Forward-Looking Statements

In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements. The forward-looking statements are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "anticipate," "intend," "estimate," "forecast," "project," "should" and similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, among others, statements about our future performance, the continuation of historical trends, the sufficiency of our sources of capital for future needs, the effects of acquisitions and the expected impact of recently issued accounting pronouncements. The forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to those discussed in

Management Overview

Lawson Software, Inc. is a global provider of enterprise software. We provide business application software, consulting and maintenance to customers primarily in the services sector, trade industries and manufacturing/distribution sectors. In the manufacturing sector we serve both process manufacturing and discrete manufacturing. In the service sector we serve both asset-intensive and labor-intensive services. We currently operate as one business segment focused on broad sectors. We specialize in specific markets including healthcare, public sector in the U.S., food, fashion, wholesale distribution, equipment services and rental, and manufacturing (our targeted industries). Our software includes enterprise financial management, human capital management, business intelligence, asset management, enterprise performance management, supply chain management, service management, manufacturing operations, business project management and industry-tailored applications. Our applications help automate and integrate critical business processes, which enables our customers to collaborate with their partners, suppliers and employees. We support our customers' use of our applications through consulting services which primarily help our customers implement their Lawson applications,

and through our maintenance program that provides on-going support and product updates for our customers' continued use of our applications.

Our enterprise software solutions focus on providing competitive advantages and business flexibility to our customers. Lawson's solutions fall within three main product lines and include related maintenance and consulting services. Our product lines are referred to as "Lawson S3 Enterprise Management System," "Lawson M3 Enterprise Management System," and "Lawson Strategic Human Capital Management" with many of the solutions in each product line having broad, cross-industry application. Our S3 solutions consist of business applications designed for services oriented industries. Our M3 solutions consist of applications that are geared for manufacturing, distribution and trade businesses who face resource constraints and whose processes are often complex and industry-specific, and our Strategic Human Capital Management applications provide solutions for customers to strategically manage their workforce.

The financial market crisis has continued to disrupt credit and equity markets worldwide and has lead to continued weakening in the global economic environment during the third quarter of fiscal 2009. The affect of the continued weakening of the global economy and the fallout from the financial market crisis has been a challenge for our license contracting and demand for our services in the third quarter and will continue to be so for the remainder of our fiscal 2009. Beginning in the second quarter of fiscal 2009 some prospective and existing customers began canceling, delaying or downsizing software purchases and implementation projects because of the adverse economy and their internal budget constraints. The adverse economic environment has also intensified the difficulty of forecasting software license and consulting services revenue. A decrease in licensing activity will typically lead to a decrease in services revenue in the same or subsequent quarters. Lower licensing activity will also lower new maintenance revenue since maintenance fees for new product licenses are based on the amount of associated license fees. In response to this challenging economic environment, we have taken actions in November 2008 and February 2009 to reduce our headcount and lower expenses and are considering possible future actions to reduce our operating costs. We continue to monitor the economic situation, the business environment and our outlook for our full fiscal year.

