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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[Mark One]
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
COMMISSION FILE NUMBER: 0-23999
MANHATTAN ASSOCIATES, INC.
(Exact Name of Registrant as Specified in Its Charter)
GEORGIA 58-2373424
(State or Other Jurisdiction of Incorporation or (I.R.S. Employer Identification No.)
Organization)
2300 WINDY RIDGE PARKWAY, SUITE 700 30339
ATLANTA, GEORGIA (Zip Code)
(Address of Principal Executive Offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 955-7070
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of the issuer's class of capital stock as of May 12, 2000,
the latest practicable date, is as follows: 24,661,680 shares of Common Stock,
$0.01 par value per share.
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Form 10-Q
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MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
FORM 10-Q
QUARTER ENDED MARCH 31, 2000
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Page
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ITEM 1. FINANCIAL STATEMENTS.
Condensed Consolidated Balance Sheets as of March 31, 2000 (unaudited) and
December 31, 1999 3
Condensed Consolidated Statements of Income for the three months ended March
31, 2000 and 1999 (unaudited) 4
Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 2000 and 1999 (unaudited) 5
Notes to Condensed Consolidated Financial Statements (unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. 8
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 12
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. 13
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. 13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 13
ITEM 5. OTHER INFORMATION. 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 13
SIGNATURES. 14
Form 10-Q
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
MARCH 31, 2000 DECEMBER 31, 1999
------------------ ------------------
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents ............................................... $ 29,592 $ 19,695
Short-term investments .................................................. 20,675 20,220
Accounts receivable, net of allowance for doubtful accounts of $4,481
and $5,473 at March 31, 2000 and December 31, 1999, respectively ..... 25,195 24,275
Deferred income taxes ................................................... 2,531 2,695
Prepaid expenses and other current assets ............................... 1,021 1,492
------------------ ------------------
Total current assets ................................................ 79,014 68,377
Property and equipment, net .................................................. 9,103 9,245
Intangible and other assets .................................................. 3,088 3,301
------------------ ------------------
Total assets ........................................................ $ 91,205 $ 80,923
================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities ................................ $ 13,396 $ 12,215
Current portion of capital lease obligations ............................ 167 163
Deferred revenue ........................................................ 11,959 9,051
------------------ ------------------
Total current liabilities ........................................... 25,522 21,429
Long-term portion of capital lease obligations ............................... 755 799
Deferred income taxes ........................................................ 22 89
Shareholders' equity:
Preferred stock, no par value; 20,000,000 shares authorized, no
shares issued or outstanding at March 31, 2000 and December 31,
1999 .................................................................. -- --
Common stock, $.01 par value; 100,000,000 shares authorized,
24,589,263 and 24,221,587 shares issued and outstanding
at March 31, 2000 and December 31, 1999, respectively ................. 246 242
Additional paid-in capital .............................................. 57,904 54,563
Retained earnings ....................................................... 7,081 4,157
Accumulated other comprehensive loss .................................... (55) (51)
Deferred compensation ................................................... (270) (305)
------------------ ------------------
Total shareholders' equity .......................................... 64,906 58,606
------------------ ------------------
Total liabilities and shareholders' equity ...................... $ 91,205 $ 80,923
================== ==================
See accompanying Notes to Condensed Consolidated Financial Statements.
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ITEM 1. FINANCIAL STATEMENTS (continued)
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-----------------------
2000 1999
-------- --------
Revenue:
Software license .................................................... $ 5,036 $ 4,437
Services ............................................................ 17,544 10,958
Hardware ............................................................ 5,763 2,755
-------- --------
Total revenue ................................................... 28,343 18,150
Cost of revenue:
Software license .................................................... 277 190
Services ............................................................ 8,162 6,042
Hardware ............................................................ 4,701 2,044
-------- --------
Total cost of revenue ........................................... 13,140 8,276
-------- --------
Gross margin ............................................................. 15,203 9,874
Operating expenses:
Research and development ............................................ 3,046 2,719
Sales and marketing ................................................. 3,977 4,044
General and administrative .......................................... 3,867 3,008
-------- --------
Total operating expenses ........................................ 10,890 9,771
-------- --------
Operating income ......................................................... 4,313 103
Other income, net ........................................................ 403 262
-------- --------
Income before income taxes ............................................... 4,716 365
Provision for income taxes ............................................... 1,792 125
-------- --------
Net income ............................................................... $ 2,924 $ 240
======== ========
Basic net income per share ............................................... $ 0.12 $ 0.01
======== ========
Diluted net income per share ............................................. $ 0.10 $ 0.01
======== ========
Weighted average number of shares:
Basic ................................................................ 24,366 23,983
======== ========
Diluted .............................................................. 28,946 27,219
======== ========
See accompanying Notes to Condensed Consolidated Financial Statements.
