UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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):  July 19, 2016
 
MANHATTAN ASSOCIATES, INC.
(Exact Name of Registrant as Specified in Its Charter)

Georgia	 	0-23999	 	58-2373424	
(State or Other Jurisdiction of
Incorporation or organization)	 	(Commission
File Number)	 	(I.R.S. Employer
Identification No.)	
 
2300 Windy Ridge Parkway, Tenth Floor, Atlanta, Georgia
30339
(Address of Principal Executive Offices)
(Zip Code)
 
(770) 955-7070
(Registrant’s telephone number, including area code)
 
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:
 
¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨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 July 19, 2016, Manhattan Associates, Inc. (the “Company”) issued a press release providing its financial results for the three and six months ended June 30, 2016. 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 diluted earnings per share, which exclude the impact of equity-based compensation and acquisition-related costs, and the related income tax effects of both. We have developed our internal reporting, compensation and planning systems using these additional financial measures.
These various measures are not in accordance with, or alternatives 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.
Non-GAAP measures used in the press release exclude the impact of the items described above for the following reasons:
 
 	·	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 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 supplemental measurement information in evaluating the operating results of our business. We also believe that adjusted operating income, adjusted net income and adjusted earnings per share provide a basis for comparisons to other companies in the industry and enable investors to evaluate our operating performance in a manner consistent with our internal basis of measurement.  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
1

 
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 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.
 	 	
Exhibit	 	
Number	Description	
99.1	Press Release, dated July 19, 2016	

2

 
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/ Linda C. Pinne
Linda C. Pinne
Interim Chief Financial Officer
Senior Vice President, Global Corporate Controller, and Chief Accounting Officer

 
Dated:  July 19, 2016
 
3

 
EXHIBIT INDEX
 	 	
Exhibit	 	
Number	Description	
99.1	Press Release, dated July 19, 2016	

 

Exhibit 99.1

Contact:	 	Linda Pinne	 	Beverly McDonald	
 	 	Interim Chief Financial Officer	 	Senior Director, Corporate Marketing	
 	 	Chief Accounting Officer	 	Manhattan Associates, Inc.	
 	 	Manhattan Associates, Inc.	 	678-597-6528	
 	 	770-955-7070	 	bmcdonald@manh.com	
 	 	lpinne@manh.com	 	 	
 
Manhattan Associates Reports Record Second Quarter 2016 Performance
Company raises full-year EPS guidance
 
ATLANTA – July 19, 2016 – Leading Supply Chain Commerce Solutions provider Manhattan Associates, Inc. (NASDAQ: MANH) today reported record GAAP diluted earnings per share for the second quarter ended June 30, 2016, of $0.46 compared to $0.35 in Q2 2015, on license revenue of $20.6 million and record total revenue of $154.9 million. Non-GAAP adjusted diluted earnings per share for Q2 2016 was a record $0.49 compared to $0.37 in Q2 2015.
“We’re very pleased with our financial performance for second quarter and first half of 2016 results. We continue to execute well serving our customers,” said Eddie Capel, Manhattan Associates President and CEO. “We continue to invest in omni-channel, retail store and distribution management solutions to drive growth and enhance our market leadership position. Despite the increasing global macro-economic volatility, we remain focused on delivering value to our customers, and we are optimistic about our future.”
SECOND QUARTER 2016 FINANCIAL SUMMARY:
 	·	GAAP diluted earnings per share was $0.46 in Q2 2016, compared to $0.35 in Q2 2015.	 	

 	·	Adjusted diluted earnings per share, a non-GAAP measure, was $0.49 in Q2 2016, compared to $0.37 in Q2 2015.	 	

 	·	Consolidated total revenue was $154.9 million in Q2 2016, compared to $139.1 million in Q2 2015. License revenue was $20.6 million in Q2 2016, compared to $19.8 million in Q2 2015.	 	

 	·	GAAP operating income was $52.3 million in Q2 2016, compared to $41.4 million in Q2 2015.	 	

