0001056696 2011-07-26 0001056696 2011-06-30 0001056696 2010-12-31 0001056696 2011-04-01 2011-06-30 0001056696 2010-04-01 2010-06-30 0001056696 2011-01-01 2011-06-30 0001056696 2010-01-01 2010-06-30 0001056696 2009-12-31 0001056696 2010-06-30 iso4217:USD xbrli:shares xbrli:shares iso4217:USD MANHATTAN ASSOCIATES INC 0001056696 --12-31 No No Yes Accelerated Filer 10-Q false 2011-06-30 Q2 2011 610716498 21155243 103400000 120744000 5956000 4414000 52995000 47419000 5094000 5711000 7486000 7214000 1609000 2446000 6979000 6743000 178425000 188980000 13516000 14833000 909000 1711000 62281000 62265000 309000 1186000 9204000 8816000 3118000 2673000 267762000 280464000 8927000 7745000 13959000 19807000 13950000 13856000 50335000 44974000 87171000 86382000 9888000 10282000 0 0 0 0 20000000 20000000 0 0 0 0 211000 217000 .01 .01 100000000 100000000 21106727 21729789 21106727 21729789 0 487000 171371000 184152000 -879000 -1056000 170703000 183800000 267762000 280464000 16347000 15485000 24109000 29692000 63774000 54780000 119852000 108241000 8281000 7376000 16151000 13657000 88402000 77641000 160112000 151590000 1824000 1611000 3063000 3160000 27462000 24906000 52420000 48970000 6457000 6205000 12757000 11274000 10676000 10334000 21059000 20774000 12309000 12073000 22909000 22541000 9238000 8177000 17914000 16638000 2223000 2318000 4224000 4733000 70189000 65624000 134346000 128090000 18213000 12017000 25766000 23500000 334000 304000 352000 -194000 18547000 12321000 26118000 23306000 6208000 4132000 6613000 7922000 12339000 8189000 19505000 15384000 0.60 0.38 0.93 0.70 0.57 0.36 0.89 0.68 20696000 21718000 20861000 21837000 21775000 22776000 21926000 22655000 4814000 5087000 -12000 6000 2885000 1237000 1198000 342000 -633000 -25000 57000 -24000 5198000 9299000 623000 1122000 -5347000 8285000 855000 -1837000 4886000 1743000 24125000 23862000 1996000 2706000 723000 -98000 -2719000 -2608000 65996000 41022000 25517000 17445000 1198000 342000 -39281000 -23235000 531000 -573000 -17344000 -2554000 120217000 117663000 <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <!-- Begin Block Tagged Note 1 - us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock--> <!-- xbrl,ns --> <!-- xbrl,nx --> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b> </div> <div align="left"> </div> <div align="center" style="font-size: 10pt"><b></b></div> <div align="center" style="font-size: 10pt"><b></b></div> <div align="center" style="font-size: 10pt"><b></b></div> <div align="left" style="font-size: 10pt; margin-top: 10pt"><b>1. Basis of Presentation and Principles of Consolidation</b> </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%"><b>Basis of Presentation</b> </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The accompanying unaudited condensed consolidated financial statements of Manhattan Associates, Inc. and its subsidiaries (the &#8220;Company&#8221;) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Rule&#160;10-01 of Regulation&#160;S-X. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, these condensed consolidated financial statements contain all normal recurring adjustments considered necessary for a fair presentation of the Company&#8217;s financial position at June&#160;30, 2011, the results of operations for the three and six months ended June&#160;30, 2011 and 2010 and cash flows for the six months ended June&#160;30, 2011 and 2010. The results for the three and six months ended June&#160;30, 2011 are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with the Company&#8217;s audited consolidated financial statements and management&#8217;s discussion and analysis included in the Company&#8217;s annual report on Form 10-K for the year ended December&#160;31, 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%"><b>Principles of Consolidation</b> </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The accompanying condensed consolidated financial statements include the Company&#8217;s accounts and the accounts of its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. </div> </div> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <!-- Begin Block Tagged Note 2 - manh:RevenueRecognitionTextBlock--> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="left" style="font-size: 10pt; margin-top: 10pt"><b>2. Revenue Recognition</b> </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Company&#8217;s revenue consists of revenues from the licensing and hosting of software, fees from implementation and training services (collectively, &#8220;professional services&#8221;), plus customer support and software enhancements, and sales of hardware and other revenues (other revenues consists of reimbursements of out-of-pocket expenses incurred in connection with its professional services). All revenue is recognized net of any related sales taxes. </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Company recognizes license revenue when the following criteria are met: (1)&#160;a signed contract is obtained; (2)&#160;delivery of the product has occurred; (3)&#160;the license fee is fixed or determinable; and (4)&#160;collection is probable. Revenue recognition for software with multiple-element arrangements requires recognition of revenue using the &#8220;residual method&#8221; when (a) there is vendor-specific objective evidence of the fair values of all undelivered elements in a multiple-element arrangement that is not accounted for using long-term contract accounting; (b) vendor-specific objective evidence of fair value does not exist for one or more of the delivered elements in the arrangement; and (c)&#160;all other applicable revenue-recognition