ATLANTA, Feb. 10, 2009 (GLOBE NEWSWIRE) -- Leading supply chain optimization provider Manhattan Associates, Inc. (Nasdaq:MANH) today reported fourth quarter 2008 Earnings Per Share (EPS) in line with adjusted guidance previously issued for the quarter.
The Company's fourth quarter adjusted diluted earnings per share, a non-GAAP measure, were $0.26 compared to $0.37 in the 2007 fourth quarter, and within the Company's previously issued guidance range of $0.24 to $0.34 for the quarter ended December 31, 2008. GAAP diluted earnings per share were $0.08, a 76% decrease compared to the fourth quarter of 2007, due to a fourth quarter restructuring charge and an 11% drop in fourth quarter revenue compared to the fourth quarter of 2007. In 2008, the Company posted fourth quarter revenue of $75.7 million, and full-year revenue of $337.2 million, essentially flat with 2007 full-year revenue.
Manhattan Associates President and CEO Pete Sinisgalli commented, "Fourth quarter results were about as expected. The selling environment continued to be quite difficult, with several opportunities pushing into 2009. Nonetheless, with the actions we took during the fourth quarter to lower headcount and reduce expenses, we were able to post a decent financial result. More important, during the fourth quarter and throughout 2008, we made significant progress extending our market-leading suite of Supply Chain Optimization solutions."
"We do not expect the market to improve until the latter half of 2009 at the earliest," Sinisgalli continued. "However, we will continue to place significant energy into developing and advancing the world's leading suite of Supply Chain Optimization solutions, so that when markets return to more normal activity levels, we will be poised to capture significant market share," he concluded.
FOURTH QUARTER FINANCIAL SUMMARY:
Summarized results for the 2008 fourth quarter, as compared to the 2007 fourth quarter, follow:
Earnings Per Share
------------------
* Adjusted diluted earnings per share, a non-GAAP measure, were
$0.26 compared to $0.37 in Q4 2007, representing a decrease of
30%.
* GAAP diluted earnings per share decreased 76% to $0.08 per share,
which includes the impact of a restructuring charge of $4.7
million associated with the workforce reduction initiative
executed in the fourth quarter and disclosed in the Company's Q3
2008 earnings release.
Revenue
-------
* Consolidated revenue decreased 11% to $75.7 million. Currency
changes during the quarter negatively affected total revenue by
$2.2 million, or 3%.
- License revenue decreased 26%, to $13.8 million.
- Services revenue decreased 6%, to $53.8 million.
Operating Income
----------------
* Adjusted operating income, a non-GAAP measure, was $7.2 million
compared to $13.3 million in the prior year quarter.
* GAAP operating income was $0.4 million compared to $11.5 million
in Q4 2007, which includes the $4.7 million restructuring charge
related to the Company's Q4 workforce reduction.
Cash
----
* The Company posted record cash flow from operations, both for the
full year and in the fourth quarter. Cash flow from operations in
Q4 2008 was $18.3 million, 17% higher than in the fourth quarter
of 2007, with Days Sales Outstanding of 78 days. Full-year cash
flow from operations totaled $63.8 million, a 67% increase over
2007.
* Cash and investments on-hand at December 31, 2008 was $88.7
million compared to $72.8 million at December 31, 2007.
Common Share Repurchase
-----------------------
* The Company repurchased 651,614 common shares totaling $10.0
million at an average share price of $15.35 in the fourth quarter
of 2008. The Company has $15.0 million in remaining share
repurchase authority.
FULL YEAR FINANCIAL SUMMARY:
Summarized results for the full year of 2008, as compared to the full year of 2007, follow:
Earnings Per Share
------------------
* Adjusted diluted earnings per share, a non-GAAP measure,
increased 6% to a record $1.38 versus $1.30 in 2007.
* GAAP diluted earnings per share were $0.94, a decrease of 17%
compared to $1.13 per share for full year 2007. Excluding unusual
adjustments taken in the second half of 2008, GAAP diluted
earnings per share increased 3%.
Revenue
-------
* Consolidated revenue in 2008 was essentially flat at $337.2
million compared to $337.4 million for the full year 2007.
Currency changes for the full year did not significantly impact
total revenue.
- License revenue decreased 11%, to $65.3 million.
- Services revenue increased 4% and totaled $236.0 million.
Operating Income
----------------
* Adjusted operating income, a non-GAAP measure, was $44.3 million
compared to $50.5 million in 2007, down 12% on lower license
revenue.