 

 	·	Adjusted operating income, a non-GAAP measure, was $55.9 million in Q2 2016, compared to $44.1 million in Q2 2015.  	 	

 	·	Cash flow from operations was $19.1 million in Q2 2016, compared to $27.5 million in Q2 2015. Days Sales Outstanding was 55 days at June 30, 2016, compared to 51 days at March 31, 2016.	 	

 	·	Cash and investments totaled $95.2 million at June 30, 2016, compared to $114.7 million at March 31, 2016.	 	

 	·	During the three months ended June 30, 2016, the Company repurchased 551,323 shares of Manhattan Associates common stock under the share repurchase program authorized by the Board of Directors, for a total investment of $35.0 million. In July 2016, the Board of Directors approved raising the Company's share repurchase authority to an aggregate of $50.0 million of the Company’s outstanding common stock.	 	
SIX MONTH 2016 FINANCIAL SUMMARY:
 	·	GAAP diluted earnings per share for the six months ended June 30, 2016, was a record $0.84, compared to $0.66 for the six months ended June 30, 2015.  	 	

 	·	Adjusted diluted earnings per share, a non-GAAP measure, was a record $0.91 for the six months ended June 30, 2016, compared to $0.71 for the six months ended June 30, 2015.	 	

 	·	Consolidated revenue for the six months ended June 30, 2016, was a record $304.8 million, compared to $272.6 million for the six months ended June 30, 2015. License revenue was a record $41.2 million for the six months ended June 30, 2016, compared to $39.1 million for the six months ended June 30, 2015.  	 	

 	·	GAAP operating income was a record $95.4 million for the six months ended June 30, 2016, compared to $78.2 million for the six months ended June 30, 2015.	 	

 	·	Adjusted operating income, a non-GAAP measure, was a record $103.8 million for the six months ended June 30, 2016, compared to $84.2 million for the six months ended June 30, 2015. 	 	

 

 	·	Cash flow from operations was a record $59.5 million in the six months ended June 30, 2016, compared to $42.7 million in the six months ended June 30, 2015.  	 	

 	·	During the six months ended June 30, 2016, the Company repurchased 1,443,606 shares of Manhattan Associates common stock under the share repurchase program authorized by the Board of Directors, for a total investment of $83.5 million.	 	
SALES ACHIEVEMENTS:
 	·	Recognized license revenue of $1.0 million or more on three new contracts during Q2 2016.	 	

 	·	Completed software license wins with new customers such as: Castlery, C&A Marketing, Guangzhou ZSY Pharmaceutical, Skye Group, Tommy Bahama, Uniform Advantage and Yogya Group.	 	
 
 	·	Expanded relationships with existing customers such as: Alliance Healthcare, Antalis, Avon Products, Big Lots, Bodega Latina, Buyers Product Company,  Cabela’s, Casella Wines, Christian Dior Perfumes, Copernica, Dalepak, Fanatics, Feld Entertainment, Floor and Decor, Forever Direct, Gazal, GENCO, Harris Teeter, Hy-Vee, IEH Auto Parts, Kane Warehousing, Kuehne + Nagel, Letco Medical, Leroy Merlin Italia, National Logistics Services, Ozburn-Hessey Logistics, Paragon Industries, RedMart, Reyes Holdings, Safeway, Swift Transportation Company, The Hillman Group, Total Sweeteners, UPS Supply Chain Management, Weldom, West Coast Distribution, WesTrac and Wineworks.

 

2016 GUIDANCE
Manhattan Associates provides the following revenue and diluted earnings per share guidance for the full year 2016:

Manhattan Associates currently intends to publish, in each quarterly earnings release, certain expectations with respect to future financial performance. Those statements, including the guidance provided above, are forward looking. Actual results may differ materially. Those statements, including the guidance provided above, do not reflect the potential impact of mergers, acquisitions or other business combinations that may be completed after the date of the release.
Manhattan Associates will make its earnings release and published expectations available on its website (www.manh.com). Beginning the close of business on September 15, 2016, 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 2016 Guidance section as 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, and Manhattan Associates disclaims any obligation to update any previously published financial expectations during the Quiet Period. The Quiet Period will extend until publication of Manhattan Associates’ next quarterly earnings release, currently scheduled for the third full week of October 2016.

