Manhattan Associates Reports Third Quarter 2009 Revenue and Record Earnings Per Share

Leading supply chain optimization provider Manhattan Associates, Inc. (NASDAQ: MANH) today reported record third quarter 2009 non-GAAP adjusted diluted earnings per share of $0.43 compared to $0.34 in the 2008 third quarter, and record GAAP diluted earnings per share of $0.50 compared to earnings of

ATLANTA (October 20, 2009) –

Leading supply chain optimization provider Manhattan Associates, Inc. (NASDAQ: MANH) today reported record third quarter 2009 non-GAAP adjusted diluted earnings per share of $0.43 compared to $0.34 in the 2008 third quarter, and record GAAP diluted earnings per share of $0.50 compared to earnings of $0.18 in the prior year third quarter. The Company posted total third quarter revenue of $65.3 million, which was down 21% from overall revenue posted in the third quarter of 2008.

Manhattan Associates President and CEO Pete Sinisgalli commented, “A more stable macro-economic environment enabled some companies to commit capital to important supply chain improvements. As a result, we closed three deals of more than $1 million in recognized license fees in the third quarter. This improvement in license revenue, coupled with aggressive expense management, led to record earnings per share for the quarter.”
THIRD QUARTER 2009 FINANCIAL SUMMARY:

* Adjusted diluted earnings per share, a non-GAAP measure, was a record $0.43 in the third quarter of 2009, compared to $0.34 in the third quarter of 2008.
* The Company reported record GAAP diluted earnings per share of $0.50, including the release of tax contingency reserves associated with expiring tax audit statutes for 2005, compared to $0.18 in the third quarter of 2008. Results for the third quarter of 2008 include the impact of asset write-downs and the release of tax contingency reserves associated with expiring tax audit statutes for 2004 and prior.
* Consolidated revenue for the third quarter of 2009 was $65.3 million, compared to $82.7 million in the third quarter of 2008. License revenue was $11.4 million in the third quarter of 2009, compared to $13.8 million in the third quarter of 2008.
* Adjusted operating income, a non-GAAP measure, was $13.2 million in the third quarter of 2009, compared to $10.6 million in the third quarter of 2008.
* GAAP operating income for the third quarter of 2009 was $11.1 million compared to $3.2 million in the third quarter of 2008. Third quarter 2008 results include $5.2 million in asset write-downs for a technology company investment and an auction-rate security investment.
* Cash flow from operations was $15.4 million in the third quarter of 2009, compared to $18.4 million in the third quarter of 2008. Days Sales Outstanding were 59 days at September 30, 2009, compared to 61 days at June 30, 2009.
* Cash and investments on-hand at September 30, 2009 was $106.0 million compared to $90.8 million at June 30, 2009.
* The Company did not repurchase any shares during the third quarter of 2009. The Company has $15.0 million in remaining share repurchase authority.

NINE MONTH 2009 FINANCIAL SUMMARY:

* Adjusted diluted earnings per share, a non-GAAP measure, were $0.65 for the nine months ended September 30, 2009, compared to $1.12 for the nine months ended September 30, 2008.
* GAAP diluted earnings per share for the nine months ended September 30, 2009 was $0.47, compared to $0.84 for the nine months ended September 30, 2008. Results for the first nine months of 2009 include pre-tax restructuring charges of $3.9 million, or $0.12 per share, and the release of tax contingency reserves associated with expiring tax audit statutes for 2005. Results for the first nine months of 2008 include pre-tax impairment charges of $5.2 million, or $0.21 per share, and the release of tax contingency reserves associated with expiring tax audit statutes for 2004 and prior.
* Consolidated revenue for the nine months ended September 30, 2009 was $184.5 million compared to $261.6 million for the nine months ended September 30, 2008. License revenue was $20.4 million for the nine months ended September 30, 2009, compared to $51.5 million in the nine months ended September 30, 2008.
* Adjusted operating income, a non-GAAP measure, was $21.2 million for the nine months ended September 30, 2009, compared to $37.1 million for the nine months ended September 30, 2008.
* GAAP operating income was $11.3 million for the nine months ended September 30, 2009, which included a restructuring charge of $3.9 million, compared to $25.6 million for the nine months ended September 30, 2008, which included asset write-downs of $5.2 million.
* For the nine months ended September 30, 2009, the Company repurchased approximately 1.3 million common shares at an average share price of $15.93, for a total investment of $20.0 million.

