Manugistics Announces Fourth Quarter Fiscal 2005 Results
ROCKVILLE, Md.--April 12, 2005--Manugistics Group, Inc. (NASDAQ:MANU), a leading global provider of synchronized supply chain and revenue management solutions, today reported results for its fourth quarter and fiscal year ended February 28, 2005.
For the fourth quarter, total revenue was $45.2 million, down 22 percent from $57.8 million in the prior year quarter. Software revenue was $8.1 million, down 57 percent from $19.0 million in the prior year quarter. Support revenue was $20.7 million compared to $21.8 million in the prior year quarter. Product revenue, which is composed of software and support revenue, was 64 percent of total revenue compared to 71 percent of total revenue in the prior year quarter. Services revenue was $14.8 million, down one percent from $15.0 million in the prior year quarter. During the quarter ended February 28, 2005, Manugistics closed three transactions (including one multi-million dollar transaction) where license revenue will be recorded as the services and support are provided to the customer.
For the fourth quarter, the Company reported a GAAP net loss of $17.2 million, or $0.21 per basic and diluted share, compared to a GAAP net loss of $57.5 million, or $0.74 per basic and diluted share, in the prior year quarter. For the fourth quarter, the Company reported a GAAP operating loss of $15.7 million compared to a GAAP operating loss of $10.2 million in the prior year quarter. The GAAP net loss and the GAAP operating loss for the quarter ended February 28, 2005 include $10.7 million in exit and disposal charges. These charges consist primarily of $9.2 million for lease abandonment and other charges, including cash expenditures of $7.0 million to be paid through 2018 and $1.5 million for severance and other benefits related to headcount reductions. 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. The GAAP net loss and the GAAP operating loss for the quarter ended February 29, 2004 included $8.1 million in exit and disposal charges. These charges consisted primarily of $8.4 million for lease abandonment and other charges and ($0.3) million for adjustments to severance and other benefits related to headcount reductions.
For the fourth quarter, the Company reported an adjusted operating loss of $0.8 million compared to an adjusted operating income of $3.3 million in the prior year quarter. The Company reported an adjusted net loss of $2.2 million, or $0.03 per basic and diluted share, for the fourth quarter, compared to an adjusted net loss of $0.6 million, or $0.01 per basic and diluted share, in the prior year quarter.
Adjusted operating income or loss, adjusted net 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, charges from exit and disposal activities, debt conversion expense and non-cash stock option compensation charges. 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."
Headcount at the end of our fourth quarter was 695 compared to 733 at the end of our third quarter. During the fourth quarter, we realized cost savings of approximately $4.0 million as a result of the second quarter exit and disposal plans. As previously announced, the Company expects to realize additional cost savings of $2.0 million to $3.0 million per quarter by the end of fiscal 2006 resulting from the opening of Manugistics India and the development center in Hyderabad, India.
Business Metrics - Quarter Ended February 28, 2005
• The Company closed 12 significant software license transactions - software license transactions of $100,000 or greater.
• Included in the above are two significant software license transactions of $1.0 million or greater.
• The average selling price for significant software transactions was approximately $559,000.
• 60 percent of software revenue came from significant transactions related to new clients.
• 21 percent of software revenue came from international sales.
• Cash flows from operations were $7.4 million.
• Cash, cash equivalents, marketable securities and long-term investments were approximately $135.9 million as of February 28, 2005, up from $132.2 million as of November 30, 2004.
• Days Sales Outstanding (DSO) for receivables was 91 days compared to 75 days for the quarter ended November 30, 2004.
Manugistics does not provide forward-looking guidance on software revenue, total revenue, operating income or net income performance nor does the Company intend to provide performance updates prior to the release of full period results.
Other Highlights and Developments:
Fourth Quarter Global Client Wins: The Company signed 12 significant software license transactions in key industries in the Americas, Europe and Asia, with fourth quarter global wins including, among others: BIC Group, Constellation Brands, DSG Retail Group and Limited Brands.
New Manugistics Chairman of the Board: With the transition of Joe Cowan as the new Manugistics CEO now complete, Gregory J. Owens has resigned as non-executive Chairman and Director of the Board to pursue other interests. "Greg has been very helpful to me during the transition and we thank him for his service to Manugistics," said Cowan. The Board of Directors has appointed Kevin C. Melia, a member of the Board since 2003 and a current member of the Audit Committee to replace Owens as non-executive Chairman of the Board. "Kevin brings years of senior executive and Board experience in the high-tech industry, with in-depth expertise in both the supply chain and finance arenas acquired throughout his career growing global technology companies," said Cowan.
National Retail Federation Show: In January, the Company showcased its retail solutions and was sponsor of the Technology Strategies Track at the National Retail Federation (NRF) Trade and Expo Show. The annual, premier retail event brings together global retail leaders shaping the future of the industry as well as provides a showcase for business and technology innovation. In collaboration with Canadian Tire and Forrester Research, Manugistics was a co-presenter on a panel titled, "Mastering the Complexities of the Consumer-Driven Supply Chain." The panel provided unique perspectives on how leading retailers are leveraging their technology investments to realize strategic advantages.
Strategic Business Units (SBUs) Created: On March 2, Manugistics unveiled a new organization structure comprised of four SBUs - Retail, Consumer Goods, Government and Revenue Management - to support the company`s strategic focus and direction. Since joining Manugistics in July 2004, Cowan has spearheaded the company`s efforts to leverage Manugistics` core strengths and leadership in these four key areas.
enVISION 2005: In May, the Company will host more than 1,000 attendees at its enVISION 2005 conference in Atlanta, Georgia. This year`s event features such keynote speakers as Avon Products Senior Vice President and Chief Information Officer (CIO) Harriet Edelman and Perdue Farms CIO Donald Taylor. More than 70 Manugistics clients will deliver session presentations on achieving better demand forecasts, precision inventory accuracy and unparalleled excellence in planning and execution with Manugistics solutions.
