<PAGE>
================================================================================
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 June 30, 1999
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)
<TABLE>
<S> <C>
Georgia 58-2373424
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
2300 Windy Ridge Parkway, Suite 700 30339
Atlanta, Georgia (Zip Code)
(Address of Principal Executive Offices)
</TABLE>
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 August 12,
1999, the latest practicable date, is as follows: 24,123,687 shares of Common
Stock, $0.01 par value per share.
===============================================================================
<PAGE>
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
FORM 10-Q
Quarter Ended June 30, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets as of June 30, 1999 (unaudited)
and December 31, 1998 3
Condensed Consolidated Statements of Income for the three months ended
June 30, 1999 and 1998 (unaudited) and for the six months ended
June 30, 1999 and 1998 (unaudited) 4
Condensed Consolidated Statements of Cash Flows for the six months
ended June 30, 1999 and 1998 (unaudited) 5
Notes to Condensed Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 19
PART II
OTHER INFORMATION
Item 1. Legal Proceedings. 20
Item 2. Changes in Securities and Use of Proceeds. 20
Item 3. Defaults Upon Senior Securities. 20
Item 4. Submission of Matters to a Vote of Security Holders. 20
Item 5. Other Information. 21
Item 6. Exhibits and Reports on Form 8-K. 21
Signatures. 22
</TABLE>
Form 10-Q
Page 2 of 22
<PAGE>
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)
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
------------- -----------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..................................................... $16,313 $27,751
Short-term investments........................................................ 12,400 5,012
Accounts receivable, net of allowance for doubtful accounts of $3,093
and $1,600 at June 30, 1999 and December 31, 1998, respectively............ 26,850 20,806
Deferred income taxes......................................................... 1,193 622
Refundable income taxes....................................................... 474 342
Prepaid expenses and other current assets..................................... 731 1,328
------- -------
Total current assets....................................................... 57,961 55,861
Property and equipment, net..................................................... 9,431 7,431
Deferred taxes.................................................................. 155 155
Intangible and other assets..................................................... 4,617 4,328
------- -------
Total assets............................................................... $72,164 $67,775
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities...................................... $ 7,226 $ 8,196
Current portion of capital lease obligations.................................. 142 126
Deferred revenue.............................................................. 8,322 2,978
------- -------
Total current liabilities.................................................. 15,690 11,300
Long-term portion of capital lease obligations.................................. 820 840
Shareholders' equity:
Preferred stock, no par value; 20,000,000 shares authorized, no shares issued
or outstanding at June 30, 1999 and December 31, 1998....................... -- --
Common stock, $.01 par value; 100,000,000 shares authorized, 24,041,887 and
23,937,874 shares issued and outstanding at June 30, 1999 and
December 31, 1998, respectively............................................. 241 239
Additional paid-in capital.................................................... 53,436 53,305
Retained earnings............................................................. 2,536 3,056
Accumulated foreign currency translation adjustment........................... (56) (7)
Deferred compensation......................................................... (503) (958)
------- -------
Total shareholders' equity.................................................. 55,654 55,635
------- -------
Total liabilities and shareholders' equity................................ $72,164 $67,775
======= =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
Form 10-Q
Page 3 of 22
<PAGE>
Item 1. Financial Statements (continued)
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ ----------------------------------
1999 1998 1999 1998
------------ ------------ -------------- --------------
<S> <C> <C> <C> <C>
Revenue:
Software license....................................... $ 3,095 $ 2,849 $ 7,532 $ 5,001
Services............................................... 12,811 7,169 23,769 12,453
Hardware............................................... 3,933 4,076 6,688 8,010
------- ------- ------- -------
Total revenue....................................... 19,839 14,094 37,989 25,464
Cost of revenue:
Software license....................................... 386 171 576 240
Services............................................... 7,542 3,377 13,584 5,896
Hardware............................................... 3,000 2,924 5,044 6,004
------- ------- ------- -------
Total cost of revenue............................... 10,928 6,472 19,204 12,140
------- ------- ------- -------
Gross margin............................................. 8,911 7,622 18,785 13,324
Operating expenses:
Research and development............................... 3,082 1,937 5,801 3,222
Acquired research and development...................... -- -- -- 1,602
Sales and marketing.................................... 4,043 2,008 8,087 3,321
General and administrative............................. 3,266 1,370 6,274 2,497
------- ------- ------- -------
Total operating expenses............................ 10,391 5,315 20,162 10,642
------- ------- ------- -------
Operating income (loss).................................. (1,480) 2,307 (1,377) 2,682
Other income, net........................................ 271 278 533 292
------- ------- ------- -------
Income (loss) before income taxes........................ (1,209) 2,585 (844) 2,974
Income tax expense (benefit):
Tax provision as a 'C' Corporation...................... (449) 702 (324) 702
Deferred tax adjustment................................. -- (316) -- (316)
------- ------- ------- -------
Historical net income (loss)............................. $ (760) $ 2,199 $ (520) $ 2,588
======= ======= ======= =======
Historical basic net income (loss) per share............. $ (0.03) $ 0.10 $ (0.02) $ 0.12
======= ======= ======= =======
Historical diluted net income (loss) per share........... $ (0.03) $0.09 $ (0.02) $0.11