 

CONFERENCE CALL
The Company’s conference call regarding its second quarter financial results will be held today, July 19, 2016, at 4:30 p.m. Eastern Daylight Time. 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 34339414 or via the web www.manh.com. The phone replay will be available for two weeks after the call, and the Internet webcast will be available until Manhattan Associates’ third quarter 2016 earnings release.
GAAP VERSUS NON-GAAP PRESENTATION
The Company provides adjusted operating income, adjusted net income and adjusted diluted earnings per share in this press release as additional information regarding the Company’s operating results. These measures are not in accordance with – or alternatives to – 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’ ability to understand and compare the Company’s results and guidance, because the measures provide supplemental information in evaluating the operating results of its business, as distinct from results that include items that are not indicative of ongoing operating results, and because the Company believes its peers typically publish similar non-GAAP measures. This release should be read in conjunction with the Company’s Form 8-K earnings release filing for the quarter and six months ended June 30, 2016.
Non-GAAP adjusted operating income, adjusted net income and adjusted diluted earnings per share exclude the impact of equity-based compensation and acquisition-related costs and the amortization thereof – all net of income tax effects. 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
Manhattan Associates makes commerce-ready supply chains that bring all points of commerce together so you’re ready to sell and ready to execute. Across the store, through your network or from your fulfillment center, we design, build and deliver market-leading solutions that support both top-line growth and bottom-line profitability. By converging front-end sales with back-end supply chain execution, our software, platform technology and unmatched experience help our customers get commerce ready—and ready to reap the rewards of the omni-channel marketplace. 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 include the information set forth under “2016 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, information security breaches and the risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. 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 Income
(in thousands, except per share amounts)

 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	 	2016	 	 	2015	 	 	2016	 	 	2015	 	
 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	 	(unaudited)	 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Software license	 	$	20,631	 	 	$	19,758	 	 	$	41,238	 	 	$	39,072	 	
Services	 	 	119,833	 	 	 	107,344	 	 	 	236,096	 	 	 	208,547	 	
Hardware and other	 	 	14,428	 	 	 	12,007	 	 	 	27,418	 	 	 	25,013	 	
Total revenue	 	 	154,892	 	 	 	139,109	 	 	 	304,752	 	 	 	272,632	 	
Costs and expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of license	 	 	2,283	 	 	 	2,137	 	 	 	5,435	 	 	 	5,043	 	
Cost of services	 	 	48,393	 	 	 	46,464	 	 	 	100,297	 	 	 	91,248	 	
Cost of hardware and other	 	 	11,841	 	 	 	10,163	 	 	 	21,598	 	 	 	20,710	 	
Research and development	 	 	13,458	 	 	 	13,257	 	 	 	28,164	 	 	 	26,813	 	
Sales and marketing	 	 	12,015	 	 	 	11,889	 	 	 	24,603	 	 	 	23,736	 	
General and administrative	 	 	12,368	 	 	 	11,927	 	 	 	24,816	 	 	 	23,165	 	
Depreciation and amortization	 	 	2,266	 	 	 	1,898	 	 	 	4,472	 	 	 	3,679	 	
Total costs and expenses	 	 	102,624	 	 	 	97,735	 	 	 	209,385	 	 	 	194,394	 	
Operating income	 	 	52,268	 	 	 	41,374	 	 	 	95,367	 	 	 	78,238	 	
Other income, net	 	 	654	 	 	 	359	 	 	 	1,174	 	 	 	621	 	
Income before income taxes	 	 	52,922	 	 	 	41,733	 	 	 	96,541	 	 	 	78,859	 	
Income tax provision	 	 	19,581	 	 	 	15,729	 	 	 	35,720	 	 	 	29,651	 	
Net income	 	$	33,341	 	 	$	26,004	 	 	$	60,821	 	 	$	49,208	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic earnings per share	 	$	0.46	 	 	$	0.35	 	 	$	0.84	 	 	$	0.67	 	
Diluted earnings per share	 	$	0.46	 	 	$	0.35	 	 	$	0.84	 	 	$	0.66	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average number of shares:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	71,880	 	 	 	73,618	 	 	 	72,264	 	 	 	73,797	 	
Diluted	 	 	72,228	 	 	 	74,126	 	 	 	72,633	 	 	 	74,366	 	