* GAAP operating income was $26.0 million compared to $43.1 million
in 2007, a decrease of 40% on lower license revenue and unusual
charges taken in the second half of 2008. Excluding $9.9 million
of unusual charges, GAAP operating income decreased 17%.
Tax Rate
--------
* GAAP and non-GAAP effective tax rates were 27.6% and 32.5%
respectively, compared to 35.5% on a GAAP and non-GAAP basis in
the full year of 2007. The lower tax rates primarily resulted
from tax contingency reserves released due to expiring tax audit
statutes, and from realizing tax credits associated with research
and development and job training.
Common Share Repurchase
-----------------------
* The Company repurchased approximately 1.7 million common shares
during the full year of 2008 at an average share price of $20.52,
for a total investment of $35.0 million.
SALES ACHIEVEMENTS:
Significant sales-related achievements during the quarter include:
* Closing four contracts of $1.0 million or more in recognized
license revenue during the quarter. During 2008, the Company
closed 15 contracts of this size.
* Completing software license wins with new customers such as A.N.
Deringer, Inc., BUT International SAS, Carolina Logistics
Services, LLC, Fasteners for Retail, J.J. Taylor Companies, Inc.,
Loglibris, Optimal LTD, Pfizer, Inc., QVC, Inc. and Wakefern
Food Corporation.
* Expanding partnerships with existing customers such as Al-Shiwari
Group, American Eagle Outfitters, Bakkavor Limited, Bed Bath &
Beyond, Inc., Benjamin Moore, Genuine Parts Company, InterDesign,
LeSaint Logistics, Maersk Distribution Services, McKesson
Corporation, Performance Team Freight Systems, Sara Lee
Corporation, simplehuman LLC, Staples, Sunglass Hut Trading
Company and Whirlpool Corporation.
2009 GUIDANCE
Manhattan Associates provided the following diluted earnings per share guidance for the first quarter and full year 2009. A full reconciliation of GAAP to non-GAAP diluted earnings per share is included in the supplemental information attached to this release.
--------------------------------------------------------------------
Fully Diluted EPS
-----------------------------------
Per Share range % Growth range
----------------- -----------------
GAAP Earnings Per Share
--------------------------
Q1 2009 - diluted earnings per
share $0.15 $0.25 -50% -17%
Full year 2009 - diluted earnings
per share $1.03 $1.28 10% 36%
Adjusted Earnings Per Share
---------------------------
Q1 2009 - diluted earnings per
share $0.20 $0.30 -43% -14%
Full year 2009 - diluted earnings
per share $1.23 $1.48 -11% 7%
--------------------------------------------------------------------
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 website (www.manh.com). Beginning March 15, 2009, 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 2009 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 third week of April 2009.
CONFERENCE CALL
The Company's conference call regarding its fourth quarter financial results will be held at 4:30 p.m. Eastern Time on Tuesday, February 10, 2008. Investors are invited to listen to a live webcast of the conference call through the investor relations section of Manhattan Associates' website. To listen to the live webcast, please go to Manhattan's website at least 15 minutes before the call to download and install any necessary audio software. For those who cannot listen to the webcast live, a telephone replay can be accessed shortly after the call by dialing +1.800.642.1687 in the U.S. and Canada, or +1.706.645.9291 outside the U.S., and entering the conference identification number 80024471, and a webcast replay is available at www.manh.com. The telephone replay will be available for two weeks after the call, and webcast replay will be available until Manhattan Associates publishes its second quarter 2009 earnings release.
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. These 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 the presentation of these non-GAAP financial measures facilitates investors' understanding of its historical operating trends, because it provides important supplemental measurement information in evaluating the operating results of its business, as distinct from results that include items that are not indicative of ongoing operating results. The Company consequently believes that the presentation of these non-GAAP financial measures provides investors with useful insight into its profitability. This release should be read in conjunction with its Form 8-K earnings release filing for the quarter ended December 31, 2008.
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, stock option expense under SFAS 123(R), asset impairment charges, and restructuring charges, all net of income tax effects, and unusual tax adjustments. A reconciliation of the Company's GAAP financial measures to non-GAAP adjustments is included in the supplemental information attached to this release.
The Company has also presented its revenue, operating income and adjusted operating income growth between periods excluding the effect of changes in exchange rates between the U.S. dollar and the functional currencies of its foreign subsidiaries. Certain information regarding the effect of currency exchange rate fluctuation on results is included in note 5 to the supplemental information attached to this release.
ABOUT MANHATTAN ASSOCIATES, INC.
