Software Revenue and Total Revenue Up Sequentially From Third Quarter
ROCKVILLE, Md., Mar 27, 2003 -- Manugistics Group, Inc. (Nasdaq:MANU), a leading global provider of supply chain and pricing optimization solutions, today reported fourth quarter and annual results for its fiscal year ended February 28, 2003. Fourth quarter total revenue increased 5 percent sequentially from the third quarter of fiscal 2003 to $65.5 million from $62.4 million, and decreased 21 percent from the prior year quarter. Software revenue increased 29 percent sequentially to $18.2 million from $14.1 million for the Company`s third quarter of fiscal 2003 and decreased 52 percent from the prior year quarter.
For the quarter ended February 28, 2003, the Company reported a net loss, as measured under generally accepted accounting principles (GAAP), of $111.4 million, or $1.59 per basic and diluted share, compared to $26.0 million, or $.37 per basic and diluted share, in the third quarter of fiscal 2003 and $25.1 million, or $.36 per basic and diluted share, in the prior year quarter. The GAAP results for the fourth quarter of fiscal 2003 included a goodwill impairment charge of $96.3 million.
For the fourth quarter, the Company reported a sequentially narrowed adjusted net loss of $7.6 million, or $.11 per basic and diluted share, as compared to adjusted net loss of $12.5 million, or $.18 per basic and diluted share, in the Company`s third quarter. Adjusted net loss was $1.3 million, or $.02 per basic and diluted share, in the prior year quarter.
For the year ended February 28, 2003, Manugistics generated total annual revenue of $272.4 million, a decrease of 15 percent from the prior year. For the year ended February 28, 2003, Manugistics generated software revenue of $74.9 million, a decrease of 42 percent from the year ended February 28, 2002.
The Company reported a net loss, as measured under GAAP, for the year ended February 28, 2003 of $212.2 million, or $3.04 per basic and diluted share, compared to a net loss of $115.2 million, or $1.69 per basic and diluted share, for the year ended February 28, 2002.
The adjusted net loss totaled $51.6 million, or $.74 per basic and diluted share, for the year ended February 28, 2003, compared to an adjusted net loss of $17.4 million, or $.26 per basic and diluted share, for the year ended February 28, 2002.
Adjusted net loss and adjusted net loss per basic and diluted share, for quarterly and annual periods referred to herein, exclude the following items: amortization of intangibles and acquired technology, goodwill impairment charge, restructuring and other impairment charges, purchased research and development charges related to acquisitions, non-cash stock compensation charges or benefits, settlement of a lawsuit, impairment of an investment and a charge to record valuation allowances against deferred tax assets - together with the related income tax effects. A reconciliation of GAAP results to adjusted results has been provided in the financial statement tables following the text of this press release.
The Company recorded an impairment charge of approximately $96.3 million during the quarter ended February 28, 2003 to write down the value of goodwill associated with past acquisitions. The goodwill impairment charge was required as a result of the Company`s "implied fair value" (defined as market capitalization plus control premium) being less than recorded stockholders` equity as of February 28, 2003. This charge reflects the combination of continuing lower market valuations and challenging industry conditions for enterprise application software companies that have persisted over multiple quarters.
"Manugistics continues to garner mindshare and recognition throughout the market. We believe our product quality and our state-of-the-market products have us well positioned as the economy rebounds," said Greg Owens, Manugistics chairman and chief executive officer. "Manugistics` enhanced market presence was a key factor in helping drive our performance this quarter including a sequential improvement in software revenue, record quarterly solution support revenue and strong renewals of annual solution support contracts."
During the fourth quarter, the Company`s aggregate cash and marketable securities increased sequentially by $5.0 million to $137.7 million. The Company`s total cash position at February 28, 2003 was $150.7 million, including restricted cash of $13.0 million. Of the amount presented as restricted cash on the balance sheet as of February 28, 2003, approximately $10 million has become unrestricted and the balance is expected to become available for normal operating purposes during the quarter ended May 31, 2003, in connection with our previously disclosed new credit facility. Operating cash flows for the fourth quarter improved to positive $6.2 million compared to negative $17.5 million in the third quarter of fiscal 2003. Days sales outstanding in receivables improved to 88 days in the fourth quarter compared to 92 days in the third quarter. Deferred revenue increased 23 percent sequentially in the fourth quarter to $43.4 million as of February 28, 2003.
Given the ongoing economic and market uncertainties which have been exacerbated by recent world events, including the war in Iraq, at this time the Company will not be providing revenue guidance for its fiscal first quarter ending May 31, 2003. The Company reduced its employee workforce during the fourth quarter as part of continuing cost reduction initiatives. As of February 28, 2003, Manugistics had 1,133 employees, a decrease of 7.4 percent from November 30, 2002. Since the end of the fourth quarter, the Company has further reduced its workforce and would expect an employee headcount range of 1,000 - 1,050 employees over the next two quarters. This reduction is primarily a result of consolidating more of its U.S. operations to its headquarters in Rockville, MD, to improve office space utilization and increase utilization of offshore product development facilities in India. The Company expects that its operating expenses, excluding amortization of intangibles and acquired technology, restructuring and other impairment charges and non-cash stock compensation expense to be approximately $65 million for the quarter ended May 31, 2003 and $62 million for the quarter ended August 31, 2003. The Company also expects to incur approximately $4.6 million in amortization expense for intangibles and acquired technology and $700,000 for non-cash stock compensation in both of the quarters ended May 31, 2003 and August 31, 2003.