 

 
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Reconciliation of Selected GAAP to Non-GAAP Measures
(in thousands, except per share amounts)

 
  	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	 	2016	 	 	2015	 	 	2016	 	 	2015	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	 	$	52,268	 	 	$	41,374	 	 	$	95,367	 	 	$	78,238	 	
Equity-based compensation (a)	 	 	3,495	 	 	 	2,661	 	 	 	8,183	 	 	 	5,739	 	
Purchase amortization (b)	 	 	108	 	 	 	106	 	 	 	215	 	 	 	212	 	
Adjusted operating income (Non-GAAP)	 	$	55,871	 	 	$	44,141	 	 	$	103,765	 	 	$	84,189	 	

Income tax provision	 	$	19,581	 	 	$	15,729	 	 	$	35,720	 	 	$	29,651	 	
Equity-based compensation (a)	 	 	1,294	 	 	 	1,004	 	 	 	3,028	 	 	 	2,158	 	
Purchase amortization (b)	 	 	39	 	 	 	40	 	 	 	79	 	 	 	80	 	
Adjusted income tax provision (Non-GAAP)	 	$	20,914	 	 	$	16,773	 	 	$	38,827	 	 	$	31,889	 	

Net income	 	$	33,341	 	 	$	26,004	 	 	$	60,821	 	 	$	49,208	 	
Equity-based compensation (a)	 	 	2,201	 	 	 	1,657	 	 	 	5,155	 	 	 	3,581	 	
Purchase amortization (b)	 	 	69	 	 	 	66	 	 	 	136	 	 	 	132	 	
Adjusted net income (Non-GAAP)	 	$	35,611	 	 	$	27,727	 	 	$	66,112	 	 	$	52,921	 	

Diluted EPS	 	$	0.46	 	 	$	0.35	 	 	$	0.84	 	 	$	0.66	 	
Equity-based compensation (a)	 	 	0.03	 	 	 	0.02	 	 	 	0.07	 	 	 	0.05	 	
Purchase amortization (b)	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	
Adjusted diluted EPS (Non-GAAP)	 	$	0.49	 	 	$	0.37	 	 	$	0.91	 	 	$	0.71	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fully diluted shares	 	 	72,228	 	 	 	74,126	 	 	 	72,633	 	 	 	74,366	 	

(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 six months ended June 30, 2016 and 2015:	
 
  	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	 	2016	 	 	2015	 	 	2016	 	 	2015	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cost of services	 	$	868	 	 	$	729	 	 	$	2,147	 	 	$	1,520	 	
Research and development	 	 	620	 	 	 	464	 	 	 	1,374	 	 	 	928	 	
Sales and marketing	 	 	595	 	 	 	489	 	 	 	1,280	 	 	 	880	 	
General and administrative	 	 	1,412	 	 	 	979	 	 	 	3,382	 	 	 	2,411	 	
Total equity-based compensation	 	$	3,495	 	 	$	2,661	 	 	$	8,183	 	 	$	5,739	 	
 
(b)	Adjustments represent purchased intangibles amortization from 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 on the date hereof.	