Manhattan Associates continues to deliver on its 18-year heritage of providing global supply chain excellence to more than 1,200 customers worldwide that consider supply chain optimization core to their strategic market leadership. The company's supply chain innovations include: Manhattan SCOPE(tm), a portfolio of software solutions and technology that leverages a Supply Chain Process Platform to help organizations optimize their supply chains from planning through execution; Manhattan ILS(tm), a portfolio of distribution management and transportation management solutions built on Microsoft(r) .NET technology; and Manhattan Carrier(tm), a suite of supply chain solutions specifically addressing the needs of the motor carrier industry. 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, 2007. 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.
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Three Months Twelve Months
Ended Ended
December 31, December 31,
----------------- -----------------
2008 2007 2008 2007
-------- -------- -------- --------
Revenue:
Software license $ 13,834 $ 18,577 $ 65,313 $ 73,031
Services 53,818 57,053 235,967 226,153
Hardware and other 7,999 9,363 35,921 38,217
-------- -------- -------- --------
Total Revenue 75,651 84,993 337,201 337,401
Costs and Expenses:
Cost of license 1,648 1,289 5,961 5,334
Cost of services 26,195 28,127 116,707 109,758
Cost of hardware and other 6,651 7,757 29,270 32,268
Research and development 11,496 11,278 48,407 46,594
Sales and marketing 11,350 13,229 51,177 53,406
General and administrative 10,108 8,440 37,145 33,366
Depreciation and amortization 3,168 3,356 12,699 13,617
Asset impairment charges -- -- 5,205 --
Restructuring charge 4,667 -- 4,667 --
-------- -------- -------- --------
Total costs and expenses 75,283 73,476 311,238 294,343
-------- -------- -------- --------
Operating income 368 11,517 25,963 43,058
Other income, net 1,667 1,599 5,545 4,608
-------- -------- -------- --------
Income before income taxes 2,035 13,116 31,508 47,666
Income tax provision 57 4,662 8,710 16,915
-------- -------- -------- --------
Net income $ 1,978 $ 8,454 $ 22,798 $ 30,751
======== ======== ======== ========
Basic earnings per share $ 0.08 $ 0.34 $ 0.95 $ 1.17
Diluted earnings per share $ 0.08 $ 0.33 $ 0.94 $ 1.13
Weighted average number of
shares:
Basic 23,500 25,066 24,053 26,174
Diluted 23,549 25,983 24,328 27,329
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
RECONCILIATION OF SELECTED GAAP TO NON-GAAP MEASURES
(in thousands, except per share amounts)
Three Months Twelve Months
Ended Ended
December 31, December 31,
----------------- -----------------
2008 2007 2008 2007
-------- -------- -------- --------
Operating income $ 368 $ 11,517 $ 25,963 $ 43,058
Stock option expense (a) 1,383 799 5,458 4,274
Purchase amortization (b) 759 1,083 3,253 4,653
Sales tax recoveries (c) -- (146) (234) (1,438)
Asset impairment charges (d) -- -- 5,205 --
Restructuring charge (f) 4,667 -- 4,667 --
-------- -------- -------- --------
Adjusted operating income
(Non-GAAP) $ 7,177 $ 13,253 $ 44,312 $ 50,547
-------- -------- -------- --------
Income tax provision $ 57 $ 4,662 $ 8,710 $ 16,915
Stock option expense (a) 481 283 1,897 1,517
Purchase amortization (b) 263 385 1,130 1,652
Sales tax recoveries (c) -- (51) (81) (510)
Asset impairment charges (d) -- -- (94) --
Unusual tax adjustments (e) 381 -- 3,032 --
Restructuring charge (f) 1,622 -- 1,622 --
-------- -------- -------- --------
Adjusted income tax provision
(Non-GAAP) $ 2,804 $ 5,279 $ 16,216 $ 19,574
-------- -------- -------- --------
Net income $ 1,978 $ 8,454 $ 22,798 $ 30,751
Stock option expense (a) 902 516 3,561 2,757
Purchase amortization (b) 496 698 2,123 3,001
Sales tax recoveries (c) -- (95) (153) (928)
Asset impairment charges (d) -- -- 5,299 --
Unusual tax adjustments (e) (381) -- (3,032) --
Restructuring charge (f) 3,045 -- 3,045 --
-------- -------- -------- --------
Adjusted Net income (Non-GAAP) $ 6,040 $ 9,573 $ 33,641 $ 35,581
-------- -------- -------- --------
Diluted EPS $ 0.08 $ 0.33 $ 0.94 $ 1.13
Stock option expense (a) 0.04 0.02 0.15 0.10
Purchase amortization (b) 0.02 0.03 0.09 0.11
Sales tax recoveries (c) -- (0.00) (0.01) (0.03)
Asset impairment charges (d) -- -- 0.22 --
Unusual tax adjustments (e) (0.02) -- (0.12) --
Restructuring charge (f) 0.13 -- 0.13 --
-------- -------- -------- --------
Adjusted Diluted EPS (Non-GAAP) $ 0.26 $ 0.37 $ 1.38 $ 1.30
-------- -------- -------- --------
Fully Diluted Shares 23,549 25,983 24,328 27,329
(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
twelve months ended December 31, 2008 and 2007:
Three Months Twelve Months
Ended Ended
December 31, December 31,
----------------- -----------------
2008 2007 2008 2007
-------- -------- -------- --------
Cost of services $ 118 $ 22 $ 476 $ 343
Research and development 199 171 790 645
Sales and marketing 436 266 1,717 1,381
General and administrative 630 340 2,475 1,905
-------- -------- -------- --------
Total stock option expense $ 1,383 $ 799 $ 5,458 $ 4,274
======== ======== ======== ========
(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) 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.
