ATLANTA, Oct. 21, 2008 (GLOBE NEWSWIRE) -- Leading supply chain optimization provider Manhattan Associates, Inc. (Nasdaq:MANH) today reported third quarter 2008 Earnings Per Share (EPS) in line with adjusted guidance previously issued for the quarter. The Company also revised its Earnings Per Share guidance for the full year after recalibrating its outlook on market demand for the fourth quarter of 2008 based on challenging global economic conditions.
The Company's third quarter adjusted diluted earnings per share were $0.34, equal to the same metric in the quarter ended September 30, 2007, and at the low end of the Company's previously issued guidance range of $0.34 to $0.42 for the quarter ended September 30, 2008. GAAP diluted earnings per share were $0.18, a 38% decrease over the third quarter of 2007, on overall revenue of $82.7 million, which was down 2% from overall revenue posted in the third quarter of 2007.
Manhattan Associates President and CEO Pete Sinisgalli commented, "Due to downward pressure on economies worldwide, we saw a significant number of software license deals we expected to close in the third quarter slip to the fourth quarter, and possibly later. The silver lining in this challenging time is that our competitive win rate remains strong, and as the capital markets return to healthier levels, we are well positioned to win a greater share of business."
"Our current market outlook assumes that market pressures similar to those in the third quarter continue through the fourth quarter," Sinisgalli added. "We therefore have recalibrated our full-year 2008 Adjusted Earnings Per Share guidance to a range of $1.36 to $1.46, representing growth of between 5% and 12% over 2007 full-year Earnings Per Share."
THIRD QUARTER FINANCIAL SUMMARY:
Summarized results for the 2008 third quarter, as compared to the 2007 third quarter, follow:
Earnings Per Share
* Adjusted diluted earnings per share, a non-GAAP measure, remained unchanged at $0.34 per share for each of the quarters ended September 30, 2008 and 2007. * GAAP diluted earnings per share decreased 38% to $0.18 per share, which includes the impact of asset write-downs and the release of tax contingency reserves due to expiring tax audit statutes for 2004 and prior years.
Revenue
* Consolidated revenue decreased 2% to $82.7 million. Currency
changes during the quarter did not significantly impact total
revenue.
- License revenue decreased 20%, to $13.8 million.
- Services revenue totaled $60.0 million, increasing 3%.
Operating Income
* GAAP Operating income decreased 69% to $3.2 million, which includes $5.2 million in asset write-downs for a technology investment and an auction-rate security investment. Excluding the impact of currency changes, GAAP operating income decreased 75%. * Operating income, on a non-GAAP basis, decreased 17% to $10.6 million. Excluding the impact of currency changes, operating income on a non-GAAP basis decreased 21%.
Cash
* Cash Flow from Operations was a record $18.4 million, increasing 190% over the third quarter of 2007, with Days Sales Outstanding of 79 days. * Cash and Investments on hand at September 30, 2008 was $82.8 million.
Common Share Repurchase
* The Company repurchased 511,404 common shares totaling $12.6 million at an average share price of $24.73 in the third quarter of 2008, thereby completing its $50 million buyback program approved in October 2007. * In October 2008, the Board of Directors approved the repurchase of up to an additional $25 million of Manhattan Associates outstanding common stock.
YEAR-TO-DATE FINANCIAL SUMMARY:
Summarized results for the first nine months of 2008, as compared to the first nine months of 2007, follow:
Earnings Per Share
* GAAP diluted earnings per share increased 5% to $0.84. * Adjusted diluted earnings per share, a non-GAAP measure, increased to $1.12, a 19% gain.
Revenue
* Consolidated revenue increased 4% to $261.6 million. Excluding the
impact of currency changes, revenue increased 3%.
- License revenue decreased 5%, to $51.5 million.
- Services revenue totaled $182.1 million, increasing 8%.
Operating Income
* GAAP operating income decreased 19% to $25.6 million. Excluding the impact of currency changes, GAAP operating income decreased 20%. * On a non-GAAP basis, operating income slightly decreased from $37.3 million to $37.1 million. Excluding the impact of currency changes, operating income on a non-GAAP basis decreased 2%.
