* Manatron secures a five-year, $1.3 million GRM CAMA contract from
Horry County (Myrtle Beach), South Carolina KALAMAZOO, Mich., March
16 /PRNewswire-FirstCall/ -- Manatron, Inc. (NASDAQ:MANA) a leading
provider of software products and services for local governments,
including the recently introduced Government Revenue Management(R)
(GRM(R)) software, today announced its financial results for the
third quarter and first nine months of fiscal 2006, which ended
January 31, 2006. The results exclude the impact from the recently
announced acquisition of ASIX, Inc., on February 1, 2006. The
Company reported net revenues of $8.0 million for the three months
ended January 31, 2006 and a net loss of $1.3 million or $0.31 per
diluted share compared to $10.4 million of net revenues and a net
profit of $512,000 or $0.12 per diluted share for the third quarter
in the prior fiscal year. For the nine months ended January 31,
2006, net revenues were $26.4 million and the net loss was $2.7
million or $0.64 per diluted share versus net revenues of $28.4
million and net income of $1.6 million or $0.37 per diluted share
for the same nine-month period in the prior fiscal year. For
comparison purposes, the prior fiscal year net income included a
$1.4 million gain or $0.31 per diluted share impact related to the
sale of the Company's Judicial Product line. "We are clearly
disappointed with our performance during the third quarter,"
commented Paul R. Sylvester, President and Chief Executive Officer.
"Although we are confident in our overall long term GRM strategy,
sales cycles continued to be elongated and existing projects have
experienced further delays, both of which have significantly
impacted our profitability. In addition, the City of Baltimore has
extended its deadline to 'go live' from February 2006 until later
this year giving them adequate time to assemble their resources,
add more functionality to the software and go through the
appropriate training. This project has been transforming from a
Commercial-Off-The-Shelf (COTS) implementation into a custom build
solution and we are currently in negotiations with Unisys (the
prime contractor) to address how we will be compensated for future
work required by the City of Baltimore beyond the scope of the
contract. We are also currently evaluating our cost structure given
that our sales and revenues for the first three quarters have been
well below our expectations and it does not appear that this trend
will reverse in the near term. We will be prepared to take
appropriate action based on the outcome of this analysis." Mr.
Sylvester continued, "On the positive side, we did take Payette
County live on our GRM Tax and CAMA software in the third quarter
and made good progress on our other Idaho GRM implementations in
Bonneville, Canyon and Kootenai counties. We are also working on
GRM implementations in Kenai, Alaska; the Arizona Department of
Revenue; Williamson County, Tennessee and the City of Virginia
Beach, Virginia. We finalized the MCCC GRM Tax contract in the
third quarter and recently signed two significant additional GRM
contracts. Currently, 28 counties in Minnesota have committed to
GRM Tax, which should generate over $5 million of software,
services and support revenue over the next couple of years. In
addition, we just received our first major GRM CAMA contract in the
state of South Carolina from Horry County (Myrtle Beach). This
contract totals $1.3 million, which includes five years of support.
We also just received our first GRM Tax contract in Nevada from
Washoe County (Reno), the second largest county in that state. This
contract totals $3.0 million over five years marking a solid entry
into this state. Input, a market research firm, recently predicted
that state and local governments would increase their spending on
IT outsourcing from $10 billion in fiscal 2005 to $18 billion by
fiscal 2010. This, coupled with a growing pipeline of new prospects
and our recent wins, reinforces our ongoing confidence in the
overall market." "We took further steps to solidify our product
offering and expand our geographic reach with the acquisition of
ASIX, Inc. This acquisition is the most important one in the
Company's 35 year history and provides us with an immediate
presence in California, which is our largest addressable market in
the country. ASIX has an extensive amount of subject matter
expertise and key reference accounts, which we are already
beginning to leverage to increase our collective competitive
position in California and several other markets. In addition, our
teams are working closely together on the Minnesota and Washoe
implementations to take advantage of ASIX's prior experience in
both of those markets. We anticipate that this collaboration will
result in significant cost savings and greatly improve the delivery
of these projects," Mr. Sylvester concluded. Financial Results The
decreases in revenues for the third quarter and nine-month period
were primarily due to reductions in software license and appraisal
services revenues, which were partially offset by increases in
professional services, and recurring software support and
maintenance revenues. Software license revenues decreased by 75.2%
to $563,000 for the third quarter and by 35.8% to $2.5 million for
the nine months ended January 31, 2006 versus the prior year
comparable periods. The prior year three and nine-month periods
included significant software license revenues from the Arizona and
Duval projects totaling $1.4 million, as well as a number of other
software license revenues from projects in Alabama, Alaska,
Georgia, Indiana, Maryland, Ohio and Virginia. Current year license