 

 
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
 
 	 	June 30, 2016	 	 	December 31, 2015	 	
 	 	(unaudited)	 	 	 	 	 	
ASSETS	 	 	 	 	 	 	 	 	
Current Assets:	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	93,135	 	 	$	118,416	 	
Short-term investments	 	 	2,076	 	 	 	10,344	 	
Accounts receivable, net of allowance of $4,359 and $7,031, respectively	 	 	92,998	 	 	 	97,379	 	
Prepaid expenses and other current assets	 	 	11,761	 	 	 	10,772	 	
Total current assets	 	 	199,970	 	 	 	236,911	 	
 	 	 	 	 	 	 	 	 	
Property and equipment, net	 	 	20,861	 	 	 	21,176	 	
Goodwill, net	 	 	62,235	 	 	 	62,233	 	
Deferred income taxes	 	 	3,699	 	 	 	4,648	 	
Other assets	 	 	7,111	 	 	 	7,275	 	
Total assets	 	$	293,876	 	 	$	332,243	 	
 	 	 	 	 	 	 	 	 	
LIABILITIES AND SHAREHOLDERS' EQUITY	 	 	 	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	 	 	 	
Accounts payable	 	$	11,546	 	 	$	11,219	 	
Accrued compensation and benefits	 	 	19,653	 	 	 	29,284	 	
Accrued and other liabilities	 	 	13,231	 	 	 	13,853	 	
Deferred revenue	 	 	63,913	 	 	 	68,757	 	
Income taxes payable	 	 	1,762	 	 	 	4,072	 	
Total current liabilities	 	 	110,105	 	 	 	127,185	 	
 	 	 	 	 	 	 	 	 	
Other non-current liabilities	 	 	8,789	 	 	 	9,566	 	
 	 	 	 	 	 	 	 	 	
Shareholders' equity:	 	 	 	 	 	 	 	 	
Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2016 and 2015	 	 	-	 	 	 	-	 	
Common stock, $0.01 par value; 200,000,000 shares authorized; 71,604,493 and 72,766,383 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively	 	 	716	 	 	 	728	 	
Retained earnings	 	 	188,362	 	 	 	207,070	 	
Accumulated other comprehensive loss	 	 	(14,096	)	 	 	(12,306	)	
Total shareholders' equity	 	 	174,982	 	 	 	195,492	 	
Total liabilities and shareholders' equity	 	$	293,876	 	 	$	332,243	 	

 

 
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
 
 	 	Six Months Ended June 30,	
 	 	2016	 	2015	
 	 	(unaudited)	 	(unaudited)	
Operating activities:	 	 	 	 	
Net income	 	$                  60,821	 	$                    49,208	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	
Depreciation and amortization	 	4,472	 	3,679	
Equity-based compensation	 	8,183	 	5,739	
Loss (Gain) on disposal of equipment	 	14	 	(38)	
Tax benefit of stock awards exercised/vested	 	5,069	 	7,848	
Excess tax benefits from equity-based compensation	 	(5,074)	 	(7,825)	
Deferred income taxes	 	950	 	1,216	
Unrealized foreign currency (gain) loss	 	(403)	 	117	
Changes in operating assets and liabilities:	 	 	 	 	
Accounts receivable, net	 	4,113	 	3,002	
Other assets	 	(1,124)	 	(97)	
Accounts payable, accrued and other liabilities	 	(10,624)	 	(13,296)	
Income taxes	 	(2,313)	 	(5,428)	
Deferred revenue	 	(4,577)	 	(1,437)	
Net cash provided by operating activities	 	59,507	 	42,688	
 	 	 	 	 	
Investing activities:	 	 	 	 	
Purchase of property and equipment	 	(4,107)	 	(5,769)	
Net maturities of investments	 	8,113	 	447	
Net cash provided by (used in) investing activities	 	4,006	 	(5,322)	
 	 	 	 	 	
Financing activities:	 	 	 	 	
Purchase of common stock	 	(92,812)	 	(61,330)	
Proceeds from issuance of common stock from options exercised	 	18	 	535	
Excess tax benefits from equity-based compensation	 	5,074	 	7,825	
Net cash used in financing activities	 	(87,720)	 	(52,970)	
 	 	 	 	 	