(d) During the quarter ended September 30, 2008, we recorded an
impairment charge of $1.7 million, writing down the remaining
balance of a $2.0 million investment in a technology company we
made in July 2003. We recorded the additional impairment due to
a down round of financing in which our preferred share
ownership was converted into common stock, eliminating our
preference rights associated with liquidation, thereby
substantially impairing our ability to recoup our investment.
In addition, we recorded an impairment charge of $3.5 million
on an investment in an auction rate security. We reduced the
carrying value to zero due to credit downgrades of the
underlying issuer and the bond insurer as well as increasing
publicly reported exposure to bankruptcy risk by the issuer. We
do not include these impairment charges in our assessment of
our operating results. Due to the unusual nature of these items
and consistent with our past treatment, we have excluded the
effect of these impairments from adjusted non-GAAP results
because they are not indicative of ongoing operating
performance.
(e) The majority of the adjustment represents release of income tax
reserves resulting from expiration of tax audit statutes for
U.S. federal income tax returns filed for 2004 and prior.
During 2008, we completed our IRS audit examination for the
2005 return identifying no significant contingencies or errors.
Because we recorded the majority of the income tax reserves
through retained earnings in conjunction with the adoption of
FIN 48 on January 1, 2007, the release of the reserves would
overstate the current period net income derived from our core
operations. The reserve reversal is partially offset by $0.6
million tax expense on the repatriation of cash from a foreign
subsidiary associated with the settlement of several large
intercompany balances in order to reduce the unrealized foreign
exchange gain/loss volatility in other income. The majority of
the large intercompany balances were associated with a
non-operating legal entity in Europe. We do not include this
tax in our assessment of our operating performance as it does
not relate to our core operations. Thus, we have excluded these
tax adjustments from adjusted non-GAAP results.
(f) During the quarter ended December 31, 2008, we committed to and
initiated plans to reduce our workforce by 170 positions due to
intermediate term market demand and to realign our capacity with
demand forecasts. As a result of this initiative, we recorded a
restructuring charge of approximately $4.7 million in the fourth
quarter of 2008. The restructuring charge primarily consists of
employee severance, outplacement services, and payout of unused
vacation. We do not believe that the restructuring charge is
common cost that resulted from normal operating activities.
Consequently, we have excluded this charge from adjusted non-GAAP
results.
