<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, 2000
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 7, 2000, there were 17,489,238 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, 2000
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 September 30, 2000 and December 31,
1999...................................................... 3
Income Statements for the three months ended September 30,
2000
and September 30, 1999.................................... 4
Income Statements for the nine months ended September 30,
2000 and September 30, 1999............................... 5
Statements of Cash Flows for the nine months ended
September 30, 2000 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................................. 9
Item 3. QUANTITATIVE AND QUALITATIVE MARKET RISK DISCLOSURES........ 17
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>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $38,935,879 $35,477,909
Accounts receivable, net.................................. 25,239,855 16,785,873
Other current assets...................................... 1,518,196 1,970,393
----------- -----------
Total current assets.................................... 65,693,930 54,234,175
Property and equipment, net................................. 22,226,201 17,367,173
Acquired intangible assets, net............................. 1,357,083 2,347,217
Other assets, net........................................... 1,884,059 1,908,165
----------- -----------
Total assets........................................ $91,161,273 $75,856,730
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................. $18,041,074 $14,049,209
Short-term borrowings and current portion of notes
payable................................................. -- 500,000
Deferred revenues......................................... 2,746,290 2,914,155
----------- -----------
Total current liabilities............................... 20,787,364 17,463,364
Other long-term liabilities............................... 848,858 910,463
Notes payable............................................. -- 191,109
----------- -----------
Total liabilities....................................... 21,636,222 18,564,936
----------- -----------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares
authorized; no shares issued or outstanding at
September 30, 2000 or December 31, 1999................. -- --
Common stock, $.01 par value; 60,000,000 shares
authorized; 18,363,253 and 17,510,661 shares issued and
17,453,510 and 16,618,756 shares outstanding at
September 30, 2000 and December 31, 1999,
respectively............................................ 183,631 175,105
Additional paid-in capital................................ 61,342,103 58,297,842
Warrants.................................................. 206,375 398,875
Retained earnings......................................... 10,537,325 1,164,355
----------- -----------
Total................................................... 72,269,434 60,036,177
Less: treasury stock, at cost............................ (2,744,383) (2,744,383)
----------- -----------
Total stockholders' equity.............................. 69,525,051 57,291,794
----------- -----------
Total liabilities and stockholders' equity.......... $91,161,273 $75,856,730
=========== ===========
</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,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Revenues:
Transaction............................................... $23,413,727 $15,225,402
Software licensing and maintenance........................ 3,703,272 5,313,696
Consulting services....................................... 4,032,752 3,276,846
----------- -----------
Total revenues.......................................... 31,149,751 23,815,944
----------- -----------
Cost of revenues:
Transaction............................................... 12,285,402 7,060,653
Software licensing and maintenance........................ 1,482,676 1,645,720
Consulting services....................................... 1,733,166 2,279,746
----------- -----------
Total cost of revenues.................................. 15,501,244 10,986,119
----------- -----------
Gross profit................................................ 15,648,507 12,829,825
----------- -----------
Operating expenses:
Development costs......................................... 3,955,195 3,309,686
Sales and marketing....................................... 2,205,421 1,703,103
General and administrative................................ 3,717,686 3,094,646
Amortization of goodwill and acquired workforce........... 119,849 348,256
----------- -----------
Total operating expenses................................ 9,998,151 8,455,691
----------- -----------
Income from operations...................................... 5,650,356 4,374,134
Other income (expense):
Interest income........................................... 367,871 180,920
Interest expense.......................................... (45,508) (29,121)
Other non-operating (expense) income...................... (25,542) 36,622
----------- -----------
Income before provision for income taxes.................... 5,947,177 4,562,555
Provision for income taxes.................................. 2,378,870 2,236,000
----------- -----------
Net income.................................................. $ 3,568,307 $ 2,326,555
=========== ===========
Basic earnings per common share............................. $ 0.21 $ 0.14
=========== ===========
Diluted earnings per common share........................... $ 0.19 $ 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,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Revenues:
Transaction............................................... $65,522,576 $44,044,602
Software licensing and maintenance........................ 10,465,822 10,324,005
Consulting services....................................... 9,662,211 11,030,516
----------- -----------
Total revenues........................................ 85,650,609 65,399,123
----------- -----------
Cost of revenues:
Transaction............................................... 33,382,193 21,138,507
