EX-99.1 3 g10083exv99w1.htm EX-99.1 PRESS RELEASE ON OCTOBER 23, 2007 EX-99.1 PRESS RELEASE ON OCTOBER 23, 2007
 

     
Financial Contact:
  Dennis Story
 
  SVP and Chief Financial Officer
 
  678.597.7116 
 
  dstory@manh.com
 
    
Media Contact:
  Terrie O’Hanlon
 
  SVP and Chief Marketing Officer
 
  678.597.7120 
 
  tohanlon@manh.com
Manhattan Associates Reports Record 3rd Quarter Revenue and
Earnings
Company raises full year EPS guidance
ATLANTA — October 23, 2007 — Leading supply chain solutions provider Manhattan Associates, Inc. (NASDAQ: MANH), today reported record third quarter 2007 revenue and earnings and raised its Earnings Per Share (EPS) guidance for the year. Manhattan Associates’ third quarter GAAP diluted earnings per share were $0.29, a 53% increase over the third quarter of 2006 on revenue of $84.6 million, a 17% increase. On a non-GAAP basis, adjusted diluted earnings per share were $0.34, a 26% increase over the third quarter of 2006.
THIRD QUARTER FINANCIAL HIGHLIGHTS
Summarized highlights of the 2007 third quarter results, as compared to the 2006 third quarter, follow.
  •   Consolidated revenue increased 17% to $84.6 million. Excluding the impact of currency changes, revenue increased 16%.
  •   License revenue totaled $17.3 million, an increase of 14%.
  •   Services revenue totaled $58.4 million, increasing 14%.
  •   GAAP Operating income increased 25% to $10.6 million. Excluding the impact of currency changes, GAAP operating income increased 32%;
  •   Operating income, on a non-GAAP basis, increased 10% to $12.7 million. Excluding the impact of currency changes, operating income on a non-GAAP basis increased 15%.
  •   GAAP diluted earnings per share increased 53% to $0.29.
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Manhattan Associates Reports Record Third Quarter Revenue — page 2 of 6
  •   Adjusted diluted earnings per share increased 26% to $0.34 per share.
  •   Appreciation of the Rupee (the company has a major research and development center in India) and other currency changes negatively impacted GAAP and adjusted operating income by $0.6 million or $0.01 per share. The negative $0.01 impact of currency changes on operating results was offset by $0.02 of foreign exchange gains in Other Income. The combined net impact of currency appreciation and foreign exchange gains in the quarter for GAAP and Adjusted EPS results was an increase of $0.01 per diluted share.
  •   Cash Flow from Operations was $6.4 million, with Days Sales Outstanding of 80 days.
  •   Cash and Investments on Hand at September 30, 2007 was $82.0 million.
  •   The Company repurchased 809,680 common shares totaling $22.2 million at an average share price of $27.37 in the quarter.
  •   The Board of Directors approved the repurchase of up to $50.0 million of Manhattan Associates’ outstanding common stock. The Board of Directors also appointed two additional members: Pete Kight, Chairman and CEO of CheckFree Corporation, a leading provider of financial e-commerce solutions; and Dan Lautenbach, a 30-year veteran of technology solution companies, primarily IBM, where he ran global software sales.
YEAR-TO-DATE FINANCIAL HIGHLIGHTS
Summarized highlights of the first nine months of 2007, as compared to the first nine months of 2006, follow.
