Form 8-K LIONBRIDGE TECHNOLOGIES For: Nov 10

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November 10, 2014 8:06 AM EST

�
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section�13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
�
November�10, 2014
Lionbridge Technologies, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)
Delaware
000-26933
04-3398462
_____________________
(State or other jurisdiction
_____________
(Commission
______________
(I.R.S. Employer
of incorporation)
File Number)
Identification No.)
��
�
�
1050 Winter Street, Suite 2300, Waltham, Massachusetts
�
02451
_________________________________
(Address of principal executive offices)
�
___________
(Zip Code)
�
�
�
Registrants telephone number, including area code:
�
781-434-6000
Not Applicable
______________________________________________
Former name or former address, if changed since last report
�
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[��]��Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[��]��Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[��]��Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[��]��Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))



Item 2.02 Results of Operations and Financial Condition.
Attached hereto as Exhibit 99.1 and incorporated by reference herein is financial information for the registrant for the third quarter of fiscal year 2014, and forward-looking statements relating to 2014, as presented in a press release of November�10, 2014. The information in this Current Report on Form 8-K is furnished under Item 2.02 - "Results of Operations and Financial Condition." Such information, including the exhibits attached hereto, shall not be deemed "filed" for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section. The information in this Current Report on Form 8-K shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing.





Item 9.01 Financial Statements and Exhibits.




SIGNATURES
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 hereunto duly authorized.
�
�
Lionbridge Technologies, Inc.
��
�
�
�
�
November�10, 2014
�
By:
�
Donald M. Muir
�
�
�
�
Name: Donald M. Muir
�
�
�
�
Title: Chief Financial Officer




Exhibit�Index

Exhibit No.
�
Description
99.1
�
Press release dated November 10, 2014




LIONBRIDGE REPORTS Q3 RESULTS WITH REVENUE OF $120.2 MILLION, GAAP EPS OF $0.06 AND NON-GAAP EPS OF $0.11

Offsets Decline from Top Client with Revenue Momentum across Offerings and Verticals;
Announces Agreement to Acquire Translation Solutions Company with $85 Million of Recurring Revenue in Financial and Industrial Markets
WALTHAM, Mass.  November�10, 2014 - Lionbridge Technologies, Inc. (Nasdaq: LIOX), today announced revenue and earnings for the third quarter ended September�30, 2014.
Financial highlights for the third quarter include:
"
Revenue of $120.2 million, a decrease of $4.5 million, or 4% compared to the third quarter of 2013. Revenue grew 6% year-on-year excluding revenue from the Company's largest client.
"
GAAP net income of $3.6 million, or $0.06 per share, based on 62.6 million weighted average fully diluted common shares outstanding. This compares to GAAP net income of $5.0 million, or $0.08 per share, in Q3 2013.
"
Non-GAAP adjusted earnings of $7.1 million or $0.11 per share. The Company defines non-GAAP adjusted earnings as net income excluding merger, restructuring and acquisition-related charges, asset impairment costs, stock-based compensation, and amortization of acquisition-related intangible assets. Please see the section of this release entitled Non-GAAP Financial Measures and the attached table for details and reconciliations of this measure to the comparable GAAP measure.
"
Cash flow from operations of $6.4 million.
"
During the quarter, the Company acquired 377,358 shares of its common stock�under its share repurchase program for an aggregate purchase price of $2.0 million.�
The Company secured several significant new customer engagements in the quarter, including relationships with a leading manufacturer of interactive pen tablets and displays, a multi-billion dollar company that provides connectivity and sensor solutions and a global personal technology company.

For the nine months ended September�30, 2014 revenue increased $9.2 million year-on-year and GAAP net income increased $3.8 million as compared to the first nine months of 2013.

Separately, the Company announced the acquisition of CLS Communication, a market-leader in translation solutions to clients in the financial services, industrial and public sector end markets. Lionbridge expects to purchase CLS Communication for approximately 74 million Swiss Francs, or approximately $77 million US Dollars in cash, subject to estimated cash and debt adjustments at closing and certain post-closing adjustments. The acquisition is being funded using Lionbridges existing cash and a new credit facility through its long-standing banking partner, HSBC, who is acting as the leading syndicator.�Lionbridge expects to close the transaction in early 2015.

While spending reduction from our largest client was greater than expected in the quarter, it appears revenue levels at that account have stabilized and business is firming. Despite this headwind, we continued to scale our new offerings, diversify our revenue with clients across multiple end markets expand our margins sequentially and generate strong cash flow, said Rory Cowan, CEO of Lionbridge. With our recent sole-source agreement with a large pharma company, our strong pace of new business wins and ongoing growth with other large accounts, we expect organic revenue, earnings and cash flow growth in 2015 as well as strong revenue and earnings contribution from our planned acquisition of CLS.
Lionbridge provided an outlook for Q4 of 2014 with estimated revenue of $120-123�million.
Lionbridge management will conduct a conference call at 9:00 a.m. ET this morning to discuss financial performance for the quarter, the CLS acquisition and other matters, including matters related to its future performance. To participate, callers within the United States can dial 800-779-6841 and international callers can dial 630-395-0427. The pass code for the call is Lionbridge. The conference call will also be available live via this link.

