Manhattan Associates Reports Fourth Quarter and Full Year 2017 Performance

ATLANTA, Feb. 06, 2018 (GLOBE NEWSWIRE) -- Leading Supply Chain and Omnichannel Commerce Solutions provider Manhattan Associates, Inc. (NASDAQ:MANH) today reported GAAP diluted earnings per share for the fourth quarter ended December 31, 2017, of $0.36 compared to $0.42 in Q4 2016, on license revenue of $14.7 million, cloud subscriptions revenue of $3.2 million and total revenue of $144.1 million. Non-GAAP adjusted diluted earnings per share for Q4 2017 was $0.45 compared to $0.46 in Q4 2016.

“Q4 and full-year 2017 marked a pivotal beginning to our cloud transformation. Deal volume and competitive win rates were strong with better than anticipated market enthusiasm for our recently launched Manhattan Active Omni Solution. Perpetual license sales and enterprise deal timelines, in contrast, saw delays as some pushed into 2018,” said Eddie Capel, president and chief executive officer of Manhattan Associates. “It’s encouraging to see the market demanding the cloud delivery model and validating Manhattan’s differentiation. We expect ongoing growth of our Manhattan Active cloud offerings as customers seek a cloud-first approach.”

FOURTH QUARTER 2017 FINANCIAL SUMMARY:

  • Certain line items in prior period financial statements have been reclassified to conform to the current period presentation in the consolidated statements of income due to the business transition to cloud subscriptions.
  • GAAP diluted earnings per share was $0.36 in Q4 2017 compared to $0.42 in Q4 2016.
  • Adjusted diluted earnings per share, a non-GAAP measure, was $0.45 in Q4 2017, compared to $0.46 in Q4 2016.
  • Consolidated total revenue was $144.1 million in Q4 2017, compared to $147.6 million in Q4 2016. License revenue was $14.7 million in Q4 2017, compared to $20.7 million in Q4 2016. Cloud subscriptions revenue was $3.2 million in Q4 2017 compared to $1.4 million in Q4 2016.
  • GAAP operating income was $43.6 million in Q4 2017, compared to $45.4 million in Q4 2016.
  • Adjusted operating income, a non-GAAP measure, was $48.8 million in Q4 2017, compared to $49.7 million in Q4 2016.
  • Cash flow from operations was $47.4 million in Q4 2017, compared to $37.8 million in Q4 2016. Days Sales Outstanding was 59 days at December 31, 2017, compared to 58 days at September 30, 2017.
  • Cash and investments totaled $125.5 million at December 31, 2017, compared to $129.7 million at September 30, 2017.
  • During the three months ended December 31, 2017, the Company repurchased 1,156,087 shares of Manhattan Associates common stock under the share repurchase program authorized by the Board of Directors for a total investment of $50.0 million. In February 2018, the Board of Directors authorized the Company to repurchase up to an aggregate of $50 million of the Company’s common stock.

FULL YEAR 2017 FINANCIAL SUMMARY:

  • Certain line items in prior period financial statements have been reclassified to conform to the current period presentation in the consolidated statements of income due to the business transition to cloud subscriptions.
  • GAAP diluted earnings per share for the twelve months ended December 31, 2017, was $1.68, compared to $1.72 for the twelve months ended December 31, 2016.
  • Adjusted diluted earnings per share, a non-GAAP measure, was $1.87 for both the twelve months ended December 31, 2017, and 2016.
  • Consolidated revenue for the twelve months ended December 31, 2017, was $594.6 million, compared to $604.6 million for the twelve months ended December 31, 2016. License revenue was $72.3 million for the twelve months ended December 31, 2017, compared to $79.2 million for the twelve months ended December 31, 2016. Cloud subscriptions revenue was $9.6 million for the twelve months ended December 31, 2017, compared to $5.8 million for the twelve months ended December 31, 2016.
  • GAAP operating income was $185.6 million for the twelve months ended December 31, 2017, compared to $194.3 million for the twelve months ended December 31, 2016.
  • Adjusted operating income, a non-GAAP measure, was $205.2 million for the twelve months ended December 31, 2017, compared to $210.7 million for the twelve months ended December 31, 2016.
  • Cash flow from operations was a record $164.1 million in the twelve months ended December 31, 2017, compared to $139.3 million in the twelve months ended December 31, 2016.
  • During the twelve months ended December 31, 2017, the Company repurchased 2,695,295 shares of Manhattan Associates common stock under the share repurchase program authorized by the Board of Directors, for a total investment of $124.9 million.