  •   Consolidated revenue increased 19% to $252.4 million. Excluding the impact of currency changes, revenue increased 17%.
  •   License revenue was $54.5 million, increasing 15%.
  •   Services revenue totaled $169.1 million, a 17% increase.
  •   GAAP operating income increased 41% to $31.5 million. Excluding the impact of currency changes, GAAP operating income increased 45%.
  •   On a non-GAAP basis, operating income increased 16% to $37.3 million. Excluding the impact of currency changes operating income on a non-GAAP basis increased 19%.
  •   GAAP diluted earnings per share increased 54% to $0.80.
  •   Adjusted diluted earnings per share, on a non-GAAP basis, increased 21% to $0.94.
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Manhattan Associates Reports Record Third Quarter Revenue — page 3 of 6
  •   Appreciation of the Rupee and other currency changes negatively impacted GAAP and adjusted operating income by $1.0 million, or $0.02 per share. The negative $1.0 million impact of currency changes on operating results was partially offset by $0.3 million of foreign exchange gains in Other Income. The combined net impact of currency appreciation and foreign exchange gains on year-to-date GAAP and Adjusted EPS results was a reduction of $0.02 per diluted share.
“The third quarter of 2007 marks our 12th consecutive quarter of double digit revenue growth,” said Pete Sinisgalli, President and CEO. “Each of our three regions contributed to our solid license revenue growth and was profitable in the quarter. Importantly, more than half of our third quarter license revenue came from new customers as we continue to capture market share from competitors. Moreover, our forecast for the fourth quarter is strong. Therefore, we are increasing our adjusted EPS guidance range by 2 cents on the low end and by 3 cents on the high end to a revised range of $1.29 to $1.34,” he added.
Significant sales-related achievements during the quarter follow.
  •   New customers such as: 3 Suisses; ASICS America Corporation; Barnes Distribution; Bed, Bath & Beyond; Blackhawk Products Group; Citi Trends, Inc.; Domaxel; Dalepak Limited; Elecon; Electronics for Imaging, Inc.; ElektroKomplektServis; Fitness Quest, Inc.; Gloria Jeans; H E Butt Grocery (HEB); Jefferson Smurfit Corporation; Lamps Plus, Inc.; National Freight, Inc.; Nelson Education Limited; Nestle Nespresso SA; Nor-Cal Beverage Co., Inc.; Northern Safety Co., Inc.; Orchard Brands, Inc. (aka Blair Corp); Performance Warehouse; Reckitt Benckiser, Inc; Restoration Hardware; Safeway, Inc.; Target Corporation; The Apparel Group; and The Tire Rack, Inc.
  •   Expanding partnerships with existing customers such as: Always; Argos Limited; Fruit of the Loom Limited; Tesco Stores Limited; and US Foodservice.
  •   Closing four large contracts, each of which generated $1 million or more in recognized license revenue.
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Manhattan Associates Reports Record Third Quarter Revenue — page 4 of 6
2007 GUIDANCE
Manhattan Associates provided the following diluted earnings per share guidance for the fourth quarter and full year 2007. The GAAP diluted earnings per share includes the impact of stock options expense under SFAS 123(R). A full reconciliation of GAAP to non-GAAP diluted earnings per share is included in the supplemental attachments to this release.