SALES ACHIEVEMENTS:

* Closing three contracts of $1.0 million or more in recognized license revenue during the quarter.
* Completing software license wins with new customers such as: Daqing Qingkelong Chain Commerce & Trade Co.; Farmacias de Similares; Freight Mark Sdn Bhd; Geba; Half Price Books; Hayneedle; Lerentang Medicine Group; Mirror Show Management, Inc.;Nalsani S.A.; Propak Development, Inc.; PT Multitrend Indo; and Yarrows Family Bakers.
* Expanding partnerships with existing customers such as: American Clubs; American Textile Company, Inc.; BUT International SAS; CJSC Proconsim; Express Scripts, Inc.; Famous Footwear; Fruit of the Loom; Genco Distribution Systems, Inc.; Guess?, Inc; HoMedics; J. Knipper and Company, Inc.; Jefferson Smurfit Corporation; LeSaint Logistics; MAN; New Balance Athletic Shoe, Inc.; O’Reilly Automotive; Perfect 10 Satellite Distribution, Inc.; Performance Team Freight Systems; SamsonOpt; Shanghai TingTong Logistics; Southern Wine & Spirits of America, Inc.; SpeedFC, Inc.; Sturm Foods, Inc.; Sulyn Industries, Inc.; Thermwell Products Co., Inc.; United Natural Foods, Inc.; and Vie Cosmetics Group.

2009 GUIDANCE

During the second quarter of 2009, due to economic uncertainty and limited visibility, Manhattan Associates suspended its earnings guidance for the remainder of 2009. Previously published guidance for fiscal year 2009 should not be relied upon as reflecting management’s current expectations for full year results.
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 20, 2009. 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 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 can be accessed shortly after the call by dialing +1.800.642.1687 in the U.S. and Canada, or +1.706.645.9291 outside the U.S., and entering the conference identification number 29905929 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 available until Manhattan Associates’ fourth quarter 2009 earnings release.
GAAP VERSUS NON-GAAP PRESENTATION

The Company provides adjusted operating income, adjusted net income and adjusted earnings per share in this press release as additional information regarding the Company’s operating results. These measures are not in accordance with – or an alternative for – GAAP, and may be different from non-GAAP operating income, non-GAAP net income and non-GAAP earnings per share measures used by other companies. The Company believes that the presentation of these non-GAAP financial measures facilitates investors’ understanding of its historical operating trends, because it provides important supplemental measurement information in evaluating the operating results of its business, as distinct from results that include items that are not indicative of ongoing operating results. The Company consequently believes that the presentation of these non-GAAP financial measures provides investors with useful insight into its profitability. This release should be read in conjunction with its Form 8-K earnings release filing for the quarter ended September 30, 2009.

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; asset impairment charges; and restructuring charges – all net of income tax effects and unusual tax adjustments. A reconciliation of the Company’s GAAP financial measures to non-GAAP adjustments is included in the supplemental information attached to this release.

The Company also has presented certain information excluding the effect between periods 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 19-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┬«, a portfolio of software solutions and technology that leverages a Supply Chain Process Platform to help organizations optimise their supply chains from planning through execution; Manhattan ILS(TM), a portfolio of distribution management and transportation management solutions built on Microsoft┬« .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 contains “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: the global economic downturn; disruptions in credit markets; delays in product development; competitive pressures; software errors; and additional risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. 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 OPERATIONS
(in thousands, except per share amounts)

Three Months Ended Nine Months Ended
September 30, September 30,
——————– ———————
2009 2008 2009 2008
——— ——— ——— ———
(unaudited) (unaudited)
Revenue:
Software license $ 11,360 $ 13,802 $ 20,408 $ 51,479
Services 46,917 60,023 147,182 182,149
Hardware and other 7,017 8,911 16,938 27,922
——— ——— ——— ———
Total revenue 65,294 82,736 184,528 261,550
——— ——— ——— ———

Costs and Expenses:
Cost of license 1,162 1,528 3,621 4,313
Cost of services 19,697 29,376 64,173 90,512
Cost of hardware
and other 5,846 7,036 14,144 22,619
Research and
development 8,781 12,546 28,196 36,911
Sales and marketing 8,626 11,579 27,731 39,827
General and
administrative 7,462 9,099 22,675 27,037
Depreciation and
amortization 2,665 3,125 8,840 9,531
Asset impairment
charges — 5,205 — 5,205
Restructuring charge — — 3,892 —
——— ——— ——— ———
Total costs
and expenses 54,239 79,494 173,272 235,955
——— ——— ——— ———