NEW PRESENTATION OF CONSOLIDATED STATEMENTS OF INCOME

Certain line items in prior period financial statements have been reclassified to conform to the current period presentation in the consolidated statements of income due to the business transition to cloud subscriptions. These reclassifications include: all revenue line items; cost of license; cost of cloud subscriptions, maintenance and services; and cost of hardware. Such reclassifications did not affect total revenues, operating income or net income. For further detail, please see note 8 in the supplemental financial information accompanying this press release.

2018 GUIDANCE

Manhattan Associates provides the following revenue and diluted earnings per share guidance for the full year 2018:

Guidance Range - 2018 Full Year
($'s in millions, except EPS)$ Range % Growth Range


Total revenue$546 $558 -8% -6%


Operating Margin:
GAAP operating margin 20.0% 20.4% -11.2% -10.8%
Equity-based compensation, net of tax 4.0% 3.9%
Adjusted operating margin(1) 24.0% 24.3% -10.5% -10.2%
Diluted earnings per share (EPS):
GAAP EPS$1.23 $1.27 -27% -24%
Equity-based compensation, net of tax 0.25 0.25

Adjusted EPS(1)$1.48 $1.52 -21% -19%
(1) Adjusted operating margin and adjusted EPS are Non-GAAP measures that exclude the impact of equity-based compensation and acquisition-related costs, and the related income tax effects of both.

Manhattan Associates currently intends to publish, in each quarterly earnings release, certain expectations with respect to future financial performance. Those statements, including the guidance provided above, are forward looking. Actual results may differ materially. Those statements, including the guidance provided above, do not reflect the potential impact of mergers, acquisitions or other business combinations that may be completed after the date of the release.

Manhattan Associates will make its earnings release and published expectations available on its website (www.manh.com). Following publication of this earnings release, any expectations with respect to future financial performance contained in this release, including the guidance above, should be considered historical only, and Manhattan Associates disclaims any obligation to update them.

CONFERENCE CALL

The Company’s conference call regarding its fourth quarter and twelve months ended December 31, 2017, financial results will be held today, February 6, 2018, at 4:30 p.m. Eastern Time. Investors are invited to listen to a live webcast of the conference call through the investor relations section of Manhattan Associates' website at www.manh.com. To listen to the live webcast, please go to the website at least 15 minutes before the call to download and install any necessary audio software.

For those who cannot listen to the live broadcast, a replay can be accessed shortly after the call by dialing +1.855.859.2056 in the U.S. and Canada, or +1.404.537.3406 outside the U.S., and entering the conference identification number ­­­­­­­­3099957 or via the web at www.manh.com. The phone replay will be available for two weeks after the call, and the Internet webcast will be available until Manhattan Associates’ first quarter 2018 earnings release.

GAAP VERSUS NON-GAAP PRESENTATION

The Company provides adjusted operating income, adjusted net income and adjusted diluted earnings per share in this press release as additional information regarding the Company’s historical and projected operating results. These measures are not in accordance with – or alternatives to – GAAP, and may be different from non-GAAP operating income, non-GAAP net income and non-GAAP earnings per share measures used by other companies. The Company believes that the presentation of these non-GAAP financial measures facilitates investors’ ability to understand and compare the Company’s results and guidance, because the measures provide supplemental information in evaluating the operating results of its business, as distinct from results that include items that are not indicative of ongoing operating results, and because the Company believes its peers typically publish similar non-GAAP measures. This release should be read in conjunction with the Company’s Form 8-K earnings release filing for the quarter and twelve months ended December 31, 2017.