Tax Rate
* GAAP and non-GAAP effective tax rates were 29.36% and 32.70% respectively, compared to 34.75% on a GAAP and non-GAAP basis in the first half of 2008. The lower tax rates primarily resulted from tax contingency reserves released due to expiring tax audit statutes. * On a non-GAAP basis, a lower tax rate was achieved through recognition of credits related to research and development and job training.
Common Share Repurchase
* The Company repurchased approximately 1.1 million common shares during the first nine months of 2008 at an average share price of $23.72, for a total investment of $25.0 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. Year-to-date, the company has closed 11 contracts of this size. * Software license wins with new customers such as Chery Automobile Company, Ltd., Crete Carrier Corporation, Lennox International, Inc., Republic National Distributing Company, SamsonOpt, Santrade, Ltd., Select Carrier Group, Inc., The Men's Wearhouse and Triplefin LLC. * Expanding partnerships with existing customers such as Amerisource Bergen Services Corporation, Anvil Knitwear, Inc., Belk, Inc, Clapper Technology Sdn Bhd, David's Bridal, Inc., DHL, Estes Express, Giant Eagle, Inc., GoldToeMoretz LLC, HoMedics, Jones Apparel Group, Inc., LeSaint Logistics, Natasha, Olympus America, Inc., Ozburn-Hessey Logistics,Inc., Polo Ralph Lauren, Robinson Manufacturing, The Apparel Group, Ltd., The Bunsha Company, Walgreen Co., Winzer and Wirtz Corporation.
FOURTH QUARTER STAFF ADJUSTMENTS
The Company also announced that, based on its view of intermediate-term market demand, it has identified over-staffed areas and eliminated approximately 150 positions worldwide to realign capacity with demand forecasts. The adjustment represents fewer than 7% of about 2,300 associates worldwide.
"While it is always difficult to release good associates, we took the responsible action of recalibrating our investment in staff based on our adjusted market outlook," Sinisgalli said. "Based on our estimates, we remain sufficiently staffed to meet current and anticipated needs, and have protected our ability to continue investing in areas critical to our short- and long-term success," he added.
"Most of the positions eliminated were in the United States, and most were in the Company's Professional Services organization, which had been sized based on a growth trajectory no longer aligned with global economic conditions," Sinisgalli concluded.
2008 GUIDANCE
Manhattan Associates provided the following diluted earnings per share guidance for the fourth quarter and full year 2008. 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
--------------------------
Q4 2008 - diluted earnings
per share $0.19 $0.29 -42% -12%
Full year 2008 -
diluted earnings per share $1.03 $1.13 -9% 0%
Adjusted Earnings Per Share
---------------------------
Q4 2008 - diluted earnings
per share $0.24 $0.34 -35% -8%
Full year 2008 -
diluted earnings per share $1.36 $1.46 5% 12%
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, 2008, 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 2008 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 2009.