Operating income 11,055 3,242 11,256 25,595

Other income
(expense), net 255 927 (382) 3,878
——— ——— ——— ———
Income before
income taxes 11,310 4,169 10,874 29,473
Income tax provision
(benefit) 327 (140) 185 8,653
——– ——– ——– ——–
Net income $ 10,983 $ 4,309 $ 10,689 $ 20,820
========= ========= ========= =========

Basic earnings
per share $ 0.50 $ 0.18 $ 0.48 $ 0.86
Diluted earnings
per share $ 0.50 $ 0.18 $ 0.47 $ 0.84

Weighted average
number of shares:
Basic 22,116 24,069 22,483 24,246
Diluted 22,175 24,568 22,529 24,736

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,
—————— ——————
2009 2008 2009 2008
——– ——– ——– ——–

Operating income $11,055 $ 3,242 $11,256 $25,595
Stock option expense(a) 1,369 1,399 3,779 4,075
Purchase amortization(b) 741 769 2,223 2,494
Restructuring charge(c) — — 3,892 —
Asset impairment charges(d) — 5,205 — 5,205
Sales tax recoveries(e) — — — (234)
——– ——– ——– ——–
Adjusted operating
income (Non-GAAP) $13,165 $10,615 $21,150 $37,135
——– ——– ——– ——–

Income tax provision (benefit) $ 327 $ (140) $ 185 $ 8,653
Stock option expense(a) 445 486 1,228 1,416
Purchase amortization(b) 240 267 722 867
Restructuring charge(c) — — 1,265 —
Asset impairment charges(d) — (94) — (94)
Sales tax recoveries(e) — — — (81)
Unusual tax adjustments(f) 2,770 2,651 2,770 2,651
——– ——– ——– ——–
Adjusted income tax
provision (Non-GAAP) $ 3,782 $ 3,170 $ 6,170 $13,412
——– ——– ——– ——–

Net income $10,983 $ 4,309 $10,689 $20,820
Stock option expense(a) 924 913 2,551 2,659
Purchase amortization(b) 501 502 1,501 1,627
Restructuring charge(c) — — 2,627 —
Asset impairment charges(d) — 5,299 — 5,299
Sales tax recoveries(e) — — — (153)
Unusual tax adjustments(f) (2,770) (2,651) (2,770) (2,651)
——– ——– ——– ——–
Adjusted net income (Non-GAAP) $ 9,638 $ 8,372 $14,598 $27,601
——– ——– ——– ——–

Diluted EPS $ 0.50 $ 0.18 $ 0.47 $ 0.84
Stock option expense(a) 0.04 0.04 0.11 0.11
Purchase amortization(b) 0.02 0.02 0.07 0.07
Restructuring charge(c) — — 0.12 —
Asset impairment charges(d) — 0.22 — 0.21
Sales tax recoveries(e) — — — (0.01)
Unusual tax adjustments(f) (0.12) (0.11) (0.12) (0.11)
——– ——– ——– ——–
Adjusted
diluted EPS
(Non-GAAP) $ 0.43 $ 0.34 $ 0.65 $ 1.12
——– ——– ——– ——–

Fully diluted shares 22,175 24,568 22,529 24,736

(a) We are required 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, 2009 and 2008:

Three Months Ended Nine Months Ended
September 30, September 30,
—————— ——————
2009 2008 2009 2008
——– ——– ——– ——–

Cost of services $ 155 $ 119 $ 476 $ 358
Research and development 208 199 679 591
Sales and marketing 389 435 794 1,281
General and administrative 617 646 1,830 1,845
——– ——– ——– ——–
Total stock option expense $ 1,369 $ 1,399 $ 3,779 $ 4,075
======== ======== ======== ========

(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) During the quarter ended June 30, 2009, we committed to and
initiated plans to reduce our workforce by approximately 140
positions to realign our capacity based on the revised revenue
outlook for 2009. As a result of this initiative, we recorded a
restructuring charge of approximately $3.8 million in the second
quarter of 2009. The restructuring charge primarily consists of
employee severance and outplacement services. We also recorded
additional employee severance expense of $63,000 in the first
quarter of 2009 related to the restructuring action taken in the
fourth quarter of 2008. We do not believe that the restructuring
charge is a common cost that resulted from normal operating
activities. Consequently, we have excluded this charge 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) 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.