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ITEM 1. FINANCIAL STATEMENTS (continued)
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
------------------------
2000 1999
-------- --------
OPERATING ACTIVITIES:
Net income ............................................................. $ 2,924 $ 240
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization ....................................... 1,294 814
Stock compensation .................................................. 21 58
Deferred income taxes ............................................... 97 --
Changes in operating assets and liabilities:
Accounts receivable, net .......................................... (970) 856
Other assets ...................................................... 459 127
Accounts payable and accrued liabilities .......................... 3,246 (2,966)
Income taxes payable .............................................. (140) --
Deferred revenue .................................................. 2,934 64
-------- --------
Net cash provided by (used in) operating activities .................... 9,865 (807)
INVESTING ACTIVITIES:
Purchase of property and equipment .................................. (939) (1,639)
Capitalized software development costs .............................. -- (487)
Purchase of short-term investments, net ............................. (442) (5,043)
-------- --------
Net cash used in investing activities .................................. (1,381) (7,169)
FINANCING ACTIVITIES:
Payment of capital lease obligations ................................ (40) (62)
Proceeds from issuance of common stock .............................. 1,446 388
-------- --------
Net cash provided by financing activities ............................... 1,406 326
Foreign currency impact on cash ..................................... 7 (6)
-------- --------
Net increase (decrease) in cash and cash equivalents .................... 9,897 (7,656)
Cash and cash equivalents at beginning of period ........................ 19,695 27,751
-------- --------
Cash and cash equivalents at end of period .............................. $ 29,592 $ 20,095
======== ========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for income taxes, net ...................................... $ 1,837 $ 113
======== ========
See accompanying Notes to Condensed Consolidated Financial Statements.
Form 10-Q
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MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of the Company's management,
these consolidated financial statements contain all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation of the
financial position at March 31, 2000, the results of operations for the three
month periods ended March 31, 2000 and 1999 and changes in cash flows for the
three month periods ended March 31, 2000 and 1999. The interim results for the
three month period ended March 31, 2000 are not necessarily indicative of the
results to be expected for the full year. These statements should be read in
conjunction with the Company's audited financial statements for the year ended
December 31, 1999.
2. PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
3. REVENUE RECOGNITION
The Company's revenue consists of revenues from the licensing of
software; fees from consulting, implementation and training services
(collectively, "professional services"), plus customer support services and
software upgrades; and sales of complementary radio frequency and computer
equipment.
Effective January 1, 1998, the Company adopted Statement of Position
No. 97-2, "Software Revenue Recognition" ("SOP 97-2"), as amended by Statement
of Position No. 98-9, "Software Revenue Recognition, With Respect to Certain
Transactions" ("SOP 98-9"). Under SOP 97-2, the Company recognizes software
license revenue when the following criteria are met: (1) a signed contract is
obtained; (2) shipment of the product has occurred; (3) the license fee is fixed
and determinable; (4) collectibility is probable; and (5) remaining obligations
under the license agreement are insignificant. SOP 98-9 requires recognition of
revenue using the "residual method" when (1) 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; (2)
vendor-specific objective evidence of fair value does not exist for one or more
of the delivered elements in the arrangement; and (3) all revenue-recognition
criteria in SOP 97-2 other than the requirement for vendor-specific objective
evidence of the fair value of each delivered element of the arrangement are
satisfied. SOP 98-9 was effective for transactions entered into after March 15,
1999, and the Company adopted the residual method for such arrangements at that
time. For those contracts which contain significant future obligations, license
revenue is recognized under the percentage of completion method.