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 21, 2008 after the market closes. 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, www.manh.com, 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 can be accessed shortly after the call by dialing +1.800.642.1687 in the U.S. and Canada, or +1.973.200.3379 outside the U.S., and entering the conference identification number 65476910, or via www.manh.com. The phone replay will be available for two weeks after the call, and the Internet broadcast will be available until Manhattan Associates' fourth quarter 2008 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 September 30, 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), and asset impairment 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 17-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
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2008 2007 2008 2007
-------- -------- -------- --------
Revenue:
Software license $ 13,802 $ 17,303 $ 51,479 $ 54,454
Services 60,023 58,437 182,149 169,100
Hardware and other 8,911 8,849 27,922 28,854
-------- -------- -------- --------
Total Revenue 82,736 84,589 261,550 252,408
Costs and Expenses:
Cost of license 1,528 1,599 4,313 4,045
Cost of services 29,376 28,348 90,512 81,631
Cost of hardware and
other 7,036 7,286 22,619 24,511
Research and
development 12,546 11,887 36,911 35,316
Sales and marketing 11,579 13,079 39,827 40,177
General and
administrative 9,099 8,397 27,037 24,926
Depreciation and
amortization 3,125 3,406 9,531 10,261
Asset impairment
charges 5,205 -- 5,205 --
-------- -------- -------- --------
Total costs and
expenses 79,494 74,002 235,955 220,867
-------- -------- -------- --------
Operating income 3,242 10,587 25,595 31,541
Other income, net 927 1,619 3,878 3,009
-------- -------- -------- --------
Income before income
taxes 4,169 12,206 29,473 34,550
Income tax provision (140) 4,321 8,653 12,253
-------- -------- -------- --------
Net income $ 4,309 $ 7,885 $ 20,820 $ 22,297
======== ======== ======== ========
Basic earnings per share $ 0.18 $ 0.31 $ 0.86 $ 0.84
Diluted earnings per
share $ 0.18 $ 0.29 $ 0.84 $ 0.80
Weighted average number
of shares:
Basic 24,069 25,739 24,246 26,536
Diluted 24,568 26,879 24,736 27,723
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
RECONCILIATION OF SELECTED GAAP TO NON-GAAP MEASURES
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2008 2007 2008 2007
-------- -------- -------- --------
Operating income $ 3,242 $ 10,587 $ 25,595 $ 31,541
Stock option
expense(a) 1,399 1,224 4,075 3,475
Purchase
amortization(b) 769 1,180 2,494 3,570
Sales tax recoveries(c) -- (269) (234) (1,292)
Asset impairment
charges(d) 5,205 -- 5,205 --
-------- -------- -------- --------
Adjusted operating
income (Non-GAAP) $ 10,615 $ 12,722 $ 37,135 $ 37,294
-------- -------- -------- --------
Income tax provision $ (140) $ 4,321 $ 8,653 $ 12,253
Stock option
expense(a) 486 435 1,416 1,234
Purchase
amortization(b) 267 419 867 1,267
Sales tax
recoveries(c) -- (96) (81) (459)
Asset impairment
charges(d) (94) -- (94) --
Unusual tax
adjustments(e) 2,651 -- 2,651 --
-------- -------- -------- --------
Adjusted income tax
provision (Non-GAAP) $ 3,170 $ 5,079 $ 13,412 $ 14,295
-------- -------- -------- --------
Net income $ 4,309 $ 7,885 $ 20,820 $ 22,297
Stock option
expense(a) 913 789 2,659 2,241
Purchase
amortization(b) 502 761 1,627 2,303
Sales tax
recoveries(c) -- (173) (153) (833)
Asset impairment
charges(d) 5,299 -- 5,299 --
Unusual tax
adjustments(e) (2,651) -- (2,651) --
-------- -------- -------- --------
Adjusted Net income
(Non-GAAP) $ 8,372 $ 9,262 $ 27,601 $ 26,008
-------- -------- -------- --------
Diluted EPS $ 0.18 $ 0.29 $ 0.84 $ 0.80
Stock option
expense(a) 0.04 0.03 0.11 0.08
Purchase
amortization(b) 0.02 0.03 0.07 0.08
Sales tax
recoveries(c) -- (0.01) (0.01) (0.03)
Asset impairment
charges(d) 0.22 -- 0.21 --
Unusual tax
adjustments(e) (0.11) -- (0.11) --
-------- -------- -------- --------
Adjusted Diluted EPS
(Non-GAAP) $ 0.34 $ 0.34 $ 1.12 $ 0.94
-------- -------- -------- --------
Fully Diluted Shares 24,568 26,879 24,736 27,723
(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, 2008 and 2007:
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2008 2007 2008 2007
-------- -------- -------- --------
Cost of services $ 119 $ 108 $ 358 $ 321
Research and
development 199 160 591 474
Sales and marketing 435 375 1,281 1,115
General and
administrative 646 581 1,845 1,565
-------- -------- -------- --------
Total stock
option expense $ 1,399 $ 1,224 $ 4,075 $ 3,475
======== ======== ======== ========
(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. In the quarter,
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.
