Exhibit 99.1
| | | |
| Financial Contact: | | Dennis Story |
| | | SVP and Chief Financial Officer |
| | | 678.597.7116 |
| | | dstory@manh.com |
| | | |
| Media Contact: | | Terrie O’Hanlon |
| | | SVP and Chief Marketing Officer |
| | | 678.597.7120 |
| | | tohanlon@manh.com |
Manhattan Associates Reports Record Fourth Quarter
Revenue and Full Year Revenue and Earnings
Q4 GAAP EPS increased 94%; Adjusted EPS increased 19%
ATLANTA — February 5, 2008 —Leading supply chain optimization provider Manhattan Associates, Inc. (NASDAQ: MANH), today reported record fourth quarter 2007 revenue and full year 2007 revenue and earnings. Manhattan Associates’ fourth quarter GAAP diluted earnings per share were $0.33, a 94% increase over the fourth quarter of 2006 on revenue of $85.0 million, a 12% increase. On a non-GAAP basis, adjusted diluted earnings per share were $0.37, a 19% increase over the fourth quarter of 2006.
FOURTH QUARTER FINANCIAL HIGHLIGHTS:
Summarized highlights of the 2007 fourth quarter results, as compared to the 2006 fourth quarter, follow:
| | • | | Consolidated revenue increased 12% to $85.0 million. Excluding the impact of currency changes, revenue increased 10%. |
| | - | | License revenue totaled $18.6 million, a 2% decrease. |
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| | - | | Services revenue totaled $57.1 million, increasing 14%. |
| | • | | GAAP Operating income increased 38% to $11.5 million. Excluding the impact of currency changes, GAAP operating income increased 46%; |
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| | • | | Operating income, on a non-GAAP basis, increased 1% to $13.3 million. Excluding the impact of currency changes, operating income on a non-GAAP basis increased 6%. |
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| | • | | GAAP diluted earnings per share increased 94% to $0.33. |
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| | • | | Adjusted diluted earnings per share increased 19% to $0.37 per share. |
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| | • | | Cash Flow from Operations was $15.7 million, a record fourth quarter, with Days Sales Outstanding of 79 days. |
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| | • | | Cash and Investments on Hand at December 31, 2007 was $72.8 million. |
| | • | | The Company repurchased 896,060 common shares totaling $25 million at an average share price of $27.90 in the quarter. The Company has $25 million of remaining share repurchase authority. |
FULL YEAR FINANCIAL HIGHLIGHTS:
Summarized highlights of the full year 2007, as compared to the full year of 2006, follow:
| | • | | Consolidated revenue increased 17% to $337.4 million. Excluding the impact of currency changes, revenue increased 15%. |
| | - | | License revenue was $73.0 million, a 10% increase. |
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| | - | | Services revenue totaled $226.2 million, increasing 16%. |
| | • | | GAAP operating income increased 40% to $43.1 million. Excluding the impact of currency changes, GAAP operating income increased 45%. |
| | • | | On a non-GAAP basis, operating income increased 12% to $50.5 million. Excluding the impact of currency changes operating income on a non-GAAP basis increased 15%. |
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| | • | | GAAP diluted earnings per share increased 64% to $1.13. |
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| | • | | Adjusted diluted earnings per share, on a non-GAAP basis, increased 20% to $1.30. |
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| | • | | The Company repurchased 3.6 million common shares totaling $100 million at an average share price of $28.05. |
“The fourth quarter of 2007 closes the most successful year in the history of the company and marks our 13th consecutive quarter of double digit revenue growth,” said Pete Sinisgalli, president and CEO. “As important, during 2007 we significantly strengthened the company and improved our market position. We expect to continue to enhance our market position and improve our financial results throughout 2008.”
Significant sales-related achievements during the quarter include:
| | • | | New customers such as Anna’s Linens, B&R Enclosures Pty Ltd, CSS Industries, Inc. Gainey Transportation Services, Inc., J. Knipper Company, Inc., Korus Consulting (Alternativa), Metersbonwe, Olgerdin Egil Skallagrimsson ehf, Orchard Supply Hardware LLC, Promotech Research Associates, Inc., Shanghai Metersbonwe Fashion & Accessories Co., Ltd., SPAR Retail, Trading Company Brozex, Tiendas Chedraui SA de CV, Washington Metro Area Transit Authority, Whirlpool Corporation, and Vitamin Shoppe Industries, Inc,. |
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| | • | | Expanding partnerships with existing customers such as Aaron Rents, Inc., ABX Logistics, American Eagle Outfitters, Inc., Belk, Inc., Casual Male Retail Group, Inc., Conair Corporation, Converse, Inc., DHL / Exel Inc., Dick’s Sporting Goods, Inc., Electronics for Imaging, Elektra del Milenio SA de CV, ElektroKompletServis, Fiskars Brands, Inc., GoldToeMoretz LLC, Hospira, Inc., IP Budin, John Paul Mitchell Systems, Jones Apparel Group, Inc., KGL Logistics, Kohl & Frisch, Ltd., Liberty Hardware Mfg. Corp., Matahari, McKesson Canada Corporation, NYK Logistics, Nestlé Nespresso, Production Tool Supply Company, PT Mataharii Putra Prima, Safeway, Inc., Shenzheng |
| | | | Easttop Trade & Logistics, Teters Floral Products, Inc., Teva Pharmaceuticals USA, Inc., TNT Fashion Logistics BV and VWR International LLC. |
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| | • | | Closing three large contracts, each of which generated $1 million or more in recognized license revenue. |
2008 GUIDANCE
Manhattan Associates provided the following diluted earnings per share guidance for the first quarter and full year 2008. The GAAP diluted earnings per share includes the impact of stock options expense under SFAS 123(R). A full reconciliation of GAAP to non-GAAP diluted earnings per share is included in the supplemental attachments to this release.
