annual report 2012
commerceconnection
where supply chain and the market meet
3
where supply chain and the market meetcommerce connection merge ahead
4
where supply chain and the market meetcommerce connection Dennis Story
Executive Vice President,
Chief Financial Officer
and Treasurer
Eddie Capel
President and
Chief Executive Officer
Today, our company is uniquely positioned with a complete
set of commerce chain solutions where customer demands
and supply chain capacity converge. We understand how to
master this convergence—and do so profitably.
— Eddie Capel
5
where supply chain and the market meetcommerce connection MAnhATTAn AS SOCiATES, inC.
LETTER TO ShA REhOLDERS
To Our Shareholders,
2012 was a very successful year for your Company in a number of important ways. The Company
delivered strong performance across all key financial metrics including revenue, operating
profit, earnings per share and cash flow from operations. We doubled the number of customers
implementing our platform-based solutions. We witnessed the emergence of a revolution in
omni-channel commerce that will likely change the way we see the supply chain forever. And,
with tremendous support from our Board of Directors along with a highly tenured and dedicated
management team, we successfully executed our CEO succession.
However, as with any business, there is room for
revolution in a generation. While this commerce shift
improvement in our performance. Geographically,
is most apparent in the retail sector, it extends into
we continued to experience elongated software sales
many other market segments, such as manufacturing
cycles in our core markets associated with persistent
and wholesale distribution. To fully understand the
global macro-economic weakness. In some instances,
current commerce revolution, it may be best to start
our heritage as the market leader in warehouse
with some historical context. Macro trends from
management overshadows
our distinctive capabilities in
other solutions where we are
not well known. Specifically, we
keep fighting to gain market
awareness for our transportation
management and inventory
optimization solutions.
As your new CEO, I am pleased
“We are working to provide
our customers with seamless
experiences no matter how
they choose to shop with us.”
— Macy’s
decades past continue to shape
how consumers gain access to
products, interact with brands
and shop for goods.
In 1947, the first planned
suburb was built using an
assembly line method of mass-
produced houses, connected
to the city by new paved
to have the opportunity to report to you my
highways that were used by increasingly affordable
perspective on the substantial market opportunity
automobiles. Within three years, more Americans
for Manhattan and supply chain management
lived in suburbs than in cities or rural areas. Six years
technology along with our performance in 2012.
later, the Dayton Company built the first enclosed
The Commerce Revolution
shopping mall in a Minneapolis suburb, ushering
in an era where the physical immediacy of urban
Transformations in commerce are inherently
shopping districts came closer to home for the
uncommon. However, I believe we are standing today
majority of Americans; and along the way, the Dayton
right in the middle of the most significant commerce
Company changed its name to Target.
6
where supply chain and the market meetcommerce connection In 1999, the first laptop computer with built-in
Today, the early signs of the commerce revolution are
Wi-Fi was introduced by Apple Computer. The era of
most apparent in the retail sector, through omni-channel
mobile computing had dawned, fueled by the rapidly
selling and fulfillment, where consumers make the rules
improving availability of wireless Internet access,
about what they want, when they want it and how much
both in public places like coffee shops and inside
they are willing to pay. However, we firmly believe the
consumers’ homes. So it’s no coincidence that three
omni-channel commerce revolution will quickly extend
years later, a little company named Amazon turned
beyond retail to every corner of the industry landscape.
its first profit. It was the ubiquity of Internet access—
In turn, these new challenges create significant
unshackled from the desktop—that gave the Seattle-
opportunities for Manhattan Associates.
based bookseller the momentum to expand beyond
books to sell nearly any retail item.
Our work in building solutions to capitalize on
this market revolution started years ago, when we
Suburbanization and mobile computing were two of the
launched an organic growth strategy anchored by
forerunners of the commerce revolution we’re seeing
investment in supply chain technology innovation.
today. The revolution has sparked
The result: Today, our Company is uniquely positioned
fundamental changes
in the relationships and
interactions between
buyers and brands. These
relationships, whether
retail or wholesale, along
with their enabling digital
technologies, are shaping
the new commerce
The Store Floor
Capabilities on the store
floor to save the sale:
• Ship from store
• Buy online, pickup in store
• In-store order capture
with a complete set of
supply chain commerce
solutions where customer
demands and supply
chain capacity converge.
Business Model and
Performance Overview
As you know,
landscape. The implications for
the supply chain and the opportunities for
Manhattan Associates can’t be understated.
Capitalizing on the Omni-Channel
Commerce Revolution
Manhattan Associates develops and deploys
comprehensive software solutions that solve the
market’s most complex and impactful supply chain
challenges. Our solutions cover a broad range of
business capabilities, connecting the supply chain
(distribution operations, transportation management,
The commerce revolution is still in its early stages,
inventory optimization, labor management and
but already its impact is reverberating through
capacity utilization) with the commerce chain (order
traditional supply chain management. In fact, it’s no
management, store operations and planning)—we
exaggeration to say that the revolution is redefining
are in the business of building better supply chains.
supply chain management. It’s no longer viewed as
just a value lever to improve efficiency and control
costs. Supply chain management is gaining clout as a
lifeline for the brand—because it drives both revenue
and profitable growth.
We currently have over 1,200 customers worldwide.
In 2012, our team of expert services professionals
supported nearly 300 “go-lives” across the globe. Many
of these implementations incorporate the most up-to-
date technology, such as cloud computing technologies
provisioned both in public and private environments.
7
where supply chain and the market meetcommerce connection
We also continue to develop innovative software
For our customers:
delivery models for our customers that provide
the lowest possible cost of ownership. Mobility, for
example, is one of the key drivers in supply chain
innovation—and we’re in the vanguard of that trend.
Our strategy is to provide customers with mobile tools
that enable anywhere, always on, untethered access
to supply chain information and functionality. To drive
Manhattan’s mobile initiatives, a development team
was formed in 2012—Manhattan Mobility Labs.
Turning to and measuring our accomplishments
for the year, we reflect on them from three primary
perspectives; our shareholders, our customers and
our employees. Our overarching goal is to grow at
• Investing in innovation continues to be our central
focus. In 2012, we invested $45 million in R&D,
bringing our cumulative investment to $301 million
since 2006.
• In 2010, we launched our Warehouse Management
solution on our Supply Chain Process Platform.™ Since
then, our customers have shown great interest and
adoption. By the end of 2012, we had 28 customers
across 57 sites running our platform-based Warehouse
Management solution, more than doubling that
number from the prior year.
• Our theme since the launch of the platform has
evolved, starting with Platform Thinking,™ then
twice the market
rate (5% - 6%)1.
By this and other
key performance
measures, we
believe 2012 was a
tremendous success.
The Store Back Room
Capabilities in the store
back room:
• Store inventory management
• Store labor productivity
• Parcel integration
Platform Thinking
Activated™ in 2011 and
Platform Payoff ™ in 2012.
I am thrilled to share
with you that many of
our customers are seeing
first-hand the power of
the platform and realizing
positive business impact
For our shareholders:
• The Company delivered record revenue of $376
million for the year, up 14% from 2011. Regionally,
total revenue growth was 13% in the Americas, 23%
in EMEA and 19% in APAC. Total license revenue
grew 13% over 2011 and our services business
continued to perform well, with professional
services revenue up 18% from 2011.
• Record revenue and solid expense management
resulted in record adjusted operating income in
2012 of $88 million, increasing 26% over 2011.
Adjusted operating margins improved to 23.5%
from 21.4% in 2011.
• The Company also delivered record adjusted
earnings per share of $2.82, up 22% from $2.32
in 2011.
through new revenue opportunity, improved
efficiencies and lower operating costs.
• Once again in 2012, we hosted our customers at
Momentum,® our annual user conference. We set
record attendance at the year’s event, with over
1,000 supply chain professionals coming together
to share experiences and participate in our growth
as a Company.
For our employees:
• Manhattan’s leadership in the supply chain
domain continues to be a key factor for attracting
and retaining the absolute best supply chain
professionals in the market.
• At the end of 2012, we had approximately 2,400
employees across 11 offices around the world.
1 Gartner Supply Chain Management Market Growth, 2012
8
where supply chain and the market meetcommerce connection We grew our workforce 12% adding approximately
focused on delivering impact. Second, we seize
265 employees during the year, led by strong
every opportunity for success. Our markets move
demand for our professional services and are
quickly and technology innovation can happen in the
investing in training programs, great career path
blink of an eye. We stand ready to make the most
development and technical infrastructure to support
of every opportunity. Finally, we don’t bask in past
our leadership position within the industry.
achievements. Our success is measured by what
Where We Go From Here
Looking forward, Manhattan Associates is well
positioned in several essential areas, including the
solutions we deliver, the markets where we compete
and the attitude that we bring to work every day.
we can make happen tomorrow. We learn from our
mistakes and constantly look to improve.
In closing, I believe our Company is well positioned,
the market that we serve is vibrant and, while overall
it will continue to grow 5% - 6% in 2013, our plans
are to grow at about twice that rate while generating
• Only Manhattan Associates delivers a comprehensive
earnings growth through operating margin expansion.
suite of supply chain commerce solutions on a single
We will continue to benefit from our leadership
process and technology platform. Our customers
position in the core warehouse management, order
represent the best evidence of our success through
management and transportation markets. We will also
their loyalty and market performance.
continue to invest in innovative solutions that capitalize
• We are in the middle of a commerce revolution
on the emerging market trends and in our people who
where supply chain management can determine
so expertly and diligently serve our customers. I’m
success or failure. As the supply chain software
proud to be part of the Manhattan Associates team
sector continues to consolidate, our strength and
and look forward to the opportunities ahead.
resilience makes Manhattan Associates the clear
choice. In 2012, eCommerce sales exceeded $US
1 trillion for the first time, and are expected to grow
by 15% every year through 20162.
• We bring a distinctive mindset to work every day.
Sincerely,
First, customers are our primary focus and by putting
Eddie Capel
them in the spotlight, we are assured to remain
President and Chief Executive Officer
2 eMarketer.com “Ecommerce Sales Topped $1 Trillion for First Time in 2012”
February 5, 2013
9
where supply chain and the market meetcommerce connection MAnhATTAn ASSOCiATES, inC.
Fi nAnCiA L h iGhLiGhT S
Statement of Income Data (annual):
License revenue
Total revenue
net income
Adjusted net income (1)
GAAP diluted earnings per share
Adjusted diluted earnings per share (1)
Balance Sheet Data (at December 31):
Cash, cash equivalents and investments
Total assets
Debt
Year Ended December 31,
2011
2012
(in thousands except per share data)
$ 54,241
329,253
44,907
49,770
2.09
2.32
$ 61,494
376,248
51,853
57,167
2.56
2.82
$ 99,114
$ 103,047
259,600
261,813
—
—
Shareholders’ equity
162,080
161,509
(1) The non-GAAP financial measures adjusted operating income, adjusted net income, and adjusted diluted earnings per share exclude
amortization of acquisition-related intangibles, equity-based compensation, unusual items such as restructuring charges, asset impairment
charges, recovery of previously impaired investment, and sales tax recoveries, net of tax effects and unusual tax adjustments. A reconciliation
of GAAP to adjusted results can be found in the Investor Relations section of our website at www.manh.com. 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.
10
where supply chain and the market meetcommerce connection
These are exciting times.
The digital commerce revolution is spawning
tremendous opportunity for businesses by building
closer connections than ever between the vast buyers’
marketplace and the supply chains that serve it. It’s
a golden intersection we describe as ‘where supply
chain and the market meet.’ This is the promise of
Supply Chain Commerce: the blending of supply
chain and commerce and the wealth of opportunity it
represents.
Through this intersection flows a ‘commerce
connection’—an all-points feeder system presenting
continuous opportunities to capitalize on today’s
omni-channel landscape.
It’s a market shift, disrupting supply chains and
creating growth opportunity for businesses across
all industries.
To capitalize and compete, it means mobilizing
the right supply chain and commerce strategy—an
integrated technology approach designed to meet
omni-channel complexity while maximizing return on
investment.
At Manhattan Associates, we believe supply chain
technology is at the heart of digital commerce
enablement and core to creating sustainable
competitive advantage. And we believe the
acceleration of this new paradigm is only just
beginning.
11
where supply chain and the market meetcommerce connection global offices
Atlanta, GA (headquarters)
Bangalore, india
Bracknell, UK
Carmel, in
Melbourne, Australia
nieuwegein, The netherlands
Paris, France
Shanghai, China
Singapore
Sydney, Australia
Tokyo, Japan
partner locations
Chile
Colombia
iceland
indonesia
Malaysia
Mexico
Poland
Romania
Russia
South Africa
South Korea
Spain
Sweden
Thailand
United Arab Emirates
Venezuela
The accelerating change
revolution
of an
has businesses on a fast track to turn
complexity into opportunity and achieve
the promise of Supply Chain Commerce.
12
contents
Supply Chain Commerce
14
Platform-based Solutions
16
Americas Update
18
Global Reach
20
Financial highlights
23
Executive Team and
24
Board of Directors
13
where supply chain and the market meetcommerce connection
supply chain commerce where supply chain and
The term Supply Chain Commerce acknowledges the transformative
role of today’s supply chain as both a money saver and a money
maker. Regardless of your industry or the markets you serve,
connecting logistics (supply chain distribution) and loyalty (supply
chain demand) is the key to delivering satisfaction profitably.
supply chain
solution suites
The name of the supply
chain game is agility and
efficiency with a strong
focus on bottom-line
results. SCOPE Supply
Chain Solutions optimize
performance throughout
the enterprise—enhancing
productivity, service and
speed across every node,
at every touch-point.
Manhattan solutions are all
about maximizing inventory
performance, enhancing
operational effectiveness
in your distribution centers,
and running a transportation
network that facilitates
timely deliveries at the
lowest possible cost.
Manhattan SCOPE Customer: Nature’s Best
Nature’s Best reaps a bumper crop of benefits
This distributor of natural and organic grocery
products decreased product handling 75%,
reduced labor 66%, increased throughput 114%,
doubled order accuracy, and achieved nearly
$100K savings in fleet costs.
It all paid off extremely quickly,” reported Jim
Beck, nature’s Best president and CEO. “We
started seeing improvement four months after
implementation. It usually takes three or four times
that long—and I have yet to see any limits to the
volume we can process. Warehouse Management
is the lifeblood of our operation and cornerstone
of our growth strategy.
14
where supply chain and the market meetcommerce connection
the market meet
Manhattan SCOPE® is the only portfolio of supply chain commerce solutions
built on a common technology platform available on the market today. SCOPE
leverages the investments we’ve made in our Supply Chain Process Platform™
to deliver both the traditional bottom-line benefits associated with supply chain
improvements and the top-line revenue gains created by commerce initiatives.
commerce chain
solution suites
SCOPE Commerce Chain
Solutions are designed to
enable retailers to engage
more with their customers
and ultimately sell more.
From planning the right
assortments in the right
channels and stores,
to serving up inventory
availability across the network
to any selling system, to
fulfilling omni-channel
promises from the store,
Commerce Chain Solutions
help ensure no sale is lost,
customers are satisfied and
margins are maximized,
while providing best-in-class
customer service in the call
center and in the store.
Manhattan SCOPE Customer: Macy’s
Macy’s embraces omni-channel and rolls out an enhanced customer experience
The other half of “buy anywhere” is “fulfill
anywhere,” noted Macy’s senior vice president
of systems development and field services, Brian
Leinbach. The company’s plan is to optimize
inventory to enable customers to easily shop any
channel they choose. By 2013, 300 of Macy’s 840
locations will be equipped to handle direct-to-
consumer order fulfillment. 1
As we’ve been adding more and more categories
online that are available to be fulfilled from the
store when they run out, we are seeing that there’s
a big opportunity and increased demand,” said
Karen hoguet, CFO. 1
1 Macy’s Takes the Lead in Tech-Enhanced Shopping, RiS news, May 15, 2012
15
where supply chain and the market meetcommerce connection
the platform
Manhattan has an impressive list of the most sophisticated and
complex supply chain customers. Manhattan has established broad
C-level executive relationships with key customers who value a
strategic association and the power of an SCE platform.
The company’s customers are also loyal; many have been
customers for a decade or more, and they continue to invest
in new Manhattan products and services.
— Gartner, 2012
16
where supply chain and the market meetcommerce connection
The industry’s first platform-based approach to Supply Chain Commerce
Once a supply-centered environment, today’s omni-channel world is more focused on the
customer. And every industry will feel the impact—retailers, manufacturers, wholesalers
and third-party logistics providers (3PLs) alike. For companies to thrive in this new
paradigm and meet the growing demands of digital commerce, supply chains must reach
beyond their legacy role in process and performance efficiency and become drivers of
revenue and relationships.
Manhattan Associates is leading the industry through today’s commerce revolution with
our platform-based solutions—Manhattan SCOPE and Manhattan SCALE. From how we
design software and deliver solutions to the marketplace, to how we provide services
and support to our customers, this platform-based approach infuses everything we
do and is enabling leading companies worldwide to capitalize on the opportunities of
Supply Chain Commerce.
Manhattan SCOPE® is the only portfolio of supply chain commerce
solutions built on a common technology platform available on the
market today. SCOPE leverages the investments we’ve made in our
Supply Chain Process Platform to deliver both the traditional bottom-
line benefits associated with supply chain
improvements and the top-line revenue gains
created by commerce initiatives. SCOPE provides
Supply Chain Solutions to optimize efficiency and
performance and Commerce Chain Solutions to seize opportunities for
revenue growth, complemented by Visibility and insight applications to
support functional capabilities across the platform. SCOPE is well
suited for companies with high levels of supply chain complexity that
consider supply chain software, processes and technology strategic to
market leadership.
Manhattan SCALE™ is an optimal blend of features, functionality and
technology for organizations looking for a high-performing, affordable
and low-risk supply chain solution. Leveraging the Microsoft .nET
platform to unify logistics functions, SCALE’s
infrastructure integrates Labor Management,
Trading Partner Management, Yard Management,
Warehouse Management and Transportation
Execution to create a cost-effective, optimized solution suite that
offers end-to-end supply chain integration and visibility. “Scaled to fit
and ready to run,” Manhattan SCALE is designed to help companies
maximize their supply chain execution speed-to-value by reducing iT
complexity and deployment costs.
Manhattan MORE®
Manhattan delivers value through
more than software. Surrounding
our software is Manhattan MORE,
a full suite of services that optimize
the supply chain at every touch-
point to maximize customer value.
Backed by a dedicated team of
Manhattan Supply Chain People®
and a worldwide network of partners,
MORE delivers on our commitment
to help our customers achieve
and maintain business advantage
through supply chain excellence.
“Customer references
complimented Manhattan
on its service and support, as
well as the robustness of the
methodologies it employs to
support implementations, or
what it calls MORE.”
Gartner WMS Magic Quadrant, 2012
17
where supply chain and the market meetcommerce connection
americas
Store Commerce Activation helps improve our inventory
accuracy, while reducing the amount of time our
associates spend in the back room. It provides a better
in-store customer experience, improves our store sales
and sets the stage for buy-online-pick-up-in-store and
ship-from-store operations.
— Lamps Plus
18
where supply chain and the market meetcommerce connection
Leading companies across the Globe capitalize on the opportunity of Supply Chain Commerce
Manhattan’s Americas operations are based out of our headquarters in Atlanta, Georgia,
and supported by Manhattan Value Partners™ and GeoPartners.™ The Americas sales team
had a very productive 2012, with an impressive win rate against both best-of-breed and
ERP competitors. Across the Americas—Canada, Latin America and the U.S.—Manhattan
customers are leveraging our platform-based approach to capitalize on the opportunity
of Supply Chain Commerce, including David’s Bridal, Canadian Tire and Ripley.
David’s Bridal, a $600 million wedding retailer, depends on its supply chain to deliver
on promises to brides across the U.S., Canada and Puerto Rico. Using Distributed
Order Management (DOM), David’s Bridal can keep track of incoming inventory,
inbound orders from stores and online purchases. DOM enables David’s Bridal to
leverage network-wide inventory, support order modifications and cancellations
throughout the order lifecycle, and provide customers the option to buy online and
pick up in store. With Warehouse Management, the retailer has greatly increased
accuracy and efficiency while reducing costs, achieving impressive results—increased
on-time delivery rates from 65-70% to 98-99%, reduced cycle time by 25% and
lowered distribution center (DC) labor costs by 20% per piece. “We don’t miss a
wedding…we have to make sure that what we promise, we can deliver,” says Diane
Garforth, director of logistics systems. Manhattan solutions help David’s Bridal do just
that—deliver on their promises while improving profit and performance.1
Canadian Tire offers everyday products and services through more than 1,700
retail and gasoline outlets across Canada. Manhattan’s Warehouse Management
provides the company with critical product sales velocity data—the information
Canadian Tire used to reorganize its auto parts DCs. “The Manhattan Associates
tools give us the ability to see the velocity, see what we’ve put in the right place
and see what we should move, either to a more productive or a less productive
area,” reports John Salt, SVP of supply chain. By improving distribution processes,
Canadian Tire is able to make near-daily deliveries to its stores, producing
significant business benefits. “More frequent deliveries lets us carry a broader
assortment of what a customer may want, so there’s a higher probability that the
tires they want will be there when they walk in—and even if not, we’ll be able to
get them more quickly,” says Salt.2
Ripley is the third largest department store chain in Chile. With more than 50 stores,
a thriving online business and intensifying competition, Ripley needed to consolidate
and automate its distribution operations. “Our competitors were providing one-
to three-hour delivery windows, which put us in a very tight spot,” says Francisco
irarrázaval, retail operations manager. Ripley’s new 660,000 sq. ft. automated DC,
equipped with Manhattan’s Warehouse Management, has radically improved
capacity, productivity and supply chain efficiency while reducing costs. Chosen
for its ability to run different operations simultaneously, Warehouse Management
integrates with Ripley’s material handling equipment and other systems to manage
receiving, order delivery and its booming home delivery business. “Today we work
with about 40% fewer people than in the past,” says CIO Gustavo Pardo. “We’re
moving more SKUs to market (70,000 daily) in far less time.” 3
“How do we be more productive
with the workforce and the
physical wall capacity that we
already have? DOM was a way
around that…It’s really the
flexibility to be omni-channel.
Our existing infrastructure really
wasn’t allowing us to do that.
DOM is allowing us the flexibility
to match the current footprint of
our business and help us grow.”4
Yankee Candle
“During this time of year we
can see our business increase five
times our normal rate. Manhattan’s
WMS and TMS integration has
helped us improve what was once a
four- to five-day lead time to delivery
overnight as required. Our accuracy
rate is higher than 99%, further
improving customer service.”
Lennox
1 happily Ever After, STORES,
September 1, 2012
2 Data-Driven Distribution, RiS news,
August 2012
3 Warehouse Management Stocks Savings
for Ripley, nRF Daily, January 17, 2012
4 The Sweet Smell of Success, STORES,
May 3, 2012
19
where supply chain and the market meetcommerce connection international
To effectively meet the expected growth in demand for
the products we’re selling, and because we’re operating
across an increasing number of channels, we realized we
would need a highly intelligent supply chain system. After
a competitive selection process, we chose Manhattan
because of its rich experience and excellent reputation
working with the world’s leading retailers.
— Happigo, China
20
where supply chain and the market meetcommerce connection
Companies across the planet realize the potential of Supply Chain Commerce
Manhattan’s EMEA and APAC business units had a very successful year, delivering
double-digit top-line and operating profit growth. With associates in nine Manhattan
offices supported by GeoPartners operating across both regions, Manhattan’s
international operations are equipped to provide local and global companies with
the supply chain and commerce chain solutions they need to make the most of every
Supply Chain Commerce opportunity.
Europe, the Middle East and Africa EMEA
2012 was a record-breaking year for the EMEA region with the business unit
delivering record total revenue and profit. This performance was achieved through
the combined efforts of Manhattan associates in our Centers of Expertise in
France, the Netherlands and the UK working closely with Manhattan GeoPartners
in Central and Eastern Europe, the Commonwealth of Independent States
(CIS) and Russia, Iberia, the Nordics, the Middle East and South Africa. It was
a milestone year for Manhattan EMEA in other respects as well, with many
regional customers across retailing, food/foodservice, consumer goods, 3PL and
pharmaceutical distribution now leveraging our platform-based approach to
address the unique challenges they face in today’s omni-channel world.
Asia Pacific APAC
More and more companies across Asia Pacific are recognizing the importance
of having an advanced distribution and fulfillment capability and are investing in
Manhattan’s solutions. They are seeing Manhattan’s technologies as critical, not
just to control costs and make their operations more transparent and efficient,
but to increase revenues by improving fill rates and customer service levels,
often across multiple channels. Manhattan’s APAC organization—represented by
offices in Australia, China, India, Japan and Singapore, and complemented by key
partners—work with customers representing 15 countries across the region.
2012 represented our APAC business unit’s strongest year ever from a revenue
and profitability perspective.
“With the significant growth we
have seen in our e-commerce
activity, we saw Manhattan’s DOM
solution as the perfect fit —
in terms of its ability to help us
manage, monitor and optimize
our e-commerce and cross
channel orders. Specifically, the
DOM solution will provide us
with real-time, global visibility of
inventory, thus boosting service
levels and enabling us to sell
more at each point of customer
engagement as well as allowing
us to fulfill those orders in a way
which maximizes profit for the
business.”
Leroy Merlin | France
“Manhattan invests a lot in R&D
and their software solutions
evolve continuously, just like
our business and our business
environment. They are exactly
the kind of supply chain partner
we were looking for. Thanks to
Manhattan Associates’ supply
chain optimization solutions we
are able to keep our promise:
‘passion for food and passion
for service.’”
Deli XL | Netherlands
“What we have been particularly
impressed with is Manhattan’s
project management approach,
both in terms of implementation
and execution, which has been
simply outstanding. They have set
the bar very high.
Jeanswest Corporation
Australia
21
the numbers
Manhattan is also a customer-intimate firm, which is exhibited by
its strategic partnership customers, which have made significant
investments in multiple solutions and have actively participated as
a sounding board and platform to drive continual innovation. While
Manhattan’s products are the primary focal point of its customer
relationships, the amount of services it provides testifies to the value
that customers place on Manhattan’s domain expertise, as well as
the value delivered through its services above and
beyond the value of its applications. — Gartner, 2012
22
where supply chain and the market meetcommerce connection
Financial highlights
Statement of Income Data (annual):
License revenue
Total revenue
net income
Adjusted net income (1)
GAAP diluted earnings per share
Adjusted diluted earnings per share (1)
Balance Sheet Data (at December 31):
Cash, cash equivalents and investments
Total assets
Debt
Shareholders’ equity
Year Ended December 31,
2008
2009
2010
2011
2012
(in thousands except per share data)
$ 65,313
$ 34,686
$ 54,450
337,201
22,798
246,667
16,562
35,863
23,885
0.94
1.47
0.73
1.06
297,117
28,061
35,360
1.25
1.58
$ 54,241
329,253
44,907
49,770
2.09
2.32
$ 61,494
376,248
51,853
57,167
2.56
2.82
$ 88,706
270,221
—
$ 123,014
$ 126,869
264,711
280,464
—
—
$ 99,114
259,600
—
$ 103,047
261,813
—
179,839
183,365
183,800
162,080
161,509
License Revenue
(in millions)
Total Revenue
(in millions)
$376
$337
$329
$297
$65
$61
$54
$54
$35
$247
net income
(in millions)
Adjusted net income (1)
(in millions)
$52
$45
$57
$50
$28
$36
$35
$23
$17
$24
08
09
10
11
12
08
09
10
11
12
08
09
10
11
12
08
09
10
11
12
Operating Highlights
n In 2012, total revenue of $376.2 million grew 14% over 2011.
n In 2012, we delivered $88.4 million in adjusted operating income.(1)
n In 2012, we achieved GAAP and adjusted diluted earnings per share (1) of $2.56 and $2.82, respectively.
n We generated operating cash flow of $75.3 million for the year ended December 31, 2012. Over the past
three years, we generated approximately $181.1 million in cash flow from operations.
n Our balance sheet is strong, with $103.0 million in cash, cash equivalents and investments and no debt.
n Of our approximately 2,400 employees, over 90% are focused on extending customer value.
(1) The non-GAAP financial measures adjusted operating income, adjusted net income, and adjusted diluted earnings per share exclude amortization of
acquisition-related intangibles, equity-based compensation, unusual items such as restructuring charges, asset impairment charges, recovery of previously
impaired investment, and sales tax recoveries, net of tax effects and unusual tax adjustments. A reconciliation of GAAP to adjusted results can be found in the
Investor Relations section of our website at www.manh.com. 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.
23
where supply chain and the market meetcommerce connection
Manhattan at a Glance
Executive Team
Eddie Capel
President and Chief Executive Officer*
Jeff Mitchell
Executive Vice President,
Americas*
Dennis Story
Executive Vice President,
Chief Financial Officer and
Treasurer*
Jeff Baum
Senior Vice President,
Asia Pacific
Jeff Cashman
Senior Vice President,
Business Development
Board of Directors
Jonathan Colehower
Senior Vice President,
Chief Marketing Officer
Terry Geraghty
Senior Vice President,
Chief Human Resources Officer
Bruce Richards
Senior Vice President, Chief Legal Officer
and Secretary*
Steve Smith
Senior Vice President,
Europe, Middle East and Africa
* Executive Officers
John J. Huntz, Jr.
Chairman of the Board of Directors
Executive Director, Venture Capital,
Arcapita, Inc.
Thomas E. Noonan
Director
Chairman, President and
Chief Executive Officer, JouleX, Inc.
Brian J. Cassidy
Director
Formerly Co-founder and Vice
Chairman, Webforia, Inc.
Dan J. Lautenbach
Director
Formerly Chairman,
Witness Systems, Inc.
Deepak Raghavan, Ph.D.
Director
Co-founder, Manhattan Associates, Inc.
Adjunct Faculty, Physics & Astronomy
Georgia State University
Pete Sinisgalli
Director
Formerly President and Chief Executive
Officer, Manhattan Associates, Inc.
Eddie Capel
Director
President and Chief Executive Officer,
Manhattan Associates, Inc.
Founded: 1990
Nasdaq: MANH
Global Customers:
more than 1,200
Deployments:
287 go-lives in 2012
Supply Chain Focused
R&D Investment:
$45 million in 2012;
$301 million since 2006
Employees Worldwide:
~ 2,400 (December 2012)
Core Markets:
Retail
Food/Grocery
Consumer Goods
Logistics Service Providers
Life Sciences
Industrial/Wholesale
High Tech/Electronics
Transportation Providers
Government
Leading Companies use
Manhattan Solutions:
More than half of the top
20 retailers
16 of the top 20 apparel
retailers
15 of the top 20
supermarkets
More than two-thirds of the
top U.S. mass merchants
8 of the top 10
pharmaceutical wholesalers
Half of the top 100
motor carriers
c o m m e r c e c o n n e c t i o n
24
Manhattan Associates, Inc. 2012 Form 10-K
25
where supply chain and the market meetcommerce connection UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
(Mark One)
For the fiscal year ended December 31, 2012
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: 000-23999
Manhattan Associates, Inc.
(Exact name of registrant as specified in its charter)
Georgia
(State or other jurisdiction of
incorporation or organization )
2300 Windy Ridge Parkway, Tenth Floor
Atlanta, Georgia
( Address of principal executive offices )
58-2373424
(I.R.S. Employer Identification No.)
30339
( Zip Code )
Registrant’s telephone number, including area code: (770) 955-7070
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $.01 par value per share
Name of each exchange on which registered
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes No
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange
Act from their obligations under those Sections.
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 No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act. (Check one):
Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company
(Do not check if a smaller reporting company)
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant as of June 30, 2012
was $915,229,892, which was calculated based upon a closing sales price of $45.71 per share of the Common Stock as reported by the
Nasdaq Global Select Market on the same day. As of February 15, 2013, the Registrant had outstanding 19,631,514 shares of
Common Stock.
The Registrant’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held May 16, 2013 is incorporated
DOCUMENTS INCORPORATED BY REFERENCE
by reference in Part III of this Form 10-K to the extent stated herein.
MANHATTAN ASSOCIATES, INC.
Annual Report on Form 10-K
MANHATTAN ASSOCIATES, INC.
For the Fiscal Year Ended December 31, 2012
Annual Report on Form 10-K
Table of Contents
For the Fiscal Year Ended December 31, 2012
Table of Contents
Page Number
Page Number
Item Description
Item Description
Item Number
Item Number
PART I
Business ...................................................................................................................................................................................... 3
Item 1
PART I
Item 1A Risk Factors .............................................................................................................................................................................. 13
Business ...................................................................................................................................................................................... 3
Item 1
Item 1B Unresolved Staff Comments .................................................................................................................................................... 21
Item 1A Risk Factors .............................................................................................................................................................................. 13
Properties ................................................................................................................................................................................. 21
Item 2
Item 1B Unresolved Staff Comments .................................................................................................................................................... 21
Legal Proceedings .................................................................................................................................................................... 21
Item 3
Properties ................................................................................................................................................................................. 21
Item 2
Mine Safety Disclosures .......................................................................................................................................................... 21
Item 4
Legal Proceedings .................................................................................................................................................................... 21
Item 3
Mine Safety Disclosures .......................................................................................................................................................... 21
Item 4
PART II
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities .............. 21
Item 5
PART II
Selected Financial Data ............................................................................................................................................................ 23
Item 6
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities .............. 21
Item 5
Management’s Discussion and Analysis of Financial Condition and Results of Operations .................................................. 24
Item 7
Selected Financial Data ............................................................................................................................................................ 23
Item 6
Item 7A Quantitative and Qualitative Disclosures About Market Risk ................................................................................................. 39
Management’s Discussion and Analysis of Financial Condition and Results of Operations .................................................. 24
Item 7
Financial Statements and Supplementary Data ........................................................................................................................ 40
Item 8
Item 7A Quantitative and Qualitative Disclosures About Market Risk ................................................................................................. 39
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .................................................. 67
Item 9
Financial Statements and Supplementary Data ........................................................................................................................ 40
Item 8
Item 9A Controls and Procedures ........................................................................................................................................................... 67
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .................................................. 67
Item 9
Item 9B Other Information .................................................................................................................................................................... 67
Item 9A Controls and Procedures ........................................................................................................................................................... 67
Item 9B Other Information .................................................................................................................................................................... 67
PART III
Item 10 Directors, Executive Officers and Corporate Governance ....................................................................................................... 67
PART III
Item 11 Executive Compensation ......................................................................................................................................................... 67
Item 10 Directors, Executive Officers and Corporate Governance ....................................................................................................... 67
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters ................................ 68
Item 11 Executive Compensation ......................................................................................................................................................... 67
Item 13 Certain Relationships and Related Transactions, and Director Independence ......................................................................... 68
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters ................................ 68
Item 14 Principal Accountant Fees and Services .................................................................................................................................. 68
Item 13 Certain Relationships and Related Transactions, and Director Independence ......................................................................... 68
Item 14 Principal Accountant Fees and Services .................................................................................................................................. 68
PART IV
Item 15 Exhibits, Financial Statement Schedules ................................................................................................................................. 68
PART IV
Signatures ............................................................................................................................................................................................... 70
Item 15 Exhibits, Financial Statement Schedules ................................................................................................................................. 68
Exhibit Index ........................................................................................................................................................................................... 71
Signatures ............................................................................................................................................................................................... 70
Exhibit Index ........................................................................................................................................................................................... 71
Exhibit 21.1 List of Subsidiaries
Exhibit 23.1 Consent of Ernst & Young LLP
Exhibit 21.1 List of Subsidiaries
Exhibit 31.1 Section 302 Certification of Principal Executive Officer
Exhibit 23.1 Consent of Ernst & Young LLP
Exhibit 31.2 Section 302 Certification of Principal Financial Officer
Exhibit 31.1 Section 302 Certification of Principal Executive Officer
Exhibit 32 Section 906 Certification of CEO and CFO
Exhibit 31.2 Section 302 Certification of Principal Financial Officer
Exhibit 101
Exhibit 32 Section 906 Certification of CEO and CFO
Exhibit 101
2
2
Forward-Looking Statements
Forward-Looking Statements
In addition to historical information, this Annual Report may contain “forward-looking statements” relating to Manhattan
In addition to historical information, this Annual Report may contain “forward-looking statements” relating to Manhattan
Associates, Inc. Investor and 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
Associates, Inc. Investor and prospective investors are cautioned that any such forward-looking statements are not guarantees of future
forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by
performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such
such forward-looking statements are delays in product development, undetected software errors, technical difficulties, availability of
forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by
technical personnel, changes in customer requirements, competitive pressures, market acceptance, the impact of acquisitions, and
such forward-looking statements are delays in product development, undetected software errors, technical difficulties, availability of
general economic conditions. Additional factors are set forth in the “Risk Factors” in Part I, Item 1A of this Annual Report. We
technical personnel, changes in customer requirements, competitive pressures, market acceptance, the impact of acquisitions, and
undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of
general economic conditions. Additional factors are set forth in the “Risk Factors” in Part I, Item 1A of this Annual Report. We
unanticipated events or changes in future operating results. Our Annual Report on Form 10-K is available through our website at
undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of
www.manh.com.
unanticipated events or changes in future operating results. Our Annual Report on Form 10-K is available through our website at
www.manh.com.
PART I
PART I
Item 1. Business
Item 1. Business
Overview
Overview
We were founded in 1990 in Manhattan Beach, California and incorporated in Georgia in 1998. References in this filing to
the “Company,” “Manhattan,” “Manhattan Associates,” “we,” “our,” and “us” refer to Manhattan Associates, Inc., our predecessors,
We were founded in 1990 in Manhattan Beach, California and incorporated in Georgia in 1998. References in this filing to
and our wholly-owned and consolidated subsidiaries. Our principal executive offices are located at 2300 Windy Ridge Parkway, Tenth
the “Company,” “Manhattan,” “Manhattan Associates,” “we,” “our,” and “us” refer to Manhattan Associates, Inc., our predecessors,
Floor, Atlanta, Georgia 30339, and our telephone number is 770-955-7070.
and our wholly-owned and consolidated subsidiaries. Our principal executive offices are located at 2300 Windy Ridge Parkway, Tenth
Floor, Atlanta, Georgia 30339, and our telephone number is 770-955-7070.
We develop, sell, deploy, service, and maintain supply chain commerce software solutions for retailers, wholesalers,
manufacturers, governments, and other organizations. Our customers include many of the world’s largest and most profitable
We develop, sell, deploy, service, and maintain supply chain commerce software solutions for retailers, wholesalers,
retailers. Manhattan Associates’ supply chain commerce solutions are at the leading edge of the “omni-channel” commerce
manufacturers, governments, and other organizations. Our customers include many of the world’s largest and most profitable
revolution, as they are positioned to deliver critical business capabilities that seamlessly connect every order and delivery channel
retailers. Manhattan Associates’ supply chain commerce solutions are at the leading edge of the “omni-channel” commerce
across the customer’s entire enterprise. Key benefits of implementing our solutions include:
revolution, as they are positioned to deliver critical business capabilities that seamlessly connect every order and delivery channel
across the customer’s entire enterprise. Key benefits of implementing our solutions include:
• Solving the complexity of operating profitably in an omni-channel world (stores, websites, mobile devices, catalogs, call
• Solving the complexity of operating profitably in an omni-channel world (stores, websites, mobile devices, catalogs, call
centers) by forecasting demand, controlling inventory, enabling “buy everywhere, deliver anywhere” shipping, and managing
bottom line costs through inventory, labor, and asset optimization;
centers) by forecasting demand, controlling inventory, enabling “buy everywhere, deliver anywhere” shipping, and managing
bottom line costs through inventory, labor, and asset optimization;
manufacturers, distributors, customers, and transportation providers;
manufacturers, distributors, customers, and transportation providers;
capturing greater gross margins by optimizing demand fulfillment and total cost of ownership;
capturing greater gross margins by optimizing demand fulfillment and total cost of ownership;
• Opening new revenue opportunities by “saving the sale” on the store floor through network-wide inventory visibility and
• Opening new revenue opportunities by “saving the sale” on the store floor through network-wide inventory visibility and
• Coordinating workflows and communications with the participants in the supply chain ecosystem, including suppliers,
• Coordinating workflows and communications with the participants in the supply chain ecosystem, including suppliers,
• Balancing transportation and inventory costs with desired service levels across all channels;
• Balancing transportation and inventory costs with desired service levels across all channels;
•
•
Increasing productivity and asset utilization in distribution centers, transportation networks, and delivery channels, including
retail stores, to capture more customer revenue and improve return on supply chain investments, including storage, labor,
Increasing productivity and asset utilization in distribution centers, transportation networks, and delivery channels, including
inventory, and transportation investments;
retail stores, to capture more customer revenue and improve return on supply chain investments, including storage, labor,
inventory, and transportation investments;
•
Improving compliance with customer requirements, including radio frequency identification (RFID) and electronic product
•
code (EPC) requirements; and
Improving compliance with customer requirements, including radio frequency identification (RFID) and electronic product
code (EPC) requirements; and
• Accelerating eco-friendliness through “green” initiatives such as reducing carbon footprints and greenhouse gas emissions
• Accelerating eco-friendliness through “green” initiatives such as reducing carbon footprints and greenhouse gas emissions
and improving reuse and recycling.
and improving reuse and recycling.