(f) 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 2005 and prior. Because we
recorded the majority of the income tax reserves through retained
earnings in conjunction with the adoption of ASC 740, Income
Taxes, on January 1, 2007, the release of the reserves would
overstate the current period net income derived from our core
operations. For the quarter ended September 30, 2009, the
reversal is partially offset by the establishment of $0.8 million
in tax reserves associated with the treatment of currency gains
under the Company’s transfer pricing policy with one of its
foreign subsidiaries. For the quarter ended September 30, 2008,
the 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,
2009 2008
——— ———
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 103,222 $ 85,739
Accounts receivable, net of allowance of
$4,996 and $5,566 in 2009 and 2008,
respectively 41,823 63,896
Deferred income taxes 7,070 6,667
Prepaid expenses and other current assets 4,920 6,979
——— ———
Total current assets 157,035 163,281

Property and equipment, net 16,899 21,721
Long-term investments 2,801 2,967
Acquisition-related intangible assets, net 4,214 6,438
Goodwill, net 62,283 62,276
Deferred income taxes 10,166 10,932
Other assets 2,346 2,606
——— ———
Total assets $ 255,744 $ 270,221
========= =========

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Accounts payable $ 6,604 $ 8,480
Accrued compensation and benefits 11,311 17,429
Accrued and other liabilities 15,090 16,188
Deferred revenue 34,540 32,984
Income taxes payable 1,448 2,365
——— ———
Total current liabilities 68,993 77,446

Other non-current liabilities 10,362 12,936

Shareholders’ equity:
Preferred stock, no par value; 20,000,000
shares authorized, no shares issued or
outstanding in 2009 or 2008 — —
Common stock, $.01 par value;
100,000,000 shares authorized;
22,512,594 and 23,581,109 shares issued
and outstanding at September 30, 2009 and
December 31, 2008, respectively 225 234
Additional paid-in capital 2,312 —
Retained earnings 176,513 182,882
Accumulated other comprehensive loss (2,661) (3,277)
——— ———
Total shareholders’ equity 176,389 179,839
——— ———
Total liabilities and shareholders’ equity $ 255,744 $ 270,221
========= =========

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Nine Months Ended
September 30,
——————–
2009 2008
——— ———
(unaudited)
Operating activities:
Net income $ 10,689 $ 20,820
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 8,840 9,531
Asset impairment charge — 5,205
Stock compensation 6,312 6,616
Loss on disposal of equipment 125 41
Tax (deficiency) benefit of stock
awards exercised/vested (1,080) 181
Excess tax benefits from stock
based compensation (29) (81)
Deferred income taxes 412 —
Unrealized foreign currency loss (gain) 585 (743)
Changes in operating assets
and liabilities:
Accounts receivable, net 22,789 1,131
Other assets 2,422 266
Accounts payable, accrued and
other liabilities (9,959) 1,249
Income taxes (3,081) (752)
Deferred revenue 898 2,059
——— ———
Net cash provided by operating activities 38,923 45,523
——— ———

Investing activities:
Purchase of property and equipment (1,726) (6,818)
Net maturities of investments 88 21,558
——— ———
Net cash (used in) provided by
investing activities (1,638) 14,740
——— ———

Financing activities:
Purchase of common stock (20,590) (25,053)
Excess tax benefits from stock
based compensation 29 81
Proceeds from issuance of common stock
from options exercised 604 3,018
——— ———
Net cash used in financing activities (19,957) (21,954)
——— ———

Foreign currency impact on cash 155 (3,182)
——— ———

Net change in cash and cash equivalents 17,483 35,127
Cash and cash equivalents at
beginning of period 85,739 44,675
——— ———
Cash and cash equivalents at end of period $ 103,222 $ 79,802
========= =========

MANHATTAN ASSOCIATES, INC.
SUPPLEMENTAL INFORMATION

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

2008
—————————————
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
——— ——— ——— ———
GAAP Diluted EPS $ 0.30 $ 0.37 $ 0.18 $ 0.08
Adjustments to GAAP:
Stock option expense 0.03 0.04 0.04 0.04
Purchase amortization 0.02 0.02 0.02 0.02
Restructuring charge — — — 0.13
Asset impairment charge — — 0.22 —
Sales tax recoveries (0.01) — — —
Unusual tax adjustments — — (0.11) (0.02)
——— ——— ——— ———
Adjusted Diluted EPS $ 0.35 $ 0.42 $ 0.34 $ 0.26
========= ========= ========= =========