| | | | | | | | | | | | | | | | | |
| | | Fully Diluted EPS |
| | | Per Share range | | % Growth range |
GAAP Earnings Per Share | | | | | | | | | | | | | | | | |
| Q1 2008 - diluted earnings per share | | $ | 0.17 | | | $ | 0.23 | | | | -11 | % | | | 21 | % |
| Full year 2008 - diluted earnings per share | | $ | 1.26 | | | $ | 1.32 | | | | 12 | % | | | 17 | % |
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Adjusted Earnings Per Share | | | | | | | | | | | | | | | | |
| Q1 2008 - diluted earnings per share | | $ | 0.22 | | | $ | 0.28 | | | | -4 | % | | | 22 | % |
| Full year 2008 - diluted earnings per share | | $ | 1.47 | | | $ | 1.53 | | | | 13 | % | | | 18 | % |
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 March 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 fourth week of April 2008.
CONFERENCE CALL
The Company’s conference call regarding its fourth quarter and year end financial results will be held at 4:30 p.m. Eastern Time on Tuesday, February 5, 2008 after the market closes. Investors are invited to listen to a live Web cast of the conference call through the investor relations section of Manhattan Associates’ Web site. To listen to the live Web cast, please go to the Web site at least 15 minutes before the call to download and install any necessary audio
software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call by dialing +1.800.642.1687 in the U.S. or Canada and +1.706.645.9291 outside the U.S., and entering the conference identification number 16923337, or via the Web at www.manh.com. The phone replay will be available for two weeks after the call, and the Internet broadcast will be archived at Manhattan Associates’ Web site.
GAAP VERSUS NON-GAAP PRESENTATION
The Company provides adjusted operating income, adjusted net income and adjusted earnings per share in this press release as additional information regarding the Company’s operating results. 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 our historical operating trends, because it provides important supplemental measurement information in evaluating the operating results of our business, as distinct from results that include items that are not indicative of ongoing operating results. We consequently believe that the presentation of these non-GAAP financial measures provides investors with useful insight into our profitability exclusive of non-GAAP adjustments. This release should be read in conjunction with our Form 8-K earnings release filing for the quarter ended December 31, 2007.
The non-GAAP adjusted operating income, adjusted net income and adjusted earnings per share exclude the impact of acquisition related costs and the amortization thereof, the recapture of previously recognized sales tax expense, stock option expense under SFAS 123(R), the severance, settlement charges, and asset impairment charges recorded in the same period, all net of income tax effects. A reconciliation of our GAAP financial measures to non-GAAP adjustments is included in the supplemental attachment 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. Manhattan SCOPE™ (Supply Chain Optimization from Planning to Execution) is a portfolio of software solutions and technology that helps organizations optimize their supply chains from planning through execution. SCOPE’s Supply Chain Process Platform provides the foundation for five Supply Chain Solution Suites: Planning and Forecasting, Inventory Optimization, Order Lifecycle Management, Transportation Lifecycle Management and Distribution Management. Visibility, Event Management and Supply Chain Intelligence Platform Applications inform all Solution Suites, while X-Suite Solutions combine solutions or their components to address specific supply chain challenges. For more information, please visit www.manh.com.
This press release may contain “forward-looking statements” relating to Manhattan Associates, Inc. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are delays in product development, undetected software errors, competitive pressures, technical difficulties, market acceptance, availability of technical personnel, changes in
customer requirements, risks of international operations and general economic conditions. Additional risk factors are set forth in Item 1A. of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006. Manhattan Associates undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results.