We believe that a platform-based approach is the best way to optimize an organization’s supply chain, as well as its entire
We believe that a platform-based approach is the best way to optimize an organization’s supply chain, as well as its entire
supply chain ecosystem (every enterprise that interacts with the supply chain). Supply chain ecosystems encompass disparate
functions within an organization that affect its supply chain (such as distribution, transportation, order lifecycle management,
supply chain ecosystem (every enterprise that interacts with the supply chain). Supply chain ecosystems encompass disparate
inventory optimization, and planning and forecasting) as well as interactions with entities outside the organization that are integral to
functions within an organization that affect its supply chain (such as distribution, transportation, order lifecycle management,
its supply chain, including manufacturers, suppliers, distributors, trading partners, transportation providers, channels (such as
inventory optimization, and planning and forecasting) as well as interactions with entities outside the organization that are integral to
catalogers, store retailers, call centers, mobile devices and web outlets) and consumers.
its supply chain, including manufacturers, suppliers, distributors, trading partners, transportation providers, channels (such as
catalogers, store retailers, call centers, mobile devices and web outlets) and consumers.
3
3
We deliver these benefits in a distinctive way through a set of supply-chain-centered capabilities we call Manhattan MORE®:
We deliver these benefits in a distinctive way through a set of supply-chain-centered capabilities we call Manhattan MORE®:
Manhattan’s Optimized Roadmap to Excellence (See Figure 1). These elements work together to coordinate insights, people,
workflows, assets, events, and tasks across supply chain functions from planning through execution. They also help to coordinate
Manhattan’s Optimized Roadmap to Excellence (See Figure 1). These elements work together to coordinate insights, people,
actions, data exchange, and communication among participants in supply chain ecosystems.
workflows, assets, events, and tasks across supply chain functions from planning through execution. They also help to coordinate
actions, data exchange, and communication among participants in supply chain ecosystems.
Figure 1: Manhattan MORE® depicts Manhattan’s Optimized Roadmap to Excellence, our comprehensive
Figure 1: Manhattan MORE® depicts Manhattan’s Optimized Roadmap to Excellence, our comprehensive
methodology for delivering customer value through supply-chain-centered people, principles, products, protocols,
and processes. We build long-term customer relationships through our Customer Excellence Lifecycle, which
methodology for delivering customer value through supply-chain-centered people, principles, products, protocols,
leverages our software, expertise and enriched services in a high-touch cycle of engagement, deployment, and
and processes. We build long-term customer relationships through our Customer Excellence Lifecycle, which
adoption for continuous supply chain advancement.
leverages our software, expertise and enriched services in a high-touch cycle of engagement, deployment, and
adoption for continuous supply chain advancement.
The Omni Channel Revolution – For Retail and Beyond
The Omni Channel Revolution – For Retail and Beyond
For decades, the supply chain had been dominated by a focus on operating
efficiency and cost management. Over the past 20 years, Manhattan Associates has built a
For decades, the supply chain had been dominated by a focus on operating
foundation and world-class reputation for building technology solutions to solve the most
efficiency and cost management. Over the past 20 years, Manhattan Associates has built a
complex and business critical supply chain problems. The consumerization of technology
foundation and world-class reputation for building technology solutions to solve the most
and emergence of on-line commerce have prompted a revolution that demands new supply
complex and business critical supply chain problems. The consumerization of technology
chain capabilities and new supply chain commerce solutions. Today, effective supply
and emergence of on-line commerce have prompted a revolution that demands new supply
chain management is as much about revenue generation as it is about cost reduction.
chain capabilities and new supply chain commerce solutions. Today, effective supply
While the earliest signals of the omni-channel revolution were seen in retail, we believe
chain management is as much about revenue generation as it is about cost reduction.
that virtually every industry around the world will be impacted in one way or another.
While the earliest signals of the omni-channel revolution were seen in retail, we believe
Manufacturers, wholesalers, and third party logistics providers all feel the impact of
that virtually every industry around the world will be impacted in one way or another.
converging channels.
Manufacturers, wholesalers, and third party logistics providers all feel the impact of
converging channels.
For almost every retailer, the omni-channel revolution has sparked an outright
For almost every retailer, the omni-channel revolution has sparked an outright
“land grab” for market share. Switching costs for the average consumer have dropped radically, as virtually every major retailer
operates on-line storefronts as well as physical, brick and mortar locations, placing customer loyalty in jeopardy. Retailers know that
“land grab” for market share. Switching costs for the average consumer have dropped radically, as virtually every major retailer
in order to keep customers they must be able to deliver a consistent shopping experience across every channel and at a cost that is
operates on-line storefronts as well as physical, brick and mortar locations, placing customer loyalty in jeopardy. Retailers know that
in order to keep customers they must be able to deliver a consistent shopping experience across every channel and at a cost that is
4
4
competitive. As the multi-channel business model has evolved, competitors have realized that winning requires more than a great
website. Winning requires an integrated business model that functions seamlessly across every channel and delivers a consistent
competitive. As the multi-channel business model has evolved, competitors have realized that winning requires more than a great
experience at a cost structure that can deliver a profit.
website. Winning requires an integrated business model that functions seamlessly across every channel and delivers a consistent
experience at a cost structure that can deliver a profit.
Manhattan Associates is leading the industry through this radical change with its platform-based solutions that connect
Manhattan Associates is leading the industry through this radical change with its platform-based solutions that connect
supply chain solutions with commerce chain solutions.
supply chain solutions with commerce chain solutions.
Manhattan Associates’ Software Solution Portfolios
Manhattan Associates’ Software Solution Portfolios
Our supply chain commerce software solution portfolios – Manhattan SCOPE® and Manhattan SCALETM – are designed to
Our supply chain commerce software solution portfolios – Manhattan SCOPE® and Manhattan SCALETM – are designed to
leverage our platform investments to deliver both the profitability benefits typically associated with supply chain improvements and
top line revenue gains created by commerce initiatives. Manhattan SCOPE (Supply Chain Optimization, Planning through Execution,
leverage our platform investments to deliver both the profitability benefits typically associated with supply chain improvements and
depicted in Figure 2) leverages our Supply Chain Process PlatformTM (SCPP, depicted in Figure 3) to bring together the supply and
top line revenue gains created by commerce initiatives. Manhattan SCOPE (Supply Chain Optimization, Planning through Execution,
depicted in Figure 2) leverages our Supply Chain Process PlatformTM (SCPP, depicted in Figure 3) to bring together the supply and
commerce chains; Manhattan SCALE (Supply Chain Architected for Logistics Execution, depicted in Figure 4) leverages Microsoft’s
.NET® platform to unify logistics functions.
commerce chains; Manhattan SCALE (Supply Chain Architected for Logistics Execution, depicted in Figure 4) leverages Microsoft’s
.NET® platform to unify logistics functions.
Our solutions operate across Unix, IBM System i, Linux and Microsoft.NET computing platforms, as well as on multiple
Our solutions operate across Unix, IBM System i, Linux and Microsoft.NET computing platforms, as well as on multiple
hardware platforms and systems. Because supply chain solutions necessarily interact with other business operation systems, our
solutions are designed to interoperate with software from other providers as well as with a company’s existing legacy systems. This
hardware platforms and systems. Because supply chain solutions necessarily interact with other business operation systems, our
interfacing and open system capability enables customers to continue using existing computer resources and to choose among a wide
solutions are designed to interoperate with software from other providers as well as with a company’s existing legacy systems. This
variety of existing and emerging computer hardware and peripheral technologies. We provide an integration framework to facilitate
interfacing and open system capability enables customers to continue using existing computer resources and to choose among a wide
rapid and reliable integration to any Enterprise Resource Planning (ERP) or host business systems (including certified integration to
variety of existing and emerging computer hardware and peripheral technologies. We provide an integration framework to facilitate
both SAP and Microsoft Dynamics AX). We also offer certain of our solutions in both on-premise software and cloud computing
rapid and reliable integration to any Enterprise Resource Planning (ERP) or host business systems (including certified integration to
models so that customers can select the option that best meets their requirements for control, flexibility, cost of ownership, and time-
both SAP and Microsoft Dynamics AX). We also offer certain of our solutions in both on-premise software and cloud computing
to-deployment.
models so that customers can select the option that best meets their requirements for control, flexibility, cost of ownership, and time-
to-deployment.
Manhattan SCOPE®
Manhattan SCOPE®
SCOPE is positioned for companies that consider supply chain software, processes, and technology strategic to their market
SCOPE is positioned for companies that consider supply chain software, processes, and technology strategic to their market
leadership. It is the leading portfolio of supply chain commerce solutions built on a common technology platform. SCOPE is
distinctive for several reasons. First, it clearly defines the role and capabilities for supply chain and commerce chain solutions.
leadership. It is the leading portfolio of supply chain commerce solutions built on a common technology platform. SCOPE is
Second, it articulates the convergence of supply chain and commerce chain, particularly in the areas of Distribution Management and
distinctive for several reasons. First, it clearly defines the role and capabilities for supply chain and commerce chain solutions.
Order Lifecycle Management. Finally, it highlights the central value of a supply chain platform by elevating visibility and insight
Second, it articulates the convergence of supply chain and commerce chain, particularly in the areas of Distribution Management and
above all of the functional capabilities.
Order Lifecycle Management. Finally, it highlights the central value of a supply chain platform by elevating visibility and insight
above all of the functional capabilities.
Figure 2: Manhattan SCOPE® Supply Chain Optimization, Planning through Execution, is a portfolio of supply chain
Figure 2: Manhattan SCOPE® Supply Chain Optimization, Planning through Execution, is a portfolio of supply chain
solution suites that leverages our Supply Chain Process Platform to enable high degrees of operational insight,
performance, agility, and optimization at a tightly-managed and overall lower total cost of ownership. This platform-based
solution suites that leverages our Supply Chain Process Platform to enable high degrees of operational insight,
architecture also enables combining different elements of different solution suites into X-Suite solutions to address specific
performance, agility, and optimization at a tightly-managed and overall lower total cost of ownership. This platform-based
supply chain challenges.
architecture also enables combining different elements of different solution suites into X-Suite solutions to address specific
supply chain challenges.
5
5
Visibility and Insight
Visibility and Insight
SCOPE offers a series of solutions designed to provide both network wide visibility as well as analytical insight into all
SCOPE offers a series of solutions designed to provide both network wide visibility as well as analytical insight into all
functions across the supply chain. These solutions include Supply Chain VisibilityTM and Event ManagementTM, which are designed
functions across the supply chain. These solutions include Supply Chain VisibilityTM and Event ManagementTM, which are designed
to provide global inventory and order visibility along with predictive alerting to critical events in the supply chain. Also included is
Total Cost to ServeTM, a financial analytics tool created to provide supply chain executives insight into granular level of cost detail
to provide global inventory and order visibility along with predictive alerting to critical events in the supply chain. Also included is
Total Cost to ServeTM, a financial analytics tool created to provide supply chain executives insight into granular level of cost detail
from purchase to final delivery. This level of information, along with simulation and predictive tools, enables executives and analysts
to better monetize their supply chain, driving revenue and profitability while enhancing customer service levels. Finally, Visibility
from purchase to final delivery. This level of information, along with simulation and predictive tools, enables executives and analysts
and InsightsTM also includes Supply Chain IntelligenceTM, Manhattan’s operational reporting and analytics solution.
to better monetize their supply chain, driving revenue and profitability while enhancing customer service levels. Finally, Visibility
and InsightsTM also includes Supply Chain IntelligenceTM, Manhattan’s operational reporting and analytics solution.
Supply Chain Solution Suites
Supply Chain Solution Suites
Inventory OptimizationTM enables enterprises to reduce overall network inventory to release working capital while improving
Inventory OptimizationTM enables enterprises to reduce overall network inventory to release working capital while improving
sales and customer order fill rates. Inventory Optimization also provides analytical tools to better balance the financial trade-off
between improving customer service levels and overall inventory investments. Our multi-echelon, all-channel solution helps
sales and customer order fill rates. Inventory Optimization also provides analytical tools to better balance the financial trade-off
organizations manage distribution networks with more than one type or level of distribution center between suppliers and various
between improving customer service levels and overall inventory investments. Our multi-echelon, all-channel solution helps
endpoints. Vendor Managed InventoryTM helps formulate tighter, lasting relationships with key trading partners, such as replenishing
organizations manage distribution networks with more than one type or level of distribution center between suppliers and various
endpoints. Vendor Managed InventoryTM helps formulate tighter, lasting relationships with key trading partners, such as replenishing
products into customers’ locations or sharing key supply chain performance indicators.
products into customers’ locations or sharing key supply chain performance indicators.
Transportation Lifecycle ManagementTM optimizes all aspects of transporting product through supply chains, from
Transportation Lifecycle ManagementTM optimizes all aspects of transporting product through supply chains, from
procurement through delivery. The system helps companies manage assets, timing, accuracy, and costs for both inbound and
outbound shipments, and across private and contracted fleets. The solution also interconnects transportation partners and suppliers to
procurement through delivery. The system helps companies manage assets, timing, accuracy, and costs for both inbound and
improve visibility to initial and changing requirements as well as to improve delivery and billing accuracy.
outbound shipments, and across private and contracted fleets. The solution also interconnects transportation partners and suppliers to
improve visibility to initial and changing requirements as well as to improve delivery and billing accuracy.
Distribution ManagementTM is designed to effectively manage the key assets required to run complex distribution operations,
Distribution ManagementTM is designed to effectively manage the key assets required to run complex distribution operations,
and to move goods and information through a warehouse with precision and velocity. The suite enables (among other processes)
knowing what inventory will be arriving at a distribution center; receiving, putting away and shipping inventory, and managing
and to move goods and information through a warehouse with precision and velocity. The suite enables (among other processes)
distribution-related labor.
knowing what inventory will be arriving at a distribution center; receiving, putting away and shipping inventory, and managing
distribution-related labor.
Commerce Chain Solution Suites
Commerce Chain Solution Suites
Order Lifecycle ManagementTM is the heart of the omni-channel enterprise. This solution set leverages network wide
Order Lifecycle ManagementTM is the heart of the omni-channel enterprise. This solution set leverages network wide
inventory and uses a single view of customer demand in order to drive new revenue and maximize profitability. Highlights include
the ability to use store inventory to fulfill on-line orders and to use inventory across the entire network to save in-store sales.
inventory and uses a single view of customer demand in order to drive new revenue and maximize profitability. Highlights include
Advanced algorithms can identify either the most distressed inventory or the lowest fulfillment costs to maximize profit margins. For
the ability to use store inventory to fulfill on-line orders and to use inventory across the entire network to save in-store sales.
retailers, in-store, mobile, and call center capabilities enable their associates to locate and sell items from across their supply chain
Advanced algorithms can identify either the most distressed inventory or the lowest fulfillment costs to maximize profit margins. For
network to meet real-time customer demand.
retailers, in-store, mobile, and call center capabilities enable their associates to locate and sell items from across their supply chain
network to meet real-time customer demand.
Store Inventory and FulfillmentTM brings execution tools to the store floor to enable omni-channel initiatives. Store
Store Inventory and FulfillmentTM brings execution tools to the store floor to enable omni-channel initiatives. Store
Inventory Management provides inventory receiving and auditing tools to help store associates build inventory integrity. Store Order
Fulfillment includes a series of tools to support pick-up in and fulfill from the store. These components provide critical capabilities to
Inventory Management provides inventory receiving and auditing tools to help store associates build inventory integrity. Store Order
enable omni-channel initiatives.
Fulfillment includes a series of tools to support pick-up in and fulfill from the store. These components provide critical capabilities to
enable omni-channel initiatives.
PlanningTM supports all levels of enterprise merchandise planning, from strategic level planning down to assortment and key
item planning. Customer Preference PlanningTM capabilities use multivariable shopper preference data to create merchandise, pricing
PlanningTM supports all levels of enterprise merchandise planning, from strategic level planning down to assortment and key
item planning. Customer Preference PlanningTM capabilities use multivariable shopper preference data to create merchandise, pricing
and promotion plans tuned to how customers think when shopping and buying across multiple channels (including stores, catalogs, the
web, mobile devices and call centers) so retailers understand relationships among product type, style, brand, color, fabrication, and
and promotion plans tuned to how customers think when shopping and buying across multiple channels (including stores, catalogs, the
price when their customers make decisions to buy.
web, mobile devices and call centers) so retailers understand relationships among product type, style, brand, color, fabrication, and
price when their customers make decisions to buy.
Supply Chain Process Platform
Supply Chain Process Platform
At the foundation of Manhattan SCOPE is our Supply Chain Process Platform (SCPP), which utilizes a service-oriented
At the foundation of Manhattan SCOPE is our Supply Chain Process Platform (SCPP), which utilizes a service-oriented
architecture (SOA), common data model, collaborative gateways, and an optimization engine (among other constructs) to facilitate
supply chain transformations that help our customers create and sustain competitive advantages. Specific elements of Manhattan’s
architecture (SOA), common data model, collaborative gateways, and an optimization engine (among other constructs) to facilitate
SCPP, along with related core benefits, are detailed in Figure 3.
supply chain transformations that help our customers create and sustain competitive advantages. Specific elements of Manhattan’s
SCPP, along with related core benefits, are detailed in Figure 3.
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Among its overall benefits, our SCPP enables customers using multiple Manhattan SCOPE applications to achieve Cross-
Among its overall benefits, our SCPP enables customers using multiple Manhattan SCOPE applications to achieve Cross-
Application OptimizationTM. Cross-Application Optimization is our term for the compound benefits derived not only from optimizing
Application OptimizationTM. Cross-Application Optimization is our term for the compound benefits derived not only from optimizing
multiple functional supply chain elements individually, but also collectively by considering factors across multiple functions in a
supply chain (e.g., warehouse management, transportation, inventory, and labor) simultaneously, so that their individual and related
multiple functional supply chain elements individually, but also collectively by considering factors across multiple functions in a
impacts inform each decision to determine the optimal course of action for the organization as a whole. Our SCPP’s common
supply chain (e.g., warehouse management, transportation, inventory, and labor) simultaneously, so that their individual and related
architecture also enables customers to speed implementations, simplify upgrades, and achieve lower total cost of ownership over time.
impacts inform each decision to determine the optimal course of action for the organization as a whole. Our SCPP’s common
architecture also enables customers to speed implementations, simplify upgrades, and achieve lower total cost of ownership over time.
Figure 3: Manhattan’s Supply Chain Process Platform provides the foundation for Manhattan SCOPE Solution
Suites, Platform Applications, and X-Suite Solutions. This common architecture provides agility and business
Figure 3: Manhattan’s Supply Chain Process Platform provides the foundation for Manhattan SCOPE Solution
differentiation advantages to operations executives while also simplifying maintenance and upgrade paths and
Suites, Platform Applications, and X-Suite Solutions. This common architecture provides agility and business
lowering the total cost of ownership over time for information technology and financial executives.
differentiation advantages to operations executives while also simplifying maintenance and upgrade paths and
lowering the total cost of ownership over time for information technology and financial executives.
Manhattan SCALETM
Manhattan SCALETM
SCALE is our portfolio of logistics execution solutions built on the Microsoft®.NET platform. It is targeted toward
SCALE is our portfolio of logistics execution solutions built on the Microsoft®.NET platform. It is targeted toward
companies with execution-focused supply chain needs that require speed-to-value, resource-light system configuration and
maintenance, and the ability to quickly scale their logistics operations up or down in response to market fluctuations or business
companies with execution-focused supply chain needs that require speed-to-value, resource-light system configuration and
requirement changes. SCALE combines the features of Trading Partner Management, Yard Management, Optimization, Warehouse
maintenance, and the ability to quickly scale their logistics operations up or down in response to market fluctuations or business
Management, and Transportation Execution, as shown in Figure 4.
requirement changes. SCALE combines the features of Trading Partner Management, Yard Management, Optimization, Warehouse
Management, and Transportation Execution, as shown in Figure 4.
Because SCALE leverages a common platform, solutions share common data elements, and each user can access all
Because SCALE leverages a common platform, solutions share common data elements, and each user can access all
applications through a single sign-on. Users also can set up “dashboards” that enable easy access to real-time information most
applications through a single sign-on. Users also can set up “dashboards” that enable easy access to real-time information most
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relevant to their jobs. SCALE’s ease of deployment, operation, and support make it a popular choice for organizations operating in
countries with emerging and developing economies, and where technical support resources are limited.
relevant to their jobs. SCALE’s ease of deployment, operation, and support make it a popular choice for organizations operating in
countries with emerging and developing economies, and where technical support resources are limited.
Figure 4: Manhattan’s Supply Chain Architected for Logistics Execution is a portfolio of logistics solutions that
leverages the Microsoft®.NET platform and is designed for organizations that want to improve their logistics
Figure 4: Manhattan’s Supply Chain Architected for Logistics Execution is a portfolio of logistics solutions that
leverages the Microsoft®.NET platform and is designed for organizations that want to improve their logistics
operations quickly with limited technical resources. SCALE also is a popular solution choice for organizations
operating in countries with emerging supply chain ecosystems.
operations quickly with limited technical resources. SCALE also is a popular solution choice for organizations
operating in countries with emerging supply chain ecosystems.
Professional Services
Professional Services
We advise and assist our customers in planning and implementing our solutions through our global Professional Services
We advise and assist our customers in planning and implementing our solutions through our global Professional Services
Organization. To ensure long-term successful customer relationships, consultants assist customers with the initial deployment of our
systems, the conversion and transfer of the customer’s historical data onto our systems, and ongoing training, education, and system
Organization. To ensure long-term successful customer relationships, consultants assist customers with the initial deployment of our
upgrades. We believe our Professional Services teams enable customers to implement our solutions knowledgeably and in the
systems, the conversion and transfer of the customer’s historical data onto our systems, and ongoing training, education, and system
appropriate amount of time, help customers achieve expected results from system investments, continuously identify new
upgrades. We believe our Professional Services teams enable customers to implement our solutions knowledgeably and in the
opportunities for supply chain advancements, and meaningfully add to our industry-specific knowledge base to improve future
appropriate amount of time, help customers achieve expected results from system investments, continuously identify new
implementations and product innovations.
opportunities for supply chain advancements, and meaningfully add to our industry-specific knowledge base to improve future
implementations and product innovations.
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Substantially all of our customers use at least some portion of our Professional Services to implement and support our
software solutions. Professional Services typically are rendered under time and materials contracts, with services billed by the hour.
Substantially all of our customers use at least some portion of our Professional Services to implement and support our
Professional Services sometimes are rendered under fixed-fee contracts, with payments due on specific dates or milestones. We
software solutions. Professional Services typically are rendered under time and materials contracts, with services billed by the hour.
believe that increased sales of our software solutions will drive higher demand for our Professional Services.
Professional Services sometimes are rendered under fixed-fee contracts, with payments due on specific dates or milestones. We
believe that increased sales of our software solutions will drive higher demand for our Professional Services.
We believe our Professional Services team delivers deep supply chain domain expertise to our customers through industry-
We believe our Professional Services team delivers deep supply chain domain expertise to our customers through industry-
specific “best-practices” protocols and processes developed through the collective knowledge we have gained in more than 3,900
installations worldwide. We also extensively train our consulting personnel on supply chain operations and on our solutions.
specific “best-practices” protocols and processes developed through the collective knowledge we have gained in more than 3,900
installations worldwide. We also extensively train our consulting personnel on supply chain operations and on our solutions.
Business consultants, systems analysts, and technical personnel assist customers in all phases of implementing our systems,
Business consultants, systems analysts, and technical personnel assist customers in all phases of implementing our systems,
including planning and design, customer-specific module configuration, on-site implementation, or conversion from existing systems,
and integration with customer systems such as Enterprise Resource Planning (ERP), web- and mobile-based commerce platforms, and
including planning and design, customer-specific module configuration, on-site implementation, or conversion from existing systems,
Material Handling Equipment (MHE) systems. At times, third-party consultants, such as those from major systems integrators, assist
and integration with customer systems such as Enterprise Resource Planning (ERP), web- and mobile-based commerce platforms, and
our customers with certain implementations.
Material Handling Equipment (MHE) systems. At times, third-party consultants, such as those from major systems integrators, assist
our customers with certain implementations.
Customer Support Services and Software Enhancements
Customer Support Services and Software Enhancements
We offer a comprehensive program that provides our customers with software upgrades for additional or improved
functionality and technological advances incorporating emerging supply chain and industry initiatives. Over the past three years, our
We offer a comprehensive program that provides our customers with software upgrades for additional or improved
annual renewal rate of customers subscribing to comprehensive support and enhancements has been greater than 90%. We are able to
functionality and technological advances incorporating emerging supply chain and industry initiatives. Over the past three years, our
remotely access customer systems to perform diagnostics, provide on-line assistance, and facilitate software upgrades. We offer 24
annual renewal rate of customers subscribing to comprehensive support and enhancements has been greater than 90%. We are able to
hour customer support every day of the year, plus software upgrades for an annual fee that is paid in advance and is based on the
remotely access customer systems to perform diagnostics, provide on-line assistance, and facilitate software upgrades. We offer 24
solutions the customer has and the service level required. Software upgrades are provided under this program on a when-and-if-
hour customer support every day of the year, plus software upgrades for an annual fee that is paid in advance and is based on the
available basis.
solutions the customer has and the service level required. Software upgrades are provided under this program on a when-and-if-
available basis.
Training
Training
We offer training in a structured environment for new and existing users. Training programs are provided at fixed fees per-
We offer training in a structured environment for new and existing users. Training programs are provided at fixed fees per-
person, per-class, and cover topics such as (but not limited to) solution use, configuration, implementation, and system administration.
Several computer-based training programs can be purchased for a fixed fee for use at client sites.
person, per-class, and cover topics such as (but not limited to) solution use, configuration, implementation, and system administration.
Several computer-based training programs can be purchased for a fixed fee for use at client sites.
Hardware Sales
Hardware Sales
Along with software licenses, and as a convenience for our customers, we sell a variety of hardware developed and
manufactured by others, including (but are not limited to) computer hardware, radio frequency terminal networks, RFID chip readers,
Along with software licenses, and as a convenience for our customers, we sell a variety of hardware developed and
bar code printers and scanners, and other peripherals. We resell all third-party hardware products and related maintenance pursuant to
manufactured by others, including (but are not limited to) computer hardware, radio frequency terminal networks, RFID chip readers,
agreements with manufacturers or through distributor-authorized reseller agreements pursuant to which we are entitled to purchase
bar code printers and scanners, and other peripherals. We resell all third-party hardware products and related maintenance pursuant to
hardware products and services at discount prices and to receive technical support in connection with product installations and any
agreements with manufacturers or through distributor-authorized reseller agreements pursuant to which we are entitled to purchase
subsequent product malfunctions. We do not maintain hardware inventory as we generally purchase hardware from vendors only after
hardware products and services at discount prices and to receive technical support in connection with product installations and any
receiving related customer orders.
subsequent product malfunctions. We do not maintain hardware inventory as we generally purchase hardware from vendors only after
receiving related customer orders.
Strategy
Strategy
Our objective is to extend our position as the leading global supply chain solutions provider for supply chain leaders,
Our objective is to extend our position as the leading global supply chain solutions provider for supply chain leaders,
meaning organizations intent on creating and sustaining market advantages by leveraging supply chain solutions. Our solutions help
global distributors, wholesalers, retailers, logistics providers and manufacturers successfully manage accelerating and fluctuating
meaning organizations intent on creating and sustaining market advantages by leveraging supply chain solutions. Our solutions help
market demands, as well as master the increasing complexity and volatility of their local and global supply chains. We believe our
global distributors, wholesalers, retailers, logistics providers and manufacturers successfully manage accelerating and fluctuating
solutions are advanced, highly functional, and highly scalable. They are designed to enable organizations to: create customer
market demands, as well as master the increasing complexity and volatility of their local and global supply chains. We believe our
experiences consistent with their brand values; improve relationships with suppliers, customers and logistics providers; leverage
solutions are advanced, highly functional, and highly scalable. They are designed to enable organizations to: create customer
investments across supply chain functions; effectively generate revenue and manage costs; and meet dynamically changing customer
experiences consistent with their brand values; improve relationships with suppliers, customers and logistics providers; leverage
requirements. We believe our solutions are uniquely positioned to holistically optimize supply chains from planning through
investments across supply chain functions; effectively generate revenue and manage costs; and meet dynamically changing customer
execution, and that customers can leverage this holistic approach to create operational and market advantages. Strategies to
requirements. We believe our solutions are uniquely positioned to holistically optimize supply chains from planning through
accomplish our objectives include (but are not limited to) the following:
execution, and that customers can leverage this holistic approach to create operational and market advantages. Strategies to
accomplish our objectives include (but are not limited to) the following:
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Develop and Enhance Software Solutions. We intend to continue to focus our research and development resources on
enhancing our supply chain solutions. We offer what we believe to be the broadest and most richly-featured software portfolio in the
Develop and Enhance Software Solutions. We intend to continue to focus our research and development resources on
supply chain solutions marketplace. To continuously expand functionality and value, we plan to continue to provide enhancements to
enhancing our supply chain solutions. We offer what we believe to be the broadest and most richly-featured software portfolio in the
existing solutions and to introduce new solutions to address evolving industry standards and market needs. We identify these
supply chain solutions marketplace. To continuously expand functionality and value, we plan to continue to provide enhancements to
opportunities through our Product Management, Professional Services, Customer Support, and Account Management organizations,
existing solutions and to introduce new solutions to address evolving industry standards and market needs. We identify these
through interactions such as ongoing customer consulting engagements and implementations, sessions with our solution user groups,
opportunities through our Product Management, Professional Services, Customer Support, and Account Management organizations,
association with leading industry analyst and market research firms, and participation on industry standards and research committees.
through interactions such as ongoing customer consulting engagements and implementations, sessions with our solution user groups,
Our solutions address needs in various vertical markets, including retail, consumer goods, food and grocery, logistics service
association with leading industry analyst and market research firms, and participation on industry standards and research committees.
providers, industrial and wholesale, high technology and electronics, life sciences and government. We intend to continue to enhance
Our solutions address needs in various vertical markets, including retail, consumer goods, food and grocery, logistics service
our solutions to meet the dynamic requirements of these and new vertical markets as business opportunities dictate.
providers, industrial and wholesale, high technology and electronics, life sciences and government. We intend to continue to enhance
our solutions to meet the dynamic requirements of these and new vertical markets as business opportunities dictate.
Expand International Presence. We believe that our solutions offer significant benefits to customers in markets outside the
United States, and for organizations with global operations. Approximately 1,270 out of a total of approximately 2,400 Manhattan
Expand International Presence. We believe that our solutions offer significant benefits to customers in markets outside the
employees work outside the United States to build international sales, service our international clients, and further develop our
United States, and for organizations with global operations. Approximately 1,270 out of a total of approximately 2,400 Manhattan
solutions. We have offices in Australia, China, France, India, Japan, the Netherlands, Singapore, and the United Kingdom, as well as
employees work outside the United States to build international sales, service our international clients, and further develop our
representatives in Mexico and reseller partnerships in Latin America, Eastern Europe, the Middle East, South Africa, and Asia. Our
solutions. We have offices in Australia, China, France, India, Japan, the Netherlands, Singapore, and the United Kingdom, as well as
Europe, Middle East, and Africa (EMEA) operations support sales, implementation services, and customer support functions for
representatives in Mexico and reseller partnerships in Latin America, Eastern Europe, the Middle East, South Africa, and Asia. Our
customers in Europe as well as a number of customers across the Middle East, concentrated in countries we consider politically and
Europe, Middle East, and Africa (EMEA) operations support sales, implementation services, and customer support functions for
economically stable, such as Jordan, Kuwait, Oman, Turkey, Saudi Arabia, and the United Arab Emirates. Our Asia Pacific (APAC)
customers in Europe as well as a number of customers across the Middle East, concentrated in countries we consider politically and
operations service emerging opportunities in China, Southeast Asia, and India, as well as more established markets in Australia and
economically stable, such as Jordan, Kuwait, Oman, Turkey, Saudi Arabia, and the United Arab Emirates. Our Asia Pacific (APAC)
New Zealand. Our international strategy includes leveraging the strength of our relationships with current U.S. and Europe-based
operations service emerging opportunities in China, Southeast Asia, and India, as well as more established markets in Australia and
customers that also have significant international operations, and pursuing strategic marketing partnerships with international systems
New Zealand. Our international strategy includes leveraging the strength of our relationships with current U.S. and Europe-based
integrators and third-party solution providers.
customers that also have significant international operations, and pursuing strategic marketing partnerships with international systems
integrators and third-party solution providers.
Expand Our Strategic Alliances and Indirect Sales Channels. We currently sell our products primarily through our direct
sales personnel, and through partnership agreements with a select number of organizations in emerging markets where we do not
Expand Our Strategic Alliances and Indirect Sales Channels. We currently sell our products primarily through our direct
currently have a direct sales presence. We have worked on joint projects and joint sales initiatives with industry-leading consultants
sales personnel, and through partnership agreements with a select number of organizations in emerging markets where we do not
and software systems implementers, including most of the large consulting firms and other systems consulting firms specializing in
currently have a direct sales presence. We have worked on joint projects and joint sales initiatives with industry-leading consultants
our targeted industries, to supplement our direct sales force and professional services organization. We have been expanding our
and software systems implementers, including most of the large consulting firms and other systems consulting firms specializing in
indirect sales channels through reseller agreements, marketing agreements, and agreements with third-party logistics providers. These
our targeted industries, to supplement our direct sales force and professional services organization. We have been expanding our
alliances extend our market coverage and provide us with new business leads and access to trained implementation personnel.
indirect sales channels through reseller agreements, marketing agreements, and agreements with third-party logistics providers. These
alliances extend our market coverage and provide us with new business leads and access to trained implementation personnel.
Acquire or Invest in Complementary Businesses. We continuously evaluate strategic acquisition opportunities of
technologies, solutions, and businesses that are consistent with our platform-based strategy and enable us to enhance and expand our
Acquire or Invest in Complementary Businesses. We continuously evaluate strategic acquisition opportunities of
supply chain planning and execution solutions and service offerings. Preferred acquisition targets are those that would be
technologies, solutions, and businesses that are consistent with our platform-based strategy and enable us to enhance and expand our
complementary to our existing solutions and technologies, expand our geographic presence and distribution channels, extend our
supply chain planning and execution solutions and service offerings. Preferred acquisition targets are those that would be
presence into additional vertical markets with challenges and requirements similar to those we currently serve, and further solidify our
complementary to our existing solutions and technologies, expand our geographic presence and distribution channels, extend our
leadership position within the primary components of supply chain planning and execution.
presence into additional vertical markets with challenges and requirements similar to those we currently serve, and further solidify our
leadership position within the primary components of supply chain planning and execution.
Sales and Marketing
Sales and Marketing
We employ multi-disciplinary sales teams that consist of professionals with industry experience in sales and technical sales
support. To date, we have generated the majority of our software sales (licensing) revenue through our direct sales force. We plan to
We employ multi-disciplinary sales teams that consist of professionals with industry experience in sales and technical sales
continue to invest in our sales, services, and marketing organizations within the United States, EMEA, and APAC, and to pursue
support. To date, we have generated the majority of our software sales (licensing) revenue through our direct sales force. We plan to
strategic marketing partnerships. We conduct comprehensive global marketing programs that include prospect profiling and targeting,
continue to invest in our sales, services, and marketing organizations within the United States, EMEA, and APAC, and to pursue
lead generation, public relations, analyst relations, trade show attendance and sponsorships, supply chain conference hosting, online
strategic marketing partnerships. We conduct comprehensive global marketing programs that include prospect profiling and targeting,
marketing, joint promotion programs with vendors and consultants, and ongoing customer communication programs.
lead generation, public relations, analyst relations, trade show attendance and sponsorships, supply chain conference hosting, online
marketing, joint promotion programs with vendors and consultants, and ongoing customer communication programs.
Our sales cycle typically begins with the generation of a sales lead — through in-house telemarketing efforts, targeted
promotions, web inquiries, trade show presence, speaking engagements, hosted seminars, or other means of referral — or the receipt
Our sales cycle typically begins with the generation of a sales lead — through in-house telemarketing efforts, targeted
of a request for proposal from a prospective customer. Leads are qualified and opportunities are closed through a process that includes
promotions, web inquiries, trade show presence, speaking engagements, hosted seminars, or other means of referral — or the receipt
telephone-based assessments of requirements; responses to requests for proposals, presentations and product demonstrations, site visits
of a request for proposal from a prospective customer. Leads are qualified and opportunities are closed through a process that includes
and/or reference calls with organizations already using our supply chain solutions, and contract negotiations. Sales cycles vary
telephone-based assessments of requirements; responses to requests for proposals, presentations and product demonstrations, site visits
substantially from opportunity to opportunity, but typically require six to twelve months.
and/or reference calls with organizations already using our supply chain solutions, and contract negotiations. Sales cycles vary
substantially from opportunity to opportunity, but typically require six to twelve months.
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In addition to new customer sales, we plan to continue to leverage our existing customer base to drive revenue from system
upgrades, sales of additional licenses of purchased solutions, and sales of new or add-on solutions. To efficiently penetrate emerging
In addition to new customer sales, we plan to continue to leverage our existing customer base to drive revenue from system
global markets, we leverage indirect sales channels, including sales through reseller agreements, marketing agreements, and
upgrades, sales of additional licenses of purchased solutions, and sales of new or add-on solutions. To efficiently penetrate emerging
agreements with third-party logistics providers. To extend our market coverage, generate new business leads, and provide access to
global markets, we leverage indirect sales channels, including sales through reseller agreements, marketing agreements, and
trained implementation personnel, we leverage strategic alliances with systems integrators skilled at implementing our solutions.
agreements with third-party logistics providers. To extend our market coverage, generate new business leads, and provide access to
Business referrals and leads are positively influenced by systems integrators, which include most of the large consulting firms and
trained implementation personnel, we leverage strategic alliances with systems integrators skilled at implementing our solutions.
other systems consulting firms specializing in our targeted industries.
Business referrals and leads are positively influenced by systems integrators, which include most of the large consulting firms and
other systems consulting firms specializing in our targeted industries.
Our Manhattan Value Partner (Manhattan MVP™) and Manhattan GeoPartner™ programs foster joint sales and marketing
with other organizations. Manhattan Value Partners are proven software and hardware providers, trusted third-party integrators and
Our Manhattan Value Partner (Manhattan MVP™) and Manhattan GeoPartner™ programs foster joint sales and marketing
consultants who bring added value to customer engagements through vertical industry knowledge or technical specialization.
with other organizations. Manhattan Value Partners are proven software and hardware providers, trusted third-party integrators and
Manhattan MVPs support and complement our supply chain solutions so we can provide customers with a comprehensive approach
consultants who bring added value to customer engagements through vertical industry knowledge or technical specialization.
that is suited to their business requirements. This collaborative program is designed to benefit both Manhattan and our partners
Manhattan MVPs support and complement our supply chain solutions so we can provide customers with a comprehensive approach
through tailored joint marketing, sales and, in some cases, co-development efforts. Among others, Manhattan MVPs include IBM,
that is suited to their business requirements. This collaborative program is designed to benefit both Manhattan and our partners
Deloitte, Kurt Salmon, Microsoft, and Motorola. Manhattan GeoPartners represent a select group of companies that sell and
through tailored joint marketing, sales and, in some cases, co-development efforts. Among others, Manhattan MVPs include IBM,
implement our solutions in specific geographies around the world, each providing valuable localized expertise to meet customer needs
Deloitte, Kurt Salmon, Microsoft, and Motorola. Manhattan GeoPartners represent a select group of companies that sell and
in areas such as Western Europe, Eastern Europe, Russia, the Middle East, Latin America, Africa, and the Asia Pacific region.
implement our solutions in specific geographies around the world, each providing valuable localized expertise to meet customer needs
in areas such as Western Europe, Eastern Europe, Russia, the Middle East, Latin America, Africa, and the Asia Pacific region.
