Manhattan Associates Reports Second Quarter 2017 Performance

Atlanta, Georgia, UNITED STATES


ATLANTA, July 20, 2017 (GLOBE NEWSWIRE) -- Leading Supply Chain Commerce Solutions provider Manhattan Associates, Inc. (NASDAQ:MANH) today reported GAAP diluted earnings per share for the second quarter ended June 30, 2017, of $0.45 compared to $0.46 in Q2 2016, on license revenue of $22.4 million and total revenue of $154.1 million. Non-GAAP adjusted diluted earnings per share for Q2 2017 was $0.50 compared to $0.49 in Q2 2016.

“Q2 represents a strong quarter of solid license revenue and pipeline activity well balanced across all three regions,” said Eddie Capel, president and chief executive officer of Manhattan Associates.  “During the quarter, we also made a strategic introduction of our next-generation software, the Manhattan Active™ portfolio, and have been very encouraged by customer interest and pipeline activity as a result.”

“We expect retail market headwinds, while challenging the speed of decision making, to present meaningful growth potential for Manhattan as many retailers address strategic challenges with enterprise transformation.  We are very focused on seizing this opportunity with the introduction of Manhattan Active Omni, the industry’s first cloud native omni-channel operations platform and the only application suite in the market that fully melds Order Management, Point of Sale, Clienteling, Store Inventory and Fulfillment into a single, cloud native solution.  We are pleased with the market’s enthusiasm for our latest innovation releases and continue to invest significant energy and capital to advance the world’s leading suite of Supply Chain Commerce solutions to extend our market leadership in 2017 and beyond,” said Capel.

SECOND QUARTER 2017 FINANCIAL SUMMARY:

  • GAAP diluted earnings per share was $0.45 in Q2 2017, compared to $0.46 in Q2 2016.
  • Adjusted diluted earnings per share, a non-GAAP measure, was $0.50 in Q2 2017, compared to $0.49 in Q2 2016.
  • Consolidated total revenue was $154.1 million in Q2 2017, compared to $154.9 million in Q2 2016. License revenue was $22.4 million in Q2 2017, compared to $20.6 million in Q2 2016.
  • GAAP operating income was $49.3 million in Q2 2017, compared to $52.3 million in Q2 2016.
  • Adjusted operating income, a non-GAAP measure, was $55.2 million in Q2 2017, compared to $55.9 million in Q2 2016.
  • Cash flow from operations was $11.3 million in Q2 2017, compared to $19.1 million in Q2 2016. Days Sales Outstanding was 57 days at June 30, 2017, compared to 53 days at March 31, 2017.
  • Cash and investments totaled $86.6 million at June 30, 2017, compared to $101.3 million at March 31, 2017.
  • During the three months ended June 30, 2017, the Company repurchased 535,340 shares of Manhattan Associates common stock under the share repurchase program authorized by the Board of Directors, for a total investment of $25.0 million. In July 2017, the Board of Directors authorized the Company to repurchase up to an aggregate of $50 million of the Company’s common stock.

SIX MONTH 2017 FINANCIAL SUMMARY:

  • GAAP diluted earnings per share for the six months ended June 30, 2017 was a record $0.85, compared to $0.84 for the six months ended June 30, 2016.  
  • Adjusted diluted earnings per share, a non-GAAP measure, was a record $0.92 for the six months ended June 30, 2017, compared to $0.91 for the six months ended June 30, 2016.
  • Consolidated revenue for the six months ended June 30, 2017, was $297.6 million, compared to $304.8 million for the six months ended June 30, 2016. License revenue was a record $45.2 million for the six months ended June 30, 2017, compared to $41.2 million for the six months ended June 30, 2016.  
  • GAAP operating income was $91.0 million for the six months ended June 30, 2017, compared to $95.4 million for the six months ended June 30, 2016.
  • Adjusted operating income, a non-GAAP measure, was $101.5 million for the six months ended June 30, 2017, compared to $103.8 million for the six months ended June 30, 2016. 
  • Cash flow from operations was a record $72.6 million in the six months ended June 30, 2017, compared to $59.5 million in the six months ended June 30, 2016.
  • During the six months ended June 30, 2017, the Company repurchased 1,539,208 shares of Manhattan Associates common stock under the share repurchase program authorized by the Board of Directors, for a total investment of $75.0 million.

