues may vary as a percentage of total revenues in the future as a result
of a number of factors, including changes in the volume of transactions
processed, the mix of transaction revenues between revenues from on-line
transaction processing and revenues from processing transactions through
Lightbridge's Teleservices Group and changes in the mix of total revenues among
transaction revenues, software licensing and maintenance revenues, and
consulting services revenues.
Transaction cost of revenues increased by 21.6% to $7.1 million in the three
months ended September 30, 1999 from $5.8 million in the three months ended
September 30, 1998, while decreasing as a percentage of total transaction
revenues to 46.4% from 54.3%. The increase in transaction cost of revenues
11
<PAGE>
for the three months ended September 30, 1999 resulted principally from
increases in transaction volume and costs attributable to expansion of
Lightbridge's staff and systems capacity. The decrease in transaction cost of
revenues as a percentage of total transaction revenues for the three months
ended September 30, 1999 principally resulted from an increase in the number of
transactions processed and a change in the mix of transaction services processed
compared to the same period of the prior year.
Software licensing and maintenance cost of revenues increased by 41.9% to
$1.6 million in the three months ended September 30, 1999 from $1.2 million in
the three months ended September 30, 1998, while decreasing as a percentage of
total software licensing and maintenance revenues to 31.0% from 46.4%. The
dollar increase in software licensing and maintenance cost of revenues was
attributable primarily to the increase in software licensing revenues in the
quarter. The decrease in software licensing and maintenance cost of revenues as
a percentage of total software licensing and maintenance revenues for the three
months ended September 30, 1999 was primarily due to a decrease in amortization
expense of acquired technology and an increase in software licensing revenues
during the quarter.
Consulting services cost of revenues increased by 76.3% to $2.3 million in
the three months ended September 30, 1999 from $1.3 million in the three months
ended September 30, 1998, while increasing as a percentage of total consulting
revenues to 69.6% from 53.4%. The dollar increase in consulting services cost of
revenues was attributable primarily to the increase in consulting staff due to
the expansion of the consulting services group. The increase in consulting
services cost of revenues as a percentage of total consulting services revenues
for the three months ended September 30, 1999 was principally from lower
utilization of consulting resources during the period.
Lightbridge expects fluctuations in future gross profit may occur primarily
due to fluctuations in revenue generated from each of Lightbridge's three
revenue components, particularly revenues from software licensing and consulting
services.
DEVELOPMENT. Development expenses include software development costs
consisting primarily of personnel and outside technical services costs related
to developing new products and services, enhancing existing products and
services, and implementing and maintaining new and existing products and
services.
Development expenses increased by 42.2% to $3.3 million in the three months
ended September 30, 1999 from $2.3 million in the three months ended
September 30, 1998, while decreasing as a percentage of total revenues to 13.9%
from 14.9%. The increase in costs for the three months ended September 30, 1999
resulted primarily from the addition of engineering personnel necessary to
support Lightbridge's product development plans. Included in these development
efforts were the development of an enhanced version of its Fraud Management
software product, FraudBuster, the continued enhancement of its Customer
Acquisition System and Retail Management System and development of its Fraud
Management software products, Alias and @Risk. The decrease in development
expenses as a percentage of total revenues for the three months ended
September 30, 1999 was principally due to total revenues increasing at a greater
rate than total development expenses during the same period. Lightbridge expects
to continue to increase the dollar amount of its engineering and development
efforts in order to continue enhancing its existing products and services,
including its Channel Solutions and Fraud Management products and services, as
well as to develop new products and services. As a result, Lightbridge expects
that its development expenses, as a percentage of total revenues, will be
similar during the last three months of 1999 to the first nine months of 1999.
SALES AND MARKETING. Sales and marketing expenses consist primarily of
salaries, commissions and travel expenses of direct sales and marketing
personnel, as well as costs associated with advertising, trade shows and
conferences.