Non-GAAP Financial Measures
In this release, the Companys adjusted earnings and adjusted earnings per share are not presented in accordance with generally accepted accounting principles (GAAP)�and are not intended to be used in lieu of GAAP presentations of results of operations. These measures are presented because management believes they provide additional information to investors with respect to the performance of our fundamental business activities. Adjusted earnings and Adjusted Earnings per Share (EPS) are Non-GAAP financial measures and should not be viewed as alternatives to GAAP measures of performance. Management believes the most directly comparable GAAP financial measure for these measures are net income and diluted net income per share and has provided a reconciliation of GAAP net income to adjusted earnings and adjusted earnings per share at the end of this release.
About Lionbridge
Lionbridge enables more than 800 world-leading brands to increase international market share, speed adoption of products and effectively engage their customers in local markets worldwide. Using our innovative cloud technology platforms and our global crowd of more than 100,000 professional cloud workers, we provide translation, online marketing, global content management and application testing solutions that ensure global brand consistency, local relevancy and technical usability across all touch points of the customer lifecycle. Based in Waltham, Mass., Lionbridge maintains solution centers in 26 countries. To learn more, visit http://www.lionbridge.com.
Forward Looking Statements.
This press release contains forward-looking statements that involve risks and uncertainties, including anticipated customer demand for the Companys services, expected financial performance, expected revenue and profit growth, and the momentum, pace and strengthening of such growth in FY 2015 and Q4 of 2014 as well as the timing of the CLS acquisition and the anticipated benefits of the combined companies. These forward-looking statements reflect managements current views and Lionbridge does not undertake to update any of these forward-looking statements to reflect a change in its views or events or circumstances that occur after the date hereof except as required by law. Lionbridges actual experiences, actions, financial and operating results may differ materially from those discussed in the forward-looking statements. Factors that might cause such a difference include Lionbridges ability to provide and maintain high quality services at a competitive price and related customer satisfaction with such service delivery; the loss of or reduction in demand from one or more major client or customer, which would materially affect Lionbridges business; reorganization or restructuring initiatives of one or more major clients or customers, which may impact such customers demand or requirements for Lionbridges services; Lionbridges ability to expand its relationships with existing clients, including by offering its expanded range of services to existing customers; Lionbridges ability to broaden its client base; the Companys dependence on clients product releases, production schedules and procurement strategies to generate revenues; the anticipated benefits of expansion of global language workflow technologies; the anticipated growth of its OnDemand, and digital marketing service offerings; the impact of competing technologies and platforms on the Companys existing customer relationships and ability to secure new customers; the ability of Lionbridge to realize the expected benefits of its technology initiatives and acquisitions, and the timing of the realization of such benefits; errors, interruptions or delays in cloud-based technology; breaches of security measures; the termination of customer contracts or engagements prior to the end of their term; the size, timing and recognition of revenue from clients; the ability of Lionbridge to integrate acquisitions, including CLS and expand its customer relationships and the timing and success of such activities; the impact of foreign currency fluctuations on revenue, margins, costs, operating results and profitability and the Companys ability to successfully manage this exposure through hedge instruments and other strategies; the portion of the Companys service engagements that are subject to the impact of foreign currency fluctuations; continued uncertainty and volatility in global economic conditions that could negatively affect demand for the Companys services and technologies; reduced demand for the Companys services that adversely impacts Lionbridges future revenues, cash flows, results of operations and financial condition; Lionbridges ability to perform services in lower cost operational locations and the timing of its transfer of service execution to such locations, and customer acceptance of service execution in such locations; risks associated with conducting business outside of the United States, including compliance with changing and potentially conflicting laws and regulations and expenses and delays associated with any such activities; longer collection cycles in particular jurisdictions; risks associated with competition; Lionbridges ability to forecast revenue, profitability, technology adoption, customer demand and operating results; changes in tax rates applicable to the Company and changes to the interpretations of applicable tax rates; changes in interpretation of statutory and regulatory positions by international tax authorities in countries in which Lionbridge conducts business; changes in interpretation of employment and tax positions by U.S. state and federal authorities; the failure of Lionbridge to keep pace with technological changes or changing customer needs; the risk of claims by third parties of intellectual property claims; the ability of Lionbridge to respond to fluctuations in the complexity, timing and mix of services required by customers; and Lionbridge being held liable for defects or errors resulting from its services or technologies; For a more detailed description of the risk factors associated with Lionbridge, please refer to the Companys Annual Report on Form 10-K for the year ended December�31, 2013 and subsequent filings with the SEC (copies of which may be accessed through the SECs website at http://www.sec.gov.


