Manhattan Associates Reports Results for the Third Quarter of 2005; Company Posts Strong Results Across All Key Financial Metrics

Key quarterly financial metrics for Manhattan Associates include:

-- Software and hosting fees for the quarter ended September 30, 2005, were $12.5 million, an increase of 22% over the third quarter of 2004;

-- Services revenue for the quarter ended September 30, 2005, was a record $43.6 million, an increase of 19% over the third quarter of 2004;

-- Total revenue for the quarter ended September 30, 2005, was a record $62.3 million, an increase of 20% over the third quarter of 2004;

-- Adjusted operating income for the quarter ended September 30, 2005, which excludes $1.3 million in amortization and other acquisition costs related to the August 31 Evant acquisition, was $8.3 million, an increase of 23% over the third quarter of 2004;

-- Cash generated from operations, including a $2.8 million cash outlay to certain former Evant employees from the approximately $50 million purchase price, aggregated $8.3 million for the quarter ended September 30, 2005;

-- Repurchased 976,800 shares of Manhattan Associates' common stock during the quarter ended September 30, 2005, at an average price of $21.81 per share, totaling $21.3 million;

-- Total cash and investments were $105.9 million at September 30, 2005, which reflects the cash outlays of approximately $50 million for the Evant acquisition and $21.3 million in share repurchases during the third quarter of 2005;

-- Days sales outstanding (DSO) at September 30, 2005, was 73 days compared to 78 days at September 30, 2004, and 69 days at June 30, 2005;

-- International revenues aggregated $15.2 million or 24% of total revenues for the third quarter of 2005, an increase of 23% over the third quarter of 2004;

-- The financial results for Evant for the month of September following the closing of the acquisition are included in the third quarter results and were consistent with our previously announced expectation of $0.01 dilutive impact on adjusted EPS.

GAAP net income was $4.8 million, or $0.17 per fully dilutedshare, for the third quarter of 2005 compared to $4.7 million, or$0.15 per fully diluted share, for the third quarter of 2004. Theeffective income tax rate for the third quarter of 2005 was 38.9%which compares with 36.6% for the third quarter of 2004.

Adjusted net income for the third quarter of 2005, which excludesamortization of acquisition-related intangibles and otheracquisition-related costs, net of taxes, was $6.2 million, or $0.21per fully diluted share, an increase of 24% over the third quarter of2004 when comparing adjusted EPS. Adjusted net income for the thirdquarter of 2004, which excludes the amortization ofacquisition-related intangible assets, net of taxes, was $5.2 million,or $0.17 per fully diluted share.

The company provides adjusted net income, adjusted net income pershare and adjusted operating income in this press release asadditional information regarding the company's operating results. Themeasures are not in accordance with, or an alternative for, GAAP andmay be different from non-GAAP net income and non-GAAP per sharemeasures used by other companies. The company believes that thispresentation of adjusted net income, adjusted net income per share andadjusted operating income provides useful information to investorsregarding additional financial and business trends relating to thecompany's financial condition and results of operations.

"Overall we are pleased with our third quarter results," said PeteSinisgalli, president and chief executive officer of ManhattanAssociates. "The financial results of Evant for the month of Septemberwere in line with our targets and the overall integration of the twocompanies is going smoothly. In our third quarter, Evant recordedlicense revenue of almost $500,000, total revenue of about $1.7million and adjusted earnings per share of ($0.01). Excluding thecontributions from Evant for the quarter, license revenue grew by 17%,services revenue by 16%, total revenue by 17% and adjusted earningsper share were $0.22 or 29% greater than in the third quarter of 2004.We are satisfied with these results and continue to be pleased withthe market's enthusiasm for our Evant acquisition and the adoption ofour Supply Chain Solutions."

Other significant achievements during the quarter include:

-- Securing key new customers in the quarter including American Central Transport, Beretta USA Corp., Cheney Brother's, Inc., Mervyns LLC, Panda, Proview Electronics Co. Ltd., PT Matahari Putra Prima Tbk, sit-up Ltd. and USF Glen Moore, Inc.;

-- Expanding partnerships with many existing clients including American Mart DBA DeLuca Liquors, Belk, Inc., Columbia Sportswear Company, Cornerstone Brands, Inc., Excel (Australia) Pty. Ltd., Innotrac Corporation, Legrand (fka Wiremold, Inc.), NYK Logistics (UWDC), Inc., O'Reilly Automotive, Inc., Paul Morrell Formalwear, Professional Veterinary Products, Ltd., Totes Isotoner, TNT China, TNT Logistics North America, Inc. and Waxman Consumer Products Group, Inc.;

-- Closing three large deals, each of which were $1 million or more in recognized license revenue;

-- Successfully completing the acquisition of Evant, Inc., to now offer a complete footprint for supply chain management solutions.

Business Outlook for 2005

Manhattan Associates currently intends to publish, in eachquarterly earnings release, certain expectations with respect tofuture financial performance. The following statements regardingfuture financial performance are based on current expectations, whichinclude a modestly improving general economic and informationtechnology spending environment over the course of the current year.These statements are forward looking. Actual results may differmaterially, especially in the current uncertain economic environment.These statements do not reflect the potential impact of mergers,acquisitions or other business combinations that may be completedafter the date of this release.

Manhattan Associates will make its earnings release and publishedexpectations available on its Web site (www.manh.com). BeginningDecember 15, 2005, Manhattan Associates will observe a "Quiet Period"during which Manhattan Associates and its representatives will notcomment concerning previously published financial expectations. Priorto the start of the Quiet Period, the public can continue to rely onthe expectations published in this Business Outlook section as stillbeing Manhattan Associates' current expectation on matters covered,unless Manhattan Associates publishes a notice stating otherwise. Thepublic should not rely on previously published expectations during theQuiet Period, and Manhattan Associates disclaims any obligation toupdate any previously published financial expectations during theQuiet Period. The Quiet Period will extend until the date whenManhattan Associates' next quarterly earnings release is published,presently scheduled for the second or third week in February 2006.