SALES ACHIEVEMENTS:

  • Recognized license revenue of $1.0 million or more on four new contracts during Q2 2017.
  • Completed software license wins with new customers such as: Avalon Express, B&H Foto & Electronics, Coolblue, Continental Express, Delta Galil, dōTERRA, Francois Marine Services, Freymiller Trucking, Nationwide Truck Brokers, New Wave Group Canadian Distribution, Nissan International, Office Depot International, Renault, s.Oliver, Sub-Zero Group, Vineyard Vines and Vision Media Management & Fulfillment.
  • Expanded relationships with existing customers such as: Alidi, American Tack & Hardware Company, APL Logistics Americas, Batory Foods, Boston Scientific Corporation, Costa Del Mar, Custom Goods, Damco Distribution Services, Dirt Cheap, Donaldson Europe, Fenix Outdoor, Fleet Wholesale Supply Co., Harng Central Department Stores, Hy-Vee, IEH Auto Parts, Keeco, LeSaint Logistics, Logistic Union, lululemon athletica, Office Depot de México, Marr Russia, My Chemist, PepsiCo Russia, Perfect-10 Satellite Distribution, Recreational Equipment, Riffle Machine Works, Skechers, Staples Australia, The Apparel Group, Task International, TwinMed, UPS Supply Chain Solutions and Uniform Advantage.

2017 GUIDANCE

Manhattan Associates provides the following revenue and diluted earnings per share guidance for the full year 2017:

   Guidance Range - 2017 Full Year  
  
  ($'s in millions, except EPS)$ Range
 % Growth Range  
  
            
  Total revenue - current guidance$   590  $   600  -2% -1%  
            
  Total revenue - previous guidance$606 $620 0% 3%  
            
  Diluted earnings per share (EPS):         
  GAAP EPS - current guidance$   1.71  $   1.75  -1% 2%  
  Equity-based compensation, net of tax   0.11     0.11       
  Restructuring charge, net of tax   0.03     0.03       
  Adjusted EPS(1) - current guidance$   1.85  $   1.89  -1% 1%  
            
  GAAP EPS - previous guidance$1.77 $1.81 3% 5%  
  Equity-based compensation, net of tax 0.12  0.12      
  Adjusted EPS(1) - previous guidance$1.89 $1.93 1% 3%  
            
            
  (1) Adjusted EPS is a Non-GAAP measure which excludes the impact of equity-based compensation and restructuring charge, and the related income tax effects of all items.  
            
            

Manhattan Associates currently intends to publish, in each quarterly earnings release, certain expectations with respect to future financial performance. Those statements, including the guidance provided above, are forward looking. Actual results may differ materially. Those statements, including the guidance provided above, do not reflect the potential impact of mergers, acquisitions or other business combinations that may be completed after the date of the release.

Manhattan Associates will make its earnings release and published expectations available on its website (www.manh.com). Following publication of this earnings release, any expectations with respect to future financial performance contained in this release, including the guidance above, should be considered historical only, and Manhattan Associates disclaims any obligation to update them.

CONFERENCE CALL

The Company’s conference call regarding its second quarter financial results will be held today, July 20, 2017, at 4:30 p.m. Eastern Standard Time. Investors are invited to listen to a live webcast of the conference call through the investor relations section of Manhattan Associates' website at www.manh.com. To listen to the live webcast, please go to the website 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 +1.855.859.2056 in the U.S. and Canada, or +1.404.537.3406 outside the U.S., and entering the conference identification number 41791412 or via the web at www.manh.com. The phone replay will be available for two weeks after the call, and the Internet webcast will be available until Manhattan Associates’ third quarter 2017 earnings release.

GAAP VERSUS NON-GAAP PRESENTATION

The Company provides adjusted operating income, adjusted net income and adjusted diluted earnings per share in this press release as additional information regarding the Company’s historical and projected operating results. These measures are not in accordance with – or alternatives to – 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’ ability to understand and compare the Company’s results and guidance, because the measures provide supplemental information in evaluating the operating results of its business, as distinct from results that include items that are not indicative of ongoing operating results, and because the Company believes its peers typically publish similar non-GAAP measures. This release should be read in conjunction with the Company’s Form 8-K earnings release filing for the quarter and six months ended June 30, 2017. 