Customers
Customers
To date, our customers have been suppliers, manufacturers, distributors, retailers, and logistics providers in a variety of
To date, our customers have been suppliers, manufacturers, distributors, retailers, and logistics providers in a variety of
industries. Our top five customers (new or pre-existing) in the aggregate accounted for 12%, 15%, and 10% of total revenue for the
years ended December 31, 2012, 2011, and 2010, respectively. No single customer accounted for more than 10% of our total revenue
industries. Our top five customers (new or pre-existing) in the aggregate accounted for 12%, 15%, and 10% of total revenue for the
in 2012, 2011, or 2010.
years ended December 31, 2012, 2011, and 2010, respectively. No single customer accounted for more than 10% of our total revenue
in 2012, 2011, or 2010.
Product Development
Product Development
We focus our development efforts on adding new functionality to existing solutions, integrating our various solution
offerings, enhancing the operability of our solutions across our Supply Chain Process Platform and across distributed and alternative
We focus our development efforts on adding new functionality to existing solutions, integrating our various solution
hardware platforms, operating systems, and database systems, and developing new solutions. We believe that our future success
offerings, enhancing the operability of our solutions across our Supply Chain Process Platform and across distributed and alternative
depends, in part, on our ability to continue to enhance existing solutions, to respond to dynamically changing customer requirements,
hardware platforms, operating systems, and database systems, and developing new solutions. We believe that our future success
and to develop new or enhanced solutions that incorporate new technological developments and emerging supply chain and industry
depends, in part, on our ability to continue to enhance existing solutions, to respond to dynamically changing customer requirements,
standards. To that end, development frequently focuses on base system enhancements and incorporating new user requirements and
and to develop new or enhanced solutions that incorporate new technological developments and emerging supply chain and industry
features into our solutions. As a result, we deliver packaged, highly configurable solutions with increasingly rich functionality rather
standards. To that end, development frequently focuses on base system enhancements and incorporating new user requirements and
than custom-developed software. We also deliver interface toolkits for many major ERP systems to enhance communication and
features into our solutions. As a result, we deliver packaged, highly configurable solutions with increasingly rich functionality rather
improve data flows between our core solutions and our clients’ host systems.
than custom-developed software. We also deliver interface toolkits for many major ERP systems to enhance communication and
improve data flows between our core solutions and our clients’ host systems.
We leverage internal and external scientific advisors to inform our solution strategies and research and development
approaches with the most advanced thinking on supply chain opportunities, challenges, and technologies. Our internal research team
We leverage internal and external scientific advisors to inform our solution strategies and research and development
is comprised of Ph.D.-credentialed math and science experts who work on creating and solving algorithms and other constructs that
approaches with the most advanced thinking on supply chain opportunities, challenges, and technologies. Our internal research team
advance the optimization capabilities and other aspects of our solutions. Our external Science Advisory Board unites the thinking of
is comprised of Ph.D.-credentialed math and science experts who work on creating and solving algorithms and other constructs that
experts from leading educational institutions known for their supply chain disciplines, and practitioners from organizations deploying
advance the optimization capabilities and other aspects of our solutions. Our external Science Advisory Board unites the thinking of
supply chain technology in innovative and market-advancing ways. Together, our Research Team and Science Advisory Board
experts from leading educational institutions known for their supply chain disciplines, and practitioners from organizations deploying
inform both the practical business approaches and the mathematical and scientific inventiveness of our solutions.
supply chain technology in innovative and market-advancing ways. Together, our Research Team and Science Advisory Board
inform both the practical business approaches and the mathematical and scientific inventiveness of our solutions.
We conduct most development internally in the U.S. and India to retain development knowledge and promote programming
We conduct most development internally in the U.S. and India to retain development knowledge and promote programming
standards continuity. However, we may periodically outsource some projects that can be performed separately and/or that require
special skills. We also use third-party research and development companies for translation to localize our products into Chinese,
standards continuity. However, we may periodically outsource some projects that can be performed separately and/or that require
French, Japanese, and Spanish.
special skills. We also use third-party research and development companies for translation to localize our products into Chinese,
French, Japanese, and Spanish.
Our research and development expenses for the years ended December 31, 2012, 2011, and 2010 were $44.7 million, $42.4
Our research and development expenses for the years ended December 31, 2012, 2011, and 2010 were $44.7 million, $42.4
million, and $40.5 million, respectively. We intend to continue to invest significantly in product development.
million, and $40.5 million, respectively. We intend to continue to invest significantly in product development.
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solutions;
solutions;
Competition
Competition
Our solutions are solely focused on the supply chain planning and execution markets, which have been consolidating rapidly,
Our solutions are solely focused on the supply chain planning and execution markets, which have been consolidating rapidly,
are intensely competitive, and are characterized by rapid technological change. The principal competitive factors affecting the
markets for our solutions include: industry expertise; company and solution reputation; company viability; compliance with industry
are intensely competitive, and are characterized by rapid technological change. The principal competitive factors affecting the
standards; solution architecture; solution functionality and features; integration experience, particularly with ERP providers and
markets for our solutions include: industry expertise; company and solution reputation; company viability; compliance with industry
material handling equipment providers; ease and speed of implementation; proven return on investment; historical and current solution
standards; solution architecture; solution functionality and features; integration experience, particularly with ERP providers and
quality and performance; total cost of ownership; solution price; and ongoing solution support structure. We believe we compete
material handling equipment providers; ease and speed of implementation; proven return on investment; historical and current solution
favorably with respect to each of these factors.
quality and performance; total cost of ownership; solution price; and ongoing solution support structure. We believe we compete
favorably with respect to each of these factors.
Our competitors are diverse and offer a variety of solutions directed at various aspects of the supply chain, as well as at the
Our competitors are diverse and offer a variety of solutions directed at various aspects of the supply chain, as well as at the
enterprise as a whole. Our existing competitors include:
enterprise as a whole. Our existing competitors include:
• Corporate information technology departments of current or potential customers capable of internally developing
• Corporate information technology departments of current or potential customers capable of internally developing
• ERP vendors, including Oracle, SAP, and Infor, among others;
• ERP vendors, including Oracle, SAP, and Infor, among others;
•
•
Supply chain execution vendors, including JDA Software Group, Inc. (JDA), HighJump Software Inc., and the
Sterling Commerce division of IBM, among others;
Supply chain execution vendors, including JDA Software Group, Inc. (JDA), HighJump Software Inc., and the
Sterling Commerce division of IBM, among others;
Supply chain planning vendors, including JDA and SAS Institute Inc., among others; and
Supply chain planning vendors, including JDA and SAS Institute Inc., among others; and
Smaller independent companies that have developed or are attempting to develop supply chain execution solutions
and/or planning solutions that apply in specific countries and/or globally.
Smaller independent companies that have developed or are attempting to develop supply chain execution solutions
and/or planning solutions that apply in specific countries and/or globally.
•
•
•
•
We anticipate facing increased competition from ERP and supply chain management (SCM) applications vendors and
business application software vendors that may broaden their solution offerings by internally developing or by acquiring or partnering
We anticipate facing increased competition from ERP and supply chain management (SCM) applications vendors and
with independent developers of supply chain planning and execution software. Some of these ERP and SCM companies and other
business application software vendors that may broaden their solution offerings by internally developing or by acquiring or partnering
potential competitors have longer operating histories; significantly more financial, technical, marketing and other resources; greater
with independent developers of supply chain planning and execution software. Some of these ERP and SCM companies and other
name recognition; broader solutions; and larger installed bases of customers than us. To the extent that ERP and SCM vendors or
potential competitors have longer operating histories; significantly more financial, technical, marketing and other resources; greater
other large competitors develop or acquire systems with functionality comparable or superior to ours, their larger customer bases,
name recognition; broader solutions; and larger installed bases of customers than us. To the extent that ERP and SCM vendors or
long-standing customer relationships, and ability to offer broader solutions outside the scope of supply chain could create significant
other large competitors develop or acquire systems with functionality comparable or superior to ours, their larger customer bases,
competitive advantage for them. It also is possible that new competitors or alliances among current and/or new competitors could
long-standing customer relationships, and ability to offer broader solutions outside the scope of supply chain could create significant
emerge to win significant market share. Increased competition could result in price reductions, fewer customer orders, reduced
competitive advantage for them. It also is possible that new competitors or alliances among current and/or new competitors could
earnings and margins and loss of market share. In turn, this could have a material adverse effect on our business, results of operations,
emerge to win significant market share. Increased competition could result in price reductions, fewer customer orders, reduced
cash flow, and financial condition.
earnings and margins and loss of market share. In turn, this could have a material adverse effect on our business, results of operations,
cash flow, and financial condition.
We believe we have established meaningful competitive advantages and have built barriers to market entry through our
We believe we have established meaningful competitive advantages and have built barriers to market entry through our
supply chain expertise; our platform-based solution approach; our track record of continuous supply chain innovation and investment;
our strong and endorsing customer relationships; our significant success in deploying and supporting supply chains for market-leading
supply chain expertise; our platform-based solution approach; our track record of continuous supply chain innovation and investment;
companies; and our ability to out-execute others in identifying sales opportunities and demonstrating expertise throughout the sales
our strong and endorsing customer relationships; our significant success in deploying and supporting supply chains for market-leading
cycle. However, to further our market success, we must continue to respond promptly and effectively to technological change and
companies; and our ability to out-execute others in identifying sales opportunities and demonstrating expertise throughout the sales
competitors’ innovations. Consequently, we cannot assure that we will not be required to make substantial additional investments in
cycle. However, to further our market success, we must continue to respond promptly and effectively to technological change and
research, development, marketing, sales and customer service efforts in order to meet any competitive threat, or that we will be able to
competitors’ innovations. Consequently, we cannot assure that we will not be required to make substantial additional investments in
compete successfully in the future.
research, development, marketing, sales and customer service efforts in order to meet any competitive threat, or that we will be able to
compete successfully in the future.
International Operations; Segments
International Operations; Segments
We have three reporting segments, based on geographic location: the Americas; Europe, Middle East and Africa (“EMEA”);
We have three reporting segments, based on geographic location: the Americas; Europe, Middle East and Africa (“EMEA”);
and Asia Pacific (“APAC”). For further information on our segments, see Note 7 to our consolidated financial statements. Our
international revenue was approximately $104.4 million, $90.7 million, and $80.7 million for the years ended December 31, 2012,
and Asia Pacific (“APAC”). For further information on our segments, see Note 7 to our consolidated financial statements. Our
2011, and 2010, respectively, which represents approximately 28%, 28%, and 27% of our total revenue for the years ended December
international revenue was approximately $104.4 million, $90.7 million, and $80.7 million for the years ended December 31, 2012,
31, 2012, 2011, and 2010, respectively. International revenue includes all revenue derived from sales to customers outside the United
2011, and 2010, respectively, which represents approximately 28%, 28%, and 27% of our total revenue for the years ended December
States. We now have approximately 1,270 employees outside the United States.
31, 2012, 2011, and 2010, respectively. International revenue includes all revenue derived from sales to customers outside the United
States. We now have approximately 1,270 employees outside the United States.
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Proprietary Rights
Proprietary Rights
We rely on a combination of copyright, trade secret, trademark, and trade dress laws, confidentiality procedures, and
contractual provisions to protect our proprietary rights in our products, processes and technology. We have registered trademarks for
We rely on a combination of copyright, trade secret, trademark, and trade dress laws, confidentiality procedures, and
Manhattan Associates and the Manhattan Associates logo, as well as a number of our products and features. Generally we enter into
contractual provisions to protect our proprietary rights in our products, processes and technology. We have registered trademarks for
confidentiality and assignment-of-rights agreements with our employees, consultants, customers and potential customers and limit
Manhattan Associates and the Manhattan Associates logo, as well as a number of our products and features. Generally we enter into
access to, and distribution of, our proprietary information. We license our proprietary products to our customers under license
confidentiality and assignment-of-rights agreements with our employees, consultants, customers and potential customers and limit
agreements that we believe contain appropriate use and other restrictions in order to try to best protect our ownership of our products
access to, and distribution of, our proprietary information. We license our proprietary products to our customers under license
and our proprietary rights in them, and to protect our revenue potential from our products. However, despite our efforts to safeguard
agreements that we believe contain appropriate use and other restrictions in order to try to best protect our ownership of our products
and maintain our proprietary rights, we cannot ensure that we will successfully deter misappropriation, unintended disclosure or
and our proprietary rights in them, and to protect our revenue potential from our products. However, despite our efforts to safeguard
independent third-party development of our technology or our proprietary rights or information. Policing unauthorized use of our
and maintain our proprietary rights, we cannot ensure that we will successfully deter misappropriation, unintended disclosure or
products is difficult, and, while we are unable to determine the extent to which piracy of our software solutions exists, as is the case
independent third-party development of our technology or our proprietary rights or information. Policing unauthorized use of our
with any software company, piracy could become a problem. Further, to the extent that we enter into transactions in countries where
products is difficult, and, while we are unable to determine the extent to which piracy of our software solutions exists, as is the case
intellectual property laws are not well developed or are poorly enforced, our efforts to protect our proprietary rights may be
with any software company, piracy could become a problem. Further, to the extent that we enter into transactions in countries where
ineffective. Whether we seek to enforce our proprietary rights in the U.S. or abroad, our efforts, including litigation to enforce our
intellectual property laws are not well developed or are poorly enforced, our efforts to protect our proprietary rights may be
rights, can result in substantial costs and diversion of resources, and such efforts, or our failure to succeed in such efforts, could have a
ineffective. Whether we seek to enforce our proprietary rights in the U.S. or abroad, our efforts, including litigation to enforce our
material adverse effect on our business, financial condition, results of operations or cash flows, regardless of the final outcome.
rights, can result in substantial costs and diversion of resources, and such efforts, or our failure to succeed in such efforts, could have a
material adverse effect on our business, financial condition, results of operations or cash flows, regardless of the final outcome.
As the number of supply chain management solutions available in the marketplace increases and solution functionality
As the number of supply chain management solutions available in the marketplace increases and solution functionality
continues to overlap, supply chain software may increasingly become subject to claims of infringement or other misappropriation of
intellectual property. Third parties may assert infringement or misappropriation claims against us relating to our products, processes
continues to overlap, supply chain software may increasingly become subject to claims of infringement or other misappropriation of
or technology. Such claims, whether or not they have merit, generally are time-consuming and may result in costly litigation, divert
intellectual property. Third parties may assert infringement or misappropriation claims against us relating to our products, processes
management’s attention or cause product shipment delays or require us to enter into royalty or licensing arrangements. Defense of
or technology. Such claims, whether or not they have merit, generally are time-consuming and may result in costly litigation, divert
infringement or other misappropriation claims, entering into royalty or licensing agreements, the unavailability of such agreements, or
management’s attention or cause product shipment delays or require us to enter into royalty or licensing arrangements. Defense of
adverse determinations in proprietary rights litigation could have a material adverse effect on our business, financial condition, results
infringement or other misappropriation claims, entering into royalty or licensing agreements, the unavailability of such agreements, or
of operations or cash flows.
adverse determinations in proprietary rights litigation could have a material adverse effect on our business, financial condition, results
of operations or cash flows.
Employees
Employees
At December 31, 2012, we employed approximately 2,400 employees worldwide, of which 1,130 are based in the Americas,
170 in EMEA, and 1,100 in APAC (including India). Our distribution by function is approximately: 145 in sales and marketing; 1,425
At December 31, 2012, we employed approximately 2,400 employees worldwide, of which 1,130 are based in the Americas,
in services; 650 in research and development (“R&D”); and 180 in general and administration.
170 in EMEA, and 1,100 in APAC (including India). Our distribution by function is approximately: 145 in sales and marketing; 1,425
in services; 650 in research and development (“R&D”); and 180 in general and administration.
Available Information
Available Information
We file annual, quarterly and current reports and other information with the Securities and Exchange Commission (the
We file annual, quarterly and current reports and other information with the Securities and Exchange Commission (the
“SEC” or the “Commission”). These materials can be inspected and copied at the SEC’s Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549. Copies of these materials may also be obtained by mail at prescribed rates from the SEC’s Public
“SEC” or the “Commission”). These materials can be inspected and copied at the SEC’s Public Reference Room at 100 F Street,
Reference Room at the above address. Information about the Public Reference Room can be obtained by calling the SEC at 1-800-
N.E., Washington, D.C. 20549. Copies of these materials may also be obtained by mail at prescribed rates from the SEC’s Public
SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other
Reference Room at the above address. Information about the Public Reference Room can be obtained by calling the SEC at 1-800-
information regarding issuers that file electronically with the SEC.
SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC.
On our website, www.manh.com, we provide free of charge our Annual Report on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K, and any amendments thereto, as soon as reasonably practicable after they have been
On our website, www.manh.com, we provide free of charge our Annual Report on Form 10-K, Quarterly Reports on Form
electronically filed or furnished to the SEC. Information contained on our website is not part of this Form 10-K or our other filings
10-Q, Current Reports on Form 8-K, and any amendments thereto, as soon as reasonably practicable after they have been
with the SEC.
electronically filed or furnished to the SEC. Information contained on our website is not part of this Form 10-K or our other filings
with the SEC.
Additionally, our code of business conduct and ethics and the charters of the Audit, Compensation, and Nomination and
Additionally, our code of business conduct and ethics and the charters of the Audit, Compensation, and Nomination and
Governance Committees of the Board of Directors are available on our website.
Governance Committees of the Board of Directors are available on our website.
Item 1A. Risk Factors
Item 1A. Risk Factors
You should consider the following and other risk factors in evaluating our business or an investment in our common stock.
The occurrence of adverse events described in the following risk factors or other adverse events not described in the following risk
You should consider the following and other risk factors in evaluating our business or an investment in our common stock.
factors could have a material adverse effect on our business, results of operations, cash flow and financial condition, and could cause
The occurrence of adverse events described in the following risk factors or other adverse events not described in the following risk
factors could have a material adverse effect on our business, results of operations, cash flow and financial condition, and could cause
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the trading price of our common stock to decline.
the trading price of our common stock to decline.
Our performance can be negatively impacted by global macroeconomic or other external influences which could have
a material adverse effect on our business, results of operations, cash flow and financial condition. We are a technology company
Our performance can be negatively impacted by global macroeconomic or other external influences which could have
selling technology-based solutions with total pricing, including software and services, often, exceeding $1.0 million. Reductions in the
a material adverse effect on our business, results of operations, cash flow and financial condition. We are a technology company
capital budgets of our customers and prospective customers could have an adverse impact on our ability to sell our solutions. We
selling technology-based solutions with total pricing, including software and services, often, exceeding $1.0 million. Reductions in the
believe that potential customer concerns over the slow economic recovery within the United States and/or other geographic regions in
capital budgets of our customers and prospective customers could have an adverse impact on our ability to sell our solutions. We
which we operate could cause delays in capital spending by our customers or delay the closing of our sales, which could have a
believe that potential customer concerns over the slow economic recovery within the United States and/or other geographic regions in
material adverse impact on our business and our ability to compete and further intensify in our already intensely competitive markets.
which we operate could cause delays in capital spending by our customers or delay the closing of our sales, which could have a
material adverse impact on our business and our ability to compete and further intensify in our already intensely competitive markets.
The recovering financial and credit markets and the slow economic recovery in general may adversely affect our
business, results of operations, cash flow and financial condition. Demand for our products and services depends in large part
The recovering financial and credit markets and the slow economic recovery in general may adversely affect our
upon the level of capital and maintenance expenditures by many of our customers. Decreased capital and maintenance spending could
business, results of operations, cash flow and financial condition. Demand for our products and services depends in large part
have a material adverse effect on the demand for our products and services, and on our business, results of operations and financial
upon the level of capital and maintenance expenditures by many of our customers. Decreased capital and maintenance spending could
condition. Disruptions in the financial markets, such as the events that began in the second half of 2008 from which the financial
have a material adverse effect on the demand for our products and services, and on our business, results of operations and financial
markets are now slowly recovering, may adversely impact the availability of credit already arranged and the availability and cost of
condition. Disruptions in the financial markets, such as the events that began in the second half of 2008 from which the financial
credit in the future, which could result in the delay or cancellation of projects or capital programs on which our business depends.
markets are now slowly recovering, may adversely impact the availability of credit already arranged and the availability and cost of
credit in the future, which could result in the delay or cancellation of projects or capital programs on which our business depends.
In addition, continuing weakness or further deterioration in regional economies or the world economy could negatively
In addition, continuing weakness or further deterioration in regional economies or the world economy could negatively
impact the capital and maintenance expenditures of our customers and end users. There can be no assurance that government
responses to the disruptions in the financial markets or to weakening economies will restore confidence, stabilize markets, or increase
impact the capital and maintenance expenditures of our customers and end users. There can be no assurance that government
liquidity and the availability of credit. These conditions may reduce the willingness or ability of our customers and prospective
responses to the disruptions in the financial markets or to weakening economies will restore confidence, stabilize markets, or increase
customers to commit funds to purchase our products and services, or their ability to pay for our products and services after purchase.
liquidity and the availability of credit. These conditions may reduce the willingness or ability of our customers and prospective
customers to commit funds to purchase our products and services, or their ability to pay for our products and services after purchase.
We may not be able to continue to successfully compete with other companies. We compete in markets that are intensely
We may not be able to continue to successfully compete with other companies. We compete in markets that are intensely
competitive and are expected to become more competitive as current competitors expand their product offerings. Our current
competitors come from many segments of the software industry and offer a variety of solutions directed at various aspects of the
competitive and are expected to become more competitive as current competitors expand their product offerings. Our current
extended supply chain, as well as the enterprise as a whole. We face competition for product sales from:
competitors come from many segments of the software industry and offer a variety of solutions directed at various aspects of the
extended supply chain, as well as the enterprise as a whole. We face competition for product sales from:
•
•
corporate information technology departments of current or potential customers capable of internally developing
solutions;
corporate information technology departments of current or potential customers capable of internally developing
solutions;
• ERP vendors, including Oracle, SAP, and Infor, among others;
• ERP vendors, including Oracle, SAP, and Infor, among others;
•
•
supply chain execution vendors, including JDA Software Group, Inc. (JDA), HighJump Software Inc., and the
Sterling Commerce division of IBM, among others;
supply chain execution vendors, including JDA Software Group, Inc. (JDA), HighJump Software Inc., and the
Sterling Commerce division of IBM, among others;
supply chain planning vendors, including JDA and SAS Institute Inc., among others; and
supply chain planning vendors, including JDA and SAS Institute Inc., among others; and
smaller independent companies that have developed or are attempting to develop supply chain execution solutions
and/or supply chain planning solutions that apply in specific countries and/or globally.
smaller independent companies that have developed or are attempting to develop supply chain execution solutions
and/or supply chain planning solutions that apply in specific countries and/or globally.
•
•
•
•
We anticipate facing increased competition from ERP and supply chain management (SCM) applications vendors and
business application software vendors that may broaden their solution offerings by internally developing or by acquiring or partnering
We anticipate facing increased competition from ERP and supply chain management (SCM) applications vendors and
with independent developers of supply chain planning and execution software. Some of these ERP and SCM companies and other
business application software vendors that may broaden their solution offerings by internally developing or by acquiring or partnering
potential competitors have longer operating histories, significantly more financial, technical, marketing, and other resources, greater
with independent developers of supply chain planning and execution software. Some of these ERP and SCM companies and other
name recognition, broader solutions, and larger installed bases of customers than do we. To the extent that ERP and SCM vendors or
potential competitors have longer operating histories, significantly more financial, technical, marketing, and other resources, greater
other large competitors develop or acquire systems with functionality comparable or superior to ours, their larger customer bases,
name recognition, broader solutions, and larger installed bases of customers than do we. To the extent that ERP and SCM vendors or
long-standing customer relationships, and ability to offer broader solutions outside the scope of supply chain could create significant
other large competitors develop or acquire systems with functionality comparable or superior to ours, their larger customer bases,
competitive advantage for them. It also is possible that new competitors or alliances among current and/or new competitors could
long-standing customer relationships, and ability to offer broader solutions outside the scope of supply chain could create significant
emerge to win significant market share. Increased competition could result in price reductions, fewer customer orders, reduced
competitive advantage for them. It also is possible that new competitors or alliances among current and/or new competitors could
earnings and margins, and loss of market share. In turn, this could have a material adverse effect on our business, results of
emerge to win significant market share. Increased competition could result in price reductions, fewer customer orders, reduced
operations, cash flow, and financial condition.
earnings and margins, and loss of market share. In turn, this could have a material adverse effect on our business, results of
operations, cash flow, and financial condition.
We believe the domain expertise required to continuously innovate supply chain technology in our target markets, effectively
We believe the domain expertise required to continuously innovate supply chain technology in our target markets, effectively
and efficiently implement solutions, identify and attract sales opportunities, and compete successfully in the sales cycle provides us
with a competitive advantage and is a significant barrier to market entry. However, in order to be successful in the future, we must
and efficiently implement solutions, identify and attract sales opportunities, and compete successfully in the sales cycle provides us
continue to respond promptly and effectively to technological change and competitors’ innovations, and consequently we cannot
with a competitive advantage and is a significant barrier to market entry. However, in order to be successful in the future, we must
continue to respond promptly and effectively to technological change and competitors’ innovations, and consequently we cannot
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assure you that we will not be required to make substantial additional investments in connection with our research, development,
marketing, sales, and customer service efforts in order to meet any competitive threat, or that we will be able to compete successfully
assure you that we will not be required to make substantial additional investments in connection with our research, development,
in the future. Some of our competitors have significant resources at their disposal, and the degree to which we will compete with their
marketing, sales, and customer service efforts in order to meet any competitive threat, or that we will be able to compete successfully
new innovative products in the marketplace is undetermined.
in the future. Some of our competitors have significant resources at their disposal, and the degree to which we will compete with their
new innovative products in the marketplace is undetermined.
Our operating results are substantially dependent on one line of business. We continue to derive our revenues from sales
of our supply chain solutions software and related services and hardware. Any factor adversely affecting the markets for supply chain
Our operating results are substantially dependent on one line of business. We continue to derive our revenues from sales
solutions could have an adverse effect on our business, results of operations, cash flow, and financial condition. Accordingly, our
of our supply chain solutions software and related services and hardware. Any factor adversely affecting the markets for supply chain
future operating results will depend on the demand for our supply chain products and related services and hardware by our customers,
solutions could have an adverse effect on our business, results of operations, cash flow, and financial condition. Accordingly, our
including new and enhanced releases that we subsequently introduce. We cannot guarantee that the market will continue to demand
future operating results will depend on the demand for our supply chain products and related services and hardware by our customers,
our current products or we will be successful in marketing any new or enhanced products. If our competitors release new products that
including new and enhanced releases that we subsequently introduce. We cannot guarantee that the market will continue to demand
are superior to our products in performance or price, demand for our products may decline. A decline in demand for our products as a
our current products or we will be successful in marketing any new or enhanced products. If our competitors release new products that
result of competition, technological change, or other factors would reduce our total revenues and harm our ability to maintain
are superior to our products in performance or price, demand for our products may decline. A decline in demand for our products as a
profitability.
result of competition, technological change, or other factors would reduce our total revenues and harm our ability to maintain
profitability.
Our operating results are difficult to predict and could cause our stock price to fall. Our quarterly revenue and operating
Our operating results are difficult to predict and could cause our stock price to fall. Our quarterly revenue and operating
results are difficult to predict and can fluctuate significantly from quarter to quarter. If our quarterly revenue or operating results fall
below the expectations of investors or public market analysts, the price of our common stock could fall substantially. Our quarterly
results are difficult to predict and can fluctuate significantly from quarter to quarter. If our quarterly revenue or operating results fall
revenue is difficult to forecast for several reasons, including the following: global macro-economic disruptions; credit and equity
below the expectations of investors or public market analysts, the price of our common stock could fall substantially. Our quarterly
market disruptions, which can significantly impact capital availability and spend timing of customers or potential customers; the
revenue is difficult to forecast for several reasons, including the following: global macro-economic disruptions; credit and equity
varying sales cycle for our products and services from customer to customer, including multiple levels of authorization required by
market disruptions, which can significantly impact capital availability and spend timing of customers or potential customers; the
some customers; the varying demand for our products; customers’ budgeting and purchasing cycles; potential deferral of license
varying sales cycle for our products and services from customer to customer, including multiple levels of authorization required by
revenue well after entering into a license agreement due to extended payment terms, including, although infrequent, payment terms in
some customers; the varying demand for our products; customers’ budgeting and purchasing cycles; potential deferral of license
a contract extending beyond twelve months, significant software modifications, future software functionality deliverables not on a
revenue well after entering into a license agreement due to extended payment terms, including, although infrequent, payment terms in
stand-alone basis, or other negotiated terms that preclude software revenue recognition under U.S. general accepted accounting
a contract extending beyond twelve months, significant software modifications, future software functionality deliverables not on a
principles; delays in our implementations at customer sites; timing of hiring new services employees and the rate at which these
stand-alone basis, or other negotiated terms that preclude software revenue recognition under U.S. general accepted accounting
employees become productive; timing of introduction of new products; development and performance of our distribution channels;
principles; delays in our implementations at customer sites; timing of hiring new services employees and the rate at which these
and timing of any acquisitions and related costs.
employees become productive; timing of introduction of new products; development and performance of our distribution channels;
and timing of any acquisitions and related costs.
As a result of these and other factors, our license revenue is difficult to predict. Because our revenue from services is largely
correlated to our license revenue, a decline in license revenue could also cause a decline in our services revenue in the same quarter or
As a result of these and other factors, our license revenue is difficult to predict. Because our revenue from services is largely
in subsequent quarters. In addition, an increase or decrease in hardware sales, which provide us with lower gross margins than sales
correlated to our license revenue, a decline in license revenue could also cause a decline in our services revenue in the same quarter or
of software licenses or services, may cause variations in our quarterly operating results.
in subsequent quarters. In addition, an increase or decrease in hardware sales, which provide us with lower gross margins than sales
of software licenses or services, may cause variations in our quarterly operating results.
Most of our expenses, including employee compensation and rent, are relatively fixed. In addition, our expense levels are
Most of our expenses, including employee compensation and rent, are relatively fixed. In addition, our expense levels are
based, in part, on our expectations regarding future revenue increases. As a result, any shortfall in revenue in relation to our
expectations could cause significant changes in our operating results from quarter to quarter and could result in quarterly losses. As a
based, in part, on our expectations regarding future revenue increases. As a result, any shortfall in revenue in relation to our
result of these factors, we believe that period-to-period comparisons of our revenue levels and operating results are not necessarily
expectations could cause significant changes in our operating results from quarter to quarter and could result in quarterly losses. As a
meaningful. Historical growth rates and historical quarterly revenue and operating results may not be a good indicator of future
result of these factors, we believe that period-to-period comparisons of our revenue levels and operating results are not necessarily
operating results and reliance on historical results should not be used to predict our future performance.
meaningful. Historical growth rates and historical quarterly revenue and operating results may not be a good indicator of future
operating results and reliance on historical results should not be used to predict our future performance.
Our future revenue is dependent on continuing license sales, which in turn drive sales of post-contract support and
professional services. We are dependent on our new customers as well as our large installed customer base to purchase additional
Our future revenue is dependent on continuing license sales, which in turn drive sales of post-contract support and
software licenses, post-contract support, and professional services from us. Our post-contract support agreements are generally for a
professional services. We are dependent on our new customers as well as our large installed customer base to purchase additional
one-year term and our professional services agreements generally only cover a particular engagement. In future periods customers
software licenses, post-contract support, and professional services from us. Our post-contract support agreements are generally for a
may not license additional products, and in turn may not renew post-contract support agreements or purchase additional professional
one-year term and our professional services agreements generally only cover a particular engagement. In future periods customers
services from us. If our customers decide not to license or purchase these products and services from us, or if they reduce the scope of
may not license additional products, and in turn may not renew post-contract support agreements or purchase additional professional
their post-contract support or hosting or professional services agreements, our revenue could decrease significantly, and that could
services from us. If our customers decide not to license or purchase these products and services from us, or if they reduce the scope of
have a material adverse effect on our business, results of operations, cash flow and financial condition.
their post-contract support or hosting or professional services agreements, our revenue could decrease significantly, and that could
have a material adverse effect on our business, results of operations, cash flow and financial condition.
In addition, many of our customers are using older versions of our products for which we are no longer developing any
In addition, many of our customers are using older versions of our products for which we are no longer developing any
further upgrades or enhancements. While we intend to migrate our customers who are using these versions to newer versions or
products, there can be no assurance that these customers will do so. If customers using older versions of our products decide not to
further upgrades or enhancements. While we intend to migrate our customers who are using these versions to newer versions or
license our current software products, or decide to discontinue the use of our products and associated post-contract support services,
products, there can be no assurance that these customers will do so. If customers using older versions of our products decide not to
our revenue could decrease and our operating results could be materially adversely affected.
license our current software products, or decide to discontinue the use of our products and associated post-contract support services,
our revenue could decrease and our operating results could be materially adversely affected.
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We may encounter long sales cycles, particularly with our larger customers, which could have an adverse effect on
the amount, timing, and predictability of our revenue, adversely affecting our business, results of operations, cash flow, and
We may encounter long sales cycles, particularly with our larger customers, which could have an adverse effect on
financial condition. Our products have lengthy sales cycles, which typically extend from six to twelve months and may take up to
the amount, timing, and predictability of our revenue, adversely affecting our business, results of operations, cash flow, and
several years. Potential and existing customers, particularly larger enterprise customers, often commit significant resources to an
financial condition. Our products have lengthy sales cycles, which typically extend from six to twelve months and may take up to
evaluation of available solutions and services and require us to expend substantial time and resources in connection with our sales
several years. Potential and existing customers, particularly larger enterprise customers, often commit significant resources to an
efforts. The length of our sales cycles also varies depending on the type of customer to which we are selling, the product being sold,
evaluation of available solutions and services and require us to expend substantial time and resources in connection with our sales
and customer requirements. We may incur substantial sales and marketing expenses and expend significant management effort during
efforts. The length of our sales cycles also varies depending on the type of customer to which we are selling, the product being sold,
this time, regardless of whether we make a sale. Many of the key risks relating to sales processes are beyond our control, including:
and customer requirements. We may incur substantial sales and marketing expenses and expend significant management effort during
our customers’ budgetary and scheduling constraints; the timing of our customers’ budget cycles and approval processes; our
this time, regardless of whether we make a sale. Many of the key risks relating to sales processes are beyond our control, including:
customers’ willingness to replace their currently deployed software solutions; and general economic conditions.
our customers’ budgetary and scheduling constraints; the timing of our customers’ budget cycles and approval processes; our
customers’ willingness to replace their currently deployed software solutions; and general economic conditions.
As a result of these lengthy and uncertain sales cycles of our products and services, it is difficult for us to predict when
As a result of these lengthy and uncertain sales cycles of our products and services, it is difficult for us to predict when
customers may purchase products or services from us, thereby affecting when we can recognize the associated revenue, and our
operating results may vary significantly and may be adversely affected. The length of our sales cycle makes us susceptible to having
customers may purchase products or services from us, thereby affecting when we can recognize the associated revenue, and our
pending transactions delayed or terminated by our customers if they decide to delay or withdraw funding for IT projects. Our
operating results may vary significantly and may be adversely affected. The length of our sales cycle makes us susceptible to having
customers may decide to delay or withdraw funding for IT projects for various reasons, including, but not limited to, global economic
pending transactions delayed or terminated by our customers if they decide to delay or withdraw funding for IT projects. Our
cycles and capital market fluctuations.
customers may decide to delay or withdraw funding for IT projects for various reasons, including, but not limited to, global economic
cycles and capital market fluctuations.
Delays in implementing our products could adversely impact us. Due to the size and complexity of most of our software
Delays in implementing our products could adversely impact us. Due to the size and complexity of most of our software
implementations, our implementation cycle can be lengthy and may result in delays. Our products may require modification or
customization and must integrate with many existing computer systems and software programs of our customers. This can be time-
implementations, our implementation cycle can be lengthy and may result in delays. Our products may require modification or
consuming and expensive for customers and can result in implementation and deployment delays of our products. Additional delays
customization and must integrate with many existing computer systems and software programs of our customers. This can be time-
could result if we fail to attract, train, and retain services personnel, or if our alliance companies fail to commit sufficient resources
consuming and expensive for customers and can result in implementation and deployment delays of our products. Additional delays
towards implementing our software. These delays and resulting customer dissatisfaction could limit our future sales opportunities,
could result if we fail to attract, train, and retain services personnel, or if our alliance companies fail to commit sufficient resources
impact revenue, and harm our reputation.
towards implementing our software. These delays and resulting customer dissatisfaction could limit our future sales opportunities,
impact revenue, and harm our reputation.
Our pricing models may need to be modified due to price competition. The competitive markets in which we operate may
Our pricing models may need to be modified due to price competition. The competitive markets in which we operate may
oblige us to reduce our prices in order to contend with the pricing models of our competitors. If our competitors discount certain
products or services, we may choose to lower prices on certain products or services in order to attract or retain customers. Any such
oblige us to reduce our prices in order to contend with the pricing models of our competitors. If our competitors discount certain
price modifications would likely reduce margins and could adversely affect our business, results of operations, cash flow, and
products or services, we may choose to lower prices on certain products or services in order to attract or retain customers. Any such
financial condition.
price modifications would likely reduce margins and could adversely affect our business, results of operations, cash flow, and
financial condition.
Our ability to license our software is highly dependent on the quality of our services offerings, and our failure to offer
high quality services could adversely affect our software licensing revenue and results of operations. Most of our customers rely
Our ability to license our software is highly dependent on the quality of our services offerings, and our failure to offer
to some extent on our professional services to aid in the implementation of our software solutions. Once our software has been
high quality services could adversely affect our software licensing revenue and results of operations. Most of our customers rely
installed and deployed, our customers may depend on us to provide them with ongoing support and resolution of issues relating to our
to some extent on our professional services to aid in the implementation of our software solutions. Once our software has been
software. Therefore, a high level of service is critical for the continued marketing and sale of our solutions. If we or our partners do
installed and deployed, our customers may depend on us to provide them with ongoing support and resolution of issues relating to our
not efficiently and effectively install and deploy our software products, or succeed in helping our customers quickly resolve post-
software. Therefore, a high level of service is critical for the continued marketing and sale of our solutions. If we or our partners do
deployment issues, our ability to sell software products to these customers would be adversely affected and our reputation in the
not efficiently and effectively install and deploy our software products, or succeed in helping our customers quickly resolve post-
marketplace and with potential customers could suffer. In turn, our business, results of operations, cash flow, and financial condition
deployment issues, our ability to sell software products to these customers would be adversely affected and our reputation in the
could be materially adversely affected.
marketplace and with potential customers could suffer. In turn, our business, results of operations, cash flow, and financial condition
could be materially adversely affected.
Our failure to manage the growth of our operations may adversely affect our business, results of operations, cash
flow, and financial condition. We plan to continue to increase the scope of our operations domestically and internationally. This
Our failure to manage the growth of our operations may adversely affect our business, results of operations, cash
growth may place a significant strain on our management systems and resources. We may further expand domestically or
flow, and financial condition. We plan to continue to increase the scope of our operations domestically and internationally. This
internationally through internal growth or through acquisitions of related companies and technologies. If we fail to maintain continuity
growth may place a significant strain on our management systems and resources. We may further expand domestically or
in our executive officers; develop the management skills of our managers and supervisors; attract, retain, train, and motivate our
internationally through internal growth or through acquisitions of related companies and technologies. If we fail to maintain continuity
employees; improve our operational, financial, and management controls; and maintain adequate reporting systems and procedures
in our executive officers; develop the management skills of our managers and supervisors; attract, retain, train, and motivate our
and our management and information control systems, our business, results of operations, and cash flow could be negatively impacted.
employees; improve our operational, financial, and management controls; and maintain adequate reporting systems and procedures
and our management and information control systems, our business, results of operations, and cash flow could be negatively impacted.
Our international operations have many associated risks. We continue to strategically manage our presence in
international markets, and these efforts require significant management attention and financial resources. We may not be able to
Our international operations have many associated risks. We continue to strategically manage our presence in
successfully penetrate international markets, or, if we do, there can be no assurance that we will grow our business in these markets at
international markets, and these efforts require significant management attention and financial resources. We may not be able to
the same rate as in North America. Because of these inherent complexities and challenges, lack of success is international markets
successfully penetrate international markets, or, if we do, there can be no assurance that we will grow our business in these markets at
could adversely affect our business, results of operations, cash flow, and financial condition.
the same rate as in North America. Because of these inherent complexities and challenges, lack of success is international markets
could adversely affect our business, results of operations, cash flow, and financial condition.
