Good afternoon, my name is Maggie and I will be your conference operator today. At this time, I would like to welcome everyone to the third quarter 2009 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. (Operator instructions) Speaking on the call today is Pete Sinisgalli, CEO of Manhattan Associates and Dennis Story, CFO of Manhattan Associates. I will now turn the call over to Mr. Story. You may begin, sir.

Thank you, Maggie and good afternoon, everyone. It is a beautiful day in Atlanta. I would like to welcome you to the Manhattan Associates 2009 third quarter earnings call. Before we launch into the results discussion, I will review our cautionary language and then turn the call over to Pete Sinisgalli, our CEO. During this call, including the question-and-answer session, we may make forward-looking statements regarding future events or future financial performance of Manhattan Associates. You are cautioned that these forward-looking statements involve risks and uncertainties, are not guarantees of future performance, and that actual results may differ materially from those in our forward-looking statements. I refer you to the reports Manhattan Associates files with the SEC for important factors that could cause actual results to differ materially from those in our projections, particularly our Annual Report on Form 10-K for fiscal 2008 and the risk factor discussion in that report. We are under no obligation to update these statements. In addition, our comments will cover certain non-GAAP financial measures. These measures are not in accordance with or an alternative for GAAP and may be different from non-GAAP measures used by other companies. We believe that this presentation of certain non-GAAP measures facilitates investors’ understanding of our historical operating trends with useful insight into our profitability, exclusive of unusual adjustments. Our Form 8-K filed today with the SEC and available from our website www.manh.com contains important disclosure about our use of non-GAAP measures. In addition, our earnings release filed with the Form 8-K reconciles our non-GAAP measures to the most directly comparable GAAP measures. Now, I will turn the call over to Pete.

Thanks and welcome to our third quarter earnings call. I will start by reviewing the highlights from the quarter, Dennis will then get into the details of our financial results, I will follow with additional details about our business and then we will move to questions. We posted a solid financial result in our third quarter of 2009. While the global economy is still sluggish, it at least appears to have stabilized. And with some level of stability, customers and prospects have begun to restart important supply chain investment initiatives. This is most clearly evidenced by our closing $3 million plus license revenue deals in Q3. And with the return of million plus dollar deals, coupled with strong expense management, we posted the best quarterly earnings per share result in our history. While we are planning for a macroeconomic environment in line with the prevailing economists' consensus that conditions won't improve much in Q4, nor throughout 2010, we are optimistic about our Q4 opportunities and our preliminary outlook for 2010. I will share more on that following Dennis's review of our financial results. Dennis?

Thanks, Pete. I will cover adjusted financial results first, and then provide a summary of our GAAP earnings. In our Q2 call, I noted that we were well positioned for positive margin expansion, once our license engine started to crank back up, given the attractive leverage opportunity of licensed margins combined with our lower expense base. While I wouldn't say we are firing on all cylinders, activity is incrementally better in our performance reflexes. The earnings leverage in Q3 was driven by improved license revenue performance, combined with our focus on taking prudent expense reduction actions to protect earnings and R&D investment. We delivered $0.43 of adjusted EPS, tripling EPS performance sequentially, growing 26% over the third quarter 2008 adjusted EPS of $0.34, and beating our previous record performance of $0.42, which we delivered in Q2 2008. Q3 adjusted net income of $9.6 million increased 15% over Q3 2008 and tripled sequentially over Q2 2009. While we are cautiously optimistic about signs the global economy is stabilized, growth headwinds are likely to persist in 2010. With that said, we are encouraged by the strength of our Q3 performance and believe our results reflect our supply-chain market leadership. Here are a few important highlights. First, growth. License revenue of $11.4 million included three $1 million plus deals, breaking our first half drought and we are entering Q4 with a very solid pipeline. Two, we have a proven track record of managing expenses and taking prudent actions necessary to protect earnings and strategic investments. Q3 2009 total expenses decreased 28% over Q3 2008 and year-to-date are down 27%. Our operating margins were 20% in the quarter. Three, our services margins continued to be world-class, strong capacity and demand alignment. We delivered services margins of 58.3% this quarter, compared to 57.2% in Q2…

Thanks. We have said for the past couple of quarters that our activity with customers and prospects has been good, but that matter conditions have been slowing capital approvals and deals just haven't been closing at our historic rates. Well, our close rate improved this quarter. We added new customers around the world, including in Yarrows Family Bakers in New Zealand, Farmacias de Similares in Mexico, Nalsani in Columbia, PT Multitrend in Indonesia, Freight Mark in Malaysia, Daqing Chain Commerce & Trade and Lerentang Medicine Group in China. US wins included specialty retailers Hayneedle and Half Price Books, logistics provider Propak Development, and custom trade show company Mirror Show Management. We also expanded our sales and services with existing customers across all regions, including American Clubs, American Textile Company, BUT, Express Scripts, Famous Footwear, Fruit of the Loom, Genco Distribution Systems, Guess?, HoMedics, J. Knipper and Company, Jefferson Smurfit, LeSaint Logistics, New Balance Athletic Shoe, O'Reilly Automotive, Perfect 10 Satellite, Performance Team Freight Systems, SamsonOpt, Shanghai TingTong Logistics, Southern Wine & Spirits, SpeedFC, Sturm Foods, Sulyn Industries, Thermwell Products, United Natural Foods, Vie Cosmetics Groups. As I mentioned in my opening comments, we closed three million plus dollar deals in the quarter. All three are in the Americas, with two in the United States and one in another region of the Americas. Two of the three are retailers, and the other is in the food category of consumer goods. To our existing customers and one is a new customer. One of the existing customers had installed our warehouse management solution in one site very successfully, and has now expanded our relationship to cover the remainder of the US sites. We won the new customer against SAP and RedPrairie, and will deploy several components of our Manhattan Scope solution suite for…