Non-GAAP adjusted operating income, adjusted income tax provision, adjusted net income and adjusted diluted earnings per share exclude the impact of equity-based compensation, acquisition-related costs and the amortization thereof, and a restructuring charge – all net of income tax effects, and the impact of the Tax Cuts and Jobs Acts. Reconciliations of the Company’s GAAP financial measures to non-GAAP adjustments are included in the supplemental information attached to this release.

ABOUT MANHATTAN ASSOCIATES

Manhattan Associates is a technology leader in supply chain and omnichannel commerce. We unite information across the enterprise, converging front-end sales with back-end supply chain execution. Our software, platform technology and unmatched experience help drive both top-line growth and bottom-line profitability for our customers.

Manhattan Associates designs, builds and delivers leading edge cloud and on-premise solutions so that across the store, through your network or from your fulfillment center, you are ready to reap the rewards of the omnichannel marketplace. For more information, please visit www.manh.com.

This press release contains “forward-looking statements” relating to Manhattan Associates, Inc. Forward-looking statements in this press release include, without limitation, the information set forth under “2018 Guidance,” statements we make about market adoption of our cloud-based solution and other statements identified by words such as “may,” “expect,” “forecast,” “anticipate,” “intend,” “plan,” “believe,” “could,” “seek,” “project,” “estimate,” and similar expressions. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: uncertainty about the global economy, risks related from transitioning our business from a traditional perpetual license software company (generally hosted by our customers on their own premises and equipment) to a subscription-based software-as-service/cloud-based model, delays in product development, competitive pressures, software errors, information security breaches and the risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Manhattan Associates undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results.

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
Three Months Ended December 31, Year Ended December 31,
2017 2016 2017 2016
(unaudited) (unaudited)
Revenue:
Software license$14,712 $20,702 $72,313 $79,213
Cloud subscriptions 3,188 1,423 9,596 5,783
Maintenance 37,325 34,826 142,998 133,848
Services 77,183 81,571 326,502 351,785
Hardware 11,678 9,070 43,190 33,928
Total revenue 144,086 147,592 594,599 604,557
Costs and expenses:
Cost of license 1,377 1,429 5,483 6,818
Cost of cloud subscriptions, maintenance and services 48,934 53,374 208,045 219,635
Cost of hardware 8,416 6,068 32,205 23,426
Research and development 14,630 13,183 57,704 54,736
Sales and marketing 13,222 13,617 47,482 48,223
General and administrative 11,764 12,281 46,054 48,322
Depreciation and amortization 2,197 2,284 9,060 9,090
Restructuring charge (24) - 2,921 -
Total costs and expenses 100,516 102,236 408,954 410,250
Operating income 43,570 45,356 185,645 194,307
Other (loss) income, net (580) 416 (812) 1,800
Income before income taxes 42,990 45,772 184,833 196,107
Income tax provision 18,476 15,855 68,352 71,873
Net income$24,514 $29,917 $116,481 $124,234
Basic earnings per share$0.36 $0.42 $1.68 $1.73
Diluted earnings per share$0.36 $0.42 $1.68 $1.72
Weighted average number of shares:
Basic 68,485 70,742 69,175 71,674
Diluted 68,791 71,148 69,424 72,060