Sales and marketing expenses increased by 5.8% to $1.7 million in the three
months ended September 30, 1999 from $1.6 million in the three months ended
September 30, 1998, while decreasing as a percentage of total revenues to 7.2%
from 10.3%. Sales and marketing dollars increased due to the continued
investment in sales and marketing efforts, both domestically and
internationally, in order to
12
<PAGE>
increase penetration of existing accounts and to add new clients and markets.
The decrease in sales and marketing expense as a percentage of total revenues
for the three months ended September 30, 1999 was principally due to the rate of
growth in total revenues during the period. Lightbridge expects to continue to
invest in sales and marketing efforts, both domestically and internationally, in
order to increase its penetration of existing accounts and to add new clients
and markets.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
principally of salaries of executive, finance, human resources and
administrative personnel and fees for certain outside professional services.
General and administrative expenses increased by 63.3% to $3.1 million in
the three months ended September 30, 1999 from $1.9 million in the three months
ended September 30, 1998, while increasing as a percentage of total revenues to
13.0% from 12.1%. Both the dollar increase and the increase as a percentage of
revenue were primarily due to increases in general and administrative personnel
and fees for professional services. Lightbridge expects that its general and
administrative expenses will not significantly change as a percentage of revenue
for the remainder of 1999.
AMORTIZATION OF GOODWILL AND ACQUIRED WORKFORCE. Amortization of goodwill
and acquired workforce consists of amortization expense of certain acquired
intangible assets from the acquisition of Coral Systems, Inc.
Amortization of goodwill and acquired workforce expense decreased by 53.3%
to $348,000 in the three months ended September 30, 1999 from $746,000 in the
three months ended September 30, 1998 and also decreased as a percentage of
total revenues to 1.5% from 4.8%. Both the dollar decrease and the decrease as a
percentage of total revenues were due to a decrease in goodwill amortization
expense during the three months ended September 30, 1999 as a result of the
goodwill impairment charge recorded in the fourth quarter of 1998.
OTHER INCOME, NET. Other income, net in the three months ended
September 30, 1999 consisted predominantly of interest income and expense.
Interest expense consists of interest, commitment fees and other similar fees
payable with respect to Lightbridge's bank lines of credit, subordinated notes
and capital leases. Interest income increased by 76.7% to approximately $181,000
for the three months ended September 30, 1999 from approximately $103,000 in the
three months ended September 30, 1998. The increase in interest income was due
to an increase in average balance of investments during the three months ended
September 30, 1999. Interest expense decreased 58.8% to approximately $29,000
for the three months ended September 30, 1999 from approximately $70,000 in the
three months ended September 30, 1998. Interest expense decreased as a result of
lower outstanding debt balances during the three months ended September 30,
1999. Interest income for the three months ended September 30, 1999 reflected a
tax-adjusted average rate of return of approximately 5.95%.
PROVISION FOR INCOME TAXES. Lightbridge's effective tax rate was 49.0% and
70.3% for the three months ended September 30, 1999 and 1998, respectively. The
relatively high effective tax rate for both years results in part from goodwill
and acquired intangible assets attributable to Lightbridge's acquisition of
Coral. The amortization of this goodwill and acquired intangible assets is
recognized as an expense for accounting purposes, but is not deductible for tax
purposes. The substantially higher effective tax rate for the three months ended
September 30, 1998 was primarily due to significantly higher amortization
expense for goodwill and certain acquired intangible assets during the three
months ended September 30, 1998 compared to the three months ended
September 30, 1999. This amortization expense was lower during the three months
ended September 30, 1999 due to the write-down of goodwill and certain acquired
intangible assets at December 31, 1998. Since the goodwill and acquired
intangible assets attributable to the Coral acquisition will continue to be
amortized at various rates through the quarter ending December 31, 2002,
Lightbridge anticipates that its effective tax rate will continue to be
relatively high during that period. The actual effective tax rate for 1999 may
vary significantly from Lightbridge's estimates as the result of a number of
factors, including any and all factors that cause Lightbridge's actual revenues
for those years to vary from Lightbridge's internal estimates.