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We have international offices in Europe: the United Kingdom, the Netherlands, and France; and in Asia: China, Japan,
Singapore, and India; and Australia. Until 2002, our international presence was limited to the United Kingdom and the Netherlands.
We have international offices in Europe: the United Kingdom, the Netherlands, and France; and in Asia: China, Japan,
Our expansion into other international markets largely began in 2002. We have committed resources to maintaining and further
Singapore, and India; and Australia. Until 2002, our international presence was limited to the United Kingdom and the Netherlands.
expanding, where appropriate, our sales offices and sales and support channels in key international markets. However, our efforts may
Our expansion into other international markets largely began in 2002. We have committed resources to maintaining and further
not be successful. International sales are subject to many risks and difficulties, including those arising from the following: building
expanding, where appropriate, our sales offices and sales and support channels in key international markets. However, our efforts may
and maintaining a competitive presence in new markets; staffing and managing foreign operations; managing international systems
not be successful. International sales are subject to many risks and difficulties, including those arising from the following: building
integrators; complying with a variety of foreign laws; producing localized versions of our products; import and export restrictions and
and maintaining a competitive presence in new markets; staffing and managing foreign operations; managing international systems
tariffs; enforcing contracts and collecting accounts receivable; unexpected changes in regulatory requirements; reduced protection for
integrators; complying with a variety of foreign laws; producing localized versions of our products; import and export restrictions and
intellectual property rights in some countries; potential adverse tax treatment; less stringent adherence to ethical and legal standards by
tariffs; enforcing contracts and collecting accounts receivable; unexpected changes in regulatory requirements; reduced protection for
prospective customers in some countries; language and cultural barriers; currency fluctuations; political and economic instability
intellectual property rights in some countries; potential adverse tax treatment; less stringent adherence to ethical and legal standards by
abroad; and seasonal fluctuations.
prospective customers in some countries; language and cultural barriers; currency fluctuations; political and economic instability
abroad; and seasonal fluctuations.
Our operating results may include foreign currency gains and losses. Due to our international operations, we conduct a
portion of our business in currencies other than the United States dollar. Our revenues, expenses, operating profit and net income are
Our operating results may include foreign currency gains and losses. Due to our international operations, we conduct a
affected when the dollar weakens or strengthens in relation to other currencies. In addition, we have a large development center in
portion of our business in currencies other than the United States dollar. Our revenues, expenses, operating profit and net income are
Bangalore, India, that does not have a natural in market revenue hedge to mitigate currency risk to our operating expense in
affected when the dollar weakens or strengthens in relation to other currencies. In addition, we have a large development center in
India. Fluctuations in the value of other currencies, particularly the Indian rupee, could significantly affect our revenues, expenses,
Bangalore, India, that does not have a natural in market revenue hedge to mitigate currency risk to our operating expense in
operating profit and net income.
India. Fluctuations in the value of other currencies, particularly the Indian rupee, could significantly affect our revenues, expenses,
operating profit and net income.
Fluctuations in our hardware sales may adversely affect us. A portion of our revenue in any period is from the resale of a
Fluctuations in our hardware sales may adversely affect us. A portion of our revenue in any period is from the resale of a
variety of third-party hardware products to purchasers of our software. However, our customers may purchase these hardware
products directly from manufacturers or distributors rather than from the Company. We view sales of hardware as non-strategic. We
variety of third-party hardware products to purchasers of our software. However, our customers may purchase these hardware
perform this service to our customers seeking a single source for their supply chain needs. Hardware sales are difficult to forecast and
products directly from manufacturers or distributors rather than from the Company. We view sales of hardware as non-strategic. We
fluctuate from quarter to quarter, leading to unusual comparisons of total revenue and fluctuations in profits. If we are unable to
perform this service to our customers seeking a single source for their supply chain needs. Hardware sales are difficult to forecast and
maintain or grow our hardware revenue, our business, results of operations, cash flow, and financial condition may be adversely
fluctuate from quarter to quarter, leading to unusual comparisons of total revenue and fluctuations in profits. If we are unable to
affected.
maintain or grow our hardware revenue, our business, results of operations, cash flow, and financial condition may be adversely
affected.
Our technology must be advanced if we are to remain competitive. The market for our products is characterized by rapid
technological change, frequent new product introductions and enhancements, changes in customer demands, and evolving industry
Our technology must be advanced if we are to remain competitive. The market for our products is characterized by rapid
standards. Our existing products could be rendered obsolete if we fail to continue to advance our technology. We have also found that
technological change, frequent new product introductions and enhancements, changes in customer demands, and evolving industry
the technological life cycles of our products are difficult to estimate, partially because of changing demands of other participants in the
standards. Our existing products could be rendered obsolete if we fail to continue to advance our technology. We have also found that
supply chain. We believe that our future success will depend in large part upon our ability to continue to enhance our current product
the technological life cycles of our products are difficult to estimate, partially because of changing demands of other participants in the
line while we concurrently develop and introduce new products that keep pace with competitive and technological developments.
supply chain. We believe that our future success will depend in large part upon our ability to continue to enhance our current product
These developments require us to continue to make substantial product development investments. Although we are presently
line while we concurrently develop and introduce new products that keep pace with competitive and technological developments.
developing a number of product enhancements to our product sets, we cannot assure you that these enhancements will be completed
These developments require us to continue to make substantial product development investments. Although we are presently
on a timely basis or gain customer acceptance.
developing a number of product enhancements to our product sets, we cannot assure you that these enhancements will be completed
on a timely basis or gain customer acceptance.
Our research and development activities may not generate significant returns. Our product development activities are
Our research and development activities may not generate significant returns. Our product development activities are
costly, and recovering our investment in product development may take a significant amount of time, if it occurs at all. We anticipate
continuing to make significant investments in software research and development and related product opportunities because we
costly, and recovering our investment in product development may take a significant amount of time, if it occurs at all. We anticipate
believe that we must continue to allocate a significant amount of resources to our research and development activities in order to
continuing to make significant investments in software research and development and related product opportunities because we
compete successfully. We cannot estimate with any certainty when we will, if ever, receive significant revenues from these
believe that we must continue to allocate a significant amount of resources to our research and development activities in order to
investments.
compete successfully. We cannot estimate with any certainty when we will, if ever, receive significant revenues from these
investments.
Our liability to clients may be substantial if our systems fail. Our products are often critical to the operations of our
Our liability to clients may be substantial if our systems fail. Our products are often critical to the operations of our
customers’ businesses and provide benefits that may be difficult to quantify. If our products fail to function as required, we may be
subject to claims for substantial damages. Courts may not enforce provisions in our contracts that would limit our liability or
customers’ businesses and provide benefits that may be difficult to quantify. If our products fail to function as required, we may be
otherwise protect us from liability for damages. Defending a lawsuit, regardless of its merit, could be costly and divert management’s
subject to claims for substantial damages. Courts may not enforce provisions in our contracts that would limit our liability or
time and attention. Although we maintain general liability insurance and error and omissions coverage, these coverages may not
otherwise protect us from liability for damages. Defending a lawsuit, regardless of its merit, could be costly and divert management’s
continue to be available on reasonable terms or in sufficient amounts to cover claims against us. In addition, our insurer may disclaim
time and attention. Although we maintain general liability insurance and error and omissions coverage, these coverages may not
coverage as to any future claim. If claims exceeding the available insurance coverage are successfully asserted against us, or our
continue to be available on reasonable terms or in sufficient amounts to cover claims against us. In addition, our insurer may disclaim
insurer imposes premium increases or large deductibles or co-insurance requirements on us, then our business, results of operations,
coverage as to any future claim. If claims exceeding the available insurance coverage are successfully asserted against us, or our
cash flow, and financial condition could be adversely affected.
insurer imposes premium increases or large deductibles or co-insurance requirements on us, then our business, results of operations,
cash flow, and financial condition could be adversely affected.
We incorporate third-party software in our solutions, the failure or unavailability of which could adversely affect our
We incorporate third-party software in our solutions, the failure or unavailability of which could adversely affect our
ability to sell, support, and service our products. We incorporate and include third-party software into and with certain of our
ability to sell, support, and service our products. We incorporate and include third-party software into and with certain of our
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products and solutions and expect to continue to do so. The operation of our products could be impaired if there are defects in that
third-party software. It may be difficult for us to correct any defects in third-party software because the development and maintenance
products and solutions and expect to continue to do so. The operation of our products could be impaired if there are defects in that
of the software is not within our control. Such defects could adversely affected or business.
third-party software. It may be difficult for us to correct any defects in third-party software because the development and maintenance
of the software is not within our control. Such defects could adversely affected or business.
In addition, there can be no assurance that these third parties will continue to make their software available to us on
acceptable terms, or at all; not make their products available to our competitors on more favorable terms; invest the appropriate levels
In addition, there can be no assurance that these third parties will continue to make their software available to us on
of resources in their products and services to maintain and enhance the capabilities of their software; or remain in business. Any
acceptable terms, or at all; not make their products available to our competitors on more favorable terms; invest the appropriate levels
impairment in our relationship with these third parties or our ability to license or otherwise use their software could have a material
of resources in their products and services to maintain and enhance the capabilities of their software; or remain in business. Any
adverse effect on our business, results of operations, cash flow, and financial condition.
impairment in our relationship with these third parties or our ability to license or otherwise use their software could have a material
adverse effect on our business, results of operations, cash flow, and financial condition.
The use of open source software in our products may expose us to additional risks and harm our intellectual property.
The use of open source software in our products may expose us to additional risks and harm our intellectual property.
Some of our products use or incorporate software that is subject to one or more open source licenses. Open source software is
typically freely accessible, usable and modifiable. Certain open source software licenses require a user who intends to distribute the
Some of our products use or incorporate software that is subject to one or more open source licenses. Open source software is
open source software as a component of the user’s software to disclose publicly part or all of the source code to the user’s software. In
typically freely accessible, usable and modifiable. Certain open source software licenses require a user who intends to distribute the
addition, certain open source software licenses require the user of such software to make any derivative works of the open source code
open source software as a component of the user’s software to disclose publicly part or all of the source code to the user’s software. In
available to others on unfavorable terms or at no cost. This can subject previously proprietary software to open source license terms.
addition, certain open source software licenses require the user of such software to make any derivative works of the open source code
available to others on unfavorable terms or at no cost. This can subject previously proprietary software to open source license terms.
While we monitor the use of all open source software in our products, processes, and technology and try to ensure that no
open source software is used in such a way as to require us to disclose the source code to the related product or solution, such use
While we monitor the use of all open source software in our products, processes, and technology and try to ensure that no
could inadvertently occur. Additionally, if a third-party software provider has incorporated open source software into software we
open source software is used in such a way as to require us to disclose the source code to the related product or solution, such use
license from them for use in our products and solutions, we could, under certain circumstances, be required to disclose the source code
could inadvertently occur. Additionally, if a third-party software provider has incorporated open source software into software we
to our products and solutions. This could harm our intellectual property position and have a material adverse effect on our business,
license from them for use in our products and solutions, we could, under certain circumstances, be required to disclose the source code
results of operations, cash flow, and financial condition.
to our products and solutions. This could harm our intellectual property position and have a material adverse effect on our business,
results of operations, cash flow, and financial condition.
If we are unable to develop software applications that interoperate with computing platforms developed by others,
If we are unable to develop software applications that interoperate with computing platforms developed by others,
our business, results of operations, cash flow, and financial condition may be adversely affected. We develop software
applications that interoperate with operating systems, database platforms, and hardware devices developed by others, which we refer
our business, results of operations, cash flow, and financial condition may be adversely affected. We develop software
to collectively as computing platforms. If the developers of these computing platforms do not cooperate with us or we are unable to
applications that interoperate with operating systems, database platforms, and hardware devices developed by others, which we refer
devote the necessary resources so that our applications interoperate with those computing platforms, our software development efforts
to collectively as computing platforms. If the developers of these computing platforms do not cooperate with us or we are unable to
may be delayed and our business and results of operations may be adversely affected. When new or updated versions of these
devote the necessary resources so that our applications interoperate with those computing platforms, our software development efforts
computing platforms are introduced, it is often necessary for us to develop updated versions of our software applications so that they
may be delayed and our business and results of operations may be adversely affected. When new or updated versions of these
interoperate properly with these computing platforms. We may not accomplish these development efforts quickly or cost-effectively,
computing platforms are introduced, it is often necessary for us to develop updated versions of our software applications so that they
and it is difficult to predict what the relative growth rates of adoption of these computing platforms will be. These development efforts
interoperate properly with these computing platforms. We may not accomplish these development efforts quickly or cost-effectively,
require substantial investment, the devotion of substantial employee resources, and the cooperation of the developers of the computing
and it is difficult to predict what the relative growth rates of adoption of these computing platforms will be. These development efforts
platforms. For some computing platforms, we must obtain some proprietary application program interfaces from the owner in order to
require substantial investment, the devotion of substantial employee resources, and the cooperation of the developers of the computing
develop software applications that interoperate with the computing platforms. Computing platform providers have no obligation to
platforms. For some computing platforms, we must obtain some proprietary application program interfaces from the owner in order to
assist in these development efforts. If they do not provide us with assistance or the necessary proprietary application program
develop software applications that interoperate with the computing platforms. Computing platform providers have no obligation to
interfaces on a timely basis, we may experience delays or be unable to expand our software applications into other areas.
assist in these development efforts. If they do not provide us with assistance or the necessary proprietary application program
interfaces on a timely basis, we may experience delays or be unable to expand our software applications into other areas.
The computing platforms we use may not continue to be available to us on commercially reasonable terms. Any loss of the
right to use any of these systems could result in delays in the provision of our products and services, and our results of operations may
The computing platforms we use may not continue to be available to us on commercially reasonable terms. Any loss of the
be adversely affected. Defects in computing platforms could result in errors or failure of our products, which could harm our business.
right to use any of these systems could result in delays in the provision of our products and services, and our results of operations may
be adversely affected. Defects in computing platforms could result in errors or failure of our products, which could harm our business.
Our software may contain undetected errors or “bugs,” or may be breached by hackers, resulting in harm to our
reputation and operating results. Software products as complex as those offered by us might contain undetected errors or failures
Our software may contain undetected errors or “bugs,” or may be breached by hackers, resulting in harm to our
when first introduced or when new versions are released, or may be vulnerable to hackers. Despite testing, we cannot ensure that
reputation and operating results. Software products as complex as those offered by us might contain undetected errors or failures
errors will not be found in new products or product enhancements after commercial release, or that malefactors will not breach these
when first introduced or when new versions are released, or may be vulnerable to hackers. Despite testing, we cannot ensure that
systems. Any errors or security breaches could cause substantial harm to our reputation, result in additional unplanned expenses to
errors will not be found in new products or product enhancements after commercial release, or that malefactors will not breach these
remedy any defects, delay the introduction of new products, result in the loss of existing or potential customers, or cause a loss in
systems. Any errors or security breaches could cause substantial harm to our reputation, result in additional unplanned expenses to
revenue. Further, such errors or breaches could subject us to claims from our customers for significant damages, and we cannot assure
remedy any defects, delay the introduction of new products, result in the loss of existing or potential customers, or cause a loss in
you that courts would enforce the provisions in our customer agreements that limit our liability for damages. In turn, our business,
revenue. Further, such errors or breaches could subject us to claims from our customers for significant damages, and we cannot assure
results of operations, cash flow, and financial condition could be materially adversely affected.
you that courts would enforce the provisions in our customer agreements that limit our liability for damages. In turn, our business,
results of operations, cash flow, and financial condition could be materially adversely affected.
Our inability to attract, integrate, and retain management and other personnel may adversely affect us. Our success
greatly depends on the continued service of our executives, as well as our other key senior management, technical personnel, and sales
Our inability to attract, integrate, and retain management and other personnel may adversely affect us. Our success
personnel. Our success will depend on the ability of our executive officers to work together as a team. The loss of any of our senior
greatly depends on the continued service of our executives, as well as our other key senior management, technical personnel, and sales
personnel. Our success will depend on the ability of our executive officers to work together as a team. The loss of any of our senior
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management or other key professional services, research and development, sales and marketing personnel—particularly if they are lost
to competitors—could impair our ability to grow our business. We do not maintain key man life insurance on any of our executive
management or other key professional services, research and development, sales and marketing personnel—particularly if they are lost
officers.
to competitors—could impair our ability to grow our business. We do not maintain key man life insurance on any of our executive
officers.
Our future success will depend in large part upon our ability to attract, retain, and motivate highly skilled employees. We
Our future success will depend in large part upon our ability to attract, retain, and motivate highly skilled employees. We
face significant competition for individuals with the skills required to perform the services we offer, and thus we may encounter
increased compensation costs that are not offset by increased revenue. We cannot guarantee that we will be able to attract and retain
face significant competition for individuals with the skills required to perform the services we offer, and thus we may encounter
sufficient numbers of these highly skilled employees or motivate them. Because of the complexity of the supply chain market, we may
increased compensation costs that are not offset by increased revenue. We cannot guarantee that we will be able to attract and retain
experience a significant time lag between the date on which technical and sales personnel are hired and the time at which these
sufficient numbers of these highly skilled employees or motivate them. Because of the complexity of the supply chain market, we may
persons become fully productive.
experience a significant time lag between the date on which technical and sales personnel are hired and the time at which these
persons become fully productive.
Our growth is dependent upon the successful development of our direct and indirect sales channel mix. We believe that
Our growth is dependent upon the successful development of our direct and indirect sales channel mix. We believe that
our future growth also will depend on further developing and maintaining a successful direct sales force and strategic relationships
with systems integrators and other technology companies. We are currently investing, and plan to continue to invest, significant
our future growth also will depend on further developing and maintaining a successful direct sales force and strategic relationships
resources to further develop certain of our sales channels. Our investment could adversely affect our operating results if these efforts
with systems integrators and other technology companies. We are currently investing, and plan to continue to invest, significant
do not generate license and service revenue necessary to offset the investment. Also, our inability to partner with other technology
resources to further develop certain of our sales channels. Our investment could adversely affect our operating results if these efforts
companies and qualified systems integrators could adversely affect our results of operations. Because lower unit prices are typically
do not generate license and service revenue necessary to offset the investment. Also, our inability to partner with other technology
charged on sales made through indirect channels, a disproportionate increase in indirect sales could reduce our average selling prices
companies and qualified systems integrators could adversely affect our results of operations. Because lower unit prices are typically
and result in lower gross margins. In addition, sales of our products through indirect channels typically do not generate consulting
charged on sales made through indirect channels, a disproportionate increase in indirect sales could reduce our average selling prices
services revenue for us at the same levels as direct sales, as the third-party systems integrators generally provide these services.
and result in lower gross margins. In addition, sales of our products through indirect channels typically do not generate consulting
Similarly, indirect sales typically do not generate the same levels of direct contact between our human resources and those of our
services revenue for us at the same levels as direct sales, as the third-party systems integrators generally provide these services.
customer, and we may have more difficulty accurately forecasting sales, evaluating customer satisfaction, and recognizing emerging
Similarly, indirect sales typically do not generate the same levels of direct contact between our human resources and those of our
customer requirements. In addition, these systems integrators and third-party software providers may develop, acquire, or market
customer, and we may have more difficulty accurately forecasting sales, evaluating customer satisfaction, and recognizing emerging
products competitive with our products.
customer requirements. In addition, these systems integrators and third-party software providers may develop, acquire, or market
products competitive with our products.
Our strategy of marketing our products directly to customers and indirectly through systems integrators and other technology
companies may result in distribution channel conflicts. Our direct sales efforts may compete with those of our indirect channels and, to
Our strategy of marketing our products directly to customers and indirectly through systems integrators and other technology
the extent different systems integrators target the same customers, systems integrators may also come into conflict with each other.
companies may result in distribution channel conflicts. Our direct sales efforts may compete with those of our indirect channels and, to
Any channel conflicts that develop may have a material adverse effect on our relationships with systems integrators or harm our
the extent different systems integrators target the same customers, systems integrators may also come into conflict with each other.
ability to attract new systems integrators.
Any channel conflicts that develop may have a material adverse effect on our relationships with systems integrators or harm our
ability to attract new systems integrators.
Our employee retention and hiring may be hindered by immigration restrictions. Foreign nationals who are not U.S.
citizens or permanent residents constitute a significant part of our professional U.S. workforce. Our ability to hire and retain these
Our employee retention and hiring may be hindered by immigration restrictions. Foreign nationals who are not U.S.
workers, and their ability to remain and work in the U.S. are impacted by laws and regulations as well as by processing procedures of
citizens or permanent residents constitute a significant part of our professional U.S. workforce. Our ability to hire and retain these
various government agencies. Changes in laws, regulations, or procedures may adversely affect our ability to hire or retain such
workers, and their ability to remain and work in the U.S. are impacted by laws and regulations as well as by processing procedures of
workers and may affect our costs of doing business and/or our ability to deliver services.
various government agencies. Changes in laws, regulations, or procedures may adversely affect our ability to hire or retain such
workers and may affect our costs of doing business and/or our ability to deliver services.
Our failure to adequately protect our proprietary rights may adversely affect us. Our success and ability to compete is
Our failure to adequately protect our proprietary rights may adversely affect us. Our success and ability to compete is
dependent in part upon our proprietary technology. There are no assurances that we will be able to protect our proprietary rights
against unauthorized disclosure or third-party copying or use. We rely on a combination of copyright, trademark, and trade secret
dependent in part upon our proprietary technology. There are no assurances that we will be able to protect our proprietary rights
laws, as well as confidentiality agreements, licensing arrangements, and contractual commitments, to establish and protect our
against unauthorized disclosure or third-party copying or use. We rely on a combination of copyright, trademark, and trade secret
proprietary rights. Despite our efforts to protect our proprietary rights, existing copyright, trademark, and trade secret laws afford only
laws, as well as confidentiality agreements, licensing arrangements, and contractual commitments, to establish and protect our
limited protection. In addition, the laws of certain foreign countries do not protect our rights to the same extent as do the laws of the
proprietary rights. Despite our efforts to protect our proprietary rights, existing copyright, trademark, and trade secret laws afford only
United States. Attempts may be made to copy or reverse engineer aspects of our products or to obtain and use information that we
limited protection. In addition, the laws of certain foreign countries do not protect our rights to the same extent as do the laws of the
regard as proprietary. Any infringement of our proprietary rights could negatively impact our future operating results. Furthermore,
United States. Attempts may be made to copy or reverse engineer aspects of our products or to obtain and use information that we
policing the unauthorized use of our products is difficult, and litigation may be necessary in the future to enforce our intellectual
regard as proprietary. Any infringement of our proprietary rights could negatively impact our future operating results. Furthermore,
property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others. Litigation could
policing the unauthorized use of our products is difficult, and litigation may be necessary in the future to enforce our intellectual
result in substantial costs and diversion of resources. In turn, our business, results of operations, cash flow, and financial condition
property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others. Litigation could
could be materially adversely affected.
result in substantial costs and diversion of resources. In turn, our business, results of operations, cash flow, and financial condition
could be materially adversely affected.
Our liability for intellectual property claims can be costly and result in the loss of significant rights. It is possible that
Our liability for intellectual property claims can be costly and result in the loss of significant rights. It is possible that
third parties will claim that we have infringed their current or future products, inventions, or other intellectual property. We expect
that supply chain software developers like us will increasingly be subject to infringement claims as the number of products grows.
third parties will claim that we have infringed their current or future products, inventions, or other intellectual property. We expect
Any claims, with or without merit, could be time-consuming, result in costly litigation, cause product shipment delays, or require us to
that supply chain software developers like us will increasingly be subject to infringement claims as the number of products grows.
pay monetary damages or to enter into royalty or licensing agreements, any of which could negatively impact our operating results.
Any claims, with or without merit, could be time-consuming, result in costly litigation, cause product shipment delays, or require us to
There are no assurances that these royalty or licensing agreements, if required, would be available on terms acceptable to us, if at all.
pay monetary damages or to enter into royalty or licensing agreements, any of which could negatively impact our operating results.
There are no assurances that these royalty or licensing agreements, if required, would be available on terms acceptable to us, if at all.
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We also may be required to indemnify our customers for damages they suffer as a result of such infringement. There are no assurances
that legal action claiming patent infringement will not be commenced against us, or that we would prevail in litigation given the
We also may be required to indemnify our customers for damages they suffer as a result of such infringement. There are no assurances
complex technical issues and inherent uncertainties in patent litigation. If a patent claim against us were successful and we could not
that legal action claiming patent infringement will not be commenced against us, or that we would prevail in litigation given the
obtain a license on acceptable terms or license a substitute technology or redesign the product or feature to avoid infringement, we
complex technical issues and inherent uncertainties in patent litigation. If a patent claim against us were successful and we could not
may be prevented from distributing our software or required to incur significant expense and delay in developing non-infringing
obtain a license on acceptable terms or license a substitute technology or redesign the product or feature to avoid infringement, we
software. Any of these events could seriously harm our business, results of operations, cash flow, and financial condition.
may be prevented from distributing our software or required to incur significant expense and delay in developing non-infringing
software. Any of these events could seriously harm our business, results of operations, cash flow, and financial condition.
Mergers or other strategic transactions involving our competitors could weaken our competitive position or reduce
our revenue. Our competitors have been consolidating, which may make them more formidable competitors to us. Competing with
Mergers or other strategic transactions involving our competitors could weaken our competitive position or reduce
stronger companies may cause us to experience pricing pressure and loss of market share, either of which could have a material
our revenue. Our competitors have been consolidating, which may make them more formidable competitors to us. Competing with
adverse effect on our business, results of operations, cash flow, and financial condition. Our competitors may establish or strengthen
stronger companies may cause us to experience pricing pressure and loss of market share, either of which could have a material
their cooperative relationships with vendors, systems integrators, third-party consulting firms, or other parties. Established companies
adverse effect on our business, results of operations, cash flow, and financial condition. Our competitors may establish or strengthen
may not only develop their own products but may also acquire or partner with our current competitors. If any of these events occur,
their cooperative relationships with vendors, systems integrators, third-party consulting firms, or other parties. Established companies
our revenue and profitability could significantly decline.
may not only develop their own products but may also acquire or partner with our current competitors. If any of these events occur,
our revenue and profitability could significantly decline.
Our business, results of operations, cash flow, and financial condition may be adversely affected if we cannot integrate
Our business, results of operations, cash flow, and financial condition may be adversely affected if we cannot integrate
acquired companies or manage joint ventures. We may from time to time acquire companies with complementary products and
services. These acquisitions will expose us to increased risks and costs, including those arising from the following: assimilating new
acquired companies or manage joint ventures. We may from time to time acquire companies with complementary products and
operations and personnel; diverting financial and management resources from existing operations; and integrating acquired
services. These acquisitions will expose us to increased risks and costs, including those arising from the following: assimilating new
technologies. We may not be able to generate sufficient revenue from any of these acquisitions to offset the associated acquisition
operations and personnel; diverting financial and management resources from existing operations; and integrating acquired
costs.
technologies. We may not be able to generate sufficient revenue from any of these acquisitions to offset the associated acquisition
costs.
We will also be required to maintain uniform standards of quality and service, controls, procedures, and policies. Our failure
We will also be required to maintain uniform standards of quality and service, controls, procedures, and policies. Our failure
to achieve any of these standards may hurt relationships with customers, employees, and new management personnel. In addition,
future acquisitions may result in additional issuances of stock that could be dilutive to our shareholders.
to achieve any of these standards may hurt relationships with customers, employees, and new management personnel. In addition,
future acquisitions may result in additional issuances of stock that could be dilutive to our shareholders.
Many acquisition candidates have significant intangible assets, and an acquisition of these businesses would likely result in
significant amounts of goodwill and other intangible assets. Goodwill and certain other intangible assets are not amortized to income,
Many acquisition candidates have significant intangible assets, and an acquisition of these businesses would likely result in
but are subject to at least annual impairment reviews. If the acquisitions do not perform as planned, future charges to income arising
significant amounts of goodwill and other intangible assets. Goodwill and certain other intangible assets are not amortized to income,
from such impairment reviews could be significant. Likewise, future quarterly and annual earnings could be significantly adversely
but are subject to at least annual impairment reviews. If the acquisitions do not perform as planned, future charges to income arising
affected. In addition, these acquisitions could involve acquisition-related charges, such as one-time acquired research and development
from such impairment reviews could be significant. Likewise, future quarterly and annual earnings could be significantly adversely
charges.
affected. In addition, these acquisitions could involve acquisition-related charges, such as one-time acquired research and development
charges.
We may also evaluate joint venture relationships with complementary businesses. Any joint venture we enter into would
We may also evaluate joint venture relationships with complementary businesses. Any joint venture we enter into would
involve many of the same risks posed by acquisitions, particularly the following: risks associated with the diversion of resources; the
inability to generate sufficient revenue; the management of relationships with third parties; and potential additional expenses.
involve many of the same risks posed by acquisitions, particularly the following: risks associated with the diversion of resources; the
inability to generate sufficient revenue; the management of relationships with third parties; and potential additional expenses.
Our business may require additional capital. We may require additional capital to finance our growth or to fund
acquisitions or investments in complementary businesses, technologies or product lines. Our capital requirements may be impacted by
Our business may require additional capital. We may require additional capital to finance our growth or to fund
many factors, including: demand for our products; the timing of and extent to which we invest in new technology; the timing of and
acquisitions or investments in complementary businesses, technologies or product lines. Our capital requirements may be impacted by
extent to which we acquire other companies; the level and timing of revenue; the expenses of sales and marketing and new product
many factors, including: demand for our products; the timing of and extent to which we invest in new technology; the timing of and
development; the success and related expense of increasing our brand awareness; the cost of facilities to accommodate a growing
extent to which we acquire other companies; the level and timing of revenue; the expenses of sales and marketing and new product
workforce; the extent to which competitors are successful in developing new products and increasing their market share; and the costs
development; the success and related expense of increasing our brand awareness; the cost of facilities to accommodate a growing
involved in maintaining and enforcing intellectual property rights.
workforce; the extent to which competitors are successful in developing new products and increasing their market share; and the costs
involved in maintaining and enforcing intellectual property rights.
To the extent that our resources are insufficient to fund our future activities, we may need to raise additional funds through
To the extent that our resources are insufficient to fund our future activities, we may need to raise additional funds through
public or private financing. However, additional funding, if needed, may not be available on terms attractive to us, or at all. In
addition, since we have historically financed our growth through cash flow from operations and available cash, our relative
public or private financing. However, additional funding, if needed, may not be available on terms attractive to us, or at all. In
inexperience in accessing the credit or capital markets may impair our ability to do so if the need arises. Our inability to raise capital
addition, since we have historically financed our growth through cash flow from operations and available cash, our relative
when needed could have a material adverse effect on our business, results of operations, cash flow and financial condition. If
inexperience in accessing the credit or capital markets may impair our ability to do so if the need arises. Our inability to raise capital
additional funds are raised through the issuance of equity securities, the percentage ownership of our company held by our current
when needed could have a material adverse effect on our business, results of operations, cash flow and financial condition. If
shareholders would be diluted.
additional funds are raised through the issuance of equity securities, the percentage ownership of our company held by our current
shareholders would be diluted.
Our stock price has been highly volatile. The trading price of our common stock has fluctuated significantly since our
Our stock price has been highly volatile. The trading price of our common stock has fluctuated significantly since our
initial public offering in April 1998. In addition, the trading price of our common stock could be subject to wide fluctuations in
response to various factors, including: global macro-economic contraction impacting demand for supply chain solutions; quarterly
initial public offering in April 1998. In addition, the trading price of our common stock could be subject to wide fluctuations in
response to various factors, including: global macro-economic contraction impacting demand for supply chain solutions; quarterly
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variations in operating results; announcements of technological innovations or new products by us or our competitors; developments
with respect to patents or proprietary rights; changes in financial estimates by securities analysts; and mergers, acquisitions, and
variations in operating results; announcements of technological innovations or new products by us or our competitors; developments
combinations involving our competitors or us.
with respect to patents or proprietary rights; changes in financial estimates by securities analysts; and mergers, acquisitions, and
combinations involving our competitors or us.
During 2012, we repurchased approximately $99.7 million of Manhattan Associates’ outstanding common stock under the
During 2012, we repurchased approximately $99.7 million of Manhattan Associates’ outstanding common stock under the
share repurchase program approved by our Board of Directors throughout the year. In January 2013, our Board of Directors approved
raising our remaining share repurchase authority to $50.0 million of Manhattan Associates outstanding common stock.
share repurchase program approved by our Board of Directors throughout the year. In January 2013, our Board of Directors approved
raising our remaining share repurchase authority to $50.0 million of Manhattan Associates outstanding common stock.
In addition, the stock market has recently experienced volatility that has particularly affected the market prices of equity
In addition, the stock market has recently experienced volatility that has particularly affected the market prices of equity
securities of many technology companies. The volatility often has been unrelated or disproportionate to the operating performance of
those companies. These broad market fluctuations may adversely affect the market price of our common stock.
securities of many technology companies. The volatility often has been unrelated or disproportionate to the operating performance of
those companies. These broad market fluctuations may adversely affect the market price of our common stock.
Our articles of incorporation and bylaws and Georgia law may inhibit a takeover of our company. Our basic corporate
Our articles of incorporation and bylaws and Georgia law may inhibit a takeover of our company. Our basic corporate
documents and Georgia law contain provisions that might enable our management to resist a takeover of our company. These
provisions might discourage, delay, or prevent a change in the control of our company or a change in our management. These
documents and Georgia law contain provisions that might enable our management to resist a takeover of our company. These
provisions could also discourage proxy contests and make it more difficult for you and other shareholders to elect directors and take
provisions might discourage, delay, or prevent a change in the control of our company or a change in our management. These
other corporate actions. The existence of these provisions could also limit the price that investors might be willing to pay in the future
provisions could also discourage proxy contests and make it more difficult for you and other shareholders to elect directors and take
for shares of our common stock.
other corporate actions. The existence of these provisions could also limit the price that investors might be willing to pay in the future
for shares of our common stock.
Item 1B. Unresolved Staff Comments
Item 1B. Unresolved Staff Comments
As of December 31, 2012, we do not have any unresolved SEC staff comments.
As of December 31, 2012, we do not have any unresolved SEC staff comments.
Item 2. Properties
Item 2. Properties
Our principal administrative, sales, marketing, support, and research and development facility is located in approximately
191,000 square feet of modern office space in Atlanta, Georgia. Substantially all of this space is leased to us through September 30,
Our principal administrative, sales, marketing, support, and research and development facility is located in approximately
2018. We have additional offices under multi-year agreements in Indiana. We also occupy facilities outside of the United States under
191,000 square feet of modern office space in Atlanta, Georgia. Substantially all of this space is leased to us through September 30,
multi-year agreements in the United Kingdom, the Netherlands, France, China, Singapore, India, and Australia. We also occupy
2018. We have additional offices under multi-year agreements in Indiana. We also occupy facilities outside of the United States under
offices under short-term agreements in other geographical regions. We believe our office space is adequate to meet our immediate
multi-year agreements in the United Kingdom, the Netherlands, France, China, Singapore, India, and Australia. We also occupy
needs; however, we may expand into additional facilities in the future.
offices under short-term agreements in other geographical regions. We believe our office space is adequate to meet our immediate
needs; however, we may expand into additional facilities in the future.
Item 3. Legal Proceedings
Item 3. Legal Proceedings
From time to time, we may be a party to legal proceedings arising in the ordinary course of business, and we could be a party
to legal proceedings not in the ordinary course of business. The Company is not currently a party to any legal proceeding the result of
From time to time, we may be a party to legal proceedings arising in the ordinary course of business, and we could be a party
which it believes could have a material adverse impact upon its business, financial position, results of operations, or cash flows.
to legal proceedings not in the ordinary course of business. The Company is not currently a party to any legal proceeding the result of
which it believes could have a material adverse impact upon its business, financial position, results of operations, or cash flows.
Liability for our Software and Services
Liability for our Software and Services
Many of our installations involve products that are critical to the operations of our clients’ businesses. Any failure in our
products could result in a claim for substantial damages against us, regardless of our responsibility for such failure. Although we
Many of our installations involve products that are critical to the operations of our clients’ businesses. Any failure in our
attempt to contractually limit our liability for damages arising from product failures or negligent acts or omissions, there can be no
products could result in a claim for substantial damages against us, regardless of our responsibility for such failure. Although we
assurance that the limitations of liability set forth in our contracts will be enforceable in all instances.
attempt to contractually limit our liability for damages arising from product failures or negligent acts or omissions, there can be no
assurance that the limitations of liability set forth in our contracts will be enforceable in all instances.
Item 4. Mine Safety Disclosures
Item 4. Mine Safety Disclosures
Not applicable.
Not applicable.
PART II
PART II
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities
Market for Common Stock
Market for Common Stock
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Our common stock is traded on the Nasdaq Global Select Market under the symbol “MANH”. The following table sets forth
Our common stock is traded on the Nasdaq Global Select Market under the symbol “MANH”. The following table sets forth
the high and low closing sales prices of the common stock as reported by the Nasdaq Global Select Market for the periods indicated:
the high and low closing sales prices of the common stock as reported by the Nasdaq Global Select Market for the periods indicated:
Fiscal Period
Fiscal Period
2012
2012
High Price
High Price
Low Price
Low Price
2011
2011
First Quarter
First Quarter
Second Quarter
Second Quarter
Third Quarter
Third Quarter
Fourth Quarter
Fourth Quarter
First Quarter
First Quarter
Second Quarter
Second Quarter
Third Quarter
Third Quarter
Fourth Quarter
Fourth Quarter
$
$
$
$
50.10
50.10
50.94
50.94
58.54
58.54
62.58
62.58
39.77
39.77
43.39
43.39
41.49
41.49
55.66
55.66
$
$
32.74
32.74
37.18
37.18
37.97
37.97
46.48
46.48
$
$
29.23
29.23
33.08
33.08
31.37
31.37
31.65
31.65
On February 15, 2013, the last reported sales price of our common stock on the Nasdaq Global Select Market was $69.42 per
On February 15, 2013, the last reported sales price of our common stock on the Nasdaq Global Select Market was $69.42 per
share. The number of shareholders of record of our common stock as of February 15, 2013 was approximately 20.
share. The number of shareholders of record of our common stock as of February 15, 2013 was approximately 20.
We do not intend to declare or pay cash dividends in the foreseeable future. Our management anticipates that all earnings and
We do not intend to declare or pay cash dividends in the foreseeable future. Our management anticipates that all earnings and
other cash resources, if any, will be retained for investment in our business.
other cash resources, if any, will be retained for investment in our business.
Equity Compensation Plan Information
Equity Compensation Plan Information
The following table provides information regarding our current equity compensation plans as of December 31, 2012:
The following table provides information regarding our current equity compensation plans as of December 31, 2012:
Plan Category
Plan Category
Equity compensation plans
approved by security holders
Equity compensation plans
approved by security holders
Equity compensation plans not
approved by security holders
Equity compensation plans not
approved by security holders
Total
Total
Number of securities to
be issued upon exercise of
Number of securities to
outstanding options and
be issued upon exercise of
rights
outstanding options and
rights
968,949
968,949
Weighted-average
exercise price of
Weighted-average
outstanding options and
exercise price of
rights
outstanding options and
rights
$22.13
$22.13
Number of securities
remaining available for
Number of securities
future issuance under
remaining available for
equity compensation plans
future issuance under
equity compensation plans
3,533,966
3,533,966
-
-
968,949
968,949
-
-
$22.13
$22.13
-
-
3,533,966
3,533,966
Additional information regarding our equity compensation plans can be found in Note 2 of the Notes to our Consolidated
Additional information regarding our equity compensation plans can be found in Note 2 of the Notes to our Consolidated
Financial Statements.
Financial Statements.
Purchase of Equity Securities
Purchase of Equity Securities
The following table provides information regarding our common stock repurchases under our publicly-announced share
The following table provides information regarding our common stock repurchases under our publicly-announced share
repurchase program and shares withheld for taxes due upon vesting of restricted stock for the quarter ended December 31, 2012. All
repurchases related to the share repurchase program were made on the open market.
repurchase program and shares withheld for taxes due upon vesting of restricted stock for the quarter ended December 31, 2012. All
repurchases related to the share repurchase program were made on the open market.