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MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Twelve Months Ended | |
| | | December 31, | | | December 31, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Revenue: | | | | | | | | | | | | | | | | |
| License | | $ | 18,577 | | | $ | 19,003 | | | $ | 73,031 | | | $ | 66,543 | |
| Services | | | 57,053 | | | | 49,879 | | | | 226,153 | | | | 194,521 | |
| Hardware and other | | | 9,363 | | | | 6,988 | | | | 38,217 | | | | 27,804 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Total Revenue | | | 84,993 | | | | 75,870 | | | | 337,401 | | | | 288,868 | |
| | | | | | | | | | | | | | | | | |
| Costs and Expenses: | | | | | | | | | | | | | | | | |
| Cost of license | | | 1,289 | | | | 1,386 | | | | 5,334 | | | | 5,796 | |
| Cost of services | | | 28,127 | | | | 23,519 | | | | 109,758 | | | | 93,427 | |
| Cost of hardware and other | | | 7,757 | | | | 6,187 | | | | 32,268 | | | | 24,515 | |
| Research and development | | | 11,278 | | | | 11,070 | | | | 46,594 | | | | 41,468 | |
| Sales and marketing | | | 13,229 | | | | 11,870 | | | | 53,406 | | | | 45,888 | |
| General and administrative | | | 8,440 | | | | 7,280 | | | | 33,366 | | | | 29,143 | |
| Depreciation and amortization | | | 3,356 | | | | 3,333 | | | | 13,617 | | | | 13,247 | |
| Settlement charges | | | — | | | | 2,856 | | | | — | | | | 2,856 | |
| Asset impairment charge | | | — | | | | — | | | | — | | | | 270 | |
| Acquisition-related charges | | | — | | | | — | | | | — | | | | 1,503 | |
| | | | | | | | | | | | | |
| Total costs and expenses | | | 73,476 | | | | 67,501 | | | | 294,343 | | | | 258,113 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Operating income | | | 11,517 | | | | 8,369 | | | | 43,058 | | | | 30,755 | |
| | | | | | | | | | | | | | | | | |
| Other income, net | | | 1,599 | | | | 911 | | | | 4,608 | | | | 3,638 | |
| | | | | | | | | | | | | |
| Income before income taxes | | | 13,116 | | | | 9,280 | | | | 47,666 | | | | 34,393 | |
| Income tax provision | | | 4,662 | | | | 4,466 | | | | 16,915 | | | | 15,062 | |
| | | | | | | | | | | | | |
| Net income | | $ | 8,454 | | | $ | 4,814 | | | $ | 30,751 | | | $ | 19,331 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | 0.34 | | | $ | 0.18 | | | $ | 1.17 | | | $ | 0.71 | |
| Diluted earnings per share | | $ | 0.33 | | | $ | 0.17 | | | $ | 1.13 | | | $ | 0.69 | |
| | | | | | | | | | | | | | | | | |
| Weighted average number of shares: | | | | | | | | | | | | | | | | |
| Basic | | | 25,066 | | | | 27,290 | | | | 26,174 | | | | 27,183 | |
| Diluted | | | 25,983 | | | | 28,642 | | | | 27,329 | | | | 27,971 | |
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
RECONCILIATION OF SELECTED GAAP TO NON-GAAP MEASURES
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Twelve Months Ended | |
| | | December 31, | | | December 31, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Operating income | | $ | 11,517 | | | $ | 8,369 | | | $ | 43,058 | | | $ | 30,755 | |
| Stock option expense | | | 799 | (a) | | | 1,192 | (a) | | | 4,274 | (a) | | | 6,643 | (a) |
| Purchase amortization | | | 1,083 | (b) | | | 1,217 | (b) | | | 4,653 | (b) | | | 4,868 | (b) |
| Settlement charges | | | — | | | | 2,856 | (c) | | | — | | | | 2,856 | (c) |
| Acquisition-related charges | | | — | | | | — | | | | — | | | | 1,503 | (d) |
| Asset impairment charge | | | — | | | | — | | | | — | | | | 270 | (e) |
| Sales tax recoveries | | | (146) | (f) | | | (514 | ) (f) | | | (1,438) | (d) | | | (1,570) | (f) |
| | | | | | | | | | | | | |
| Adjusted operating income (Non-GAAP) | | $ | 13,253 | | | $ | 13,120 | | | $ | 50,547 | | | $ | 45,325 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Income tax provision | | $ | 4,662 | | | $ | 4,466 | | | $ | 16,915 | | | $ | 15,062 | |
| Stock option expense | | | 283 | (a) | | | 201 | (a) | | | 1,517 | (a) | | | 1,373 | (a) |
| Purchase amortization | | | 385 | (b) | | | 469 | (b) | | | 1,652 | (b) | | | 1,874 | (b) |
| Settlement charges | | | — | | | | 312 | (c) | | | — | | | | 312 | (c) |
| Acquisition-related charges | | | — | | | | — | | | | — | | | | 579 | (d) |
| Asset impairment charge | | | — | | | | — | | | | — | | | | 104 | (e) |
| Sales tax recoveries | | | (51) | (f) | | | (198) | (f) | | | (510) | (f) | | | (605) | (f) |
| | | | | | | | | | | | | |
| Adjusted income tax provision (Non-GAAP) | | $ | 5,279 | | | $ | 5,250 | | | $ | 19,574 | | | $ | 18,699 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 8,454 | | | $ | 4,814 | | | $ | 30,751 | | | $ | 19,331 | |
| Stock option expense | | | 516 | (a) | | | 991 | (a) | | | 2,757 | (a) | | | 5,270 | (a) |
| Purchase amortization | | | 698 | (b) | | | 748 | (b) | | | 3,001 | (b) | | | 2,994 | (b) |
