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Press Release - July 25, 2006

Lightbridge Announces Second Quarter 2006 Financial Results

Authorize.Net Revenue Grows 29% Over Prior Year; Cash Balance, Excluding Merchant Reserves, Totals $89.7 Million

BURLINGTON, MA, Jul 25, 2006 (MARKET WIRE via COMTEX News Network) — Lightbridge, Inc. (NASDAQ: LTBG), a leading e-commerce, analytics and decisioning company, today reported financial results for the quarter ended June 30, 2006.

Results

Revenue from continuing operations for the second quarter of 2006 was $25.2 million compared to $26.6 million for the second quarter of 2005. This represents a decrease of 5% compared to the prior year due to lower revenue from Telecom Decisioning Services (TDS) clients. Authorize.Net revenue for the second quarter of 2006 was a record $13.9 million, an increase of 29% over the $10.7 million reported in the second quarter of 2005.

Income from continuing operations was $854,000, or $0.03 per fully diluted share, for the second quarter of 2006, versus $2.4 million, or $0.09 per fully diluted share, reported for the second quarter of 2005.

Second quarter 2006 results included share-based compensation expense of approximately $1.2 million reflecting the adoption of SFAS 123(R), restructuring and related asset impairment charges of $937,000, and a patent litigation settlement of $1.5 million. The restructuring and related asset impairment charges were attributable to the planned closure of the Liverpool, Nova Scotia contact center, and the patent litigation settlement was with NetMoneyIN, Inc., both previously announced on May 24, 2006. There were no significant comparative charges in the second quarter of 2005. For the second quarter of 2006, income from continuing operations before share-based compensation expense, restructuring and related asset impairment charges and the patent litigation settlement (a non-GAAP financial measure) was $4.4 million, or $0.16 per fully diluted share. A detailed reconciliation of the GAAP and non-GAAP measures is included at the end of this release.

Total revenue from continuing operations for the first six months of 2006 was $51.8 million compared to $53.7 million for the first six months of 2005. Income from continuing operations for the first six months of 2006 was $2.0 million, or $0.07 per fully diluted share, versus income from continuing operations of $3.5 million, or $0.13 per fully diluted share, for the first six months of 2005. The six months ended June 30, 2006 results include share-based compensation expense of $2.8 million, restructuring and asset impairment charges of $2.3 million and the above-mentioned patent litigation settlement of $1.5 million. Included in the first six months of 2005 was $376,000 in restructuring charges.

For the first six months of 2006, income from continuing operations before share-based compensation expense, restructuring and related asset impairment charges and the patent litigation settlement (a non-GAAP financial measure) was $8.6 million, or $0.31 per fully diluted share. A detailed reconciliation of the GAAP and non-GAAP measures is included at the end of this release.

Business Perspective

"Lightbridge had a solid second quarter, with Authorize.Net enjoying continued strong year over year financial performance," said Bob Donahue, president and CEO. "Authorize.Net generated record revenue, transaction volumes, dollars processed and net new merchants in the second quarter which reflects the strength of this business."

Donahue continued, "Telecom Decisioning achieved major milestones in product launches and rollouts in the second quarter. We extended a contract with one of our large clients, Alltel, which we expect to transition to our EDM platform over the next few months. Also, we continued our diligent efforts to control costs and took quick measures to restructure our contact center operations following our announcement of T-Mobile's plan to consolidate its contact center vendors."

Authorize.Net Metrics

  • Processed a record $7.4 billion of merchant transactions in the second quarter, up 32% compared to the same period in 2005.
  • Processed a record 73.2 million transactions in the second quarter, a 25% increase over the comparable quarter last year.
  • Added a record 17,557 new merchants in the second quarter of 2006 with net new merchant additions totaling 8,016.
  • Active Merchants as of June 30, 2006 were a record 150,000, up 21% over the prior year.

Selected Highlights
  • Added to the Russell 3000 index.
  • Rolled out best in class Enhanced Disaster Recovery service to all TDS clients.
  • Announced a multi-year contract extension with Alltel.
  • Launched Enhanced Decision Management 3.0, a new platform that allows clients to run credit and risk strategies from their desktops.

Cash and Short-Term Investments At June 30, 2006, Lightbridge's cash and short-term investment position was $98.2 million, compared to $84.8 million at December 31, 2005. This includes funds held for merchants of $8.5 million compared to $7.1 million at December 31, 2005.

Company Performance versus Previous Guidance - Second Quarter 2006

Lightbridge's revenue of $25.2 million was within the Company's guidance of $24.8 to $26.5 million for the second quarter of 2006. The Company's guidance included revenue expectations for Authorize.Net of $13.8 to $14.5 million with actual results for this business reported at $13.9 million.

Lightbridge's earnings per share of $0.03 was at the midpoint of the guidance issued on May 24, 2006 of $(0.01) to $0.07 for the second quarter of 2006.