fees have been negatively impacted by lower than expected sales and
the lack of significant software license revenues in the Company's
backlog as of the beginning of the fiscal year that the Company
could recognize during fiscal 2006. Appraisal services revenues
decreased by 27.9% to $1.5 million for the third quarter and by
16.4% to $5.2 million for the nine months ended January 31, 2006
versus the prior year comparable periods. These decreases were
anticipated as the Company has been at the low point of its
appraisal services cycle. The Company's backlog for appraisal
services was $5.4 million at January 31, 2006 versus $8.7 million
at January 31, 2005. Professional services revenues recognized in
the third quarter were comparable at $1.3 million for both years;
however, they did increase by 7.0% to $5.0 million for the nine
months ended January 31, 2006 over the prior year. The increase was
due to additional services provided to Baltimore in the first
quarter. Recurring software support and maintenance revenues
increased by 9.5% to $3.6 million for the third quarter and by 6.6%
to $10.4 million for the nine months ended January 31, 2006 versus
the prior year comparable periods. These increases are the result
of software implementations to new clients, as well as the
acquisitions of VisiCraft and Plexis. The Company anticipates that
this revenue stream will continue to increase as it completes the
software implementations for its additional new clients in Alaska,
Arizona, Idaho, Maryland, Minnesota, Nevada, South Carolina,
Tennessee and Virginia. In addition, the acquisition of ASIX will
positively impact these revenues by over $2 million annually. Total
recurring revenue from hardware maintenance, software support and
maintenance, e-government subscription, and printing and processing
is $17.1 million on an annualized basis, excluding ASIX. In
addition, the Company's backlog for software and related services
was $16.1 million compared to $16.3 million at January 31, 2005.
Cost of revenues increased by 2.9% to $5.9 million for the third
quarter and by 12.3% to $18.4 million for the nine months ended
January 31, 2006 versus the comparable periods in the prior fiscal
year. Gross margins were negatively impacted by the lower year over
year sales revenue, specifically software licenses, as well as
higher fixed costs. Selling, general and administrative expenses
increased by 12.1% to $4.4 million for the third quarter and by
7.5% to $12.6 million for the nine months ended January 31, 2006
versus the prior year comparable periods. The increased costs and
expenses are due to additional personnel hired in connection with
the VisiCraft and Plexis acquisitions and the addition of
development, implementation and project management staff required
to execute the new software projects. Pay increases and higher
travel costs associated with more employees and national sales and
marketing efforts were also a factor. In addition, these costs
include new amortization expenses associated with the intangible
assets acquired in connection with the VisiCraft and Plexis
acquisitions, as well as a higher level of software amortization
expense. Total depreciation and amortization expense was $2.3
million for the nine months ended January 31, 2006 versus $1.8
million for the prior year. "Gwinnett County, Georgia continues to
be a valuable GRM reference site and serves as a validation for our
value proposition to other clients who are looking to upgrade their
systems," Mr. Sylvester continued. "We are still very confident
that we have the right strategy and feel good about the progress we
are making on many fronts. We believe sales velocity will increase
as the market acceptance continues to improve, especially as more
of our GRM implementations get successfully completed. We continued
to commit significant capital to our research and development
efforts having expensed $2.3 million and $6.5 million during the
third quarter and first nine months of fiscal 2006, respectively.
This represents increases of 21% and 16% over the respective prior
year periods. We believe these capital investments, as well as the
ongoing integration of ASIX and our other near-term strategies
should enable us to return to profitability during our next fiscal
year." The Company finished the quarter with working capital of
$9.8 million, $3.8 million in cash, and no bank debt. Shareholders'
equity was $21.3 million compared to $23.6 million as of April 30,
2005. Teleconference Information Management will discuss the
results in a conference call, scheduled for 4:15 p.m. Eastern Time,
on Thursday, March 16, 2006. Anyone interested in participating
should call 800-322-0079 if calling within the United States or
973-409-9258 if calling internationally. There will be a playback
available until March 23, 2006. To listen to the playback, please
call 877-519-4471 if calling within the United States or
973-341-3080 if calling internationally. Please use pin number
7139066 for the replay. This call is being web cast by ViaVid
Broadcasting and can be accessed at Manatron's website at
http://www.manatron.com/. The web cast may also be accessed at
ViaVid's website at http://www.viavid.net/. The web cast can be
accessed until April 16, 2006 on either site. To access the web
cast, you will need to have the Windows Media Player on your
desktop. For the free download of the Media Player please visit:
http://www.microsoft.com/windows/windowsmedia/en/download/default.asp.
About Manatron, Inc.: Manatron, Inc. designs, develops, markets and
supports a family of web-based and client/server application
software products for county, city and township governments.