Software licensing and maintenance........................ 4,636,203 3,609,752
Consulting services....................................... 5,118,992 6,077,366
----------- -----------
Total cost of revenues................................ 43,137,388 30,825,625
----------- -----------
Gross profit................................................ 42,513,221 34,573,498
----------- -----------
Operating expenses:
Development............................................... 11,997,229 9,048,673
Sales and marketing....................................... 6,361,402 5,746,760
General and administrative................................ 9,073,020 8,666,264
Amortization of goodwill and acquired workforce........... 501,584 1,044,770
----------- -----------
Total operating expenses.............................. 27,933,235 24,506,467
----------- -----------
Income from operations...................................... 14,579,986 10,067,031
Other income (expense):
Interest income........................................... 1,036,772 500,005
Interest expense.......................................... (53,545) (103,181)
Other non-operating income................................ 125,627 505,923
----------- -----------
Income before provision for income taxes.................... 15,688,840 10,969,778
Provision for income taxes.................................. 6,315,870 5,376,000
----------- -----------
Net income.................................................. $ 9,372,970 $ 5,593,778
=========== ===========
Basic earnings per common share............................. $ 0.55 $ 0.35
=========== ===========
Diluted earnings per common share........................... $ 0.51 $ 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,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income................................................ $ 9,372,970 $ 5,593,778
Gain on sale of investment................................ -- (414,725)
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization........................... 7,497,692 6,583,868
Changes in assets and liabilities:
Accounts receivable................................... (8,453,982) (2,334,976)
Other assets.......................................... 398,743 375,086
Accounts payable and accrued liabilities.............. 3,991,866 2,678,942
Deferred revenues..................................... (167,865) 1,525,896
Other liabilities..................................... (61,606) 399,875
----------- -----------
Net cash provided by operating activities................. 12,577,818 14,407,744
----------- -----------
Cash Flows From Investing Activities:
Principal payments--note receivable from officer........ -- 25,328
Purchases of property and equipment..................... (11,268,251) (6,320,611)
Proceeds from sale of investment........................ -- 550,378
----------- -----------
Net cash used in investing activities..................... (11,268,251) (5,744,905)
----------- -----------
Cash Flows From Financing Activities:
Principal payments on notes payable..................... -- (527,769)
Principal payments under capital lease obligations...... -- (44,440)
Proceeds from issuance of common stock.................. 1,931,193 1,067,699
Proceeds from exercise of warrants...................... 217,210 156,250
----------- -----------
Net cash provided by financing activities................. 2,148,403 651,740
----------- -----------
Net increase in cash and cash equivalents................... 3,457,970 9,314,579
Cash and cash equivalents, beginning of period.............. 35,477,909 16,436,995
----------- -----------
Cash and cash equivalents, end of period.................... $38,935,879 $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, 1999.
2. SIGNIFICANT ACCOUNTING POLICIES:
DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION
Based upon the manner in which management and the Board of Directors monitor
its operations, Lightbridge operates in three distinct segments consisting of
the transaction business, the software licensing and maintenance business, and
the consulting services business. Within these three segments, performance is
measured based on gross profit realized from each segment. Information about
costs and expenses, other than costs of revenues, and assets and cash flows is
not reported by segment. Information about revenues and cost of revenues of each
segment is shown separately on the statement of operations. There are no
transactions between segments.
REVENUE RECOGNITION
Lightbridge generates revenue from the processing of qualification and
activation transactions; granting of software licenses; services (including
maintenance, installation and training); development and consulting contracts;
and certain hardware sold in conjunction with certain software licenses.
Revenues from processing of qualification and activation transactions for
wireless telecommunications carriers are recognized in the period in which
services are performed. Lightbridge's software license agreements have typically
provided for an initial license fee and annual maintenance fees based on a
defined number of subscribers or users, as well as additional license and
maintenance fees for net subscriber or user additions. Lightbridge has also
entered into license agreements that provide for either a one-time license fee
or a monthly license fee with no additional fees based on incremental subscriber
or user growth.
Revenue from software license sales is recognized when persuasive evidence
of an arrangement exists, delivery of the product has been made, and a fixed fee
and collectibility has been determined; to the extent that obligations exist for
other services, Lightbridge allocates revenue between the license and the
services based upon their relative fair value. Revenue from customer maintenance
support agreements is deferred and recognized ratably over the term of the
agreements. Revenue from consulting and training services is recognized as those
services are rendered. Hardware is sold in conjunction with software licenses
only when required by the customer and such revenue is deferred until the
related license revenue is recognized.