2009 2008 2009
—————————– ——— ———
1st Qtr 2nd Qtr 3rd Qtr YTD YTD
——— ——— ——— ——— ———
GAAP Diluted EPS $ 0.01 $ (0.02) $ 0.50 $ 0.84 $ 0.47
Adjustments to
GAAP:
Stock option
expense 0.04 0.03 $ 0.04 0.11 0.11
Purchase
amortization 0.02 0.02 0.02 0.07 0.07
Restructuring
charge — 0.12 — — 0.12
Asset
impairment
charge — — — 0.21 —
Sales tax
recoveries — — — (0.01) —
Unusual tax
adjustments — — (0.12) (0.11) (0.12)
——— ——— ——— ——— ———
Adjusted Diluted
EPS $ 0.07 $ 0.14 $ 0.43 $ 1.12 $ 0.65
========= ========= ========= ========= =========

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

2008
—————————————
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
——— ——— ——— ———
Revenue:
Americas $ 72,129 $ 73,551 $ 67,957 $ 63,609
EMEA 12,028 11,961 10,083 8,726
APAC 4,167 4,978 4,696 3,316
——— ——— ——— ———
$ 88,324 $ 90,490 $ 82,736 $ 75,651
========= ========= ========= =========

GAAP Operating Income
(Loss):
Americas $ 7,065 $ 10,643 $ 1,618 $ (477)
EMEA 2,055 2,215 1,292 1,078
APAC (31) 406 332 (233)
——— ——— ——— ———
$ 9,089 $ 13,264 $ 3,242 $ 368
========= ========= ========= =========

Adjustments (pre-tax):
Americas:
Stock option expense $ 1,304 $ 1,372 $ 1,399 $ 1,383
Purchase amortization 881 844 769 759
Restructuring charge — — — 4,369
Asset impairment charge — — 5,205 —
Sales tax recoveries (234) — — —
——— ——— ——— ———
$ 1,951 $ 2,216 $ 7,373 $ 6,511
——— ——— ——— ———

EMEA:
Restructuring charge — — — 204
——— ——— ——— ———
$ — $ — $ — $ 204
——— ——— ——— ———

APAC:
Restructuring charge — — — 94
——— ——— ——— ———
$ — $ — $ — $ 94
——— ——— ——— ———
——— ——— ——— ———
Total Adjustments $ 1,951 $ 2,216 $ 7,373 $ 6,809
========= ========= ========= =========

Adjusted non-GAAP Operating
Income (Loss):
Americas $ 9,016 $ 12,859 $ 8,991 $ 6,034
EMEA 2,055 2,215 1,292 1,282
APAC (31) 406 332 (139)
——— ——— ——— ———
$ 11,040 $ 15,480 $ 10,615 $ 7,177
========= ========= ========= =========

2009 2008 2009
—————————– ——— ———
1st Qtr 2nd Qtr 3rd Qtr YTD YTD
——— ——— ——— ——— ———
Revenue:
Americas $ 50,827 $ 47,372 $ 55,626 $213,637 $153,825
EMEA 7,030 7,818 6,527 34,072 21,375
APAC 2,968 3,219 3,141 13,841 9,328
——— ——— ——— ——— ———
$ 60,825 $ 58,409 $ 65,294 $261,550 $184,528
========= ========= ========= ========= =========

GAAP Operating
Income (Loss):
Americas $ 260 $ (407) $ 10,736 $ 19,326 $ 10,589
EMEA 738 1,124 20 5,562 1,882
APAC (371) (1,143) 299 707 (1,215)
——— ——— ——— ——— ———
$ 627 $ (426) $ 11,055 $ 25,595 $ 11,256
========= ========= ========= ========= =========

Adjustments
(pre-tax):
Americas:
Stock option
expense $ 1,400 $ 1,010 $ 1,369 $ 4,075 $ 3,779
Purchase
amortization 741 741 741 2,494 2,223
Restructuring
charge 59 2,960 — — 3,019
Asset
impairment
charge — — — 5,205 —
Sales tax
recoveries — — — (234) —
——— ——— ——— ——— ———
$ 2,200 $ 4,711 $ 2,110 $ 11,540 $ 9,021
——— ——— ——— ——— ———