Form 10-Q
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The Company's services revenue consists of fees generated from
professional services, customer support and software upgrades related to the
Company's software products. Revenue related to professional services performed
by the Company is generally billed on an hourly basis and revenue is recognized
as the services are performed. Revenue related to customer support and software
upgrades is generally paid in advance and recognized ratably over the term of
the agreement, typically 12 months.
Hardware 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's warehouse system solutions. As part of a
complete distribution center management system solution, the Company's customers
frequently purchase hardware from the Company in conjunction with the licensing
of software. These products include computer hardware, radio frequency terminals
networks, bar code printers and scanners, and other peripherals. Hardware
revenue is recognized upon shipment by the vendor to the customer. The Company
generally purchases hardware from its vendors only after receiving an order from
a customer. As a result, the Company does not maintain significant hardware
inventory.
4. COMPREHENSIVE INCOME
Comprehensive income includes foreign currency translation gains and
losses and unrealized gains and losses on investments that have been previously
excluded from net income and reflected in shareholders' equity.
The following table sets forth the calculation of comprehensive income on an
interim basis:
THREE MONTHS ENDED
-----------------------------------
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
(in thousands)
Net Income ...................................................... 2,924 240
Unrealized gain on investments .................................. 13 --
Foreign currency loss ........................................... (17) (19)
-------------- --------------
Total comprehensive income ...................................... 2,920 221
============== ==============
5. NET INCOME PER SHARE
Basic net income per share is computed using net income divided by the
weighted average number of shares of common stock outstanding ("Weighted
Shares"). Diluted net income per share is computed using net income divided by
Weighted Shares, and the treasury stock method effect of common equivalent
shares ("CES's") outstanding related to options to purchase common stock.
The following is a reconciliation of the shares used in the computation
of net income per share:
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 2000 MARCH 31, 1999
----------------------------- --------------------------
BASIC DILUTED BASIC DILUTED
-------- -------- -------- --------
(in thousands) (in thousands)
Weighted Shares ......... 24,366 24,366 23,983 23,983
Effect of CES's ......... -- 4,580 -- 3,236
-------- -------- -------- --------
24,366 28,946 23,983 27,219
======== ======== ======== ========
Form 10-Q
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
OVERVIEW
Manhattan is a leading provider of technology-based solutions to
improve supply chain effectiveness and efficiencies. Our solutions enhance
distribution efficiencies through the integration of supply chain constituents,
including manufacturers, distributors, retailers, suppliers, transportation
providers and end consumers. Our solutions are designed to optimize the receipt,
storage, assembly and distribution of inventory and the management of equipment
and personnel within a distribution center, and to enhance communications
between the distribution center and its trading partners. Our solutions consist
of software, including PkMS, a comprehensive and modular software system;
services, including design, configuration, implementation, and training
services, plus customer support and software upgrades; and hardware. We
currently provide solutions to manufacturers, distributors, retailers and
transportation providers primarily in the following markets:
direct-to-consumer/e-commerce, retail, apparel/footwear, consumer products
manufacturing, food/grocery and third party logistics.
Revenues
Our revenues consist of fees from the licensing of software; fees from
consulting, implementation and training services (collectively, "professional
services"), plus customer support and software upgrades; and sales of
complementary radio frequency and computer equipment.
We recognize license revenue in accordance with Statement of Position
No. 97-2, "Software Revenue Recognition" ("SOP 97-2"), as amended by Statement
of Position No. 98-9, "Software Revenue Recognition, With Respect to Certain
Transactions" ("SOP 98-9"). Under SOP 97-2, we recognize software license
revenue when the following criteria are met: (1) a signed contract is obtained;
(2) shipment of the product has occurred; (3) the license fee is fixed and
determinable; (4) collectibility is probable; and (5) remaining obligations
under the license agreement are insignificant. SOP 98-9 requires recognition of
revenue using the "residual method" when (1) 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; (2)
vendor-specific objective evidence of fair value does not exist for one or more
of the delivered elements in the arrangement; and (3) all revenue-recognition
criteria in SOP 97-2 other than the requirement for vendor-specific objective
evidence of the fair value of each delivered element of the arrangement are
satisfied. SOP 98-9 was effective for transactions entered into after March 15,
1999, and we adopted the residual method for such arrangements at that time. For
those contracts that contain significant future obligations, license revenue is
recognized under the percentage of completion method.