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
7
<PAGE>
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,
----------------------- -----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Shares for basic earnings per
share....................... 17,224,323 16,168,520 16,934,510 15,960,472
Effect of dilutive options and
warrants.................... 1,259,009 2,094,659 1,566,672 1,588,664
---------- ---------- ---------- ----------
Shares for diluted earnings
per share................... 18,483,332 18,263,179 18,501,182 17,549,136
========== ========== ========== ==========
</TABLE>
No adjustments were made to net income in computing diluted earnings per
share.
SUPPLEMENTAL CASH FLOW INFORMATION
The Company entered into the following noncash transactions:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Application of note to exercise warrants................ $691,109 $ --
======== ========
</TABLE>
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities". In June 2000, the FASB issued
SFAS No. 138, which amends certain provisions of SFAS 133 to clarify four areas
causing difficulties in implementation. The amendment included expanding the
normal purchase and sale exemption for supply contracts, permitting the
offsetting of certain intercompany foreign currency derivatives and thus
reducing the number of third party derivatives, permitting hedge accounting for
foreign-currency denominated assets and liabilities, and redefining interest
rate risk to reduce sources of ineffectiveness. Lightbridge will adopt SFAS 133
and the corresponding amendments under SFAS 138 on January 1, 2001. SFAS 133, as
amended by SFAS 138, is not expected to have a material impact on Lightbridge's
consolidated results of operations, financial position or cash flows.
Staff Accounting Bulletin No. 101 ("SAB 101") was released on December 3,
1999 and provides the SEC staff's views in applying generally accepted
accounting principles to selected revenue recognition issues. Lightbridge
believes that its revenue recognition practices are in compliance with SAB 101
and does not expect that SAB 101 will have a material effect on its consolidated
financial position or results of operations.
3. COMMITMENTS AND CONTINGENCIES
LEASES--Lightbridge has noncancelable operating lease agreements for office
space and certain equipment.
8
<PAGE>
Future minimum payments under operating leases consisted of the following at
September 30, 2000:
<TABLE>
<CAPTION>
OPERATING
LEASES
-----------
<S> <C>
2000........................................................ $ 1,064,853
2001........................................................ 4,577,189
2002........................................................ 3,740,299
2003........................................................ 3,355,194
2004........................................................ 1,543,673
Thereafter.................................................. 499,907
-----------
Total minimum lease payments................................ $14,781,115
===========
</TABLE>
4. SUBSEQUENT EVENT
On October 26, 2000, Lightbridge announced that it had signed a definitive
merger agreement with Corsair Communications, Inc. ("Corsair"). Under the terms
of the agreement Corsair will become a wholly owned subsidiary of Lightbridge
and each share of Corsair's outstanding common stock will be exchanged for
0.5978 shares of Lightbridge's common stock. Total shares issued by Lightbridge
will be approximately 10.5 million. The transaction is anticipated to close in
the first calendar quarter of 2001, and is expected to be accounted for as a
pooling of interest.
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, INCLUDING THE FACTORS SET FORTH UNDER "ITEM 1A. RISK FACTORS" IN
THE ANNUAL REPORT ON FORM 10-K OF LIGHTBRIDGE, INC. FOR THE YEAR ENDED
DECEMBER 31, 1999, THAT MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE AND
ACHIEVEMENTS OF LIGHTBRIDGE, INC. TO DIFFER MATERIALLY FROM THOSE INDICATED BY
THE FORWARD-LOOKING STATEMENTS.
Information set forth under the heading "ITEM 1A. Risk Factors" in the Annual
Report on Form 10-K of Lightbridge, Inc. for the year ended December 31, 1999 is
incorporated as an exhibit to this Form 10-Q. Unless the context otherwise
requires, "Lightbridge" and the "Company" refer collectively to Lightbridge and
its subsidiaries.
ALIAS, FRAUDBUSTER, FRAUD SENTINEL, LIGHTBRIDGE, the Lightbridge logo,
PROFILE, and TELESTO are registered trademarks of Lightbridge, and @RISK,
ALLEGRO, CUSTOMER ACQUISITION SYSTEM, CREDIT DECISION SYSTEM, FRAUD CENTURION,
INSIGHT, POPS, 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.
9
<PAGE>
OVERVIEW
Lightbridge develops, markets and supports a network of integrated products
and services that enable telecommunications carriers to improve their customer
acquisition, service provisioning, retention and fraud management processes.
