UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 18, 2011
MANHATTAN ASSOCIATES, INC.
(Exact name of registrant as specified in its charter)
 	 	 	 	 	
Georgia	 	0-23999	 	58-2373424	
 	 	 	 	 	
(State or other jurisdiction
of incorporation)	 	(Commission File Number)	 	(IRS Employer Identification No.)	

2300 Windy Ridge Parkway,
Suite 1000, Atlanta, Georgia	 	 
30339	
 	 	 	
(Address of principal executive offices)	 	(Zip Code)	
Registrant’s telephone number, including area code: (770) 955-7070
NONE
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o	 	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 	 	 	
o	 	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 	 	 	
o	 	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 	 	 	
o	 	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 

 
Item 2.02 Results of Operations and Financial Condition.
On October 18, 2011, Manhattan Associates, Inc. (the “Company”) issued a press release providing the results for its financial performance for the third quarter and nine months ended September 30, 2011. A copy of this press release is attached as Exhibit 99.1. Pursuant to General Instruction B.2 of Form 8-K, this exhibit is “furnished” and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934.
Non-GAAP Financial Measures in the Press Release
The press release includes, as additional information regarding our operating results, our adjusted operating income, adjusted net income and adjusted earnings per share, which excludes the impact of acquisition-related costs and the amortization thereof, the recapture of previously recognized transaction tax expense, equity-based compensation, and asset impairment charges and related reversals — all net of income tax effects and unusual tax adjustments.
These various measures are not in accordance with, or an alternative for, financial measures calculated in accordance with generally accepted accounting principles in the United States (“GAAP”) and may be different from similarly titled non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be used as a substitute for, or considered superior to, measures of financial performance prepared in accordance with GAAP.
Adjusted Income and Earnings Per Share
We believe that these adjusted (non-GAAP) results provide more meaningful information regarding those aspects of our current operating performance that can be effectively managed, and consequently have developed our internal reporting, compensation and planning systems using these measures. Non-GAAP measures used in the press release exclude the impact of the items described above for the following reasons:
 	•	 	Because we sporadically engage in acquisitions, we incur acquisition-related costs that consist primarily of expenses from accounting and legal due diligence, whether or not we ultimately proceed with the transaction. Additionally, we might assume and incur certain unusual costs, such as employee retention benefits, that result from arrangements made prior to the acquisition. These acquisition costs are difficult to predict and do not correlate to the expenses of our core operations. We believe our competitors and peers typically present as a non-GAAP measure adjusted net income and adjusted earnings per share that exclude the amortization of acquisition-related intangible assets, and thus we exclude these amortization costs when calculating adjusted net income and adjusted earnings per share to facilitate more relevant and meaningful comparisons of our operating results with that of our competitors.	
 	 	 	 	
 	•	 	Because we have recognized the full potential amount of the transaction (sales) tax expense in prior periods, any recovery of that expense resulting from the expiration of the state sales tax statutes, the collection of the taxes from our customers or a sales tax audit refund would overstate the current period net income derived from our core operations as the recovery is not a result of anything occurring within our control during the current period.	

1

 
 	•	 	Because equity-based compensation expense is not an expense that typically requires or will require cash settlement by the Company, and because we believe our competitors and peers typically present non-GAAP results excluding all equity-based compensation expense, we have not included equity-based compensation expense and the related tax benefit generated upon the disposition of equity-based compensation in the assessment of our operating performance.	
 	 	 	 	
 	•	 	We previously excluded the asset impairment charge recorded in 2008 to writedown the value of an auction rate security because we typically invest our treasury funds in cash, cash equivalents or other liquid investments, not illiquid, risky securities. We believed the write-down in value of the auction rate security was due to unusual changes in the characteristics of the auction rate security since our initial investment in it, including failed auctions and default risk for a municipal obligor. Consistent with our prior exclusion of the charge, we have excluded the current period’s reversal of the charge stemming from our recovery of over 70% of the investment.	
For these reasons, we have developed our internal reporting, compensation and planning systems using non-GAAP measures which adjust for these amounts.
We believe the reporting of adjusted operating income, adjusted net income and adjusted earnings per share facilitates investors’ understanding of our historical operating trends, because it provides important supplemental measurement information in evaluating the operating results of our business, as distinct from results that include items that are not indicative of ongoing operating results, and thus provide the investors with useful insight into our profitability exclusive of unusual adjustments. While these adjusted items may not be considered as non-recurring in nature in a strictly accounting sense, management regards those items as infrequent and not arising out of the ordinary course of business and finds it useful to utilize a non-GAAP measure in evaluating the performance of our underlying core business.
We also believe that adjusted operating income, adjusted net income and adjusted earnings per share provide a basis for more relevant comparisons to other companies in the industry, enable investors to evaluate our operating performance in a manner consistent with our internal basis of measurement and also present our investors our operating results on the same basis as that used by our management. Management refers to adjusted operating income, adjusted net income and adjusted earnings per share in making operating decisions because we believe they provide meaningful supplemental information regarding our operational performance and our ability to invest in research and development and fund acquisitions and capital expenditures. In addition, adjusted operating income, adjusted net income and adjusted earnings per share facilitate management’s internal comparisons to our historical operating results and comparisons to competitors’ operating results.
Further, we rely on adjusted operating income, adjusted net income and adjusted net income per share information as primary measures to review and assess the operating performance of our company and our management team in connection with our executive compensation and bonus plans. Since most of our employees are not directly involved with decisions surrounding acquisitions or severance related activities and other items that are not central to our core operations, we do not believe it is appropriate or fair to have their incentive compensation affected by these items.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.

2

 
 	 	 	 	 	
Exhibit	 	 	
Number	 	Description	
 	 	 	 	 	
 	99.1	 	 	Press Release, dated October 18, 2011	

3

 
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
 	 	 	 	 	
 	MANHATTAN ASSOCIATES, INC.
 	 	
 	By:  	/s/ Dennis B. Story  	 	
 	 	Dennis B. Story 	 	
 	 	Executive Vice President, Chief Financial Officer and Treasurer 	 	
 	
Dated: October 18, 2011

 

 
EXHIBIT INDEX
 	 	 	 	 	
Exhibit	 	 	
Number	 	Description	
 	 	 	 	 	
 	99.1	 	 	Press Release, dated October 18, 2011.	

 

Exhibit 99.1

Contact:	 	Dennis Story	 	Will Haraway	
 	 	Chief Financial Officer	 	Senior Manager, Media Relations	
 	 	Manhattan Associates, Inc.	 	Manhattan Associates, Inc.	
 	 	678-597-7115	 	678-597-7466	
 	 	dstory@manh.com	 	wharaway@manh.com	
Manhattan Associates Reports Record Third Quarter Revenue and Earnings
Company raises full-year EPS guidance
ATLANTA — October 18, 2011 — Leading supply chain optimization provider Manhattan Associates, Inc. (NASDAQ: MANH) today reported record third quarter 2011 non-GAAP adjusted diluted earnings per share of $0.67 compared to $0.38 in the third quarter of 2010, on license revenue of $13.6 million and record third quarter total revenue of $85.6 million. GAAP diluted earnings per share were a record $0.70 compared to $0.28 per share in the prior year third quarter.
Manhattan Associates President and CEO Pete Sinisgalli commented, “We posted another strong quarter in Q3. More importantly, our competitive position continues to strengthen and our outlook for the balance of this year and the future is quite positive.”
THIRD QUARTER 2011 FINANCIAL SUMMARY:
 	•	 	Adjusted diluted earnings per share, a non-GAAP measure, was $0.67 in the third quarter of 2011, compared to $0.38 in the third quarter of 2010.	
 	 	 	 	