Revenues for the three and nine months ended February 28, 2009 were $173.8 million and $571.1 million, respectively, down 18.3% and 7.7% compared to $212.9 million and $618.9 million in the similar periods of fiscal 2008. The continued global economic downturn has significantly affected software and information technology spending and as a result has negatively impacted our revenues. Revenues in all our geographic regions were down for the third quarter of fiscal 2009 compared to the third quarter of fiscal 2008. For the comparable nine month periods, revenues in the Americas and EMEA were down while our APAC region's revenues were flat. Our EMEA region experienced the largest decreases of 34.7% and 16.9%, respectively, for the comparable three and nine month periods of fiscal 2009 and 2008. Maintenance revenues for the third quarter of fiscal 2009 were up 1.4% over the third quarter of last year and increased 6.9% in the nine month period of fiscal 2009 compared to fiscal 2008. These increases were offset by a 22.2% and 15.9% decrease in our third quarter and year-to-date fiscal 2009 license fees revenues primarily relating to a decrease in M3 sales in our EMEA region. In addition, our consulting revenues decreased 34.4% and 18.0% in the third quarter and first nine months of fiscal 2009 compared to the similar periods last year. The Americas accounted for approximately 59.6% of our total revenues in the third quarter of fiscal 2009. Our EMEA region accounted for 36.5% of total revenues in the third quarter of fiscal 2009 with the remaining 3.9% originating in APAC. In the fiscal 2009 year-to-date period, the Americas, EMEA and APAC regions accounted for 56.5%, 39.4% and 4.1% of total revenues, respectively. Total gross margin as a percent of revenues for the third quarter of fiscal 2009 increased to 52.5% compared to 52.0% in the third quarter of fiscal 2008 and improved to 51.9% in the first nine months of fiscal 2009 as compared to 51.0% in the similar period last year. We experienced improved margins on license fees revenues and maintenance which were offset in part by significantly lower consulting margins. Operating expenses decreased $17.9 million, or 19.0%, in the third quarter of fiscal 2009 from the third quarter of last year. For the first nine months of fiscal 2009, operating expenses decreased $17.6 million, or 6.3%, as compared to the similar period last year. As a percent of revenues, operating expenses for the third quarter improved to 43.9% compared to 44.3% in last year's third quarter and were up slightly at 46.3% in the nine month period of fiscal 2009 compared to 45.6% in the comparable period of fiscal 2008.

Our results for the three and nine months ended February 28, 2009 include restructuring charges of approximately $3.5 million and $11.0 million, respectively, primarily relating to the cost reduction actions we announced on November 18, 2008. In response to the continued uncertainty in the global economic environment, we implemented a restructuring plan over the second and third quarter of fiscal 2009 that included the elimination of approximately 300 employees, or 7.0% of our global workforce, and the closing of two of our leased facilities. See Note 3, Restructuring,in Notes to Condensed Consolidated Financial Statements of this Form 10-Q, for more information. In addition, we have reduced our discretionary spending while preserving targeted investments that we believe will enable Lawson's long-term growth and increase our operational efficiencies.

A significant portion of our business is in currencies other than the U.S. dollar, particularly the Swedish Kroner (SEK) and the Euro. Our revenues and operating expenses are affected by fluctuations in applicable foreign currency exchange rates. Since the acquisition of Intentia in April 2006, the U.S. dollar has generally weakened against the SEK and Euro. However, during fiscal 2009, mainly the second quarter, foreign currency exchange rates were extremely volatile and the U.S. dollar strengthened significantly against most major currencies. U.S. dollar exchange rates improved 11.0% relative to the SEK during the third quarter of fiscal 2009. While the Euro exchange rates were relatively flat compared to the second quarter of fiscal 2009, fluctuations during the quarter affected our third quarter results. Year-to-date the U.S. dollar exchange rates relative to the SEK and Euro have improved 50.3% and 22.5%, respectively. Improvements in the U.S. dollar to SEK and Euro exchange rates have the effect of reducing our revenues but also reducing our operating expenses denominated in currencies other the U.S. dollar.

The strengthening of the U.S. dollar during our third quarter ended February 28, 2009, had a negative impact on our revenues of approximately $20.1 million, or 8.5%, of the decline in revenues, as compared to the third quarter last year. This primarily affected our EMEA region resulting in a negative impact on EMEA's license fee, maintenance and consulting revenues of 13.8%, 20.6% and 12.5%, respectively, as compared to the third quarter last year. Excluding the effect of currency fluctuations, our total revenues were down approximately $18.9 million, or 9.8%, as compared to the third quarter last year. Together, these resulted in a total decrease in revenues during the third quarter of $39.0 million as compared to the similar period last year. The currency fluctuations also had the effect of decreasing our total costs and operating expenses, as reported in U.S. dollars, by approximately $20.6 million, this is in addition to a decrease in total expenses of $17.0 million excluding the effect of currency fluctuations resulting in a total reported decrease of $37.6 million in the third quarter of fiscal 2009 as compared to the similar period last year. Foreign currency exchange rates had a minimal impact on our third quarter net income.