Lightbridge's transaction revenues are derived primarily from the processing
of applications for qualification of subscribers for telecommunications services
and the activation of service for those subscribers. Lightbridge's offerings
include credit evaluation services, 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 varies depending on industry,
seasonal and retail trends, the success of the carriers utilizing Lightbridge's
services in attracting subscribers and the markets served by Lightbridge's
clients. Transaction revenues 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 perform other point-of-sale and 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. Software
licensing revenues are recognized when persuasive evidence of an arrangement
exists, delivery of the product has been made, and a fixed fee and
collectibility has been determined. Revenues from software maintenance contracts
are recognized ratably over the term of the maintenance agreement.
Lightbridge's consulting services revenues are derived from solution
development and deployment consulting and business advisory services in the
areas of customer acquisition, retention and fraud 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 2000, Lightbridge continued its efforts to
complete development of in-process technology obtained through the acquisition
of Coral Systems Inc. ("Coral") in November 1997. Lightbridge completed beta
testing of FraudBuster 5.0, which contains enhancements in performance,
scalability and functionality, during the second quarter of 2000. Lightbridge
deployed FraudBuster 5.0 for two clients during the quarter ended September 30,
2000. Lightbridge commenced Beta testing of Alias 2.0 and @Risk, which are
complimentary to FraudBuster and contain new subscription fraud detection tools.
Both products are currently scheduled to be generally released in the first
quarter of 2001. If Lightbridge is unsuccessful in completing these projects,
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 a substantial portion of its revenues for the
remainder of 2000.
10
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain financial
data as a percentage of total revenues:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS ENDED
ENDED SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Transaction...................................... 75.2% 63.9% 76.5% 67.3%
Software licensing and maintenance............... 11.9 22.3 12.2 15.8
Consulting services.............................. 12.9 13.8 11.3 16.9
----- ----- ----- -----
Total revenues................................. 100.0 100.0 100.0 100.0
----- ----- ----- -----
Cost of revenues:
Transaction...................................... 39.4 29.6 39.0 32.3
Software licensing and maintenance............... 4.8 6.9 5.4 5.5
Consulting services.............................. 5.6 9.6 6.0 9.3
----- ----- ----- -----
Total cost of revenues........................... 49.8 46.1 50.4 47.1
----- ----- ----- -----
Gross profit....................................... 50.2 53.9 49.6 52.9
----- ----- ----- -----
Operating expenses:
Development...................................... 12.7 13.9 14.0 13.8
Sales and marketing.............................. 7.1 7.1 7.5 8.8
General and administrative....................... 11.9 13.0 10.6 13.3
Amortization of goodwill and acquired
workforce...................................... 0.4 1.5 0.5 1.6
----- ----- ----- -----
Total operating expenses....................... 32.1 35.5 32.6 37.5
----- ----- ----- -----
Income from operations............................. 18.1 18.4 17.0 15.4
Other income, net.................................. 1.0 0.8 1.3 1.4
----- ----- ----- -----
Income before provision for income taxes........... 19.1 19.2 18.3 16.8
Provision for income taxes......................... 7.6 9.4 7.4 8.2
----- ----- ----- -----
Net income......................................... 11.5% 9.8% 10.9% 8.6%
===== ===== ===== =====
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 1999
REVENUES. Revenues increased by 30.8% to $31.1 million in the three months
ended September 30, 2000 from $23.8 million in the three months ended
September 30, 1999.
Transaction revenues increased by 53.8% to $23.4 million in the three months
ended September 30, 2000 from $15.2 million in the three months ended
September 30, 1999, while increasing as a percentage of total revenues to 75.2%
from 63.9%. The increase in transaction revenues for the three months ended
September 30, 2000 was due to increased volume of qualification and activation
transactions processed for carrier clients, including new clients, and an
increase in special program efforts through Lightbridge's TeleServices Call
Center, which are generally not provided under a long-term contract. Lightbridge
believes that its transaction revenues also benefited directly from client
promotional activities generally attributable to the current competitive market
for wireless services.
Lightbridge anticipates that the volume of transaction-based activities will
increase in the quarter ending December 31, 2000. However, the volume of
transaction-based activities may vary based on special program efforts through
Lightbridge's TeleServices Call Center or other factors. Lightbridge's
transaction revenues will continue to reflect in large part the industry's rate
of growth of new subscribers and seasonal trends 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 while
the rate of subscriber churn will remain fairly constant.
