Georgia

0-23999

58-2373424

(State or Other Jurisdiction of
Incorporation or organization)

(Commission
File Number)

(I.R.S. Employer
Identification No.)

•

Equity-based compensation expense typically does not require cash settlement by the Company. We do not include this expense and the related income tax effects when assessing our operating performance, and believe our peers also typically present non-GAAP results that exclude equity-based compensation expense.

•

From time to time, we incur acquisition-related costs consisting primarily of (i) accounting and legal expenses, whether or not we ultimately consummate a proposed acquisition, (ii) certain unusual costs, such as employee retention benefits, resulting from pre-acquisition arrangements, and (iii) amortization of acquisition-related intangible assets.  These costs are difficult to predict and, if and when incurred, generally are not expenses associated with our core operations.  We exclude these costs and the related income tax effects from our internal assessments of our operating performance, and believe our peers also typically present non-GAAP results that exclude similar acquisition-related costs.

•

We do not believe that the restructuring charge related to a reduction in our workforce recorded in 2017 is a common cost that results from normal operating activities; rather, we believe that it relates to the headwinds in the retail sector and a realignment of our capacity with demand forecasts. We have excluded the charge from our internal assessment of our operating performance and non-GAAP results.

•

The enactment of the Tax Cuts and Jobs Act in December 2017 resulted in a provisional net one-time charge in the fourth quarter of 2017 based on a reasonable estimate of the income tax effects. The charge was primarily from a tax on accumulated foreign earnings

and the remeasurement of deferred tax assets. We have excluded the charge from our internal assessment of our operating performance and non-GAAP results.

Exhibit

Number

Description

99.1

Press Release, dated February 6, 2018

Exhibit

Number

Description

99.1

Press Release, dated February 6, 2018

Contact:

Dennis Story

Rick Fernandez

Chief Financial Officer

Senior Manager, Corporate Communications

Manhattan Associates, Inc.

Manhattan Associates, Inc.

770-955-7070

678-597-6988

dstory@manh.com

rfernandez@manh.com

•

Certain line items in prior period financial statements have been reclassified to conform to the current period presentation in the consolidated statements of income due to the business transition to cloud subscriptions.

•

GAAP diluted earnings per share was $0.36 in Q4 2017 compared to $0.42 in Q4 2016.

•

Adjusted diluted earnings per share, a non-GAAP measure, was $0.45 in Q4 2017, compared to $0.46 in Q4 2016.

•

Consolidated total revenue was $144.1 million in Q4 2017, compared to $147.6 million in Q4 2016. License revenue was $14.7 million in Q4 2017, compared to $20.7 million in

Q4 2016. Cloud subscriptions revenue was $3.2 million in Q4 2017 compared to $1.4 million in Q4 2016.

•

GAAP operating income was $43.6 million in Q4 2017, compared to $45.4 million in Q4 2016.

•

Adjusted operating income, a non-GAAP measure, was $48.8 million in Q4 2017, compared to $49.7 million in Q4 2016.

•

Cash flow from operations was $47.4 million in Q4 2017, compared to $37.8 million in Q4 2016. Days Sales Outstanding was 59 days at December 31, 2017, compared to 58 days at September 30, 2017.

•

Cash and investments totaled $125.5 million at December 31, 2017, compared to $129.7 million at September 30, 2017.

•

During the three months ended December 31, 2017, the Company repurchased 1,156,087 shares of Manhattan Associates common stock under the share repurchase program authorized by the Board of Directors for a total investment of $50.0 million. In February 2018, the Board of Directors authorized the Company to repurchase up to an aggregate of $50 million of the Company’s common stock.

•

Certain line items in prior period financial statements have been reclassified to conform to the current period presentation in the consolidated statements of income due to the business transition to cloud subscriptions.

•

GAAP diluted earnings per share for the twelve months ended December 31, 2017, was $1.68, compared to $1.72 for the twelve months ended December 31, 2016.  

•

Adjusted diluted earnings per share, a non-GAAP measure, was $1.87 for both the twelve months ended December 31, 2017, and 2016.

•

Consolidated revenue for the twelve months ended December 31, 2017, was $594.6 million, compared to $604.6 million for the twelve months ended December 31, 2016. License revenue was $72.3 million for the twelve months ended December 31, 2017, compared to $79.2 million for the twelve months ended December 31, 2016.  Cloud subscriptions revenue was $9.6 million for the twelve months ended December 31, 2017, compared to $5.8 million for the twelve months ended December 31, 2016.

•

GAAP operating income was $185.6 million for the twelve months ended December 31, 2017, compared to $194.3 million for the twelve months ended December 31, 2016.

