Paul Demery , Managing Editor, B2B E-commerce
Record Software Fees of $16.1 Million for the Quarter Push Manhattan Associates to $246 Million in Annual Revenue
ATLANTA - February 7, 2006 - Leading supply chain solutions provider, Manhattan Associates®, Inc. (NASDAQ: MANH), today announced results for the fourth quarter ended December 31, 2005.
Key financial highlights for Manhattan Associates include:
• Software and hosting fees for the quarter ended December 31, 2005, were a record $16.1 million, an increase of 19% over the fourth quarter of 2004;
• Services revenue for the quarter ended December 31, 2005, was a record $43.8 million, an increase of 26% over the fourth quarter of 2004;
• Total revenue for the quarter ended December 31, 2005, was a record $66.4 million, an increase of 19% over the fourth quarter of 2004;
• Adjusted earnings per share for the quarter ended December 31, 2005, was $0.24 per share;
• Repurchased 876,000 shares of Manhattan Associates` common stock during the quarter ended December 31, 2005, at an average price of $22.47 per share, totaling approximately $20 million.
We recently became aware of certain tax accounting issues related to prior years which we and our auditors believe require the restatement of our previously issued financial statements for the years ended December 31, 1999 through December 31, 2004. Net income in those years was overstated by a total of approximately $7 million resulting primarily from not filing an election to change the method of computing our research and development income tax credit in 1998 following a small acquisition and for not providing the appropriate liability for transaction taxes in certain states. Although it is possible to recover some, if not all, of the lost tax credits through a retroactive relief request from the Internal Revenue Service and some of the transaction taxes from our customers who contractually agreed to be responsible for these taxes, the amount of recovery cannot be estimated precisely and collection is not considered probable. Any future recapture of the lost tax credits or collection of transaction taxes from our customers will be recorded as a reduction to expense in the period received and included in U.S. GAAP earnings per share. All U.S. GAAP amounts included herein reflect the restated amounts.
The previously reported quarterly adjusted earnings per share amounts announced in 2005 remain unchanged.
Adjusted earnings per share is defined herein as net earnings per share according to accounting principles generally accepted in the United States of America, excluding the impact of certain items, if applicable in that period, including acquisition-related costs and the amortization thereof, the recapture of previously recognized transaction tax expense, stock option expense under FAS 123R and the severance and accounts receivable charge recorded in Q2 of 2005, all net of income taxes.
GAAP net income was $5.7 million or $0.20 per fully diluted share for the fourth quarter of 2005 compared to $4.5 million or $0.15 per fully diluted share for the fourth quarter of 2004.
Adjusted net income for the fourth quarter of 2005 was $6.7 million, or $0.24 per fully diluted share. Adjusted net income for the fourth quarter of 2004 was $5.1 million, or $0.17 per fully diluted share.
For the year ended December 31, 2005, total revenue was a record $246.4 million, increasing 15% over the prior year. Software and hosting fees for the year totaled $57.1 million, an increase of 14% over 2004 and services revenues totaled $166.1 million, an increase of 17% compared with the prior year. GAAP net income was $18.6 million, or $0.64 per fully diluted share for the year ended December 31, 2005, compared with GAAP net income of $21.6 million, or $0.70 per fully diluted share for the year ended December 31, 2004. Adjusted net income for the year ended December 31, 2005 was $25.7 million, or $0.88 per fully diluted share compared to $23.8 million, or $0.77 per fully diluted share for the year ended December 31, 2004.
The company provides adjusted net income and adjusted net income per share in the press release as additional information of its operating results. The measures are not in accordance with, or an alternative for, GAAP and may be different from non-GAAP net income and non-GAAP per share measures used by other companies. The company believes that this presentation of adjusted net income and adjusted net income per share provides useful information to investors regarding certain additional financial and business trends relating to its financial condition and results of operations.
Overall I am pleased with our fourth quarter results, said Pete Sinisgalli, president and CEO of Manhattan Associates. Our revenue and earnings results were solid and we continued to capture market share in the markets we serve. Our complete Supply Chain Management offering is gaining momentum and I look forward to building on our successes in 2006.
Other key highlights for Manhattan Associates include the following:
• Signed key new customers in the quarter including, Asbjorn Olafsson ehf, Clark Material Handling Company, Federated Systems, Inc., HP Products Corp., IBS Logistics, J. Crew Group, Inc., KGL Logistics, Korus Consulting, Kuka Flexible Production Systems Corp., Nobex ehf, Roger & Roger NV, The Standard Register Company, TW Logistica, Urban Brands and Vivendi Universal Games, Inc.;
• Expanded partnerships with many existing clients including Belkin Components, Columbia Sportswear Company, Conair Corporation, Converse, Inc., David`s Bridal, Inc., Electronics for Imaging, Inc., Healthcare Logistics Limited, Hudd Distribution Services, Inc., Jones Apparel Group, Inc., Liberty Hardware Mfg. Corporation, Logix FZCO, Nippon Express USA, Inc., Nordstrom, Inc., O`Reilly Automotive, Inc., Patagonia, Inc., PepsiCo., Inc., Super Cheap Auto, TDG (UK) Limited, The Dannon Company, Inc., The Hillman Group, Inc., Warnaco, Inc.;
• Closed three large deals, each of which were $1 million or more in recognized license revenue;
• Released the latest version of our supply chain management solutions in December 2005, offering an expanded solution portfolio that includes planning and execution solutions. Highlights of the release include a standalone demand forecasting solution, a mid-market execution solution called Integrated Logistics Solutions™, built on Microsoft® .NET and significantly enhanced transportation management capabilities;
• Continued to see channel results from Microsoft-Axapta partnership with the signing of four new deals.
Business Outlook for 2006
Manhattan Associates currently intends to publish, in each quarterly earnings release, certain expectations with respect to future financial performance. The following statements regarding future financial performance are based on current expectations, which include a modestly improving general economic and information technology spending environment over the course of the current year. 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, 2006, 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 Business Outlook section as still being Manhattan Associates` current expectation on matters covered, unless Manhattan Associates publishes a notice stating otherwise. The public should not rely on previously published expectations during 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, presently scheduled for the fourth week of April 2006.
Steve Norton, senior vice president and chief financial officer, stated, For the quarter ending March 31, 2006, Manhattan Associates expects to achieve net earnings of between $0.11 and $0.15 per fully diluted share and adjusted earnings of between $0.19 and $0.23 per fully diluted share. For the full-year 2006, we expect net earnings per fully diluted share of between $0.70 and $0.74 and adjusted earnings per share of $1.01 to $1.05.
About Manhattan Associates, Inc.
Manhattan Associates® is a leading supply chain solutions provider. The company`s supply chain planning, supply chain execution, business intelligence and business process platform capabilities enable its more than 1200 customers worldwide to enhance profitability, performance and competitive advantage. 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 factors are set forth in Safe Harbor Compliance Statement for Forward-Looking Statements included as Exhibit 99.1 to the Company`s Annual Report on Form 10-K for the year ended December 31, 2004. 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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