Conference Call Information: Manugistics will conduct a simultaneous conference call and audio Web-cast on Tuesday, April 12, 2005 at 5:00 PM ET to discuss the Company`s financial performance for its fourth quarter and 2005 fiscal year. Interested parties may listen to the Web-cast by going to www.manugistics.com/ir/.
A recording of the call will be available from 7:00 PM ET Tuesday, April 12, 2005 through 7:00 PM ET on Thursday, April 14, 2005. To listen to the recording, callers within North America may call 800-633-8284. Callers outside North America may call 402-977-9140. Callers to the recording will be required to enter the access number for this call, which is 21231425. In addition, a recording of the Web-cast will be archived for approximately three months on the Manugistics website at www.manugistics.com/ir/.
About Manugistics Group, Inc.
Manugistics powers the synchronized supply chain. Clients depend on Manugistics to position them one step ahead of demand. With Manugistics` unparalleled supply chain and revenue management solutions, clients achieve improved forecast and inventory accuracy, leverage industry leading pricing and yield management solutions to maximize profits while ensuring constant supply for constantly changing demand. Its clients include industry leaders such as AT&T, BMW, Boeing, Caesars Entertainment, Canadian Tire, Cingular, Circuit City, Coca-Cola Bottling, Coty International, Delta Air Lines, DHL, Diageo, Dixons, DuPont, Eurostar Railway, Georgia-Pacific, Great North Eastern Railway (GNER), Harley-Davidson, Harrah`s Entertainment, H.J. Heinz, John Deere, LL Bean, Limited Brands, Kraft Foods, Marriott, McCormick, Nestle, Nissan, RadioShack, The Scotts Company, Sears, Sinotrans, Unilever and Wickes Building Supplies. For more information, go to www.manugistics.com.
Reasons for Presentation of Non-GAAP Financial Measures
The non-GAAP financial measures presented in the text of this press release and accompanying supplementary financial information (also referred to as "adjusted") represent the financial measures used by the Company`s management to evaluate the quarterly operating performance of the Company and to conduct its business operations. These non-GAAP financial measures are also used by management to evaluate return on investment, income contribution and future impact to operating results of potential mergers and acquisitions. In addition, these non-GAAP financial measures facilitate management`s internal comparisons to competitors` operating results and the software industry in general. This non-GAAP financial information is provided as additional information for investors and is not in accordance with, or an alternative to, GAAP. In addition, the non-GAAP financial information provided may be different than similar measures used by other companies. However, the Company`s management believes these non-GAAP measures provide useful information to investors, potential investors, securities analysts and others so each group can evaluate the Company`s current and future prospects in the same manner as management if they so choose. The Company believes its non-GAAP measures of operating performance better reflect the underlying economics of its business and better align with the cash flow performance of the Company as measured under GAAP than it does with operating results as presented under GAAP, which include or may include, from time to time, non-cash charges for amortization expense and purchased research and development related to acquisitions, impairment losses on long-lived assets, exit and disposal activities and non-cash stock option compensation charges. A reconciliation of GAAP results to adjusted results has been provided in the financial statement tables that accompany this press release.
Forward-Looking Statements
Information in this release relating to Manugistics` prospects that are forward-looking statements involve risks and uncertainties that could cause actual results to differ materially, including, but not limited to, the following: (1) Manugistics has recently instituted exit and disposal plans which include, among other things, a decrease in employee workforce and office closures. In addition, Manugistics` has recently undergone significant changes in its organizational structure and senior management. There can be no assurances as to the effectiveness of these plans and changes on the Company`s overall financial performance and condition, that further similar initiatives will not be undertaken in the future, or that these plans will not have an adverse impact on Manugistics` ability to successfully operate its business; (2) Continued softness in the market conditions for enterprise application software; (3) Manugistics` management`s ability to accurately forecast revenue or to adjust the Company`s cost structure, most of which is fixed in the short-term, quickly enough to align it with revenue; (4) Manugistics` management`s ability to accurately project cost savings from exit and disposal activities and other cost saving initiatives; (5) Manugistics` ability to maintain its competitive place in the markets for its products and services, to keep pace with the rapid technological advances or to introduce new products or product versions that satisfy customer demand, achieve market acceptance or meet competitive challenges.
Forward looking statements may be identified by the use of words such as "achieve," "address," "adjust," "align," "allow," "anticipate," "assume," "begin," "believe," "build," "confident," "continue," "create," "develop," "enable," "engage," "expand," "expect," "fix," "focus," "forecast," "future," "gain," "goal," "go-forward," "grow," "guidance," "help," "improve," "initiative," "intend," "invest," "lead," "leverage," "looking forward," "maintain," "manage," "meet," "might," "objectives," "opportunities," "pipeline," "position," "positive," "predict," "probably," "progress," "provide," "ramp up," "reduce," "remain," "realize," "return," "see," "should," "strategy," "target," "understand," "want," "well-positioned," "will," or "would." More information about factors that potentially could affect Manugistics` financial results is included in Manugistics filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended February 29, 2004, its Quarterly Report on Form 10-Q for the quarter ended November 30, 2004 and its Report on Form 8-K filed with the Securities and Exchange Commission on April 12, 2005. Manugistics assumes no obligation to update the forward-looking information contained in this announcement.
Manugistics is a registered trademark, the Manugistics logo, and Manugistics NetWORKS are trademarks of Manugistics, Inc. All other product or company names mentioned are used for identification purposes only, and may be trademarks of their respective owners.
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