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Period
Period
October 1 - October 31, 2012
October 1 - October 31, 2012
November 1 - November 30, 2012
November 1 - November 30, 2012
December 1 - December 31, 2012
December 1 - December 31, 2012
Total
Total
Total Number
of S hares
Total Number
Purchased (a)
of S hares
Purchased (a)
217,047
217,047
215,797
215,797
97,838
97,838
530,682
530,682
Total Number of
S hares Purchased as
Total Number of
Average Price
Part of Publicly
S hares Purchased as
Paid per S hare
Average Price
Announced Plans or
Part of Publicly
(b)
Paid per S hare
Programs
Announced Plans or
(b)
213,865
$61.13
Programs
213,865
$61.13
$58.40 215,732
$58.40 215,732
$57.20 97,026
$57.20 97,026
$59.29 526,623
$59.29 526,623
Maximum Number (or
Approximate Dollar Value)
Maximum Number (or
of S hares that May Yet Be
Approximate Dollar Value)
Purchased Under the Plans
of S hares that May Yet Be
or Programs
Purchased Under the Plans
$
36,925,385
or Programs
$
36,925,385
24,326,628
24,326,628
18,776,868
18,776,868
and December, respectively.
(a) Includes 3,182 shares, 65 shares, and 812 shares withheld for taxes due upon vesting of restricted stock during October, November,
(a) Includes 3,182 shares, 65 shares, and 812 shares withheld for taxes due upon vesting of restricted stock during October, November,
(b) The average price paid per share for shares withheld for taxes due upon vesting of restricted stock was $60.50, $61.44, and $57.19 in
(b) The average price paid per share for shares withheld for taxes due upon vesting of restricted stock was $60.50, $61.44, and $57.19 in
and December, respectively.
October, November, and December, respectively.
October, November, and December, respectively.
During the year ended December 31, 2012, we repurchased a total of 1,944,828 shares at an average price per share of $51.26
During the year ended December 31, 2012, we repurchased a total of 1,944,828 shares at an average price per share of $51.26
under our publicly-announced share repurchase program. In January 2013, our Board of Directors approved raising our remaining
share repurchase authority to $50.0 million of Manhattan Associates outstanding common stock.
under our publicly-announced share repurchase program. In January 2013, our Board of Directors approved raising our remaining
share repurchase authority to $50.0 million of Manhattan Associates outstanding common stock.
Item 6. Selected Financial Data
Item 6. Selected Financial Data
You should read the following selected consolidated financial data in conjunction with our Consolidated Financial
Statements and related Notes thereto and with “Management’s Discussion and Analysis of Financial Condition and Results of
You should read the following selected consolidated financial data in conjunction with our Consolidated Financial
Operations” included elsewhere in this Form 10-K. The statement of income data for the years ended December 31, 2012, 2011, and
Statements and related Notes thereto and with “Management’s Discussion and Analysis of Financial Condition and Results of
2010, and the balance sheet data as of December 31, 2012 and 2011, are derived from, and are qualified by reference to, the audited
Operations” included elsewhere in this Form 10-K. The statement of income data for the years ended December 31, 2012, 2011, and
financial statements included elsewhere in this Form 10-K. The statement of income data for the years ended December 31, 2009 and
2010, and the balance sheet data as of December 31, 2012 and 2011, are derived from, and are qualified by reference to, the audited
2008 and the balance sheet data as of December 31, 2010, 2009, and 2008 are derived from audited financial statements not included
financial statements included elsewhere in this Form 10-K. The statement of income data for the years ended December 31, 2009 and
herein. Historical results are not necessarily indicative of results to be expected in the future.
2008 and the balance sheet data as of December 31, 2010, 2009, and 2008 are derived from audited financial statements not included
herein. Historical results are not necessarily indicative of results to be expected in the future.
Statement of Income Data:
Software license
Statement of Income Data:
Total revenue
Software license
Operating income
Total revenue
Net income
Operating income
Earnings per diluted share
Net income
Earnings per diluted share
Balance Sheet Data:
Cash, cash equivalents and investments
Balance Sheet Data:
Total assets
Cash, cash equivalents and investments
Debt
Total assets
Shareholders' equity
Debt
Shareholders' equity
2008
2008
Year Ended December 31,
2011
2010
2009
Year Ended December 31,
(in thousands, except per share data)
2011
2010
2009
(in thousands, except per share data)
$
$
$
$
$
$
$
$
$
$
65,313
337,201
65,313
25,963
337,201
22,798
25,963
0.94
22,798
0.94
$
$
$
$
$
$
$
$
$
$
34,686
246,667
34,686
21,142
246,667
16,562
21,142
0.73
16,562
0.73
2008
2008
2009
2009
$
$
$
$
$
$
$
$
$
$
54,241
329,253
54,241
61,363
329,253
44,907
61,363
2.09
44,907
2.09
54,450
297,117
54,450
41,927
297,117
28,061
41,927
1.25
28,061
1.25
$
$
$
$
$
$
$
$
$
$
December 31,
2010
December 31,
(in thousands)
2010
(in thousands)
2012
2012
$
$
$
$
$
$
$
$
$
$
61,494
376,248
61,494
80,073
376,248
51,853
80,073
2.56
51,853
2.56
2011
2011
2012
2012
$
88,706
$
270,221
$
88,706
$
-
$
270,221
$
179,839
$
-
$
179,839
$
123,014
$
264,711
$
123,014
$
-
$
264,711
$
183,365
$
-
$
183,365
$
126,869
$
280,464
$
126,869
$
-
$
280,464
$
183,800
$
-
$
183,800
$
99,114
$
259,600
$
99,114
$
-
$
259,600
$
162,080
$
-
$
162,080
$
103,047
$
261,813
$
103,047
$
-
$
261,813
$
161,509
$
-
$
161,509
23
23
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
All statements, trend analyses, and other information contained in the following discussion relative to markets for our
products and trends in revenue, gross margins, and anticipated expense levels, as well as other statements including words such as
All statements, trend analyses, and other information contained in the following discussion relative to markets for our
“anticipate,” “believe,” “plan,” “estimate,” “expect,” and “intend” and other similar expressions constitute forward-looking
products and trends in revenue, gross margins, and anticipated expense levels, as well as other statements including words such as
statements. These forward-looking statements are subject to business and economic risks and uncertainties, including those discussed
“anticipate,” “believe,” “plan,” “estimate,” “expect,” and “intend” and other similar expressions constitute forward-looking
under the caption “Risk Factors” in Item 1A of this Form 10-K, and our actual results of operations may differ materially from those
statements. These forward-looking statements are subject to business and economic risks and uncertainties, including those discussed
contained in the forward-looking statements.
under the caption “Risk Factors” in Item 1A of this Form 10-K, and our actual results of operations may differ materially from those
contained in the forward-looking statements.
Business Overview
Business Overview
We are a leading developer and implementer of supply chain software solutions that help organizations optimize their supply
We are a leading developer and implementer of supply chain software solutions that help organizations optimize their supply
chain operations from planning through execution. Our platform-based supply chain software solution portfolios – Manhattan
SCOPE® and Manhattan SCALETM – are designed to deliver both business agility and total cost of ownership advantages to
chain operations from planning through execution. Our platform-based supply chain software solution portfolios – Manhattan
SCOPE® and Manhattan SCALETM – are designed to deliver both business agility and total cost of ownership advantages to
customers. Manhattan SCOPE (Supply Chain Optimization, Planning through Execution) leverages our Supply Chain Process
Platform (SCPP) to unify the full breadth of the supply chain, while Manhattan SCALE (Supply Chain Architected for Logistics
customers. Manhattan SCOPE (Supply Chain Optimization, Planning through Execution) leverages our Supply Chain Process
Execution) leverages Microsoft’s .NET® platform to unify logistics functions.
Platform (SCPP) to unify the full breadth of the supply chain, while Manhattan SCALE (Supply Chain Architected for Logistics
Execution) leverages Microsoft’s .NET® platform to unify logistics functions.
Early in the Company’s history, our offerings were heavily focused on warehouse management solutions. As the Company
grew in size and scope, our offerings expanded across the entire supply chain, while still maintaining a significant presence in, and a
Early in the Company’s history, our offerings were heavily focused on warehouse management solutions. As the Company
relatively strong concentration of revenues from warehouse management solutions, which is a component of our distribution
grew in size and scope, our offerings expanded across the entire supply chain, while still maintaining a significant presence in, and a
management solution suite. Over time, as our non-warehouse management solutions have proliferated and increased in capability, the
relatively strong concentration of revenues from warehouse management solutions, which is a component of our distribution
Company’s revenue concentration in its warehouse management solutions has correspondingly decreased.
management solution suite. Over time, as our non-warehouse management solutions have proliferated and increased in capability, the
Company’s revenue concentration in its warehouse management solutions has correspondingly decreased.
Our business model is singularly focused on the development and implementation of complex supply chain software
solutions that are designed to optimize supply chain effectiveness and efficiency for our customers. We have three principal sources
Our business model is singularly focused on the development and implementation of complex supply chain software
of revenue:
solutions that are designed to optimize supply chain effectiveness and efficiency for our customers. We have three principal sources
of revenue:
•
•
•
•
•
•
licenses of our supply chain software;
licenses of our supply chain software;
professional services, including solutions planning and implementation, related consulting, customer training, and
customer support services and software enhancements (collectively, “services”); and
professional services, including solutions planning and implementation, related consulting, customer training, and
customer support services and software enhancements (collectively, “services”); and
hardware sales and other revenue.
hardware sales and other revenue.
In 2012, we generated $376.2 million in total revenue, with a revenue mix of: license revenue 16%; services revenue 76%;
In 2012, we generated $376.2 million in total revenue, with a revenue mix of: license revenue 16%; services revenue 76%;
and hardware and other revenue 8%.
and hardware and other revenue 8%.
We manage our business based on three geographic regions: North America and Latin America (Americas), Europe, Middle
East, and Africa (EMEA), and Asia Pacific (APAC). Geographic revenue is based on the location of the sale. Our international
We manage our business based on three geographic regions: North America and Latin America (Americas), Europe, Middle
revenue was approximately $104.4 million, $90.7 million, and $80.7 million for the years ended December 31, 2012, 2011, and 2010,
East, and Africa (EMEA), and Asia Pacific (APAC). Geographic revenue is based on the location of the sale. Our international
respectively, which represents approximately 28%, 28%, and 27% of our total revenue for the years ended December 31, 2012, 2011,
revenue was approximately $104.4 million, $90.7 million, and $80.7 million for the years ended December 31, 2012, 2011, and 2010,
and 2010, respectively. International revenue includes all revenue derived from sales to customers outside the United States. At
respectively, which represents approximately 28%, 28%, and 27% of our total revenue for the years ended December 31, 2012, 2011,
December 31, 2012, we employed approximately 2,400 employees worldwide, of which 1,130 employees are based in the Americas,
and 2010, respectively. International revenue includes all revenue derived from sales to customers outside the United States. At
170 employees in EMEA, and 1,100 employees in APAC (including India). We have offices in Australia, China, France, India, Japan,
December 31, 2012, we employed approximately 2,400 employees worldwide, of which 1,130 employees are based in the Americas,
the Netherlands, Singapore, and the United Kingdom, as well as representatives in Mexico and reseller partnerships in Latin America,
170 employees in EMEA, and 1,100 employees in APAC (including India). We have offices in Australia, China, France, India, Japan,
Eastern Europe, the Middle East, South Africa, and Asia.
the Netherlands, Singapore, and the United Kingdom, as well as representatives in Mexico and reseller partnerships in Latin America,
Eastern Europe, the Middle East, South Africa, and Asia.
Global Economic Trends and Industry Factors
Global Economic Trends and Industry Factors
Global macro economic trends, technology spending, and supply chain management market growth are important barometers
for our business. In 2012, approximately 72% of our total revenue was generated in the United States, 12% in EMEA, and the balance
Global macro economic trends, technology spending, and supply chain management market growth are important barometers
in APAC, Canada, and Latin America. In addition, Gartner Inc., an information technology research and advisory company, estimates
for our business. In 2012, approximately 72% of our total revenue was generated in the United States, 12% in EMEA, and the balance
that nearly 80% of every supply chain software solutions dollar invested is spent in the United States (50%) and Western Europe
in APAC, Canada, and Latin America. In addition, Gartner Inc., an information technology research and advisory company, estimates
(28%); consequently, the health of the U.S. and the Western European economies has a meaningful impact on our financial results.
that nearly 80% of every supply chain software solutions dollar invested is spent in the United States (50%) and Western Europe
(28%); consequently, the health of the U.S. and the Western European economies has a meaningful impact on our financial results.
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24
We sell technology-based solutions with total pricing, including software and services, in many cases exceeding $1.0 million.
Our software often is a part of our customers’ and prospects’ much larger capital commitment associated with facilities expansion and
We sell technology-based solutions with total pricing, including software and services, in many cases exceeding $1.0 million.
business improvement. We believe that, given the lingering uncertainty in the global macro environment, the current sales cycles for
Our software often is a part of our customers’ and prospects’ much larger capital commitment associated with facilities expansion and
large license sales of $1.0 million or greater in our target markets have been extended. The current business climate within the United
business improvement. We believe that, given the lingering uncertainty in the global macro environment, the current sales cycles for
States and geographic regions in which we operate continues to affect customers’ and prospects’ decisions regarding timing of
large license sales of $1.0 million or greater in our target markets have been extended. The current business climate within the United
strategic capital expenditures. Delays with respect to such decisions can have a material adverse impact on our business, and may
States and geographic regions in which we operate continues to affect customers’ and prospects’ decisions regarding timing of
further intensify competition in our already highly competitive markets.
strategic capital expenditures. Delays with respect to such decisions can have a material adverse impact on our business, and may
further intensify competition in our already highly competitive markets.
In January 2013, the International Monetary Fund (IMF) provided a World Economic Outlook (WEO) update lowering its
In January 2013, the International Monetary Fund (IMF) provided a World Economic Outlook (WEO) update lowering its
previous 2013 world economic growth forecast from October 2012 by 10 basis points projecting 3.5 percent growth in 2013 versus 3.2
percent growth in 2012. The WEO noted that Europe and Japan are in recession, and the United States continues to struggle with
previous 2013 world economic growth forecast from October 2012 by 10 basis points projecting 3.5 percent growth in 2013 versus 3.2
fiscal policy, including the debt ceiling, tax policy, and entitlement programs. The update stated that “[g]lobal growth is projected to
percent growth in 2012. The WEO noted that Europe and Japan are in recession, and the United States continues to struggle with
increase during 2013, as the factors underlying soft global activity are expected to subside. However, this upturn is projected to be
fiscal policy, including the debt ceiling, tax policy, and entitlement programs. The update stated that “[g]lobal growth is projected to
more gradual than in the October 2012 WEO projections.” Further the update stated that “[g]lobal financial conditions improved
increase during 2013, as the factors underlying soft global activity are expected to subside. However, this upturn is projected to be
further in the fourth quarter of 2012. However, a broad set of indicators for global industrial production and trade suggests that global
more gradual than in the October 2012 WEO projections.” Further the update stated that “[g]lobal financial conditions improved
growth did not strengthen further.” The WEO projected that advanced economies, which represent our primary revenue markets,
further in the fourth quarter of 2012. However, a broad set of indicators for global industrial production and trade suggests that global
would grow at about 1.4 percent in 2013 and 2.2 percent in 2014, while the emerging and developing economies would continue to
growth did not strengthen further.” The WEO projected that advanced economies, which represent our primary revenue markets,
grow at about 5.5 percent in 2013 and 5.9 percent in 2014.
would grow at about 1.4 percent in 2013 and 2.2 percent in 2014, while the emerging and developing economies would continue to
grow at about 5.5 percent in 2013 and 5.9 percent in 2014.
During 2012 and 2011, the overall trend has been an increase in large license sales for the Company, with recognized $1.0
During 2012 and 2011, the overall trend has been an increase in large license sales for the Company, with recognized $1.0
million or larger software license sales totaling twelve and thirteen for 2012 and 2011, respectively, up from nine in 2010. However,
the number of large license sales has been inconsistent from quarter to quarter, reflecting what we believe to be ongoing
million or larger software license sales totaling twelve and thirteen for 2012 and 2011, respectively, up from nine in 2010. However,
macroeconomic uncertainty in the United States and Western Europe. While we are encouraged by our 2012 and 2011 results, we,
the number of large license sales has been inconsistent from quarter to quarter, reflecting what we believe to be ongoing
along with many of our customers, still remain cautious regarding the pace of global economic recovery. With global GDP growth
macroeconomic uncertainty in the United States and Western Europe. While we are encouraged by our 2012 and 2011 results, we,
continuing to be well below pre-2008 levels, we believe global economic volatility likely will continue to shape customers’ and
along with many of our customers, still remain cautious regarding the pace of global economic recovery. With global GDP growth
prospects’ buying decisions, making it more difficult to forecast sales cycles for our products and the timing of large software license
continuing to be well below pre-2008 levels, we believe global economic volatility likely will continue to shape customers’ and
sales.
prospects’ buying decisions, making it more difficult to forecast sales cycles for our products and the timing of large software license
sales.
Revenue
Revenue
License revenue: License revenue, a leading indicator of our business, is primarily derived from software license fees that
License revenue: License revenue, a leading indicator of our business, is primarily derived from software license fees that
customers pay for supply chain solutions. In 2012, license revenue totaled $61.5 million, or 16% of total revenue, with gross margins
of 87.3%. For the year ended December 31, 2012, Americas, EMEA, and APAC recognized $50.0 million, $9.6 million, and $1.9
customers pay for supply chain solutions. In 2012, license revenue totaled $61.5 million, or 16% of total revenue, with gross margins
million in license revenue, respectively. Our typical license revenue percentage mix of new to existing customers historically has
of 87.3%. For the year ended December 31, 2012, Americas, EMEA, and APAC recognized $50.0 million, $9.6 million, and $1.9
approximated 50/50. However, for the year ended December 31, 2012, the majority of license revenue was generated from existing
million in license revenue, respectively. Our typical license revenue percentage mix of new to existing customers historically has
customers, largely influenced by two large deals signed during the third quarter ended September 30, 2012, resulting in the percentage
approximated 50/50. However, for the year ended December 31, 2012, the majority of license revenue was generated from existing
mix of new to existing customers of approximately 30/70. We believe our current mix of new customer to existing customer license
customers, largely influenced by two large deals signed during the third quarter ended September 30, 2012, resulting in the percentage
sales will fluctuate with continuing global macroeconomic uncertainty; however, the mix should return to historically normal levels in
mix of new to existing customers of approximately 30/70. We believe our current mix of new customer to existing customer license
improved global economic conditions.
sales will fluctuate with continuing global macroeconomic uncertainty; however, the mix should return to historically normal levels in
improved global economic conditions.
License revenue growth is influenced by the strength of general economic and business conditions and the competitive
License revenue growth is influenced by the strength of general economic and business conditions and the competitive
position of our software products. Our license revenue generally has long sales cycles of which the timing of the closing of a few
large license transactions can have a material impact on our license revenues, operating profit, operating margins and earnings per
position of our software products. Our license revenue generally has long sales cycles of which the timing of the closing of a few
share. For example, $1.0 million of license revenue in 2012 equates to approximately three cents of diluted earnings per share impact.
large license transactions can have a material impact on our license revenues, operating profit, operating margins and earnings per
share. For example, $1.0 million of license revenue in 2012 equates to approximately three cents of diluted earnings per share impact.
Our software solutions are singularly focused on the supply chain planning and execution markets, which are intensely
competitive and characterized by rapid technological change. We are a market leader in the supply chain management software
Our software solutions are singularly focused on the supply chain planning and execution markets, which are intensely
solutions market as defined by industry analysts such as ARC Advisory Group and Gartner. Our goal is to extend our position as a
competitive and characterized by rapid technological change. We are a market leader in the supply chain management software
leading global supply chain solutions provider by growing our license revenues faster than our competitors through investment in
solutions market as defined by industry analysts such as ARC Advisory Group and Gartner. Our goal is to extend our position as a
innovation. We expect to continue to face increased competition from Enterprise Resource Planning (ERP) and Supply Chain
leading global supply chain solutions provider by growing our license revenues faster than our competitors through investment in
Management application vendors and business application software vendors that may broaden their solution offerings by internally
innovation. We expect to continue to face increased competition from Enterprise Resource Planning (ERP) and Supply Chain
developing, or by acquiring or partnering with independent developers of supply chain planning and execution software. Increased
Management application vendors and business application software vendors that may broaden their solution offerings by internally
competition could result in price reductions, fewer customer orders, reduced gross margins, and loss of market share.
developing, or by acquiring or partnering with independent developers of supply chain planning and execution software. Increased
competition could result in price reductions, fewer customer orders, reduced gross margins, and loss of market share.
Services revenue: Our services business consists of professional services (consulting and customer training) and customer
Services revenue: Our services business consists of professional services (consulting and customer training) and customer
support services and software enhancements (“CSSE”). In 2012, our services revenue totaled $283.9 million, or 76% of total revenue,
support services and software enhancements (“CSSE”). In 2012, our services revenue totaled $283.9 million, or 76% of total revenue,
25
25
with gross margins of 54.7%. The Americas, EMEA, and APAC recognized $228.7 million, $36.2 million, and $19.0 million,
respectively, in services revenue for the year ended December 31, 2012. Professional services accounted for approximately 65% of
with gross margins of 54.7%. The Americas, EMEA, and APAC recognized $228.7 million, $36.2 million, and $19.0 million,
total services revenue and approximately 50% of total revenue in 2012. Our consolidated operating margin profile may be lower than
respectively, in services revenue for the year ended December 31, 2012. Professional services accounted for approximately 65% of
those of various other technology companies due to our large services revenue mix as a percentage of total revenue. While we believe
total services revenue and approximately 50% of total revenue in 2012. Our consolidated operating margin profile may be lower than
our services margins are very strong, they do lower our overall operating margin profile as services margins are inherently lower than
those of various other technology companies due to our large services revenue mix as a percentage of total revenue. While we believe
license revenue margins.
our services margins are very strong, they do lower our overall operating margin profile as services margins are inherently lower than
license revenue margins.
At December 31, 2012, our professional services organization totaled approximately 1,425 employees, accounting for 60% of
our total employees worldwide. Our professional services organization provides our customers with expertise and assistance in
At December 31, 2012, our professional services organization totaled approximately 1,425 employees, accounting for 60% of
planning and implementing our solutions. To ensure a successful product implementation, consultants assist customers with the initial
our total employees worldwide. Our professional services organization provides our customers with expertise and assistance in
installation of a system, the conversion and transfer of the customer’s historical data onto our system, and ongoing training, education,
planning and implementing our solutions. To ensure a successful product implementation, consultants assist customers with the initial
and system upgrades. We believe our professional services enable customers to implement our software rapidly, ensure the
installation of a system, the conversion and transfer of the customer’s historical data onto our system, and ongoing training, education,
customer’s success with our solution, strengthen our customer relationships, and add to our industry-specific knowledge base for use
and system upgrades. We believe our professional services enable customers to implement our software rapidly, ensure the
in future implementations and product innovations.
customer’s success with our solution, strengthen our customer relationships, and add to our industry-specific knowledge base for use
in future implementations and product innovations.
Although our professional services are optional, the majority of our customers use at least some portion of these services for
Although our professional services are optional, the majority of our customers use at least some portion of these services for
their planning, implementation, or related needs. Professional services are typically rendered under time and materials-based contracts
with services typically billed on an hourly basis. Professional services are sometimes rendered under fixed-fee based contracts with
their planning, implementation, or related needs. Professional services are typically rendered under time and materials-based contracts
payments due on specific dates or milestones.
with services typically billed on an hourly basis. Professional services are sometimes rendered under fixed-fee based contracts with
payments due on specific dates or milestones.
Typically, our professional services lag license revenue by several quarters, as implementation services and related consulting
Typically, our professional services lag license revenue by several quarters, as implementation services and related consulting
are performed after the purchase of the software. Services revenue growth is contingent upon license revenue growth and customer
upgrade cycles, which is influenced by the strength of general economic and business conditions and the competitive position of our
are performed after the purchase of the software. Services revenue growth is contingent upon license revenue growth and customer
software products. In addition, our professional services business has competitive exposure to offshore providers and other consulting
upgrade cycles, which is influenced by the strength of general economic and business conditions and the competitive position of our
companies. All of these factors potentially create the risk of pricing pressure, fewer customer orders, reduced gross margins, and loss
software products. In addition, our professional services business has competitive exposure to offshore providers and other consulting
of market share.
companies. All of these factors potentially create the risk of pricing pressure, fewer customer orders, reduced gross margins, and loss
of market share.
For CSSE, we offer a comprehensive 24 hours per day, 365 days per year program that provides our customers with software
upgrades, when and if available, which include additional or improved functionality and technological advances incorporating
For CSSE, we offer a comprehensive 24 hours per day, 365 days per year program that provides our customers with software
emerging supply chain and industry initiatives. Our CSSE revenues totaled $98.6 million in 2012, representing approximately 35% of
upgrades, when and if available, which include additional or improved functionality and technological advances incorporating
services revenue and approximately 25% of total revenue, respectively. The growth of CSSE revenues is influenced by: (1) new
emerging supply chain and industry initiatives. Our CSSE revenues totaled $98.6 million in 2012, representing approximately 35% of
license revenue growth; (2) annual renewal of support contracts; (3) increase in customers through acquisitions; and (4) fluctuations in
services revenue and approximately 25% of total revenue, respectively. The growth of CSSE revenues is influenced by: (1) new
currency rates. Substantially all of our customers renew their annual support contracts. Over the last three years, our annual revenue
license revenue growth; (2) annual renewal of support contracts; (3) increase in customers through acquisitions; and (4) fluctuations in
renewal rate of customers subscribing to comprehensive support and enhancements has been greater than 90%. CSSE revenue is
currency rates. Substantially all of our customers renew their annual support contracts. Over the last three years, our annual revenue
generally paid in advance and recognized ratably over the term of the agreement, typically twelve months. CSSE renewal revenue is
renewal rate of customers subscribing to comprehensive support and enhancements has been greater than 90%. CSSE revenue is
not recognized unless payment is received from the customer.
generally paid in advance and recognized ratably over the term of the agreement, typically twelve months. CSSE renewal revenue is
not recognized unless payment is received from the customer.
Hardware and other revenue: Our hardware and other revenue totaled $30.9 million in 2012 representing 8% of total
revenue with gross margins of 18.4%. During 2012, Americas, EMEA, and APAC were responsible for $28.9 million, $1.4 million,
Hardware and other revenue: Our hardware and other revenue totaled $30.9 million in 2012 representing 8% of total
and $0.6 million, respectively, in hardware and other revenue. In conjunction with the licensing of our software, and as a convenience
revenue with gross margins of 18.4%. During 2012, Americas, EMEA, and APAC were responsible for $28.9 million, $1.4 million,
for our customers, we resell a variety of hardware products developed and manufactured by third parties. These products include
and $0.6 million, respectively, in hardware and other revenue. In conjunction with the licensing of our software, and as a convenience
computer hardware, radio frequency terminal networks, RFID chip readers, bar code printers and scanners, and other peripherals. We
for our customers, we resell a variety of hardware products developed and manufactured by third parties. These products include
resell all third-party hardware products and related maintenance pursuant to agreements with manufacturers or through distributor-
computer hardware, radio frequency terminal networks, RFID chip readers, bar code printers and scanners, and other peripherals. We
authorized reseller agreements pursuant to which we are entitled to purchase hardware products and services at discount prices. We
resell all third-party hardware products and related maintenance pursuant to agreements with manufacturers or through distributor-
generally purchase hardware from our vendors only after receiving an order from a customer. As a result, we generally do not
authorized reseller agreements pursuant to which we are entitled to purchase hardware products and services at discount prices. We
maintain hardware inventory.
generally purchase hardware from our vendors only after receiving an order from a customer. As a result, we generally do not
maintain hardware inventory.
Other revenue represents amounts associated with reimbursements from customers for out-of-pocket expenses. The total
amount of expense reimbursement recorded to hardware and other revenue was $12.6 million, $10.4 million, and $9.0 million for
Other revenue represents amounts associated with reimbursements from customers for out-of-pocket expenses. The total
2012, 2011, and 2010, respectively.
amount of expense reimbursement recorded to hardware and other revenue was $12.6 million, $10.4 million, and $9.0 million for
2012, 2011, and 2010, respectively.
Product Development
Product Development
We continue to invest significantly in research and development (R&D), which historically has averaged about 14 cents of
We continue to invest significantly in research and development (R&D), which historically has averaged about 14 cents of
every revenue dollar, excluding hardware and other revenue, to provide leading solutions that help global manufacturers, wholesalers,
distributors, retailers, and logistics providers successfully manage accelerating and fluctuating demands as well as the increasing
every revenue dollar, excluding hardware and other revenue, to provide leading solutions that help global manufacturers, wholesalers,
distributors, retailers, and logistics providers successfully manage accelerating and fluctuating demands as well as the increasing
26
26
complexity and volatility of their local and global supply chains. Our research and development expenses for the years ended
December 31, 2012, 2011, and 2010 were $44.7 million, $42.4 million, and $40.5 million, respectively. At December 31, 2012, our
complexity and volatility of their local and global supply chains. Our research and development expenses for the years ended
R&D organization totaled approximately 650 employees, located in the U.S. and India.
December 31, 2012, 2011, and 2010 were $44.7 million, $42.4 million, and $40.5 million, respectively. At December 31, 2012, our
R&D organization totaled approximately 650 employees, located in the U.S. and India.
We expect to continue to focus our R&D resources on the development and enhancement of supply chain software solutions.
We expect to continue to focus our R&D resources on the development and enhancement of supply chain software solutions.
We offer what we believe to be the broadest solution portfolio in the supply chain solutions marketplace, to address all aspects of
planning and forecasting, inventory optimization, order lifecycle management, transportation lifecycle management, and distribution
We offer what we believe to be the broadest solution portfolio in the supply chain solutions marketplace, to address all aspects of
management.
planning and forecasting, inventory optimization, order lifecycle management, transportation lifecycle management, and distribution
management.
We also plan to continue to enhance our existing solutions and to introduce new solutions to address evolving industry
standards and market needs. We identify opportunities to further enhance our solutions and to develop and provide new solutions
We also plan to continue to enhance our existing solutions and to introduce new solutions to address evolving industry
through our customer support organization, as well as through ongoing customer consulting engagements and implementations,
standards and market needs. We identify opportunities to further enhance our solutions and to develop and provide new solutions
interactions with our user groups, association with leading industry analysts and market research firms, and participation on industry
through our customer support organization, as well as through ongoing customer consulting engagements and implementations,
standards and research committees. Our solutions address the needs of customers in various vertical markets, including retail,
interactions with our user groups, association with leading industry analysts and market research firms, and participation on industry
consumer goods, food and grocery, logistics service providers, industrial and wholesale, high technology and electronics, life sciences,
standards and research committees. Our solutions address the needs of customers in various vertical markets, including retail,
and government.
consumer goods, food and grocery, logistics service providers, industrial and wholesale, high technology and electronics, life sciences,
and government.
Cash Flow and Financial Condition
Cash Flow and Financial Condition
For 2012, we generated cash flow from operating activities of $75.3 million and have generated a cumulative total of $181.1
million for the three years ended December 31, 2012. Our cash and investments at December 31, 2012 totaled $103.0 million, with no
For 2012, we generated cash flow from operating activities of $75.3 million and have generated a cumulative total of $181.1
debt on our balance sheet. We currently have no credit facilities. During the past three years, our primary uses of cash have been
million for the three years ended December 31, 2012. Our cash and investments at December 31, 2012 totaled $103.0 million, with no
funding investment in R&D and operations to drive earnings growth and repurchases of common stock.
debt on our balance sheet. We currently have no credit facilities. During the past three years, our primary uses of cash have been
funding investment in R&D and operations to drive earnings growth and repurchases of common stock.
During 2012, we repurchased approximately $99.7 million of Manhattan Associates’ outstanding common stock under the
During 2012, we repurchased approximately $99.7 million of Manhattan Associates’ outstanding common stock under the
share repurchase program approved by our Board of Directors throughout the year. In January 2013, our Board of Directors approved
raising our remaining share repurchase authority to $50.0 million.
share repurchase program approved by our Board of Directors throughout the year. In January 2013, our Board of Directors approved
raising our remaining share repurchase authority to $50.0 million.
In 2013, we anticipate that our priorities for use of cash will be in developing sales and services resources and continued
investment in product development to drive and support profitable growth and extend our market leadership. We will continue to
In 2013, we anticipate that our priorities for use of cash will be in developing sales and services resources and continued
evaluate acquisition opportunities that are complementary to our product footprint and technology direction. We will also continue to
investment in product development to drive and support profitable growth and extend our market leadership. We will continue to
weigh our share repurchase options against cash for acquisitions and investing in the business. We do not anticipate any borrowing
evaluate acquisition opportunities that are complementary to our product footprint and technology direction. We will also continue to
requirements in 2013 for general corporate purposes.
weigh our share repurchase options against cash for acquisitions and investing in the business. We do not anticipate any borrowing
requirements in 2013 for general corporate purposes.
Application of Critical Accounting Policies and Estimates
Application of Critical Accounting Policies and Estimates
The SEC defines “critical accounting policies” as those that require application of management’s most difficult, subjective, or
The SEC defines “critical accounting policies” as those that require application of management’s most difficult, subjective, or
complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may
change in subsequent periods.
complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may
change in subsequent periods.
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles
(GAAP). The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions in certain
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles
circumstances that affect amounts reported in the accompanying consolidated financial statements and related footnotes. We believe
(GAAP). The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions in certain
that estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that
circumstances that affect amounts reported in the accompanying consolidated financial statements and related footnotes. We believe
these estimates, judgments, and assumptions are made. To the extent there are material differences between those estimates,
that estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that
judgments, or assumptions and actual results, our financial statements will be affected. The accounting policies that reflect our more
these estimates, judgments, and assumptions are made. To the extent there are material differences between those estimates,
significant estimates, judgments, and assumptions are: Revenue Recognition, Allowance for Doubtful Accounts, Valuation of
judgments, or assumptions and actual results, our financial statements will be affected. The accounting policies that reflect our more
Goodwill, Accounting for Income Taxes, and Stock-based Compensation.
significant estimates, judgments, and assumptions are: Revenue Recognition, Allowance for Doubtful Accounts, Valuation of
Goodwill, Accounting for Income Taxes, and Stock-based Compensation.
Revenue Recognition
Revenue Recognition
The Company’s revenue consists of fees from the licensing and hosting of software (collectively included in “Software
The Company’s revenue consists of fees from the licensing and hosting of software (collectively included in “Software
license” revenue in the Consolidated Statements of Income), fees from implementation and training services (collectively,
“professional services”) and customer support services and software enhancements (collectively included in “Services” revenue in the
license” revenue in the Consolidated Statements of Income), fees from implementation and training services (collectively,
Consolidated Statements of Income), and sales of hardware and other revenue, which consists of reimbursements of out-of-pocket
“professional services”) and customer support services and software enhancements (collectively included in “Services” revenue in the
Consolidated Statements of Income), and sales of hardware and other revenue, which consists of reimbursements of out-of-pocket
27
27
expenses incurred in connection with our professional services (collectively included in “Hardware and other” revenue in the
Consolidated Statements of Income). All revenue is recognized net of any related sales taxes.
expenses incurred in connection with our professional services (collectively included in “Hardware and other” revenue in the
Consolidated Statements of Income). All revenue is recognized net of any related sales taxes.
The Company recognizes license revenue when the following criteria are met: (1) a signed contract is obtained covering all
elements of the arrangement, (2) delivery of the product has occurred, (3) the license fee is fixed or determinable, and (4) collection is
The Company recognizes license revenue when the following criteria are met: (1) a signed contract is obtained covering all
probable. Revenue recognition for software with multiple-element arrangements requires recognition of revenue using the “residual
elements of the arrangement, (2) delivery of the product has occurred, (3) the license fee is fixed or determinable, and (4) collection is
method” when (a) there is vendor-specific objective evidence (VSOE) of the fair values of all undelivered elements in a multiple-
probable. Revenue recognition for software with multiple-element arrangements requires recognition of revenue using the “residual
element arrangement that is not accounted for using long-term contract accounting, (b) VSOE of fair value does not exist for one or
method” when (a) there is vendor-specific objective evidence (VSOE) of the fair values of all undelivered elements in a multiple-
more of the delivered elements in the arrangement, and (c) all other applicable revenue-recognition criteria for software revenue
element arrangement that is not accounted for using long-term contract accounting, (b) VSOE of fair value does not exist for one or
recognition, are satisfied. For those contracts that contain significant customization or modifications, license revenue is recognized
more of the delivered elements in the arrangement, and (c) all other applicable revenue-recognition criteria for software revenue
using contract accounting.
recognition, are satisfied. For those contracts that contain significant customization or modifications, license revenue is recognized
using contract accounting.
The Company allocates revenue to customer support services and software enhancements and any other undelivered elements
of the arrangement based on VSOE of fair value of each element and such amounts are deferred until the applicable delivery criteria
The Company allocates revenue to customer support services and software enhancements and any other undelivered elements
and other revenue recognition criteria have been met. The balance of the revenue, net of any discounts inherent in the arrangement, is
of the arrangement based on VSOE of fair value of each element and such amounts are deferred until the applicable delivery criteria
recognized at the outset of the arrangement using the residual method as the product licenses are delivered. If the Company cannot
and other revenue recognition criteria have been met. The balance of the revenue, net of any discounts inherent in the arrangement, is
objectively determine the fair value of each undelivered element based on the VSOE of fair value, the Company defers revenue
recognized at the outset of the arrangement using the residual method as the product licenses are delivered. If the Company cannot
recognition until all elements are delivered, all services have been performed, or until fair value can be objectively determined. The
objectively determine the fair value of each undelivered element based on the VSOE of fair value, the Company defers revenue
Company must apply judgment in determining all elements of the arrangement and in determining the VSOE of fair value for each
recognition until all elements are delivered, all services have been performed, or until fair value can be objectively determined. The
element, considering the price charged for each product on a stand-alone basis or applicable renewal rates. For arrangements that
Company must apply judgment in determining all elements of the arrangement and in determining the VSOE of fair value for each
include future software functionality deliverables, the Company accounts for these deliverables as a separate element of the
element, considering the price charged for each product on a stand-alone basis or applicable renewal rates. For arrangements that
arrangement. Because the Company does not sell these deliverables on a standalone basis, the Company is not able to establish VSOE
include future software functionality deliverables, the Company accounts for these deliverables as a separate element of the
of fair value of these deliverables. As a result, the Company defers all revenue under the arrangement until the future functionality has
arrangement. Because the Company does not sell these deliverables on a standalone basis, the Company is not able to establish VSOE
been delivered to the customer.
of fair value of these deliverables. As a result, the Company defers all revenue under the arrangement until the future functionality has
been delivered to the customer.
Payment terms for the Company’s software licenses vary. Each contract is evaluated individually to determine whether the
fees in the contract are fixed or determinable and whether collectibility is probable. Judgment is required in assessing the probability
Payment terms for the Company’s software licenses vary. Each contract is evaluated individually to determine whether the
of collection, which is generally based on evaluation of customer-specific information, historical collection experience, and economic
fees in the contract are fixed or determinable and whether collectibility is probable. Judgment is required in assessing the probability
market conditions. If market conditions decline, or if the financial conditions of customers deteriorate, the Company may be unable to
of collection, which is generally based on evaluation of customer-specific information, historical collection experience, and economic
determine that collectibility is probable, and the Company could be required to defer the recognition of revenue until the Company
market conditions. If market conditions decline, or if the financial conditions of customers deteriorate, the Company may be unable to
receives customer payments. The Company has an established history of collecting under the terms of its software license contracts
determine that collectibility is probable, and the Company could be required to defer the recognition of revenue until the Company
without providing refunds or concessions to its customers. Therefore, the Company has determined that the presence of payment
receives customer payments. The Company has an established history of collecting under the terms of its software license contracts
terms that extend beyond contract execution in a particular contract do not preclude the conclusion that the fees in the contract are
without providing refunds or concessions to its customers. Therefore, the Company has determined that the presence of payment
fixed or determinable. Although infrequent, when payment terms in a contract extend beyond twelve months, the Company has
terms that extend beyond contract execution in a particular contract do not preclude the conclusion that the fees in the contract are
determined that such fees are not fixed or determinable and recognizes revenue as payments become due provided that all other
fixed or determinable. Although infrequent, when payment terms in a contract extend beyond twelve months, the Company has
conditions for revenue recognition have been met.
determined that such fees are not fixed or determinable and recognizes revenue as payments become due provided that all other
conditions for revenue recognition have been met.