======= ======= ======= =======
Income (loss) before pro forma income taxes.............. (1,209) 2,585 (844) 2,974
Pro forma income tax expense (benefit)................... (449) 904 (324) 1,617
------- ------- ------- -------
Pro forma net income (loss).............................. $ (760) $ 1,681 $ (520) $ 1,357
======= ======= ======= =======
Pro forma basic net income (loss) per share.............. $ (0.03) $0.07 $ (0.02) $0.06
======= ======= ======= =======
Pro forma diluted net income (loss) per share............ $ (0.03) $0.07 $ (0.02) $0.06
======= ======= ======= =======
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
Form 10-Q
Page 4 of 22
<PAGE>
Item 1. Financial Statements (continued)
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------------------
1999 1998
----------- ---------
<S> <C> <C>
Operating activities:
Net loss or pro forma net income.................................... $ (520) $ 1,357
Adjustments to reconcile net loss or pro forma net income to net
cash provided by operating activities:
Pro forma income taxes........................................... -- 1,231
Depreciation and amortization.................................... 2,135 584
Stock compensation............................................... 94 124
Gain on sale of equipment........................................ (22) --
Acquired research and development................................ -- 1,602
Deferred income taxes............................................ (571) (386)
Accrued interest on note payable to shareholder.................. -- 34
Changes in operating assets and liabilities:
Accounts receivable, net........................................ (6,092) (5,399)
Other assets.................................................... 352 (24)
Accounts payable and accrued liabilities........................ (1,075) 1,741
Deferred revenue................................................ 5,345 953
-------- --------
Net cash provided by (used in) operating activities................. (354) 1,817
Investing activities:
Purchase of property and equipment................................... (3,263) (3,039)
Proceeds from the sale of equipment.................................. 22 --
Capitalized software development costs............................... (836) --
Purchase of short-term investments, net.............................. (7,388) --
Payments in connection with the acquisition of Performance
Analysis Corporation, net of cash acquired......................... -- (1,351)
-------- --------
Net cash used in investing activities................................ (11,465) (4,390)
Financing activities:
Distributions to shareholders.................................... -- (11,720)
Payment of capital lease obligations............................. (106) --
Borrowings under note payable to shareholder..................... -- 900
Repayment of note payable to shareholder......................... -- (1,953)
Proceeds from issuance of common stock........................... 494 48,259
-------- --------
Net cash provided by financing activities............................ 388 35,486
Foreign currency impact on cash.................................. (7) --
-------- --------
Net increase (decrease) in cash and cash equivalents................. (11,438) 32,913
Cash and cash equivalents at beginning of period..................... 27,751 3,194
-------- --------
Cash and cash equivalents at end of period........................... $ 16,313 $ 36,107
======== ========
Supplemental cash flow disclosures:
Issuance of common stock in connection with acquisition of
Performance Analysis Corporation.................................. $ -- $ 1,067
======== ========
Assets acquired under capital lease................................. $ 102 $ --
======== ========
Cash paid for income taxes........................................ $ 263 $ 839
======== ========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
Form 10-Q
Page 5 of 22
<PAGE>
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 1999
(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 June 30, 1999, the results of operations for the three and
six month periods ended June 30, 1999 and 1998 and changes in cash flows for the
six month periods ended June 30, 1999 and 1998. The interim results for the
three month and six month periods ended June 30, 1999 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 financial statements for the
year ended December 31, 1998.
2. Principles of Consolidation
The accompanying 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. Completion of Initial Public Offering and Conversion
On April 23, 1998, the Company completed its initial public offering (the
"Offering") of its $.01 par value per share common stock (the "Common Stock").
The Company sold 3,500,000 shares of Common Stock, excluding 525,000 shares sold
by certain selling shareholders as part of the underwriters' over-allotment, for
$52,500,000 less issuance costs of approximately $5,242,000.
In connection with the Offering, the assets and liabilities of Manhattan
Associates, LLC ("Manhattan LLC") were contributed to the Company in exchange
for Common Stock (the "Conversion"). Manhattan LLC then distributed the Common
Stock received to its shareholders. Prior to the completion of the Offering,
Manhattan LLC distributed all undistributed earnings, calculated on a tax basis,
to the shareholders of Manhattan LLC. The amount distributed subsequent to
December 31, 1997 and prior to completion of the Offering was approximately
$11,720,000.
Form 10-Q
Page 6 of 22
<PAGE>
4. Revenue Recognition
The Company recognizes 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, 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. For those contracts which contain significant future obligations, license
revenue is recognized under the percentage of completion method.
Consulting services are generally billed on an hourly basis and revenue is
recognized as the work is performed. Maintenance revenue from ongoing customer
support is billed in advance for a one year period and recorded as revenue
ratably over the billing period. Hardware revenue is billed and recognized upon
shipment.
5. Comprehensive Income
The Company has adopted Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income," which establishes standards for reporting
and display of "comprehensive income" and its components. Comprehensive income
for the Company consists of net income and foreign currency translation
adjustments. Total historical comprehensive loss was $790,000 and $569,000 for
the three month and six month periods ended June 30, 1999, respectively. Total
historical comprehensive income was $2.2 million and $2.6 million for the three
month and six month periods ended June 30, 1998, respectively.