| Settlement charges | | | — | | | | 2,544 | (c) | | | — | | | | 2,544 | (c) |
| Acquisition-related charges | | | — | | | | — | | | | — | | | | 924 | (d) |
| Asset impairment charge | | | — | | | | — | | | | — | | | | 166 | (e) |
| Sales tax recoveries | | | (95) | (f) | | | (316) | (f) | | | (928) | (f) | | | (965) | (f) |
| | | | | | | | | | | | | |
| Adjusted Net income (Non-GAAP) | | $ | 9,573 | | | $ | 8,781 | | | $ | 35,581 | | | $ | 30,264 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Diluted EPS | | $ | 0.33 | | | $ | 0.17 | | | $ | 1.13 | | | $ | 0.69 | |
| Stock option expense | | $ | 0.02 | (a) | | $ | 0.03 | (a) | | $ | 0.10 | (a) | | $ | 0.19 | (a) |
| Purchase amortization | | $ | 0.03 | (b) | | $ | 0.03 | (b) | | $ | 0.11 | (b) | | $ | 0.11 | (b) |
| Settlement charges | | $ | — | | | $ | 0.09 | (c) | | $ | — | | | $ | 0.09 | (c) |
| Acquisition-related charges | | $ | — | | | $ | — | | | $ | — | | | $ | 0.03 | (d) |
| Asset impairment charge | | $ | — | | | $ | — | | | $ | — | | | $ | 0.01 | (e) |
| Sales tax recoveries | | $ | — | (f) | | $ | (0.01) | (f) | | $ | (0.03) | (f) | | $ | (0.03) | (f) |
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| Adjusted Diluted EPS (Non-GAAP) | | $ | 0.37 | | | $ | 0.31 | | | $ | 1.30 | | | $ | 1.08 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Fully Diluted Shares | | | 25,983 | | | | 28,642 | | | | 27,329 | | | | 27,971 | |
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| (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, 2007 and 2006: |
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Twelve Months Ended | |
| | | December 31, | | | December 31, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Cost of services | | | 22 | | | $ | (45 | ) | | $ | 343 | | | $ | 1,564 | |
| Research and development | | | 171 | | | | 349 | | | | 645 | | | | 1,086 | |
| Sales and marketing | | | 266 | | | | 379 | | | | 1,381 | | | | 1,493 | |
| General and administrative | | | 340 | | | | 509 | | | | 1,905 | | | | 2,500 | |
| | | | | | | | | | | | | |
| Total stock option expense | | $ | 799 | | | $ | 1,192 | | | $ | 4,274 | | | $ | 6,643 | |
| | | | | | | | | | | | | |
| | | |
| (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. |
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| (c) | | The amount for 4th quarter 2006 includes legal settlements of $2.9 million pretax ($2.5 million after-tax or $.09 diluted EPS) resulting from legal disputes over the implementation of our software. We do not believe that these are common costs that result from normal operating activities. |
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| (d) | | In conjunction with the Evant acquisition, we paid $2.8 million into escrow for employee retention bonuses to be paid upon completion of up to 12 months of service with us. During 2006, we completed the Evant retention bonus program and paid out the final bonuses. The 2006 adjustment represents the current period expense associated with these retention bonuses. We have excluded these costs because they do not correlate to the expenses of our core operations. |
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| (e) | | During 2006, we recorded an impairment charge of $270 against a $2.0 million investment in a technology company. We made our original investment in 2003. Because of the value of the investment is beyond our control and does not relate to our core operations, we have excluded the asset impairment from adjusted non-GAAP results. |
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| (f) | | Adjustment represents recoveries of previously expensed sales tax resulting primarily from the expiration of the sales tax audit statutes in certain states. Because we have recognized the full potential amount of the sales tax expense in prior periods, any recovery of that expense resulting from the expiration of the statutes or the collection of tax from our customers would overstate the current period net income derived from our core operations as the recovery is not a result of any event occurring within our control during the current period. Thus, we have excluded these recoveries from adjusted non-GAAP results. |
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
| | | | | | | | | |
| | | December 31, | | | December 31, | |
| | | 2007 | | | 2006 | |
| ASSETS | | | | | | | | |
| Current Assets: | | | | | | | | |
| Cash and cash equivalents | | $ | 44,675 | | | $ | 18,449 | |
| Short term investments | | | 17,904 | | | | 90,570 | |
| Accounts receivable, net of a $6,618 and $4,901 allowance for doubtful accounts in 2007 and 2006, respectively | | | 72,534 | | | | 60,937 | |