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Reconciliation of Selected GAAP to Non-GAAP Measures
(in thousands, except per share amounts)
Three Months Ended December 31, Year Ended December 31,
2017 2016 2017 2016
Operating income $43,570 $45,356 $185,645 $194,307
Equity-based compensation (a) 5,188 4,210 16,229 15,934
Purchase amortization (c) 107 108 430 430
Restructuring charge (d) (24) - 2,921 -
Adjusted operating income (Non-GAAP) $48,841 $49,674 $205,225 $210,671
Income tax provision $18,476 $15,855 $68,352 $71,873
Equity-based compensation (a) 1,934 1,451 5,964 5,789
Tax benefit of stock awards vested (b) 14 - 1,911 -
Purchase amortization (c) 40 37 158 156
Restructuring charge (d) (2) - 1,073 -
U.S. Tax Cuts and Jobs Act impact (e) (2,825) - (2,825) -
Adjusted income tax provision (Non-GAAP) $17,637 $17,343 $74,633 $77,818
Net income $24,514 $29,917 $116,481 $124,234
Equity-based compensation (a) 3,254 2,759 10,265 10,145
Tax benefit of stock awards vested (b) (14) - (1,911) -
Purchase amortization (c) 67 71 272 274
Restructuring charge (d) (22) - 1,848 -
U.S. Tax Cuts and Jobs Act impact (e) 2,825 - 2,825 -
Adjusted net income (Non-GAAP) $30,624 $32,747 $129,780 $134,653
Diluted EPS $0.36 $0.42 $1.68 $1.72
Equity-based compensation (a) 0.05 0.04 0.15 0.14
Tax benefit of stock awards vested (b) - - (0.03) -
Purchase amortization (c) - - - -
Restructuring charge (d) - - 0.03 -
U.S. Tax Cuts and Jobs Act impact (e) 0.04 - 0.04 -
Adjusted diluted EPS (Non-GAAP) $0.45 $0.46 $1.87 $1.87
Fully diluted shares 68,791 71,148 69,424 72,060

(a) Adjusted results exclude all equity-based compensation, to facilitate comparison with our peers and for the other reasons explained in our Current Report on Form 8-K filed with the SEC on the date hereof. Equity-based compensation is included in the following GAAP operating expense lines for the three and twelve months ended December 31, 2017 and 2016:

Three Months Ended December 31, Year Ended December 31,
2017 2016 2017 2016
Cost of services $1,398 $819 $3,994 $3,794
Research and development 1,280 567 3,208 2,489
Sales and marketing 690 593 2,240 2,431
General and administrative 1,820 2,231 6,787 7,220
Total equity-based compensation $5,188 $4,210 $16,229 $15,934

(b) During the first quarter of 2017, we adopted Accounting Standards Update (ASU) 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting, to improve the accounting for employee share-based payments. Under the new guidance, all excess tax benefits and certain tax deficiencies are recognized as income tax expense or benefit in the income statements on a prospective basis, rather than recorded in additional paid-in capital. The adjustment represents the excess tax benefits and tax deficiencies of the stock awards vested during the period. Excess tax benefits (deficiencies) occur when the amount deductible for an award of equity instruments on our tax return is more (less) than the cumulative compensation cost recognized for financial reporting purposes, respectively. As discussed above, we excluded equity-based compensation from adjusted non-GAAP results to be consistent with other companies in the software industry and for the other reasons explained in our Current Report on Form 8-K filed the SEC. Therefore, we also excluded the related tax benefit (expense) generated upon their vesting.

(c) Adjustments represent purchased intangibles amortization from a prior acquisition. Such amortization is excluded from adjusted results to facilitate comparison with our peers, to facilitate comparisons of the results of our core operations from period to period and for the other reasons explained in our Current Report on Form 8-K filed with the SEC.

(d) In May 2017, we eliminated about 100 positions due to the headwinds in the retail sector and to align our services capacity with demand. This action does not impair or alter our strategic investment plans in innovation and sales and marketing to increase market share and extend our competitive advantage. As a result of this initiative, we recorded a charge of approximately $2.9 million in 2017. The charge primarily consists of employee severance and employee transition and outplacement costs. We do not believe that the charge is a cost resulting from normal operating activities. Consequently, we have excluded this charge from adjusted non-GAAP results.

(e) The enactment of the Tax Cuts and Jobs Act in December 2017 resulted in a provisional net one-time tax of $2.8 million in the fourth quarter of 2017 based on a reasonable estimate of the income tax effects, primarily from a tax on accumulated foreign earnings and the remeasurement of deferred tax assets. As this was a one-time charge, we have excluded this charge from adjusted non-GAAP results. We continue to finalize the analysis of the tax reform provisions in 2018.