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
Sept. 30, Dec. 31,
2008 2007
-------- --------
ASSETS
Current Assets:
Cash and cash equivalents $ 79,802 $ 44,675
Short term investments -- 17,904
Accounts receivable, net of allowance of
$4,832 and $6,618 in 2008 and 2007,
respectively 71,078 72,534
Deferred income taxes 6,577 6,602
Prepaid expenses and other current assets 8,325 8,646
-------- --------
Total current assets 165,782 150,361
Property and equipment, net 23,606 24,421
Long-term investments 3,033 10,193
Acquisition-related intangible assets, net 7,197 9,691
Goodwill, net 62,281 62,285
Deferred income taxes 9,797 9,846
Other assets 2,865 4,863
-------- --------
Total assets $274,561 $271,660
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,998 $ 9,112
Accrued compensation and benefits 16,436 19,357
Accrued and other liabilities 11,868 10,040
Deferred revenue 33,978 31,817
Income taxes payable 7,399 8,156
-------- --------
Total current liabilities 78,679 78,482
Other non-current liabilities 8,650 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; 24,222,343 and
24,899,919 shares issued and outstanding at
September 30, 2008 and December 31, 2007,
respectively 240 249
Additional paid-in capital 2,515 17,744
Retained earnings 186,009 165,189
Accumulated other comprehensive (loss) income (1,532) 2,523
-------- --------
Total shareholders' equity 187,232 185,705
-------- --------
Total liabilities and shareholders' equity $274,561 $271,660
======== ========
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended
September 30,
------------------------
2008 2007
----------- -----------
Operating activities:
Net income $ 20,820 $ 22,297
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 9,531 10,261
Asset impairment charge 5,205 --
Stock compensation 6,616 4,939
Loss on disposal of equipment 41 26
Tax benefit of stock awards
exercised/vested 181 1,596
Excess tax benefits from stock based
compensation (81) (607)
Deferred income taxes -- (742)
Unrealized foreign currency gain (743) (880)
Changes in operating assets and liabilities:
Accounts receivable, net 1,131 (11,341)
Other assets 266 2,228
Accounts payable, accrued and other
liabilities 1,249 (7,173)
Income taxes (752) (1,304)
Deferred revenue 2,059 3,261
--------- ---------
Net cash provided by operating activities 45,523 22,561
--------- ---------
Investing activities:
Purchase of property and equipment (6,818) (7,934)
Net maturities of investments 21,558 63,185
--------- ---------
Net cash provided by investing activities 14,740 55,251
--------- ---------
Financing activities:
Purchase of common stock (25,053) (74,932)
Excess tax benefits from stock based
compensation 81 607
Proceeds from issuance of common stock
from options exercised 3,018 9,356
--------- ---------
Net cash used in financing activities (21,954) (64,969)
--------- ---------
Foreign currency impact on cash (3,182) 1,239
--------- ---------
Net change in cash and cash equivalents 35,127 14,082
Cash and cash equivalents at beginning of
period 44,675 18,449
--------- ---------
Cash and cash equivalents at end of period $ 79,802 $ 32,531
========= =========
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 -- -- -- --
Unusual tax adjustments -- -- -- --
-------- -------- -------- --------
Adjusted Diluted EPS $ 0.23 $ 0.36 $ 0.34 $ 0.37
======== ======== ======== ========
2008 2007 2008
---------------------------- ------------------
1st Qtr 2nd Qtr 3rd Qtr YTD YTD
-------- -------- -------- -------- --------
GAAP Diluted EPS $ 0.30 $ 0.37 $ 0.18 $ 0.80 $ 0.84
Adjustments to GAAP:
Stock option
expense 0.03 0.04 0.04 0.08 0.11