 	•	 	The Company reported GAAP diluted earnings per share of $0.70 in the third quarter of 2011, compared to $0.28 in the third quarter of 2010. Results for the quarter ended September 30, 2011 include a positive impact of $0.12 per share for the recovery of an auction rate security investment which had been impaired in a prior period.	
 	 	 	 	
 	•	 	Consolidated revenue in the third quarter of 2011 was $85.6 million, compared to $74.0 million in the third quarter of 2010. License revenue was $13.6 million in the third quarter of 2011, compared to $12.1 million in the third quarter of 2010.	
 	 	 	 	
 	•	 	Adjusted operating income, a non-GAAP measure, was $19.7 million in the third quarter of 2011, compared to $12.8 million in the third quarter of 2010.	

 

 

 	•	 	GAAP operating income in the third quarter of 2011 was $19.4 million, which includes a $2.5 million recovery of an auction rate security investment referred to above, compared to $9.6 million in the third quarter of 2010.	
 	 	 	 	
 	•	 	Cash flow from operations was $16.9 million in the third quarter of 2011, compared to $11.5 million in the third quarter of 2010. Days Sales Outstanding were 61 days at September 30, 2011, compared to 55 days at June 30, 2011.	
 	 	 	 	
 	•	 	Cash and investments on-hand at September 30, 2011 was $101.7 million, compared to $126.9 million at December 31, 2010.	
 	 	 	 	
 	•	 	The Company repurchased approximately 0.8 million common shares under the share repurchase program authorized by the Board of Directors, totaling $29.4 million at an average share price of $34.79, in the third quarter of 2011. In October 2011, the Board of Directors approved raising the Company’s remaining share repurchase authority to an aggregate $50.0 million of Manhattan Associates outstanding common stock.	
NINE MONTH 2011 FINANCIAL SUMMARY:
 	•	 	Adjusted diluted earnings per share, a non-GAAP measure, was a record $1.72 for the nine months ended September 30, 2011, compared to $1.20 for the nine months ended September 30, 2010.	
 	 	 	 	
 	•	 	GAAP diluted earnings per share for the nine months ended September 30, 2011 was a record $1.59, compared to $0.96 for the nine months ended September 30, 2010. Results for the nine months ended September 30, 2011 include a positive impact of $0.12 per share for the recovery of an auction rate security investment which had been impaired in a prior period. The prior year’s results include $0.04 per share of recoveries of previously expensed sales tax associated with expiring sales tax audit statutes.	
 	 	 	 	
 	•	 	Consolidated revenue for the nine months ended September 30, 2011 was $245.7 million, compared to $225.6 million for the nine months ended September 30, 2010. License revenue was $37.7 million for the nine months ended September 30, 2011, compared to $41.8 million in the nine months ended September 30, 2010.	
 	 	 	 	
 	•	 	Adjusted operating income, a non-GAAP measure, was $51.1 million for the nine months ended September 30, 2011, compared to $41.5 million for the nine months ended September 30, 2010.	

 

 

 	•	 	GAAP operating income was $45.2 million for the nine months ended September 30, 2011, compared to $33.1 million for the nine months ended September 30, 2010. Results for the nine months ended September 30, 2011 include a $2.5 million recovery of an auction rate security investment referred to above. The prior year’s results include $1.2 million of recoveries of previously expensed sales tax associated with expiring sales tax audit statutes.	
 	 	 	 	
 	•	 	Adjusted and GAAP income tax expense for the nine months ended September 30, 2011 include a $2.0 million tax benefit resulting from the release of a valuation allowance associated with a change in India tax law. The change eliminates the tax holiday for India companies under the STPI “Software Technology Park of India” tax plan.	
 	 	 	 	
 	•	 	For the nine months ended September 30, 2011, the Company repurchased approximately 2.8 million common shares under the share repurchase program authorized by the Board of Directors at an average share price of $33.93, for a total investment of $93.3 million.	
SALES ACHIEVEMENTS:
 	•	 	Closing three contracts of $1.0 million or more in recognized license revenue during the quarter.	
 	 	 	 	
 	•	 	Completing software license wins with new customers such as: Abercrombie & Fitch Management Co., AvtoZapchast Kamaz Ltd, El Corte Ingles, Jumei, Liquidity Services, Inc., Niagara Bottling LLC, Western Express, Inc., Winn-Dixie Stores, Inc. and Zhejiang Semir Garment Co., Ltd.	
 	 	 	 	
 	•	 	Expanding partnerships with existing customers such as: BUT International SAS, CEVA Logistics U.S., Inc., Complete Entertainment Services Ltd, Dubois Chemicals, Inc., Fantastic Holdings Limited, F&T Apparel LLC, Harlequin Sales Corporation, IFC Warehousing and Distribution Pty Ltd, InterDesign, Inc., LeSaint Logistics, Performance Team Freight Systems, Precision Planting Incorporated, PSP Distribution LLC, Restoration Hardware, Simplehuman, Southern Wine & Spirits of America, Inc., Speed Global Services and United Natural Foods, Inc.	

 

 

2011 GUIDANCE
Manhattan Associates provided the following revenue and diluted earnings per share guidance for the full year 2011. A full reconciliation of GAAP to non-GAAP diluted earnings per share is included in the supplemental attachments to this release.
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Guidance Range — 2011 Full year	 	
($’s in millions, except EPS)	 	$ Range	 	 	% Growth range	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue — current guidance	 	$	325	 	 	$	335	 	 	 	10	%	 	 	13	%	
Total revenue — previous guidance	 	$	325	 	 	$	335	 	 	 	10	%	 	 	13	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted earnings per share (EPS):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EPS(1) — current guidance	 	$	2.23	 	 	$	2.27	 	 	 	41	%	 	 	44	%	
GAAP EPS — current guidance	 	$	2.03	 	 	$	2.07	 	 	 	62	%	 	 	66	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted EPS(1) — previous guidance	 	$	1.97	 	 	$	2.02	 	 	 	25	%	 	 	28	%	
GAAP EPS — previous guidance	 	$	1.65	 	 	$	1.70	 	 	 	32	%	 	 	36	%	
 	 	 	
(1)	 	Adjusted EPS is Non-GAAP	
Manhattan Associates currently intends to publish, in each quarterly earnings release, certain expectations with respect to future financial performance. 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 December 16, 2011, 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 2011 Guidance section as still being Manhattan Associates’ current expectation on matters covered, unless Manhattan Associates publishes a notice stating otherwise. During the Quiet Period, previously published expectations should be considered historical only, speaking only as of or prior to 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, currently scheduled for the week of January 30 to February 3, 2012.