criteria for software revenue recognition, other than the requirement for vendor-specific objective evidence of the fair value of each delivered element of the arrangement, are satisfied. For those contracts that contain significant customization or modifications, license revenue is recognized using contract accounting. </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Company allocates revenue to customer support and software enhancements and any other undelivered elements of the arrangement based on vendor specific objective evidence, or VSOE, of fair value of each element and such amounts are deferred until the applicable delivery criteria and other revenue recognition criteria have been met. The balance of the revenue, net of any discounts inherent in the arrangement, is recognized at the outset of the arrangement using the residual method as the product licenses are delivered. If the Company cannot objectively determine the fair value of each undelivered element based on the VSOE of fair value, the Company defers revenue recognition until all elements are delivered, all services have been performed, or until fair value can be objectively determined. The Company must apply judgment in determining all elements of the arrangement and in determining the VSOE of fair value for each element, considering the price charged for each product on a stand-alone basis or applicable renewal rates. </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The accounting related to license revenue recognition in the software industry is complex and affected by interpretations of the rules which are subject to change. Judgment is required in assessing the probability of collection, which is generally based on evaluation of customer-specific information, historical collection experience and economic market conditions. If market conditions decline, or if the financial conditions of customers deteriorate, the Company may be unable to determine that collectibility is probable, and the Company could be required to defer the recognition of revenue until the Company receives customer payments. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Company&#8217;s services revenue consists of fees generated from professional services and customer support and software enhancements related to the Company&#8217;s software products. Fees from professional services performed by the Company are generally billed on an hourly basis, and revenue is recognized as the services are performed. Professional services are sometimes rendered under agreements in which billings are limited to contractual maximums or based upon a fixed-fee for portions of or all of the engagement. Revenue related to fixed-fee based contracts is recognized on a proportional performance basis based on the hours incurred on discrete projects within an overall services arrangement. Project losses are provided for in their entirety in the period in which they become known. Revenue related to customer support services and software enhancement is generally paid in advance and recognized ratably over the term of the agreement, typically 12&#160;months. </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">Hardware and other revenue is generated from the resale of a variety of hardware products, developed and manufactured by third parties, that are integrated with and complementary to the Company&#8217;s software solutions. As part of a complete solution, the Company&#8217;s customers periodically purchase hardware from the Company in conjunction with the licensing of software. These products include computer hardware, radio frequency terminal networks, radio frequency identification (RFID)&#160;chip readers, bar code printers and scanners and other peripherals. Hardware revenue is recognized upon shipment to the customer when title passes. The Company generally purchases hardware from the Company&#8217;s vendors only after receiving an order from a customer. As a result, the Company does not maintain hardware inventory. </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">In accordance with the other presentation matters within the Revenue Recognition Topic of the Financial Accounting Standards Board&#8217;s (FASB)&#160;Accounting Standards Codification, the Company recognizes amounts associated with reimbursements from customers for out-of-pocket expenses as revenue. Such amounts have been classified as hardware and other revenue. The total amount of expense reimbursement recorded to revenue was $2.7&#160;million and $2.3&#160;million for the three months ended June&#160;30, 2011 and 2010, respectively, and $5.1&#160;million and $4.1&#160;million for the six months ended June&#160;30, 2011 and 2010, respectively. </div> </div> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <!-- Begin Block Tagged Note 3 - us-gaap:FairValueDisclosuresTextBlock--> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>3. Fair Value Measurement</b> </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Company measures its investments based on a fair value hierarchy disclosure framework that prioritizes and ranks the level of market price observability used in measuring assets and liabilities at fair value. Market price observability is affected by a number of factors, including the type of asset or liability and their characteristics. 