Non-GAAP adjusted operating income, adjusted income tax provision, adjusted net income and adjusted diluted earnings per share exclude the impact of equity-based compensation, acquisition-related costs and the amortization thereof, and a restructuring charge – all net of income tax effects. Reconciliations of the Company’s GAAP financial measures to non-GAAP adjustments are included in the supplemental information attached to this release.

ABOUT MANHATTAN ASSOCIATES

Manhattan Associates is a technology leader in supply chain and omni-channel commerce. We unite information across the enterprise, converging front-end sales with back-end supply chain execution. Our software, platform technology and unmatched experience help drive both top-line growth and bottom-line profitability for our customers. 

Manhattan Associates designs, builds and delivers leading edge cloud and on-premise solutions so that across the store, through your network or from your fulfillment center, you are ready to reap the rewards of the omni-channel marketplace. For more information, please visit www.manh.com.

This press release contains “forward-looking statements” relating to Manhattan Associates, Inc. Forward-looking statements in this press release include the information set forth under “2017 Guidance.” 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: uncertainty about the global economy, delays in product development, competitive pressures, software errors, information security breaches and the risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. 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
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
 
  
  Three Months Ended June 30,  Six Months Ended June 30, 
  2017  2016  2017  2016 
  (unaudited)  (unaudited)  (unaudited)  (unaudited) 
Revenue:                
Software license $22,442  $20,631  $45,215  $41,238 
Services  116,828   119,833   225,661   236,096 
Hardware and other  14,871   14,428   26,754   27,418 
Total revenue  154,141   154,892   297,630   304,752 
Costs and expenses:                
Cost of license  2,355   2,283   4,595   5,435 
Cost of services  47,751   48,393   97,494   100,297 
Cost of hardware and other  12,207   11,841   21,845   21,598 
Research and development  14,102   13,458   28,327   28,164 
Sales and marketing  11,732   12,015   23,521   24,603 
General and administrative  11,387   12,368   23,259   24,816 
Depreciation and amortization  2,326   2,266   4,588   4,472 
Restructuring charge  3,022   -   3,022   - 
Total costs and expenses  104,882   102,624   206,651   209,385 
Operating income  49,259   52,268   90,979   95,367 
Other (loss) income, net  (68)  654   (439)  1,174 
Income before income taxes  49,191   52,922   90,540   96,541 
Income tax provision  18,047   19,581   31,172   35,720 
Net income $31,144  $33,341  $59,368  $60,821 
                 
Basic earnings per share $0.45  $0.46  $0.85  $0.84 
Diluted earnings per share $0.45  $0.46  $0.85  $0.84 
                 
Weighted average number of shares:                
Basic  69,227   71,880   69,610   72,264 
Diluted  69,421   72,228   69,844   72,633 


MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Reconciliation of Selected GAAP to Non-GAAP Measures
(in thousands, except per share amounts)
 
  
  Three Months Ended June 30,  Six Months Ended June 30, 
  2017  2016  2017  2016 
                 
Operating income $49,259  $52,268  $90,979  $95,367 
Equity-based compensation (a)  2,796   3,495   7,268   8,183 
Purchase amortization (c)  108   108   215   215 
Restructuring charge (d)  3,022   -   3,022   - 
Adjusted operating income (Non-GAAP) $55,185  $55,871  $101,484  $103,765 
                 
                 
Income tax provision $18,047  $19,581  $31,172  $35,720 
Equity-based compensation (a)  1,021   1,294   2,653   3,028 
Tax (expense) benefit of stock awards vested (b)  (93)  -   1,875   - 
Purchase amortization (c)  40   39   79   79 
Restructuring charge (d)  1,103   -   1,103   - 
Adjusted income tax provision (Non-GAAP) $20,118  $20,914  $36,882  $38,827 
                 
                 
Net income $31,144  $33,341  $59,368  $60,821 
Equity-based compensation (a)  1,775   2,201   4,615   5,155 
Tax expense (benefit) of stock awards vested (b)  93   -   (1,875)  - 
Purchase amortization (c)  68   69   136   136 
Restructuring charge (d)  1,919   -   1,919   - 
Adjusted net income (Non-GAAP) $34,999  $35,611  $64,163  $66,112 
           -     
                 
Diluted EPS $0.45  $0.46  $0.85  $0.84 
Equity-based compensation (a)  0.03   0.03   0.07   0.07 
Tax benefit of stock awards vested (b)  -   -   (0.03)  - 
Purchase amortization (c)  -   -   -   - 
Restructuring charge (d)  0.03   -   0.03   - 
Adjusted diluted EPS (Non-GAAP) $0.50  $0.49  $0.92  $0.91 
                 