Year-to-date fiscal 2009, currency fluctuations had a negative impact of approximately $21.1 million on revenues or 3.2% of the decline in revenues for the nine months ended February 28, 2009. Excluding the effect of currency fluctuations, our total revenues decreased approximately $26.7 million, or 4.5%, for the nine months ended February 28, 2009, as compared to the similar period last year. These decreases account for the total decrease in revenues of $47.8 million in the comparable nine month periods of fiscal 2009 and 2008. Total costs and expenses decreased by approximately $20.8 million as a result of currency fluctuations and on a constant currency basis, total expenses decreased $25.3 million for a total decrease of approximately $46.1 million for the nine months ended February 28, 2009, as compared to the similar period last year. The effect of foreign currency on basic and diluted earnings for the nine months ended February 28, 2009, was less than $0.01 per share.

For financial results denominated in a currency other than the U.S. Dollar, we calculate constant currency changes by converting the prior period financial results at the exchange rates applicable to current periods. We believe these constant currency changes provide additional insight into our business performance during the applicable reporting periods exclusive of the effects of foreign currency exchange rate fluctuations, and should be considered in addition to, and not as a substitute for the actual changes in revenues, expenses, income or other financial measures presented in this Quarterly Report on Form 10-Q.

During the second quarter of fiscal 2009 the price of our common stock was significantly impacted by the volatility in the U.S. equity markets. The price of Lawson's common stock reached a low of $2.71 during the second quarter of fiscal 2009; a condition that was not sustained for an extended period of time as Lawson's common stock closed below $3.00 per share for only two consecutive days in mid-November as the financial crisis intensified. This volatility has continued during the third quarter of fiscal 2009 and the price of Lawson's common stock traded at prices between $3.33 and $5.31 during the third quarter and closed above $4.00 per share on most trading days during the third quarter. Our common stock price closed at $3.84 on February 27, 2009. Accordingly, our market capitalization as of February 28, 2009, the end of our third quarter of fiscal 2009, was $627.3 million exceeding the carrying value of our consolidated net assets of $549.7 million by $77.6 million. Since February 28, 2009 our common stock has traded between $3.40 and $4.75, resulting in a level of market capitalization such that we continue to believe there is no indication of potential goodwill impairment requiring interim testing under SFAS 142. See Note 6, Goodwill and Intangible Assets, in Notes to Condensed Consolidated Financial Statements of this Form 10-Q, for more information. However, due to the ongoing uncertainty in market conditions, which may negatively impact our market capitalization, we will continue to monitor and evaluate the carrying value of our goodwill.

Critical Accounting Policies and Estimates

Our critical accounting policies are described in Part II - Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended May 31, 2008.

These policies reflect those areas that require more significant judgments, and use of estimates and assumptions in the preparation of our financial statements and include the following:

† Revenue Recognition

† Allowance for Doubtful Accounts

† Sales Returns and Allowances

† Valuation of Long-Lived and Intangible Assets and Goodwill

† Income Taxes

† Contingencies

† Litigation reserves

† Stock-Based Compensation

† Marketable Securities and Other Investments

With the July 7, 2008 sale of our auction rate securities portfolio, we no longer consider our accounting policies related to Marketable Securities and Other Investments as critical. Other than this change, there have been no material changes to our critical accounting policies and estimates as disclosed in our Annual Report on Form 10-K.

Results of Operations

We generated net income of $7.4 million in the third quarter of fiscal 2009 as compared to net income of $0.7 million in the third quarter of fiscal 2008. Net income per diluted share was $0.04 in the third quarter of fiscal 2009 compared to $0.00 per diluted share in the third quarter last year. For the first nine months of fiscal 2009 we reported net income of $9.1 million or $0.05 per diluted share, as compared to $10.0 million, or $0.06 per share, in the similar period last year.