| Deferred income taxes | | | 6,602 | | | | 5,208 | |
| Prepaid expenses and other current assets | | | 8,646 | | | | 11,939 | |
| | | | | | | |
| Total current assets | | | 150,361 | | | | 187,103 | |
| | | | | | | | | |
| Property and equipment, net | | | 24,421 | | | | 15,850 | |
| Long-term investments | | | 10,193 | | | | 22,038 | |
| Acquisition-related intangible assets, net | | | 9,691 | | | | 14,344 | |
| Goodwill, net | | | 62,285 | | | | 70,361 | |
| Deferred income taxes | | | 9,846 | | | | 481 | |
| Other assets | | | 4,863 | | | | 4,716 | |
| | | | | | | |
| Total assets | | $ | 271,660 | | | $ | 314,893 | |
| | | | | | | |
| | | | | | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable | | $ | 9,112 | | | $ | 11,716 | |
| Accrued compensation and benefits | | | 19,357 | | | | 16,560 | |
| Accrued and other liabilities | | | 10,040 | | | | 13,872 | |
| Deferred revenue | | | 31,817 | | | | 29,918 | |
| Income taxes payable | | | 8,156 | | | | 4,006 | |
| | | | | | | |
| Total current liabilities | | | 78,482 | | | | 76,072 | |
| | | | | | | | | |
| Other non-current liabilities | | | 7,473 | | | | 1,681 | |
| | | | | | | | | |
| Shareholders’ equity: | | �� | | | | | | |
| Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2007 or 2006 | | | — | | | | — | |
| Common stock, $.01 par value; 100,000,000 shares authorized; 24,899,919 and 27,610,105 shares issued and outstanding at December 31, 2007 and December 31, 2006, respectively | | | 249 | | | | 276 | |
| Additional paid-in capital | | | 17,744 | | | | 98,704 | |
| Retained earnings | | | 165,189 | | | | 136,321 | |
| Accumulated other comprehensive income | | | 2,523 | | | | 1,839 | |
| | | | | | | |
| Total shareholders’ equity | | | 185,705 | | | | 237,140 | |
| | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 271,660 | | | $ | 314,893 | |
| | | | | | | |
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| | | | | | | | | |
| | | Twelve Months Ended | |
| | | December 31, | |
| | | 2007 | | | 2006 | |
Operating activities: | | | | | | | | |
| Net income | | $ | 30,751 | | | $ | 19,331 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 13,617 | | | | 13,247 | |
| Asset impairment charge | | | — | | | | 270 | |
| Stock compensation | | | 6,199 | | | | 6,762 | |
| Loss on disposal of equipment | | | 12 | | | | 22 | |
| Tax benefit of options exercised | | | 1,835 | | | | 4,546 | |
| Excess tax benefits from stock based compensation | | | (721 | ) | | | (2,519 | ) |
| Deferred income taxes | | | (2,759 | ) | | | (574 | ) |
| Unrealized foreign currency gain | | | (1,419 | ) | | | (317 | ) |
| Changes in operating assets and liabilities: | | | | | | | | |
| Accounts receivable, net | | | (10,618 | ) | | | (1,617 | ) |
| Other assets | | | 3,451 | | | | (3,483 | ) |
| Prepaid retention bonus | | | — | | | | 1,599 | |
| Accounts payable, accrued and other liabilities | | | (5,339 | ) | | | 3,814 | |
| Income taxes | | | 1,528 | | | | 367 | |
| Deferred revenue | | | 1,737 | | | | 2,672 | |
| | | | | | | | | |
| | | | | | | |
| Net cash provided by operating activities | | | 38,274 | | | | 44,120 | |
| | | | | | | |
| | | | | | | | | |
Investing activities: | | | | | | | | |
| Purchase of property and equipment | | | (9,401 | ) | | | (9,641 | ) |
| Net maturities (purchases) of investments | | | 84,517 | | | | (38,133 | ) |
| Payments in connection with various acquisitions | | | — | | | | (126 | ) |
| | | | | | | | | |
| | | | | | | |
| Net cash provided by (used in) investing activities | | | 75,116 | | | | (47,900 | ) |
| | | | | | | |
| | | | | | | | | |
Financing activities: | | | | | | | | |
| Payment of capital lease obligations | | | — | | | | (147 | ) |
| Purchase of common stock | | | (99,931 | ) | | | (16,029 | ) |
| Excess tax benefits from stock based compensation | | | 721 | | | | 2,519 | |
| Proceeds from issuance of common stock from options exercised | | | 10,910 | | | | 16,156 | |
| | | | | | | | | |
| | | | | | | |
| Net cash (used in) provided by financing activities | | | (88,300 | ) | | | 2,499 | |
| | | | | | | |
| | | | | | | | | |
| | | | | | | |
| Foreign currency impact on cash | | | 1,136 | | | | 311 | |
| | | | | | | |
| | | | | | | | | |
| Net change in cash and cash equivalents | | | 26,226 | | | | (970 | ) |
| Cash and cash equivalents at beginning of period | | | 18,449 | | | | 19,419 | |
| | | | | | | |
| Cash and cash equivalents at end of period | | $ | 44,675 | | | $ | 18,449 | |
| | | | | | | |
| | | | | | | | | |
| Supplemental disclosures of cash flow information- noncash investing activity: | | | | | | | | |
| Tenant improvements funded by landlord | | $ | 7,918 | | | $ | — | |
| | | | | | | |
MANHATTAN ASSOCIATES, INC.