•

Adjusted operating income, a non-GAAP measure, was $205.2 million for the twelve months ended December 31, 2017, compared to $210.7 million for the twelve months ended December 31, 2016. 

•

Cash flow from operations was a record $164.1 million in the twelve months ended December 31, 2017, compared to $139.3 million in the twelve months ended December 31, 2016.

•

During the twelve months ended December 31, 2017, the Company repurchased 2,695,295 shares of Manhattan Associates common stock under the share repurchase program authorized by the Board of Directors, for a total investment of $124.9 million.

Guidance Range - 2018 Full Year

($'s in millions, except EPS and operating margin)

$ Range

% Growth Range

Total revenue

$

546

$

558

-8%

-6%

Operating Margin:

GAAP operating margin

20.0

%

20.4

%

-11.2%

-10.8%

Equity-based compensation, net of tax

4.0

%

3.9

%

Adjusted operating margin⁽¹⁾

24.0

%

24.3

%

-10.5%

-10.2%

Diluted earnings per share (EPS):

GAAP EPS

$

1.23

$

1.27

-27%

-24%

Equity-based compensation, net of tax

0.25

0.25

Adjusted EPS⁽¹⁾

$

1.48

$

1.52

-21%

-19%

⁽¹⁾ Adjusted EPS is a Non-GAAP measure that excludes the impact of equity-based compensation

    and acquisition-related costs, and the related income tax effects of both.

Three Months Ended December 31,

Year Ended December 31,

2017

2016

2017

2016

(unaudited)

(unaudited)

Revenue:

Software license

$

14,712

$

20,702

$

72,313

$

79,213

Cloud subscriptions

3,188

1,423

9,596

5,783

Maintenance

37,325

34,826

142,998

133,848

Services

77,183

81,571

326,502

351,785

Hardware

11,678

9,070

43,190

33,928

Total revenue

144,086

147,592

594,599

604,557

Costs and expenses:

Cost of license

1,377

1,429

5,483

6,818

Cost of cloud subscriptions, maintenance and services

48,934

53,374

208,045

219,635

Cost of hardware

8,416

6,068

32,205

23,426

Research and development

14,630

13,183

57,704

54,736

Sales and marketing

13,222

13,617

47,482

48,223

General and administrative

11,764

12,281

46,054

48,322

Depreciation and amortization

2,197

2,284

9,060

9,090

Restructuring charge

(24

)

-

2,921

-

Total costs and expenses

100,516

102,236

408,954

410,250

Operating income

43,570

45,356

185,645

194,307

Other (loss) income, net

(580

)

416

(812

)

1,800

Income before income taxes

42,990

45,772

184,833

196,107

Income tax provision

18,476

15,855

68,352

71,873

Net income

$

24,514

$

29,917

$

116,481

$

124,234

Basic earnings per share

$

0.36

$

0.42

$

1.68

$

1.73

Diluted earnings per share

$

0.36

$

0.42

$

1.68

$

1.72

Weighted average number of shares:

Basic

68,485

70,742

69,175

71,674

Diluted

68,791

71,148

69,424

72,060

Three Months Ended December 31,

Year Ended December 31,

2017

2016

2017

2016

Operating income

$

43,570

$

45,356

$

185,645

$

194,307

Equity-based compensation (a)

5,188

4,210

16,229

15,934

Purchase amortization (c)

107

108

430

430

Restructuring charge (d)

(24

)

-

2,921

-

Adjusted operating income (Non-GAAP)

$

48,841

$

49,674

$

205,225

$

210,671

Income tax provision

$

18,476

$

15,855

$

68,352

$

71,873

Equity-based compensation (a)

1,934

1,451

5,964

5,789

Tax benefit of stock awards vested (b)

14

-

1,911

-

Purchase amortization (c)

40

37

158

156

Restructuring charge (d)

(2

)

-

1,073

-

U.S. Tax Cuts and Jobs Act impact (e)

(2,825

)

-

(2,825

)

-

Adjusted income tax provision (Non-GAAP)

$

17,637

$

17,343

$

74,633

$

77,818

Net income

$

24,514

$

29,917

$

116,481

$

124,234

Equity-based compensation (a)

3,254

2,759

10,265

10,145

Tax benefit of stock awards vested (b)

(14

)

-

(1,911

)

-

Purchase amortization (c)

67

71

272

274

Restructuring charge (d)

(22

)

-

1,848

-

U.S. Tax Cuts and Jobs Act impact (e)

2,825

-

2,825

-

Adjusted net income (Non-GAAP)

$

30,624

$

32,747

$

129,780

$

134,653

Diluted EPS

$

0.36

$

0.42

$

1.68

$

1.72

Equity-based compensation (a)