The following table sets forth certain line items in our Condensed Consolidated Statements of Operations as a percentage of total revenues for the periods indicated, the period-over-period percent actual increase (decrease) and the period-over-period percent increase (decrease) on a constant currency basis:

                                                                                                                                       Year-to-Date
                                                                     Quarterly Change                                                     Change
                                      Percentage of                  Fiscal 2009 vs.                  Percentage of                  Fiscal 2009 vs.
                                      Total Revenue                        2008                       Total Revenue                        2008
                                    Three Months Ended                Percent Change                Nine Months Ended                 Percent Change
                                                                              Constant                                                        Constant
                          February 28, 2009    February 29, 2008    Actual    Currency    February 28, 2009    February 29, 2008    Actual    Currency
Revenues:
License fees                           14.3 %               15.0 %   (22.2 )%    (13.7 )%              13.3 %               14.6 %   (15.9 )%    (12.1 )%
Maintenance                            49.4                 39.8       1.4         8.4                 46.4                 40.0       6.9         9.2
Consulting                             36.3                 45.2     (34.4 )     (25.6 )               40.3                 45.4     (18.0 )     (14.3 )
Total revenues                        100.0                100.0     (18.3 )      (9.8 )              100.0                100.0      (7.7 )      (4.5 )

Cost of revenues:
Cost of license fees                    2.8                  3.2     (28.0 )     (23.2 )                2.9                  3.3     (16.3 )     (15.9 )
Cost of maintenance                     8.5                  7.7      (9.6 )       0.7                  8.6                  7.9       0.4         3.7
Cost of consulting                     36.2                 37.1     (20.5 )      (9.5 )               36.6                 37.8     (10.8 )      (6.8 )
Total cost of revenues                 47.5                 48.0     (19.2 )      (8.8 )               48.1                 49.0      (9.4 )      (5.7 )
Gross profit                           52.5                 52.0     (17.5 )     (10.7 )               51.9                 51.0      (6.1 )      (3.3 )

Operating expenses:
Research and
development                            10.5                 10.4     (18.1 )      (8.3 )               11.0                  9.9       2.3         7.2
Sales and marketing                    19.6                 22.2     (27.6 )     (20.7 )               21.7                 22.3     (10.2 )      (7.2 )
General and
administrative                         10.7                 10.0     (13.3 )      (4.7 )               10.5                 11.8     (17.8 )     (16.4 )
Restructuring                           2.0                    -       *NM         *NM                  1.9                    -       *NM         *NM
Amortization of
acquired intangibles                    1.1                  1.7     (46.5 )     (37.4 )                1.2                  1.6     (31.9 )     (28.9 )
Total operating
expenses                               43.9                 44.3     (19.0 )     (10.5 )               46.3                 45.6      (6.3 )      (3.2 )

Operating income                        8.6                  7.7      (9.1 )     (11.7 )                5.6                  5.4      (4.9 )      (4.1 )
Total other income
(expense), net                         (0.5 )               (2.7 )   (86.0 )    (113.4 )                0.1                 (0.3 )     *NM         *NM
Income before income
taxes                                   8.1                  5.0      33.0        30.1                  5.7                  5.1       2.0         4.9
Provision for income
taxes                                   3.9                  4.7     (32.0 )     (30.0 )                4.1                  3.5       7.4         9.1
Net income                              4.2 %                0.3 %   916.1 %     495.4 %                1.6 %                1.6 %    (9.6 )%     (4.5 )%

The discussion that follows relates to our results of operations for the comparable three and nine months periods ended February 28, 2009 and February 29, 2008 and should be read in conjunction with the accompanying unaudited Condensed Consolidated Financials Statements and related notes and with the information presented in the above table. This analysis addresses the actual changes in the current quarter and year-to-date periods' results compared to the

similar periods last year. For changes excluding the impact of foreign currency fluctuations, see the constant currency percentages in the above table.

Revenues



                       Three Months Ended             Quarterly Change
                  February 28,     February 29,     Fiscal 2009 vs. 2008
(in thousands)        2009             2008          Dollars       Percent

Revenues:
License fees     $       24,881   $       31,984   $     (7,103 )    (22.2 )%
Maintenance              85,806           84,630          1,176        1.4
Consulting               63,161           96,273        (33,112 )    (34.4 )
Total revenues   $      173,848   $      212,887   $    (39,039 )    (18.3 )%

                        Nine Months Ended            Year-to-Date Change
                  February 28,     February 29,     Fiscal 2009 vs. 2008
(in thousands)        2009             2008          Dollars       Percent