11
<PAGE>
Software licensing and maintenance revenues decreased by 30.3% to
$3.7 million in the three months ended September 30, 2000 from $5.3 million in
the three months ended September 30, 1999, while decreasing as a percentage of
total revenues to 11.9% from 22.3%. The decrease in software licensing and
maintenance revenues for the three months ended September 30, 2000 was primarily
due to a major deployment of Lightbridge's Retail Management System product
during the third quarter of 1999.
Lightbridge currently anticipates a slight decrease in demand for its
software licensing and maintenance revenues for the remainder of 2000 as its
customers are focused on the upcoming retail season and typically do not
commence projects in this period. Lightbridge believes that its software
licensing and maintenance revenues for 2000 will approximate software licensing
and maintenance revenues recorded for the year ended December 31, 1999. Actual
results for 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 are subject to fluctuation and are more
difficult to anticipate than Lightbridge's other types of revenues. This is due
to the relatively large dollar magnitude and long sales cycles for 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 within a given
quarter.
Consulting services revenues increased by 23.1% to $4.0 million in the three
months ended September 30, 2000 from $3.3 million in the three months ended
September 30, 1999, while decreasing as a percentage of total revenues to 12.9%
from 13.8%. The increase in consulting services revenues for the three months
ended September 30, 2000 was due to an increase in demand for the Company's
consulting services. Lightbridge currently anticipates that its consulting
services revenue for the year 2000 as a whole will approximate the level
achieved in 1999 as Lightbridge continues to standardize its consulting services
offerings and to build its consulting capabilities.
COST OF REVENUES. Cost of revenues consists primarily of personnel costs,
costs of purchasing and 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 as a result of a number of factors, including changes in 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 74.0% to $12.3 million in the
three months ended September 30, 2000 from $7.1 million in the three months
ended September 30, 1999, while increasing as a percentage of total transaction
revenues to 52.5% from 46.4%. The increase in transaction cost of revenues for
the three months ended September 30, 2000 resulted from increases in transaction
volume and costs attributable to expansion of Lightbridge's staff and systems
capacity and an increase in the level of temporary labor used, particularly for
Lightbridge's TeleServices Call Centers. Transaction cost of revenues was also
affected by a shift in the mix of services provided during the quarter.
Lightbridge anticipates that transaction cost of revenues will decline slightly
as a percentage of transaction revenues during the quarter ending December 31,
2000.
Software licensing and maintenance cost of revenues decreased by 9.9% to
$1.5 million in the three months ended September 30, 2000 from $1.6 million in
the three months ended September 30, 1999, while increasing as a percentage of
total software licensing and maintenance revenues to 40.0% from 31.0%. The
increase 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, 2000 was primarily due to a high
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<PAGE>
proportion of licensing revenue in the third quarter of 1999 attributable to a
major deployment of Lightbridge's Retail Management System product. The
licensing component of software licensing and maintenance revenues generally has
higher margins than the maintenance component.
Consulting services cost of revenues decreased by 24.0% to $1.7 million in
the three months ended September 30, 2000 from $2.3 million in the three months
ended September 30, 1999, while decreasing as a percentage of total consulting
services revenues to 43.0% from 69.6%. The decrease in consulting services cost
of revenues was attributable primarily to the allocation of consulting resources
to other areas of the Company. The decrease in consulting services cost of
revenue as a percentage of consulting revenues during the three months ended
September 30, 2000 was due to increased utilization of the consulting resources.
DEVELOPMENT. Development expenses include software development costs, which
consist 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 19.5% to $4.0 million in the three months
ended September 30, 2000 from $3.3 million in the three months ended
September 30, 1999, while decreasing as a percentage of total revenues to 12.7%
from 13.9%. The increase in costs for the three months ended September 30, 2000
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 enhanced versions 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. In addition, Lightbridge
continued deployment of its Customer Acquisition System for its first
international client in Brazil, which is scheduled to be generally completed in
the first half of 2001. 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 will be
slightly higher during the last three months of 2000 than during the three
months ended September 30, 2000.
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 29.5% to $2.2 million for the
three months ended September 30, 2000 from $1.7 million in the three months
ended September 30, 1999, while remaining at 7.1% of total revenues. The
increase in sales and marketing expense was due to the addition of direct sales
and product marketing personnel, increased customer events and marketing
spending during the quarter ended September 30, 2000. Lightbridge expects to
further 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. As a result, Lightbridge expects that its sales
and marketing expenses as a percentage of total revenues will be slightly higher
for the remainder of 2000 than during the three months ended September 30, 2000.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
principally of salaries of executive, finance, human resources and
administrative personnel and fees for outside professional services.