 

 

CONFERENCE CALL
The Company’s conference call regarding its third quarter 2011 financial results will be held at 4:30 p.m. Eastern Time on Tuesday, October 18, 2011. Investors are invited to listen to a live webcast of the conference call through the investor relations section of Manhattan Associates’ website at  www.manh.com . To listen to the live webcast, please go to the website at least 15 minutes before the call to download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay can be accessed shortly after the call by dialing +1.855.859.2056 in the U.S. and Canada, or +1.404.537.3406 outside the U.S., and entering the conference identification number 10174711, or via the web at www.manh.com . The phone replay will be available for two weeks after the call, and the Internet broadcast will be available until Manhattan Associates’ fourth quarter 2011 earnings release.
GAAP VERSUS NON-GAAP PRESENTATION
The Company provides adjusted operating income, adjusted net income and adjusted earnings per share in this press release as additional information regarding the Company’s operating results. These measures are not in accordance with — or an alternative
for — GAAP, and may be different from non-GAAP operating income, non-GAAP net income and non-GAAP earnings per share measures used by other companies. The Company believes that the presentation of these non-GAAP financial measures facilitates investors’ understanding of its historical operating trends, because it provides important supplemental measurement information in evaluating the operating results of its business, as distinct from results that include items that are not indicative of ongoing operating results. The Company consequently believes that the presentation of these non-GAAP financial measures provides investors with useful insight into its profitability. This release should be read in conjunction with its Form 8-K earnings release filing for the quarter ended September 30, 2011.
The non-GAAP adjusted operating income, adjusted net income and adjusted earnings per share exclude the impact of acquisition-related costs and the amortization thereof; the recapture of previously recognized sales tax expense; equity-based compensation; and asset impairment charges and related reversals — all net of income tax effects and unusual tax adjustments. In addition, the Company’s forward-looking non-GAAP adjusted earnings per share included with its 2011 Guidance excludes all equity-based compensation expense. Reconciliations of the Company’s GAAP financial measures to non-GAAP adjustments are included in the supplemental information attached to this release.

 

 

ABOUT MANHATTAN ASSOCIATES, INC.
Manhattan Associates continues to deliver on its 21-year heritage of providing global supply chain excellence to more than 1,200 customers worldwide that consider supply chain optimization core to their strategic market leadership. The company’s supply chain innovations include:  Manhattan SCOPE ®  a portfolio of software solutions and technology that leverages a Supply Chain Process Platform to help organizations optimize their supply chains from planning through execution;  Manhattan SCALE™ , a portfolio of distribution management and transportation management solutions built on Microsoft. NET technology; and  Manhattan Carrier™ , a suite of supply chain solutions specifically addressing the needs of the motor carrier industry. For more information, please visit  www.manh.com .
This press release contains “forward-looking statements” relating to Manhattan Associates, Inc. Forward-looking statements in this press release includes the information set forth under “2011 Guidance.” 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: uncertainty about the global economy; delays in product development; competitive pressures; software errors; and additional risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. 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.
###

 

 
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended September 30,	 	 	Nine Months Ended September 30,	 	
 	 	2011	 	 	2010	 	 	2011	 	 	2010	 	
 	 	(unaudited)	 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Software license	 	$	13,565	 	 	$	12,092	 	 	$	37,674	 	 	$	41,784	 	
Services	 	 	63,594	 	 	 	53,486	 	 	 	183,446	 	 	 	161,727	 	
Hardware and other	 	 	8,443	 	 	 	8,436	 	 	 	24,594	 	 	 	22,093	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total revenue	 	 	85,602	 	 	 	74,014	 	 	 	245,714	 	 	 	225,604	 	
Costs and expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of license	 	 	1,196	 	 	 	1,471	 	 	 	4,259	 	 	 	4,631	 	
Cost of services	 	 	28,054	 	 	 	24,661	 	 	 	80,474	 	 	 	73,631	 	
Cost of hardware and other	 	 	6,695	 	 	 	7,092	 	 	 	19,452	 	 	 	18,366	 	
Research and development	 	 	10,877	 	 	 	9,866	 	 	 	31,936	 	 	 	30,640	 	
Sales and marketing	 	 	10,865	 	 	 	10,329	 	 	 	33,774	 	 	 	32,870	 	
General and administrative	 	 	9,342	 	 	 	8,721	 	 	 	27,256	 	 	 	25,359	 	
Depreciation and amortization	 	 	1,698	 	 	 	2,262	 	 	 	5,922	 	 	 	6,995	 	
Recovery of previously impaired investment	 	 	(2,519	)	 	 	—	 	 	 	(2,519	)	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total costs and expenses	 	 	66,208	 	 	 	64,402	 	 	 	200,554	 	 	 	192,492	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	 	19,394	 	 	 	9,612	 	 	 	45,160	 	 	 	33,112	 	
Other income (loss), net	 	 	862	 	 	 	(188	)	 	 	1,214	 	 	 	(382	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Income before income taxes	 	 	20,256	 	 	 	9,424	 	 	 	46,374	 	 	 	32,730	 	
Income tax provision	 	 	5,379	 	 	 	3,192	 	 	 	11,992	 	 	 	11,114	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	14,877	 	 	$	6,232	 	 	$	34,382	 	 	$	21,616	 	

Basic earnings per share	 	$	0.74	 	 	$	0.29	 	 	$	1.67	 	 	$	1.00	 	
Diluted earnings per share	 	$	0.70	 	 	$	0.28	 	 	$	1.59	 	 	$	0.96	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average number of shares:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	20,156	 	 	 	21,248	 	 	 	20,623	 	 	 	21,638	 	
Diluted	 	 	21,125	 	 	 	22,051	 	 	 	21,656	 	 	 	22,456	 	

 

 
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
RECONCILIATION OF SELECTED GAAP TO NON-GAAP MEASURES
(in thousands, except per share amounts)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended September 30,	 	 	Nine Months Ended September 30,	 	
 	 	2011	 	 	2010	 	 	2011	 	 	2010	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	$	19,394	 	 	$	9,612	 	 	$	45,160	 	 	$	33,112	 	
Equity-based compensation (a)	 	 	2,503	 	 	 	2,620	 	 	 	7,317	 	 	 	7,707	 	
Purchase amortization (b)	 	 	293	 	 	 	571	 	 	 	1,170	 	 	 	1,848	 	
Recovery of previously impaired investment  (c)	 	 	(2,519	)	 	 	—	 	 	 	(2,519	)	 	 	—	 	
Sales tax recoveries (d)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(1,212	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted operating income (Non-GAAP)	 	$	19,671	 	 	$	12,803	 	 	$	51,128	 	 	$	41,455	 	