Our services revenue consists of fees generated from professional
services, customer support and software upgrades related to our software
products. Fees related to professional services performed by us are generally
billed on an hourly basis and recognized as revenue as the services are
performed. Fees related to customer support and software upgrades are generally
paid in advance and recognized as revenue ratably over the term of the
agreement, typically 12 months.
Hardware 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 our warehouse system solutions. These products include
computer hardware, radio frequency terminal networks, bar code printers and
scanners, and other peripherals. We generally purchase hardware from our vendors
only after receiving an order from a customer and revenue is recognized upon
shipment by the vendor to the customer. The amount of hardware purchases by
customers may vary significantly from period to period depending on the
technological sophistication and purchasing power of the customers and the scope
of the implementations. In addition, our gross margins on sales of hardware may
vary depending upon the type of hardware sold.
Form 10-Q
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RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
REVENUE
The Company's revenues consist of fees from the licensing of software;
fees from consulting, implementation and training services (collectively,
"professional services"), plus customer support and software upgrades; and sales
of complementary radio frequency and computer equipment. Total revenue increased
56.2% to $28.3 million for the quarter ended March 31, 2000 from $18.2 million
for the quarter ended March 31, 1999. The increase in total revenue is primarily
attributable to increases in sales of software licenses and services to new and
existing customers.
Software License. Software license revenue increased to $5.0 million
for the quarter ended March 31, 2000 from $4.4 million for the quarter ended
March 31, 1999, an increase of $0.6 million or 13.5%. The increase in revenue
from software licenses is primarily due to an increase in the sales of user and
site-specific licenses of PkMS. In recent quarters, the Company has experienced
an increase in the average sales price and sale size of PkMS principally due to
increased product functionality and market acceptance of PkMS.
Services. Services revenue increased to $17.5 million for the quarter
ended March 31, 2000 from $11.0 million for the quarter ended March 31, 1999, an
increase of $6.5 million or 60.1%. The increase in revenue from services is
principally due to increases in sales of software licenses, services to support
customers and provide software upgrades on a growing installed base, and the
number of services personnel devoted to the delivery of billable professional
services.
Hardware. Hardware revenue increased to $5.8 million for the quarter
ended March 31, 2000 from $2.8 million for the quarter ended March 31, 1999, an
increase of $3.0 million or 109.2%. Sales of hardware are largely dependent upon
the number of PkMS licenses sold, the scope of such PkMS implementations and the
technological sophistication and purchasing power of customers buying PkMS. The
increase in the first quarter of fiscal year 2000 is attributable to PkMS
implementations of larger scope, requiring customers to purchase more hardware.
COST OF REVENUE
Cost of Software License. Cost of software license revenue consists of
the costs associated with software reproduction and delivery; media, packaging,
documentation and other related costs; and the amortization of purchased
software and capitalized research and development costs. Cost of software
license revenue increased to $277,000 for the quarter ended March 31, 2000, or
5.5% of software license revenue, from $190,000 for the quarter ended March 31,
1999, or 4.3% of software license revenue. The increase in cost of software
license revenue is principally due to an increase in the amortization of
research and development costs capitalized prior to September 1, 1999.
Cost of Services. Cost of services revenue consists primarily of
salaries and other personnel-related expenses of employees dedicated to system
implementation projects, training and software support services. Cost of
services revenue increased to $8.2 million for the quarter ended March 31, 2000,
or 46.5% of services revenue, from $6.0 million for the quarter ended March 31,
1999, or 55.1% of services revenue. The dollar increase in cost of services
revenue is directly related to an increase in the number of employees
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and contracted personnel dedicated to services activities. The decrease in cost
of services revenue as a percentage of services revenue is principally due to an
increase in the percentage of billable time per services personnel as our
service delivery organization improved its efficiency.
Cost of Hardware. Cost of hardware revenue increased to $4.7 million
for the quarter ended March 31, 2000, or 81.6% of hardware revenue, from $2.0
million for the quarter ended March 31, 1999, or 74.2% of hardware revenue. The
increase in the cost of hardware as a percentage of hardware revenue is
principally due to an increase in the percentage of hardware products sold with
relatively lower gross margins during the quarter ended March 31, 2000 as
compared to hardware sales during the quarter ended March 31, 1999.