General and administrative expenses increased by 20.1% to $3.7 million in
the three months ended September 30, 2000 from $3.1 million in the three months
ended September 30, 1999, while decreasing as a percentage of total revenues to
11.9% from 13.0%. The increase was primarily due to higher usage of external
consulting for strategic reviews and recruiting fees for additional hires.
Lightbridge expects that its
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<PAGE>
general and administrative expenses during the last three months of 2000 will
decrease slightly from the quarter ended September 30, 2000.
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 65.6%
to $0.1 million in the three months ended September 30, 2000 from $0.3 million
in the three months ended September 30, 1999 and also decreased as a percentage
of total revenues to 0.4% from 1.5%. The decrease was due to the write-off
during the fourth quarter of 1999 of the remainder of the net goodwill balance
and a portion of the acquired workforce asset to reflect the return of a portion
of the shares escrowed at the time of the Coral acquisition in settlement of
claims made by Lightbridge. Goodwill and acquired workforce are fully amortized
at September 30, 2000.
OTHER INCOME, NET. Other income, net in the three months ended
September 30, 2000 consisted predominantly of interest income and interest
expense. Other income, net increased by 57.5% to $0.3 million in the three
months ended September 30, 2000 from $0.2 million in the three months ended
September 30, 1999. This was primarily due to a $0.2 million increase in
interest income as a result of higher average cash balances during the three
months ended September 30, 2000. The increase in interest income was partially
offset by a decrease in other income and expenses of approximately $0.1 million
due to a decrease in sublease income from the termination of a subrental
agreement during the quarter ended September 30, 2000.
PROVISION FOR INCOME TAXES. Lightbridge's effective tax rate was 40.0% and
49.0% for the three months ended September 30, 2000 and 1999, respectively. The
relatively high effective tax rate for 1999 resulted from the amortization of
goodwill related to Lightbridge's acquisition of Coral, which was recognized as
an expense for accounting purposes, but was not deductible for tax purposes.
Lightbridge anticipates that its effective tax rate for the year ending
December 31, 2000 will be approximately 40%. The actual effective tax rate for
2000 may vary from Lightbridge's estimates due to factors that may cause
Lightbridge's actual pretax book income for the year to differ from
Lightbridge's internal estimates. Lightbridge has net operating loss
carryforwards for federal income tax purposes which were acquired from Coral.
These net operating loss carryforwards are limited in use and therefore a
valuation allowance has been established against a portion of the deferred tax
assets as their full realization is not assured.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1999
REVENUES. Revenues increased by 31.0% to $85.7 million in the nine months
ended September 30, 2000 from $65.4 million in the nine months ended
September 30, 1999.
Transaction revenues increased by 48.8% to $65.5 million in the nine months
ended September 30, 2000 from $44.0 million in the nine months ended
September 30, 1999. The increase in transaction revenues for the nine months
ended September 30, 2000 was due to increased volume of qualification and
activation transactions processed for carrier clients, including new clients,
and an increase in special program efforts through Lightbridge's TeleServices
Call Centers, which are generally not provided under a long-term contract.
Software licensing and maintenance revenues increased by 1.4% to $10.5
million in the nine months ended September 30, 2000 from $10.3 million in the
nine months ended September 30, 1999. The increase in software licensing and
maintenance revenues for the nine months ended September 30, 2000 resulted from
an increase in maintenance revenues.
Consulting services revenues decreased by 12.4% to $9.7 million in the nine
months ended September 30, 2000 from $11.0 million in the nine months ended
September 30, 1999. The decrease in
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<PAGE>
consulting services revenues for the nine months ended September 30, 2000 was
due to a decrease in demand for the Company's consulting services. In addition,
consulting services revenues for the nine months ended September 30, 1999 were
higher than expected principally as a result of one large engagement during the
second quarter of 1999.
COST OF REVENUES. Transaction cost of revenues increased by 57.9% to $33.4
million in the nine months ended September 30, 2000 from $21.1 million in the
nine months ended September 30, 1999, while increasing as a percentage of total
transaction revenues to 50.9% from 48.0%. The increase in transaction cost of
revenues for the nine months ended September 30, 2000 resulted from increased
transaction volume and costs attributable to expansion of the Company's staff
and systems capacity. The increase in transaction cost of revenues as a
percentage of total transaction revenues for the nine months ended
September 30, 2000 resulted from increases in transaction volume and costs
attributable to expansion of Lightbridge's staff and systems capacity,
particularly for Lightbridge's TeleServices Call Centers. Transaction cost of
revenues was also affected by an increase in the level of temporary labor used
and a shift in the mix of services provided during the nine months ended
September 30, 2000.