The Company’s services revenue consists of fees generated from professional services and customer support and software
The Company’s services revenue consists of fees generated from professional services and customer support and software
enhancements related to the Company’s software products. Professional services include system planning, design, configuration,
testing, and other software implementation support and are not typically essential to the functionality of our software. Fees from
enhancements related to the Company’s software products. Professional services include system planning, design, configuration,
professional services performed by the Company are separately priced and are generally billed on an hourly basis, and revenue is
testing, and other software implementation support and are not typically essential to the functionality of our software. Fees from
recognized as the services are performed. In certain situations, professional services are rendered under agreements in which billings
professional services performed by the Company are separately priced and are generally billed on an hourly basis, and revenue is
are limited to contractual maximums or based upon a fixed-fee for portions of or all of the engagement. Revenue related to fixed-fee
recognized as the services are performed. In certain situations, professional services are rendered under agreements in which billings
based contracts is recognized on a proportional performance basis based on the hours incurred on discrete projects within an overall
are limited to contractual maximums or based upon a fixed-fee for portions of or all of the engagement. Revenue related to fixed-fee
services arrangement. The Company has determined that output measures, or services delivered, approximate the input measures
based contracts is recognized on a proportional performance basis based on the hours incurred on discrete projects within an overall
associated with fixed-fee services arrangements. Project losses are provided for in their entirety in the period in which they become
services arrangement. The Company has determined that output measures, or services delivered, approximate the input measures
known. Revenue related to customer support services and software enhancements is generally paid in advance and recognized ratably
associated with fixed-fee services arrangements. Project losses are provided for in their entirety in the period in which they become
over the term of the agreement, typically twelve months.
known. Revenue related to customer support services and software enhancements is generally paid in advance and recognized ratably
over the term of the agreement, typically twelve months.
Hardware and other revenue is generated from the resale of a variety of hardware products, developed and manufactured by
Hardware and other revenue is generated from the resale of a variety of hardware products, developed and manufactured by
third parties, that are integrated with and complementary to the Company’s software solutions. As part of a complete solution, the
Company’s customers periodically purchase hardware from the Company for use with the software licenses purchased from the
third parties, that are integrated with and complementary to the Company’s software solutions. As part of a complete solution, the
Company. These products include computer hardware, radio frequency terminal networks, RFID chip readers, bar code printers and
Company’s customers periodically purchase hardware from the Company for use with the software licenses purchased from the
scanners, and other peripherals. Hardware revenue is recognized upon shipment to the customer when title passes. The Company
Company. These products include computer hardware, radio frequency terminal networks, RFID chip readers, bar code printers and
generally purchases hardware from the Company’s vendors only after receiving an order from a customer. As a result, the Company
scanners, and other peripherals. Hardware revenue is recognized upon shipment to the customer when title passes. The Company
generally does not maintain hardware inventory.
generally purchases hardware from the Company’s vendors only after receiving an order from a customer. As a result, the Company
generally does not maintain hardware inventory.
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28
In accordance with the other presentation matters within the Revenue Recognition Topic of the Financial Accounting
Standards Board’s (FASB) Accounting Standards Codification, the Company recognizes amounts associated with reimbursements
from customers for out-of-pocket expenses as revenue. Such amounts have been included in “Hardware and other” revenue in the
Consolidated Statements of Income. The total amount of expense reimbursement recorded to revenue was $12.6 million, $10.4
million, and $9.0 million for 2012, 2011, and 2010, respectively.
Allowance for Doubtful Accounts
We continuously monitor collections and payments from our customers and maintain an allowance for doubtful accounts
based upon our historical experience and any specific customer collection issues that we have identified. Additions to the allowance
for doubtful accounts generally represent a sales allowance on services revenue, which are recorded to operations as a reduction to
services revenue. While such losses have historically been within our expectations and the provisions established, we cannot guarantee
that we will continue to experience the same loss rates that we have in the past.
Valuation of Goodwill
In accordance with the Intangibles - Goodwill and Other Topic of the FASB Accounting Standards Codification, we do not
amortize goodwill and other intangible assets with indefinite lives. Our goodwill is subject to an annual impairment test, which
requires us to estimate the fair value of our business compared to the carrying value. The impairment reviews require an analysis of
future projections and assumptions about our operating performance. Should such review indicate the assets are impaired, we would
record an expense for the impaired assets.
Annual tests or other future events could cause us to conclude that impairment indicators exist and that our goodwill is
impaired. For example, if we had reason to believe that our recorded goodwill had become impaired due to decreases in the fair
market value of the underlying business, we would have to record a charge to income for that portion of goodwill that we believed was
impaired. Any resulting impairment loss could have a material adverse impact on our financial position and results of operations. At
December 31, 2012, our goodwill balance was $62.3 million.
Accounting for Income Taxes
We provide for the effect of income taxes on our financial position and results of operations in accordance with the Income
Taxes Topic of the FASB Accounting Standards Codification. Under this accounting pronouncement, income tax expense is
recognized for the amount of income taxes payable or refundable for the current year and for the change in net deferred tax assets or
liabilities resulting from events that are recorded for financial reporting purposes in a different reporting period than recorded in the
tax return. Management must make significant assumptions, judgments, and estimates to determine our current provision for income
taxes and also our deferred tax assets and liabilities and any valuation allowance to be recorded against our net deferred tax asset.
Our judgments, assumptions, and estimates relative to the current provision for income tax take into account current tax laws,
our interpretation of current tax laws, allowable deductions, projected tax credits, and possible outcomes of current and future audits
conducted by foreign and domestic tax authorities. We do not recognize a tax benefit unless we conclude that it is more likely than not
that the benefit will be sustained on audit by the taxing authority based solely on the technical merits of the associated tax position. If
the recognition threshold is met, we recognize a tax benefit measured at the largest amount of the tax benefit that, in our judgment, is
greater than 50 percent likely to be realized. Changes in tax law or our interpretation of tax laws and the resolution of current and
future tax audits could significantly impact the amounts provided for income taxes in our financial position and results of operations.
Our assumptions, judgments, and estimates relative to the value of our net deferred tax asset take into account predictions of the
amount and category of future taxable income. Actual operating results and the underlying amount and category of income in future
years could render our current assumptions, judgments, and estimates of recoverable net deferred taxes inaccurate, thus materially
impacting our financial position and results of operations.
Equity-Based Compensation
In January 2012, in order to simplify equity grant administration, we changed our practice of granting restricted stock in
favor of granting restricted stock units, or RSUs, which convert to our common stock upon vesting. There is no material difference
between the grant of restricted stock and the grant of RSUs to either us or the recipients receiving the grants; however, in contrast to
29
the granting of restricted stock, no stock will actually be issued under the granting of RSUs until the units vest. We do not currently
grant stock options.
In January 2010 our Compensation Committee approved certain changes to our historical equity incentive grant practices,
with the objective to optimize the Company’s performance and retention strength while managing program share usage to improve
long-term equity overhang. The change eliminated stock option awards in favor of 100% restricted stock grants, which for the 2011
and 2010 awards contain vesting provisions that are 50% service-based and 50% performance-based. The 2011 and 2010 awards have
a four year vesting period, with the performance portion tied to their respective year revenue and adjusted earnings per share targets.
For our historical stock option grants, we estimated the fair value on the date of grant using the Black-Scholes option pricing
model. We based our estimate of fair value on certain assumptions, including the expected term of the option, the expected volatility
of the price of the underlying share for the expected term of the option, the expected dividends on the underlying share for the
expected term, and the risk-free interest rate for the expected term of the option. We based our expected volatilities on a combination
of the historical volatility of our stock and the implied volatility of publicly traded options (issued by third party) for our common
stock. Due to the limited trading volume of publicly traded options for our common stock, we placed a greater emphasis on historical
volatility of our common stock. We also used historical data to estimate the term that options are expected to be outstanding. We
based the risk-free interest rate on the rate for U.S. Treasury zero-coupon issues with a term approximating the expected term.
We recognize compensation cost for service-based awards with graded vesting on a straight-line basis over the entire vesting
period, with the amount of compensation cost recognized at any date at least equal to the portion of the grant-date value of the award
that is vested at that date. For our performance-based restricted stock awards with graded vesting, we recognize compensation cost on
an accelerated basis applying straight-line expensing for each separately vesting portion of each award. Compensation cost
recognized in any period is impacted by the number of stock-based awards granted, the vesting period of the awards (which generally
is four years), the estimated forfeiture rate, and the probable outcome of any performance conditions.
Accounting Charges
Recovery of previously impaired investment. In the quarter ended September 30, 2008, we recorded an impairment charge of
$3.5 million on an investment in an auction rate security. We reduced the carrying value to zero due to credit downgrades of the
underlying issuer and the bond insurer as well as increasing publicly reported exposure to bankruptcy risk by the issuer. In the quarter
ended September 30, 2011, we were able to sell the auction rate security recovering 72%, or $2.5 million, of our original investment.
Full Year 2012 Financial Summary
• Diluted earnings per share for the twelve months ended December 31, 2012 was $2.56, compared to $2.09 for the twelve
months ended December 31, 2011. Results for the twelve months ended December 31, 2011 include a positive impact of
$0.12 per share for the recovery of an auction rate security investment, which had been impaired in a prior period, and a
$2.0 million tax benefit, or $0.09 per share, resulting from the reduction of a valuation allowance associated with a
change in India tax law. The change eliminates the tax holiday for India companies under the Software Technology Park
of India (STPI) tax plan;
• Consolidated revenue for the twelve months ended December 31, 2012 was $376.2 million, compared to $329.3 million
for the twelve months ended December 31, 2011. License revenue was $61.5 million for the twelve months ended
December 31, 2012, compared to $54.2 million for the twelve months ended December 31, 2011;
• Operating income was $80.1 million for the twelve months ended December 31, 2012, compared to $61.4 million for the
twelve months ended December 31, 2011. Results for the twelve months ended December 31, 2011 included a $2.5
million recovery of a previously impaired auction rate security investment;
• Operating margins for 2012 were 21.3%, up 270 basis points compared to operating margins of 18.6% in 2011;
• Cash flow from operations totaled $75.3 million for the full year 2012 compared to $55.8 million in 2011;
• Cash and investments on hand at December 31, 2012 was $103.0 million compared to $99.1 million at December 31,
2011;
30
• During the twelve months ended December 31, 2012, the Company repurchased approximately 2.0 million shares of
Manhattan Associates common stock under the share repurchase program authorized by the Board of Directors, for a
total investment of $99.7 million; and
•
In January 2013, the Board of Directors approved raising the Company’s remaining share repurchase authority to $50.0
million of Manhattan Associates’ outstanding common stock.
Results of Operations
The following table summarizes selected Statement of Income data for the years ended December 31, 2012, 2011, and 2010.
Revenue:
Software license
Services
Hardware and other
Total revenue
Costs and expenses:
Cost of license
Cost of services
Cost of hardware and other
Research and development
Sales and marketing
General and administrative
Depreciation and amortization
Recovery of previously impaired investment (1)
Total costs and expenses
Income from operations
Operating margin
Year Ended December 31,
% Change vs. Prior Year
2012
2011
2010
2012
2011
(in thousands)
$ 61,494
$ 54,241
$ 54,450
283,872
30,882
376,248
7,838
128,686
25,213
44,704
45,622
38,474
5,638
244,058
30,954
329,253
6,806
107,510
24,785
42,372
43,944
37,708
7,284
213,750
28,917
297,117
6,172
98,776
23,844
40,508
42,702
34,027
9,161
-
(2,519)
-
296,175
$ 80,073
267,890
$ 61,363
255,190
$ 41,927
21.3%
18.6%
14.1%
13%
16%
0%
14%
15%
20%
2%
6%
4%
2%
-23%
N/A
11%
30%
0%
14%
7%
11%
10%
9%
4%
5%
3%
11%
-20%
N/A
5%
46%
(1)
Amount represents recovery of an auction rate security investment which had been impaired in a prior period.
We manage our business based on three geographic regions: the Americas, EMEA, and APAC. Geographic revenue
information is based on the location of sale. The revenues represented below are from external customers only. The geographical-
based expenses include costs of personnel, direct sales, and marketing expenses, and general and administrative costs to support the
business. There are certain corporate expenses included in the Americas region that are not charged to the other segments including
research and development, certain marketing and general and administrative costs that support the global organization, and the
amortization of acquired developed technology. Included in the Americas costs are all research and development costs, including the
costs associated with the Company’s India operations. During 2012, 2011, and 2010, we derived the majority of our revenues from
sales to customers within our Americas region. The following table summarizes revenue and operating profit by region:
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Revenue:
Software license
Americas
EMEA
APAC
Total license
Services
Americas
EMEA
APAC
Total services
Hardware and Other
Americas
EMEA
APAC
Total hardware and other
Total Revenue
Americas
EMEA
APAC
Total revenue
Operating income:
Americas
EMEA
APAC
Total operating income
Year Ended December 31,
2012
2011
(in thousands)
% Change vs. Prior Year
2010
2012
2011
$ 50,036
9,569
1,889
$ 61,494
$ 45,506
6,362
2,373
$ 54,241
$ 44,254
4,972
5,224
$ 54,450
$ 228,673
36,167
19,032
$ 283,872
$ 198,041
30,824
15,193
$ 244,058
$ 176,912
26,269
10,569
$ 213,750
$ 28,883
1,402
597
$ 30,882
$ 29,312
1,109
533
$ 30,954
$ 27,784
925
208
$ 28,917
$ 307,592
47,138
21,518
$ 376,248
$ 272,859
38,295
18,099
$ 329,253
$ 248,950
32,166
16,001
$ 297,117
$ 65,517
9,725
4,831
$ 80,073
$ 53,550
5,239
2,574
$ 61,363
$ 35,868
3,685
2,374
$ 41,927
10%
50%
-20%
13%
15%
17%
25%
16%
-1%
26%
12%
0%
13%
23%
19%
14%
22%
86%
88%
30%
3%
28%
-55%
0%
12%
17%
44%
14%
5%
20%
156%
7%
10%
19%
13%
11%
49%
42%
8%
46%
The results of our operations for the years ended December 31, 2012, 2011, and 2010 are discussed below.
Revenue
Our revenue consists of fees generated from the licensing and hosting of software; fees from professional services, customer
support services and software enhancements; hardware sales of complementary radio frequency and computer equipment; and other
revenue representing amounts associated with reimbursements from customers for out-of-pocket expenses.
Year Ended December, 31
% Change vs. Prior Year
2012
2011
2010
2012
2011
(in thousands)
% of Total Revenue
2011
2010
2012
Software license
$ 61,494
$ 54,241
$ 54,450
Services
Hardware and other
Total revenue
283,872
244,058
213,750
30,882
$376,248
30,954
$ 329,253
28,917
$ 297,117
13%
16%
0%
14%
0%
14%
7%
11%
16%
76%
8%
17%
74%
9%
18%
72%
10%
100%
100%
100%
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License revenue
Year 2012 compared with year 2011
License revenue increased $7.3 million, or 13%, to $61.5 million in 2012 compared to 2011. We completed twelve large
deals and thirteen large deals greater than $1.0 million in 2012 and 2011, respectively. Our Americas and EMEA license revenue
increased $4.5 million and $3.2 million, respectively, while APAC license revenue decreased $0.5 million over 2011.
The license sales percentage mix across our product suite in 2012 was approximately 65% warehouse management solutions
and 35% non-warehouse management solutions. Our warehouse management solutions increased $6.5 million, or 19%, in 2012
compared to 2011 and non-warehouse management solutions increased $0.7 million, or 4%, in 2012 over 2011.
Year 2011 compared with year 2010
License revenue decreased slightly to $54.2 million in 2011 compared to $54.5 million in 2010. Our APAC license revenue
decreased $2.9 million in 2011 compared to 2010 partially offset by an increase in Americas and EMEA license revenue of $1.3
million and $1.4 million, respectively, in the same period.
The license sales percentage mix across our product suite in 2011 was approximately 60% warehouse management solutions
and 40% non-warehouse management solutions. Our warehouse management solutions increased $2.6 million, or 8%, in 2011
compared to 2010, and non-warehouse management solutions decreased $2.8 million, or 12%, in 2011 over 2010.
Services revenue
Year 2012 compared with year 2011
Services revenue increased $39.8 million, or 16%, in 2012 compared to 2011 due to a $28.4 million, or 18%, increase in
professional services revenue and an $11.4 million, or 13%, increase in CSSE revenue. The Americas, EMEA, and APAC segments
increased $30.6 million, $5.3 million, and $3.8 million, respectively, compared to 2011. The increase in services revenue is primarily
due to customer-specific initiatives in conjunction with customer upgrade activity and size of license deals signed.
Year 2011 compared with year 2010
Services revenue increased $30.3 million, or 14%, in 2011 compared to 2010 due to a $24.9 million, or 19%, increase in
professional services revenue and a $5.4 million, or 7%, increase in CSSE revenue. The Americas, EMEA, and APAC segments
increased $21.1 million, $4.6 million, and $4.6 million, respectively, compared to 2010. The increase in services revenue is primarily
due to customer-specific initiatives in conjunction with customer upgrade activity and large license deals signed.
Hardware and other
Sales of hardware decreased $2.3 million to $18.3 million in 2012 compared to $20.5 million in 2011. Sales of hardware
increased slightly to $20.5 million in 2011 from $19.9 million in 2010. The majority of hardware sales are derived from our Americas
segment. Sales of hardware are largely dependent upon customer-specific desires, which fluctuate. Other revenue represents
reimbursements for professional service travel expenses that are required to be classified as revenue and are included in hardware and
other revenue. Reimbursements by customers for out-of-pocket expenses were approximately $12.6 million, $10.4 million, and
$9.0 million for 2012, 2011, and 2010, respectively.
33
Cost of Revenue
Cost of license
Cost of services
Cost of hardware and other
Total cost of revenue
Cost of License
Year Ended December 31,
% Change vs. Prior Year
2012
2011
2010
2012
2011
(in thousands)
$ 7,838
128,686
25,213
$ 161,737
$ 6,806
107,510
24,785
$ 139,101
$ 6,172
98,776
23,844
$ 128,792
15%
20%
2%
16%
10%
9%
4%
8%
Cost of license consists of the costs associated with software reproduction; hosting services; media, packaging and delivery,
documentation, and other related costs; and royalties on third-party software sold with or as part of our products. Cost of licenses
increased $1.0 million, or 15%, in 2012 compared to 2011, primarily due to increase in sales of over the prior year. Cost of licenses
increased $0.6 million, or 10%, in 2011 compared to 2010, primarily due to increased sales of third party software over the prior year.
Cost of Services
Year 2012 compared with year 2011
Cost of services consists primarily of salaries and other personnel-related expenses of employees dedicated to professional
and technical services and customer support services. Cost of services increased $21.2 million, or 20%, in 2012 compared to 2011
principally due to a $14.3 million increase in employee-related costs such as salary, benefits, and payroll taxes resulting from an
increase in the number of professional services personnel in 2012 to support demand and a $3.1 million increase in performance-based
compensation expense.
Services gross margin decreased 120 basis points to 54.7% in 2012 from 55.9% in 2011. The decrease in services margin is
primarily attributable to an increase in the hiring of professional services personnel to fulfill services demand.
Year 2011 compared with year 2010
Cost of services increased $8.7 million, or 9%, in 2011 compared to 2010 principally due to an $11.4 million increase in
employee-related costs such as salary, benefits, and payroll taxes resulting from an increase in the number of professional services
personnel in 2011 to support demand, partially offset by a $2.4 million decrease in performance-based compensation expense.
Services gross margin increased 210 basis points to 55.9% in 2011 from 53.8% in 2010. The increase in services margin is
attributable to services revenue growth and higher than normal billable utilization from our services personnel.
Cost of Hardware and other
In 2012, cost of hardware decreased $1.6 million to $12.8 million from $14.4 million in 2011 as a direct result of a decrease
in sales of hardware. Cost of hardware decreased slightly to $14.4 million in 2011 from $15.0 million in 2010. Cost of hardware and
other includes professional services billed travel expenses reimbursed by customers of approximately $12.4 million, $10.4 million,
and $8.8 million for 2012, 2011, and 2010, respectively. Changes in amounts of out-of-pocket expenses correlate to changes in
amounts of services revenue.
34
Operating Expenses
Research and development
Sales and marketing
General and administrative
Depreciation and amortization
Recovery of previously impaired investment
Operating expenses
Research and Development
Year Ended December 31,
2012
$ 44,704
45,622
38,474
5,638
-
$ 134,438
2011
(in thousands)
$ 42,372
43,944
37,708
7,284
(2,519)
$ 128,789
% Change vs. Prior Year
2010
2012
2011
$ 40,508
42,702
34,027
9,161
-
$ 126,398
6%
4%
2%
-23%
N/A
4%
5%
3%
11%
-20%
N/A
2%
Our principal research and development (R&D) activities during 2012, 2011, and 2010 focused on the expansion and
integration of new products acquired and new product releases and expanding the product footprint of our supply chain optimization
solutions called Supply Chain Optimization from Planning through Execution. The Manhattan SCOPE Platform provides not only a
sophisticated service oriented, architecture based application framework, but a platform that facilitates the integration with Enterprise
Resource Planning (ERP) and other supply chain solutions.
For the years ended December 31, 2012, 2011, and 2010, we did not capitalize any R&D costs because the costs incurred
following the attainment of technological feasibility for the related software product through the date of general release were
insignificant.
Year 2012 compared with year 2011
R&D expenses primarily consist of salaries and other personnel-related costs for personnel involved in our R&D activities.
Consistent with prior years, we typically invest approximately 13% to 15% of total revenue, excluding hardware and other revenue, in
R&D. R&D expenses increased $2.3 million, or 6%, to $44.7 million in 2012 compared to $42.4 million in 2011 primarily due to a
$1.4 million increase in salary-related costs resulting from an increase in the number of R&D personnel to support our product
development and a $1.1 million increase in performance-based compensation expense.
Year 2011 compared with year 2010
R&D expenses increased to $42.4 million in 2011 compared to $40.5 million in 2010 primarily due to a $1.9 million increase
in salary-related costs resulting from an increase in the number of R&D personnel, partially offset by a $0.7 million decrease in
performance-based compensation expense.
Sales and Marketing
Year 2012 compared with year 2011
Sales and marketing expenses include salaries, commissions, travel, and other personnel-related costs and the costs of our
marketing and alliance programs and related activities. Sales and marketing expenses increased by $1.7 million, or 4%, in 2012
compared to 2011. The increase was mainly attributable to a $3.1 million increase in performance-based compensation partially offset
by a decrease in travel expense of $1.1 million.
Year 2011 compared with year 2010
Sales and marketing expenses increased by $1.2 million, or 3%, in 2011 compared to 2010. The increase was mainly
attributable to $1.1 million in compensation and employee-related expenses and $0.7 million in marketing programs, partially offset
by a decrease in performance-based compensation expense of $0.5 million.
35
General and Administrative
Year 2012 compared with year 2011
General and administrative expenses consist primarily of salaries and other personnel-related costs of executive, financial,
human resources, information technology, and administrative personnel, as well as facilities, legal, insurance, accounting, and other
administrative expenses. General and administrative expenses increased $0.8 million, or 2%, in 2012 primarily attributable to an
increase in compensation, employee-related expenses, and temporary contracted personnel of $1.8 million and an increase in
performance-based compensation expense of $0.4 million partially offset by a $1.1 million decrease in equity-based compensation and
a $0.7 million decrease in professional fees.
Year 2011 compared with year 2010
General and administrative expenses increased $3.7 million, or 11%, in 2011 primarily attributable to (i) an increase in
compensation, employee-related expenses, and temporary contracted personnel of $1.6 million, (ii) an increase in professional fees of
$1.1 million, and (iii) a 2010 non-recurring $1.2 million recovery of previously recorded state sales tax partially offset by a $1.0
million decrease in 2011 performance-based compensation expense.
Depreciation and Amortization
Depreciation expense amounted to $5.6 million, $6.1 million, and $6.9 million, during 2012, 2011, and 2010, respectively,
and has decreased due to lower capital expenditures over the past several years. Amortization of intangibles was nearly nil in 2012,
$1.2 million and $2.3 million in 2011 and 2010, respectively. We have recorded goodwill and other acquisition-related intangible
assets as part of the purchase accounting associated with various acquisitions prior to 2006. The decreases in amortization expense in
2012 and 2011 of $1.2 million and $1.1 million, respectively, were associated with certain finite-lived intangible assets related to prior
acquisitions, which are now fully amortized.
Recovery of previously impaired investment
In September 2008, we recorded an impairment charge of $3.5 million on an investment in an auction rate security. We
reduced the carrying value to zero due to credit downgrades of the underlying issuer and the bond insurer as well as increasing
publicly reported exposure to bankruptcy risk by the issuer.
In the quarter ended September 30, 2011, we were able to sell the auction rate security, recovering 72%, or $2.5 million, of
our original investment.
Operating Income
Operating income for the year ended December 31, 2012 increased $18.7 million to $80.1 million, compared to $61.4
million, which includes a $2.5 million recovery of an auction rate security investment which had been impaired in a prior period, for
the year ended December 31, 2011. Operating margins were 21.3% for 2012 versus 18.6% for 2011. Operating income and margins
increased due to increased services revenue. Operating income in the Americas, EMEA, and APAC segments increased by
$12.0 million, $4.5 million, and $2.2 million, respectively in 2012.
Operating income for the year ended December 31, 2011 was $61.4 million, which includes a $2.5 million recovery of an
auction rate security investment which had been impaired in a prior period, compared to $41.9 million for the year ended December
31, 2010. Operating margins were 18.6% for 2011 versus 14.1% for 2010. Operating income and margins increased due to services
revenue and expense management. Operating income in the Americas, EMEA, and APAC segments increased by $17.7 million, $1.6
million, and $0.2 million, respectively in 2011.
36
Other Income (Loss) and Income Taxes
Other income (loss), net
$ 965
$ 1,864
$ (143)
Income tax provision
29,185
18,320
13,723
2012
2011
2010
% Change vs. Prior Year
2012
-48%
59%
2011
1403%
33%
Year Ended December 31,
Other Income (Loss), net
Other income (loss), net primarily includes interest income, foreign currency gains and losses, and other non-operating
expenses. Interest income was $1.1 million for the years ended December 31, 2012 and 2011, and $0.6 million for the year ended
December 31, 2010. The increase of $0.4 million in interest income in 2011 compared to 2010 was due to a higher weighted-average
interest rate earned. The weighted-average interest rate earned on cash and investments was approximately 1% for the years ended
December 31, 2012 and 2011, and 0.5% for the year ended December 31, 2010. We recorded a net foreign currency loss of $0.1
million in 2012, a net foreign currency gain of $0.8 million in 2011, and a net foreign currency loss of $0.7 million in 2010. The
foreign currency gain and losses mainly resulted from gains or losses on intercompany transactions denominated in foreign currencies
with subsidiaries due to the fluctuation of the U.S. dollar relative to other foreign currencies, primarily the Indian Rupee.
Income Tax Provision
Our effective income tax rates were 36.0%, 29.0%, and 32.8% in 2012, 2011, and 2010, respectively. Our effective income
tax rate takes into account the source of taxable income, domestically by state and internationally by country, and available income tax
credits. The increase in the effective tax rate for the year ended December 31, 2012 compared to the same periods in the prior year is
principally due to the expiration of the federal research and development tax credit and foreign net operating loss carry-forwards
benefitted in prior periods that have now been fully utilized.
The effective rate for the year ended December 31, 2011 was impacted by the $2.5 million recovery of a previously impaired
auction rate security investment discussed in Note 3. We did not record a tax benefit in 2008 on the original impairment charge as
there were no future capital gains to offset the loss, and we therefore did not have tax expense related to the recovery of the charge.
Also, the effective tax rate in 2011 included a $2.0 million tax benefit resulting from the reduction of a valuation allowance associated
with tax credit carryforwards and deferred tax assets in India. The benefit was attributable to the elimination of the tax holiday for
Indian companies under the Software Technology Park of India (STPI) tax plan, based on the February 2011 budget approved by the
India Finance Ministry, which will allow us to utilize tax assets previously reserved. In addition, the effective tax rate for the year
ended December 31, 2011 included a tax benefit from the disqualifying disposition of incentive stock options that were previously
expensed and the reduction of income tax reserves that resulted from the expiration of tax audit statutes and the settlement of an IRS
audit.
The effective tax rate in 2010 included a tax benefit from the disqualifying disposition of incentive stock options that were
previously expensed and the reduction of U.S. federal income tax reserves that resulted from the expiration of tax audit statutes for tax
returns filed for 2006 and prior, partially offset by the establishment of income tax reserves for state audits.
Liquidity and Capital Resources
During 2012, 2011, and 2010, we funded our business through cash generated from operations. As of December 31, 2012,
our cash and investments totaled $103.0 million as compared to $99.1 million at December 31, 2011.
Our cash flow from operating activities totaled $75.3 million, $55.8 million, and $50.0 million in 2012, 2011, and 2010,
respectively. Typical factors affecting our cash provided by operating activities include our level of revenue and earnings for the
period, the timing and amount of employee bonus payments and income tax payments, and the timing of cash collections from our
customers which is our largest source of operating cash flow. Cash flow from operating activities for 2012 increased $19.4 million
compared to 2011 primarily attributable to higher revenue and net earnings combined with lower tax payments in 2012. Cash flow
from operating activities for 2011 increased $5.8 million compared to 2010 primarily attributable to higher revenue and net earnings.
37
Days sales outstanding (DSO) was 60 days, 62 days, and 61 days at December 31, 2012, 2011, and 2010, respectively, reflects strong
collection.
Our investing activities used cash of approximately $7.0 million, $4.6 million, and $8.9 million in 2012, 2011, and 2010,
respectively. The use of cash for investing activities for the year ended December 31, 2012 was for capital expenditures of
approximately $7.9 million partially offset by the net maturities of $0.9 million in investments. The use of cash for investing activities
for the year ended December 31, 2011 was $5.1 million in capital expenditures partially offset by the net maturities of $0.5 million in
investments. The use of cash for investing activities for the year ended December 31, 2010 was for capital expenditures of
approximately $5.9 million and the net purchase of $3.0 million in short-term investments.
Our financing activities used cash of approximately $63.5 million, $77.9 million, and $40.9 million in 2012, 2011, and 2010,
respectively. The principal use of cash for financing activities for the year ended December 31, 2012 was to purchase approximately
$103.2 million of our common stock, including $3.5 million for shares withheld for taxes due upon vesting of restricted stock,
partially offset by proceeds generated from options exercised of $32.1 million and a $7.5 million excess tax benefit related to the
exercise of stock options and vesting of restricted stock awards. The principal use of cash for financing activities for the year ended
December 31, 2011 was to purchase approximately $133.1 million of our common stock, including $2.4 million for shares withheld
for taxes due upon vesting of restricted stock, partially offset by proceeds generated from options exercised of $52.7 million and a
$2.5 million excess tax benefit related to the exercise of stock options and vesting of restricted stock awards. The principal use of
cash for financing activities for the year ended December 31, 2010 was to purchase approximately $77.7 million of our common
stock, including $1.2 million for shares withheld for taxes due upon vesting of restricted stock, partially offset by proceeds generated
from options exercised of $36.4 million. In January 2013, our Board of Directors increased our remaining share repurchase authority
to a total of $50.0 million.
Periodically, opportunities may arise to grow our business through the acquisition of complementary and synergistic
companies, products, and technologies. Any material acquisition could result in a decrease to our working capital depending on the
amount, timing, and nature of the consideration to be paid. We believe that our existing cash and investments will be sufficient to
meet our working capital and capital expenditure needs at least for the next twelve months, although there can be no assurance that
this will be the case. In 2013, we anticipate that our priorities for use of cash will be similar to prior years, with our first priority being
continued investment in product development and profitably growing our business to extend our market leadership. We will continue
to evaluate acquisition opportunities that are complementary to our product footprint and technology direction. We will also continue
to weigh our share repurchase options against cash for acquisitions and investing in the business. We do not anticipate any borrowing
requirements in 2013 for general corporate purposes.
New Accounting Pronouncements
In September 2011, the FASB issued an Accounting Standards Update on testing goodwill for impairment to simplify the
goodwill impairment test. The standards update is intended to reduce cost and complexity of the annual goodwill impairment test by
permitting companies to first assess qualitative factors to determine whether further impairment testing is necessary. Under this
standards update, a company is not required to calculate the fair value of a reporting unit unless the company determines that it is more
likely than not that its fair value is less than its carrying amount. The “more likely than not” threshold is defined as having a
likelihood of more than 50 percent. This guidance is effective for interim and annual goodwill impairment tests performed for fiscal
years beginning after December 15, 2011. We adopted this guidance as of December 31, 2012. The adoption of this guidance did not
have a material impact on our financial statements.
In May 2011, the FASB issued an Accounting Standards Update on fair value measurements that clarifies the application of
existing guidance and disclosure requirements, changes certain fair value measurement principles, and requires additional disclosures
about fair value measurements. This guidance is effective for interim and annual periods beginning after December 15, 2011. We
adopted of this guidance as of December 31, 2012. The adoption of this guidance did not have a material impact on our financial
statements.
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
Our principal commitments as of December 31, 2012 consist of obligations under operating leases. We expect to fulfill all of
the following commitments from our working capital. We have no off-balance sheet arrangements within the meaning of SEC rules.
38
Lease Commitments
We lease our facilities and some of our equipment under noncancelable operating lease arrangements that expire at various
dates through 2018. Rent expense for these leases aggregated $5.8 million, $5.7 million, and $5.3 million during 2012, 2011, and
2010, respectively.
The following table summarizes our contractual commitments as of December 31, 2012 (in thousands):
Non-cancelable operating leases
Total
$ 32,910
2013
$ 6,630
2014
$ 6,317
2015
$ 5,452
2016
$ 5,410
2017
$ 5,368
Thereafter
$ 3,733
Indemnifications
Our customer contracts generally contain infringement indemnity provisions. Under those provisions, we generally agree,
subject to certain exceptions, to indemnify, defend, and hold harmless the customer in connection with third party claims against the
customer alleging that the customer’s use of our software products in compliance with their license infringe the third party’s patent,
copyright, or other intellectual property rights. Conditions to our obligations generally include that we are provided the right to
control the defense of the claims and, in general, to control settlement negotiations. Those provisions generally provide also that, if
the customer is prevented from using our software because of a third party infringement claim, our sole obligation (in addition to the
indemnification, defense, and hold harmless obligation referred to above) is to, at our expense, (i) procure for the customer the right to
continue to use the software, (ii) to replace or modify the product so that its use by the customer does not infringe, or, if either of the
foregoing are not reasonably feasible, to terminate the customer contract and provide a refund of the unamortized portion of the
customer’s license fee (based on a five year amortization period). Our customer contracts sometimes also require us to indemnify,
defend, and hold harmless the customer in connection with death, personal injury, or property damage claims made by third parties
with respect to actions of our personnel or contractors. Conditions to our obligations generally include that we are provided the right
to control the defense of the claims and, in general, to control settlement negotiations. The indemnity obligations contained in our
customer contracts generally have no specified expiration date and no specified monetary limitation on liability. We have not
previously incurred costs to settle claims or pay awards under these indemnification obligations. We account for these indemnity
obligations in accordance with FASB guidance on accounting for contingencies, and record a liability for these obligations when a
loss is probable and reasonably estimable. We have not recorded any liabilities for these contracts as of December 31, 2012.
Warranties
In general, in our customer contracts we warrant to our customers that our software products will perform in all material
respects in accordance with our standard published specifications in effect at the time of delivery of the licensed products to the
customer for six months after first use of the licensed products, but no more than 24 months after execution of the license agreement.
Additionally, we warrant to our customers that our services will be performed consistent with generally accepted industry standards or
specific service levels through completion of the agreed upon services. If necessary, we would provide for the estimated cost of
product and service warranties based on specific warranty claims and claim history. However, we have not incurred significant
recurring expense under our product or service warranties. As a result, we believe the estimated fair value of these agreements is
nominal. Accordingly, we have no liabilities recorded for these agreements as of December 31, 2012.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Foreign Business
Our 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. Our international operations currently include business activity out of offices in the United Kingdom, the Netherlands,
France, Australia, China, Japan, Singapore, and India. When the U.S. dollar strengthens against a foreign currency, the value of our
sales and expenses in that currency converted to U.S. dollars decreases. When the U.S. dollar weakens, the value of our sales and
expenses in that currency converted to U.S. dollars increases. We recognized a foreign exchange loss of $0.1 million in 2012, a
foreign exchange gain of $0.8 million in 2011, and a foreign exchange loss of $0.7 million in 2010. Foreign exchange rate transaction
gains and losses are classified in “Other (loss) income, net” in our Consolidated Statements of Income. A fluctuation of 10% in the
39
period end exchange rates at December 31, 2012 relative to the U.S. dollar would result in a change of approximately $0.4 million in
the reported foreign currency gain. A fluctuation of 10% in the period end exchange rates at December 31, 2011 relative to the U.S.
dollar would result in minimal change to the reported foreign currency gain.
Interest Rates
We currently invest our cash in a variety of financial instruments, including taxable and tax-advantaged floating rate
obligations in money market funds and certificates of deposit. These investments are mainly denominated in U.S. dollars. Cash
balances in foreign currencies overseas are derived from business operations. At December 31, 2012, our cash, cash equivalents, and
investment balances totaled $103.0 million, of which $96.7 million is highly liquid. The remaining $6.3 million balance is invested in
short-term certificates of deposit. Our cash equivalents balance at December 31, 2012 was $45.9 million. Cash equivalents principally
consist of highly liquid money market funds and certificates of deposit with maturities of less than three months when purchased.
Investments in both fixed rate and floating rate interest-earning instruments carry 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, our future investment income may fall short of expectations due to
changes in interest rates, or we may suffer losses in principal if forced to sell securities that have seen a decline in market value due to
changes in interest rates. The weighted-average interest rate of return on cash and investment securities was approximately 1% for the
years ended December 31, 2012 and 2011. The fair value of cash equivalents and investments held at December 31, 2012 and 2011
was $52.3 million and $42.7 million, respectively. Based on the average investments outstanding during 2012 and 2011, increases or
decreases in the rates of return of 25 basis points would result in increases or decreases to interest income of approximately $0.3
million for both years from the reported interest income.
Item 8. Financial Statements and Supplementary Data
Financial Statements
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Management’s Annual Report on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm on Internal Control over
Financial Reporting
Report of Independent Registered Public Accounting Firm on the Consolidated Financial
Statements
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Shareholders’ Equity
Notes to Consolidated Financial Statements
41
42
43
44
45
46
47
48
49
40
MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of Manhattan Associates, Inc. is responsible for establishing and maintaining adequate internal control over financial
reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s
principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting
principles.
The Company’s internal control over financial reporting includes policies and procedures that pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted
accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and
the directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As of the end of the Company’s 2012 fiscal year, management conducted an assessment of the Company’s internal control over
financial reporting based on the framework established in Internal Control—Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has determined that the
Company’s internal control over financial reporting as of December 31, 2012 was effective.
Ernst & Young LLP, the independent registered public accounting firm that audited the Company’s financial statements for the year
ended December 31, 2012, has audited the Company’s internal control over financial reporting as of December 31, 2012 and has
issued a report regarding the Company’s internal control over financial reporting appearing on page 42, which expresses an
unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2012.
/s/ Eddie Capel
Eddie Capel
President and Chief Executive Officer
February 22, 2013
/s/ Dennis B. Story
Dennis B. Story
Executive Vice President, Chief Financial
Officer, and Treasurer
February 22, 2013
41
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The Board of Directors and Shareholders
Manhattan Associates, Inc. and Subsidiaries
We have audited Manhattan Associates, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2012, based
on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (the COSO criteria). Manhattan Associates, Inc. and subsidiaries’ management is responsible for maintaining
effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Manhattan Associates, Inc. and subsidiaries maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2012, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Manhattan Associates, Inc. and subsidiaries as of December 31, 2012 and 2011, and the related
consolidated statements of income, comprehensive income, cash flows, and shareholders’ equity for each of the three years in the
period ended December 31, 2012 of Manhattan Associates, Inc. and subsidiaries, and our report dated February 22, 2013 expressed an
unqualified opinion thereon.