EMEA:
Restructuring
charge — 20 — — 20
——— ——— ——— ——— ———
$ — $ 20 $ — $ — $ 20
——— ——— ——— ——— ———

APAC:
Restructuring
charge 4 849 — — 853
——— ——— ——— ——— ———
$ 4 $ 849 $ — $ — $ 853
——— ——— ——— ——— ———
——— ——— ——— ——— ———
Total
Adjustments $ 2,204 $ 5,580 $ 2,110 $ 11,540 $ 9,894
========= ========= ========= ========= =========

Adjusted non-GAAP
Operating Income
(Loss):
Americas $ 2,460 $ 4,304 $ 12,846 $ 30,866 $ 19,610
EMEA 738 1,144 20 5,562 1,902
APAC (367) (294) 299 707 (362)
——— ——— ——— ——— ———
$ 2,831 $ 5,154 $ 13,165 $ 37,135 $ 21,150
========= ========= ========= ========= =========

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):

2008
—————————————
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
——— ——— ——— ———
Professional services $ 41,718 $ 42,866 $ 40,693 $ 33,728
Customer support and
software enhancements 18,119 19,423 19,330 20,090
——— ——— ——— ———
Total services revenue $ 59,837 $ 62,289 $ 60,023 $ 53,818
========= ========= ========= =========

2009 2008 2009
—————————– ——— ———
1st Qtr 2nd Qtr 3rd Qtr YTD YTD
——— ——— ——— ——— ———
Professional
services $ 32,345 $ 30,767 $ 27,158 $125,277 $ 90,270
Customer support
and software
enhancements 18,498 18,655 19,759 56,872 56,912
——— ——— ——— ——— ———
Total services
revenue $ 50,843 $ 49,422 $ 46,917 $182,149 $147,182
========= ========= ========= ========= =========

4. Hardware and other revenue includes the following items (in
thousands):
2008
—————————————
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
——— ——— ——— ———

Hardware revenue $ 7,141 $ 5,428 $ 5,756 $ 4,916
Billed travel 3,034 3,408 3,155 3,083
——— ——— ——— ———
Total hardware and other
revenue $ 10,175 $ 8,836 $ 8,911 $ 7,999
========= ========= ========= =========

2009 2008 2009
—————————– ——— ———
1st Qtr 2nd Qtr 3rd Qtr YTD YTD
——— ——— ——— ——— ———

Hardware revenue $ 3,080 $ 2,992 $ 5,086 $ 18,325 $ 11,158
Billed travel 1,980 1,869 1,931 9,597 5,780
——— ——— ——— ——— ———
Total hardware
and other
revenue $ 5,060 $ 4,861 $ 7,017 $ 27,922 $ 16,938
========= ========= ========= ========= =========

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):

2008
—————————————
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
——— ——— ——— ———

Revenue $ 1,131 $ 1,189 $ 132 $ (2,209)
Costs and expenses 1,601 911 (331) (3,112)
——— ——— ——— ———

Operating income (470) 278 463 903
Foreign currency gains
(losses) in other income 1,641 299 542 1,395
——— ——— ——— ———

$ 1,171 $ 577 $ 1,005 $ 2,298
========= ========= ========= =========

2009 2008 2009
—————————– ——— ———
1st Qtr 2nd Qtr 3rd Qtr YTD YTD
——— ——— ——— ——— ———

Revenue $ (2,387) $ (1,996) $ (764) $ 2,452 $ (5,147)
Costs and
expenses (3,307) (2,560) (1,286) 2,181 (7,153)
——— ——— ——— ——— ———
Operating income 920 564 522 271 2,006
Foreign currency
gains (losses)
in other income (366) (506) 294 2,482 (578)
——— ——— ——— ——— ———
$ 554 $ 58 $ 816 $ 2,753 $ 1,428
========= ========= ========= ========= =========

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):

2008
————————————–
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
——— ——— ——— ———

Operating income $ (619) $ 59 $ 540 $ 1,248
Foreign currency gains
(losses) in other income 94 385 787 549
——— ——— ——— ———
Total impact of changes
in the Indian Rupee $ (525) $ 444 $ 1,327 $ 1,797
========= ========= ========= =========

2009 2008 2009
—————————– ——— ———
1st Qtr 2nd Qtr 3rd Qtr YTD YTD
——— ——— ——— ——— ———