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
December 31,
2017
December 31,
2016
ASSETS
Current Assets:
Cash and cash equivalents $125,522 $95,615
Short-term investments - -
Accounts receivable, net of allowance of $2,692 and $3,595 in 2017 and 2016, respectively 92,231 100,285
Prepaid expenses and other current assets 10,320 11,118
Total current assets 228,073 207,018
Property and equipment, net 15,493 17,424
Goodwill, net 62,248 62,228
Deferred income taxes 1,877 2,867
Other assets 7,304 7,603
Total assets $314,995 $297,140
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $14,028 $12,052
Accrued compensation and benefits 15,826 20,700
Accrued and other liabilities 12,105 12,510
Deferred revenue 75,068 63,457
Income taxes payable 7,228 8,924
Total current liabilities 124,255 117,643
Other non-current liabilities 15,784 10,131
Shareholders' equity:
Preferred stock, no par value; 20,000,000 shares authorized, no shares issued or outstanding in 2017 and 2016 - -
Common stock, $.01 par value; 200,000,000 shares authorized; 67,776,138 and 70,233,955 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively 678 702
Retained earnings 186,117 184,558
Accumulated other comprehensive loss (11,839) (15,894)
Total shareholders' equity 174,956 169,366
Total liabilities and shareholders' equity $314,995 $297,140

MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31,
2017 2016
Operating activities:
Net income $116,481 $124,234
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 9,060 9,090
Equity-based compensation 16,229 15,934
Loss on disposal of equipment 152 30
Tax benefit of stock awards exercised/vested - 5,209
Excess tax benefits from equity-based compensation - (5,214)
Deferred income taxes 1,574 1,797
Unrealized foreign currency loss (gain) 196 (393)
Changes in operating assets and liabilities:
Accounts receivable, net 10,139 (4,358)
Other assets 661 299
Accounts payable, accrued and other liabilities (5,354) (9,261)
Income taxes 1,876 6,129
Deferred revenue 13,052 (4,150)
Net cash provided by operating activities 164,066 139,346
Investing activities:
Purchases of property and equipment (6,199) (6,843)
Maturities of short-term investments 429 10,201
Net cash (used in) provided by investing activities (5,770) 3,358
Financing activities:
Purchase of common stock (131,707) (167,933)
Proceeds from issuance of common stock from options exercised - 18
Excess tax benefits from equity-based compensation - 5,214
Net cash used in financing activities (131,707) (162,701)
Foreign currency impact on cash 3,318 (2,804)
Net change in cash and cash equivalents 29,907 (22,801)
Cash and cash equivalents at beginning of period 95,615 118,416
Cash and cash equivalents at end of period $125,522 $95,615

MANHATTAN ASSOCIATES, INC.
SUPPLEMENTAL INFORMATION

1. GAAP and Adjusted earnings per share by quarter are as follows:

2016 2017
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
GAAP Diluted EPS$0.38 $0.46 $0.47 $0.42 $1.72 $0.40 $0.45 $0.47 $0.36 $1.68
Adjustments to GAAP:
Equity-based compensation 0.04 0.03 0.03 0.04 0.14 0.04 0.03 0.03 0.05 0.15
Tax benefit of stock awards vested - - - - - (0.03) - - - (0.03)
Purchase amortization - - - - - - - - - -
Restructuring charge - - - - - - 0.03 - - 0.03
U.S. Tax Cuts and Jobs Act impact - - - - - - - - 0.04 0.04
Adjusted Diluted EPS$0.42 $0.49 $0.50 $0.46 $1.87 $0.42 $0.50 $0.51 $0.45 $1.87
Fully Diluted Shares 73,020 72,228 71,743 71,148 72,060 70,247 69,421 69,135 68,791 69,424