Foreign currency impact on cash	 	(1,074)	 	52	
 	 	 	 	 	
Net change in cash and cash equivalents	 	(25,281)	 	(15,552)	
Cash and cash equivalents at beginning of period	 	118,416	 	115,708	
Cash and cash equivalents at end of period	 	$                  93,135	 	$                  100,156	

 

 
MANHATTAN ASSOCIATES, INC.
SUPPLEMENTAL INFORMATION
1.	GAAP and Adjusted earnings per share by quarter are as follows:	
 
 	 	 	2015	 	 	2016	 	
 	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	YTD	 	
GAAP Diluted EPS	 	 	$	0.31	 	 	$	0.35	 	 	$	0.38	 	 	$	0.36	 	 	$	1.40	 	 	$	0.38	 	 	$	0.46	 	 	$	0.84	 	
Adjustments to GAAP:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity-based
   compensation	 	 	 	0.03	 	 	 	0.02	 	 	 	0.05	 	 	 	0.03	 	 	 	0.12	 	 	 	0.04	 	 	 	0.03	 	 	 	0.07	 	
Purchase amortization	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	
Adjusted Diluted EPS	 	 	$	0.34	 	 	$	0.37	 	 	$	0.42	 	 	$	0.39	 	 	$	1.52	 	 	$	0.42	 	 	$	0.49	 	 	$	0.91	 	
Fully Diluted Shares	 	 	 	74,607	 	 	 	74,126	 	 	 	73,761	 	 	 	73,555	 	 	 	74,038	 	 	 	73,020	 	 	 	72,228	 	 	 	72,633	 	

2.	Revenues and operating income by reportable segment are as follows (in thousands):	
 
 	 	 	2015	 	 	2016	 	
 	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	YTD	 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Americas	 	 	$	109,959	 	 	$	117,154	 	 	$	120,118	 	 	$	117,245	 	 	$	464,476	 	 	$	128,807	 	 	$	131,018	 	 	$	259,825	 	
EMEA	 	 	 	18,305	 	 	 	17,175	 	 	 	16,829	 	 	 	17,767	 	 	 	70,076	 	 	 	15,686	 	 	 	18,185	 	 	 	33,871	 	
APAC	 	 	 	5,259	 	 	 	4,780	 	 	 	5,357	 	 	 	6,423	 	 	 	21,819	 	 	 	5,367	 	 	 	5,689	 	 	 	11,056	 	
 	 	 	$	133,523	 	 	$	139,109	 	 	$	142,304	 	 	$	141,435	 	 	$	556,371	 	 	$	149,860	 	 	$	154,892	 	 	$	304,752	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP Operating Income:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Americas	 	 	$	30,182	 	 	$	36,214	 	 	$	36,407	 	 	$	31,020	 	 	$	133,823	 	 	$	37,454	 	 	$	44,126	 	 	$	81,580	 	
EMEA	 	 	 	5,522	 	 	 	4,516	 	 	 	5,909	 	 	 	6,363	 	 	 	22,310	 	 	 	4,439	 	 	 	6,854	 	 	 	11,293	 	
APAC	 	 	 	1,160	 	 	 	644	 	 	 	1,364	 	 	 	2,145	 	 	 	5,313	 	 	 	1,206	 	 	 	1,288	 	 	 	2,494	 	
 	 	 	$	36,864	 	 	$	41,374	 	 	$	43,680	 	 	$	39,528	 	 	$	161,446	 	 	$	43,099	 	 	$	52,268	 	 	$	95,367	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjustments (pre-tax):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Americas:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Equity-based
   compensation	 	 	$	3,078	 	 	$	2,661	 	 	$	5,348	 	 	$	3,441	 	 	$	14,528	 	 	$	4,688	 	 	$	3,495	 	 	$	8,183	 	
Purchase amortization	 	 	 	106	 	 	 	106	 	 	 	113	 	 	 	107	 	 	 	432	 	 	 	107	 	 	 	108	 	 	 	215	 	
 	 	 	$	3,184	 	 	$	2,767	 	 	$	5,461	 	 	$	3,548	 	 	$	14,960	 	 	$	4,795	 	 	$	3,603	 	 	$	8,398	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Adjusted non-GAAP
   Operating Income:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Americas	 	 	$	33,366	 	 	$	38,981	 	 	$	41,868	 	 	$	34,568	 	 	$	148,783	 	 	$	42,249	 	 	$	47,729	 	 	$	89,978	 	
EMEA	 	 	 	5,522	 	 	 	4,516	 	 	 	5,909	 	 	 	6,363	 	 	 	22,310	 	 	 	4,439	 	 	 	6,854	 	 	 	11,293	 	
APAC	 	 	 	1,160	 	 	 	644	 	 	 	1,364	 	 	 	2,145	 	 	 	5,313	 	 	 	1,206	 	 	 	1,288	 	 	 	2,494	 	
 	 	 	$	40,048	 	 	$	44,141	 	 	$	49,141	 	 	$	43,076	 	 	$	176,406	 	 	$	47,894	 	 	$	55,871	 	 	$	103,765	 	