                                 
    Fully Diluted EPS
    Per Share range   % Growth range
GAAP Earnings Per Share
                                
Q4 2007 - diluted earnings per share
   $ 0.30     $ 0.35       76 %     106 %
Full year 2007 - diluted earnings per share
   $ 1.09     $ 1.14       58 %     65 %
 
                                
Adjusted Earnings Per Share
                                
Q4 2007 - diluted earnings per share
   $ 0.35     $ 0.40       13 %     29 %
Full year 2007 - diluted earnings per share
   $ 1.29     $ 1.34       19 %     24 %
Manhattan Associates currently intends to publish, in each quarterly earnings release, certain expectations with respect to future financial performance. These statements are forward-looking. Actual results may differ materially, especially in the current uncertain economic environment. These statements do not reflect the potential impact of mergers, acquisitions or other business combinations that may be completed after the date of this release.
Manhattan Associates will make its earnings release and published expectations available on its Web site (www.manh.com). Beginning December 15, 2007, Manhattan Associates will observe a “Quiet Period” during which Manhattan Associates and its representatives will not comment concerning previously published financial expectations. Prior to the start of the Quiet Period, the public can continue to rely on the expectations published in this 2007 Guidance section as still being Manhattan Associates’ current expectation on matters covered, unless Manhattan Associates publishes a notice stating otherwise. During the Quiet Period, previously published expectations should be considered historical only, speaking only as of or prior to the Quiet Period, and Manhattan Associates disclaims any obligation to update any previously published financial expectations during the Quiet Period. The Quiet Period will extend until the date when Manhattan Associates’ next quarterly earnings release is published, currently scheduled for the first week of February 2008.
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Manhattan Associates Reports Record Third Quarter Revenue — page 5 of 6
CONFERENCE CALL
The Company’s conference call regarding its third quarter financial results will be held at 4:30 p.m. Eastern time on Tuesday, October 23, 2007 after the market closes. Investors are invited to listen to a live Web cast of the conference call through the investor relations section of Manhattan Associates’ Web site. To listen to the live Web cast, please go to the Web site at least 15 minutes before the call to download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call by dialing +1.800.642.1687 in the U.S. or Canada and +1.706.645.9291 outside the U.S., and entering the conference identification number 16923337, or via the Web at www.manh.com. The phone replay will be available for two weeks after the call, and the Internet broadcast will be archived at Manhattan Associates’ Web site.
GAAP VERSUS NON-GAAP PRESENTATION
The Company provides adjusted operating income, adjusted net income and adjusted earnings per share in this press release as additional information regarding the Company’s operating results. The measures are not in accordance with — or an alternative for — GAAP, and may be different from non-GAAP operating income, non-GAAP net income and non-GAAP earnings per share measures used by other companies. The Company believes that this presentation of adjusted operating income, adjusted net income and adjusted earnings per share facilitates investors’ understanding of our historical operating trends, because it provides important supplemental measurement information in evaluating the operating results of our business, as distinct from results that include items that are not indicative of ongoing operating results, and thus provide investors with useful insight into our profitability exclusive of unusual adjustments. This release should be read in conjunction with our Form 8-K earnings release filing for the quarter ended September 30, 2007.
The non-GAAP adjusted operating income, adjusted net income and adjusted earnings per share exclude the impact of acquisition related costs and the amortization thereof, the recapture of previously recognized sales tax expense and stock option expense under SFAS 123(R). A reconciliation of our GAAP financial measures to non-GAAP adjustments is included in the supplemental attachment to this release.
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Manhattan Associates Reports Record Third Quarter Revenue — page 6 of 6
The Company also provides revenue, GAAP and adjusted operating income, and GAAP and adjusted diluted earnings per share excluding the impact of foreign currency exchange. This information is not in accordance with — or an alternative for — GAAP, and may be different from measures used by other companies. The Company believes that this information allows a more meaningful comparison of the Company’s performance from period to period.
About Manhattan Associates, Inc.
Manhattan Associates® provides global supply chain solutions to organizations that consider supply chain software, processes and technology strategic to market leadership. The company’s software portfolio includes five key Supply Chain Solution Suites: Planning and Forecasting, Inventory Optimization, Order Lifecycle Management, Transportation Lifecycle Management and Distribution Management. These solution suites are enhanced by Platform Applications — including Supply Chain Intelligence, Supply Chain Visibility and Supply Chain Event Management - that organize and deliver the information and processes needed to optimize supply chains across functions and locations within and outside an enterprise.. A Supply Chain Process Platform provides a unifying architecture that fosters agility and scalability while minimizing solution implementation, evolution and support costs. More than 1,200 customers worldwide use Manhattan Associates’ global supply chain solutions to enhance profitability and build sustainable competitive advantage. For more information, please visit www.manh.com.
This press release may contain “forward-looking statements” relating to Manhattan Associates, Inc. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are delays in product development, undetected software errors, competitive pressures, technical difficulties, market acceptance, availability of technical personnel, changes in customer requirements, risks of international operations and general economic conditions. Additional risk factors are set forth in Item 1A. of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006. Manhattan Associates undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results.
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MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited and in thousands, except per share amounts)
                                 
    Three Months Ended     Nine Months Ended  
    September 30     September 30  
    2007     2006     2007     2006  
Revenue:
                                
License
   $ 17,303     $ 15,217     $ 54,454     $ 47,540  
Services
     58,437       51,049       169,100       144,642  
Hardware and other
     8,849       6,046       28,854       20,816  
 
                        
Total Revenue
     84,589       72,312       252,408       212,998  
 
                                
Costs and Expenses:
                                