OPERATING EXPENSES
Research and Development. Research and development expenses principally
consist of salaries and other personnel-related costs for personnel involved in
the Company's research development efforts. The Company's research and
development expenses increased by 12.0% to $3.0 million for the quarter ended
March 31, 2000, or 10.7% of total revenue, from $2.7 million for the quarter
ended March 31, 1999, or 15.0% of total revenue. The increase in research and
development expenses is due to further investments in our research and
development organization and activities, principally resources to strengthen
product management and planned Graphical User Interface ("GUI") enhancements to
PkMS. The Company's significant product development efforts include the
continued development and enhancement of PkMS, including the N-Tier version of
PkMS, and, to a lesser extent, the continued development of SLOT-IT, including
the Windows NT version of SLOT-IT. The Company capitalized no research and
development costs in the quarter ended March 31, 2000, as compared to
capitalization of $487,000 in the comparable quarter ended March 31, 1999.
Sales and Marketing. Sales and marketing expenses include salaries,
commissions, travel and other personnel-related costs, advertising programs and
other promotional activities. Sales and marketing expenses decreased by 1.7% to
$3.98 million for the quarter ended March 31, 2000, or 14.0% of total revenue,
from $4.04 million for the quarter ended March 31, 1999, or 22.3% of total
revenue. The decrease in sales and marketing expenses is the result of a slight
decrease in headcount in the sales and marketing organization.
General and Administrative. General and administrative expenses consist
primarily of salaries and other personnel-related costs of executive, financial,
human resources and administrative personnel, as well as facilities,
depreciation and amortization, legal, insurance, accounting and other
administrative expenses. General and administrative expenses increased by 28.6%
to $3.9 million for the quarter ended March 31, 2000, or 13.6% of total revenue,
from $3.0 million for the quarter ended March 31, 1999, or 16.6% of total
revenue. The increase in general and administrative expenses is principally due
to increases in depreciation and amortization expense, recruiting expenses and
other administrative expenses to support the Company's business and improve its
infrastructure. Depreciation and amortization expense included in general and
administrative was $1.2 million and $0.8 million for the quarters ended March
31, 2000 and 1999, respectively.
Operating Income. Operating income increased $4.2 million to $4.3
million for the quarter ended March 31, 2000, or 15.2% of total revenue, from
$103,000 for the quarter ended March 31, 1999, or 0.6% of total revenue. The
increase in operating income is primarily due to increased revenue from sales of
software licenses, services and hardware combined with improved efficiencies in
all areas of the Company's business.
Form 10-Q
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INCOME TAXES
The provision for income taxes was $1.8 million for the quarter ended
March 31, 2000. The increase of $1.7 million from the quarter ended March 31,
1999 is a direct result of the Company's increased income for the quarter ended
March 31, 2000. For the quarter ended March 31, 2000, the Company's effective
income tax rate was 38.0%. The quarterly income tax rate reflects the estimated
annual effective income tax rate of the Company and considers estimated taxable
income, effective state and international income tax rates and anticipated tax
credits.
LIQUIDITY AND CAPITAL RESOURCES
Since the Company's initial public offering ("IPO") in April 1998, the
Company has funded its operations primarily through cash generated from
operations and the IPO proceeds. As of March 31, 2000, the Company had $50.3
million in cash, cash equivalents and short-term investments, as compared to
$39.9 million at December 31, 1999.
The Company's operating activities provided cash of $9.9 million for
the quarter ended March 31, 2000. Cash from operating activities arose
principally from increases in deferred revenue and accrued liabilities,
partially reduced by an increase in accounts receivable. The Company used cash
of $807,000 in operations in the comparable quarter ended March 31, 1999.
The Company's investing activities used cash of approximately $1.4
million and $7.2 million for the quarters ended March 31, 2000 and 1999,
respectively. The Company's uses of cash were primarily for purchases of
short-term investments and capital equipment to support its business and
infrastructure.
The Company's financing activities provided cash of approximately $1.4
million and $326,000 for the quarters ended March 31, 2000 and 1999,
respectively. The principal sources of cash provided by financing activities are
the proceeds from the issuance of Common Stock pursuant to the exercise of stock
options, partially reduced by the payments under capital lease obligations.
The Company believes that existing balances of cash, cash equivalents
and short-term investments will be sufficient to meet its working capital and
capital expenditure needs at least for the next twelve months.