Business Outlook

Guidance for the third quarter of 2006 is only current as of today, Tuesday, July 25, 2006. The Company undertakes no obligation to update its estimates.
  • The Company anticipates revenue for the third quarter of 2006 to be in the range of $22.4 million to $24.2 million, reflecting reduced T-Mobile revenue expectations. Authorize.Net expects to contribute in the range of $13.9 to $14.7 million.
  • The Company anticipates net income per fully diluted share for the third quarter of 2006 to be in the range of $0.03 to $0.11. The Company anticipates share-based compensation expense in the third quarter of 2006 associated with the expensing of stock options in accordance with SFAS 123(R) in the range of $700,000 to $900,000, or $0.02 to $0.03 per fully diluted share. The Company uses the modified prospective method to report compensation charges associated with the expensing of stock options. The Company expects to record restructuring charges in the third quarter related to the closure of the Liverpool, Nova Scotia facility in the range of $500,000 to $700,000, or approximately $0.02 per fully diluted share.
  • For the third quarter of 2006, net income per fully diluted share before share-based compensation expense and restructuring charges related to the closure of the Liverpool, Nova Scotia contact center (a non-GAAP financial measure) is anticipated to be in the range of $0.08 to $0.16.

Non-GAAP Measures

In addition to reporting financial results in accordance with generally accepted accounting principles, (GAAP), the Company has provided non-GAAP financial measures which it believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. Such measures exclude share-based compensation expense, restructuring and related asset impairment charges and the patent litigation settlement in the second quarter of 2006. The Company uses the modified prospective method to report compensation charges associated with the expensing of stock options. Results for prior periods have not been adjusted to reflect non-GAAP financial performance. Management believes these non-GAAP financial measures assist in providing a more complete understanding of the Company's underlying operational results and trends and in allowing for a more comparable presentation of results in the reported period to those in prior periods that did not include SFAS 123(R) share-based compensation. Management uses these measures along with their corresponding GAAP financial measures to help manage the Company's business and to help evaluate its performance compared to the marketplace. However, the presentation of non-GAAP financial measures is not meant to be considered in isolation or as superior to or as a substitute for financial information provided in accordance with GAAP. The non-GAAP financial measures used by the Company may be calculated differently from, and, therefore, may not be comparable to, similarly titled measures used by other companies. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to the comparable GAAP results, contained in the attached exhibits and found on the Company's website at: www.lightbridge.com.

Conference Call Information

Lightbridge will conduct a conference call today, Tuesday, July 25, 2006 at 5:00 pm (ET) to discuss the information contained in this news release. Investors wishing to listen to a webcast of the conference call should link to the "Investor Relations" section of www.lightbridge.com at least 15 minutes prior to the broadcast and follow the instructions provided to assure the necessary audio applications are downloaded and installed. The call will be available online at the Company's website for one week. The call can also be accessed live over the phone by dialing 1-877-427-0636 or for international callers by dialing 973-935-8515. The replay will be available one hour after the call and can be accessed by dialing 877-519-4471 or for international callers by dialing 973-341-3080. The passcode number is 7548773. The replay will be available until Tuesday, August 8, 2006.

About Lightbridge

Lightbridge, Inc. (NASDAQ: LTBG) is a leading e-commerce, analytics and decisioning company that businesses trust to manage customer transactions. Lightbridge adds value to fraud screening, credit qualification, and payment authorization. Lightbridge solutions leverage intelligent automated systems and human expertise, delivered primarily through the efficiencies and cost savings of an outsourced business model. Businesses use Lightbridge to make smarter decisions, deliver better services, provide secure payments, reduce costs and enhance the lifetime value of their customers. For more information, visit www.lightbridge.com.

Note to Editors: LIGHTBRIDGE and AUTHORIZE.NET are registered trademarks, and the Lightbridge logo, EDM and Enhanced Decision Management are trademarks of Lightbridge, Inc. All other trademarks and registered trademarks are the properties of their respective owners.

Forward-looking Statements

Certain statements in this news release that are not historical facts, including, without limitation, those relating to the Company's expectations with respect to its EDM platform and efforts to control costs, the Company's belief that its presentation of non-GAAP financial measures is useful to investors, and the third quarter of 2006 financial guidance are forward-looking statements that involve risks and uncertainties. Such statements are based upon the current beliefs and expectations of the management of the Company. Actual results may vary materially from those contained in forward-looking statements based on a number of factors including, without limitation, (i) dependence on a limited number of clients, (ii) the Company's revenue concentration in the wireless telecommunications business and the declining subscriber growth rate in that business, (iii) continuing rapid change in the telecommunications industry, payment processing industry, and other markets in which the Company does business that may affect both the Company and its clients, (iv) current and future economic conditions generally and particularly in the telecommunications and payment processing industry, (v) uncertainties about the Company's ability to execute on, and about the impact on the Company's business and operations of, its objectives, plans or strategies as a result of potential technological, market or competitive factors, or the acquisition of Authorize.Net, (vi) the impact of compensation expense, restructuring and other charges on the Company's business and operations, (vii) integration, employee retention, recognition of cost and other benefits and revenue synergies, and other risks associated with acquisitions including the acquisition of Authorize.Net, (viii) the industry risks associated with Authorize.Net's business and operations including, without limitation, illegal or improper uses of Authorize.Net's payment system, unauthorized intrusions and attacks on Authorize.Net's payment system that may impair the operation of its payment systems, changes in or failures to comply with credit card association rules, governmental regulation and the application of existing laws to Authorize.Net's business and dependence on relationships with third party payment processors, and (ix) the factors disclosed in the Company's filings with the U.S. Securities and Exchange Commission including, without limitation, its 2005 Annual Report on Form 10-K, first quarter 2006 Quarterly Report on Form 10-Q, and other public filings. The Company undertakes no obligation to update any forward-looking statements.

Contact: Lynn Ricci Director, Investor & Media Relations Lightbridge, Inc. 781/359-4854 Contact via http://www.marketwire.com/mw/emailprcntct?id=707E92EAD12260FB

SOURCE: Lightbridge