Atlanta, Georgia
February 22, 2013
/s/ Ernst & Young LLP
42
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON THE CONSOLIDATED FINANCIAL STATEMENTS
The Board of Directors and Shareholders
Manhattan Associates, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Manhattan Associates, Inc. and subsidiaries as of December 31,
2012 and 2011, and the related consolidated statements of income, comprehensive income, cash flows, and shareholders’ equity for
each of the three years in the period ended December 31, 2012. Our audits also included the financial statement schedule listed in the
Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility
is to express an opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial
position of Manhattan Associates, Inc. and subsidiaries at December 31, 2012 and 2011, and the consolidated results of their
operations and their cash flows for each of the three years in the period ended December 31, 2012, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
Manhattan Associates, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2012, based on criteria
established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated February 22, 2013 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Atlanta, Georgia
February 22, 2013
43
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(in thousands, except per share amounts)
Revenue:
Software license
Services
Hardware and other
Total revenue
Costs and expenses:
Cost of license
Cost of services
Cost of hardware and other
Research and development
Sales and marketing
General and administrative
Depreciation and amortization
Recovery of previously impaired investment
Total costs and expenses
Operating income
Interest income
Other (loss) income, net
Income before income taxes
Income tax provision
Net income
Basic earnings per share
Diluted earnings per share
Weighted average number of shares:
Basic
Diluted
Year Ended December 31,
2012
2011
2010
$ 61,494
$ 54,241
$ 54,450
283,872
244,058
213,750
30,882
30,954
28,917
376,248
329,253
297,117
7,838
6,806
6,172
128,686
107,510
98,776
25,213
24,785
23,844
44,704
42,372
40,508
45,622
43,944
42,702
38,474
37,708
34,027
5,638
-
7,284
(2,519)
9,161
-
296,175
267,890
255,190
80,073
61,363
41,927
1,062
1,072
636
(97)
792
(779)
81,038
63,227
41,784
29,185
$ 51,853
18,320
$ 44,907
13,723
$ 28,061
$
2.64
$
2.20
$
1.31
$
2.56
$
2.09
$
1.25
19,660
20,271
20,455
21,492
21,497
22,450
The accompanying notes are an integral part of these Consolidated Statements of Income.
44
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(In thousands)
Net income
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment
Unrealized gain (loss) on investments, net of taxes of $53, ($20) and $43
in 2012, 2011 and 2010, respectively
Other comprehensive income (loss)
Year Ended December 31,
2011
2012
2010
$
51,853
$
44,907
$
28,061
318
92
410
(4,024)
(33)
(4,057)
1,012
71
1,083
Comprehensive income
$
52,263
$
40,850
$
29,144
The accompanying notes are an integral part of these Consolidated Statements of Comprehensive Income.
45
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share and per share data)
December 31,
2012
2011
Current Assets:
ASSETS
Cash and cash equivalents
Short term investments
Accounts receivable, net of allowance of $6,235 and $4,816 in 2012 and 2011, respectively
Deferred income taxes
Income taxes receivable
Prepaid expenses
Other current assets
Total current assets
$
96,737
6,310
62,102
7,787
-
7,386
1,185
181,507
$
92,180
6,079
56,264
7,599
4,859
6,059
1,474
174,514
Property and equipment, net
Long-term investments
Goodwill
Deferred income taxes
Other assets
Total assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
Accrued compensation and benefits
Accrued and other liabilities
Deferred revenue
Income taxes payable
Total current liabilities
Deferred rent, long-term
Deferred income taxes
Other non-current liabilities
Shareholders' equity:
Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or
outstanding in 2012 or 2011
Common stock, $.01 par value; 100,000,000 shares authorized; 19,620,967 and 20,415,946
shares issued and outstanding at December 31, 2012 and 2011, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total shareholders' equity
Total liabilities and shareholders' equity
15,650
-
62,265
732
1,659
261,813
$
13,321
855
62,261
5,696
2,953
259,600
$
$
10,229
16,720
12,233
47,935
4,024
91,141
5,770
656
2,737
$
8,090
16,503
13,648
49,882
-
88,123
6,612
-
2,785
-
-
196
-
166,016
(4,703)
161,509
261,813
$
204
-
166,989
(5,113)
162,080
259,600
$
The accompanying notes are an integral part of these Consolidated Balance Sheets.
46
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31,
2011
2012
2010
Operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
$
51,853
$
44,907
$
28,061
Depreciation and amortization
Recovery of previously impaired investment
Equity-based compensation
(Gain) loss on disposal of equipment
Tax benefits of stock awards exercised/vested
Excess tax benefits from equity-based compensation
Deferred income taxes
Unrealized foreign currency loss (gain)
Changes in operating assets and liabilities:
Accounts receivable, net
Other assets
Accounts payable, accrued and other liabilities
Income taxes
Deferred revenue
Net cash provided by operating activities
Investing activities:
Purchases of property and equipment
Purchases of short-term investments
Maturities of short-term investments
Sales of long-term investments
Net cash used in investing activities
Financing activities:
Purchase of common stock
Proceeds from issuance of common stock from options exercised
Excess tax benefits from equity-based compensation
Net cash used in financing activities
Foreign currency impact on cash
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental disclosures of cash flow information:
Cash paid for taxes
5,638
-
8,338
(46)
9,901
(7,531)
5,388
427
(5,446)
281
(162)
8,831
(2,201)
75,271
(7,873)
(7,582)
7,446
1,000
(7,009)
7,284
(2,519)
10,372
25
7,481
(2,474)
2,409
(189)
(8,994)
(1,332)
(3,537)
(2,514)
4,905
55,824
(5,074)
(7,296)
4,438
3,323
(4,609)
9,161
-
10,420
(4)
2,207
(475)
(463)
210
(9,454)
(2,661)
8,271
(2,934)
7,633
49,972
(5,871)
(8,625)
4,414
1,200
(8,882)
(103,155)
32,082
7,531
(63,542)
(133,144)
52,721
2,474
(77,949)
(77,704)
36,368
475
(40,861)
(163)
(1,830)
298
4,557
92,180
96,737
$
(28,564)
120,744
92,180
$
527
120,217
120,744
$
$
6,277
$
11,113
$
14,340
The accompanying notes are an integral part of these Consolidated Statements of Cash Flows.
47
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4
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012, 2011, and 2010
1. Organization, Consolidation and Summary of Significant Accounting Policies
Organization and Business
Manhattan Associates, Inc. (“Manhattan” or the “Company”) is a developer and provider of supply chain solutions that help
organizations optimize the effectiveness, efficiency, and strategic advantages of their supply chains. The Company’s solutions consist
of software, services, and hardware, which coordinate people, workflows, assets, events, and tasks holistically across the functions
linked in a supply chain from planning through execution. These solutions also help coordinate the actions, data exchange, and
communication of participants in supply chain ecosystems, such as manufacturers, suppliers, distributors, trading partners,
transportation providers, channels (such as catalogers, store retailers, and Web outlets), and consumers.
The Company’s operations are in North America, Europe, and the Asia/Pacific region. The European operations are
conducted through the Company’s wholly-owned subsidiaries, Manhattan Associates Limited, Manhattan Associates Europe B.V.,
Manhattan France SARL, and Manhattan Associates GmbH, in the United Kingdom, the Netherlands, France, and Germany,
respectively. The Company’s Asia/Pacific operations are conducted through its wholly-owned subsidiaries, Manhattan Associates Pty
Ltd., Manhattan Associates KK, Manhattan Associates Software (Shanghai), Co. Ltd., Manhattan Associates Software Pte Ltd., and
Manhattan Associates (India) Development Centre Private Limited in Australia, Japan, China, Singapore, and India, respectively. The
Company occasionally sells its products and services in other countries, such as countries in Latin America, Eastern Europe, Middle
East, and Asia, through its direct sales channel as well as various reseller channels.
Principles of Consolidation and Foreign Currency Translation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
The financial statements of foreign subsidiaries have been translated into United States dollars in accordance with the foreign
currency matters topic in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (the
“Codification”). Revenues and expenses from international operations were denominated in the respective local currencies and
translated using the average monthly exchange rates for the year. All balance sheet accounts have been translated using the exchange
rates in effect at the balance sheet date and the effect of changes in exchange rates from year to year are disclosed as a separate
component of shareholders’ equity and comprehensive income.
New Accounting Pronouncements
In September 2011, the FASB issued an Accounting Standards Update on testing goodwill for impairment to simplify the
goodwill impairment test. The standards update is intended to reduce cost and complexity of the annual goodwill impairment test by
permitting companies to first assess qualitative factors to determine whether further impairment testing is necessary. Under this
standards update, a company is not required to calculate the fair value of a reporting unit unless the company determines that it is more
likely than not that its fair value is less than its carrying amount. The “more likely than not” threshold is defined as having a
likelihood of more than 50 percent. This guidance is effective for interim and annual goodwill impairment tests performed for fiscal
years beginning after December 15, 2011. The Company adopted this guidance as of December 31, 2012. The adoption of this
guidance did not have a material impact on its financial statements.
In May 2011, the FASB issued an Accounting Standards Update on fair value measurements that clarifies the application of
existing guidance and disclosure requirements, changes certain fair value measurement principles, and requires additional disclosures
about fair value measurements. This guidance is effective for interim and annual periods beginning after December 15, 2011. The
Company adopted of this guidance as of December 31, 2012. The adoption this guidance did not have a material impact on its
financial statements.
Summary of Significant Accounting Policies
Cash and Cash Equivalents
49
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2012, 2011 and 2010
The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash or
cash equivalents.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of
cash and cash equivalents, short- and long-term investments and accounts receivable. The Company maintains cash and cash
equivalents and short- and long-term investments with various financial institutions. Amounts held at certain financial institutions are
above the federally insured limit.
The Company’s sales are primarily to companies located in the United States, Europe and Asia. The Company performs
periodic credit evaluations of its customers’ financial condition and does not require collateral. Accounts receivable are due
principally from large U.S., European and Asia Pacific companies under stated contract terms. Accounts receivable, net as of
December 31, 2012 for the Americas, EMEA, and APAC companies were $51.0 million, $8.2 million, and $2.8 million, respectively.
Accounts receivable, net as of December 31, 2011 for the Americas, EMEA, and APAC companies were $46.0 million, $6.1 million,
and $4.1 million, respectively. The Company’s top five customers in aggregate accounted for 12%, 15%, and 10% of total revenue in
the period the related sales were recorded for each of the years ended December 31, 2012, 2011, and 2010, respectively. No single
customer accounted for more than 10% of revenue in the years ended December 31, 2012, 2011, and 2010 or for more than 10% of
accounts receivable as of December 31, 2012 and 2011.
Fair Value Measurement
The Company measures its investments based on a fair value hierarchy disclosure framework that prioritizes and ranks the
level of market price observability used in measuring assets and liabilities at fair value. Market price observability is affected by a
number of factors, including the type of asset or liability and their characteristics. This hierarchy prioritizes the inputs into three broad
levels as follows:
• Level 1–Quoted prices in active markets for identical instruments.
• Level 2–Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets
that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in
active markets.
• Level 3–Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are
unobservable.
The Company’s investments are categorized as available-for-sale securities and recorded at fair market value. Investments
with maturities of 90 days or less from the date of purchase are classified as cash equivalents; investments with maturities of greater
than 90 days from the date of purchase but less than one year are generally classified as short-term investments; and investments with
maturities of one year or greater from the date of purchase are generally classified as long-term investments. Unrealized holding gains
and losses are reflected as a net amount in a separate component of shareholders’ equity until realized. For the purposes of computing
realized gains and losses, cost is determined on a specific identification basis.
Prior to 2008, the Company invested in auction rate securities of which certain auctions failed during 2008 and the
underlying securities were not redeemed by the issuer. In the quarter ended September 30, 2008, the Company recorded an other-
than-temporary impairment charge of $3.5 million for one of its investments. The Company reduced the carrying value of the
investment to zero due to credit downgrades of the underlying issuer and the bond insurer as well as increasing publicly reported
exposure to bankruptcy risk by the issuer. In the quarter ended September 30, 2011, the Company was able to sell the auction rate
security and recovered 72%, or $2.5 million, of its original investment. The $2.5 million recovery from the sale of the auction rate
security is included in the recovery of previously impaired investment line in the Consolidated Statements of Income. During 2010,
2011, and 2012, the Company sold all of its remaining auction rate securities investments at their par value totaling $3.0 million. The
Company currently has no long-term investments.
At December 31, 2012, the Company’s cash, cash equivalents, and short-term investments balances were $50.8 million,
$45.9 million, and $6.3 million, respectively. Cash equivalents consist of highly liquid money market funds and certificates of
deposit. Short-term investments consist of certificates of deposit. The Company uses quoted prices from active markets that are
50
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2012, 2011, and 2010
classified at Level 1 as a highest level observable input in the disclosure hierarchy framework for all available-for-sale securities. At
December 31, 2012, the Company has $35.2 million in money market funds, which are classified as Level 1 and are included in cash
and cash equivalents on the Consolidated Balance Sheet. The Company has no investments classified as Level 2 or Level 3.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting
period. Significant estimates include the allowance for doubtful accounts, which is based upon an evaluation of historical amounts
written-off, the customers’ ability to pay, and general economic conditions; the useful lives of intangible assets; self-insurance
accruals; legal accruals; the recoverability or impairment of intangible asset values; stock based compensation, which is based on the
expected term of the award and corresponding expected volatility, risk-free interest rate, and dividends; and the Company’s effective
income tax rate and deferred tax assets, which are based upon the Company’s expectations of future taxable income, allowable
deductions, and projected tax credits. Actual results will differ from these estimates.
Fair Value of Financial Instruments
The carrying values of cash and cash equivalents, accounts receivable, accounts payable, and other financial instruments
included in the accompanying Consolidated Balance Sheets approximate their fair values principally due to the short-term maturities
of these instruments. Unrealized gains and losses on investments are included as a separate component of “Accumulated other
comprehensive loss,” net of any related tax effect, in the Consolidated Balance Sheets.
Risks Associated with Single Business Line, Technological Advances, and Foreign Operations
The Company currently derives a substantial portion of its revenues from sales of its software and related services and
hardware. The markets for supply chain execution and supply chain planning solutions are highly competitive, subject to rapid
technological change, changing customer needs, frequent new product introductions, and evolving industry standards that may render
existing products and services obsolete. As a result, the Company’s position in these markets could be eroded rapidly by unforeseen
changes in customer requirements for application features, functions, and technologies. The Company’s growth and future operating
results will depend, in part, upon its ability to enhance existing applications and develop and introduce new applications that meet
changing customer requirements that respond to competitive products and that achieve market acceptance. Any factor adversely
affecting the markets for supply chain execution and supply chain planning solutions could have an adverse effect on the Company’s
business, financial condition, and results of operations.
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, future results could be materially adversely impacted by changes in these or other factors. The
Company recognized a foreign exchange rate loss of $0.1 million in 2012, foreign exchange rate gain of $0.8 million in 2011, and
foreign exchange rate loss of $0.7 million in 2010. Foreign exchange rate transaction gains and losses are classified in “Other (loss)
income, net” on the Consolidated Statements of Income.
Revenue Recognition
The Company’s revenue consists of fees from the licensing and hosting of software (collectively included in “Software
license” revenue in the Consolidated Statements of Income), fees from implementation and training services (collectively,
“professional services”) and customer support services and software enhancements (collectively included in “Services” revenue in the
Consolidated Statements of Income), and sales of hardware and other revenue, which consists of reimbursements of out-of-pocket
expenses incurred in connection with our professional services (collectively included in “Hardware and other” revenue in the
Consolidated Statements of Income). All revenue is recognized net of any related sales taxes.
The Company recognizes license revenue when the following criteria are met: (1) a signed contract is obtained covering all
elements of the arrangement, (2) delivery of the product has occurred, (3) the license fee is fixed or determinable, and (4) collection is
probable. Revenue recognition for software with multiple-element arrangements requires recognition of revenue using the “residual
method” when (a) there is vendor-specific objective evidence (VSOE) of the fair values of all undelivered elements in a multiple-
51
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2012, 2011, and 2010
element arrangement that is not accounted for using long-term contract accounting, (b) VSOE of fair value does not exist for one or
more of the delivered elements in the arrangement, and (c) all other applicable revenue-recognition criteria for software revenue
recognition, are satisfied. For those contracts that contain significant customization or modifications, license revenue is recognized
using contract accounting.
The Company allocates revenue to customer support services and software enhancements and any other undelivered elements
of the arrangement based on VSOE of fair value of each element and such amounts are deferred until the applicable delivery criteria
and other revenue recognition criteria have been met. The balance of the revenue, net of any discounts inherent in the arrangement, is
recognized at the outset of the arrangement using the residual method as the product licenses are delivered. If the Company cannot
objectively determine the fair value of each undelivered element based on the VSOE of fair value, the Company defers revenue
recognition until all elements are delivered, all services have been performed, or until fair value can be objectively determined. The
Company must apply judgment in determining all elements of the arrangement and in determining the VSOE of fair value for each
element, considering the price charged for each product on a stand-alone basis or applicable renewal rates. For arrangements that
include future software functionality deliverables, the Company accounts for these deliverables as a separate element of the
arrangement. Because the Company does not sell these deliverables on a standalone basis, the Company is not able to establish VSOE
of fair value of these deliverables. As a result, the Company defers all revenue under the arrangement until the future functionality has
been delivered to the customer.
Payment terms for the Company’s software licenses vary. Each contract is evaluated individually to determine whether the
fees in the contract are fixed or determinable and whether collectibility is probable. Judgment is required in assessing the probability
of collection, which is generally based on evaluation of customer-specific information, historical collection experience, and economic
market conditions. If market conditions decline, or if the financial conditions of customers deteriorate, the Company may be unable to
determine that collectibility is probable, and the Company could be required to defer the recognition of revenue until the Company
receives customer payments. The Company has an established history of collecting under the terms of its software license contracts
without providing refunds or concessions to its customers. Therefore, the Company has determined that the presence of payment
terms that extend beyond contract execution in a particular contract do not preclude the conclusion that the fees in the contract are
fixed or determinable. Although infrequent, when payment terms in a contract extend beyond twelve months, the Company has
determined that such fees are not fixed or determinable and recognizes revenue as payments become due provided that all other
conditions for revenue recognition have been met.
The Company’s services revenue consists of fees generated from professional services and customer support and software
enhancements related to the Company’s software products. Professional services include system planning, design, configuration,
testing and other software implementation support and are not typically essential to the functionality of our software. Fees from
professional services performed by the Company are separately priced and are generally billed on an hourly basis, and revenue is
recognized as the services are performed. In certain situations, professional services are rendered under agreements in which billings
are limited to contractual maximums or based upon a fixed-fee for portions of or all of the engagement. Revenue related to fixed-fee
based contracts is recognized on a proportional performance basis based on the hours incurred on discrete projects within an overall
services arrangement. The Company has determined that output measures, or services delivered, approximate the input measures
associated with fixed-fee services arrangements. Project losses are provided for in their entirety in the period in which they become
known. Revenue related to customer support services and software enhancements is generally paid in advance and recognized ratably
over the term of the agreement, typically twelve months.
Hardware and other revenue is generated from the resale of a variety of hardware products, developed and manufactured by
third parties, that are integrated with and complementary to the Company’s software solutions. As part of a complete solution, the
Company’s customers periodically purchase hardware from the Company for use with the software licenses purchased from the
Company. These products include computer hardware, radio frequency terminal networks, RFID chip readers, bar code printers and
scanners, and other peripherals. Hardware revenue is recognized upon shipment to the customer when title passes. The Company
generally purchases hardware from the Company’s vendors only after receiving an order from a customer. As a result, the Company
generally does not maintain hardware inventory.
In accordance with the other presentation matters within the Revenue Recognition Topic of the Financial Accounting
Standards Board’s (FASB) Accounting Standards Codification, the Company recognizes amounts associated with reimbursements
from customers for out-of-pocket expenses as revenue. Such amounts have been included in “Hardware and other” revenue in the
Consolidated Statements of Income. The total amount of expense reimbursement recorded to revenue was $12.6 million, $10.4
million, and $9.0 million for 2012, 2011, and 2010, respectively.
52
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2012, 2011, and 2010
Deferred Revenue
Deferred revenue represents amounts collected prior to having completed performance of professional services, customer
support services and software enhancements, and significant remaining obligations under license agreements. The Company generally
expects to complete such services or obligations within the next twelve months.
Returns and Allowances
The Company has not experienced significant returns or warranty claims to date and, as a result, has not recorded a provision
for the cost of returns and product warranty claims at December 31, 2012 or 2011.
The Company records an allowance for doubtful accounts based on the historical experience of write-offs and a detailed
assessment of accounts receivable. Additions to the allowance for doubtful accounts generally represent a sales allowance on services
revenue, which are recorded to operations as a reduction to services revenue. The total amounts charged to operations were $4.3
million, $2.5 million, and $3.5 million for 2012, 2011, and 2010, respectively. In estimating the allowance for doubtful accounts,
management considers the age of the accounts receivable, the Company’s historical write-offs, and the creditworthiness of the
customer, among other factors. Should any of these factors change, the estimates made by management will also change accordingly,
which could affect the level of the Company’s future allowances. Uncollectible accounts are written off when it is determined that the
specific balance is not collectible.
Property and Equipment
Property and equipment is recorded at cost and consists of furniture, computers, other office equipment, internal use
software, and leasehold improvements. The Company depreciates the cost of furniture, computers, other office equipment, and
internal use software on a straight-line basis over their estimated useful lives (three to five years for computer software, five years for
office equipment, seven years for furniture and fixtures). Leasehold improvements are depreciated over the lesser of their useful lives
or the term of the lease. Depreciation and amortization expense for property and equipment for the years ended December 31, 2012,
2011, and 2010 was approximately $5.6 million, $6.1 million, and $6.9 million, respectively, and was included in “Depreciation and
amortization” in the Consolidated Statements of Income.
Property and equipment, at cost, consist of the following (in thousands):
Office equipment
Computer software
Furniture and fixtures
Leasehold improvement
Property, plant and equipment, gross
Less accumulated depreciation and amortization
Property, plant and equipment, net
Software Development Costs
December 31,
2012
2011
$
28,889
$
36,667
15,727
2,892
15,606
63,114
(47,464)
15,466
2,746
14,834
69,713
(56,392)
$
15,650
$
13,321
Research and development expenses are charged to expense as incurred. For the years ended December 31, 2012, 2011, and
2010, the Company did not capitalize any internal research and development costs because the costs incurred between the attainment
of technological feasibility for the related software product through the date when the product was available for general release to
customers have been insignificant.
The Company determines the amount of development costs capitalizable under the provisions of FASB Codification
accounting for costs of computer software to be sold, leased, or marketed. Under this guidance, computer software development costs
53
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2012, 2011, and 2010
are charged to R&D expense until technological feasibility is established, after which remaining software production costs are
capitalized. The Company has defined technological feasibility as the point in time at which the Company has a detailed program
design or a working model of the related product, depending on the type of development efforts, and high-risk development issues
have been resolved through end-to-end system testing.
Impairment of Long-Lived Assets
The Company reviews the values assigned to long-lived assets, including property and certain intangible assets, to determine
whether events and circumstances have occurred which indicate that the remaining estimated useful lives may warrant revision or that
the remaining balances may not be recoverable. In such reviews, undiscounted cash flows associated with these assets are compared
with their carrying value to determine if a write-down to fair value is required. During 2012, 2011, and 2010, the Company did not
recognize any impairment charges associated with its long-lived or intangible assets.
The evaluation of asset impairment requires management to make assumptions about future cash flows over the life of the
asset being evaluated. These assumptions require significant judgment, and actual results may differ from assumed and estimated
amounts.
Goodwill and Impairment of Goodwill
Goodwill
Goodwill represents the excess of purchase price over fair value of net identified tangible and intangible assets and liabilities
acquired. The Company does not amortize goodwill, but instead tests goodwill for impairment on at least an annual basis. Goodwill
was $62.3 million at the end of each year ended December 31, 2012 and 2011. Approximately $36.0 million of the gross Goodwill
balance is deductible for income tax purposes. To date, there have been no goodwill impairments.
Impairment of Goodwill
The Company evaluates the carrying value of goodwill annually as of December 31 and between annual evaluations if events
occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount.
Such circumstances could include, but are not limited to, (1) a significant adverse change in legal factors or in business climate,
(2) unanticipated competition, or (3) an adverse action or assessment by a regulator.
The Company adopted the simplified goodwill impairment test for the fiscal year ended December 31, 2012, that permits
companies to perform a qualitative assessment based on economic, industry and company-specific factors as the initial step in the
annual goodwill impairment test for all or selected reporting units. Based on the results of the qualitative assessment, companies are
only required to perform Step 1 of the annual impairment test for a reporting unit if the company concludes that it is more likely than
not that the unit’s fair value is less than its carrying amount. To the extent the Company concludes it is more likely than not that a
reporting unit’s fair value is less than its carrying amount, the two-step approach is applied. The first step would require a comparison
of each reporting unit’s fair value to the respective carrying value. If the carrying value exceeds the fair value, a second step is
performed to measure the amount of impairment loss, if any. The Company did not identify any macroeconomic or industry
conditions as of December 31, 2012, that would indicate the fair value of the reporting units were more likely than not to be less than
their respective carrying values. If circumstances change or events occur to indicate it is more likely than not that the fair value of any
reporting units have fallen below their carrying value, the Company would test such reporting unit for impairment. The Company
previously performed its periodic review of its goodwill for impairment as of December 31, 2011, and 2010, and did not identify any
impairment as a result of the review.
Guarantees and Indemnifications
The Company accounts for guarantees in accordance with the guarantee accounting topic in the FASB Codification. Our
customer contracts generally contain infringement indemnity provisions. Under those provisions, we generally agree, subject to certain
exceptions, to indemnify, defend, and hold harmless the customer in connection with third party claims against the customer alleging
that the customer’s use of our software products in compliance with their license infringe the third party’s patent, copyright, or other
intellectual property rights. Conditions to our obligations generally include that we are provided the right to control the defense of the
claims and, in general, to control settlement negotiations. Those provisions generally provide also that, if the customer is prevented
54
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2012, 2011, and 2010
from using our software because of a third party infringement claim, our sole obligation (in addition to the indemnification, defense,
and hold harmless obligation referred to above) is to, at our expense, (i) procure for the customer the right to continue to use the
software, (ii) to replace or modify the product so that its use by the customer does not infringe, or, if either of the foregoing are not
reasonably feasible, to terminate the customer contract and provide a refund of the unamortized portion of the customer’s license fee
(based on a five year amortization period). Our customer contracts sometimes also require us to indemnify, defend, and hold harmless
the customer in connection with death, personal injury, or property damage claims made by third parties with respect to actions of our
personnel or contractors. Conditions to our obligations generally include that we are provided the right to control the defense of the
claims and, in general, to control settlement negotiations. The indemnity obligations contained in our customer contracts generally
have no specified expiration date and no specified monetary limitation on liability. We have not previously incurred costs to settle
claims or pay awards under these indemnification obligations. We account for these indemnity obligations in accordance with FASB
guidance on accounting for contingencies, and record a liability for these obligations when a loss is probable and reasonably
estimable. We have not recorded any liabilities for these contracts as of December 31, 2012, or 2011.
In general, in our customer contracts, the Company warrants to its customers that its software products will perform in all
material respects in accordance with the standard published specifications in effect at the time of delivery of the licensed products to
the customer for six months after first use of the licensed products, but no more than 24 months after execution of the license
agreement. Additionally, the Company warrants to its customers that services will be performed consistent with generally accepted
industry standards or specific service levels through completion of the agreed upon services. If necessary, the Company will provide
for the estimated cost of product and service warranties based on specific warranty claims and claim history. However, the Company
has not incurred significant recurring expense under product or service warranties. As a result, the Company believes the estimated
fair value of these agreements is nominal. Accordingly, the Company has no liabilities recorded for these agreements as of
December 31, 2012, and 2011.
Segment Information
The Company has three reporting segments: Americas, EMEA, and APAC as defined by FASB Codification topic for
segment reporting. See Note 7 for discussion of the Company’s reporting segments.
Advertising Costs
Advertising costs are expensed as incurred and totaled approximately $95,000, $240,000, and $10,000 in 2012, 2011, and
2010, respectively. Advertising costs are included in “Sales and marketing” in the Consolidated Statements of Income.
Basic and Diluted Net Income Per Share
Basic net income per share is computed using net income divided by the weighted average number of shares of common
stock outstanding (“Weighted Shares”) for the period presented.
Diluted net income per share is computed using net income divided by Weighted Shares and the treasury stock method effect
of common equivalent shares (“CESs”) outstanding for each period presented. The following is a reconciliation of the shares used in
the computation of net income per share for the years ended December 31, 2012, 2011, and 2010 (in thousands, except per share data):
55
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2012, 2011, and 2010
Net income
Earnings per share:
Basic
Effect of CESs
Diluted
Weighted average number of shares:
Basic
Effect of CESs
Diluted
Year Ended December 31,
2011
2012
2010
$
51,853
$
44,907
$
28,061
$ 2.64
(0.08)
$ 2.56
$ 2.20
(0.11)
$ 2.09
$ 1.31
(0.06)
$ 1.25
19,660
20,455
21,497
611
20,271
1,037
21,492
953
22,450
Options to purchase 2,000 shares and 1,312,639 shares of common stock were outstanding at December 31, 2011 and 2010,
respectively, but were not included in the computation of diluted earnings per share because the options’ exercise prices were greater
than the average market price of the common shares during the respective years. There were no anti-dilutive CESs in 2012. See Note
2 for further information on those securities.
Accumulated Other Comprehensive Income
Comprehensive income includes net income, foreign currency translation adjustments, and unrealized gains and losses on
investments that are excluded from net income and reflected in shareholders’ equity.
The following table sets forth the components of accumulated other comprehensive income (in thousands):
Unrealized loss on investments, net of taxes
Foreign currency translation adjustment
Total
2. Equity-Based Compensation
Equity Based Compensation Plans
December 31,
2012
2011
$ -
$ (92)
(4,703)
$ (4,703)
(5,021)
$ (5,113)
The Manhattan Associates, Inc. 1998 Stock Incentive Plan (the “1998 Plan”) was adopted by the Board of Directors and
approved by the shareholders in February 1998. Options granted under the 1998 Plan cannot have a term exceeding ten years. Options
typically have an annual graded vesting schedule over four years and vest based on service conditions. Following approval of the
Manhattan Associates, Inc. 2007 Stock Incentive Plan (the “2007 Plan”) discussed below, the Company may not make any additional
awards under the 1998 Plan.
The 2007 Plan was initially approved by the shareholders of the Company in May 2007 and was subsequently amended in
May 2009 and May 2011. The 2007 Plan provides for the grant of stock options, restricted stock, restricted stock units, and stock
appreciation rights. Vesting conditions can be service-based or performance-based, or a combination of both.
As amended, a maximum of 7,500,000 shares are available for grant under the 2007 Plan. Each stock option or stock
appreciation right granted is counted against the maximum share limitation as one share, and each share of restricted stock or
restricted stock unit granted (including those that are service based or performance based) counts against the maximum share
limitation as two shares. Options and stock appreciation rights cannot have a term exceeding seven years. As of December 31, 2012,
56
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2012, 2011, and 2010
there were 3,533,966 shares available for issuance under the amended 2007 Plan. The 1998 and 2007 Plans are administered by the
Compensation Committee of the Board of Directors. The committee has the authority to interpret the provisions thereof.
In January 2010 the Compensation Committee of the Board of Directors approved certain changes to the Company’s
historical equity incentive grant practices, with the objective to optimize its performance and retention strength while managing
program share usage to improve long-term equity overhang. The changes eliminated stock option awards in favor of 100% restricted
stock grants, which for the 2010 and 2011 awards contain vesting provisions that are 50% service based and 50% performance based
for employee awards and 100% service based for non-employee members of the Board of Directors (“Outside Directors”). The equity
compensation program change for employees was effective January 2010 and for Outside Directors was effective May 2010. The
employee awards have a four year vesting period, with the performance portion tied to annual revenue and earnings per share targets.
The awards to Outside Directors have a one year vesting period. The Company recognizes compensation cost for service-based
restricted awards with graded vesting on a straight-line basis over the entire vesting period, with the amount of compensation cost
recognized at any date at least equal to the portion of the grant-date value of the award that is vested at that date. For its performance-
based restricted stock awards with graded vesting, the Company recognizes compensation cost on an accelerated basis applying
straight-line expensing for each separately vesting portion of each award.
In January 2012, in order to simplify equity grant administration, the Company changed its practice of granting restricted
stock in favor of granting restricted stock units, or RSUs, which convert to the Company’s common stock upon vesting. There is no
material difference between the grant of restricted stock and the grant of RSUs to either the Company or the recipients receiving the
grants; however, in contrast to the granting of restricted stock, no stock will actually be issued under the granting of RSUs until the
units vest. The Company does not currently grant stock options.
Stock Option Awards
The Company recorded equity-based compensation related to stock options granted prior to 2011 of $0.6 million, $2.0
million, and $3.8 million during the years ended December 31, 2012, 2011, and 2010, respectively. A summary of changes in
outstanding options for the year ended December 31, 2012 is as follows:
Outstanding at January 1, 2012
Exercised
Forfeited and expired
Outstanding at December 31, 2012
Vested or expected to vest at December 31, 2012
Exercisable at December 31, 2012
Number of
Shares
1,633,566
(1,252,634)
(9,182)
371,750
351,574
278,868
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual Term
Average
Intrinsic
Value (in
thousands)
$24.79
25.61
21.08
$22.13
$22.46
$24.09
2.1
$
14,206
2.1
1.8
$
13,317
$
10,109
The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model with the
following weighted-average assumptions for the year ended December 31, 2010:
Dividend yield
Expected volatility
Risk-free interest rate at the date of grant
Expected life (in years)
No stock options were granted in 2011 or 2012.
57
2010
0%
36%
2.4%
4.0
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2012, 2011, and 2010
Expected volatilities are based on a combination of historical volatility of the Company’s stock and implied volatility of the
Company’s publicly traded stock options. Due to the limited trading volume of the Company’s publicly traded options, the Company
places a greater emphasis on historical volatility. The Company also uses historical data to estimate the term that options are expected
to be outstanding and the forfeiture rate of options granted. The risk-free interest rate is based on the U.S. Treasury zero-coupon
issues with a term approximating the expected term. Using these assumptions, the weighted average grant-date fair values of the stock
options granted during the year ended December 31, 2010 was $7.82.
Options with graded vesting are valued as a single award. The total value of the award is expensed on a straight line basis
over the vesting period with the amount of compensation cost recognized at any date at least equal to the portion of the grant-date fair
value of the award that is vested at that date. The total intrinsic value of options exercised during the years ended December 31, 2012,
2011, and 2010 based on market value at the exercise dates was $31.2 million, $25.8 million, and $11.9 million, respectively. As of
December 31, 2012, unrecognized compensation cost related to unvested stock option awards totaled less than $0.1 million and is
expected to be recognized over a weighted average period of less than one year.
Restricted Stock and RSU Awards
A summary of changes in unvested shares/units of restricted stock for the year ended December 31, 2012 are as follows:
Outstanding at January 1, 2012
Granted
Vested
Forfeited
Outstanding at December 31, 2012
Number of
Shares
655,155
227,748
(252,285)
(33,419)
597,199
Grant Date Fair
Value
$
25.84
44.08
25.62
29.07
32.70
$
The Company recorded equity-based compensation related to restricted stock and RSUs of $7.7 million, $8.4 million, and
$6.6 million during the years ended December 31, 2012, 2011, and 2010, respectively. The total fair value of restricted stock awards
vested during the years ended December 31, 2012, 2011, and 2010, based on market value at the vesting dates was $15.2 million,
$10.8 million, and $3.6 million, respectively. As of December 31, 2012, unrecognized compensation cost related to unvested
restricted stock awards totaled $9.8 million and is expected to be recognized over a weighted average period of approximately 2.2
years.
Included in the RSU grants for the year ended December 31, 2012, are 98,202 units that have performance-based vesting
criteria. As noted above, the performance criteria are tied to the Company’s 2012 financial performance. As of December 31, 2012,
the performance criteria for the fiscal year were met and the associated equity-based compensation expense has been recognized for
the portion of the award attributable to 2012 services.
The Company recognizes compensation cost for service-based restricted stock awards with graded vesting on a straight-line
basis over the entire vesting period, with the amount of compensation cost recognized at any date at least equal to the portion of the
grant-date value of the award that is vested at that date. For performance-based restricted stock awards with graded vesting, the
Company recognizes compensation cost on an accelerated basis applying straight-line expensing for each separately vesting portion of
each award.
3. Income Taxes
The Company is subject to future federal, state, and foreign income taxes and has recorded net deferred tax assets on the
Consolidated Balance Sheets at December 31, 2012 and 2011. Deferred tax assets and liabilities are determined based on the
difference between the financial accounting and tax bases of assets and liabilities. Significant components of the Company’s deferred
tax assets and liabilities as of December 31, 2012 and 2011 are as follows (in thousands):
58
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2012, 2011, and 2010
Deferred tax assets:
Accounts receivable
Accrued liabilities
Equity-based compensation
Capitalized costs
Accrued sales taxes
Deferred rent
State tax credits
Net operating losses
Tax credits - foreign
Valuation allowance
Other
Deferred tax liabilities:
Intangible assets
Depreciation
Net deferred tax assets
December 31,
2012
2011
$ 2,128
$ 1,722
4,131
4,745
3,595
5,765
2,647
3,801
765
765
2,435
2,658
3,079
2,958
2,246
2,803
683
1,205
(5,965)
(6,711)
591
350
$
16,335
$
20,061
6,155
4,627
2,317
2,139
8,472
7,863
$
6,766
13,295
$
The components of income from domestic and foreign operations before income tax expense for the years ended December
31, 2012, 2011, and 2010, are as follows (in thousands):
Domestic
Foreign
Total
Year Ended December 31,
2011
2010
2012
$
75,731
$
55,487
$
36,881
5,307
81,038
$
7,740
63,227
$
4,903
41,784
$
The components of the income tax provision for the years ended December 31, 2012, 2011, and 2010, are as follows (in
thousands):
59
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2012, 2011, and 2010
Year Ended December 31,
2011
2010
2012
$
20,150
1,835
1,702
$
12,438
1,043
2,432
$
11,271
1,296
1,817
23,687
15,913
14,384
4,670
232
596
4,036
240
(1,869)
(694)
(29)
62
5,498
29,185
$
2,407
18,320
$
(661)
13,723
$
Current:
Federal
State
Foreign
Deferred:
Federal
State
Foreign
Total
The income tax benefits related to the exercise of stock options were approximately $11.0 million, $9.2 million, and $4.2
million, for the years ended December 31, 2012, 2011, and 2010, respectively.
As a result of losses in foreign locations, the Company has net operating loss carry-forwards (“NOLs”) of approximately $7.9
million available to offset future income. Approximately $7.6 million of the NOLs expire in 2013 to 2020, and the remainder does not
expire. The Company has established a valuation allowance for substantially all of these NOLs because the ability to utilize them is
not more likely than not.
The Company has tax credit carry-forwards of approximately $4.7 million available to offset future state tax. These tax
credit carry-forwards expire in 2017 to 2021. These credits represent a deferred tax asset of $3.1 million after consideration of the
federal benefit of state tax deductions. A valuation allowance of $2.8 million has been established for these credits because the ability
to use them is not more likely than not.
The Company recorded a $2.0 million tax benefit in 2011, resulting from the reduction of a valuation allowance associated
with tax credit carryforwards and deferred tax assets in India. The benefit is attributable to the elimination of the tax holiday for
Indian companies under the Software Technology Park of India (STPI) tax plan, based on the February 2011 budget approved by the
India Finance Ministry, which will allow the Company to utilize tax assets previously reserved. The Company expects to fully utilize
the credits by 2015.
Deferred taxes are not provided for temporary differences of approximately $29.5 million, $24.9 million, and $22.2 million
as of December 31, 2012, 2011, and 2010, respectively, representing earnings of non-U.S. subsidiaries that are intended to be
permanently reinvested. Those earnings are considered to be indefinitely reinvested; accordingly, no provision for U.S. federal and
state income taxes has been provided thereon. Upon repatriation of those earnings, in the form of dividends or otherwise, the
Company would be subject to both U.S. income taxes (subject to adjustment for foreign tax credits) and withholding taxes payable to
various foreign countries. It is impractical to calculate the tax impact until such repatriation occurs.