 

 
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): 	
 
 	 	 	2015	 	 	2016	 	
 	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	YTD	 	
Professional services	 	 	$	72,659	 	 	$	76,548	 	 	$	80,994	 	 	$	74,423	 	 	$	304,624	 	 	$	84,506	 	 	$	86,992	 	 	$	171,498	 	
Customer support and
   software enhancements	 	 	 	28,544	 	 	 	30,796	 	 	 	31,555	 	 	 	32,559	 	 	 	123,454	 	 	 	31,757	 	 	 	32,841	 	 	 	64,598	 	
Total services revenue	 	 	$	101,203	 	 	$	107,344	 	 	$	112,549	 	 	$	106,982	 	 	$	428,078	 	 	$	116,263	 	 	$	119,833	 	 	$	236,096	 	

4.	Hardware and other revenue includes the following items (in thousands):	
 
 	 	 	2015	 	 	2016	 	
 	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	YTD	 	
Hardware revenue	 	 	$	7,730	 	 	$	7,080	 	 	$	5,462	 	 	$	9,243	 	 	$	29,515	 	 	$	8,761	 	 	$	9,554	 	 	$	18,315	 	
Billed travel	 	 	 	5,276	 	 	 	4,927	 	 	 	5,163	 	 	 	4,797	 	 	 	20,163	 	 	 	4,229	 	 	 	4,874	 	 	 	9,103	 	
Total hardware and
   other revenue	 	 	$	13,006	 	 	$	12,007	 	 	$	10,625	 	 	$	14,040	 	 	$	49,678	 	 	$	12,990	 	 	$	14,428	 	 	$	27,418	 	

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):
 	 	 	2015	 	 	2016	 	
 	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	YTD	 	
Revenue	 	 	$	(3,426	)	 	$	(3,599	)	 	$	(3,421	)	 	$	(2,263	)	 	$	(12,709	)	 	$	(810	)	 	$	(474	)	 	$	(1,284	)	
Costs and expenses	 	 	 	(2,546	)	 	 	(3,201	)	 	 	(2,820	)	 	 	(2,058	)	 	 	(10,625	)	 	 	(1,292	)	 	 	(702	)	 	 	(1,994	)	
Operating income	 	 	 	(880	)	 	 	(398	)	 	 	(601	)	 	 	(205	)	 	 	(2,084	)	 	 	482	 	 	 	228	 	 	 	710	 	
Foreign currency (losses)
   gains in other income	 	 	 	(86	)	 	 	(4	)	 	 	213	 	 	 	(199	)	 	 	(76	)	 	 	165	 	 	 	331	 	 	 	496	 	
 	 	 	$	(966	)	 	$	(402	)	 	$	(388	)	 	$	(404	)	 	$	(2,160	)	 	$	647	 	 	$	559	 	 	$	1,206	 	
 
