Revenues Tick up at Manugistics

Supply chain solution provider sees software sales rise for latest quarter, but steep charge boosts losses

Rockville, MD  March 28, 2003  Supply chain solution provider Manugistics Group this week reported quarter-on-quarter increases in revenue and software sales but also a steep loss as the company recorded a $96.3 million charge.

Results for Manugistics' fourth quarter, ended February 28, showed $65.5 million in total revenue, an increase of 5 percent over third quarter revenues of $62.4 million, but a drop of 21 percent versus the same period of the previous year.

Software revenues, which analysts view as a key indicator of future earnings, came in at $18.2 million for the latest quarter, an increase of 29 percent over the $14.1 million that came in during the third quarter, but a drop of 52 percent against the year-ago period.

For the quarter ended February 28 Manugistics reported a net loss, as measured under generally accepted accounting principles (GAAP), of $111.4 million, compared to $26.0 million in the third quarter and $25.1 million in the same quarter of the previous year. The results for the latest quarter included a goodwill impairment charge of $96.3 million to write down the value of goodwill associated with past acquisitions.

Excluding the changes, the company reported a sequentially narrowed adjusted net loss of $7.6 million, as compared to adjusted net loss of $12.5 million for the previous quarter. Adjusted net loss for the year-ago period was $1.3 million.

For the year ended February 28, Manugistics generated total annual revenue of $272.4 million, a decrease of 15 percent from the prior year. Software revenue for the latest fiscal year was $74.9 million, a decrease of 42 percent from the previous year.

GAAP net loss for the past fiscal year was $212.2 million, compared to a net loss of $115.2 million for the previous year. The adjusted net loss for the latest fiscal year totaled $51.6 million, compared to an adjusted net loss of $17.4 million for the prior year.

In a statement, Greg Owens, Manugistics chairman and chief executive officer, said that the company believes it is well-positioned as the economy rebounds. "Manugistics' enhanced market presence was a key factor in helping drive our performance this quarter, including a sequential improvement in software revenue, record quarterly solution support revenue and strong renewals of annual solution support contracts," Owens said.

Manugistics said its total cash position at the end of the last quarter was $150.7 million. Days sales outstanding in receivables  DSO, a measure of how well the company is doing at collecting what it is owed by customers  improved to 88 days in the latest quarter, compared to 92 days in the third quarter.

The company reported that it had reduced its workforce by 7.4 percent over the past quarter, to 1,133 employees. Manugistics said that it expected to further reduce its headcount to between 1,000 and 1,050 over the next two quarters, primarily as a result of consolidating more of its U.S. operations to its headquarters in Rockville to improve office space utilization and due to increased utilization of offshore product development facilities in India. The company expects restructuring charges of $4 million over the next two quarters.

In addition, Manugistics said that it was promoting the president of its government, aerospace and defense sector, Jeff Holmes, from senior vice president to executive vice president, reporting directly to Owens. (Holmes shared his insights into the U.S. government's use of technology to streamline its procurement and supply chain processes in the article "e-Pluribus Unum: Uncle Sam Wants 'e'...Or Does He?", in the June/July 2002 issue of iSource Business.)

The company's wins for the past quarter included software license agreements with AT&T, BAE Systems, Bacou-Dalloz, Beringer Blass Wine Estates, Bic Corporation, Bristol Myers Squibb Company, Diageo, Federated Systems Group, Hershey Foods, Leapfrog and Schreiber Foods.