The following is a summary of the items that cause recorded income taxes to differ from taxes computed using the statutory
federal income tax rate for the years ended December 31, 2012, 2011, and 2010:
60
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2012, 2011, and 2010
Statutory federal income tax rate
Effect of:
State income tax, net of federal benefit
State credit carryforwards
Foreign operations
Tax exempt income
Tax contingencies
Other permanent differences
Change in valuation allowance
Income taxes
Year Ended December 31,
2011
2010
2012
35.0%
35.0%
35.0%
1.8
(0.1)
-
-
-
(0.7)
-
2.1
(0.2)
(4.9)
-
(0.3)
(1.1)
(1.6)
1.2
(0.6)
(0.8)
(0.1)
0.7
(3.7)
1.1
36.0%
29.0%
32.8%
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows for the years ended December
31, 2012, 2011, and 2010 (in thousands):
December 31,
2011
2010
2012
Unrecognized tax benefits at January 1,
$
(2,328)
$
(2,435)
$
(2,331)
Gross amount of increases in unrecognized tax benefits as a result of tax positions
taken during a prior period
Gross amount of decreases in unrecognized tax benefits as a result of tax
positions taken during a prior period
Gross amount of increases in unrecognized tax benefits as a result of tax positions
taken during the current period
Amounts of decreases in the unrecognized tax benefits relating to settlements
with taxing authorities
Reductions to unrecognized tax benefits as a result of a lapse of the applicable
statute of limitations
Unrecognized tax benefits at December 31,
(47)
87
(40)
(527)
40
360
(142)
(526)
(227)
-
228
159
240
(2,190)
$
405
(2,328)
$
131
(2,435)
$
The Company’s unrecognized tax benefits totaled $2.2 million and $2.3 million as of December 31, 2012 and 2011,
respectively, of which substantially all, if recognized, would affect the effective tax rate.
The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits within its global
operations in income tax expense. For the years ended December 31, 2012, 2011, and 2010, the Company recognized $0.2 million,
$0.1 million, and $0.2 million, respectively, of expense for the potential payment of interest and penalties. Accrued interest and
penalties were $0.5 million for the years ended December 31, 2012, and 2011. The Company conducts business globally and, as a
result, files income tax returns in the United State federal jurisdiction and in many state and foreign jurisdictions. The Company is
generally no longer subject to U.S. federal, state, and local, or non-US income tax examinations for the years before 2009. Due to the
expiration of statutes of limitations in multiple jurisdictions globally during 2013, the Company anticipates it is reasonably possible
that unrecognized tax benefits may decrease by $0.3 million.
4. Shareholders’ Equity
During 2012, 2011, and 2010, the Company purchased 1,944,828 shares, 3,607,267 shares, and 2,716,621 shares of the
Company’s common stock for approximately $99.7 million, $130.7 million, and $76.5 million, respectively, through open market
transactions as part of a publicly-announced share repurchase program. In January 2013, the Board of Directors increased the
remaining share repurchase authority to $50.0 million.
61
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2012, 2011, and 2010
5. Commitments and Contingencies
Leases
Rents charged to expense were approximately $5.8 million, $5.7 million, and $5.3 million for the years ended December 31,
2012, 2011, and 2010, respectively. During the first quarter of 2007, the Company extended its Atlanta headquarters lease, which was
set to expire in March 2008, to September 30, 2018. The landlord funded leasehold improvements of $7.9 million in conjunction with
the new lease which was recorded as an increase in leasehold improvements and deferred rent. Additionally, the Company had a rent
holiday from April to September 2008. In August 2012, the Company amended its Atlanta headquarters lease to obtain additional
space and will receive reimbursement of $0.2 million from the landlord for leasehold improvements as part of the agreement. The
entire cash rent obligation is being amortized to expense on a straight line basis over the lease term.
Aggregate future minimum lease payments under noncancellable operating leases as of December 31, 2012 are as follows (in
thousands):
Year Ending December 31,
2013
2014
2015
2016
2017
Thereafter
Total minimum payments required
$ 6,630
6,317
5,452
5,410
5,368
3,733
$ 32,910
There are no future minimum lease payments under capital leases as of December 31, 2012.
Employment Agreements
The Company has entered into employment agreements with certain executives and other key employees. The agreements
provide for total severance payments of up to approximately $2.1 million for termination of employment for any reason other than
cause. Pursuant to these agreements, payments would be made in equal monthly installments over a period of not more than
12 months. No amounts have been accrued because the payments are not probable and cannot be reasonably estimated.
Legal and Other Matters
From time to time, the Company may be involved in litigation relating to claims arising out of its ordinary course of business,
and occasionally legal proceeding not in the ordinary course. Many of the Company’s installations involve products that are critical
to the operations of its clients’ businesses. Any failure in a Company product could result in a claim for substantial damages against
the Company, regardless of the Company’s responsibility for such failure. Although the Company attempts to limit contractually its
liability for damages arising from product failures or negligent acts or omissions, there can be no assurance that the limitations of
liability set forth in its contracts will be enforceable in all instances. The Company is not currently a party to any ordinary course
legal proceeding or other legal proceedings the result of which it believes is likely to have a material adverse impact upon its business,
financial position, results of operations, or cash flows. The Company expenses legal costs associated with loss contingencies as such
legal costs are incurred.
6. Employee Benefit Plan
The Company sponsors the Manhattan Associates 401(k) Plan and Trust (the “401(k) Plan”), a qualified profit sharing plan
with a 401(k) feature covering substantially all employees of the Company. Under the 401(k) Plan’s deferred compensation
arrangement, eligible employees who elect to participate in the 401(k) Plan may contribute up to 60% of eligible compensation up to
$17,000, as defined, to the 401(k) Plan. The Internal Revenue Service raised the eligible compensation limit to $250,000 for 2012.
During the second quarter of 2009, the Company suspended its 401(k) matching contribution for the remainder of 2009 and full year
62
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2012, 2011, and 2010
2010. In 2011, the Company reinstated its matching contribution program, which provides for a 25% matching contribution up to 6%
of eligible compensation being contributed after the participant’s first year of employment. In 2012, the Company increased the
401(k) match to a 50% matching contribution up to 6% of eligible compensation. During the years ended December 31, 2012 and
2011, the Company made matching contributions to the 401(k) Plan of $1.3 million, and $0.9 million, respectively.
7. Reporting Segments
The Company manages the business by geographic segment. The Company has identified three geographic reportable
segments: the Americas, EMEA, and APAC. All segments derive revenue from the sale and implementation of the Company’s supply
chain execution and planning solutions. The individual products sold by the segments are similar in nature and are all designed to
help companies manage the effectiveness and efficiency of their supply chain. The Company uses the same accounting policies for
each reporting segment. The chief executive officer and chief financial officer evaluate performance based on revenue and operating
results for each region.
The Americas segment charges royalty fees to the other segments based on software licenses sold by those reporting
segments. The royalties, which totaled $2.9 million, $2.2 million, and $2.5 million in 2012, 2011, and 2010, respectively, are included
in cost of revenue for each segment with a corresponding reduction in America’s cost of revenue. The revenues represented below are
from external customers only. The geographical-based costs consist of costs of professional services personnel, direct sales and
marketing expenses, cost of infrastructure to support the employees and customer base, billing and financial systems, and management
and support team. There are certain corporate expenses included in the Americas region that are not charged to the other segments,
including research and development, certain marketing and general and administrative costs that support the global organization, and
the amortization of acquired developed technology. Included in the Americas’ costs are all research and development costs including
the costs associated with the Company’s India operations.
The operating expenses for the Americas segment include $1.2 million and $2.3 million of amortization expense on
intangible assets in 2011 and 2010, respectively. Amortization expense on intangible assets in 2012 was immaterial.
In accordance with the segment reporting topic of the FASB Codification, the Company has included a summary of financial
information by reportable segment. The following table presents the revenues, expenses, and operating income by reportable segment
for the years ended December 31, 2012, 2011, and 2010 (in thousands):
Revenue:
Software license
Services
Hardware and other
Total revenue
Costs and Expenses:
Cost of revenue
Operating expenses
Year Ended December 31,
Americas
EMEA
APAC
Consolidated Americas EMEA APAC Consolidated
2012
2011
$ 50,036
$ 9,569
$ 1,889
$ 61,494
$ 45,506
$6,362
$2,373
$ 54,241
228,673
36,167
19,032
283,872
198,041
30,824
15,193
244,058
28,883
1,402
597
30,882
29,312
1,109
533
30,954
307,592
47,138
21,518
376,248
272,859
38,295
18,099
329,253
126,342
23,998
11,397
161,737
108,648
20,436
10,017
139,101
110,575
13,153
5,072
128,800
106,439
12,268
5,317
124,024
Depreciation and amortization
5,158
262
218
5,638
6,741
352
191
7,284
Recovery of previously impaired investment
-
-
-
-
(2,519)
-
- (2,519)
Total costs and expenses
Operating income
242,075
37,413
16,687
296,175
219,309
33,056
15,525
267,890
$ 65,517
$ 9,725
$ 4,831
$ 80,073
$ 53,550
$5,239
$2,574
$ 61,363
63
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2012, 2011, and 2010
Revenue:
Software license
Services
Hardware and other
Total revenue
Costs and Expenses:
Cost of revenue
Operating expenses
Depreciation and amortization
Total costs and expenses
Operating income
Year Ended December 31, 2010
Americas
EMEA
APAC
Total
$ 44,254
$ 4,972
$ 5,224
$ 54,450
176,912
26,269
10,569
213,750
27,784
925
208
28,917
248,950
32,166
16,001
297,117
102,682
17,634
8,476
128,792
101,742
10,523
4,972
117,237
8,658
324
179
9,161
213,082
28,481
13,627
255,190
$ 35,868
$ 3,685
$ 2,374
$ 41,927
The following table presents the goodwill, long-lived assets, and total assets by reporting segment for the years ended
December 31, 2012 and 2011 (in thousands):
As of December 31, 2012
As of December 31, 2011
Goodwill
Long lived assets
Americas
$ 54,766
15,810
EMEA
$ 5,536
800
APAC
$ 1,963
699
Consolidated Americas
$
62,265
17,309
$ 54,766
15,090
EMEA
$ 5,532
586
APAC
$ 1,963
598
Consolidated
62,261
$
16,274
Total assets
235,945
17,391
8,477
261,813
236,122
15,330
8,148
259,600
For the years ended December 31, 2012, 2011, and 2010, we derived revenue from sales to customers outside the United
State of approximately $104.4 million, $90.7 million, and $80.7 million, respectively. Our remaining revenue was derived from
domestic sales.
Our services revenue consists of fees generated from professional services and customer support services and software
enhancements related to our software products for the years ended December 31, 2012, 2011, and 2010, are as follows (in thousands):
Professional services
Customer support and software enhancements
Total services revenue
Year ended December 31,
2011
2010
$
$
156,794
87,264
244,058
$
$
131,871
81,879
213,750
2012
185,242
98,630
283,872
$
$
License revenues related to our warehouse and non-warehouse product groups for the years ended December 31, 2012, 2011,
and 2010, are as follows (in thousands):
Year ended December 31,
2011
2010
2012
Warehouse
Non-Warehouse
Total license revenue
64
$
$
40,068
21,426
61,494
$
$
33,560
20,681
54,241
$
$
30,966
23,484
54,450
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
December 31, 2012, 2011, and 2010
8. Subsequent Events
The American Taxpayer Relief Act of 2012 ("the Act") was enacted on January 2, 2013. The Act retroactively reinstates the
federal research and development tax credit for amounts incurred from January 1, 2012 through December 31, 2013, which will result
in a reduction in our projected annual effective tax rate for 2013 and the associated income tax expense. Application of the reinstated
provisions to the year ended December 31, 2012 would have reduced income tax expense for that period by approximately $0.7
million. The benefit of the reduction in the annual effective tax rate will be included in our income tax expense beginning in the first
quarter of 2013.
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G
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed
under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including
our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
No system of controls, no matter how well designed and operated, can provide absolute assurance that the objectives of the
system of controls are met, and no evaluation of controls can provide absolute assurance that the system of controls has operated
effectively in all cases. Our disclosure controls and procedures, however, are designed to provide reasonable assurance that the
objectives of disclosure controls and procedures are met.
As of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer evaluated, with
the participation of management, the effectiveness of our disclosure controls and procedures. Based on the evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure
controls and procedures were effective to provide reasonable assurance that the objectives of disclosure controls and procedures are
met.
Management’s Report on Internal Control over Financial Reporting
Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31,
2012, and the report of Ernst & Young LLP on the effectiveness of the Company’s internal control over financial reporting are
contained on pages 41 and 42 of this report.
Change in Internal Control over Financial Reporting
During the fourth quarter of 2012, there were no changes in our internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting, including any corrective actions
with regard to material weaknesses.
Item 9B. Other Information
None.
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information required by this item is incorporated by reference from the information contained in our Proxy Statement for
the Annual Meeting of Shareholders expected to be filed with the SEC on or prior to April 12, 2013, under the captions “Election of
Directors,” “Executive Officers,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Code of Ethics,” and “Board
Committees.”
Item 11. Executive Compensation
The information required by this item is incorporated by reference from the relevant information contained in our Proxy
Statement for the Annual Meeting of Shareholders expected to be filed with the SEC on or prior to April 12, 2013, under the captions
“Director Compensation,” “Executive Compensation,” “Compensation Committee Interlocks and Insider Participation,” and
“Compensation Committee Report.”
67
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
The information required by this item is incorporated by reference from the relevant information contained in our Proxy
Statement for the Annual Meeting of Shareholders expected to be filed with the SEC on or prior to April 12, 2013, under the caption
“Security Ownership of Certain Beneficial Owners and Management.” The information required by this item with respect to the
Company’s securities authorized for issuance under equity compensation plans is included in Part II, Item 5 of this Annual Report on
Form 10-K and is incorporated by reference herein.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference from the relevant information contained in our Proxy
Statement for the Annual Meeting of Shareholders expected to be filed with the SEC on or prior to April 12, 2013, under the captions
“Related Party Transactions” and “Election of Directors.”
Item 14. Principal Accountant Fees and Services
The information required by this item is incorporated by reference from the relevant information contained in our Proxy
Statement for the Annual Meeting of Shareholders expected to be filed with the SEC on or prior to April 12, 2013, under the caption
“Ratification of Appointment of Independent Registered Public Accounting Firm.”
Item 15. Exhibits and Financial Statement Schedules
(a)
1.
Financial Statements.
PART IV
The response to this item is submitted as a separate section of this Form 10-K. See Item 8.
2.
Financial Statement Schedule.
68
The following financial statement schedule is filed as a part of this report:
SCHEDULE II
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Classification:
Allowance for Doubtful Accounts
For the year ended:
December 31, 2010
December 31, 2011
December 31, 2012
Deferred Tax Asset Valuation Allowance
For the year ended:
December 31, 2010
December 31, 2011
December 31, 2012
Restructuring Charge Accrual
For the year ended:
December 31, 2010
December 31, 2011
Balance at
Beginning of
Period
Additions
Charged to
Operations
Net
Deductions
Balance at End
of Period
$
$
$
4,943,000
5,711,000
4,816,000
$
$
$
3,467,000
2,508,000
4,294,000
$
$
$
2,699,000
3,403,000
2,875,000
$
$
$
5,711,000
4,816,000
6,235,000
$
$
$
7,887,000
7,689,000
6,711,000
$
-
$
-
$
-
$
$
$
198,000
978,000
746,000
$
$
$
7,689,000
6,711,000
5,965,000
$
$
255,000
63,000
$
-
$
-
$
$
192,000
63,000
$
63,000
$
-
All other schedules are omitted because they are not required or the required information is shown in the consolidated
financial statements or notes thereto.
3.
Exhibits.
See (b) below.
The exhibits listed below under “Exhibit Index” are filed with or incorporated by reference in this Report. Where such filing
(b)
is made by incorporation by reference to a previously filed registration statement or report, such registration statement or report is
identified in parentheses.
(c)
See Item 15(a)(2).
69
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
MANHATTAN ASSOCIATES, INC.
By: /s/ Eddie Capel
Eddie Capel
President, Chief Executive Officer, and Director
Date: February 22, 2013
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant in the capacities and on the dates indicated.
Signature
Title
Date
/s/ John J. Huntz, Jr.
John J. Huntz, Jr.
/s/ Eddie Capel
Eddie Capel
/s/ Dennis B. Story
Dennis B. Story
/s/ Brian J. Cassidy
Brian J. Cassidy
/s/ Dan J. Lautenbach
Dan J. Lautenbach
/s/ Thomas E. Noonan
Thomas E. Noonan
/s/ Deepak Raghavan
Deepak Raghavan
/s/ Peter F. Sinisgalli
Peter F. Sinisgalli
Chairman of the Board
February 22, 2013
President, Chief Executive Officer, and
Director (Principal Executive Officer)
February 22, 2013
Executive Vice President, Chief Financial
Officer, and Treasurer (Principal
Financial and Accounting Officer)
February 22, 2013
February 22, 2013
February 22, 2012
February 22, 2013
February 22, 2013
February 22, 2013
Director
Director
Director
Director
Director
70
The following exhibits are filed with this Report.
EXHIBIT INDEX
Description
Exhibit
Number
2.1
2.2
2.3
3.1
3.2
4.1
4.2
10.1
10.2
10.3
10.4
10.5
Agreement and Plan of Merger, by and among the Registrant, Madison Acquisition Corp., Evant, Inc. and Ted
Schlein, as Shareholder Representative, dated August 10, 2005 (Incorporated by reference to Exhibit 2.1 to the
Company’s Form 8-K (File No. 000-23999), filed on August 16, 2005).
Voting Agreement, by and between the Registrant and the shareholders of Evant, Inc., dated August 10, 2005
(Incorporated by reference to Exhibit 2.2 to the Company’s Form 8-K (File No. 000-23999), filed on August 16,
2005).
Amendment Number 1 to Agreement and Plan of Merger, by and among Evant, Inc., the Registrant, Madison
Acquisition Corp. and Ted Schlein, as Shareholder Representative, dated as of August 15, 2005 (Incorporated by
reference to Exhibit 2.3 to the Company’s Form 8-K (File No. 000-23999), filed on August 16, 2005).
Articles of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Company’s Registration
Statement on Form S-1 (File No. 333-47095), filed on February 27, 1998).
Amended Bylaws of the Registrant (As Amended Effective October 13, 2010) (Incorporated by reference to
Exhibit 3.2 to the Company’s Form 8-K (File No. 000-23999), filed on October 19, 2010).
Provisions of the Articles of Incorporation and Bylaws of the Registrant defining rights of the holders of common
stock of the Registrant (Incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on
Form S-1 (File No. 333-47095), filed on February 27, 1998).
Specimen Stock Certificate (Incorporated by reference to Exhibit 4.2 to the Company’s Pre-Effective Amendment
No. 1 to its Registration Statement on Form S-1 (File No. 333-47095), filed on April 2, 1998).
Lease Agreement by and between Wildwood Associates, a Georgia general partnership, and the Registrant dated
September 24, 1997 (Incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form
S-1 (File No. 333-47095), filed on February 27, 1998).
First Amendment to Lease between Wildwood Associates, a Georgia general partnership, and the Registrant dated
October 31, 1997 (Incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1
(File No. 333-47095), filed on February 27, 1998).
Second Amendment to Lease Agreement between Wildwood Associates, a Georgia general partnership, and the
Registrant, dated February 27, 1998 (Incorporated by reference to Exhibit 10.8 to the Company’s Pre-Effective
Amendment No. 1 to its Registration Statement on Form S-1 (File No. 333-47095), filed on April 2, 1998).
Third Amendment to Lease Agreement between Wildwood Associates and the Registrant, dated October 24, 2000
(Incorporated by reference to Exhibit 10.9 to the Company’s Annual Report for the period ended December 31,
2000 (File No. 000-23999), filed on April 2, 2001).
Lease Agreement by and between Wildwood Associates, a Georgia general partnership, and the Registrant, dated
June 25, 2001 (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report for the period ended
June 30, 2001 (File No. 000-23999), filed August 14, 2001).
71
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
First Amendment to Lease Agreement between Wildwood Associates, and the Registrant, dated June 10, 2002
(Incorporated by reference to Exhibit 10.6 to the Company’s Annual Report for the period ended December 31,
2006 (File No. 000-23999), filed on March 14, 2007).
Second Amendment to Lease Agreement between 2300 Windy Ridge Parkway Investors LLC, and the Registrant,
dated February 27, 2007 (Incorporated by reference to Exhibit 10.7 to the Company’s Annual Report for the
period ended December 31, 2006 (File No. 000-23999), filed on March 14, 2007).
Lease Agreement by and between Tektronix UK Limited, Manhattan Associates Limited and Manhattan
Associates, Inc., dated October 21, 1999 (Incorporated by reference to Exhibit 10.27 to the Company’s Annual
Report for the period ended December 31, 1999 (File No. 000-23999), filed on March 30, 2000).
Lease (Burlington Business Center) by and between Gateway Rosewood, Inc. and Manhattan Associates, Inc.,
dated August 23, 2004 (Incorporated by reference to Exhibit 10.7 to the Company’s Annual Report for the period
ended December 31, 2004 (File No. 000-23999), filed on March 16, 2005).
Agreement to Build and Lease between Orchid Apartments Private Limited and Manhattan Associates India
Development Centre Private Limited, executed on November 19, 2004 (Incorporated by reference to Exhibit 10.8
to the Company’s Annual Report for the period ended December 31, 2004 (File No. 000-23999), filed on
March 16, 2005).
Lease Agreement between IGE Energy Services (UK) Limited, Manhattan Associates Limited and Manhattan
Associates, Inc., dated February 1, 2005 (Incorporated by reference to Exhibit 10.9 to the Company’s Annual
Report for the period ended December 31, 2004 (File No. 000-23999), filed on March 16, 2005).
Sub-Sublease Agreement between Scientific Research Corporation, a Georgia corporation, and the Registrant,
dated July 2, 1998 (Incorporated by reference to Exhibit 10.19 to the Company’s Annual Report for the period
ended December 31, 1998 (File No. 000-23999), filed on March 31, 1999).
Sub-Sublease Agreement between The Profit Recovery Group International 1, Inc., a Georgia corporation, and the
Registrant, dated August 19, 1998 (Incorporated by reference to Exhibit 10.20 to the Company’s Annual Report
for the period ended December 31, 1998 (File No. 000-23999), filed on March 31, 1999).
Standard Sublease Agreement between Life Office Management Association, Inc. and the Registrant, dated
October 20, 2000 (Incorporated by reference to Exhibit 10.17 to the Company’s Annual Report for the period
ended December 31, 2000 (File No. 000-23999), filed on April 2, 2001).
Standard Sublease Agreement between Chevron USA Inc. and the Registrant, dated November 20, 2000
(Incorporated by reference to Exhibit 10.18 to the Company’s Annual Report for the period ended December 31,
2000 (File No. 000-23999), filed on April 2, 2001).
Form of Indemnification Agreement with certain directors and officers of the Registrant (Incorporated by
reference to Exhibit 10.2 to the Company’s Quarterly Report for the period ended June 30, 2004 (File No. 000-
23999), filed on August 9, 2004).
Form of Tax Indemnification Agreement for direct and indirect shareholders of Manhattan Associates Software,
LLC (Incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-1 (File No.
333-47095), filed on February 27, 1998).
Summary Plan Description of the Registrant’s Money Purchase Plan & Trust, effective January 1, 1997
(Incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1 (File No. 333-
47095), filed on February 27, 1998).
72
10.19
10.20 *
10.21 *
10.22 *
10.23 *
10.24 *
10.25 *
10.26 *
10.27 *
10.28 *
Summary Plan Description of the Registrant’s 401(k) Plan and Trust, effective January 1, 1995 (Incorporated by
reference to Exhibit 10.4 to the Company’s Registration Statement on Form S-1 (File No. 333-47095), filed on
February 27, 1998).
Manhattan Associates, Inc. 1998 Stock Incentive Plan (Incorporated by reference to Exhibit 10.10 to the
Company’s Registration Statement on Form S-1 (File No. 333-47095), filed on February 27, 1998).
First Amendment to the Manhattan Associates, Inc. 1998 Stock Incentive Plan (Incorporated by reference to
Exhibit 10.22 to the Company’s Annual Report for the period ended December 31, 1998 (File No. 000-23999),
filed on March 31, 1999).
Second Amendment to the Manhattan Associates, Inc. 1998 Stock Incentive Plan (Incorporated by reference to
Exhibit 10.23 to the Company’s Annual Report for the period ended December 31, 1998 (File No. 000-23999),
filed on March 31, 1999).
Third Amendment to the Manhattan Associates, Inc. 1998 Stock Incentive Plan (Incorporated by reference to
Exhibit 10.24 to the Company’s Annual Report for the period ended December 31, 1998 (File No. 000-23999),
filed on March 31, 1999).
Fourth Amendment to the Manhattan Associates, Inc. 1998 Stock Incentive Plan (Incorporated by reference to
Exhibit 10.25 to the Company’s Annual Report for the period ended December 31, 1999 (File No. 000-23999),
filed on March 30, 2000).
Fifth Amendment to the Manhattan Associates, Inc. 1998 Stock Incentive Plan (Incorporated by reference to
Exhibit 4.8 to the Company’s Form S-8 (File No. 333-68968), filed on September 5, 2001).
Sixth Amendment to the Manhattan Associates, Inc. 1998 Stock Incentive Plan (Incorporated by reference to
Annex A to the Company’s Proxy Statement for its Annual Meeting held May 17, 2002 (File No. 000-23999),
filed on April 24, 2002).
Amendment No. 7 to the Manhattan Associates, Inc. 1998 Stock Incentive Plan (Incorporated by reference to
Exhibit 4.10 to the Company’s Form S-8 (File No. 333-105913), filed on June 6, 2003).
Form of Composite Stock Option Agreement (Incorporated by reference to Exhibit 10.1 to the Company’s
Quarterly Report for the period ended March 31, 2006 (File No. 000-23999), filed on May 4, 2006).
10.30 (a)*
Executive Employment Agreement by and between the Registrant and Peter F. Sinisgalli, effective as of
February 25, 2004 (Incorporated by reference to Exhibit 10.28 to the Company’s Annual Report for the period
ended December 31, 2003 (File No. 000-23999), filed on March 15, 2004).
(b)*
(c)*
Modification dated July 19, 2007 by and between the Company and Peter F. Sinisgalli to the Executive
Employment Agreement dated February 25, 2004 (Incorporated by reference to Exhibit 10.1 to the Company’s
Form 8-K (File No. 000-23999), filed on July 24, 2007).
Executive Employment Agreement by and between the Registrant and Peter F. Sinisgalli, effective as of April 13,
2012 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 000-23999), filed on
December 23, 2011).
10.31 *
Separation and Non-Competition Agreement by and between the Registrant and Peter F. Sinisgalli, effective as of
February 25, 2004 (Incorporated by reference to Exhibit 10.29 to the Company’s Annual Report for the period
ended December 31, 2003 (File No. 000-23999), filed on March 15, 2004).
73
10.32 *
10.33 *
10.34 *
10.35 *
10.36 *
10.37 *
10.38
*
10.39 *
10.40 *
10.41 *
10.42
10.43
10.44 *
Executive Employment Agreement by and between the Registrant and Jeffrey Mitchell, effective as of
September 3, 1999 (Incorporated by reference to Exhibit 10.32 to the Company’s Annual Report for the period
ended December 31, 2003 (File No. 000-23999), filed on March 15, 2004).
Executive Non-Competition and Severance Agreement by and between the Registrant and Jeffrey S. Mitchell,
dated June 22, 2004 (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report for the period
ended June 30, 2004 (File No. 000-23999), filed on August 9, 2004).
Executive Employment Agreement by and between the Registrant and Jeffry Baum, effective as of October 30,
2000 (Incorporated by reference to Exhibit 10.36 to the Company’s Annual Report for the period ended December
31, 2003 (File No. 000-23999), filed on March 15, 2004).
Executive Employment Agreement by and between the Registrant and Dennis B. Story, effective as of
February 18, 2006 (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 000-23999),
filed on February 22, 2006).
Severance and Non-Competition Agreement by and between the Registrant and Dennis B. Story, effective as of
February 18, 2006 (Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K (File No. 000-23999),
filed on February 22, 2006).
Executive Employment Agreement by and between the Registrant and Pervinder Johar, effective as of March 30,
2006. (Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 000-23999), filed on
January 2, 2009).
Severance and Non-Competition Agreement by and between the Registrant and Pervinder Johar, effective as
March 30, 2006. (Incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K (File No. 000-23999),
filed on January 2, 2009).
Separation Agreement and Release by and between the Registrant and Pervinder Johar, dated December 31, 2008.
(Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K (File No. 000-23999), filed on January 7,
2009).
Form of Modification Agreement for Terms and Conditions for Stock Options. (Incorporated by reference to
Exhibit 10.3 to the Company’s Form 8-K (File No. 000-23999), filed on January 2, 2009).
Severance and Non-Competition Agreement by and between the Registrant and David Dabbiere, effective as of
September 29, 2008. (Incorporated by reference to Exhibit 10.4 to the Company’s Form 8-K (File No. 000-
23999), filed on January 2, 2009).
Form of License Agreement, Software Maintenance Agreement and Consulting Agreement (Incorporated by
reference to Exhibit 10.18 to the Company’s Pre-Effective Amendment No. 1 to its Registration Statement on
Form S-1 (File No. 333-47095), filed on April 2, 1998).
Form of Software License, Services and Maintenance Agreement (Incorporated by reference to Exhibit 10.21 to
the Company’s Annual Report for the period ended December 31, 1998 (File No. 000-23999), filed on March 31,
1999).
2007 Stock Incentive Plan, as amended by the First Amendment thereto (Incorporated by reference to Annex A to
the Company’s Definitive Proxy Statement related to its 2009 Annual Meeting of Shareholders (File No. 000-
23999) filed on April 20, 2009).
74
10.45 *
10.46 *
10.47 *
10.48 *
10.49 *
10.50 *
10.51 *
10.52 *
10.53 *
10.54 *
10.55 *
Written Summary of Manhattan Associates, Inc. 2009 Annual Cash Incentive Plan (Incorporated by reference to
Exhibit 10.1 to the Company’s Form 8-K (File No. 000-23999), filed on June 19, 2009).
Written Summary of Manhattan Associates, Inc. 2009 Supplemental Cash Incentive Plan (Incorporated by
reference to Exhibit 10.2 to the Company’s Form 8-K (File No. 000-23999), filed on June 19, 2009).
Written Summary of Manhattan Associates, Inc. Annual Cash Incentive Plan (Incorporated by reference to
Exhibit 10.47 to the Company’s Annual Report for the period ended December 31, 2009 (File No. 000-23999),
filed on February 19, 2010).
Form of Manhattan Associates, Inc. Restricted Stock Award Agreement for Employees (Incorporated by reference
to Exhibit 10.48 to the Company’s Annual Report for the period ended December 31, 2009 (File No. 000-23999),
filed on February 19, 2010).
Form of Manhattan Associates, Inc. Restricted Stock Award Agreement for Non-Employee Directors
(Incorporated by reference to Exhibit 10.49 to the Company’s Annual Report for the period ended December 31,
2009 (File No. 000-23999), filed on February 19, 2010).
Form of Manhattan Associates, Inc. Restricted Stock Unit Award Agreement for Employees (Incorporated by
reference to Exhibit 10.50 to the Company’s Annual Report for the period ended December 31, 2012 (File
No. 000-23999), filed on February 23, 2012).
Form of Manhattan Associates, Inc. Restricted Stock Unit Award Agreement for Non-Employee Directors
(Incorporated by reference to Exhibit 10.51 to the Company’s Annual Report for the period ended December 31,
2012 (File No. 000-23999), filed on February 23, 2012).
Executive Employment Agreement by and between the Registrant and Bruce Richards, effective as of August 1,
2011 (Incorporated by reference to Exhibit 10.51 to the Company’s Annual Report for the period ended December
31, 2012 (File No. 000-23999), filed on February 23, 2012).
Severance and Non-Competition Agreement by and between the Registrant and Bruce Richards, effective as of
August 1, 2011 (Incorporated by reference to Exhibit 10.51 to the Company’s Annual Report for the period ended
December 31, 2012 (File No. 000-23999), filed on February 23, 2012).
Modification Agreement for Terms and Conditions for Stock Options by and between the Registrant and Eddie
Capel, effective as of June 4, 2007 (Incorporated by reference to Exhibit 10.51 to the Company’s Annual Report
for the period ended December 31, 2012 (File No. 000-23999), filed on February 23, 2012).
Severance and Non-Competition Agreement by and between the Registrant and Eddie Capel, effective as of
March 18, 2010 (Incorporated by reference to Exhibit 10.51 to the Company’s Annual Report for the period ended
December 31, 2012 (File No. 000-23999), filed on February 23, 2012).
21.1
List of Subsidiaries.
23.1
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
31.1
31.2
Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
75
32 **
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101 .INS ***
XBRL Instance Document
101 .SCH ***
XBRL Taxonomy Extension Schema Document
101 .CAL ***
XBRL Taxonomy Extension Calculation Linkbase Document
101 .DEF ***
XBRL Taxonomy Extension Definition Linkbase Document
101 .LAB ***
XBRL Taxonomy Extension Label Linkbase Document
101 .PRE ***
XBRL Taxonomy Extension Presentation Linkbase Document
* Management contract or compensatory plan or agreement.
**In accordance with Item 601(b)(32)(ii) of the SEC’s Regulation S-K, this Exhibit is hereby furnished to
the SEC as an accompanying document and is not deemed “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be
deemed incorporated by reference into any filing under the Securities Act of 1933.
*** In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this
Annual Report on Form 10-K shall not be deemed to be “filed” for purposes of Section 18 of the Exchange
Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any
registration statement or other document filed under the Securities Act of 1933, as amended, or the
Exchange Act, except as shall be expressly set forth by specific reference in such filing.
76
MANHATTAN ASSOCIATES, INC. SUBSIDIARIES
Subsidiaries
Manhattan Associates Limited
Manhattan Associates Europe B.V.
Manhattan Associates France SARL
Manhattan Associates GmbH
Manhattan Associates KK
Manhattan Associates Software (Shanghai), Co. Ltd.
Manhattan Associates Pty Ltd.
Manhattan Associates Software Pte Ltd.
Manhattan Associates (India) Development Centre Private Limited
Manhattan Associates, S. de R.L. de CV
Manhattan Associates Services, S. de R.L. de CV
EXHIBIT 21.1
Place of Incorporation
United Kingdom
Netherland
France
Germany
Japan
China
Australia
Singapore
India
Mexico
Mexico
Manhattan Associates Supply Chain Software, LLC
Georgia, USA
Consent of Independent Registered Public Accounting Firm
EXHIBIT 23.1
We consent to the incorporation by reference in the following Registration Statements:
1. Registration Statement (Form S-8 No. 333-60635) pertaining to the Manhattan Associates, Inc. Stock Incentive Plan,
2. Registration Statement (Form S-8 No. 333-45802) pertaining to the Manhattan Associates, Inc. 1998 Stock Incentive Plan,
3. Registration Statement (Form S-8 No. 333-68968) pertaining to the Manhattan Associates, Inc. 1998 Stock Incentive Plan,
4. Registration Statement (Form S-8 No. 333-105913) pertaining to the Manhattan Associates, Inc. Stock Incentive Plan,
5. Registration Statement (Form S-8 No. 333-129272) pertaining to the Manhattan Associates, Inc. Stock Incentive Plan,
6. Registration Statement (Form S-8 No. 333-139598) pertaining to the Manhattan Associates, Inc. Stock Incentive Plan,
7. Registration statement (Form S-8 No. 333-143611) pertaining to the Manhattan Associates, Inc. 2007 Stock Incentive Plan,
8. Registration statement (Form S-8 No. 333-159852) pertaining to the Manhattan Associates, Inc. 2007 Stock Incentive Plan,
and
9. Registration statement (Form S-8 No. 333-174499) pertaining to the Manhattan Associates, Inc. 2007 Stock Incentive Plan;
of our reports dated February 22, 2013, with respect to the consolidated financial statements and schedule of Manhattan Associates,
Inc. and subsidiaries and the effectiveness of internal control over financial reporting of Manhattan Associates, Inc. and subsidiaries
included in this Annual Report (Form 10-K) of Manhattan Associates, Inc. and subsidiaries for the year ended December 31, 2012.
Atlanta, Georgia
February 22, 2013
/s/ Ernst & Young LLP
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a)/15d-14(a), AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 31.1
I, Eddie Capel, certify that:
1.
I have reviewed this annual report on Form 10-K of the registrant;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this annual report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Dated this 22nd day of February, 2013
/s/ Eddie Capel
Eddie Capel, President and Chief Executive Officer
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a)/15d-14(d), AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 31.2
I, Dennis B. Story, certify that:
1.
I have reviewed this annual report on Form 10-K of the registrant;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under
our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this annual report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Dated this 22nd day of February, 2013
/s/ Dennis B. Story
Dennis B. Story, Executive Vice President, Chief Financial
Officer, and Treasurer
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32
This Certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18
(Crimes and Criminal Procedures) of the United States Code and shall not be relied on by any person for any other purpose.
The undersigned, who are the Chief Executive Officer and Chief Financial Officer, respectively, of Manhattan Associates, Inc. (the
“Company”), hereby each certify that, to the undersigned’s knowledge:
1. the Annual Report on Form 10-K of the Company for the twelve month period ended December 31, 2012 (the “Report”), which
accompanies this Certification, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
2. all information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of
the Company.
Dated this 22nd day of February, 2013
/s/ Eddie Capel
Eddie Capel, President and Chief Executive Officer
/s/ Dennis B. Story
Dennis B. Story, Executive Vice President, Chief Financial
Officer, and Treasurer
In accordance with SEC Release No. 34-47986, this Exhibit is furnished to the SEC as an accompanying document and is not deemed
“filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor
shall it be deemed incorporated by reference into any filing under the Securities Act of 1933. A signed original of this written
statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the registrant and will be retained by the
registrant and furnished to the Securities and Exchange Commission or its staff upon request.
Registrar and Transfer Agent
Computershare Investor Services
P O Box 43078
Providence, RI 02940-3078
+1 800.568.3476
Inquiries regarding stock transfers, lost
certificates or address changes should be
directed to above address.
Auditors
Ernst & Young LLP
Atlanta, Georgia
Legal Counsel
Kilpatrick Townsend & Stockton LLP
Atlanta, Georgia
The Company’s common stock is traded on the Nasdaq Global Select Market under the symbol MANH.
Additional copies of the Company’s 2012 10-K, included with this annual report to shareholders and filed with the
Securities and Exchange Commission, may be obtained by shareholders online at www.manh.com or without charge by
writing to Manhattan Associates Investor Relations at the Company’s headquarters.
Stock Performance
The following line-graph provides a comparison of the cumulative total shareholder return for Manhattan Associates,
Inc. (“Manhattan”) common stock for the period from December 31, 2007 through December 31, 2012, against the
cumulative shareholder return during such period achieved by The NASDAQ Stock Market (“NASDAQ Composite”)
and the NASDAQ Computer and Data Processing Index. The graph assumes that $100 was invested on December
31, 2007 in Common Stock and in each of the comparison indices and assumes reinvestment of dividends. No cash
dividends have been declared on shares of Manhattan common stock. The data for the graph was provided to us
by Zacks Investment Research, Inc.
Comparison of 5-Year Cumulative Total Return
Assumes Initial Investment of $100
December 31, 2012
250 _______________________________________________________________________________________________________________________________________________
200 _______________________________________________________________________________________________________________________________________________
150 _______________________________________________________________________________________________________________________________________________
100 _______________________________________________________________________________________________________________________________________________
50 ____________________________________________________________________________________
0 ____________________________________________________________________________________
2007
2008
2009
2010
2011
2012
Stock Performance Graph Data Points for fiscal year ended December 31:
2007
2008
2009
2010
2011
2012
Manhattan Associates, inc.
nASDAQ Composite
100
100
nASDAQ Computer and Data Processing index
100
60
60
58
91
87
33
116
103
54
154
102
61
229
102
70
26
where supply chain and the market meetcommerce connection
Global Headquarters
2300 Windy Ridge Parkway | Atlanta, Georgia 30339
tel +1 770.955.7070 | fax +1 770.955.0302
North & South America +1 877.596.9208 | Global +44 (0)1344 318000
www.manh.com
Manhattan Associates is committed to developing supply chain solutions that foster environmental stewardship.
Cert no. XXX-XXX-XXXX
©2013 Manhattan Associates, Inc. All rights reserved.
27
where supply chain and the market meetcommerce connection