Income tax provision	 	$	5,379	 	 	$	3,192	 	 	$	11,992	 	 	$	11,114	 	
Equity-based compensation (a)	 	 	838	 	 	 	904	 	 	 	2,451	 	 	 	2,659	 	
Purchase amortization (b)	 	 	98	 	 	 	197	 	 	 	392	 	 	 	638	 	
Sales tax recoveries (d)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(418	)	
Unusual tax adjustments (e)	 	 	115	 	 	 	11	 	 	 	227	 	 	 	129	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted income tax provision (Non-GAAP)	 	$	6,430	 	 	$	4,304	 	 	$	15,062	 	 	$	14,122	 	

Net income	 	$	14,877	 	 	$	6,232	 	 	$	34,382	 	 	$	21,616	 	
Equity-based compensation (a)	 	 	1,665	 	 	 	1,716	 	 	 	4,866	 	 	 	5,048	 	
Purchase amortization (b)	 	 	195	 	 	 	374	 	 	 	778	 	 	 	1,210	 	
Recovery of previously impaired investment  (c)	 	 	(2,519	)	 	 	—	 	 	 	(2,519	)	 	 	—	 	
Sales tax recoveries (d)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(794	)	
Unusual tax adjustments (e)	 	 	(115	)	 	 	(11	)	 	 	(227	)	 	 	(129	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted net income (Non-GAAP)	 	$	14,103	 	 	$	8,311	 	 	$	37,280	 	 	$	26,951	 	

Diluted EPS	 	$	0.70	 	 	$	0.28	 	 	$	1.59	 	 	$	0.96	 	
Equity-based compensation (a)	 	 	0.08	 	 	 	0.08	 	 	 	0.22	 	 	 	0.22	 	
Purchase amortization (b)	 	 	0.01	 	 	 	0.02	 	 	 	0.04	 	 	 	0.05	 	
Recovery of previously impaired investment  (c)	 	 	(0.12	)	 	 	—	 	 	 	(0.12	)	 	 	—	 	
Sales tax recoveries (d)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(0.04	)	
Unusual tax adjustments (e)	 	 	(0.01	)	 	 	—	 	 	 	(0.01	)	 	 	(0.01	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted diluted EPS (Non-GAAP)	 	$	0.67	 	 	$	0.38	 	 	$	1.72	 	 	$	1.20	 	

Fully diluted shares	 	 	21,125	 	 	 	22,051	 	 	 	21,656	 	 	 	22,456	 	

(a)	 	Beginning in 2011, to be consistent with other companies in the software industry, we began to report adjusted results excluding all equity-based compensation. The equity-based compensation is included in the following GAAP operating expense lines for the three and nine months ended September 30, 2011 and 2010:	

 	 	Three Months Ended September 30,	 	 	Nine Months Ended September 30,	 	
 	 	2011	 	 	2010	 	 	2011	 	 	2010	 	
Cost of services	 	$	374	 	 	$	364	 	 	 	1,077	 	 	$	1,070	 	
Research and development	 	 	415	 	 	 	399	 	 	 	1,173	 	 	 	1,177	 	
Sales and marketing	 	 	585	 	 	 	724	 	 	 	1,733	 	 	 	2,156	 	
General and administrative	 	 	1,129	 	 	 	1,133	 	 	 	3,334	 	 	 	3,304	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total equity-based compensation	 	$	2,503	 	 	$	2,620	 	 	 	7,317	 	 	$	7,707	 	

 	 	 	
(b)	 	Adjustments represent purchased intangibles amortization from prior acquisitions. Such amortization is commonly excluded from GAAP net income by companies in our industry and we therefore exclude these amortization costs to provide more relevant and meaningful comparisons of our operating results to that of our competitors.	

 

 
 	 	 	
(c)	 	During the quarter ended September 30, 2008, we recorded an impairment charge of $3.5 million on an investment in an auction rate security. We reduced the carrying value to zero due to credit downgrades of the underlying issuer and the bond insurer as well as increasing publicly reported exposure to bankruptcy risk by the issuer. However, during the quarter ended September 30, 2011, we were able to sell the auction rate security and recovered over 70%, or $2.5 million, of our original investment. We previously excluded the asset impairment charge recorded in 2008 to writedown the value of the auction rate security because we typically invest our treasury funds in cash, cash equivalents or other liquid investments, not illiquid, risky securities. We believed the write-down in value of the auction rate security was due to unusual changes in the characteristics of the auction rate security since our initial investment in it, including failed auctions and default risk for a municipal obligor. Consistent with our prior exclusion of the charge, we have excluded the current period’s reversal of the charge from adjusted non-GAAP results because it is not indicative of ongoing operating performance.	
 	 	 	
(d)	 	Adjustment represents recoveries of previously recorded state sales tax resulting primarily from the expiration of the sales tax audit statutes in certain states. Because we have recognized the full potential amount of the sales tax expense in prior periods, any recovery of that expense resulting from the expiration of the statutes or the collection of tax from our customers would overstate the current period net income derived from our core operations as the recovery is not a result of any event occurring within our control during the current period. Thus, we have excluded these recoveries from adjusted non-GAAP results.	
 	 	 	
(e)	 	Adjustments represent tax benefit from disqualifying dispositions of incentive stock options that were previously expensed. As discussed above, we excluded equity-based compensation from adjusted non-GAAP results to be consistent with other companies in the software industry. Therefore, we also excluded the related tax benefit generated upon their disposition.	

 

 
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
 	 	 	 	 	 	 	 	 	
 	 	September 30,	 	 	December 31,	 	
 	 	2011	 	 	2010	 	
 	 	(unaudited)	 	 	 	 	
ASSETS	 	 	 	 	 	 	 	 	
Current Assets:	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	94,153	 	 	$	120,744	 	
Short term investments	 	 	6,650	 	 	 	4,414	 	
Accounts receivable, net of allowance of $4,424 and $5,711 in 2011 and 2010, respectively	 	 	56,745	 	 	 	47,419	 	
Deferred income taxes	 	 	7,855	 	 	 	7,214	 	
Income taxes receivable	 	 	—	 	 	 	2,446	 	
Prepaid expenses and other current assets	 	 	8,062	 	 	 	6,743	 	
 	 	 	 	 	 	 	
Total current assets	 	 	173,465	 	 	 	188,980	 	
 	 	 	 	 	 	 	 	 	
Property and equipment, net	 	 	13,508	 	 	 	14,833	 	
Long-term investments	 	 	908	 	 	 	1,711	 	
Goodwill, net	 	 	62,270	 	 	 	62,265	 	
Acquisition-related intangible assets, net	 	 	15	 	 	 	1,186	 	
Deferred income taxes	 	 	9,800	 	 	 	8,816	 	
Other assets	 	 	2,765	 	 	 	2,673	 	
 	 	 	 	 	 	 	