6. Earnings Per Share
Subsequent to the completion of the initial public offering, pro forma and
historical basic net income per share is calculated using the weighted average
number of shares outstanding during the period. Pro forma and historical
diluted net income per share is computed on the basis of the weighted average
number of common shares outstanding plus the dilutive effect of outstanding
stock options using the "treasury stock" method.
Prior to the completion of the initial public offering, pro forma basic net
income per share was computed using pro forma net income divided by (i) the
weighted average number of shares of Common Stock outstanding ("Weighted
Shares") for the period presented and (ii) pursuant to the Securities and
Exchange Commission Staff Accounting Bulletin 1B.3, the number of shares that,
at the assumed public offering price, would yield proceeds in the amount
necessary to pay the shareholder distribution discussed in Note 3 that is not
covered by the earnings for the one year period through the date of distribution
("Distribution Shares"). Pro forma diluted net income per share was computed
using pro forma net income divided by (i) the Weighted Shares, (ii) the
Distribution Shares and (iii) the treasury stock method effect of common
equivalent shares ("CES's") outstanding for each period presented.
Form 10-Q
Page 7 of 22
<PAGE>
No adjustment is necessary for historical and pro forma net income for net
income per share presentation. The following is a reconciliation of the shares
used in the computation of net income per share:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
June 30, 1999 June 30, 1998
----------------------------------- --------------------------------
Basic Diluted Basic Diluted
--------------- --------------- -------------- --------------
Historical Historical
----------------------------------- --------------------------------
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Weighted Shares........................... 24,029 24,029 22,822 22,822
Effect of CES's........................... -- -- -- 2,603
------ ------ ------ ------
24,029 24,029 22,822 25,425
====== ====== ====== =======
Basic Diluted Basic Diluted
--------------- --------------- -------------- --------------
Pro Forma Pro Forma
----------------------------------- --------------------------------
Weighted Shares........................... 24,029 24,029 22,822 22,822
Effect of CES's........................... -- -- -- 2,603
------ ------ ------ ------
24,029 24,029 22,822 25,425
====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1999 June 30, 1998
----------------------------------- --------------------------------
Basic Diluted Basic Diluted
--------------- --------------- -------------- --------------
Historical Historical
----------------------------------- --------------------------------
<S> <C> <C> <C> <C>
Weighted Shares........................... 24,006 24,006 21,459 21,459
Effect of CES's........................... -- -- -- 2,422
------ ------ ------ ------
24,006 24,006 21,459 23,881
====== ====== ====== ======
Basic Diluted Basic Diluted
--------------- --------------- -------------- --------------
Pro Forma Pro Forma
----------------------------------- --------------------------------
Weighted Shares........................... 24,006 24,006 21,459 21,459
Shares to Minority Holder................. -- -- 27 27
Distribution Shares....................... -- -- 45 45
Effect of CES's........................... -- -- -- 2,422
------ ------ ------ ------
24,006 24,006 21,531 23,953
====== ====== ====== ======
</TABLE>
Form 10-Q
Page 8 of 22
<PAGE>
7. Income Taxes
Prior to the Conversion, the Company elected to report as a limited
liability company that was treated as a partnership for income tax purposes (see
Note 3), and as a result, the Company was not subject to federal and state
income taxes. After the Conversion, the Company became subject to federal and
state income taxes. In connection with the Conversion, the Company recognized a
one-time benefit in April 1998 of $316,000 by recording the asset related to the
future reduction of income tax payments due to temporary differences between the
recognition of income for financial statements and income tax regulations. Pro
forma net income amounts discussed herein include provisions for income taxes on
a pro forma basis as if the Company were liable for federal and state income
taxes as a taxable corporate entity throughout the periods presented. Pro forma
income tax provisions reflect the Company's anticipated effective annual tax
rate of 36% for the three month and six month periods ended June 30, 1998. For
the three month and six month periods ended June 30, 1999, the pro forma income
tax provision equals the historical income tax provision.
8. Acquisition
On February 16, 1998, the Company purchased all of the outstanding stock of
Performance Analysis Corporation ("PAC") for $2,200,000 in cash and 106,666
shares of the Company's common stock valued at $10.00 per share (the "PAC
Acquisition"). PAC is a developer of distribution center slotting software.
The PAC Acquisition has been accounted for as a purchase.
The purchase price of approximately $3,300,000 has been allocated to the
assets acquired and liabilities assumed of $490,000, acquired research and
development of $1,602,000, purchased software of $500,000, and other intangible
assets of $750,000. Purchased software will be amortized over an estimated two-
year useful life and other intangible assets will be amortized over a seven-year
useful life. In connection with the PAC Acquisition, the Company recorded a
charge to income of $1,602,000 in the first quarter of 1998 for acquired
research and development.
Form 10-Q
Page 9 of 22
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Overview
The Company provides information technology solutions for distribution
centers that are designed to enable the efficient movement of goods through the
supply chain. The Company's solutions are designed to optimize the receipt,
storage and distribution of inventory and the management of equipment and
personnel within a distribution center, and to meet the increasingly complex
information requirements of manufacturers, distributors and retailers. The
Company's solutions consist of software, including PkMS, a comprehensive and
modular software system; services, including design, configuration,
implementation, training and support; and hardware. The Company currently
provides solutions to manufacturers, distributors and retailers primarily in the
apparel, consumer products, food service and grocery markets.