Purchase
amortization 0.02 0.02 0.02 0.08 0.07
Sales tax
recoveries (0.01) -- -- (0.03) (0.01)
Asset impairment
charge -- -- 0.22 -- 0.21
Unusual tax
adjustments -- -- (0.11) -- (0.11)
-------- -------- -------- -------- --------
Adjusted Diluted
EPS $ 0.35 $ 0.42 $ 0.34 $ 0.94 $ 1.12
======== ======== ======== ======== ========
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 $ 1,082 $ 1,090 $ 1,184 $ 816
Purchase amortization 1,195 1,195 1,180 1,083
Sales tax recoveries (373) (650) (269) (146)
Asset impairment charge -- -- -- --
-------- -------- -------- --------
$ 1,904 $ 1,635 $ 2,095 $ 1,753
-------- -------- -------- --------
EMEA:
Stock option expense $ 39 $ 40 $ 40 $ (17)
-------- -------- -------- --------
$ 39 $ 40 $ 40 $ (17)
-------- -------- -------- --------
Total Adjustments $ 1,943 $ 1,675 $ 2,135 $ 1,736
======== ======== ======== ========
Adjusted non-GAAP Operating
Income (Loss):
Americas $ 10,638 $ 13,973 $ 10,989 $ 12,087
EMEA (1,282) 1,185 1,472 1,149
APAC (131) 189 261 17
-------- -------- -------- --------
$ 9,225 $ 15,347 $ 12,722 $ 13,253
======== ======== ======== ========
2008 2007 2008
---------------------------- ------------------
1st Qtr 2nd Qtr 3rd Qtr YTD YTD
-------- -------- -------- -------- --------
Revenue:
Americas $ 72,129 $ 73,551 $ 67,957 $213,895 $213,637
EMEA 12,028 11,961 10,083 26,116 34,072
APAC 4,167 4,978 4,696 12,397 13,841
-------- -------- -------- -------- --------
$ 88,324 $ 90,490 $ 82,736 $252,408 $261,550
======== ======== ======== ======== ========
GAAP Operating
Income (Loss):
Americas $ 7,065 $ 10,643 $ 1,618 $ 29,966 $ 19,326
EMEA 2,055 2,215 1,292 1,256 5,562
APAC (31) 406 332 319 707
-------- -------- -------- -------- --------
$ 9,089 $ 13,264 $ 3,242 $ 31,541 $ 25,595
======== ======== ======== ======== ========
Adjustments
(pre-tax):
Americas:
Stock option
expense $ 1,267 $ 1,335 $ 1,361 $ 3,356 $ 3,963
Purchase
amortization 881 844 769 3,570 2,494
Sales tax
recoveries (234) -- -- (1,292) (234)
Asset impairment
charge -- -- 5,205 -- 5,205
-------- -------- -------- -------- --------
$ 1,914 $ 2,179 $ 7,335 $ 5,634 $ 11,428
-------- -------- -------- -------- --------
EMEA:
Stock option
expense $ 37 $ 37 $ 38 $ 119 $ 112
-------- -------- -------- -------- --------
$ 37 $ 37 $ 38 $ 119 $ 112
-------- -------- -------- -------- --------
Total Adjustments $ 1,951 $ 2,216 $ 7,373 $ 5,753 $ 11,540
======== ======== ======== ======== ========
Adjusted non-GAAP
Operating Income
(Loss):
Americas $ 8,979 $ 12,822 $ 8,953 $ 35,600 $ 30,754
EMEA 2,092 2,252 1,330 1,375 5,674
APAC (31) 406 332 319 707
-------- -------- -------- -------- --------
$ 11,040 $ 15,480 $ 10,615 $ 37,294 $ 37,135
======== ======== ======== ======== ========
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 YTD YTD
-------- -------- -------- -------- --------
Professional
services $ 41,718 $ 42,866 $ 40,693 $120,184 $125,277
Customer support
and software
enhancements 18,119 19,423 19,330 48,916 56,872
-------- -------- -------- -------- --------
Total services
revenue $ 59,837 $ 62,289 $ 60,023 $169,100 $182,149
======== ======== ======== ======== ========
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 YTD YTD
-------- -------- -------- -------- --------
Hardware revenue $ 7,141 $ 5,428 $ 5,756 $ 19,550 $ 18,325
Billed Travel 3,034 3,408 3,155 9,304 9,597
-------- -------- -------- -------- --------
Total Hardware
and other
revenue $ 10,175 $ 8,836 $ 8,911 $ 28,854 $ 27,922
======== ======== ======== ======== ========
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 YTD YTD
-------- -------- -------- -------- --------