Revenues:
License fees     $       76,067   $       90,434   $    (14,367 )    (15.9 )%
Maintenance             264,998          247,849         17,149        6.9
Consulting              230,056          280,614        (50,558 )    (18.0 )
Total revenues   $      571,121   $      618,897   $    (47,776 )     (7.7 )%

Total Revenues. We generate revenues from licensing software, providing maintenance on licensed products and providing consulting services. We generally utilize written contracts as the means to establish the terms and conditions by which our products, maintenance and consulting services are sold to our customers. As our maintenance and consulting services are primarily attributable to our licensed products, growth in our maintenance and consulting services is generally tied to the level of our license contracting activity.

We recognize revenues pursuant to specific and detailed guidelines applicable to the software industry. License fees revenues from end-users are generally recognized when the software product has been shipped provided a non-cancelable license agreement has been signed; there are no uncertainties surrounding product acceptance; the fees are fixed or determinable and collection of the related receivable is considered probable. If the fee due from the customer is not fixed or determinable, or includes extended payment terms, revenue is deferred and recognized as payments become due and all other conditions for revenue recognition have been satisfied. Revenues from customer maintenance and support contracts are deferred and recognized ratably over the term of the agreements. Revenues from consulting services (including training and implementation services) are recognized as services are provided to customers. See Critical Accounting Policies and Estimate - Revenue Recognition, in our Annual Report on Form 10-K for the year ended May 31, 2008, for a more complete description of our revenue recognition policy.

Third quarter fiscal 2009 total revenues decreased 18.3% to $173.8 million as compared to $212.9 million in the third quarter of fiscal 2008. The decrease was driven by a 34.4% decrease in consulting revenues and a 22.2% decrease in license fees. These decreases were partially offset by a 1.4% increase in our maintenance revenues. For the nine month period ended February 28, 2009, total revenues decreased 7.7% to $571.1 million as compared to $618.9 million in the similar period last year. The decrease was driven by an 18.0% decrease in consulting revenues and a 15.9% decrease in license fees, which were partially offset by a 6.9% increase in our maintenance revenues.

License Fees. Our license fees primarily consist of fees resulting from products licensed to customers on a perpetual basis. Product license fees result from a customer's licensing of a given software product for the first time or with a customer's licensing of additional users for previously licensed products.

License fees revenues for the third quarter of fiscal 2009 decreased $7.1 million, or 22.2%, compared to the third quarter of fiscal 2008. The continued global economic downturn negatively impacted our license fees revenues in the third quarter primarily in our EMEA region which was down approximately $6.6 million compared to the third quarter of last year. This related to decreased sales of our M3 solutions in manufacturing related verticals. License fees revenues in our APAC region were also down $1.0 million compared to the third quarter of last year, primarily related to decreased M3 licensing. Our Americas region's license fees revenues were up $0.5 million in the third quarter as compared to the third

quarter of last year as increased license revenues in our healthcare and equipment services management and rental verticals offset decreased license revenues related to other service industries. The total number of licensing transactions decreased in the third quarter of fiscal 2009 by 83 to 234 as compared to 317 in the third quarter of fiscal 2008. The number of licensing transactions with new customers in the current quarter was 22 compared to 27 in last year's third quarter. In the third quarter of fiscal 2009, we entered into nine license transactions between $0.5 million and $1.0 million compared to 13 in the similar period last year. We entered into one licensing transaction greater than $1.0 million in the current quarter compared to two in the third quarter of fiscal 2008.

For the first nine months of fiscal 2009, license fees revenues decreased $14.4 million, or 15.9%, compared to the first nine months of fiscal 2008. As previously discussed, the weakening global economic environment negatively affected our year-to-date license fees revenues. This decrease in license fees revenues was experienced in all of our geographies with EMEA, the Americas, and APAC down approximately $10.8 million, $2.4 million and $1.1 million, respectively. The EMEA decrease of 29.1% was due to lower sales of our M3 solutions in manufacturing related verticals. The America's decrease was primarily related to lower M3 license fees in our manufacturing vertical, . . .