0.05

0.04

0.15

0.14

Tax benefit of stock awards vested (b)

-

-

(0.03

)

-

Purchase amortization (c)

-

-

-

-

Restructuring charge (d)

-

-

0.03

-

U.S. Tax Cuts and Jobs Act impact (e)

0.04

-

0.04

-

Adjusted diluted EPS (Non-GAAP)

$

0.45

$

0.46

$

1.87

$

1.87

Fully diluted shares

68,791

71,148

69,424

72,060

(a)

Adjusted results exclude all equity-based compensation, to facilitate comparison with our peers and for the other reasons explained in our Current Report on Form 8-K filed with the SEC on the date hereof. Equity-based compensation is included in the following GAAP operating expense lines for the three and twelve months ended December 31, 2017 and 2016:

Three Months Ended December 31,

Year Ended December 31,

2017

2016

2017

2016

Cost of services

$

1,398

$

819

$

3,994

$

3,794

Research and development

1,280

567

3,208

2,489

Sales and marketing

690

593

2,240

2,431

General and administrative

1,820

2,231

6,787

7,220

Total equity-based compensation

$

5,188

$

4,210

$

16,229

$

15,934

(b)

During the first quarter of 2017, we adopted Accounting Standards Update (ASU) 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting, to improve the accounting for employee share-based payments. Under the new guidance, all excess tax benefits and certain tax deficiencies are recognized as income tax expense or benefit in the income statements on a prospective basis, rather than recorded in additional paid-in capital. The adjustment represents the excess tax benefits and tax deficiencies of the stock awards vested during the period. Excess tax benefits (deficiencies) occur when the amount deductible for an award of equity instruments on our tax return is more (less) than the cumulative compensation cost recognized for financial reporting purposes, respectively. As discussed above, we excluded equity-based compensation from adjusted non-GAAP results to be consistent with other companies in the software industry and for the other reasons explained in our Current Report on Form 8-K filed the SEC.  Therefore, we also excluded the related tax benefit (expense) generated upon their vesting.

(c)

Adjustments represent purchased intangibles amortization from a prior acquisition. Such amortization is excluded from adjusted results to facilitate comparison with our peers, to facilitate comparisons of the results of our core operations from period to period and for the other reasons explained in our Current Report on Form 8-K filed with the SEC.

(d)

In May 2017, we eliminated about 100 positions due to the headwinds in the retail sector and to align our services capacity with demand. This action does not impair or alter our strategic investment plans in innovation and sales and marketing to increase market share and extend our competitive advantage. As a result of this initiative, we recorded a charge of approximately $2.9 million in 2017. The charge primarily consists of employee severance and employee transition and outplacement costs. We do not believe that the charge is a cost resulting from normal operating activities. Consequently, we have excluded this charge from adjusted non-GAAP results.

(e)

The enactment of the Tax Cuts and Jobs Act in December 2017 resulted in a provisional net one-time tax of $2.8 million in the fourth quarter of 2017 based on a reasonable estimate of the income tax effects, primarily from a tax on accumulated foreign earnings and the remeasurement of deferred tax assets. As this was a one-time charge, we have excluded this charge from adjusted non-GAAP results. We continue to finalize the analysis of the tax reform provisions in 2018.

December 31, 2017

December 31, 2016

ASSETS

Current Assets:

Cash and cash equivalents

$

125,522

$

95,615

Short-term investments

-

-

Accounts receivable, net of allowance of $2,692 and $3,595 in 2017 and 2016, respectively

92,231

100,285

Prepaid expenses and other current assets

10,320

11,118

Total current assets

228,073

207,018

Property and equipment, net

15,493

17,424

Goodwill, net

62,248

62,228

Deferred income taxes

1,877

2,867

Other assets

7,304

7,603

Total assets

$

314,995

$

297,140

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

14,028

$

12,052

Accrued compensation and benefits

15,826

20,700

Accrued and other liabilities

12,105

12,510

Deferred revenue

75,068

63,457

Income taxes payable

7,228

8,924

Total current liabilities

124,255

117,643

Other non-current liabilities

15,784

10,131

Shareholders' equity:

Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or

   outstanding in 2017 and 2016

-

-

Common stock, $.01 par value; 200,000,000 shares authorized; 67,776,138 and

   70,233,955 shares issued and outstanding at December 31, 2017 and

   December 31, 2016, respectively

678

702

Retained earnings

186,117

184,558

Accumulated other comprehensive loss

(11,839

)

(15,894

)

Total shareholders' equity

174,956

169,366

Total liabilities and shareholders' equity

$

314,995

$

297,140

Year Ended December 31,

2017

2016

Operating activities:

Net income

$

116,481

$

124,234

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

9,060

9,090

Equity-based compensation

16,229

15,934

Loss on disposal of equipment

152

30

Tax benefit of stock awards exercised/vested

-

5,209

Excess tax benefits from equity-based compensation

-

(5,214

)

Deferred income taxes

1,574

1,797

Unrealized foreign currency loss (gain)

196

(393

)

Changes in operating assets and liabilities:

Accounts receivable, net

10,139

(4,358

)

Other assets

661

299

Accounts payable, accrued and other liabilities

(5,354

)

(9,261

)

Income taxes

1,876

6,129

Deferred revenue

13,052

(4,150

)

Net cash provided by operating activities

164,066

139,346

Investing activities:

Purchases of property and equipment

(6,199

)

(6,843

)

Maturities of short-term investments

429

10,201

Net cash (used in) provided by investing activities

(5,770

)

3,358

Financing activities:

Purchase of common stock

(131,707

)

(167,933

)

Proceeds from issuance of common stock from options exercised

-

18

Excess tax benefits from equity-based compensation

-

5,214

Net cash used in financing activities

(131,707

)

(162,701

)

Foreign currency impact on cash

3,318

(2,804

)

Net change in cash and cash equivalents

29,907

(22,801

)

Cash and cash equivalents at beginning of period

95,615

118,416

Cash and cash equivalents at end of period

$

125,522

$

95,615

1.

GAAP and Adjusted earnings per share by quarter are as follows:

2016

2017

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

GAAP Diluted EPS

$

0.38

$

0.46

$

0.47

$

0.42

$

1.72

$

0.40

$

0.45

$

0.47

$

0.36

$

1.68

Adjustments to GAAP:

Equity-based compensation

0.04

0.03

0.03

0.04

0.14

0.04

0.03

0.03

0.05

0.15

Tax benefit of stock awards vested

-

-

-

-

-

(0.03

)

-

-

-

(0.03

)

Purchase amortization

-

-

-

-

-

-

-

-

-

-

Restructuring charge

-

-

-

-

-

-

0.03

-

-

0.03

U.S. Tax Cuts and Jobs Act impact

-

-

-

-

-

-

-

-

0.04

0.04

Adjusted Diluted EPS

$

0.42

$

0.49

$

0.50

$

0.46

$

1.87

$

0.42

$

0.50

$

0.51

$

0.45

$

1.87

Fully Diluted Shares

73,020

72,228

71,743

71,148

72,060

70,247

69,421

69,135

68,791

69,424

2016

2017

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

1st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Full Year

Revenue:

Americas

$

128,807

$

131,018

$

130,099

$

123,660

$

513,584

$

113,115

$

123,658

$

124,833

$

115,543

$

477,149

EMEA

15,686

18,185

15,078

17,333

66,282

23,360

22,028

18,453

21,508

85,349

APAC

5,367

5,689

7,036

6,599

24,691

7,014

8,455

9,597

7,035

32,101

$

149,860

$

154,892

$

152,213

$

147,592

$

604,557

$

143,489

$

154,141

$

152,883

$

144,086

$

594,599

GAAP Operating Income:

Americas

$

37,454

$

44,126

$

46,213

$

37,154

$

164,947

$

28,713

$

35,717

$

39,295

$

32,968

$

136,693

EMEA

4,439

6,854

4,822

5,945

22,060

10,754

9,995

7,128

7,952

35,829

APAC

1,206

1,288

2,549

2,257

7,300

2,253

3,547

4,673

2,650

13,123

$

43,099

$

52,268

$

53,584

$

45,356

$

194,307

$

41,720

$

49,259

$

51,096

$

43,570

$

185,645

Adjustments (pre-tax):

Americas:

Equity-based

   compensation

$

4,688

$

3,495

$

3,541

$

4,210

$

15,934

$

4,472

$

2,796

3,773

$

5,188

$

16,229

Purchase amortization

107

108

107

108

430

107

108

108

107

430

Restructuring charge

-

-

-

-

-

-

2,908

(77

)

(18

)

2,813

$

4,795

$

3,603

$

3,648

$

4,318

$

16,364

$

4,579

$

5,812

$

3,804

$

5,277

$

19,472

EMEA:

Restructuring charge

-

-

-

-

-

-

114

-

(6

)

108

Adjusted non-GAAP Operating Income:

Americas

$

42,249

$

47,729

$

49,861

$

41,472

$

181,311

$

33,292

$

41,529

$

43,099

$

38,245

$

156,165

EMEA

4,439

6,854

4,822

5,945

22,060