LIONBRIDGE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)



�
Three Months Ended�
�September 30,
�
Nine Months Ended�
�September 30,
(In thousands, except per share amounts)
2014
�
2013
�
2014
�
2013
Revenue
$
120,191

�
$
124,647

�
$
370,934

�
$
361,724

Operating expenses:
�
�
�
�
�
�
�
Cost of revenue (exclusive of depreciation and amortization included below)
80,608

�
83,088

�
253,559

�
249,223

Sales and marketing
9,685

�
8,725

�
29,369

�
26,997

General and administrative
19,868

�
20,574

�
60,587

�
59,243

Research and development
1,698

�
1,653

�
5,194

�
5,128

Depreciation and amortization
2,033

�
1,866

�
5,771

�
5,513

Amortization of acquisition-related intangible assets
842

�
828

�
2,453

�
2,484

Restructuring, impairment and other charges
611

�
1,363

�
1,827

�
3,384

Total operating expenses
115,345

�
118,097

�
358,760

�
351,972

Income from operations
4,846

�
6,550

�
12,174

�
9,752

Interest expense:
�
�
�
�
�
�
�
Interest on outstanding debt
164

�
213

�
413

�
660

Amortization of deferred financing charges
25

�
25

�
79

�
75

Interest income
9

�
41

�
59

�
80

Other expense (income), net
(42
)
�
66

�
(153
)
�
950

Income before income taxes
4,708

�
6,287

�
11,894

�
8,147

Provision for income taxes
1,066

�
1,273

�
2,580

�
2,636

Net income
$
3,642

�
$
5,014

�
$
9,314

�
$
5,511

�
�
�
�
�
�
�
�
Net income per share of common stock:
�
�
�
�
�
�
�
Basic
$
0.06

�
$
0.08

�
$
0.15

�
$
0.09

Diluted
$
0.06

�
$
0.08

�
$
0.15

�
$
0.09

Weighted average number of common shares outstanding:
�
�
�
�
�
�
�
Basic
60,012

�
59,523

�
60,263

�
60,461

Diluted
62,646

�
61,451

�
63,070

�
62,006




LIONBRIDGE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)


(In thousands)
September 30,�
�2014
�
December 31,�
�2013
ASSETS
�
�
�
Current assets:
�
�
�
Cash and cash equivalents
$
31,790

�
$
38,867

Accounts receivable, net of allowance of $250 at September�30, 2014 and December�31, 2013
70,456

�
70,431

Unbilled receivables
27,816

�
19,498

Other current assets
12,742

�
12,938

Total current assets
142,804

�
141,734

Property and equipment, net
22,804

�
20,968

Goodwill
20,579

�
19,595

Acquisition-related intangible assets, net
11,597

�
13,226

Other assets
4,661

�
5,487

Total assets
$
202,445

�
$
201,010

LIABILITIES AND STOCKHOLDERS EQUITY
�
�
�
Current liabilities:
�
�
�
Accounts payable
$
22,131

�
$
21,784

Accrued compensation and benefits
18,884

�
18,183

Accrued outsourcing
10,579

�
12,579

Accrued restructuring
1,061

�
1,201

Income taxes payable
2,169

�
2,047

Accrued expenses and other current liabilities
9,458

�
11,155

Deferred revenue
9,327

�
10,583

Total current liabilities
73,609

�
77,532

Long-term debt
27,000

�
27,000

Deferred income taxes, long-term
913

�
913

Other long-term liabilities
12,674

�
13,172

Total liabilities
114,196

�
118,617

Commitments and contingencies

�

Stockholders equity:
�
�
�
Preferred stock


�


Common stock
638

�
637

Additional paid-in capital
271,592

�
273,411

Accumulated deficit
(202,690
)
�
(212,004
)
Accumulated other comprehensive income
18,709

�
20,349

Total stockholders equity
88,249

�
82,393

Total liabilities and stockholders equity
$
202,445

�
$
201,010










Reconciliation of GAAP Net Income to Non-GAAP Adjusted Earnings (Unaudited)
Comparison to Three and Nine Months Ended September�30, 2014 and 2013

�
Three Months Ended�
�September 30,
�
Nine Months Ended�
�September 30,
(In thousands, except per share amounts)
2014
�
2013
�
2014
�
2013
Net income
$
3,642

�
$
5,014

�
$
9,314

�
$
5,511

Amortization of acquisition-related intangible assets
842

�
828

�
2,453

�
2,484

Stock-based compensation
2,008

�
1,651

�
5,814

�
4,961

Restructuring, impairment and other charges
611

�
1,363

�
1,827

�
3,384

Adjusted earnings
$
7,103

�
$
8,856

�
$
19,408

�
$
16,340

Fully diluted weighted-average number of common shares outstanding
62,646

�
61,451

�
63,070

�
62,006

Adjusted diluted earnings per share
0.11

�
0.14

�
0.31

�
0.26





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