The Company recognizes 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, 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. For those contracts which contain significant future obligations, license
revenue is recognized under the percentage of completion method.
Consulting services are generally billed on an hourly basis and revenue is
recognized as the work is performed. Maintenance revenue from ongoing customer
support is billed in advance for a one year period and recorded as revenue
ratably over the billing period. Hardware revenue is billed and recognized upon
shipment.
Prior to the Conversion, the Company elected to report as a limited
liability company that was treated as a partnership for income tax purposes, and
as a result, the Company was not subject to federal and state income taxes. Pro
forma net income amounts discussed herein include additional provisions for
income taxes on a pro forma basis as if the Company was liable for federal and
state income taxes as a taxable corporate entity throughout the periods
presented. The pro forma tax provision is calculated by applying the Company's
statutory tax rate to pre-tax income, adjusted for permanent tax differences.
The Company's status as a limited liability company terminated immediately prior
to the effectiveness of the Offering, and the Company was thereafter taxed as a
business corporation. See Notes to Condensed Consolidated Financial Statements.
Form 10-Q
Page 10 of 22
<PAGE>
Results of Operations
Three Months Ended June 30, 1999 Compared to Three Months Ended June 30, 1998
Revenue
Total revenue increased 41% to $19.8 million for the three months ended
June 30, 1999 from $14.1 million for the three months ended June 30, 1998.
Total revenue consists of software license revenue, revenue derived from
consulting, maintenance and other services and revenue from the sale of
hardware. The increase in total revenue was primarily due to an increase in
revenue from services and software licenses.
Software License. Software license revenue increased 9% to $3.1 million
for the three months ended June 30, 1999 from $2.8 million for the three months
ended June 30, 1998. The increase in revenue from software licenses was
primarily due to an increase in the number of licenses of the Company's
products.
Services. Services revenue increased 79% to $12.8 million for the three
months ended June 30, 1999 from $7.2 million for the three months ended June 30,
1998. The increase in revenue from services was principally due to the
increased demand for these services resulting from the increased demand for the
Company's products.
Hardware. Hardware revenue decreased 4% to $3.9 million for the three
months ended June 30, 1999 from $4.1 million for the three months ended June 30,
1998. The decrease in revenue from hardware was principally a result of a
higher demand for hardware products during the three months ended June 30, 1998
as compared to the three months ended June 30, 1999.
Cost of Revenue
Cost of Software License. Cost of software license revenue consists of the
costs of 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
$386,000, or 13% of software license revenue, for the three months ended June
30, 1999 from $171,000, or 6% of software license revenue, for the three months
ended June 30, 1998. Cost of software license revenue increased primarily due
to an increase in the amortization of capitalized research and development
expenses. In addition, approximately $180,000 of capitalized research and
development costs relating to discontinued projects was expensed during the
three months ended June 30, 1999.
Cost of Services. Cost of services revenue consists primarily of
consultant salaries and other personnel-related expenses incurred in system
implementation projects and software support services. Cost of services revenue
increased to $7.5 million, or 59% of services revenue, for the three months
ended June 30, 1999 from $3.4 million, or 47% of services revenue, for the three
months ended June 30, 1998. The increase in cost of services revenue was
primarily due to increased personnel as a result of the increased demand for
services. The increase in cost of services revenue as a percentage of services
revenue was primarily due to increased training and other costs related to the
increase in services personnel.
Cost of Hardware. Cost of hardware revenue increased to $3.0 million, or
76% of hardware revenue, for the three months ended June 30, 1999 from $2.9
million, or 72% of hardware revenue, for the three months ended June 30, 1998.
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 three month period ended June 30, 1999
as compared to hardware sales during the three month period ended June 30, 1998.
Form 10-Q
Page 11 of 22
<PAGE>
Operating Expenses
Research and Development. Research and development expenses principally
consist of salaries and other personnel-related costs. The Company's research
and development expenses increased by 59% to $3.1 million, or 16% of total
revenue, for the three months ended June 30, 1999 from $1.9 million, or 14% of
total revenue, for the three months ended June 30, 1998. The increase in
research and development expenses resulted from an increase in the number of
research and development personnel during the three months ended June 30, 1999
as compared to the three months ended June 30, 1998. Significant product
development efforts during the three months ended June 30, 1999 included the
continued development of the N-Tier version of PkMS, the continued development
of PkMS and, to a lesser extent, the development of the Windows based version of
SLOT-IT and the continued development of SLOT-IT. During the three months ended
June 30, 1999, the Company capitalized $349,000 of research and development
expenses. Those capitalized costs will be amortized over three years commencing
upon the availability of the anticipated products. The Company believes that a
continued commitment to product development will be required for the Company to
remain competitive and expects the dollar amount of research and development
expenses to continue to increase in the near future.
Sales and Marketing. Sales and marketing expenses include salaries,
commissions and other personnel-related costs, travel expenses, advertising
programs and other promotional activities. Sales and marketing expenses
increased by 101% to $4.0 million, or 20% of total revenue, for the three months
ended June 30, 1999 from $2.0 million, or 14% of total revenue, for the three
months ended June 30, 1998. The increase in sales and marketing expenses was
the result of additional sales and marketing personnel and expanded marketing
program activities.