13
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1998
REVENUES. Revenues increased by 48.5% to $65.4 million in the nine months
ended September 30, 1999 from $44.1 million in the nine months ended
September 30, 1998.
Transaction revenues increased by 59.2% to $44.0 million in the nine months
ended September 30, 1999 from $27.7 million in the nine months ended
September 30, 1998. The increase in transaction revenues for the nine months
ended September 30, 1999 was primarily due to increased volume of qualification
and activation transactions processed for carrier clients.
Software licensing and maintenance revenues increased by 3.0% to
$10.3 million in the nine months ended September 30, 1999 from $10.0 million in
the nine months ended September 30, 1998. The increase in software licensing
revenues for the nine months ended September 30, 1999 was principally a result
of the increase in revenues attributable to Lightbridge's Retail Management
System product.
Consulting services revenues increased by 73.3% to $11.0 million in the nine
months ended September 30, 1999 from $6.4 million in the nine months ended
September 30, 1998. The increase in consulting services revenues for the nine
months ended September 30, 1999 was principally due to an increased demand for
the consulting services offered by Lightbridge.
COST OF REVENUES. Transaction cost of revenues increased by 32.7% to
$21.1 million in the nine months ended September 30, 1999 from $15.9 million in
the nine months ended September 30, 1998, while decreasing as a percentage of
total transaction revenues to 48.0% from 57.6%. The increase in transaction cost
of revenues for the nine months ended September 30, 1999 resulted principally
from increases in transaction volume and costs attributable to expansion of
Lightbridge's staff and systems capacity. The decrease in transaction cost of
revenues as a percentage of total transaction revenues for the nine months ended
September 30, 1999 principally resulted from an increase in the number of
transactions processed and a change in the mix of transaction services processed
compared to the same period in the prior year.
Software licensing and maintenance cost of revenues decreased by 1.5% to
$3.6 million in the nine months ended September 30, 1999 from $3.7 million in
the nine months ended September 30, 1998, while decreasing as a percentage of
total software licensing and maintenance revenues to 35.0% from 36.6%. The
dollar decrease in software licensing and maintenance cost of revenues for the
nine months ended September 30, 1999 was primarily due to the decreased
amortization expense for certain acquired intangible assets. The decrease in
software licensing and maintenance cost of revenues as a percentage of total
software licensing and maintenance revenues for the nine months ended
September 30, 1999 principally resulted from a higher percentage of software
licensing revenues during that period when compared to the same period in the
prior year. The software licensing component of software licensing and
maintenance revenues generally has higher margins than the software maintenance
component.
Consulting services cost of revenues increased by 62.4% to $6.1 million in
the nine months ended September 30, 1999 from $3.7 million in the nine months
ended September 30, 1998, while decreasing as a percentage of total consulting
services revenues to 55.1% from 58.8%. The dollar increase in consulting
services cost of revenues was primarily due to the increase in consulting staff
due to the expansion of the consulting services group. The decrease in
consulting services cost of revenues as a percentage of total consulting
services revenues for the nine months ended September 30, 1999 principally
resulted from the growth in total consulting services revenues as well as a
higher utilization of consulting resources during the same period.
DEVELOPMENT. Development expenses increased by 28.4% to $9.0 million in the
nine months ended September 30, 1999 from $7.0 million in the nine months ended
September 30, 1998. The increase in costs for the nine months ended
September 30, 1999 resulted primarily from the addition of engineering personnel
necessary to support Lightbridge's product development plans.
14
<PAGE>
SALES AND MARKETING. Sales and marketing expenses increased by 8.8% to
$5.7 million in the nine months ended September 30, 1999 from $5.3 million in
the nine months ended September 30, 1998. The increase for the nine months ended
September 30, 1999 was due to the addition of direct sales and product marketing
personnel, increased commissions resulting from the higher level of revenues and
increased use of marketing programs, including trade shows. This increase was
offset in part by the reallocation during the nine months ended September 30,
1998 of certain personnel and related expenses to Lightbridge Consulting
Services.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
by 36.3% to $8.7 million in the nine months ended September 30, 1999 from
$6.4 million in the nine months ended September 30, 1998. The increase for the
nine months ended September 30, 1999 was primarily due to increases in personnel
and fees for professional services.