Fully diluted shares  69,421   72,228   69,844   72,633 

(a) Adjusted results exclude all equity-based compensation, to facilitate comparison with our peers and for the other reasons explained in our Current Report on Form 8-K filed with the SEC on the date hereof. Equity-based compensation is included in the following GAAP operating expense lines for the three and six months ended June 30, 2017 and 2016:

  Three Months Ended June 30,  Six Months Ended June 30, 
  2017  2016  2017  2016 
                 
Cost of services $580  $868  $1,721  $2,147 
Research and development  434   620   1,154   1,374 
Sales and marketing  393   595   1,060   1,280 
General and administrative  1,389   1,412   3,333   3,382 
Total equity-based compensation                                 $2,796  $3,495  $7,268  $8,183 

(b) During the first quarter of 2017, we adopted Accounting Standards Update (ASU) 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting, to improve the accounting for employee share-based payments. Under the new guidance, all excess tax benefits and certain tax deficiencies are recognized as income tax expense or benefit in the income statements on a prospective basis, rather than recorded in additional paid-in capital. The adjustment represents the excess tax benefits and tax deficiencies of the stock awards vested during the period. Excess tax benefits (deficiencies) occur when the amount deductible for an award of equity instruments on our tax return is more (less) than the cumulative compensation cost recognized for financial reporting purposes, respectively. As discussed above, we excluded equity-based compensation from adjusted non-GAAP results to be consistent with other companies in the software industry. Therefore, we also excluded the related tax benefit (expense) generated upon their vesting.

(c) Adjustments represent purchased intangibles amortization from prior acquisition. Such amortization is excluded from adjusted results to facilitate comparison with our peers, to facilitate comparisons of the results of our core operations from period to period and for the other reasons explained in our Current Report on Form 8-K filed with the SEC on the date hereof.

(d) In May 2017, we eliminated about 100 positions due to the headwinds in the retail sector and to align our services capacity with demand. This action does not impair nor alter our strategic investment plans in innovation and sales and marketing to increase market share and extend our competitive advantage. As a result of this initiative, we recorded a charge of approximately $3.0 million in the second quarter of 2017. The charge primarily consists of employee severance, employee transition cost and outplacement services. We do not believe that the 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
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
 
  
   June 30, 2017  December 31, 2016 
  (unaudited)     
ASSETS        
Current Assets:        
Cash and cash equivalents $76,704  $95,615 
Short-term investments  9,898   - 
Accounts receivable, net of allowance of $3,394 and $3,595, respectively  96,295   100,285 
Prepaid expenses and other current assets  13,935   11,118 
Total current assets  196,832   207,018 
         
Property and equipment, net  16,177   17,424 
Goodwill, net  62,240   62,228 
Deferred income taxes  1,464   2,867 
Other assets  8,022   7,603 
Total assets $284,735  $297,140 
         
LIABILITIES AND SHAREHOLDERS' EQUITY        
Current liabilities:        
Accounts payable $13,201  $12,052 
Accrued compensation and benefits  20,102   20,700 
Accrued and other liabilities  11,561   12,510 
Deferred revenue  73,001   63,457 
Income taxes payable  -   8,924 
Total current liabilities  117,865   117,643 
         
Other non-current liabilities  9,184   10,131 
         
Shareholders' equity:        
Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2017 and 2016  -   - 
Common stock, $0.01 par value; 200,000,000 shares authorized; 68,926,397 and 70,233,955 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively  689   702 
Retained earnings  170,119   184,558 
Accumulated other comprehensive loss  (13,122)  (15,894)
Total shareholders' equity  157,686   169,366 
Total liabilities and shareholders' equity $284,735  $297,140 



MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
 
  
  Six Months Ended June 30, 
  2017  2016 
  (unaudited)  (unaudited) 
Operating activities:        
Net income $59,368  $60,821 
Adjustments to reconcile net income to net cash provided by operating activities:                                        
Depreciation and amortization  4,588   4,472 
Equity-based compensation  7,268   8,183 
Loss on disposal of equipment  9   14 
Tax benefit of stock awards exercised/vested  -   5,069 
Excess tax benefits from equity-based compensation  -   (5,074)
Deferred income taxes  1,966   950 
Unrealized foreign currency loss (gain)  42   (403)
Changes in operating assets and liabilities:        
Accounts receivable, net  5,243   4,113 
Other assets  (2,985)  (1,124)
Accounts payable, accrued and other liabilities  (2,117)  (10,624)
Income taxes  (9,336)  (2,313)
Deferred revenue  8,549   (4,577)
Net cash provided by operating activities  72,595   59,507 
         