FORWARD LOOKING STATEMENTS
Certain statements contained in this filing are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, including but not limited to statements related to plans for future
business development activities, anticipated costs of revenues, product mix and
service revenues, research and development and selling, general and
administrative activities, and liquidity and capital needs and resources. Such
forward-looking statements are subject to risks, uncertainties and other factors
that could cause actual results to differ materially from future results
expressed or implied by such forward-looking statements. For further information
about these and other factors that could affect the Company's future results,
please see Exhibit 99.1 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1999. Investors are cautioned that any 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.
Form 10-Q
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLAIMERS ABOUT MARKET RISK.
FOREIGN EXCHANGE
Total international revenues were approximately $1.9 million and $1.0
million for the quarters ended March 31, 2000 and 1999, respectively, which
represents 6.9% and 5.4% of the Company's total revenues for the three months
ended March 31, 2000 and 1999, respectively. International revenues include all
revenues derived from sales of licenses, services and hardware to customers
outside the United States.
Total revenues for Europe were approximately $1.7 million and $0.8
million for the quarters ended March 31, 2000 and 1999, respectively, which
represents 6.0% and 4.5% of the Company's total revenues for the three months
ended March 31, 2000 and 1999, respectively.
The Company's international business is subject to risks typical of an
international business, including, but not limited to: differing economic
conditions, changes in political climate, differing tax structures, other
regulations and restrictions, and foreign exchange rate volatility. Accordingly,
the Company's future results could be materially adversely impacted by changes
in these or other factors. The effect of foreign exchange rate fluctuations on
the Company during the quarters ended March 31, 2000 and 1999 was not material.
INTEREST RATES
The Company invests its cash in a variety of financial instruments,
including taxable and tax-advantaged variable rate and fixed rate obligations of
corporations, municipalities, and local, state and national governmental
entities and agencies. These investments are denominated in U.S. dollars. Cash
balances in foreign currencies overseas are operating balances.
Interest income on the Company's investments is classified in "Other
income, net" on the Company's Consolidated Financial Statements. The Company
accounts for its investment instruments in accordance with Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" ("SFAS 115"). All of the cash equivalents and
short-term investments are treated as available-for-sale under SFAS 115.
Investments in both fixed rate and floating rate interest earning
instruments carry a degree of interest rate risk. Fixed rate securities may have
their fair market value adversely impacted due to a rise in interest rates,
while floating rate securities may produce less income than expected if interest
rates fall. Due in part to these factors, the Company's future investment income
may fall short of expectations due to changes in interest rates, or the Company
may suffer losses in principal if forced to sell securities which have seen a
decline in market value due to changes in interest rates. The weighted-average
interest rate on investment securities at March 31, 2000 was approximately 5.6%.
The fair value of securities held at March 31, 2000 was $27.5 million.
Form 10-Q
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13
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
No events occurred during the quarter covered by the report that would
require a response to this item.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
No events occurred during the quarter covered by the report that would
require a response to this item.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
No events occurred during the quarter covered by the report that would
require a response to this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No events occurred during the quarter covered by the report that would
require a response to this item.
ITEM 5. OTHER INFORMATION.
No events occurred during the quarter covered by the report that would
require a response to this item.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
The following exhibit is filed with this Report:
Exhibit 27.1 Financial Data Schedule.
(b) Reports to be filed on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
March 31, 2000.
Form 10-Q
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14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MANHATTAN ASSOCIATES, INC.
Date: May 15, 2000 /s/ Richard M. Haddrill
-----------------------------------------------
Richard M. Haddrill
Chief Executive Officer, President and Director
(Principal Executive Officer)
Date: May 15, 2000 /s/ Thomas Williams
-----------------------------------------------
Thomas Williams
Senior Vice President, Chief Financial Officer
and Treasurer
(Principal Financial and Accounting Officer)
Form 10-Q
14 of 14
5
1,000
3-MOS
DEC-31-2000
JAN-01-2000
MAR-31-2000
29,592
20,675
29,676
(4,481)
0
79,014
15,139
(6,036)
91,205
25,522
0
0
0
246
64,660
91,205
28,343
28,343
13,140
0
10,890
0
0
4,716
1,792
2,924
0
0
0
2,924
0.12
0.10