Cost of license
     1,599       1,400       4,045       4,410  
Cost of services
     28,348       24,231       81,631       69,908  
Cost of hardware and other
     7,286       5,356       24,511       18,328  
Research and development
     11,887       9,765       35,316       30,398  
Sales and marketing
     13,079       11,407       40,177       34,018  
General and administrative
     8,397       7,896       24,926       21,863  
Depreciation and amortization
     3,406       3,377       10,261       9,914  
Asset impairment charge
     —       270       —       270  
Acquisition-related charges
     —       174       —       1,503  
 
                        
Total costs and expenses
     74,002       63,876       220,867       190,612  
 
                        
 
                                
Operating income
     10,587       8,436       31,541       22,386  
 
                                
Other income, net
     1,619       630       3,009       2,727  
 
                        
Income before income taxes
     12,206       9,066       34,550       25,113  
Income tax provision
     4,321       3,822       12,253       10,596  
 
                        
Net income
   $ 7,885     $ 5,244     $ 22,297     $ 14,517  
 
                        
 
                                
Basic earnings per share
   $ 0.31     $ 0.19     $ 0.84     $ 0.53  
Diluted earnings per share
   $ 0.29     $ 0.19     $ 0.80     $ 0.52  
 
                                
Weighted average number of shares:
                                
Basic
     25,739       26,969       26,536       27,151  
Diluted
     26,879       27,462       27,723       27,688  

 

 

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
RECONCILIATION OF SELECTED GAAP TO NON-GAAP MEASURES
(unaudited and in thousands, except per share amounts)
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
 
                                
Operating income
   $ 10,587     $ 8,436     $ 31,541     $ 22,386  
Stock option expense
     1,224 (a)     1,831 (a)     3,475 (a)     5,451 (a)
Purchase amortization
     1,180 (b)     1,217 (b)     3,570 (b)     3,651 (b)
Acquisition-related charges
     —       174 (c)     —       1,503 (c)
Asset impairment charge
     —       270 (d)     —       270 (d)
Sales tax recoveries
     (269) (d)     (324 )(e)     (1,292) (d)     (1,056 )(e)
 
                        
Adjusted operating income (Non-GAAP)
   $ 12,722     $ 11,604     $ 37,294     $ 32,205  
 
                        
 
                                
Income tax provision
   $ 4,321     $ 3,822     $ 12,253     $ 10,596  
Stock option expense
     435 (a)     370 (a)     1,234 (a)     1,172 (a)
Purchase amortization
     419 (b)     469 (b)     1,267 (b)     1,406 (b)
Acquisition-related charges
     —       67 (c)     —       579 (c)
Asset impairment charge
     —       104 (d)     —       104 (d)
Sales tax recoveries
     (96) (d)     (125 )(e)     (459) (d)     (408 )(e)
 
                        
Adjusted income tax provision (Non-GAAP)
   $ 5,079     $ 4,707     $ 14,295     $ 13,449  
 
                        
 
                                
Net income
   $ 7,885     $ 5,244     $ 22,297     $ 14,517  
Stock option expense
     789 (a)     1,461 (a)     2,241 (a)     4,279 (a)
Purchase amortization
     761 (b)     748 (b)     2,303 (b)     2,245 (b)
Acquisition-related charges
     —       107 (c)     —       924 (c)
Asset impairment charge
     —       166 (d)     —       166 (d)
Sales tax recoveries
     (173) (d)     (199 )(e)     (833) (d)     (648 )(e)
 
                        
Adjusted Net income (Non-GAAP)
   $ 9,262     $ 7,527     $ 26,008     $ 21,483  
 
                        
 
                                
Diluted EPS
   $ 0.29     $ 0.19     $ 0.80     $ 0.52  
Stock option expense
   $ 0.03 (a)   $ 0.05 (a)   $ 0.08 (a)   $ 0.15 (a)
Purchase amortization
   $ 0.03 (b)   $ 0.03 (b)   $ 0.08 (b)   $ 0.08 (b)
Acquisition-related charges
   $ —     $ 0.00 (c)   $ —     $ 0.03 (c)
Asset impairment charge
   $ —     $ 0.01 (d)   $ —     $ 0.01 (d)
Sales tax recoveries
   $ (0.01) (d)   $ (0.01 )(e)   $ (0.03) (d)   $ (0.02 )(e)
 