SUPPLEMENTAL INFORMATION
1. GAAP and Adjusted Earnings per share by quarter are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2006 | | | 2007 | | | 2006 | | | 2007 | |
| | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | YTD | | | YTD | |
GAAP Diluted EPS | | $ | 0.08 | | | $ | 0.25 | | | $ | 0.19 | | | $ | 0.17 | | | $ | 0.19 | | | $ | 0.32 | | | $ | 0.29 | | | $ | 0.33 | | | $ | 0.69 | | | $ | 1.13 | |
Adjustments to GAAP: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock option expense | | $ | 0.04 | | | $ | 0.06 | | | $ | 0.05 | | | $ | 0.03 | | | $ | 0.03 | | | $ | 0.03 | | | $ | 0.03 | | | $ | 0.02 | | | $ | 0.19 | | | $ | 0.10 | |
| Purchase amortization | | $ | 0.03 | | | $ | 0.03 | | | $ | 0.03 | | | $ | 0.03 | | | $ | 0.03 | | | $ | 0.03 | | | $ | 0.03 | | | $ | 0.03 | | | $ | 0.11 | | | $ | 0.11 | |
| Acquisition related charges | | $ | 0.02 | | | $ | 0.01 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 0.03 | | | $ | — | |
| Settlement charges | | $ | — | | | $ | — | | | $ | — | | | $ | 0.09 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 0.09 | | | $ | — | |
| Asset impairment charge | | $ | — | | | $ | — | | | $ | 0.01 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 0.01 | | | $ | — | |
| Sales tax recoveries | | $ | (0.01 | ) | | $ | (0.01 | ) | | $ | (0.01 | ) | | $ | (0.01 | ) | | $ | (0.01 | ) | | $ | (0.02 | ) | | $ | (0.01 | ) | | $ | — | | | $ | (0.03 | ) | | $ | (0.03 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted Diluted EPS | | $ | 0.16 | | | $ | 0.34 | | | $ | 0.27 | | | $ | 0.31 | | | $ | 0.23 | | | $ | 0.36 | | | $ | 0.34 | | | $ | 0.37 | | | $ | 1.08 | | | $ | 1.30 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2. Revenues and operating income (loss) by reportable segment are as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2006 | | | 2007 | | | 2006 | | | 2007 | |
| | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | YTD | | | YTD | |
Revenue: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Americas | | $ | 51,143 | | | $ | 65,695 | | | $ | 60,799 | | | $ | 64,683 | | | $ | 68,446 | | | $ | 75,599 | | | $ | 69,850 | | | $ | 70,427 | | | $ | 242,320 | | | $ | 284,322 | |
| EMEA | | | 6,952 | | | | 6,850 | | | | 6,478 | | | | 7,071 | | | | 5,844 | | | | 9,809 | | | | 10,463 | | | | 10,733 | | | | 27,351 | | | | 36,849 | |
| Asia Pacific | | | 4,690 | | | | 5,356 | | | | 5,035 | | | | 4,116 | | | | 3,900 | | | | 4,221 | | | | 4,276 | | | | 3,833 | | | | 19,197 | | | | 16,230 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 62,785 | | | $ | 77,901 | | | $ | 72,312 | | | $ | 75,870 | | | $ | 78,190 | | | $ | 89,629 | | | $ | 84,589 | | | $ | 84,993 | | | $ | 288,868 | | | $ | 337,401 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
GAAP Operating Income (Loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Americas | | $ | 2,467 | | | $ | 10,095 | | | $ | 9,131 | | | $ | 11,054 | | | $ | 8,734 | | | $ | 12,338 | | | $ | 8,894 | | | $ | 10,334 | | | $ | 32,747 | | | $ | 40,300 | |
| EMEA | | | 245 | | | | 3 | | | | (839 | ) | | | (2,226 | ) | | | (1,321 | ) | | | 1,145 | | | | 1,432 | | | | 1,166 | | | | (2,817 | ) | | | 2,422 | |
| Asia Pacific | | | 401 | | | | 739 | | | | 144 | | | | (459 | ) | | | (131 | ) | | | 189 | | | | 261 | | | | 17 | | | | 825 | | | | 336 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 3,113 | | | $ | 10,837 | | | $ | 8,436 | | | $ | 8,369 | | | $ | 7,282 | | | $ | 13,672 | | | $ | 10,587 | | | $ | 11,517 | | | $ | 30,755 | | | $ | 43,058 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjustments (pre-tax): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Americas: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock option expense | | $ | 1,558 | | | $ | 1,819 | | | $ | 1,700 | | | $ | 1,177 | | | $ | 1,082 | | | $ | 1,090 | | | $ | 1,184 | | | $ | 816 | | | $ | 6,254 | | | $ | 4,172 | |
| Purchase amortization | | | 1,217 | | | | 1,217 | | | | 1,217 | | | | 1,217 | | | | 1,195 | | | | 1,195 | | | | 1,180 | | | | 1,083 | | | | 4,868 | | | | 4,653 | |
| Acquisition related charges | | | 722 | | | | 607 | | | | 174 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,503 | | | | — | |