AMORTIZATION OF GOODWILL AND ACQUIRED WORKFORCE. Amortization of goodwill
and acquired workforce expense decreased by 53.3% to $1.0 million in the nine
months ended September 30, 1999 from $2.2 million in the nine months ended
September 30, 1998. The decrease in amortization of goodwill and acquired
workforce was due to the goodwill impairment charge recorded in the fourth
quarter of 1998.
OTHER INCOME, NET. Other income, net in the nine months ended
September 30, 1999 consisted of interest income and expense and a nonrecurring
gain on sale of investments of approximately $415,000. Interest income remained
fairly constant at approximately $500,000 for the nine months ended
September 30, 1999 and 1998. Interest expense decreased to $103,000 in the nine
months ended September 30, 1999 from $170,000 in the nine months ended
September 30, 1998 due to lower outstanding debt balances during the nine months
ended September 30, 1999.
PROVISION FOR INCOME TAXES. During the nine months ended September 30,
1999, Lightbridge's effective tax rate was 49.0%. During the nine months ended
September 30, 1998, Lightbridge recorded tax provisions of $952,000 despite
income before provision for income taxes of $334,000, due primarily to the
impact of nondeductible amortization.
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of 1999 Lightbridge generated cash flows from
operating and financing activities of $14.4 million and $652,000, respectively,
and used cash of $5.7 million in investing activities.
Lightbridge's capital expenditures totalled $2.7 million and $6.3 million,
respectively, for the three and nine months ended September 30, 1999 and $3.3
and $5.3 million, respectively, for the three and nine months ended
September 30, 1998. The capital expenditures during these periods consisted of
purchases of fixed assets, principally for Lightbridge's services delivery
infrastructure and computer equipment for development activities and additional
personnel added during these periods. Lightbridge currently estimates that its
capital expenditures for the remainder of 1999 will total approximately
$3.5 million to $4.5 million, although the actual amount of those expenditures
may vary significantly, depending upon, among other things, the extent to which
Lightbridge determines to update the capacity of its data center and to acquire
additional computer equipment. Lightbridge leases its facilities and certain
equipment under non-cancelable capital and operating lease agreements that
expire at various dates through December 2002.
Lightbridge has a $5.0 million working capital line of credit and a
$3.0 million equipment line of credit with a bank. The working capital line of
credit is secured by a pledge of Lightbridge's accounts receivable, equipment
and intangible assets, and borrowing availability is based on the amount of
qualifying accounts receivable. Advances under the working capital line of
credit and equipment line of credit bear interest at the bank's prime rate
(8.25% at September 30, 1999). The working line of credit also provides for the
issuance of letters of credit, which reduce the amount that may be borrowed
under the line of credit and are limited to $1,250,000 in the aggregate. At
September 30, 1999, there were no borrowings outstanding
15
<PAGE>
under the working capital line of credit or the equipment line of credit.
Lightbridge's agreements with the bank contain covenants that, among other
things, prohibit the declaration or payment of dividends and require Lightbridge
to maintain certain financial ratios which Lightbridge believes are not
restrictive to its business operations. The working capital line of credit
expires in June 2000 and the equipment line of credit expires in June 2001.
Lightbridge considers earnings before interest, taxes, depreciation, and
amortization ("EBITDA") to be meaningful given the impact on operating income
from non-cash expenses such as depreciation of property and equipment and the
amortization of intangible assets. EBITDA and after-tax cash flow should not be
considered in isolation from, or as a substitute for, operating income, net
income or cash flow and other consolidated income or cash flow statement data
computed in accordance with generally accepted accounting principles or as a
measure of Lightbridges' profitability or liquidity. Although these measures of
performance are not calculated in accordance with generally accepted accounting
principles, Lightbridge believes they are widely used in the telecommunications
industry as a measure of a company's operating performance because they assist
in comparing companies on a more consistent basis without regard to depreciation
and amortization which can vary significantly depending on accounting methods
(particularly when acquisitions are involved). EBITDA increased by 102.2% to
$6.6 million in the three months ended September 30, 1999, from $3.3 million in
the three months ended September 30, 1998. For the nine months ended
September 30, 1999, EBITDA increased 121.3% to $16.7 million from $7.5 million
for the nine months ended September 30, 1998. The increases for the three and
nine months ended September 30, 1999 resulted primarily from an increase in
operating income.
