Company Reports Positive Cash Flows from Operations and Reduces Convertible Debt Balance by $74.5 Million to $175.5 Million in Fiscal 2004
ROCKVILLE, Md.--March 31, 2004--Manugistics Group, Inc. (NASDAQ:MANU), a leading global provider of demand and supply chain management solutions, today reported results for its fiscal 2004 fourth quarter and fiscal year ended February 29, 2004.
"We made significant progress towards many of our financial objectives in fiscal 2004," said Gregory J. Owens, Chairman and CEO, Manugistics. "In the second half of the year, we grew software revenue, generated positive cash flows from operations and reduced our convertible debt balance by 30 percent. We believe market conditions continue to improve modestly as evidenced by increased numbers of closed software license transactions over the past two quarters, increased average deal size in the fourth quarter and year over year growth in software revenue for two consecutive quarters. Our Americas operation posted its strongest quarterly results in nearly two years, and our Government, Aerospace and Defense business continues to be a major contributor for us."
For the fourth quarter, software revenue was $19.0 million, up four percent from $18.2 million in the prior year quarter. Product revenue, which is composed of software and support revenue, was 71 percent of total revenue, up from 62 percent in the prior year quarter. Services revenue was $15.0 million, down 33 percent from $22.5 million in the prior year quarter. Total revenue was $57.8 million, down 12 percent from $65.5 million in the prior year quarter due to the decrease in services revenue, the Company`s lowest gross margin revenue source.
For the fourth quarter, the Company reported a GAAP operating loss of $9.3 million compared to a GAAP operating loss of $108.9 million in the prior year quarter. The Company reported a GAAP net loss of $56.6 million, or $0.73 per basic and diluted share, compared to a GAAP net loss of $111.4 million, or $1.59 per basic and diluted share, in the prior year quarter. The GAAP net loss for the quarter ended February 29, 2004 includes a non-cash debt conversion expense of $43.4 million, or $0.56 per share, as a result of the exchange of $52.0 million of convertible debt for 6.7 million shares of the Company`s common stock during the quarter ended February 29, 2004. The GAAP net loss for the quarter ended February 28, 2003 included a $96.3 million non-cash goodwill impairment charge, or $1.38 per share.
For the fourth quarter, the Company reported positive adjusted operating income of $4.2 million, compared to an adjusted operating loss of $5.0 million in the prior year quarter. The Company reported adjusted net income of $273,000, or $.00 per basic and diluted share, for the fourth quarter, compared to an adjusted net loss of $7.6 million, or $.11 per basic and diluted share, in the prior year quarter.
Adjusted net income or loss, adjusted operating income or loss and adjusted net income or loss per basic and diluted share referred to in this press release are non-GAAP measures and exclude the following items: amortization of intangibles and acquired technology, restructuring and lease abandonment charges, non-cash stock option compensation charges, goodwill impairment charges and non-cash debt conversion expenses. A reconciliation of GAAP results to adjusted results has been provided in the financial statement tables following the text of this press release. For further information, please refer to the section of the press release titled "Reasons for Presentation of Non-GAAP Financial Measures."
"We delivered positive adjusted operating income and year over year improvement in adjusted net income in every quarter in fiscal 2004 - an impressive accomplishment given the challenging market conditions information technology companies have faced. Our goal for fiscal 2005 and beyond is to drive towards more growth and adjusted net income each quarter," added Owens. "Our competitive position remains strong, and we are seeing increasing levels of business activity across the consumer goods, electronics and high technology, government, aerospace and defense and retail sectors."
Additional February 2004 Quarterly Financial Metrics:
-- Closed 27 significant software license transactions of $100,000 or more, including three transactions of $1 million or greater.
-- 20 percent of software revenue came from new customers.
-- 27 percent of software revenue came from international sales.
-- Average deal size for significant software transactions was $654,000.
-- Cash flows from operations were $16.1 million during the quarter ended February 29, 2004, the highest in three years.
-- Cash, marketable securities and investments were approximately $155.3 million as of February 29, 2004, up $18.2 million from November 30, 2003.
-- Convertible debt balance was reduced to $175.5 million at February 29, 2004 from $227.5 million at November 30, 2003 via debt-for-equity exchanges.
-- Days Sales Outstanding (DSO) for receivables were 87 days compared to 88 days in the third quarter.
-- Deferred revenue increased to $43.7 million on February 29, 2004 from $34.9 million as of November 30, 2003, reflecting strong seasonal renewals of annual support contracts.
Guidance - First Quarter Fiscal 2005:
The Company expects its first quarter adjusted operating income and adjusted income per diluted share to improve sequentially on slightly higher total revenue. Projected adjusted net income for the first quarter excludes expected quarterly charges of $5.2 million for amortization of intangibles and acquired technology.
Other Highlights and Developments:
Fourth Quarter Global Client Wins: The Company signed significant software license transactions across key industries in the Americas, Europe and Asia, with fourth quarter global wins including, among others: Albertson`s, Inc., Arnott`s, Arrow Electronics, Inc., BearingPoint, Inc., Dollar General Corporation, DSG Retail Limited, Lotte Co. Ltd., Mahou San Miguel, Mitsubishi Motors Europe B.V., Owens & Minor Medical, Inc., Royal Numico N.V., Sanmina-SCI Corporation, Smith & Nephew, and The Scotts Company.