Counting the Lehman’s at Lawson…

October 14, 2008

Late Friday, Lawson Software (LWSN) filed this 10Q and one of the things that jumped out at me was the number of times that Lehman Brothers was mentioned in the filing: 91 times. Compare that to the 10K that Lawson filed back on July 11 when Lehman was mentioned just twice.

What changed over the past three months? Well, the Lehman bankruptcy to be sure. As we’ve footnoted before, there’s lots of companies suddenly disclosing their ties to Lehman. Lawson details the relationship in two footnotes in the filing. Here’s a snippet from #16:

In April 2007, we issued $240.0 million of our 2.5% senior convertible notes. Lehman Brothers was one of the original purchasers of these notes…Lehman Holding is a guarantor of Lehman OTC’s obligations under the convertible note hedge transaction. The bankruptcy filing of Lehman Holding, as guarantor under the convertible note hedge transaction, and the bankruptcy filing by Lehman OTC, were events of default under the hedge transaction and warrant agreements. As a result of these defaults we are exercising our rights to terminate both the hedge transaction and the warrant transaction. We are in the process of evaluating the impact that our termination of the hedge transaction and warrant may have on our financial statements in future periods.

While the filing says it does not expect the Lehman situation to have a “material adverse impact” on the company, it also notes that it is still evaluating the situation. To provide additional context, the filing also includes several exhibits — letters between Lawson and Lehman — that spell out additional details of the transaction.

On Thursday, Lawson will be holding its annual meeting in St. Paul and in a somewhat innovative twist, is allowing investors to participate by phone instead of having to show up in person. One has to wonder how many investors will be asking about Lehman.

One final note about Lawson and Lehman. There’s a series of comment letters dating back to early 2006 where the SEC is asking Lawson to provide additional details about its dealings with Lehman and where Lawson seems to be pushing back.

Image Source: Lawson Software

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