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
Dec. 31, Dec. 31,
2008 2007
-------- --------
ASSETS
Current Assets:
Cash and cash equivalents $ 85,739 $ 44,675
Short term investments -- 17,904
Accounts receivable, net of
allowance of $5,566 and $6,618
in 2008 and 2007, respectively 63,896 72,534
Deferred income taxes 6,667 6,602
Prepaid expenses and other
current assets 6,979 8,646
-------- --------
Total current assets 163,281 150,361
Property and equipment, net 21,721 24,421
Long-term investments 2,967 10,193
Acquisition-related intangible assets, net 6,438 9,691
Goodwill, net 62,276 62,285
Deferred income taxes 10,932 9,846
Other assets 2,606 4,863
-------- --------
Total assets $270,221 $271,660
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,480 $ 9,112
Accrued compensation and benefits 17,429 19,357
Accrued and other liabilities 16,188 10,040
Deferred revenue 32,984 31,817
Income taxes payable 6,811 8,156
-------- --------
Total current liabilities 81,892 78,482
Other non-current liabilities 8,490 7,473
Shareholders' equity:
Preferred stock, no par value; 20,000,000 shares
authorized, no shares issued or outstanding in
2008 or 2007 -- --
Common stock, $.01 par value; 100,000,000 shares
authorized; 23,581,109 and 24,899,919 shares
issued and outstanding at December 31, 2008 and
2007, respectively 234 249
Additional paid-in capital -- 17,744
Retained earnings 182,882 165,189
Accumulated other comprehensive (loss) income (3,277) 2,523
-------- --------
Total shareholders' equity 179,839 185,705
-------- --------
Total liabilities and shareholders' equity $270,221 $271,660
======== ========
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Twelve Months Ended
December 31,
-----------------
2008 2007
-------- --------
Operating activities:
Net income $ 22,798 $ 30,751
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 12,699 13,617
Asset impairment charge 5,205 --
Stock compensation 8,864 6,199
Loss on disposal of equipment 156 12
Tax benefit of stock awards exercised/vested 202 1,835
Excess tax benefits from stock based
compensation (100) (721)
Deferred income taxes (1,389) (2,759)
Unrealized foreign currency gain (694) (1,419)
Changes in operating assets and liabilities:
Accounts receivable, net 7,077 (10,618)
Other assets 2,691 3,451
Accounts payable, accrued and other
liabilities 5,997 (5,339)
Income taxes (1,324) 1,528
Deferred revenue 1,659 1,737
-------- --------
Net cash provided by operating activities 63,841 38,274
-------- --------
Investing activities:
Purchase of property and equipment (7,708) (9,401)
Net maturities of investments 21,623 84,517
-------- --------
Net cash provided by investing activities 13,915 75,116
-------- --------
Financing activities:
Purchase of common stock (35,107) (99,931)
Excess tax benefits from stock based compensation 100 721
Proceeds from issuance of common stock from
options exercised 3,177 10,910
-------- --------
Net cash used in financing activities (31,830) (88,300)
-------- --------
Foreign currency impact on cash (4,862) 1,136
-------- --------
Net change in cash and cash equivalents 41,064 26,226
Cash and cash equivalents at beginning of year 44,675 18,449
-------- --------
Cash and cash equivalents at end of year $ 85,739 $ 44,675
======== ========
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:
2007
-----------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
-------- -------- -------- --------
GAAP Diluted EPS $ 0.19 $ 0.32 $ 0.29 $ 0.33
Adjustments to GAAP:
Stock option expense 0.03 0.03 0.03 0.02
Purchase amortization 0.03 0.03 0.03 0.03
Sales tax recoveries (0.01) (0.02) (0.01) --
Asset impairment charge -- -- -- --
Non-recurring tax adjustments -- -- -- --
Restructuring charge -- -- -- --
-------- -------- -------- --------
Adjusted Diluted EPS $ 0.23 $ 0.36 $ 0.34 $ 0.37
======== ======== ======== ========
2008 2007 2008
----------------------------------- -------- --------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD YTD
-------- -------- -------- -------- -------- --------
GAAP Diluted
EPS $ 0.30 $ 0.37 $ 0.18 $ 0.08 $ 1.13 $ 0.94
Adjustments
to GAAP:
Stock
option
expense 0.03 0.04 0.04 0.04 0.10 0.15
Purchase
amortiza-
tion 0.02 0.02 0.02 0.02 0.11 0.09
Sales tax
recoveries (0.01) -- -- -- (0.03) (0.01)
Asset
impairment
charge -- -- 0.22 -- -- 0.22
Non-
recurring
tax adjust-
ments -- -- (0.11) (0.02) -- (0.12)
Restructur-
ing charge -- -- -- 0.13 -- 0.13
-------- -------- -------- -------- -------- --------
Adjusted
Diluted
EPS $ 0.35 $ 0.42 $ 0.34 $ 0.26 $ 1.30 $ 1.38
======== ======== ======== ======== ======== ========