Revenue $ 1,131 $ 1,189 $ 132 $ 2,789 $ 2,452
Costs and
Expenses 1,601 911 (500) 3,793 2,012
-------- -------- -------- -------- --------
Operating Income (470) 278 632 (1,004) 440
Foreign currency
gains (losses)
in other income 1,641 299 542 273 2,482
-------- -------- -------- -------- --------
$ 1,171 $ 577 $ 1,174 $ (731) $ 2,922
======== ======== ======== ======== ========
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 Indian Rupee $ (96) $ (979) $ (1,005) $ (973)
======== ======== ======== ========
2008 2007 2008
---------------------------- ------------------
1st Qtr 2nd Qtr 3rd Qtr YTD YTD
-------- -------- -------- -------- --------
Operating Income $ (619) $ 59 $ 711 $ (1,150) $ 151
Foreign currency
gains (losses)
in other income 94 385 787 (930) 1,266
-------- -------- -------- -------- --------
Total impact of
changes in the
Indian Rupee $ (525) $ 444 $ 1,498 $ (2,080) $ 1,417
======== ======== ======== ======== ========
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 YTD YTD
------- ------- ------- ------- -------
Interest income $ 660 $ 351 $ 385 $ 2,736 $ 1,396
Foreign currency
gains (losses) 1,641 299 542 273 2,482
------- ------- ------- ------- -------
Total other
income $ 2,301 $ 650 $ 927 $ 3,009 $ 3,878
======= ======= ======= ======= =======
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 YTD YTD
-------- -------- -------- -------- --------
Capital
expenditures $ 2,716 $ 2,844 $ 1,258 $ 7,934 $ 6,818
======== ======== ======== ======== ========
8. Stock Repurchase Activity
During 2008, we repurchased approximately 1.1 million shares of
common stock totaling $25.0 million at an average price of
$23.72. In 2007 for the full year, we repurchased 3.6 million
shares of common stock totaling $100 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 September 30, 2008
-----------------------------------------------------
Income
before Income Effective
income tax Net Diluted Tax
taxes provision income EPS Rate
--------- --------- --------- --------- ---------
GAAP results
before
impairment
charges $ 9,374 $ 3,257 $ 6,117 $ 0.25 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) (840) 840 0.03
Unusual tax
adjustments (c) (2,651) 2,651 0.11
--------- --------- --------- --------- ----------
GAAP results-
reported $ 4,169 $ (140) $ 4,309 $ 0.18 -3.35%
--------- --------- --------- --------- ---------
Adjusted
results $ 11,542 $ 4,010 $ 7,532 $ 0.31 34.74%
Provision to
return
adjustments (b) (840) 840 0.03
--------- --------- --------- --------- ---------
Adjusted
results-
reported $ 11,542 $ 3,170 $ 8,372 $ 0.34 27.46%
--------- --------- --------- --------- ---------
Nine Months Ended September 30, 2008
-----------------------------------------------------
Income
before Income Effective
income tax Net Diluted Tax
taxes provision income EPS Rate
--------- --------- --------- --------- ---------
GAAP results
before
impairment
charges $ 34,678 $ 12,050 $ 22,628 $ 0.91 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) (840) 840 0.03
Unusual tax
adjustments (c) (2,651) 2,651 0.11
--------- --------- --------- --------- ---------
GAAP results-
reported $ 29,473 $ 8,653 $ 20,820 $ 0.84 29.36%
--------- --------- --------- --------- ---------
Adjusted
results $ 41,013 $ 14,252 $ 26,761 $ 1.08 34.75%
Provision to
return
adjustments (b) (840) 840 0.03
--------- --------- --------- --------- ---------
Adjusted
results-
reported $ 41,013 $ 13,412 $ 27,601 $ 1.12 32.70%
--------- --------- --------- --------- ---------
(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. In the
quarter, 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.