| Settlement charges | | | — | | | | — | | | | — | | | | 810 | | | | — | | | | — | | | | — | | | | — | | | | 810 | | | | — | |
| Asset impairment charge | | | — | | | | — | | | | 270 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 270 | | | | — | |
| Sales tax recoveries | | | (267 | ) | | | (465 | ) | | | (324 | ) | | | (514 | ) | | | (373 | ) | | | (650 | ) | | | (269 | ) | | | (146 | ) | | | (1,570 | ) | | | (1,438 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 3,230 | | | $ | 3,178 | | | $ | 3,037 | | | $ | 2,690 | | | $ | 1,904 | | | $ | 1,635 | | | $ | 2,095 | | | $ | 1,753 | | | $ | 12,135 | | | $ | 7,387 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EMEA: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock option expense | | $ | 118 | | | $ | 125 | | | $ | 131 | | | $ | 15 | | | $ | 39 | | | $ | 40 | | | $ | 40 | | | $ | (17 | ) | | $ | 389 | | | $ | 102 | |
| Settlement charges | | | — | | | | — | | | | — | | | | 2,046 | | | | — | | | | — | | | | — | | | | — | | | | 2,046 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 118 | | | $ | 125 | | | $ | 131 | | | $ | 2,061 | | | $ | 39 | | | $ | 40 | | | $ | 40 | | | $ | (17 | ) | | $ | 2,435 | | | $ | 102 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Adjustments | | $ | 3,348 | | | $ | 3,303 | | | $ | 3,168 | | | $ | 4,751 | | | $ | 1,943 | | | $ | 1,675 | | | $ | 2,135 | | | $ | 1,736 | | | $ | 14,570 | | | $ | 7,489 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted non-GAAP Operating Income (Loss): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Americas | | $ | 5,697 | | | $ | 13,273 | | | $ | 12,168 | | | $ | 13,744 | | | $ | 10,638 | | | $ | 13,973 | | | $ | 10,989 | | | $ | 12,087 | | | $ | 44,882 | | | $ | 47,687 | |
| EMEA | | | 363 | | | | 128 | | | | (708 | ) | | | (165 | ) | | | (1,282 | ) | | | 1,185 | | | | 1,472 | | | | 1,149 | | | | (382 | ) | | | 2,524 | |
| Asia Pacific | | | 401 | | | | 739 | | | | 144 | | | | (459 | ) | | | (131 | ) | | | 189 | | | | 261 | | | | 17 | | | | 825 | | | | 336 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 6,461 | | | $ | 14,140 | | | $ | 11,604 | | | $ | 13,120 | | | $ | 9,225 | | | $ | 15,347 | | | $ | 12,722 | | | $ | 13,253 | | | $ | 45,325 | | | $ | 50,547 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
3. Our services revenue consists of fees generated from professional services and customer support and software enhancements related to our software products as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2006 | | | 2007 | | | 2006 | | | 2007 | |
| | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | YTD | | | YTD | |
| Professional services | | $ | 31,801 | | | $ | 34,376 | | | $ | 36,105 | | | $ | 34,105 | | | $ | 38,831 | | | $ | 39,865 | | | $ | 41,488 | | | $ | 38,946 | | | $ | 136,387 | | | $ | 159,130 | |
| Customer support and software enhancements | | | 13,361 | | | | 14,055 | | | | 14,944 | | | | 15,774 | | | | 15,969 | | | | 15,998 | | | | 16,949 | | | | 18,107 | | | | 58,134 | | | | 67,023 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total services revenue | | $ | 45,162 | | | $ | 48,431 | | | $ | 51,049 | | | $ | 49,879 | | | $ | 54,800 | | | $ | 55,863 | | | $ | 58,437 | | | $ | 57,053 | | | $ | 194,521 | | | $ | 226,153 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
4. Hardware and other revenue includes the following items (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2006 | | | 2007 | | | 2006 | | | 2007 | |
| | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | YTD | | | YTD | |
| Hardware revenue | | $ | 4,471 | | | $ | 5,424 | | | $ | 3,326 | | | $ | 4,967 | | | $ | 6,666 | | | $ | 7,270 | | | $ | 5,614 | | | $ | 5,661 | | | $ | 18,188 | | | $ | 25,211 | |
| Billed Travel | | | 2,076 | | | | 2,799 | | | | 2,720 | | | | 2,021 | | | | 2,971 | | | | 3,098 | | | | 3,235 | | | | 3,702 | | | | 9,616 | | | | 13,006 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Hardware and other revenue | | $ | 6,547 | | | $ | 8,223 | | | $ | 6,046 | | | $ | 6,988 | | | $ | 9,637 | | | $ | 10,368 | | | $ | 8,849 | | | $ | 9,363 | | | $ | 27,804 | | | $ | 38,217 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
MANHATTAN ASSOCIATES, INC.