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

2016 2017
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
Revenue:
Americas$128,807 $131,018 $130,099 $123,660 $513,584 $113,115 $123,658 $124,833 $115,543 $477,149
EMEA 15,686 18,185 15,078 17,333 66,282 23,360 22,028 18,453 21,508 85,349
APAC 5,367 5,689 7,036 6,599 24,691 7,014 8,455 9,597 7,035 32,101
$149,860 $154,892 $152,213 $147,592 $604,557 $143,489 $154,141 $152,883 $144,086 $594,599
GAAP Operating Income:
Americas$37,454 $44,126 $46,213 $37,154 $164,947 $28,713 $35,717 $39,295 $32,968 $136,693
EMEA 4,439 6,854 4,822 5,945 22,060 10,754 9,995 7,128 7,952 35,829
APAC 1,206 1,288 2,549 2,257 7,300 2,253 3,547 4,673 2,650 13,123
$43,099 $52,268 $53,584 $45,356 $194,307 $41,720 $49,259 $51,096 $43,570 $185,645
Adjustments (pre-tax):
Americas:
Equity-based compensation$4,688 $3,495 $3,541 $4,210 $15,934 $4,472 $2,796 3,773 $5,188 $16,229
Purchase amortization 107 108 107 108 430 107 108 108 107 430
Restructuring charge - - - - - - 2,908 (77) (18) 2,813
$4,795 $3,603 $3,648 $4,318 $16,364 $4,579 $5,812 $3,804 $5,277 $19,472
EMEA:
Restructuring charge - - - - - - 114 - (6) 108
Adjusted non-GAAP Operating Income:
Americas$42,249 $47,729 $49,861 $41,472 $181,311 $33,292 $41,529 $43,099 $38,245 $156,165
EMEA 4,439 6,854 4,822 5,945 22,060 10,754 10,109 7,128 7,946 35,937
APAC 1,206 1,288 2,549 2,257 7,300 2,253 3,547 4,673 2,650 13,123
$47,894 $55,871 $57,232 $49,674 $210,671 $46,299 $55,185 $54,900 $48,841 $205,225

3. Impact of Currency Fluctuation

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

2016 2017
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
Revenue$(810) $(474) $(784) $(1,425) $(3,493) $(1,547) $(1,219) $536 $1,820 $(410)
Costs and expenses (1,292) (702) (782) (1,028) (3,804) (789) (396) 723 1,485 1,023
Operating income 482 228 (2) (397) 311 (758) (823) (187) 335 (1,433)
Foreign currency gains (losses) in other income 165 331 (72) 211 635 (646) (348) (81) (771) (1,846)
$647 $559 $(74) $(186) $946 $(1,404) $(1,171) $(268) $(436) $(3,279)

Manhattan Associates has a large research and development center in Bangalore, India. The following table reflects the increases (decreases) in the financial results for each period attributable to changes in the Indian Rupee exchange rate (in thousands):

2016 2017
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
Operating income$682 $459 $259 $159 $1,559 $(70) $(326) $(338) $(345) $(1,079)
Foreign currency gains (losses) in other income (109) 212 (44) 159 218 (320) (190) 71 (43) (482)
Total impact of changes in the Indian Rupee$573 $671 $215 $318 $1,777 $(390) $(516) $(267) $(388) $(1,561)

4. Other income includes the following components (in thousands):

2016 2017
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
Interest income$335 $329 $281 $216 $1,161 $293 $264 $314 $303 $1,174
Foreign currency gains (losses) 165 331 (72) 211 635 (646) (348) (81) (771) (1,846)
Other non-operating income (expense) 20 (6) 1 (11) 4 (18) 16 (26) (112) (140)
Total other income (loss)$520 $654 $210 $416 $1,800 $(371) $(68) $207 $(580) $(812)

5. Capital expenditures are as follows (in thousands):

2016 2017
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
Capital expenditures$1,906 $2,201 $1,358 $1,378 $6,843 $789 $1,914 $1,194 $2,302 $6,199