General and Administrative. General and administrative expenses consist
primarily of salaries and other personnel-related costs of executive, financial
and human resources and administrative personnel, as well as facilities, legal,
insurance, accounting and other administrative expenses. General and
administrative expenses increased by 138% to $3.3 million, or 16% of total
revenue, for the three months ended June 30, 1999 from $1.4 million, or 10% of
total revenue, for the three months ended June 30, 1998. The increase in
general and administrative expenses was primarily due to increased personnel,
recruiting expenses, rent and other administrative expenses necessary to support
the Company's growth.
Income Taxes
Provision for Income Taxes. The provision for income taxes for the three
months ended June 30, 1999 was a benefit of $449,000 as compared to a provision
for income taxes of $386,000, net of a one-time benefit of $316,000, for the
three months ended June 30, 1998.
Prior to the initial public offering in April 1998 (the "Offering"), the
Company's predecessor, Manhattan Associates Software, LLC, was treated as a
partnership and was not subject to federal income taxes. The income or loss of
Manhattan Associates Software, LLC was included in the owners' individual
federal and state tax returns. In connection with the conversion of Manhattan
Associates, LLC to Manhattan Associates, Inc. in April 1998, the Company
recognized a one-time benefit of $316,000 by recording the asset related to the
future reduction of income tax payments due to temporary differences between the
recognition of income for financial statements and income tax regulations.
Pro Forma Provision for Income Taxes. The pro forma provision for income
taxes for the three months ended June 30, 1998 was $904,000. For the three
month period ended June 30, 1999, the pro forma income tax provision equals the
historical income tax provision.
Form 10-Q
Page 12 of 22
<PAGE>
Net Income (Loss) per Share
Net Income (Loss) per Share. Net loss was $760,000, or $0.03 per diluted
share, for the three months ended June 30, 1999, compared to pro forma net
income of $1.7 million, or $0.07 per diluted share, for the three months ended
June 30, 1998.
Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998
Revenue
Total revenue increased 49% to $38.0 million for the six months ended June
30, 1999, from $25.5 million for the six months ended June 30, 1998. Total
revenue consists of software license revenue, revenue derived from consulting,
maintenance and other services and revenue from the sale of hardware.
Software License. Software license revenue increased 51% to $7.5 million
for the six months ended June 30, 1999 from $5.0 million for the six months
ended June 30, 1998. The increase in revenue from software licenses was
primarily due to an increase in the number of licenses of the Company's
products.
Services. Services revenue increased 91% to $23.8 million for the six
months ended June 30, 1999 from $12.5 million for the six months ended June 30,
1998. The increase in revenue from services was principally due to the
increased demand for these services resulting from the increased demand for the
Company's products.
Hardware. Hardware revenue decreased 17% to $6.7 million for the six
months ended June 30, 1999 from $8.0 million for the six months ended June 30,
1998. The decrease in revenue from hardware was principally a result of a
higher demand for hardware products during the six months ended June 30, 1998 as
compared to the six months ended June 30, 1999.
Cost of Revenue
Cost of Software License. Cost of software license revenue consists of the
costs of 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
$576,000, or 8% of software license revenue, for the six months ended June 30,
1999 from $240,000, or 5% of software license revenue, for the six months ended
June 30, 1998. Cost of software license revenue increased principally due to an
increase in the amortization of purchased software from the PAC Acquisition and
the amortization of capitalized research and development expenses. In addition,
approximately $180,000 of capitalized research and development costs relating to
discontinued projects was expensed during the six months ended June 30, 1999.
Cost of Services. Cost of services revenue consists primarily of
consultant salaries and other personnel-related expenses incurred in system
implementation projects and software support services. Cost of services revenue
increased to $13.6 million, or 57% of services revenue, for the six months ended
June 30, 1999 from $5.9 million, or 47% of services revenue, for the six months
ended June 30, 1998. The increase in cost of services revenue was primarily due
to increased personnel as a result of increased demand for services. The
increase in cost of services revenue as a percentage of services revenue was
primarily due to increased training and other costs related to the increase in
services personnel.
Form 10-Q
Page 13 of 22
<PAGE>
Cost of Hardware. Cost of hardware revenue decreased to $5.0 million, or
75% of hardware revenue, for the six months ended June 30, 1999 from $6.0
million, or 75% of hardware revenue, for the six months ended June 30, 1998.
Operating Expenses
Research and Development. Research and development expenses principally
consist of salaries and other personnel-related costs. The Company's research
and development expenses increased by 80% to $5.8 million, or 15% of total
revenue, for the six months ended June 30, 1999 from $3.2 million, or 13% of
total revenue, for the six months ended June 30, 1998. The increase in research
and development expenses resulted from an increase in the number of research and
development personnel during the six months ended June 30, 1999 as compared to
the six months ended June 30, 1998. Significant product development efforts
during the six months ended June 30, 1999 included the continued development of
the N-Tier version of PkMS, the continued development of PkMS and, to a lesser
extent, the development of the Windows based version of SLOT-IT and the
continued development of SLOT-IT. During the six months ended June 30, 1999,
the Company capitalized $836,000 of research and development expenses. Those
capitalized costs will be amortized over three years commencing upon the
availability of the anticipated products.