SUPPLEMENTAL INFORMATION
5. Impact of Currency Fluctuation
The following table reflects the increases (decreases) in the results of operations for each period attributable to the change in foreign currency exchange rates from the prior period as well as foreign currency gains (losses) included in other income, net for each period (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2006 | | | 2007 | | | 2006 | | | 2007 | |
| | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | YTD | | | YTD | |
| Revenue | | $ | (853 | ) | | $ | (158 | ) | | $ | 251 | | | $ | 779 | | | $ | 748 | | | $ | 992 | | | $ | 1,049 | | | $ | 1,231 | | | $ | 19 | | | $ | 4,020 | |
| Costs and Expenses | | | (823 | ) | | | (324 | ) | | | 53 | | | | 1,030 | | | | 858 | | | | 1,306 | | | | 1,629 | | | | 1,892 | | | | (64 | ) | | | 5,685 | |
| Operating Income | | | (30 | ) | | | 166 | | | | 198 | | | | (251 | ) | | | (110 | ) | | | (314 | ) | | | (580 | ) | | | (661 | ) | | | 83 | | | | (1,665 | ) |
| Foreign currency gains (losses) in other income | | | 98 | | | | 275 | | | | (34 | ) | | | (91 | ) | | | (22 | ) | | | (602 | ) | | | 897 | | | | 892 | | | | 248 | | | | 1,165 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 68 | | | $ | 441 | | | $ | 164 | | | $ | (342 | ) | | $ | (132 | ) | | $ | (916 | ) | | $ | 317 | | | $ | 231 | | | $ | 331 | | | $ | (500 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Manhattan Associates has a large research and development center in Bangalore, India. The following table reflects the increases (decreases) in the financial results for each period attributable to changes in the Indian Rupee exchange rate (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2006 | | | 2007 | | | 2006 | | | 2007 | |
| | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | YTD | | | YTD | |
| Operating Income | | $ | 53 | | | $ | 145 | | | $ | 235 | | | $ | (32 | ) | | $ | (14 | ) | | $ | (443 | ) | | $ | (693 | ) | | | (725 | ) | | $ | 401 | | | $ | (1,875 | ) |
| Foreign currency gains (losses) in other income | | | (30 | ) | | | 25 | | | | 87 | | | | (136 | ) | | | (82 | ) | | | (536 | ) | | | (312 | ) | | | (248 | ) | | | (54 | ) | | | (1,178 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total impact of changes in the Indian Rupee | | $ | 23 | | | $ | 170 | | | $ | 322 | | | $ | (168 | ) | | $ | (96 | ) | | $ | (979 | ) | | $ | (1,005 | ) | | $ | (973 | ) | | $ | 347 | | | $ | (3,053 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
6. Capital expenditures are as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2006 | | | 2007 | | | 2006 | | | 2007 | |
| | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | YTD | | | YTD | |
| Capital expenditures | | $ | 2,195 | | | $ | 2,603 | | | $ | 2,731 | | | $ | 2,112 | | | $ | 2,956 | | | $ | 3,511 | | | $ | 1,467 | | | $ | 1,467 | | | $ | 9,641 | | | $ | 9,401 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
7. Stock Repurchase Activity
During 2007, we repurchased 3.6 million shares of common stock totaling $100 million at an average price of $28.05. In 2006 for the full year, we repurchased 0.8 million shares of common stock totaling $16.0 million at an average cost of $20.73.