Total assets	 	$	262,731	 	 	$	280,464	 	

LIABILITIES AND SHAREHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	 	
Accounts payable	 	$	8,296	 	 	$	7,745	 	
Accrued compensation and benefits	 	 	16,037	 	 	 	19,807	 	
Accrued and other liabilities	 	 	14,181	 	 	 	13,856	 	
Deferred revenue	 	 	49,393	 	 	 	44,974	 	
Income tax payable	 	 	4,554	 	 	 	—	 	
 	 	 	 	 	 	 	
Total current liabilities	 	 	92,461	 	 	 	86,382	 	
 	 	 	 	 	 	 	 	 	
Other non-current liabilities	 	 	8,971	 	 	 	10,282	 	
 	 	 	 	 	 	 	 	 	
Shareholders’ equity:	 	 	 	 	 	 	 	 	
Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2011 or 2010	 	 	—	 	 	 	—	 	
Common stock, $.01 par value; 100,000,000 shares authorized; 20,433,676 and 21,729,789	 	 	 	 	 	 	 	 	
shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively	 	 	204	 	 	 	217	 	
Additional paid-in capital	 	 	—	 	 	 	487	 	
Retained earnings	 	 	164,392	 	 	 	184,152	 	
Accumulated other comprehensive loss	 	 	(3,297	)	 	 	(1,056	)	
 	 	 	 	 	 	 	
Total shareholders’ equity	 	 	161,299	 	 	 	183,800	 	
 	 	 	 	 	 	 	
Total liabilities and shareholders’ equity	 	$	262,731	 	 	$	280,464	 	

 

 
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 	 	 	 	 	 	 	 	 	
 	 	Nine Months Ended September 30,	 	
 	 	2011	 	 	2010	 	
 	 	(unaudited)	 	
Operating activities:	 	 	 	 	 	 	 	 	
Net income	 	$	34,382	 	 	$	21,616	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	5,922	 	 	 	6,995	 	
Recovery of previously impaired investment	 	 	(2,519	)	 	 	—	 	
Stock compensation	 	 	7,317	 	 	 	7,707	 	
Loss (gain) on disposal of equipment	 	 	22	 	 	 	(2	)	
Tax benefit of stock awards exercised/vested	 	 	3,345	 	 	 	1,277	 	
Excess tax benefits from stock based compensation	 	 	(1,416	)	 	 	(354	)	
Deferred income taxes	 	 	(1,821	)	 	 	(529	)	
Unrealized foreign currency (gain) loss	 	 	(513	)	 	 	343	 	
Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	
Accounts receivable, net	 	 	(9,370	)	 	 	(10,624	)	
Other assets	 	 	(1,546	)	 	 	(2,236	)	
Accounts payable, accrued and other liabilities	 	 	(3,325	)	 	 	8,619	 	
Income taxes	 	 	6,250	 	 	 	(748	)	
Deferred revenue	 	 	4,267	 	 	 	3,297	 	
 	 	 	 	 	 	 	
Net cash provided by operating activities	 	 	40,995	 	 	 	35,361	 	

Investing activities:	 	 	 	 	 	 	 	 	
Purchase of property and equipment	 	 	(3,672	)	 	 	(4,331	)	
Net maturities (purchases) of investments	 	 	465	 	 	 	(8,439	)	
 	 	 	 	 	 	 	
Net cash used in investing activities	 	 	(3,207	)	 	 	(12,770	)	

Financing activities:	 	 	 	 	 	 	 	 	
Purchase of common stock	 	 	(95,569	)	 	 	(56,562	)	
Proceeds from stock options exercised	 	 	30,265	 	 	 	18,381	 	
Excess tax benefits from stock based compensation	 	 	1,416	 	 	 	354	 	
 	 	 	 	 	 	 	
Net cash used in financing activities	 	 	(63,888	)	 	 	(37,827	)	

Foreign currency impact on cash	 	 	(491	)	 	 	346	 	

Net change in cash and cash equivalents	 	 	(26,591	)	 	 	(14,890	)	
Cash and cash equivalents at beginning of period	 	 	120,744	 	 	 	120,217	 	
 	 	 	 	 	 	 	
Cash and cash equivalents at end of period	 	$	94,153	 	 	$	105,327	 	

 

 
MANHATTAN ASSOCIATES, INC.
SUPPLEMENTAL INFORMATION
1.	 	GAAP and Adjusted earnings (loss) per share by quarter are as follows:	

 	 	2010	 	 	2011	 	
 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	YTD	 	
GAAP Diluted EPS	 	$	0.32	 	 	$	0.36	 	 	$	0.28	 	 	$	0.29	 	 	$	1.25	 	 	$	0.32	 	 	$	0.57	 	 	$	0.70	 	 	$	1.59	 	
Adjustments to GAAP:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity-based compensation	 	 	0.08	 	 	 	0.07	 	 	 	0.08	 	 	 	0.08	 	 	 	0.30	 	 	 	0.07	 	 	 	0.07	 	 	 	0.08	 	 	 	0.22	 	
Purchase amortization	 	 	0.02	 	 	 	0.02	 	 	 	0.02	 	 	 	0.01	 	 	 	0.07	 	 	 	0.01	 	 	 	0.01	 	 	 	0.01	 	 	 	0.04	 	
Recovery of previously impaired investment	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(0.12	)	 	 	(0.12	)	
Sales tax recoveries	 	 	(0.01	)	 	 	(0.02	)	 	 	—	 	 	 	—	 	 	 	(0.04	)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Unusual tax adjustments	 	 	—	 	 	 	(0.01	)	 	 	—	 	 	 	—	 	 	 	(0.01	)	 	 	—	 	 	 	—	 	 	 	(0.01	)	 	 	(0.01	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted Diluted EPS	 	$	0.40	 	 	$	0.42	 	 	$	0.38	 	 	$	0.38	 	 	$	1.58	 	 	$	0.41	 	 	$	0.65	 	 	$	0.67	 	 	$	1.72	 	

2.	 	Revenues and operating income (loss) by reportable segment are as follows (in thousands):	

 	 	2010	 	 	2011	 	
 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	YTD	 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Americas	 	$	61,889	 	 	$	64,875	 	 	$	62,555	 	 	$	59,631	 	 	$	248,950	 	 	$	60,185	 	 	$	72,634	 	 	$	70,663	 	 	$	203,482	 	
EMEA	 	 	7,989	 	 	 	8,587	 	 	 	8,266	 	 	 	7,324	 	 	 	32,166	 	 	 	8,336	 	 	 	11,075	 	 	 	10,041	 	 	 	29,452	 	
APAC	 	 	4,071	 	 	 	4,179	 	 	 	3,193	 	 	 	4,558	 	 	 	16,001	 	 	 	3,189	 	 	 	4,693	 	 	 	4,898	 	 	 	12,780	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	$	73,949	 	 	$	77,641	 	 	$	74,014	 	 	$	71,513	 	 	$	297,117	 	 	$	71,710	 	 	$	88,402	 	 	$	85,602	 	 	$	245,714	 	