                        
Adjusted Diluted EPS (Non-GAAP)
   $ 0.34     $ 0.27     $ 0.94     $ 0.78  
 
                        
 
                                
Fully Diluted Shares
     26,879       27,462       27,723       27,688  
 
(a)   SFAS 123(R) requires us to expense stock options issued to employees. Because stock option expense is determined in significant part by the trading price of our common stock and the volatility thereof, over which we have no direct control, the impact of such expense is not subject to effective management by us. Thus, we have excluded the impact of this expense from adjusted non-GAAP results. The stock option expense is included in the following GAAP operating expense lines for the three and nine months ended September 30, 2007 and 2006:
                                 
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2007     2006     2007     2006  
Cost of services
   $ 108     $ 546     $ 321     $ 1,609  
Research and development
     160       261       474       737  
Sales and marketing
     375       405       1,115       1,114  
General and administrative
     581       619       1,565       1,991  
 
                        
Total stock option expense
   $ 1,224     $ 1,831     $ 3,475     $ 5,451  
 
                        
 
(b)   Adjustments represent purchase amortization from prior acquisitions. Such amortization is commonly excluded from GAAP net income by companies in our industry and we therefore exclude these amortization costs to provide more relevant and meaningful comparisons of our operating results to that of our competitors.
 
(c)   In conjunction with the Evant acquisition, we paid $2.8 million into escrow for employee retention bonuses to be paid upon completion of up to 12 months of service with us. During 2006, we completed the Evant retention bonus program and paid out the final bonuses. The 2006 adjustment represents the current period expense associated with these retention bonuses. We have excluded these costs because they do not correlate to the expenses of our core operations.
 
(d)   During the quarter ended September 30, 2006, we recorded an impairment charge of $270 against a $2.0 million investment in a technology company. We made our original investment in 2003. Because of the value of the investment is beyond our control and does not relate to our core operations, we have excluded the asset impairment from adjusted non-GAAP results.
 
(e)   Adjustment represents recoveries of previously expensed sales tax resulting primarily from the expiration of the sales tax audit statutes in certain states. Because we have recognized the full potential amount of the sales tax expense in prior periods, any recovery of that expense resulting from the expiration of the statutes or the collection of tax from our customers would overstate the current period net income derived from our core operations as the recovery is not a result of any event occurring within our control during the current period. Thus, we have excluded these recoveries from adjusted non-GAAP results.

 

 

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
                 
    September 30,     December 31,  
    2007     2006  
    (unaudited)          
 
                
ASSETS
                
Current Assets:
                
Cash and cash equivalents
   $ 32,531     $ 18,449  
Short term investments
     36,228       90,570  
Accounts receivable, net of a $6,002 and $4,901 allowance for doubtful accounts in 2007 and 2006, respectively
     73,166       60,937  
Deferred income taxes
     6,558       5,208  
Prepaid expenses and other current assets
     9,199       11,939  
 
            
Total current assets
     157,682       187,103  
 
                
Property and equipment, net
     25,198       15,850  
Long-term investments
     13,226       22,038  
Acquisition-related intangible assets, net
     10,774       14,344  
Goodwill, net
     62,279       70,361  
Deferred income taxes
     7,890       481  
Other assets
     5,488       4,716  
 
            
Total assets
   $ 282,537     $ 314,893  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
 
                
Current liabilities:
                
Accounts payable
   $ 7,912     $ 11,716  
Accrued compensation and benefits
     18,557       16,560  
Accrued and other liabilities
     10,096       13,872  
Deferred revenue
     32,968       29,918  
Income taxes payable
     5,310       4,006  
 
            
Total current liabilities
     74,843       76,072  
 
                
Other non-current liabilities
     7,990       1,681  
 
                
Shareholders’ equity:
                
Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2007 or 2006
     —       —  
Common stock, $.01 par value; 100,000,000 shares authorized, 25,702,405 shares issued and outstanding in 2007 and 27,610,105 shares issued and outstanding in 2006
     254       276  
Additional paid-in capital
     39,685       98,704  
Retained earnings
     156,736       136,321  
Accumulated other comprehensive income
     3,029       1,839  
 
            
Total shareholders’ equity
     199,704       237,140  
 
            
Total liabilities and shareholders’ equity
   $ 282,537     $ 314,893  
 
            

 

 

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
                 
    Nine Months Ended  
    September 30,  
    2007     2006  
Operating activities:
                
Net income
   $ 22,297     $ 14,517  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
     10,261       9,914  
Asset impairment charge
     —       270  
Stock compensation
     4,939       5,544  
Loss/(Gain) on disposal of equipment
     26       (32 )
Tax benefit of options exercised
     1,596       2,444  
Excess tax benefits from stock based compensation
     (607 )     (1,792 )
Deferred income taxes
     (742 )     (790 )
Unrealized foreign currency loss
     (880 )     622  
Changes in operating assets and liabilities:
                
Accounts receivable, net
     (11,341 )     5,510  
Other assets
     2,228       (2,055 )
Prepaid retention bonus
     —       1,599  
Accounts payable, accrued and other liabilities
     (7,173 )     (1,066 )
Income taxes
     (1,304 )     2,528  
Deferred revenue
     3,261       4,133  
 
            
Net cash provided by operating activities
     22,561       41,346  
 
            
 
                
Investing activities:
                
Purchase of property and equipment
     (7,934 )     (7,529 )
Net maturities (purchases) of investments
     63,185       (29,631 )
Payments in connection with various acquisitions
     —       (126 )
 
            
Net cash provided by (used in) investing activities
     55,251       (37,286 )
 
            
 
                
Financing activities:
                
Payment of capital lease obligations
     —       (72 )
Purchase of common stock
     (74,932 )     (16,029 )
Excess tax benefits from stock based compensation
     607       1,792  
Proceeds from issuance of common stock from options exercised
     9,356       5,124  
 
            
Net cash used in financing activities
     (64,969 )     (9,185 )
 
            
 
                
 
            
Foreign currency impact on cash
     1,239       (775 )
 
            
Net change in cash and cash equivalents
     14,082       (5,900 )
Cash and cash equivalents at beginning of period
     18,449       19,419  
 
            
Cash and cash equivalents at end of period
   $ 32,531     $ 13,519  
 
            
 
                
Supplemental disclosures of cash flow information — noncash investing activity:
                
Tenant improvements funded by landlord
   $ 7,918     $ —  
 
            

 

 

MANHATTAN ASSOCIATES, INC.
SUPPLEMENTAL INFORMATION
1.   GAAP and Adjusted Earnings per share by quarter are as follows:
                                                                         
    2006     2007     2006     2007  
    1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     1st Qtr     2nd Qtr     3rd Qtr     YTD     YTD  
GAAP Diluted EPS
   $ 0.08     $ 0.25     $ 0.19     $ 0.17     $ 0.19     $ 0.32     $ 0.29     $ 0.52     $ 0.80  
Adjustments to GAAP:
                                                                        
Stock option expense
   $ 0.04     $ 0.06     $ 0.05     $ 0.03     $ 0.03     $ 0.03     $ 0.03     $ 0.15     $ 0.08  
Purchase amortization
   $ 0.03     $ 0.03     $ 0.03     $ 0.03     $ 0.03     $ 0.03     $ 0.03     $ 0.08     $ 0.08  
Acquisition related charges
   $ 0.02     $ 0.01     $ —     $ —     $ —     $ —     $ —     $ 0.03     $ —  
Write off of receivable and settlement charges
   $ —     $ —     $ —     $ 0.09     $ —     $ —     $ —     $ —     $ —  
Asset impairment charge
   $ —     $ —     $ 0.01     $ —     $ —     $ —     $ —     $ 0.01     $ —  
Sales tax recoveries
   $ (0.01 )   $ (0.01 )   $ (0.01 )   $ (0.01 )   $ (0.01 )   $ (0.02 )   $ (0.01 )   $ (0.02 )   $ (0.03 )
 