Steve Norton, senior vice president and chief financial officer,stated, "For the quarter ending December 31, 2005, ManhattanAssociates expects to achieve net earnings of between $0.16 and $0.20per fully diluted share and adjusted earnings, which excludes theamortization of acquisition-related intangibles, of between $0.20 and$0.24 per fully diluted share. For the full-year 2005, we expect netearnings per fully diluted share of between $0.59 and $0.63, whichincludes $0.13 per fully diluted share impact from severance,acquisition and accounts receivable charges incurred in our secondquarter and an additional $0.12 per fully diluted share impact fromacquisition-related charges, including amortization of intangibleassets. We continue to expect our adjusted earnings per share for thefull year to be in the range of $0.84 to $0.88."

About Manhattan Associates

Manhattan Associates(R) is a leading supply chain solutionsprovider. The company's demand intelligence, advanced planning, supplychain planning, supply chain execution and business process platformcapabilities enable its more than 1200 customers worldwide to enhanceprofitability, performance and competitive advantage. For moreinformation, please visit www.manh.com.

This press release may contain "forward-looking statements"relating to Manhattan Associates, Inc. Prospective investors arecautioned that any such forward-looking statements are not guaranteesof future performance and involve risks and uncertainties, and thatactual results may differ materially from those contemplated by suchforward-looking statements. Among the important factors that couldcause actual results to differ materially from those indicated by suchforward-looking statements are delays in product development,undetected software errors, competitive pressures, technicaldifficulties, market acceptance, availability of technical personnel,changes in customer requirements, risks of international operationsand general economic conditions. Additional factors are set forth in"Safe Harbor Compliance Statement for Forward-Looking Statements"included as Exhibit 99.1 to the Company's Annual Report on Form 10-Kfor the year ended December 31, 2004. Manhattan Associates undertakesno obligation to update or revise forward-looking statements toreflect changed assumptions, the occurrence of unanticipated events orchanges in future operating results.
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)

Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2005 2004 2005 2004
-------- -------- -------- --------
(unaudited) (unaudited)
Revenue:
Software and hosting fees $ 12,531 $ 10,257 $ 40,978 $ 36,347
Services 43,621 36,759 122,324 106,693
Hardware and other 6,155 4,853 16,681 16,092
-------- -------- -------- --------
Total revenue 62,307 51,869 179,983 159,132

Costs and Expenses:
Cost of software and hosting fees 1,022 977 3,582 2,650
Cost of services 19,952 17,009 55,905 48,628
Cost of hardware and other 5,078 4,211 14,180 13,860
Research and development 9,037 7,090 24,584 21,571
Sales and marketing 9,649 8,062 29,844 24,924
General and administrative 8,317 6,833 22,747 19,966
Amortization of acquisition-
related intangibles 1,161 894 3,292 2,655
Severance, acquisition and
accounts receivable charges 1,081 -- 5,481 --
-------- -------- -------- --------
Total costs and expenses 55,297 45,076 159,615 134,254
-------- -------- -------- --------
Operating income 7,010 6,793 20,368 24,878
Other income, net 877 540 1,971 1,233
-------- -------- -------- --------
Income before income taxes 7,887 7,333 22,339 26,111
Income tax provision 3,068 2,683 9,965 9,164
-------- -------- -------- --------
Net income $ 4,819 $ 4,650 $ 12,374 $ 16,947
======== ======== ======== ========

Basic net income per share $ 0.17 $ 0.16 $ 0.43 $ 0.56
======== ======== ======== ========
Diluted net income per share $ 0.17 $ 0.15 $ 0.42 $ 0.54
======== ======== ======== ========

Weighted average number of shares:
Basic 28,392 29,891 29,060 30,110
======== ======== ======== ========
Diluted 29,055 30,787 29,686 31,214
======== ======== ======== ========

Reconciliation of Adjusted Net
Income:
----------------------------------
Net income $ 4,819 $ 4,650 $ 12,374 $ 16,947
Amortization of acquisition-
related intangibles 1,161 894 3,292 2,655
Severance, acquisition and
accounts receivable charges 1,081 -- 5,481 --
Income tax effect (872) (327) (2,137) (934)
-------- -------- -------- --------
Adjusted net income $ 6,189 $ 5,217 $ 19,010 $ 18,668
======== ======== ======== ========

Adjusted net income per diluted
share $ 0.21 $ 0.17 $ 0.64 $ 0.60
======== ======== ======== ========
MANHATTAN ASSOCIATES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

September 30, December 31,
2005 2004
---------------------------
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 23,190 $ 37,429
Short-term investments 41,744 88,794
Accounts receivable, net 54,336 45,996
Prepaid expenses and other current assets 13,412 7,087
Deferred income taxes 7,150 4,257
---------- ----------
Total current assets 139,832 183,563

Long-term investments 40,965 46,433
Property and equipment, net 15,271 13,598
Intangible and other assets 92,903 46,907
---------- ----------

Total assets $ 288,971 $ 290,501

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 31,154 $ 19,518
Current portion of capital lease
obligations 145 139
Income taxes payable 6,381 2,233
Deferred rent 506 203
Deferred revenue 29,063 22,710
---------- ----------
Total current liabilities 67,249 44,803

Long-term portion of capital lease
obligations 38 148
Deferred rent 777 457
Deferred income taxes 3,417 466

Total shareholders' equity 217,490 244,627
---------- ----------

Total liabilities and shareholders' equity $ 288,971 $ 290,501
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