GAAP Operating Income (Loss):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Americas	 	$	10,333	 	 	$	9,836	 	 	$	8,121	 	 	$	7,578	 	 	$	35,868	 	 	$	7,087	 	 	$	15,749	 	 	$	17,183	 	 	$	40,019	 	
EMEA	 	 	418	 	 	 	1,530	 	 	 	1,214	 	 	 	523	 	 	 	3,685	 	 	 	909	 	 	 	1,963	 	 	 	1,334	 	 	 	4,206	 	
APAC	 	 	732	 	 	 	651	 	 	 	277	 	 	 	714	 	 	 	2,374	 	 	 	(443	)	 	 	501	 	 	 	877	 	 	 	935	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	$	11,483	 	 	$	12,017	 	 	$	9,612	 	 	$	8,815	 	 	$	41,927	 	 	$	7,553	 	 	$	18,213	 	 	$	19,394	 	 	$	45,160	 	

Adjustments (pre-tax):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Americas:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity-based compensation	 	$	2,585	 	 	$	2,502	 	 	$	2,620	 	 	$	2,713	 	 	$	10,420	 	 	$	2,409	 	 	$	2,405	 	 	$	2,503	 	 	$	7,317	 	
Purchase amortization	 	 	638	 	 	 	639	 	 	 	571	 	 	 	439	 	 	 	2,287	 	 	 	439	 	 	 	438	 	 	 	293	 	 	 	1,170	 	
Recovery of previously impaired investment	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(2,519	)	 	 	(2,519	)	
Sales tax recoveries	 	 	(420	)	 	 	(792	)	 	 	—	 	 	 	—	 	 	 	(1,212	)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	$	2,803	 	 	$	2,349	 	 	$	3,191	 	 	$	3,152	 	 	$	11,495	 	 	$	2,848	 	 	$	2,843	 	 	$	277	 	 	$	5,968	 	

Adjusted non-GAAP Operating Income (Loss):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Americas	 	$	13,136	 	 	$	12,185	 	 	$	11,312	 	 	$	10,730	 	 	$	47,363	 	 	$	9,935	 	 	$	18,592	 	 	$	17,460	 	 	$	45,987	 	
EMEA	 	 	418	 	 	 	1,530	 	 	 	1,214	 	 	 	523	 	 	 	3,685	 	 	 	909	 	 	 	1,963	 	 	 	1,334	 	 	 	4,206	 	
APAC	 	 	732	 	 	 	651	 	 	 	277	 	 	 	714	 	 	 	2,374	 	 	 	(443	)	 	 	501	 	 	 	877	 	 	 	935	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	$	14,286	 	 	$	14,366	 	 	$	12,803	 	 	$	11,967	 	 	$	53,422	 	 	$	10,401	 	 	$	21,056	 	 	$	19,671	 	 	$	51,128	 	

3.	 	Our services revenue consists of fees generated from professional services and customer support and software enhancements related to our software products as follows (in thousands):	

 	 	2010	 	 	2011	 	
 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	YTD	 	
Professional services	 	$	33,960	 	 	$	34,349	 	 	$	33,349	 	 	$	30,213	 	 	$	131,871	 	 	$	35,184	 	 	$	42,150	 	 	$	41,403	 	 	$	118,737	 	
Customer support and software enhancements	 	 	19,501	 	 	 	20,431	 	 	 	20,137	 	 	 	21,810	 	 	 	81,879	 	 	 	20,894	 	 	 	21,624	 	 	 	22,191	 	 	 	64,709	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total services revenue	 	$	53,461	 	 	$	54,780	 	 	$	53,486	 	 	$	52,023	 	 	$	213,750	 	 	$	56,078	 	 	$	63,774	 	 	$	63,594	 	 	$	183,446	 	

4.	 	Hardware and other revenue includes the following items (in thousands):	

 	 	2010	 	 	2011	 	
 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	YTD	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Hardware revenue	 	$	4,518	 	 	$	5,053	 	 	$	5,763	 	 	$	4,612	 	 	$	19,946	 	 	$	5,504	 	 	$	5,540	 	 	$	5,597	 	 	$	16,641	 	
Billed travel	 	 	1,763	 	 	 	2,323	 	 	 	2,673	 	 	 	2,212	 	 	 	8,971	 	 	 	2,366	 	 	 	2,741	 	 	 	2,846	 	 	 	7,953	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total hardware and other revenue	 	$	6,281	 	 	$	7,376	 	 	$	8,436	 	 	$	6,824	 	 	$	28,917	 	 	$	7,870	 	 	$	8,281	 	 	$	8,443	 	 	$	24,594	 	

5.	 	Impact of Currency Fluctuation	

The following table reflects the increases (decreases) in the results of operations for each period attributable to the change in foreign currency exchange rates from the prior period as well as foreign currency gains (losses) included in other income, net for each period (in thousands):	

 	 	2010	 	 	2011	 	
 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	YTD	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revenue	 	$	1,053	 	 	$	(72	)	 	$	(548	)	 	$	(217	)	 	$	216	 	 	$	282	 	 	$	1,743	 	 	$	1,140	 	 	$	3,165	 	
Costs and expenses	 	 	1,346	 	 	 	235	 	 	 	(262	)	 	 	(26	)	 	 	1,293	 	 	 	386	 	 	 	1,513	 	 	 	1,038	 	 	 	2,937	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	 	(293	)	 	 	(307	)	 	 	(286	)	 	 	(191	)	 	 	(1,077	)	 	 	(104	)	 	 	230	 	 	 	102	 	 	 	228	 	
Foreign currency gains (losses) in other income	 	 	(415	)	 	 	187	 	 	 	(436	)	 	 	—	 	 	 	(664	)	 	 	(207	)	 	 	77	 	 	 	575	 	 	 	445	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	$	(708	)	 	$	(120	)	 	$	(722	)	 	$	(191	)	 	$	(1,741	)	 	$	(311	)	 	$	307	 	 	$	677	 	 	$	673	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Manhattan Associates has a large research and development center in Bangalore, India. The following table reflects the increases (decreases) in the financial results for each period attributable to changes in the Indian Rupee exchange rate (in thousands):
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	2010	 	 	2011	 	
 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	YTD	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	$	(395	)	 	$	(340	)	 	$	(180	)	 	$	(181	)	 	$	(1,096	)	 	$	(53	)	 	$	(82	)	 	$	(76	)	 	$	(211	)	
Foreign currency gains (losses) in other income	 	 	(289	)	 	 	246	 	 	 	(302	)	 	 	64	 	 	 	(281	)	 	 	(112	)	 	 	53	 	 	 	653	 	 	 	594	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total impact of changes in the Indian Rupee	 	$	(684	)	 	$	(94	)	 	$	(482	)	 	$	(117	)	 	$	(1,377	)	 	$	(165	)	 	$	(29	)	 	$	577	 	 	$	383	 	

 

 
MANHATTAN ASSOCIATES, INC.
SUPPLEMENTAL INFORMATION
6.	 	Other (expense) income includes the following components (in thousands):	