                                                      
Adjusted Diluted EPS
   $ 0.16     $ 0.34     $ 0.27     $ 0.31     $ 0.23     $ 0.36     $ 0.34     $ 0.78     $ 0.94  
 
                                                      
2.   Revenues and operating income (loss) by reportable segment are as follows (in thousands):
                                                                         
    2006     2007     2006     2007  
    1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     1st Qtr     2nd Qtr     3rd Qtr     YTD     YTD  
 
                                                                        
Revenue:
                                                                        
Americas
   $ 51,143     $ 65,695     $ 60,799     $ 64,683     $ 68,446     $ 75,599     $ 69,850     $ 177,637     $ 213,895  
EMEA
     6,952       6,850       6,478       7,071       5,844       9,809       10,463       20,280       26,116  
Asia Pacific
     4,690       5,356       5,035       4,116       3,900       4,221       4,276       15,081       12,397  
 
                                                      
 
   $ 62,785     $ 77,901     $ 72,312     $ 75,870     $ 78,190     $ 89,629     $ 84,589     $ 212,998     $ 252,408  
 
                                                      
 
                                                                        
GAAP Operating Income (Loss):
                                                                        
Americas
   $ 2,467     $ 10,095     $ 9,131     $ 11,054     $ 8,734     $ 12,338     $ 8,894     $ 21,693     $ 29,966  
EMEA
     245       3       (839 )     (2,226 )     (1,321 )     1,145       1,432       (591 )     1,256  
Asia Pacific
     401       739       144       (459 )     (131 )     189       261       1,284       319  
 
                                                      
 
   $ 3,113     $ 10,837     $ 8,436     $ 8,369     $ 7,282     $ 13,672     $ 10,587     $ 22,386     $ 31,541  
 
                                                      
 
                                                                        
Adjustments (pre-tax):
                                                                        
Americas:
                                                                        
Stock option expense
   $ 1,558     $ 1,819     $ 1,700     $ 1,177     $ 1,082     $ 1,090     $ 1,184     $ 5,077     $ 3,356  
Purchase amortization
     1,217       1,217       1,217       1,217       1,195       1,195       1,180       3,651       3,570  
Acquisition related charges
     722       607       174       —       —       —       —       1,503       —  
Settlement charges
     —       —       —       810       —       —       —       —       —  
Asset impairment charge
     —       —       270       —       —       —       —       270       —  
Sales tax recoveries
     (267 )     (465 )     (324 )     (514 )     (373 )     (650 )     (269 )     (1,056 )     (1,292 )
 
                                                      
 
   $ 3,230     $ 3,178     $ 3,037     $ 2,690     $ 1,904     $ 1,635     $ 2,095     $ 9,445     $ 5,634  
 
                                                      
EMEA:
                                                                        
Stock option expense
   $ 118     $ 125     $ 131     $ 15     $ 39     $ 40     $ 40     $ 374     $ 119  
Write off of receivable and settlement charges
     —       —       —       2,046       —       —               —       —  
 
                                                      
 
   $ 118     $ 125     $ 131     $ 2,061     $ 39     $ 40     $ 40     $ 374     $ 119  
 
                                                      
 
                                                                        
Total Adjustments
   $ 3,348     $ 3,303     $ 3,168     $ 4,751     $ 1,943     $ 1,675     $ 2,135     $ 9,819     $ 5,753  
 
                                                      
 
                                                                        
Adjusted non-GAAP Operating Income (Loss):
                                                                        
Americas
   $ 5,697     $ 13,273     $ 12,168     $ 13,744     $ 10,638     $ 13,973     $ 10,989     $ 31,138     $ 35,600  
EMEA
     363       128       (708 )     (165 )     (1,282 )     1,185       1,472       (217 )     1,375  
Asia Pacific
     401       739       144       (459 )     (131 )     189       261       1,284       319  
 
                                                      
 
   $ 6,461     $ 14,140     $ 11,604     $ 13,120     $ 9,225     $ 15,347     $ 12,722     $ 32,205     $ 37,294  
 
                                                      
3.   Our services revenue consists of fees generated from professional services and customer support and software enhancements related to our software products as follows (in thousands):
                                                                         