Acquired Research and Development. In February 1998, the Company purchased
all of the outstanding stock of PAC for approximately $2.2 million in cash and
106,666 shares of the Company's common stock valued at $10.00 per share. The
acquisition was accounted for as a purchase. In connection with this
acquisition, approximately $1.6 million of the purchase price was allocated to
acquired research and development and expensed during the first quarter of 1998.
Sales and Marketing. Sales and marketing expenses include salaries,
commissions and other personnel-related costs, travel expenses, advertising
programs and other promotional activities. Sales and marketing expenses
increased by 144% to $8.1 million, or 21% of total revenue, for the six months
ended June 30, 1999 from $3.3 million, or 13% of total revenue, for the six
months ended June 30, 1998. The increase in sales and marketing expenses was
the result of additional sales and marketing personnel and expanded marketing
program activities.
General and Administrative. General and administrative expenses consist
primarily of salaries and other personnel-related costs of executive, financial
and human resources and administrative personnel, as well as facilities, legal,
insurance, accounting and other administrative expenses. General and
administrative expenses increased by 151% to $6.3 million, or 16% of total
revenue, for the six months ended June 30, 1999 from $2.5 million, or 10% of
total revenue, for the six months ended June 30, 1998. The increase in general
and administrative expenses was principally due to increased personnel,
recruiting expenses, rent and other administrative expenses necessary to support
the Company's growth.
Income Taxes
Provision for Income Taxes. The provision for income taxes for the six
months ended June 30, 1999 was a benefit of $324,000 as compared to a provision
for income taxes of $386,000, net of a one-time benefit of $316,000, for the six
months ended June 30, 1998.
Form 10-Q
Page 14 of 22
<PAGE>
Prior to the Offering, the Company's predecessor, Manhattan Associates
Software, LLC, was treated as a partnership and was not subject to federal
income taxes. The income or loss of Manhattan Associates Software, LLC was
included in the owners' individual federal and state tax returns. In connection
with the conversion of Manhattan Associates, LLC to Manhattan Associates, Inc.
in April 1998, the Company recognized a one-time benefit of $316,000 by
recording the asset related to the future reduction of income tax payments due
to temporary differences between the recognition of income for financial
statements and income tax regulations.
Pro Forma Provision for Income Taxes. The pro forma provision for income
taxes for the six months ended June 30, 1998 was $1.6 million. For the six
month period ended June 30, 1999, the pro forma income tax provision equals the
historical income tax provision.
Net Income (Loss) per Share
Net Income (Loss) per Share. Net loss was $520,000, or $0.02 per diluted
share, for the six months ended June 30, 1999 compared to pro forma net income,
excluding the effect of a one-time acquired research and development charge of
$1.6 million, of $3.0 million, or $0.12 per diluted share, for the six months
ended June 30, 1998. Including the effect of the one-time acquired research and
development charge, the Company's pro forma net income was $1.4 million, or
$0.06 per diluted share, for the six months ended June 30, 1998.
Liquidity and Capital Resources
Since inception, the Company has funded its operations primarily through
cash generated from operations and the Offering. In addition, the Company
previously borrowed money from its majority shareholder, which it has
subsequently repaid. As of June 30, 1999, the Company had $28.7 million in
cash, cash equivalents and short-term investments.
Cash used for operating activities was approximately $354,000 for the six
months ended June 30, 1999 while the operating activities provided cash of $1.8
million for the six months ended June 30, 1998. The cash used for operating
activities was principally the result of the net loss for the six months ended
June 30, 1999, an increase in accounts receivable of approximately $6.1 million,
partially reduced by an increase in deferred revenue of approximately $5.3
million and other changes in cash provided by operating activities.
Cash used for investing activities was approximately $11.5 million for the
six months ended June 30, 1999 and $4.4 million for the six months ended June
30, 1998. The use of cash for the six months ended June 30, 1999 was primarily
for the purchase of short-term investments and the purchase of capital
equipment, such as computer equipment and furniture and fixtures, to support the
Company's growth. In addition, the Company capitalized $836,000 of research and
development costs during the six months ended June 30, 1999.
Cash provided by financing activities was approximately $388,000 for the
three months ended June 30, 1999 and $35.5 million for the three months ended
June 30, 1998. The principal source of cash provided by financing activities
for the three months ended June 30, 1999 was the proceeds from the issuance of
Common Stock pursuant to the exercise of stock options, partially reduced by the
payment of capital lease obligations.
Form 10-Q
Page 15 of 22
<PAGE>
Prior to the Offering, the Company entered into a line of credit with
Silicon Valley Bank to fund its distribution to the Company's shareholders and
to fund its continuing working capital needs. The line of credit does not
contain any conditions or restrictive covenants that would materially affect the
Company's business, financial condition or results of operations. In April
1998, the Company borrowed approximately $7.0 million under the line of credit.
The Company repaid the borrowings and accrued interest with the proceeds from
the Offering.