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Stock-Based Compensation</b> </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">In January&#160;2010 the Compensation Committee of the Board of Directors approved certain changes to the Company&#8217;s historical equity incentive grant practices, with the objective to optimize its performance and retention strength while managing program share usage to improve long-term equity overhang. The changes eliminate stock option awards in favor of 100% restricted stock grants, which for the 2010 and 2011 awards contain vesting provisions that are 50% service-based and 50% performance-based for employee awards and 100% service based for non-employee members of the Board of Directors (&#8220;Outside Directors&#8221;). The equity compensation program change for employees was effective January&#160;2010 and for Outside Directors was effective May&#160;2010. 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Although the Company attempts to limit contractually its liability for damages arising from product failures or negligent acts or omissions, there can be no assurance that the limitations of liability set forth in the Company&#8217;s contracts will be enforceable in all instances. The Company is not presently involved in any material litigation. However, it is involved in various legal proceedings. The Company believes that any liability that may arise as a result of these proceedings will not have a material adverse effect on its financial condition, results of operations or cash flows. 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The information for the periods presented below reflects these segments. All segments derive revenue from the sale and implementation of the Company&#8217;s supply chain execution and planning solutions. The individual products sold by the segments are similar in nature and are all designed to help companies manage the effectiveness and efficiency of their supply chain. The Company uses the same accounting policies for each operating segment. The Chief Executive Officer and Chief Financial Officer evaluate performance based on revenue and operating results for each region. </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">The Americas segment charges royalty fees to the EMEA and APAC segments based on software licenses sold by those operating segments. 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text-indent:-15px">Total software license revenue </div></td> <td>&#160;</td> <td align="left"><b>$</b></td> <td align="right"><b>16,347</b></td> <td>&#160;</td> <td>&#160;</td> <td align="left">$</td> <td align="right">15,485</td> <td>&#160;</td> <td>&#160;</td> <td align="left"><b>$</b></td> <td align="right"><b>24,109</b></td> <td>&#160;</td> <td>&#160;</td> <td align="left">$</td> <td align="right">29,692</td> <td>&#160;</td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">&#160; </div></td> <td>&#160;</td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000">&#160;</td> <td>&#160;</td> </tr> <!-- End Table Body --> </table> </div> </div> <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <!-- Begin Block Tagged Note 10 - us-gaap:DescriptionOfNewAccountingPronouncementsNotYetAdopted--> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="justify" style="font-size: 10pt; margin-top: 10pt"><b>10. New Accounting Pronouncements</b> </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">In June&#160;2011, the FASB issued an Accounting Standards Update on the presentation of comprehensive income. This guidance requires the presentation of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This guidance also requires presentation of adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. This guidance is effective for interim and annual periods beginning after December&#160;15, 2011. The adoption of this guidance will only impact the presentation of the Company&#8217;s financial statements. </div> <!-- Folio --> <!-- /Folio --> </div> <!-- PAGEBREAK --> <div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; "> <div align="center" style="font-size: 10pt; margin-top: 0pt"> <b> </b> </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">In May&#160;2011, the FASB issued an Accounting Standards Update on fair value measurements that clarifies the application of existing guidance and disclosure requirements, changes certain fair value measurement principles and requires additional disclosures about fair value measurements. This guidance is effective for interim and annual periods beginning after December 15, 2011. The Company does not expect the adoption of this guidance to have a material impact on its financial statements. </div> <div align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">In January&#160;2010, the FASB issued an Accounting Standard Update to improve disclosures about fair value measurements. This guidance requires enhanced disclosures regarding transfers in and out of the levels within the fair value hierarchy. Separate disclosures are required for significant transfers in and out of Level 1 and 2 in the fair value hierarchy and the reasons for the transfers. This guidance also requires disclosures relating to the reconciliation of fair value measurements using significant unobservable inputs (Level 3) investments. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December&#160;15, 2009 except Level 3 reconciliation disclosures which are effective for the fiscal years and interim periods beginning after December&#160;15, 2010. The Company adopted the enhanced disclosures for Level 1 and 2 in its first quarter of 2010 reporting, which did not have a material impact on its financial statements. The Company also adopted the enhanced disclosures for Level 3 reconciliation disclosures in its first quarter of 2011 reporting, which also did not have a material impact on its financial statements. </div> </div>