Investing activities:        
Purchase of property and equipment  (2,703)  (4,107)
Net (purchases) maturities of investments  (9,457)  8,113 
Net cash (used in) provided by investing activities  (12,160)  4,006 
         
Financing activities:        
Purchase of common stock  (81,620)  (92,812)
Proceeds from issuance of common stock from options exercised  -   18 
Excess tax benefits from equity-based compensation  -   5,074 
Net cash used in financing activities  (81,620)  (87,720)
         
Foreign currency impact on cash  2,274   (1,074)
         
Net change in cash and cash equivalents  (18,911)  (25,281)
Cash and cash equivalents at beginning of period  95,615   118,416 
Cash and cash equivalents at end of period $76,704  $93,135 

MANHATTAN ASSOCIATES, INC.
SUPPLEMENTAL INFORMATION

1.    GAAP and Adjusted earnings per share by quarter are as follows:

   2016  2017 
   1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Full Year  1st Qtr  2nd Qtr YTD 
GAAP Diluted EPS  $0.38  $0.46  $0.47  $0.42  $1.72  $0.40  $0.45 $0.85 
Adjustments to GAAP:                                
Equity-based
  compensation
   0.04   0.03   0.03   0.04   0.14   0.04   0.03  0.07 
Tax benefit of stock awards vested   -   -   -   -   -   (0.03)  -  (0.03)
Purchase amortization   -   -   -   -   -   -   -  - 
Restructuring charge   -   -   -   -   -   -   0.03  0.03 
Adjusted Diluted EPS  $0.42  $0.49  $0.50  $0.46  $1.87  $0.42  $0.50 $0.92 
Fully Diluted Shares   73,020   72,228   71,743   71,148   72,060   70,247   69,421  69,844 

2.    Revenues and operating income by reportable segment are as follows (in thousands):

   2016  2017 
   1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Full Year  1st Qtr  2nd Qtr YTD 
Revenue:                                
Americas  $128,807  $131,018  $130,099  $123,660  $513,584  $113,115  $123,658 $236,773 
EMEA   15,686   18,185   15,078   17,333   66,282   23,360   22,028  45,388 
APAC   5,367   5,689   7,036   6,599   24,691   7,014   8,455  15,469 
   $149,860  $154,892  $152,213  $147,592  $604,557  $143,489  $154,141 $297,630 
                                 
GAAP Operating Income:                                
Americas  $37,454  $44,126  $46,213  $37,154  $164,947  $28,713  $35,717 $64,430 
EMEA   4,439   6,854   4,822   5,945   22,060   10,754   9,995  20,749 
APAC   1,206   1,288   2,549   2,257   7,300   2,253   3,547  5,800 
   $43,099  $52,268  $53,584  $45,356  $194,307  $41,720  $49,259 $90,979 
                                 
Adjustments (pre-tax):                                
Americas:                                
Equity-based
  compensation
  $4,688  $3,495  $3,541  $4,210  $15,934  $4,472  $2,796 $7,268 
Purchase amortization   107   108   107   108   430   107   108  215 
Restructuring charge   -   -   -   -   -   -   2,908  2,908 
   $4,795  $3,603  $3,648  $4,318  $16,364  $4,579  $5,812 $10,391 
                                 
EMEA:                                
Restructuring charge   -   -   -   -   -   -   114  114 
                                 
Adjusted non-GAAP
   Operating Income:
                                
Americas  $42,249  $47,729  $49,861  $41,472  $181,311  $33,292  $41,529 $74,821 
EMEA   4,439   6,854   4,822   5,945   22,060   10,754   10,109  20,863 
APAC   1,206   1,288   2,549   2,257   7,300   2,253   3,547  5,800 
   $47,894  $55,871  $57,232  $49,674  $210,671  $46,299  $55,185 $101,484 
                                 

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):