In April 1998, the Company completed the Offering, in which the Company
received net proceeds of approximately $47.3 million after deducting
underwriting discounts and offering expenses. The Company applied a portion of
the net proceeds to repay all of the Company's outstanding indebtedness to
Silicon Valley Bank ($7.0 million) and a note payable to the Company's Chairman
of the Board, Chief Executive Officer and President ($1.9 million). Prior to
the Offering, the Company made payments of $11.7 million in distributions to its
shareholders. The balance of the net proceeds of the Offering (approximately
$34.0 million) has been and will continue to be utilized for general corporate
purposes. Such purposes may also include possible acquisitions of, or
investments in, businesses and technologies that are complementary to those of
the Company. There can be no assurance that the remaining net proceeds from the
Offering will be sufficient to pay for future acquisitions, planned research and
development projects or other growth-oriented activities, which could require
the Company to incur additional debt or other financing that could impose
restrictive covenants and other terms having a material adverse effect on the
Company's business, financial condition and results of operations.
The Company anticipates that existing cash and cash equivalents will be
adequate to meet its cash requirements for the next twelve months.
Year 2000 Readiness Disclosure
Many currently installed computer systems and software products are coded
to accept only two digit entries in date code fields. Beginning in the year
2000, many of these systems will need to be modified to accept four digit
entries or otherwise distinguish twenty-first century dates from twentieth
century dates. As a result, over the next few months, many companies will need
to upgrade their computer systems and software products to comply with these
"Year 2000" requirements.
In September 1998, the Company formed its Year 2000 Readiness Committee to
oversee the Company's Year 2000 Readiness Assessment Program, which includes the
following tasks:
- establishing a standard for Year 2000 Readiness;
- designing test parameters for the Company's products, information
technology ("IT") and non-IT systems;
- overseeing the remediation program, including establishing priorities for
remediation and allocating available resources;
- overseeing the communication of the status of the Company's efforts to
its customers; and
- establishing contingency plans in the event that the Company experiences
Year 2000 disruptions.
Form 10-Q
Page 16 of 22
<PAGE>
The Company describes its products as "Year 2000 Ready" when they have been
successfully tested using the procedure prescribed in the Readiness Assessment
Program. This procedure defines the criteria used to design tests that seek to
determine the Year 2000 readiness of a product. Under the Company's criteria, a
software product is Year 2000 Ready if it:
- will completely and accurately address, present (in a two-digit format),
produce, store and calculate data involving dates beginning January 1,
2000 and will not produce abnormally ending or incorrect results
involving such dates as used in many forward or regression date based
functions;
- will provide that all "date" related functionalities and data fields
include the indication of century and millennium, whether shown on-screen
or internally noted; and
- will perform calculations that involve a four-digit year field, provided
that the data input into the software from any other source has the same
Year 2000 capabilities and is in a format that is compatible with the
Company's software.
Because the latest versions of the Company's products are designed to be
Year 2000 compliant, the Year 2000 remediation efforts with respect to the
Company's products have focused on determining the compliance of the Company's
earlier software products as implemented in the Company's installed customer
base, as well as the impact of any non-compliance on the Company and its
customers. The Company offers its customers the alternatives of implementing a
modification to their non-compliant versions of the software or migrating to a
later version of the software that is Year 2000 Ready. Because the Company's
software is often marketed as an integrated system that includes hardware and
operating or interface software from third parties over which the Company can
assert little control, the Year 2000 Readiness Committee is evaluating the Year
2000 Readiness of such systems and the risks associated with the failure of such
third parties to adequately address the Year 2000 issue. The Company makes no
representation with respect to third party hardware or software.
The Company's Year 2000 Readiness Committee is also addressing Year 2000
readiness with respect to both IT and non-IT systems on which the Company's
operations rely. As a result of the Company's recent rapid growth, it has, or
expects it will have by the end of 1999, replaced or significantly upgraded
substantially all of the core IT systems, including those related to sales,
customer service, human resources, finance and other enterprise resource
planning functions. The Company believes that the upgraded systems are all Year
2000 Ready, and it has received assurances from the vendors of these systems to
that effect. The Company is reviewing its remaining IT systems for Year 2000
Readiness and expects to modify, replace or discontinue the use of non-compliant
systems before the end of 1999. In addition, the Company is in the process of
evaluating its Year 2000 readiness with respect to non-IT systems, including
systems embedded in its communications and office facilities. In many cases
these facilities have been recently upgraded or are scheduled to be upgraded
before year-end 1999 as a result of the Company's recent growth. Finally,
because the Company relies upon relationships with third parties, such as
providers of telecommunications and similar infrastructure services, over which
it can assert little control, the Year 2000 Readiness Committee is also
assessing the risks associated with the failure of these third parties to
adequately address Year 2000 issues.
Form 10-Q
Page 17 of 22
<PAGE>
The Company does not currently believe that the effects of any Year 2000
non-compliance in its installed base of software will result in a material
adverse effect on its business, financial condition or results of operations.
However, the Company's investigation has not been completed, and the Company may
be exposed to potential claims resulting from system problems associated with
the century change. There can also be no assurance that the Company's software
products that are designed to be Year 2000 compliant contain all necessary date
code changes. In addition, Year 2000 non-compliance in the Company's internal
IT systems or certain non-IT systems on which the Company's operations rely or
by the Company's business partners may have an adverse impact on the Company's
business, financial condition or results of operations.