2. Revenues and operating income (loss) by reportable segment are as
follows (in thousands):
2007
-----------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
-------- -------- -------- --------
Revenue:
Americas $ 68,446 $ 75,599 $ 69,850 $ 70,427
EMEA 5,844 9,809 10,463 10,733
APAC 3,900 4,221 4,276 3,833
-------- -------- -------- --------
$ 78,190 $ 89,629 $ 84,589 $ 84,993
======== ======== ======== ========
GAAP Operating Income (Loss):
Americas $ 8,734 $ 12,338 $ 8,894 $ 10,334
EMEA (1,321) 1,145 1,432 1,166
APAC (131) 189 261 17
-------- -------- -------- --------
$ 7,282 $ 13,672 $ 10,587 $ 11,517
======== ======== ======== ========
Adjustments (pre-tax):
Americas:
Stock option expense $ 1,121 $ 1,130 $ 1,224 $ 799
Purchase amortization 1,195 1,195 1,180 1,083
Sales tax recoveries (373) (650) (269) (146)
Asset impairment charge -- -- -- --
Restructuring charge -- -- -- --
-------- -------- -------- --------
1,943 1,675 2,135 1,736
-------- -------- -------- --------
EMEA:
Restructuring charge -- -- -- --
-------- -------- -------- --------
-- -- -- --
-------- -------- -------- --------
APAC:
Restructuring charge -- -- -- --
-------- -------- -------- --------
-- -- -- --
-------- -------- -------- --------
-------- -------- -------- --------
Total Adjustments $ 1,943 $ 1,675 $ 2,135 $ 1,736
======== ======== ======== ========
Adjusted non-GAAP Operating
Income (Loss):
Americas $ 10,677 $ 14,013 $ 11,029 $ 12,070
EMEA (1,321) 1,145 1,432 1,166
APAC (131) 189 261 17
-------- -------- -------- --------
$ 9,225 $ 15,347 $ 12,722 $ 13,253
======== ======== ======== ========
2008 2007 2008
----------------------------------- -------- --------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD YTD
-------- -------- -------- -------- -------- --------
Revenue:
Americas $ 72,129 $ 73,551 $ 67,957 $ 63,609 $284,322 $277,246
EMEA 12,028 11,961 10,083 8,726 36,849 42,798
APAC 4,167 4,978 4,696 3,316 16,230 17,157
-------- -------- -------- -------- -------- --------
$ 88,324 $ 90,490 $ 82,736 $ 75,651 $337,401 $337,201
======== ======== ======== ======== ======== ========
GAAP
Operating
Income
(Loss):
Americas $ 7,065 $ 10,643 $ 1,618 $ (477)$ 40,300 $ 18,849
EMEA 2,055 2,215 1,292 1,078 2,422 6,640
APAC (31) 406 332 (233) 336 474
-------- -------- -------- -------- -------- --------
$ 9,089 $ 13,264 $ 3,242 $ 368 $ 43,058 $ 25,963
======== ======== ======== ======== ======== ========
Adjustments
(pre-tax):
Americas:
Stock
option
expense $ 1,304 $ 1,372 $ 1,399 $ 1,383 $ 4,274 $ 5,458
Purchase
amortiza-
tion 881 844 769 759 4,653 3,253
Sales tax
recoveries (234) -- -- -- (1,438) (234)
Asset im-
pairment
charge -- -- 5,205 -- -- 5,205
Restructur-
ing charge -- -- -- 4,369 -- 4,369
-------- -------- -------- -------- -------- --------
1,951 2,216 7,373 6,511 7,489 18,051
-------- -------- -------- -------- -------- --------
EMEA:
Restructur-
ing charge -- -- -- 204 -- 204
-------- -------- -------- -------- -------- --------
-- -- -- 204 -- 204
-------- -------- -------- -------- -------- --------
APAC:
Restructur-
ing charge -- -- -- 94 -- 94
-------- -------- -------- -------- -------- --------
-- -- -- 94 -- 94
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Total
Adjustments $ 1,951 $ 2,216 $ 7,373 $ 6,809 $ 7,489 $ 18,349
======== ======== ======== ======== ======== ========
Adjusted
non-GAAP
Operating
Income
(Loss):
Americas $ 9,016 $ 12,859 $ 8,991 $ 6,034 $ 47,789 $ 36,900
EMEA 2,055 2,215 1,292 1,282 2,422 6,844
APAC (31) 406 332 (139) 336 568
-------- -------- -------- -------- -------- --------
$ 11,040 $ 15,480 $ 10,615 $ 7,177 $ 50,547 $ 44,312
======== ======== ======== ======== ======== ========
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):
2007
-----------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
--------- -------- -------- --------
Professional services $ 38,831 $ 39,865 $ 41,488 $ 38,946
Customer support and software
enhancements 15,969 15,998 16,949 18,107
-------- -------- -------- --------
Total services revenue $ 54,800 $ 55,863 $ 58,437 $ 57,053
======== ======== ======== ========
2008 2007 2008
----------------------------------- -------- --------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD YTD
-------- -------- -------- -------- -------- --------
Professional
services $ 41,718 $ 42,866 $ 40,693 $ 33,728 $159,130 $159,005
Customer
support and
software
enhance-
ments 18,119 19,423 19,330 20,090 67,023 76,962
-------- -------- -------- -------- -------- --------
Total
services
revenue $ 59,837 $ 62,289 $ 60,023 $ 53,818 $226,153 $235,967