   2016  2017 
   1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Full Year  1st Qtr  2nd Qtr YTD 
Professional services  $84,506  $86,992  $84,843  $77,097  $333,438  $75,457  $80,869 $156,326 
Customer support and
  software enhancements
   31,757   32,841   34,424   34,826   133,848   33,376   35,959  69,335 
Total services revenue  $116,263  $119,833  $119,267  $111,923  $467,286  $108,833  $116,828 $225,661 

4.    Hardware and other revenue includes the following items (in thousands):

   2016  2017 
   1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Full Year  1st Qtr  2nd Qtr YTD 
Hardware revenue  $8,761  $9,554  $6,543  $9,070  $33,928  $7,559  $10,413 $17,972 
Billed travel   4,229   4,874   4,770   4,474   18,347   4,324   4,458  8,782 
Total hardware and
  other revenue                        
  $12,990  $14,428  $11,313  $13,544  $52,275  $11,883  $14,871 $26,754 

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):

   2016  2017 
   1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Full Year  1st Qtr  2nd Qtr YTD 
Revenue  $(810) $(474) $(784) $(1,425) $(3,493) $(1,547) $(1,219)$(2,766)
Costs and expenses   (1,292)  (702)  (782)  (1,028)  (3,804)  (789)  (396) (1,185)
Operating income   482   228   (2)  (397)  311   (758) $(823) (1,581)
Foreign currency gains
  (losses) in other income                    
   165   331   (72)  211   635   (646)  (348) (994)
   $647  $559  $(74) $(186) $946  $(1,404) $(1,171)$(2,575)

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):

   2016  2017 
   1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Full Year  1st Qtr  2nd Qtr YTD 
Operating income  $682  $459  $259  $159  $1,559  $(70) $(326)$(396)
Foreign currency (losses)
  gains in other income
   (109)  212   (44)  159   218   (320)  (190) (510)
Total impact of changes
  in the Indian Rupee                                
  $573  $671  $215  $318  $1,777  $(390) $(516)$(906)

6.    Other income includes the following components (in thousands):

   2016  2017 
   1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Full Year  1st Qtr  2nd Qtr YTD 
Interest income  $335  $329  $281  $216  $1,161  $293  $264 $557 
Foreign currency gains
  (losses)
   165   331   (72)  211   635   (646)  (348) (994)
Other non-operating
  income (expense)
   20   (6)  1   (11)  4   (18)  16  (2)
Total other income (loss)                              $520  $654  $210  $416  $1,800  $(371) $(68)$(439)

7.    Capital expenditures are as follows (in thousands):

   2016  2017 
   1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Full Year  1st Qtr  2nd Qtr YTD 
Capital expenditures                                    $1,906  $2,201  $1,358  $1,378  $6,843  $789  $1,914 $2,703 

8.    Stock Repurchase Activity (in thousands):

   2016  2017 
   1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Full Year  1st Qtr  2nd Qtr YTD 
Shares purchased under
  publicly-announced
  buy-back program
  892   552   420   957   2,821   1,004   535  1,539 
Shares withheld for taxes
  due upon vesting of
  restricted stock
  163   -   3   1   167   131   1  132 
Total shares purchased   1,055   552   423   958   2,988   1,135   536  1,671 
Total cash paid for shares
  purchased under
  publicly-announced
  buy-back program
 $48,499  $34,995  $24,998  $49,901  $158,393  $49,978  $24,974 $74,952 
Total cash paid for shares
  withheld for taxes due
  upon vesting of restricted
  stock
  9,292   26   158   64   9,540   6,641   27  6,668 
Total cash paid for shares
  repurchased                              
  $57,791  $35,021  $25,156  $49,965  $167,933  $56,619  $25,001 $81,620 

9.     As mentioned in footnote b to the reconciliation of selected GAAP to Non-GAAP Measures, during the first quarter of 2017, we adopted ASU 2016-09 Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. Had we adopted the guidance during the first quarter of 2016, the cash provided by operating activities and cash used in financing activities for the six months ended June 30, 2016 as compared to June 30, 2017 would have been as follows:

   Six Months Ended
June 30,
 
   2016  2017 
          
Net cash provided by operating activities, as stated        $59,507  $72,595 
Add: excess tax benefit from equity-based
  compensation
 5,074   - 
Revised net cash provided by operating activities  $64,581  $72,595 
          
Net cash used in financing activities, as stated  $(87,720) $(81,620)
Less: excess tax benefit from equity-based
  compensation
 (5,074)  - 
Revised net cash used in financing activities  $(92,794) $(81,620)



        

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