Manatron's products support the back-office processes for these
government agencies and facilitate the broader business processes
via eGovernment and Internet features, such as Internet payments
and mortgage lender integration, targeted at the needs of taxpayers
and industry professionals. Manatron also provides mass appraisal
services, which includes the assessment of residential, commercial
and other types of properties to ensure updated and equitable
property valuations. Manatron is headquartered in Portage, Michigan
and has offices in Florida, Georgia, Illinois, Indiana, North
Carolina, Ohio, and Washington. Manatron currently serves
approximately 1,300 customers in 30 states and two Canadian
provinces. Information about Manatron, Inc. is available at the
Company's site on the World Wide Web at http://www.manatron.com/.
Safe Harbor Statement: The information provided in this news
release may include forward-looking statements relating to future
events, such as the development of new products, the commencement
of production, or the future financial performance of the Company.
Actual results may differ from such projections and are subject to
certain risks including, without limitation, risks arising from:
changes in the rate of growth of the local government market,
increased competition in the industry, delays in developing and
commercializing new products, adequacy of financing and other
factors described in the Company's most recent annual report on
Form 10-K filed with the Securities and Exchange Commission, which
can be reviewed at http://www.sec.gov/. MANATRON, INC. CONDENSED
STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Nine Months
Ended January 31, January 31, 2006 2005 2006 2005 NET REVENUES
$8,024,451 $10,355,681 $26,414,813 $28,355,485 COST OF REVENUES
5,858,868 5,696,437 18,398,909 16,386,869 Gross profit 2,165,583
4,659,244 8,015,904 11,968,616 SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 4,368,023 3,897,534 12,638,649 11,756,792 Income (loss)
from operations (2,202,440) 761,710 (4,622,745) 211,824 GAIN ON
SALE -- -- -- 2,237,157 OTHER INCOME, NET 54,213 63,180 207,078
189,076 Income (loss) before provision (credit) for income taxes
(2,148,227) 824,890 (4,415,667) 2,638,057 PROVISION (CREDIT) FOR
INCOME TAXES (816,000) 313,000 (1,677,440) 993,000 NET INCOME
(LOSS) $(1,332,227) $511,890 $(2,738,227) $1,645,057 BASIC EARNINGS
(LOSS) PER SHARE $(.31) $.12 $(.64) $.40 DILUTED EARNINGS (LOSS)
PER SHARE $(.31) $.12 $(.64) $.37 BASIC WEIGHTED AVERAGE SHARES
OUTSTANDING 4,322,363 4,146,077 4,297,453 4,123,759 DILUTED
WEIGHTED AVERAGE SHARES OUTSTANDING 4,322,363 4,434,405 4,297,453
4,439,175 MANATRON, INC. CONDENSED BALANCE SHEETS January 31, April
30, 2006 2005 (Unaudited) ASSETS CURRENT ASSETS: Cash and
equivalents $3,813,453 $8,444,195 Accounts receivable, net
10,377,765 6,387,440 Federal income tax receivable 1,751,175
659,736 Revenues earned in excess of billings on long-term
contracts 6,391,582 6,596,025 Unbilled retainages on long term
contracts 1,170,125 1,349,371 Notes receivable 474,854 339,958
Inventories 174,846 198,995 Deferred tax assets 901,000 901,000
Other current assets 451,103 706,000 Total current assets
25,505,903 25,582,720 NET PROPERTY AND EQUIPMENT 2,682,835
2,882,004 OTHER ASSETS: Notes receivable, less current portion
243,502 280,227 Computer software development costs, net of
accumulated amortization 2,692,092 2,760,762 Goodwill 5,441,693
4,886,676 Intangible assets, net of accumulated amortization
1,405,477 1,243,903 Other, net 289,256 164,908 Total other assets
10,072,020 9,336,476 Total assets $38,260,758 $37,801,200
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts
payable $801,880 $781,110 Current portion of notes payable 500,000
300,000 Billings in excess of revenues earned on long-term
contracts 2,806,009 2,445,813 Billings for future services
8,853,492 6,020,275 Accrued liabilities 2,722,488 3,267,771 Total
current liabilities 15,683,869 12,814,969 DEFERRED INCOME TAXES
538,000 538,000 LONG-TERM PORTION OF NOTES PAYABLE 728,523 807,686
SHAREHOLDERS' EQUITY: Common stock 14,505,663 14,321,184 Retained
earnings 8,082,750 10,820,977 Deferred stock compensation
(1,278,047) (1,501,616) Total shareholders' equity 21,310,366
23,640,545 Total liabilities and shareholders' equity $38,260,758
$37,801,200 DATASOURCE: Manatron, Inc. CONTACT: Paul Sylvester,
President and CEO of Manatron, Inc., +1-269-567-2900, ; or Matthew
Hayden, President of Hayden Communications, Inc., +1-843-272-4653,
, for Manatron, Inc. Web site: http://www.manatron.com/
http://www.viavid.net/
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