======== ======== ======== ======== ======== ========
4. Hardware and other revenue includes the following items (in
thousands):
2007
-----------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
-------- -------- -------- --------
Hardware revenue $ 6,666 $ 7,270 $ 5,614 $ 5,661
Billed Travel 2,971 3,098 3,235 3,702
-------- -------- -------- --------
Total Hardware and other
revenue $ 9,637 $ 10,368 $ 8,849 $ 9,363
======== ======== ======== ========
2008 2007 2008
----------------------------------- -------- --------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD YTD
-------- -------- -------- -------- -------- --------
Hardware
revenue $ 7,141 $ 5,428 $ 5,756 $ 4,916 $ 25,211 $ 23,241
Billed
Travel 3,034 3,408 3,155 3,083 13,006 12,680
-------- -------- -------- -------- -------- --------
Total Hard-
ware and
other
revenue $ 10,175 $ 8,836 $ 8,911 $ 7,999 $ 38,217 $ 35,921
======== ======== ======== ======== ======== ========
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):
2007
-----------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
-------- -------- -------- --------
Revenue $ 748 $ 992 $ 1,049 $ 1,231
Costs and Expenses 858 1,306 1,629 1,892
-------- -------- -------- --------
Operating Income (110) (314) (580) (661)
Foreign currency gains
(losses) in other income (22) (602) 897 892
-------- -------- -------- --------
$ (132)$ (916)$ 317 $ 231
======== ======== ======== ========
2008 2007 2008
----------------------------------- -------- --------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD YTD
-------- -------- -------- -------- -------- --------
Revenue $ 1,131 $ 1,189 $ 132 $ (2,209)$ 4,020 $ 243
Costs and
Expenses 1,601 911 (331) (3,112) 5,685 (931)
-------- -------- -------- -------- -------- --------
Operating
Income (470) 278 463 903 (1,665) 1,174
Foreign
currency
gains
(losses) in
other
income 1,641 299 542 1,395 1,165 3,877
-------- -------- -------- -------- -------- --------
$ 1,171 $ 577 $ 1,005 $ 2,298 $ (500)$ 5,051
======== ======== ======== ======== ======== ========
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):
2007
-----------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
-------- -------- -------- --------
Operating Income $ (14)$ (443)$ (693)$ (725)
Foreign currency gains
(losses) in other income (82) (536) (312) (248)
-------- -------- -------- --------
Total impact of changes in the
India Rupee $ (96) $ (979)$ (1,005)$ (973)
======== ======== ======== ========
2008 2007 2008
----------------------------------- -------- --------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD YTD
-------- -------- -------- -------- -------- --------
Operating
Income $ (619)$ 59 $ 540 1,248 $ (1,875)$ 1,228
Foreign
currency
gains
(losses) in
other
income 94 385 787 549 (1,178) 1,815
-------- -------- -------- -------- -------- --------
Total
impact of
changes in
the India
Rupee $ (525)$ 444 $ 1,327 $ 1,797 $ (3,053)$ 3,043
======== ======== ======== ======== ======== ========
6. Other income includes the following components (in thousands):
2007
-----------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
-------- -------- -------- --------
Interest income $ 1,114 $ 900 $ 722 $ 707
Foreign currency gains
(losses) (22) (602) 897 892
-------- -------- -------- --------
Total other income $ 1,092 $ 298 $ 1,619 $ 1,599
======== ======== ======== ========
2008 2007 2008
----------------------------------- -------- --------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD YTD
-------- -------- -------- -------- -------- --------
Interest
income $ 660 $ 351 $ 385 $ 272 $ 3,443 $ 1,668
Foreign
currency
gains
(losses) 1,641 299 542 1,395 1,165 3,877
-------- -------- -------- -------- -------- --------
Total other
income $ 2,301 $ 650 $ 927 $ 1,667 $ 4,608 $ 5,545
======== ======== ======== ======== ======== ========
7. Capital expenditures are as follows (in thousands):
2007
-----------------------------------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
-------- -------- -------- --------
Capital expenditures $ 2,956 $ 3,511 $ 1,467 $ 1,467
======== ======== ======== ========
2008 2007 2008
----------------------------------- -------- --------
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr YTD YTD
-------- -------- -------- -------- -------- --------
Capital ex-
penditures $ 2,716 $ 2,844 $ 1,258 $ 890 $ 9,401 $ 7,708
======== ======== ======== ======== ======== ========
8. Stock Repurchase Activity
In 2008, we repurchased approximately 1.7 million shares of
common stock totaling $35.0 million at an average price of $20.52.