Operating income $ 1,129 $ 800 $ 458 $ (20) $ 2,387
Foreign currency
gains (losses)
in other income 336 (367) 2 1,266 (29)
——— ——— ——— ——— ———
Total impact of
changes in the
Indian Rupee $ 1,465 $ 433 $ 460 $ 1,246 $ 2,358
========= ========= ========= ========= =========

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

2008
—————————————
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
——— ——— ——— ———

Interest income $ 663 $ 375 $ 394 $ 391
Foreign currency gains
(losses) 1,641 299 542 1,395
Other non-operating
(expense) income (3) (24) (9) (119)
——— ——— ——— ———
Total other income
(expense) $ 2,301 $ 650 $ 927 $ 1,667
========= ========= ========= =========

2009 2008 2009
—————————– ——— ———
1st Qtr 2nd Qtr 3rd Qtr YTD YTD
——— ——— ——— ——— ———

Interest income $ 137 $ 95 $ 71 $ 1,432 $ 303
Foreign currency
gains (losses) (366) (506) 294 2,482 (578)
Other non-
operating
(expense) income (4) 7 (110) (36) (107)
——— ——— ——— ——— ———
Total other
income
(expense) $ (233) $ (404) $ 255 $ 3,878 $ (382)
========= ========= ========= ========= =========

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

2008
—————————————
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
——— ——— ——— ———

Capital expenditures $ 2,716 $ 2,844 $ 1,258 $ 890
========= ========= ========= =========

2009 2008 2009
—————————– ——— ———
1st Qtr 2nd Qtr 3rd Qtr YTD YTD
——— ——— ——— ——— ———

Capital
expenditures $ 873 $ 487 $ 366 $ 6,818 $ 1,726
========= ========= ========= ========= =========

8. Stock Repurchase Activity

During 2009, we repurchased 1,256,106 shares of common stock
totaling $20.0 million at an average price of $15.93. In 2008 for
the full year, we repurchased approximately 1.7 million shares of
common stock totaling $35.0 million at an average price of $20.52.

9. Effective Tax Rate Reconciliation for GAAP and Adjusted Results
(in thousands except tax rate and per share data):

Three Months Ended September 30, 2009
————————————————-
Income
before
income Income tax Net Diluted Effective
taxes provision income EPS Tax Rate
——— ——— ——— ——— ———

GAAP results
before tax
adjustments $ 11,310 $ 3,676 $ 7,634 $ 0.34 32.50%
Provision to
return
adjustments (a) — (579) 579 0.03
Unusual tax
adjustments (b) — (2,770) 2,770 0.12
——— ——— ——— ——— ———
GAAP results-
reported $ 11,310 $ 327 $ 10,983 $ 0.50 2.89%
========= ========= ========= ========= =========

Adjusted results $ 13,420 $ 4,361 $ 9,059 $ 0.41 32.50%
Provision to
return
adjustments (a) — (579) 579 0.03
——— ——— ——— ——— ———
Adjusted
results-
reported $ 13,420 $ 3,782 $ 9,638 $ 0.43 28.18%
========= ========= ========= ========= =========

Nine Months Ended September 30, 2009
————————————————-
Income
before Income
income tax Net Diluted Effective
taxes provision income EPS Tax Rate
——— ——— ——— ——— ———

GAAP results
before tax
adjustments $ 10,874 $ 3,534 $ 7,340 $ 0.33 32.50%
Provision to
return
adjustments (a) — (579) 579 0.03
Unusual tax
adjustments (b) — (2,770) 2,770 0.12
——— ——— ——— ——— ———
GAAP results-
reported $ 10,874 $ 185 $ 10,689 $ 0.47 1.70%
========= ========= ========= ========= =========

Adjusted results $ 20,768 $ 6,749 $ 14,019 $ 0.62 32.50%
Provision to
return
adjustments (a) — (579) 579 0.03
——— ——— ——— ——— ———
Adjusted
results-
reported $ 20,768 $ 6,170 $ 14,598 $ 0.65 29.71%
========= ========= ========= ========= =========

(a) Provision to return adjustments include the true-up of the 2008
tax provision to the 2008 tax return filed in the third quarter
of 2009. The majority of the adjustments relate to research and
development and job training tax credits.

(b) 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 2005 and prior. The reserve
reversal is partially offset by the establishment of $0.8 million
in tax reserves associated with the treatment of currency gains
under the Company’s transfer pricing policy with one of its
foreign subsidiaries.

Source: Manhattan Associates

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