    2006     2007     2006     2007  
    1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     1st Qtr     2nd Qtr     3rd Qtr     YTD     YTD  
Professional services
   $ 31,801     $ 34,376     $ 36,105     $ 34,105     $ 38,831     $ 39,865     $ 41,488     $ 102,282     $ 120,184  
Customer support and software enhancements
     13,361       14,055       14,944       15,774       15,969       15,998       16,949       42,360       48,916  
 
                                                      
Total services revenue
   $ 45,162     $ 48,431     $ 51,049     $ 49,879     $ 54,800     $ 55,863     $ 58,437     $ 144,642     $ 169,100  
 
                                                      
4.   Hardware and other revenue includes the following items (in thousands):
                                                                         
    2006     2007     2006     2007  
    1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     1st Qtr     2nd Qtr     3rd Qtr     YTD     YTD  
 
                                                                        
Hardware revenue
     4,471       5,424       3,326       4,967       6,666       7,270       5,614     $ 13,221     $ 19,550  
Billed Travel
     2,076       2,799       2,720       2,021       2,971       3,098       3,235       7,595       9,304  
 
                                                      
Total Hardware and other revenue
   $ 6,547     $ 8,223     $ 6,046     $ 6,988     $ 9,637     $ 10,368     $ 8,849     $ 20,816     $ 28,854  
 
                                                      

 

 

MANHATTAN ASSOCIATES, INC.
SUPPLEMENTAL INFORMATION
5.   Impact of Currency Fluctuation
 
    The following table reflects the increases (decreases) in the results of operations for each period attributable to the change in foreign currency exchange rates from the prior period as well as foreign currency gains (losses) included in other income, net for each period (in thousands):
                                                                         
    2006     2007     2006     2007  
    1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     1st Qtr     2nd Qtr     3rd Qtr     YTD     YTD  
 
                                                                        
Revenue
   $ (853 )   $ (158 )   $ 251     $ 779     $ 748     $ 992     $ 1,049     $ (760 )   $ 2,789  
Costs and Expenses
     (823 )     (324 )     53       1,030       858       1,306       1,629       (1,094 )     3,793  
Operating Income
     (30 )     166       198       (251 )     (110 )     (314 )     (580 )     334       (1,004 )
Foreign currency gains (losses) in other income
     98       275       (34 )     (91 )     (22 )     (602 )     897       339       273  
 
                                                      
 
   $ 68     $ 441     $ 164     $ (342 )   $ (132 )   $ (916 )   $ 317     $ 673     $ (731 )
 
                                                      
    Manhattan Associates has a large research and development center in Bangalore, India. The following table reflects the increases (decreases) in the financial results for each period attributable to changes in the Indian Rupee exchange rate (in thousands):
                                                                         
    2006     2007     2006     2007  
    1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     1st Qtr     2nd Qtr     3rd Qtr     YTD     YTD  
 
                                                                        
Operating Income
     53       145       235       (32 )     (14 )     (443 )     (693 )   $ 433     $ (1,150 )
Foreign currency gains (losses) in other income
     (30 )     25       87       (136 )     (82 )     (536 )     (312 )     82       (930 )
 
                                                      
Total impact of changes in the Indian Rupee
   $ 23     $ 170     $ 322     $ (168 )   $ (96 )   $ (979 )   $ (1,005 )   $ 515     $ (2,080 )
 
                                                      
6.   Capital expenditures are as follows (in thousands):
                                                                         
    2006     2007     2006     2007  
    1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     1st Qtr     2nd Qtr     3rd Qtr     YTD     YTD  
 
                                                                        
Capital expenditures
   $ 2,195     $ 2,603     $ 2,731     $ 2,112     $ 2,956     $ 3,511     $ 1,467     $ 7,529     $ 7,934  
 
                                                      
7.   Stock Repurchase Activity
 
    During the first nine months of 2007, we repurchased 2.7 million shares of common stock totaling $75 million at an average price of $28.10. In 2006 for the full year, we repurchased 0.8 million shares of common stock totaling $16.0 million at an average cost of $20.73.