Software licensing and maintenance cost of revenues increased by 28.4% to
$4.6 million in the nine months ended September 30, 2000 from $3.6 million in
the nine months ended September 30, 1999, while increasing as a percentage of
total software licensing and maintenance revenues to 44.3% from 35.0%. The
dollar increase in software licensing and maintenance cost of revenues for the
nine months ended September 30, 2000 was primarily due to an increase in
personnel in connection with an increase in maintenance contracts and the
deployment and testing of FraudBuster 5.0. The increase 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, 2000 resulted from
a higher percentage of software maintenance revenues during that period when
compared to the same period in the prior year. The software maintenance
component of software licensing and maintenance revenues generally has lower
margins than the software licensing component.
Consulting services cost of revenues decreased by 15.8% to $5.1 million in
the nine months ended September 30, 2000 from $6.1 million in the nine months
ended September 30, 1999, while decreasing as a percentage of total consulting
services revenues to 53.0% from 55.1%. The dollar decrease in consulting
services cost of revenues for the nine months ended September 30, 2000 was due
to the decrease in consulting services revenue from the prior year and the
allocation of resources to other departments in the Company. The decrease in
consulting services cost of revenues as a percentage of consulting revenues for
the nine months ended September 30, 2000 resulted from a higher utilization of
consulting resources during the same period.
DEVELOPMENT. Development expenses increased by 32.6% to $12.0 million in
the nine months ended September 30, 2000 from $9.0 million in the nine months
ended September 30, 1999. The increase in costs for the nine months ended
September 30, 2000 resulted primarily from the addition of engineering personnel
necessary to support the Company's product development plans.
SALES AND MARKETING. Sales and marketing expenses increased by 10.7% to
$6.4 million in the nine months ended September 30, 2000 from $5.7 million in
the nine months ended September 30, 1999. The increase for the nine months ended
September 30, 2000 was due to the increased use of marketing programs, including
trade shows and an increase in sales and marketing personnel.
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
by 4.7% to $9.1 million in the nine months ended September 30, 2000 from $8.7
million in the nine months ended September 30, 1999. The increase for the nine
months ended September 30, 2000 was primarily due to higher usage of external
consulting for strategic reviews and recruiting fees for additional hires.
AMORTIZATION OF GOODWILL AND ACQUIRED WORKFORCE. Amortization of goodwill
and acquired work force expense decreased by 52.0% to $0.5 million in the nine
months ended September 30, 2000 from
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<PAGE>
$1.0 million in the nine months ended September 30, 1999. The decrease in
amortization of goodwill and acquired workforce was due to the write-off during
the fourth quarter of 1999 of the remainder of the net goodwill balance and a
portion of the acquired workforce asset to reflect the return of a portion of
the shares escrowed at the time of the Coral acquisition in settlement of claims
made by Lightbridge.
OTHER INCOME, NET. Other income, net in the nine months ended
September 30, 2000 consisted predominantly of interest income and interest
expense. Other income, net increased by 22.8% to $1.1 million in the nine months
ended September 30, 2000 from $0.9 million in the nine months ended
September 30, 1999. This increase was primarily due to a $0.5 million increase
in interest income as a result of higher average cash balances during the nine
months ended September 30, 2000. The increase in interest income was offset by a
decrease in other income and expenses due to a nonrecurring gain on a sale of
investments of $0.4 million during the nine months ended September 30, 1999.
PROVISION FOR INCOME TAXES. During the nine months ended September 30, 2000
and 1999, the Company's effective tax rate was 40.0% and 49.0%, respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2000, Lightbridge had cash and cash equivalents of
$38.9 million. Lightbridge's working capital increased by 22.0% to
$44.9 million at September 30, 2000 from $36.8 million at December 31, 2000. The
increase in working capital was primarily due to an increase in cash and
accounts receivable as a result of an increase in revenues. In addition, the
short term borrowing balance decreased due to Lightbridge calling the
outstanding balance of subordinated notes during the quarter ended
September 30, 2000 (See Note 2 to Unaudited Condensed Consolidated Financial
Statements). The increase in cash and accounts receivable was slightly offset by
an increase in Lightbridge's accounts payable and accrued liabilities
principally due to capital expenditures for construction of a third call center
and new space buildouts during the three months ended September 30, 2000.