6. Stock Repurchase Activity (in thousands):

2016 2017
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
Shares purchased under publicly-announced buy-back program 892 552 420 957 2,821 1,004 535 - 1,156 2,695
Shares withheld for taxes due upon vesting of restricted stock 163 - 3 1 167 131 1 2 1 135
Total shares purchased 1,055 552 423 958 2,988 1,135 536 2 1,157 2,830
Total cash paid for shares purchased under publicly-announced buy-back program$48,499 $34,995 $24,998 $49,901 $158,393 $49,978 $24,974 $- $49,953 $124,905
Total cash paid for shares withheld for taxes due upon vesting of restricted stock 9,292 26 158 64 9,540 6,641 27 80 54 6,802
Total cash paid for shares repurchased$57,791 $35,021 $25,156 $49,965 $167,933 $56,619 $25,001 $80 $50,007 $131,707

7. As mentioned in footnote b to the reconciliation of selected GAAP to Non-GAAP Measures, during the first quarter of 2017, we adopted ASU 2016-09 Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. Had we adopted the guidance during the first quarter of 2016, the cash provided by operating activities and cash used in financing activities for the twelve months ended December 31, 2016, as compared to December 31, 2017, would have been as follows:

Twelve Months Ended December 31,
2016 2017
Net cash provided by operating activities, as stated $139,346 $164,066
Add: excess tax benefit from equity-based compensation 5,214 -
Revised net cash provided by operating activities $144,560 $164,066
Net cash used in financing activities, as stated $(162,701) $(131,707)
Less: excess tax benefit from equity-based compensation (5,214) -
Revised net cash used in financing activities $(167,915) $(131,707)

8. Certain line items in prior period financial statements have been reclassified to conform to the current period presentation in the consolidated statements of income. These reclassifications include all revenue line items, cost of license, cost of cloud, subscriptions, maintenance and services, and cost of hardware. Such reclassifications did not affect total revenues, operating income or net income. The following table reflects the comparison between the former and new presentation (in thousands):

2016 2017
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
Former Presentation:
Software license$20,607 $20,631 $21,633 $22,125 $84,996 $22,773 $22,442 $18,794 $17,900 $81,909
Services 116,263 119,833 119,267 111,923 467,286 108,833 116,828 115,555 110,394 451,610
Hardware and other 12,990 14,428 11,313 13,544 52,275 11,883 14,871 18,534 15,792 61,080
$149,860 $154,892 $152,213 $147,592 $604,557 $143,489 $154,141 $152,883 $144,086 $594,599
Cost of license$3,152 $2,283 $2,966 $2,419 $10,820 $2,240 $2,355 $2,830 $3,169 $10,594
Cost of services 51,904 48,393 49,436 47,742 197,475 49,743 47,751 44,750 43,053 185,297
Cost of hardware and other 9,757 11,841 9,276 10,710 41,584 9,638 12,207 15,492 12,505 49,842
$ 64,813 $ 62,517 $ 61,678 $ 60,871 $249,879 $ 61,621 $ 62,313 $ 63,072 $ 58,727 $245,733
New Presentation:
Software license$19,617 $18,882 $20,012 $20,702 $79,213 $21,277 $20,064 $16,260 $14,712 $72,313
Cloud subscriptions (a) 990 1,749 1,621 1,423 5,783 1,496 2,378 2,534 3,188 9,596
Maintenance 31,757 32,841 34,424 34,826 133,848 33,376 35,959 36,338 37,325 142,998
Services 88,735 91,866 89,613 81,571 351,785 79,781 85,327 84,211 77,183 326,502
Hardware 8,761 9,554 6,543 9,070 33,928 7,559 10,413 13,540 11,678 43,190
$149,860 $154,892 $152,213 $147,592 $604,557 $143,489 $154,141 $152,883 $144,086 $594,599
Cost of license$2,322 $1,361 $1,706 $1,429 $6,818 $1,352 $1,438 $1,316 $1,377 $5,483
Cost of cloud subscriptions, maintenance and services (b) 56,862 54,053 55,346 53,374 219,635 54,899 53,109 51,103 48,934 208,045
Cost of hardware 5,629 7,103 4,626 6,068 23,426 5,370 7,766 10,653 8,416 32,205
$64,813 $62,517 $61,678 $60,871 $249,879 $61,621 $62,313 $63,072 $58,727 $245,733
Reconciliation of Selected GAAP to Non-GAAP Measure:
2016 2017
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
Former Presentation:
Cost of services$51,904 $48,393 $49,436 $47,742 $197,475 $49,743 $47,751 $44,750 $43,053 $185,297
Equity-based compensation (c) (1,279) (868) (828) (819) (3,794) (1,141) (580) (875) (1,398) (3,994)
Adjusted Cost of services$50,625 $47,525 $48,608 $46,923 $193,681 $48,602 $47,171 $43,875 $41,655 $181,303
New Presentation:
Cost of cloud subscriptions, maintenance and services (b)$56,862 $54,053 $55,346 $53,374 $219,635 $54,899 $53,109 $51,103 $48,934 $208,045
Equity-based compensation (c) (1,279) (868) (828) (819) (3,794) (1,141) (580) (875) (1,398) (3,994)
Adjusted Cost of cloud subscriptions, maintenance and services$55,583 $53,185 $54,518 $52,555 $215,841 $53,758 $52,529 $50,228 $47,536 $204,051
(a) Cloud subscriptions includes software as a service (“SaaS”) and arrangements which provide customers with the right to use our software within a cloud-based environment provided by and managed by us where the customer does not have the right to take possession of the software without significant penalties.
(b) Cost of cloud subscriptions, maintenance and services consists primarily of salaries and other personnel-related expenses of employees dedicated to cloud subscriptions; maintenance services; and professional and technical services as well as hosting fees.
(c) Adjusted result exclude all equity-based compensation, to facilitate comparison with our competitors and peers and for the other reasons explained in our Current Report on Form 8-K filed with the SEC on the date hereof.