As of September 30, 1999, Lightbridge had cash and cash equivalents of
$25.8 million and working capital of $32.2 million. Lightbridge believes that
the current cash balances and funds available under existing lines of credit,
together with cash flows provided by operations, will be sufficient to finance
Lightbridge's operations and capital expenditures for at least the next twelve
months.
YEAR 2000 IMPACT ON INFORMATION TECHNOLOGY COSTS
Many companies' currently installed computer systems and software products
are coded to accept only two digit year entries in date coded fields,
potentially with the incorrect assumption of 1900 as the century. To eliminate
date ambiguity, these date coded fields need to accept four digit entries, or
utilize a consistent, predictable technique to distinguish twenty-first century
dates from twentieth century dates. In addition, four digit year dates must be
stored in database or file fields, regardless of the entry of two digit years.
As a result, in less than three months, computer systems and software used by
many companies may need to be upgraded to comply with these "Year 2000"
requirements. Significant uncertainty exists in the software industry concerning
the potential effects associated with such compliance.
Lightbridge has been actively involved in addressing Year 2000 issues since
early 1997. Lightbridge believes that its software products are generally Year
2000 compliant, meaning that the use or occurrence of dates after January 1,
2000 will not materially affect the performance of Lightbridge's software
products with respect to date dependent data, or the ability of such products to
correctly create, store, process and output information related to such date
data. Lightbridge is continuing its testing efforts relating to its software
products. There can be no assurance that Lightbridge's software products contain
all necessary software routines and codes necessary for the accurate
calculation, display, storage and manipulation of data involving dates. In
addition, in certain circumstances, Lightbridge has warranted that the use or
occurrence of dates on or after January 1, 2000 will not adversely affect the
performance of Lightbridge's products with respect to date dependent data or the
ability to create, store, process and output information related to such data.
If any of Lightbridge's clients experience Year 2000 problems, such clients
could assert claims for damages against Lightbridge. Lightbridge's agreements
with clients in most cases limit liability to prevent unlimited exposure from
such claims.
16
<PAGE>
Lightbridge has completed an inventory and review of the Year 2000
compliance status of the software and systems considered critical to its service
bureau operations and its internal business, and has obtained appropriate
assurances of compliance from manufacturers of such software and systems and
agreements to modify or replace all non-compliant products. In addition,
Lightbridge has converted certain of its software and systems to commercial
products that are known to be Year 2000 compliant. Based on the information
available to date, Lightbridge believes it has made the necessary modifications
to its service bureau systems, back office software and other systems considered
critical to Lightbridge's business. Nevertheless, particularly to the extent
Lightbridge is relying on the products of other vendors to resolve Year 2000
issues, there can be no assurance that Lightbridge will not experience delays in
completing the resolution of such issues. If a key system, or a significant
number of systems, were to fail as a result of software products that were not
Year 2000 compliant, Lightbridge could incur substantial costs and experience
disruption of its business, which could have a material adverse effect on
Lightbridge's business, financial condition, results of operations and cash
flows.
Lightbridge believes that it has completed its Year 2000 procedures with
respect to its software products, service bureau systems, and internal business
software and systems. Lightbridge has not separately tracked the costs incurred
for investigating and remedying issues related to Year 2000 compliance, and all
of the costs have been internal. Lightbridge currently estimates that it has
spent approximately $600,000 on Year 2000 testing and compliance during 1999.
There can be no assurance that Lightbridge resources spent on investigating and
remedying Year 2000 issues will not have a material adverse effect on
Lightbridge's business, financial condition, results of operations and cash
flows.