 	 	2010	 	 	2011	 	
 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	YTD	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest income	 	$	80	 	 	$	109	 	 	$	252	 	 	$	195	 	 	$	636	 	 	$	225	 	 	$	269	 	 	$	298	 	 	$	792	 	
Foreign currency (losses) gains	 	 	(415	)	 	 	187	 	 	 	(436	)	 	 	—	 	 	 	(664	)	 	 	(207	)	 	 	77	 	 	 	575	 	 	 	445	 	
Other non-operating (expense) income	 	 	(163	)	 	 	8	 	 	 	(4	)	 	 	44	 	 	 	(115	)	 	 	—	 	 	 	(12	)	 	 	(11	)	 	 	(23	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total other (expense) income	 	$	(498	)	 	$	304	 	 	$	(188	)	 	$	239	 	 	$	(143	)	 	$	18	 	 	$	334	 	 	$	862	 	 	$	1,214	 	

7.	 	Effective Tax Rate Reconciliation for GAAP and Adjusted Results (in thousands except tax rate and per share data):	

 	 	Three Months Ended September 30, 2011	 	 	Nine Months Ended September 30, 2011	 	
 	 	Income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	before income	 	 	Income tax	 	 	 	 	 	 	 	 	 	 	Effective Tax	 	 	before income	 	 	Income tax	 	 	 	 	 	 	 	 	 	 	Effective Tax	 	
 	 	taxes	 	 	provision	 	 	Net income	 	 	Diluted EPS	 	 	Rate	 	 	taxes	 	 	provision	 	 	Net income	 	 	Diluted EPS	 	 	Rate	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP results before investment recovery and tax adjustments	 	$	17,737	 	 	$	5,942	 	 	$	11,795	 	 	$	0.56	 	 	 	33.5	%	 	$	43,855	 	 	$	14,691	 	 	$	29,164	 	 	$	1.35	 	 	 	33.5	%	
Recovery of previously impaired investment  (a)	 	 	2,519	 	 	 	—	 	 	 	2,519	 	 	 	0.12	 	 	 	 	 	 	 	2,519	 	 	 	—	 	 	 	2,519	 	 	 	0.12	 	 	 	 	 	
Provision to return adjustments (b)	 	 	—	 	 	 	272	 	 	 	(272	)	 	 	(0.01	)	 	 	 	 	 	 	—	 	 	 	272	 	 	 	(272	)	 	 	(0.01	)	 	 	 	 	
Income tax reserve adjustments (c)	 	 	—	 	 	 	(720	)	 	 	720	 	 	 	0.03	 	 	 	 	 	 	 	—	 	 	 	(720	)	 	 	720	 	 	 	0.03	 	 	 	 	 	
Release of India valuation allowance  (d)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	(2,025	)	 	 	2,025	 	 	 	0.09	 	 	 	 	 	
Disqualifying dispositions of incentive stock options (e)	 	 	—	 	 	 	(115	)	 	 	115	 	 	 	0.01	 	 	 	 	 	 	 	—	 	 	 	(226	)	 	 	226	 	 	 	0.01	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP results- reported	 	$	20,256	 	 	$	5,379	 	 	$	14,877	 	 	$	0.70	 	 	 	26.6	%	 	$	46,374	 	 	$	11,992	 	 	$	34,382	 	 	$	1.59	 	 	 	25.9	%	

Adjusted results before tax adjustments	 	$	20,533	 	 	$	6,878	 	 	$	13,655	 	 	$	0.65	 	 	 	33.5	%	 	$	52,342	 	 	$	17,535	 	 	$	34,807	 	 	$	1.61	 	 	 	33.5	%	
Provision to return adjustments (b)	 	 	—	 	 	 	272	 	 	 	(272	)	 	 	(0.01	)	 	 	 	 	 	 	—	 	 	 	272	 	 	 	(272	)	 	 	(0.01	)	 	 	 	 	
Income tax reserve adjustments (c)	 	 	—	 	 	 	(720	)	 	 	720	 	 	 	0.03	 	 	 	 	 	 	 	—	 	 	 	(720	)	 	 	720	 	 	 	0.03	 	 	 	 	 	
Release of India valuation allowance  (d)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	(2,025	)	 	 	2,025	 	 	 	0.09	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted results- reported	 	$	20,533	 	 	$	6,430	 	 	$	14,103	 	 	$	0.67	 	 	 	31.3	%	 	$	52,342	 	 	$	15,062	 	 	$	37,280	 	 	$	1.72	 	 	 	28.8	%	

 	 	 	
(a)	 	During the quarter ended September 30, 2008, we recorded an impairment charge of $3.5 million on an investment in an auction rate security. We reduced the carrying value to zero due to credit downgrades of the underlying issuer and the bond insurer as well as increasing publicly reported exposure to bankruptcy risk by the issuer. However, during the quarter ended September 30, 2011, we were able to sell the auction rate security and recovered over 70%, or $2.5 million, of our original investment. We did not record a tax benefit on the original impairment charge because we did not have any future capital gains to offset the loss and therefore do not have tax expense on the reversal of the charge.	
 	 	 	
(b)	 	Provision to return adjustments primarily include the true-up of the 2010 tax provision to the 2010 tax return filed in the third quarter of 2011.	
 	 	 	
(c)	 	The adjustment represents the release of U.S. federal income tax reserves that were previously expensed. The release primarily resulted from the expiration of tax audit statues for tax returns filed for 2007 and prior.	
 	 	 	
(d)	 	Our subsidiary in India had a tax holiday under Software Technology Park of India Plan through March 2011. Late in the first quarter of 2011, the tax authorities in India announced that the tax holiday would not be extended. This decision eliminated uncertainty as to our ability to realize a tax credit carry-forward and other deferred tax assets. Therefore, we released the corresponding valuation allowance of approximately $2.0 million.	
 	 	 	
(e)	 	The adjustment represents a tax benefit from disqualifying dispositions of incentive stock options that were previously expensed.	

8.	 	Beginning in 2011, to be consistent with other companies in the software industry, we began to report adjusted results excluding all equity-based compensation. Historically, our adjusted results did not exclude restricted stock expense. See note 1 above for the other reconciling items between our GAAP and adjusted results. The impact of restricted stock expense on our GAAP and Adjusted Results is as follows (in thousands except per share amounts):	