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):
 
 	 	 	2015	 	 	2016	 	
 	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	YTD	 	
Operating income	 	 	$	72	 	 	$	468	 	 	$	571	 	 	$	492	 	 	$	1,603	 	 	$	682	 	 	$	459	 	 	$	1,141	 	
Foreign currency gains
   (losses) in other income	 	 	 	45	 	 	 	182	 	 	 	423	 	 	 	2	 	 	 	652	 	 	 	(109	)	 	 	212	 	 	 	103	 	
Total impact of changes
   in the Indian Rupee	 	 	$	117	 	 	$	650	 	 	$	994	 	 	$	494	 	 	$	2,255	 	 	$	573	 	 	$	671	 	 	$	1,244	 	

 

 
6.	Other income (loss) includes the following components (in thousands): 	
 
 	 	 	2015	 	 	2016	 	
 	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	YTD	 	
Interest income	 	 	$	324	 	 	$	335	 	 	$	336	 	 	$	336	 	 	$	1,331	 	 	$	335	 	 	$	329	 	 	$	664	 	
Foreign currency (losses)
   gains	 	 	 	(86	)	 	 	(4	)	 	 	213	 	 	 	(199	)	 	 	(76	)	 	 	165	 	 	 	331	 	 	 	496	 	
Other non-operating
   income (expense)	 	 	 	24	 	 	 	28	 	 	 	55	 	 	 	33	 	 	 	140	 	 	 	20	 	 	 	(6	)	 	 	14	 	
Total other income (loss)	 	 	$	262	 	 	$	359	 	 	$	604	 	 	$	170	 	 	$	1,395	 	 	$	520	 	 	$	654	 	 	$	1,174	 	
 
7.Capital expenditures are as follows (in thousands):
 
 	 	 	2015	 	 	2016	 	
 	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	YTD	 	
Capital expenditures	 	 	$	3,098	 	 	$	2,671	 	 	$	3,850	 	 	$	1,873	 	 	$	11,492	 	 	$	1,906	 	 	$	2,201	 	 	$	4,107	 	

8.	Stock Repurchase Activity (in thousands):	
 
 	 	 	2015	 	 	2016	 	
 	 	 	1st Qtr	 	 	2nd Qtr	 	 	3rd Qtr	 	 	4th Qtr	 	 	Full Year	 	 	1st Qtr	 	 	2nd Qtr	 	 	YTD	 	
Shares purchased under
   publicly-announced
   buy-back program	 	 	524	 	 	 	458	 	 	 	399	 	 	 	340	 	 	 	1,721	 	 	 	892	 	 	 	552	 	 	 	1,444	 	
Shares withheld for taxes
   due upon vesting of
   restricted stock	 	 	212	 	 	 	2	 	 	 	9	 	 	 	3	 	 	 	226	 	 	 	163	 	 	 	-	 	 	 	163	 	
Total shares purchased	 	 	 	736	 	 	 	460	 	 	 	408	 	 	 	343	 	 	 	1,947	 	 	 	1,055	 	 	 	552	 	 	 	1,607	 	
Total cash paid for shares
   purchased under
   publicly-announced
   buy-back program	 	$	26,306	 	 	$	25,214	 	 	$	25,001	 	 	$	25,078	 	 	$	101,599	 	 	$	48,499	 	 	$	34,995	 	 	$	83,494	 	
Total cash paid for shares
   withheld for taxes due
   upon vesting of restricted
   stock	 	 	9,727	 	 	 	83	 	 	 	508	 	 	 	221	 	 	 	10,539	 	 	 	9,292	 	 	 	26	 	 	 	9,318	 	
Total cash paid for shares
   repurchased	 	 	$	36,033	 	 	$	25,297	 	 	$	25,509	 	 	$	25,299	 	 	$	112,138	 	 	$	57,791	 	 	$	35,021	 	 	$	92,812