Year 2000 issues may affect the purchasing patterns of clients and potential
clients. Certain clients may elect to forego purchasing new software products
until after January 1, 2000. In addition, many companies are expending
significant resources to correct their current software systems for Year 2000
compliance. These expenditures may adversely affect the amount or timing of
funds available to purchase software products or consulting services such as
those offered by Lightbridge, which could have an adverse effect on
Lightbridge's business, financial condition, results of operations and cash
flows.
The foregoing is a Year 2000 readiness disclosure within the meaning of the
Year 2000 Information and Readiness Disclosure Act.
INFLATION
Although certain of Lightbridge's expenses increase with general inflation
in the economy, inflation has not had a material impact on Lightbridge's
financial results to date.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1998, the AICPA released Statement of Position No. 98-9 ("SOP
98-9") "Modification of SOP 97-2 'Software Revenue Recognition' with Respect to
Certain Transactions" which Lightbridge adopted January 1, 1999. The adoption of
SOP 98-9 did not have a material effect on its consolidated financial position
or results of operations of Lightbridge.
ITEM 3. QUANTITATIVE AND QUALITATIVE MARKET RISK DISCLOSURES
The market risk exposure inherent in Lightbridge's financial instruments and
consolidated financial position represents the potential losses arising from
adverse changes in interest rates. Lightbridge is exposed to such interest rate
risk primarily in its significant investment in cash and cash equivalents and
the use of fixed- and variable-rate debt to fund its acquisitions of property
and equipment in past years.
Market risk for cash and cash equivalents and fixed-rate borrowings is
estimated as the potential change in the fair value of the assets or obligations
resulting from a hypothetical ten percent adverse change in interest rates,
which would not have been significant to Lightbridge's financial position or
results
17
<PAGE>
of operations during 1999. The effect of a similar hypothetical change in
interest rates on Lightbridge's variable-rate debt also would have been
insignificant due to the immaterial amounts of borrowings outstanding under
Lightbridge's credit arrangements.
For additional information about Lightbridge's financial instruments and
debt obligations, see Notes to Consolidated Financial Statements in
Lightbridge's Annual Report on Form 10-K for the year ended December 31, 1998.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
NO. DESCRIPTION
- --------------------- -----------
<C> <S>
27.1 Financial Data Schedule for the three months ended
September 30, 1999
</TABLE>
(b) Reports on Form 8-K
Lightbridge did not file any Current Report on Form 8-K during the three
months ended September 30, 1999.
18
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C> <C>
LIGHTBRIDGE, INC.
By: /s/ JOSEPH S. TIBBETTS, JR.
-----------------------------------------
Joseph S. Tibbetts, Jr.
Senior Vice President, Finance &
Administration and Chief Financial
Officer (Principal Financial and
Date: November 12, 1999 Accounting Officer)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 25,751,574
<SECURITIES> 0
<RECEIVABLES> 22,324,916
<ALLOWANCES> 1,553,000
<INVENTORY> 0
<CURRENT-ASSETS> 48,317,711
<PP&E> 30,315,263
<DEPRECIATION> 15,138,126
<TOTAL-ASSETS> 68,680,083
<CURRENT-LIABILITIES> 16,164,550
<BONDS> 807,203
0
0
<COMMON> 172,014
<OTHER-SE> 51,092,816
<TOTAL-LIABILITY-AND-EQUITY> 68,680,083
<SALES> 23,815,944
<TOTAL-REVENUES> 23,815,944
<CGS> 10,986,119
<TOTAL-COSTS> 10,986,119
<OTHER-EXPENSES> 8,455,691
<LOSS-PROVISION> 610,717
<INTEREST-EXPENSE> 29,121
<INCOME-PRETAX> 4,562,555
<INCOME-TAX> 2,236,000
<INCOME-CONTINUING> 2,326,555
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<NET-INCOME> 2,326,555
<EPS-BASIC> .14
<EPS-DILUTED> .13
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