During the first nine months of 2000 the Company generated cash flows from
operating and financing activities of $12.6 million and $2.1 million,
respectively, and used $11.3 million in investing activities.
The Company's capital expenditures totaled $5.5 million and $11.3 million,
respectively, for the three and nine months ended September 30, 2000 and $2.7
million and $6.3 million, respectively, for the three and nine months ended
September 30, 1999. The capital expenditures during these periods were
principally for the Company's services delivery infrastructure and computer
equipment for development activities. In addition, during the three months ended
September 30, 2000 capital expenditures included construction of a third call
center and new space build-outs. The Company currently estimates that its
capital expenditures for the remainder of 2000 will total approximately
$5.0 million to $6.0 million, reflecting the completion of a third call center,
continued system improvements and the cost of building out new office space. The
Company leases its facilities and certain equipment under non-cancelable
operating lease agreements that expire at various dates through January 2006.
The Company has a $15.0 million unsecured working capital line of credit
with a bank. Borrowing availability on the working capital line of credit is
based on the amount of qualifying accounts receivable. Advances under the
working capital line of credit bear interest at the bank's prime rate (9.5% at
September 30, 2000). The working capital 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 $1.25 million in the aggregate. At
September 30, 2000, there were no borrowings outstanding under the working
capital line of credit. Borrowing availability at September 30, 2000 was $14.0
million for the working capital line of credit. The Company's agreement with the
bank contains covenants that, among other things, prohibit the declaration or
payment of dividends and require the Company to maintain certain financial
ratios which the Company believes are not restrictive to its business
operations. The working capital line of credit expires in August 2001. At
September 30, 2000 the Company has an outstanding letter of credit in the amount
of $1.0 million which expires in May 2002.
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<PAGE>
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 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 Lightbridge's
profitability or liquidity. Although this measure of performance is not
calculated in accordance with generally accepted accounting principles,
Lightbridge believes it is widely used in the telecommunications industry as a
measure of a company's operating performance because it assists 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 23.7% to
$8.2 million in the three months ended September 30, 2000, from $6.6 million in
the three months ended September 30, 1999. For the nine months ended
September 30, 2000 EBITDA increased 32.6% to $22.1 million from $16.7 million
for the nine months ended September 30, 1999. The increase for the three and
nine months ended September 30, 2000 resulted primarily from an increase in
operating income.
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 June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities". In June 2000, the FASB issued
SFAS No. 138, which amends certain provisions of SFAS 133 to clarify four areas
causing difficulties in implementation. The amendment included expanding the
normal purchase and sale exemption for supply contracts, permitting the
offsetting of certain intercompany foreign currency derivatives and thus
reducing the number of third party derivatives, permitting hedge accounting for
foreign-currency denominated assets and liabilities, and redefining interest
rate risk to reduce sources of ineffectiveness. Lightbridge will adopt SFAS 133
and the corresponding amendments under SFAS 138 on January 1, 2001. SFAS 133, as
amended by SFAS 138, is not expected to have a material impact on Lightbridge's
consolidated results of operations, financial position or cash flows.
Staff Accounting Bulletin No. 101 ("SAB 101") was released on December 3,
1999 and provides the SEC staff's views in applying generally accepted
accounting principles to selected revenue recognition issues. Lightbridge
believes that its revenue recognition practices are in compliance with SAB 101
and does not expect that SAB 101 will have a material effect on its consolidated
financial position or results of operations.
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 of operations during the nine months ended September 30, 2000. 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.
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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, 1999.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
NO. DESCRIPTION
--------------------- -----------
<S> <C>
10.1 Office lease dated August 15, 2000 between the Company and
Arthur Pappathanasi, Trustee 330 Scangas Nominee Trust
27.1 Financial Data Schedule for the three months ended
September 30, 2000
99.1 Information set forth under the heading "ITEM 1A. Risk
Factors" in the Annual Report on Form 10-K of the Company
for the year ended December 31, 1999 is incorporated herein
by reference
</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, 2000.
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/ HARLAN PLUMLEY
-----------------------------------------
Harlan Plumley
VICE PRESIDENT, CHIEF FINANCIAL OFFICER
AND TREASURER
(PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER)
Date: November 8, 2000
</TABLE>
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