The majority of the work performed for the Company's Year 2000 Readiness
Assessment Program has been completed by the Company's staff. The total costs
for completing the Year 2000 Readiness Assessment Program, including
modifications to the Company's software products, is estimated to be between
$0.5 million and $1.0 million, funded through the Company's internal operating
cash flows. This cost does not include the cost of new software, or for
modifications to existing software, or the Company's core IT and non-IT systems,
as these projects were not accelerated due to the Year 2000 issue.
The Company's evaluation of Year 2000 issues includes the development of
contingency plans for business functions that are most susceptible to a
substantive risk of disruption resulting from a Year 2000 related event.
Because the Company has not yet identified any business function that is
materially at risk of Year 2000 related disruptions, the Company has not yet
developed detailed contingency plans specific to Year 2000 events for any
business function. The Company is prepared for the possibility, however, that
it may identify risks in certain business functions, and it will develop
contingency plans for these business functions when and if it identifies them as
being at risk.
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, 1998. 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
Page 18 of 22
<PAGE>
Item 3. Quantitative and Qualitative Disclaimers About Market Risk.
Foreign Exchange
During 1998, the Company commenced operations in the United Kingdom. Total
revenues for the United Kingdom were approximately 5% of the Company's total
revenues for the three months ended June 30, 1999.
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 second quarter of 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 carried 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 June 30, 1999 was
approximately 4%. The fair value of securities held at June 30, 1999 was $26.5
million.
Form 10-Q
Page 19 of 22
<PAGE>
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.
(a) The Annual Meeting of Shareholders (the "Annual Meeting") of the
Company was held on May 15, 1999. There were present at the Annual Meeting, in
person or by proxy, holders of 22,351,511 shares (or 93%) of the Common Stock
entitled to vote.
(b) The following directors were elected to hold office for a term as
designated below or until their successors are elected and qualified, with the
vote for each director being reflected below:
<TABLE>
<CAPTION>
Name Votes For Votes Withheld
---- --------- --------------
<S> <C> <C>
Elected to hold office until the
2002 Annual Meeting:
Alan J. Dabbiere 22,284,242 0
Brian J. Cassidy 22,284,242 0
Elected to hold office until the
2001 Annual Meeting:
Gregory Cronin 22,284,242 0
Elected to hold office until the
2000 Annual Meeting:
John J. Huntz, Jr. 22,284,242 0
Thomas E. Noonan 22,284,242 0
</TABLE>
The affirmative vote of the holders of a plurality of the outstanding
shares of Common Stock represented at the Annual Meeting was required to elect
each director.
Deepak Raghavan, also a director of the Company, will continue in office
until the 2001 Annual Meeting of Shareholders.
Form 10-Q
Page 20 of 22
<PAGE>
(c) The proposal to increase the number of shares available for issuance
under the Company's 1998 Stock Incentive Plan from 5,000,000 shares to 7,000,000
shares, an increase of 2,000,000 shares and to authorize the Company to
automatically adjust the number of shares available under the 1998 Stock
Incentive Plan on the first day of each fiscal year was approved with 18,942,312
affirmative votes cast, 2,014,348 negative votes cast and 1,394,851 abstentions.
The affirmative vote of the holders of a majority of the outstanding shares of
Common Stock represented at the annual meeting was required to approve the
amendment.
(d) The appointment of Arthur Andersen LLP as independent public
accountants to audit the accounts of the Company and its subsidiaries for the
year ending December 31, 1999, was ratified with 22,336,420 affirmative votes
cast, 14,641 negative votes cast and 450 abstentions. The affirmative vote of
the holders of a majority of the outstanding shares of Common Stock represented
at the annual meeting was required to ratify the appointment of Arthur Andersen
LLP.
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 June 30,
1999.
Form 10-Q
Page 21 of 22
<PAGE>
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: August 13, 1999 /s/ Alan J. Dabbiere
----------------------------------
Alan J. Dabbiere
Chairman of the Board, Chief
Executive Officer and President
(Principal Executive Officer)
Date: August 13, 1999 /s/ Michael J. Casey
----------------------------------
Michael J. Casey
Senior Vice President, Chief
Financial Officer and Treasurer
(Principal Financial and
Accounting Officer)
Form 10-Q
Page 22 of 22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF MANHATTAN ASSOCIATES, INC. FOR THE SIX
MONTHS ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 16,313
<SECURITIES> 12,400
<RECEIVABLES> 29,943
<ALLOWANCES> (3,093)
<INVENTORY> 0
<CURRENT-ASSETS> 57,961
<PP&E> 10,914
<DEPRECIATION> (1,483)
<TOTAL-ASSETS> 72,164
<CURRENT-LIABILITIES> 15,690
<BONDS> 0
0
0
<COMMON> 241
<OTHER-SE> 55,413
<TOTAL-LIABILITY-AND-EQUITY> 72,164
<SALES> 37,989
<TOTAL-REVENUES> 37,989
<CGS> 19,204
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20,162
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (844)
<INCOME-TAX> (324)
<INCOME-CONTINUING> (520)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (520)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>