 	 	2007	 	 	2008	 	
 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of services	 	$	38	 	 	$	40	 	 	$	42	 	 	$	42	 	 	$	162	 	 	$	81	 	 	$	79	 	 	$	84	 	 	$	81	 	 	$	325	 	
Sales and marketing	 	 	134	 	 	 	149	 	 	 	131	 	 	 	152	 	 	 	566	 	 	 	231	 	 	 	235	 	 	 	244	 	 	 	244	 	 	 	954	 	
Research and development	 	 	57	 	 	 	60	 	 	 	65	 	 	 	63	 	 	 	245	 	 	 	117	 	 	 	117	 	 	 	120	 	 	 	120	 	 	 	474	 	
General and administrative	 	 	220	 	 	 	206	 	 	 	322	 	 	 	204	 	 	 	952	 	 	 	377	 	 	 	424	 	 	 	432	 	 	 	420	 	 	 	1,653	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total restricted stock expense	 	$	449	 	 	$	455	 	 	$	560	 	 	$	461	 	 	$	1,925	 	 	$	806	 	 	$	855	 	 	$	880	 	 	$	865	 	 	$	3,406	 	
Income tax provision	 	 	159	 	 	 	162	 	 	 	199	 	 	 	163	 	 	 	683	 	 	 	280	 	 	 	297	 	 	 	306	 	 	 	301	 	 	 	1,184	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	290	 	 	$	293	 	 	$	361	 	 	$	298	 	 	$	1,242	 	 	$	526	 	 	$	558	 	 	$	574	 	 	$	564	 	 	$	2,222	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted earnings per share	 	$	0.01	 	 	$	0.01	 	 	$	0.01	 	 	$	0.01	 	 	$	0.05	 	 	$	0.02	 	 	$	0.02	 	 	$	0.02	 	 	$	0.02	 	 	$	0.09	 	

 	 	2009	 	 	2010	 	
 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of services	 	$	98	 	 	$	106	 	 	$	108	 	 	$	107	 	 	$	419	 	 	$	198	 	 	$	240	 	 	$	242	 	 	$	236	 	 	$	916	 	
Sales and marketing	 	 	267	 	 	 	146	 	 	 	254	 	 	 	258	 	 	 	925	 	 	 	378	 	 	 	438	 	 	 	442	 	 	 	449	 	 	 	1,707	 	
Research and development	 	 	134	 	 	 	42	 	 	 	125	 	 	 	125	 	 	 	426	 	 	 	206	 	 	 	250	 	 	 	262	 	 	 	269	 	 	 	987	 	
General and administrative	 	 	420	 	 	 	395	 	 	 	438	 	 	 	446	 	 	 	1,699	 	 	 	625	 	 	 	673	 	 	 	821	 	 	 	899	 	 	 	3,018	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total restricted stock expense	 	$	919	 	 	$	689	 	 	$	925	 	 	$	936	 	 	$	3,469	 	 	$	1,407	 	 	$	1,601	 	 	$	1,767	 	 	$	1,853	 	 	$	6,628	 	
Income tax provision	 	 	308	 	 	 	215	 	 	 	300	 	 	 	382	 	 	 	1,205	 	 	 	485	 	 	 	553	 	 	 	609	 	 	 	652	 	 	 	2,299	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	611	 	 	$	474	 	 	$	625	 	 	$	554	 	 	$	2,264	 	 	$	922	 	 	$	1,048	 	 	$	1,158	 	 	$	1,201	 	 	$	4,329	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted earnings per share	 	$	0.03	 	 	$	0.02	 	 	$	0.03	 	 	$	0.02	 	 	$	0.10	 	 	$	0.04	 	 	$	0.05	 	 	$	0.05	 	 	$	0.05	 	 	$	0.19	 	

9.	 	Total equity-based compensation is as follows (in thousands except per share amounts):	

 	 	2010	 	 	2011	 	
 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	YTD	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stock options	 	$	1,178	 	 	$	901	 	 	$	853	 	 	$	860	 	 	$	3,792	 	 	$	512	 	 	$	487	 	 	$	486	 	 	$	1,485	 	
Restricted stock	 	 	1,407	 	 	 	1,601	 	 	 	1,767	 	 	 	1,853	 	 	 	6,628	 	 	 	1,897	 	 	 	1,918	 	 	 	2,017	 	 	 	5,832	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total equity-based compensation	 	 	2,585	 	 	 	2,502	 	 	 	2,620	 	 	 	2,713	 	 	 	10,420	 	 	 	2,409	 	 	 	2,405	 	 	 	2,503	 	 	 	7,317	 	
Income tax provision	 	 	892	 	 	 	863	 	 	 	904	 	 	 	955	 	 	 	3,614	 	 	 	807	 	 	 	806	 	 	 	838	 	 	 	2,451	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 	$	1,693	 	 	$	1,639	 	 	$	1,716	 	 	$	1,758	 	 	$	6,806	 	 	$	1,602	 	 	$	1,599	 	 	$	1,665	 	 	$	4,866	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted earnings per share	 	$	0.08	 	 	$	0.07	 	 	$	0.08	 	 	$	0.08	 	 	$	0.30	 	 	$	0.07	 	 	$	0.07	 	 	 	0.08	 	 	$	0.22	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted earnings per share — stock options	 	$	0.03	 	 	$	0.03	 	 	$	0.03	 	 	$	0.02	 	 	$	0.11	 	 	$	0.02	 	 	$	0.01	 	 	 	0.02	 	 	$	0.05	 	
Diluted earnings per share — restricted stock	 	$	0.04	 	 	$	0.05	 	 	$	0.05	 	 	$	0.05	 	 	$	0.19	 	 	$	0.06	 	 	$	0.06	 	 	 	0.06	 	 	$	0.18	 	

 

 
MANHATTAN ASSOCIATES, INC.
SUPPLEMENTAL INFORMATION
10.	 	Capital expenditures are as follows (in thousands):	

 	 	2010	 	 	2011	 	
 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	YTD	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Capital expenditures	 	$	1,177	 	 	$	1,529	 	 	$	1,625	 	 	$	1,541	 	 	$	5,872	 	 	$	1,338	 	 	$	658	 	 	$	1,676	 	 	$	3,672	 	

11.	 	Stock Repurchase Activity (in thousands):	

 	 	2010	 	 	2011	 	
 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	YTD	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Shares purchased under publicly-announced buy-back program	 	 	595	 	 	 	869	 	 	 	573	 	 	 	680	 	 	 	2,717	 	 	 	826	 	 	 	1,079	 	 	 	845	 	 	 	2,750	 	
Shares withheld for taxes due upon vesting of restricted stock	 	 	39	 	 	 	3	 	 	 	3	 	 	 	4	 	 	 	49	 	 	 	65	 	 	 	4	 	 	 	4	 	 	 	73	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total shares purchased	 	 	634	 	 	 	872	 	 	 	576	 	 	 	684	 	 	 	2,766	 	 	 	891	 	 	 	1,083	 	 	 	849	 	 	 	2,823	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total cash paid for shares purchased under publicly-announced buy-back program	 	$	15,000	 	 	$	25,000	 	 	$	15,446	 	 	$	21,023	 	 	$	76,469	 	 	$	25,621	 	 	$	38,286	 	 	$	29,414	 	 	$	93,321	 	
Total cash paid for shares withheld for taxes due upon vesting of restricted stock	 	 	938	 	 	 	84	 	 	 	94	 	 	 	119	 	 	 	1,235	 	 	 	1,960	 	 	 	129	 	 	 	159	 	 	 	2,248	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total cash paid for shares repurchased	 	$	15,938	 	 	$	25,084	 	 	$	15,540	 	 	$	21,142	 	 	$	77,704	 	 	$	27,581	 	 	$	38,415	 	 	$	29,573	 	 	$	95,569