In 2007, we repurchased 3.6 million shares of common stock
totaling $100.0 million at an average price of $28.05.
9. Effective Tax Rate Reconciliation for GAAP and Adjusted Results
(in thousands except tax rate and per share data):
Three Months Ended December 31, 2008
------------------------------------------------
Income
before Income
income tax Net Diluted Effective
taxes provision income EPS tax rate
-------- -------- -------- -------- --------
GAAP results before
impairment charges $ 2,035 $ 707 $ 1,328 $ 0.06 34.75%
Impairment of
technology
investment (a) -- -- -- --
Impairment of auction
rate security (a) -- -- -- --
Provision to return
adjustments (b) -- (269) 269 0.01
Unusual tax
adjustments (c) -- (381) 381 0.02
-------- -------- -------- -------- --------
GAAP results-
reported $ 2,035 $ 57 $ 1,978 $ 0.08 2.81%
======== ======== ======== ======== ========
Adjusted results $ 8,844 $ 3,073 $ 5,771 $ 0.25 34.75%
Provision to return
adjustments (b) -- (269) 269 0.01
-------- -------- -------- -------- --------
Adjusted results-
reported $ 8,844 $ 2,804 $ 6,040 $ 0.26 31.71%
======== ======== ======== ======== ========
Twelve Months Ended December 31, 2008
--------------------------------------------
Income
before Income
income tax Net Diluted Effective
taxes provision income EPS tax rate
--------------------------------------------
GAAP results before
impairment charges $ 36,713 $ 12,757 $ 23,956 $ 0.98 34.75%
Impairment of technology
investment (a) (1,730) 94 (1,824) (0.07)
Impairment of auction
rate security (a) (3,475) -- (3,475) (0.14)
Provision to return
adjustments (b) -- (1,109) 1,109 0.05
Unusual tax adjustments
(c) -- (3,032) 3,032 0.12
-------- -------- -------- -------- --------
GAAP results-
reported $ 31,508 $ 8,710 $ 22,798 $ 0.94 27.64%
======== ======== ======== ======== ========
Adjusted results $ 49,857 $ 17,325 $ 32,532 $ 1.34 34.75%
Provision to return
adjustments (b) (1,109) 1,109 0.05
-------- -------- -------- -------- --------
Adjusted results-
reported $ 49,857 $ 16,216 $ 33,641 $ 1.38 32.53%
======== ======== ======== ======== ========
(a) During the quarter ended September 30, 2008, we recorded an
impairment charge of $1.7 million, writing down the remaining
balance of a $2.0 million investment in a technology company we
made in July 2003. We recorded the additional impairment due to a
down round of financing in which our preferred share ownership
was converted into common stock, eliminating our preference
rights associated with liquidation, thereby substantially
impairing our ability to recoup our investment. In addition, we
recorded an impairment charge of $3.5 million on an investment in
an auction rate security. We reduced the carrying value to zero
due to credit downgrades of the underlying issuer and the bond
insurer as well as increasing publicly reported exposure to
bankruptcy risk by the issuer. We recorded a tax valuation
allowance against these capital losses as we do not have any
future capital gains to offset these losses.
(b) Provision to return adjustments include the true-up of the 2007
tax provision to the 2007 tax return filed in the third quarter
of 2008. The majority of the adjustments relate to research and
development and job training tax credits.
(c) The majority of the adjustment represents release of income tax
reserves resulting from expiration of tax audit statutes for U.S.
federal income tax returns filed for 2004 and prior. During 2008,
we completed our IRS audit examination for the 2005 return
identifying no significant contingencies or errors. The reserve
reversal is partially offset by $0.6 million tax expense on the
repatriation of cash from a foreign subsidiary associated with
the settlement of several large intercompany balances in order to
reduce the unrealized foreign exchange gain/loss volatility in
other income. The majority of the large intercompany balances
were associated with a non-operating legal entity in Europe.