9. We adopted the new revenue recognition standard, FASB ASC Topic 606, Revenue from Contracts with Customers, in the first quarter of 2018. The new standard provides accounting guidance for all revenue arising from contracts with customers and affects substantially all entities. We adopted the standard using the modified retrospective method with the cumulative effect of initially adopting the standard recorded as an adjustment to retained earnings as of January 1, 2018. Historical hardware sales prior to the adoption of ASC606 were recorded on a gross basis, as we were the principal in the transaction in accordance with ASC 605-45. Under the new standard, we are an agent in the transaction as we do not physically control the hardware which we sell, accordingly, we recognize our hardware revenue net of related cost which reduces both hardware revenue and cost of sales as compared to our accounting prior to 2018. We recognize and present our hardware revenue net of related cost under the new standard prospectively. For comparison purposes only, had we implemented ASC 606 using the full retrospective method, we would have presented hardware revenue net of expense in our 2016 and 2017 quarterly financial results below:

2016 2017
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
Presentation of Hardware Revenue - Pre ASC 606 adoption:
Revenue
Hardware Revenue$8,761 $9,554 $6,543 $9,070 $33,928 $7,559 $10,413 $13,540 $11,678 $43,190
Cost of Revenue
Cost of Hardware (5,629) (7,103) (4,626) (6,068) (23,426) (5,370) (7,766) (10,653) (8,416) (32,205)
Hardware Revenue, net$3,132 $2,451 $1,917 $3,002 $10,502 $2,189 $2,647 $2,887 $3,262 $10,985
Proforma Presentation of Hardware Revenue - Post ASC 606 Using Full Retrospective Method:
Hardware Revenue$3,132 $2,451 $1,917 $3,002 $10,502 $2,189 $2,647 $2,887 $3,262 $10,985

Contact: Dennis Story Rick Fernandez
Chief Financial Officer Senior Manager, Corporate Communications
Manhattan Associates, Inc. Manhattan Associates, Inc.
770-955-7070 678-597-6988
dstory@manh.com rfernandez@manh.com

Source:Manhattan Associates, Inc.