(Operator instructions) Your first question comes from the line of Michael Huang with ThinkEquity. Michael Huang – ThinkEquity: Hi, just a couple of questions for you guys. The first one, with respect to the next release of the WMS product, I know it is a little bit early to call, but based on his conversations with clients, do you think this release of the products, is there any pent up demand around this one and could this coincide with an increased willingness to spend as we get into 2010?

Yes, Michael, that is a great question. We do believe this is an important release of our warehouse management system. It is the next release, builds on all of the great attributes of our covert release of the solution, which is already perceived by most as the most advanced solution in the marketplace, but we are quite excited about this next release. But we don't have any specific data that would suggest that it will change materially the dynamics in the marketplace. As I said in my prepared remarks, we don't expect customers to change their upgrade plans, their supply chain transformation plans just because Manhattan has a great new release out, what we do expect though as those opportunities come to market, our win rate will increase and we expect the value we receive for those wins to improve as well. Michael Huang – ThinkEquity: Okay. And do you think this impacted all the end customer segment that you are selling into? Does it change at all the vertical composition or the size of the customer that you're going after?

That is very likely to be quite consistent with the vertical markets we go after and the larger tier-1, tier-2 target market that we go after, we think the solutions should be very attractive participants in those target markets. As I said earlier in my comments, we do believe one of the true benefits of moving warehouse management onto the platform is the clear benefit our other solutions get by having WM, our market-leading solution on the platform as well. So you're quite upbeat and optimistic about the long-term potential and hopefully we will see some of that begin to materialize in the early part of 2010. Michael Huang – ThinkEquity: Great. So is it fair to say then that assuming a better spending environment that the attached rates around from the additional products, back at the picking up as a result of this release?

We certainly expect so. Not sure that will happen in the early part of 2010, but over the next several years, we certainly expect that the investments we have made over the last several years to move each of our solutions onto a common supply-chain platform should benefit each of the solutions. Michael Huang – ThinkEquity: And then just switching gears a little bit, so as you look into 2010, and you look at the replenishment, planning and replenishment area, now is that an area that you would expect to see kind of rebound faster than warehouse in 2010 or could you help us understand your views on product areas and which one benefits from a slightly improved spending environment?

Yes, you know we would love to be able to have a more complete perspective on that, Michael, but we are just numbers about the overall market turbulence and what happens next in the global economy. Overall, over the next several years, we believe there will be a very attractive replacement cycle for all of the solutions that we offer to the marketplace, whether it is distribution management, transportation management, inventory optimization, replacement, lifecycle management, planning and forecasting, we take each of those, our target areas will be ripe opportunities for a meaningful replacement cycle, but just don't have a very good crystal ball to be able to forecast that in the near term. Michael Huang – ThinkEquity: Okay. And last question for you, just what you'd expect, going into Q4, when you look at the pipeline, could you give us a sense for how much bigger is this pipeline going into Q4 versus what you saw last year in Q4 and assuming it is consistent close rates with what you saw in Q3 would actually help you drive sequential growth in license performance in Q4? Thanks.

Yes, that is a very good and fair question, Michael, but we are probably going to be hesitant to address it. One of the things that we learned in the first half of this year, it is a little hard to predict in this environment close rates. As I mentioned in my prepared remarks, our close rate was better in Q3 and so we are encouraged by that. We would expect all other things being equal to see a comparable close rate in Q4, but a lot unknown at this moment, but we are quite pleased with the overall size of the pipeline, the activity in the pipeline, and encouraged that we will win more than our fair share of that eventually, I am just not ready to commit to how much of that we will close in Q4. Michael Huang – ThinkEquity: Thanks very much.

Thanks, Michael.

Second question comes from the line of Brad Reback with Oppenheimer. Brad Reback – Oppenheimer: Hey, guys, how are you?

Hey, Brad.

Good, Brad. Brad Reback – Oppenheimer: Dennis, on your comments around the incentive comp for next year, I think you had said $11 million, is that right?

Yes. Brad Reback – Oppenheimer: And that was sort of consistent with 2007 levels?

Down slightly over 2007 levels, because of headcount being down. Brad Reback – Oppenheimer: Okay, so would the implication there be that the expectation is somewhere for a return to license revenue similar to 2007 in 2010?

Can't go there. Brad Reback – Oppenheimer: I am sorry, 2008 levels?

That is a great question, Brad, but can't go there. Brad Reback – Oppenheimer: Okay, well, maybe you can just help us understand where that number came from then. It is clearly that is the single biggest delta, right, year-over-year, as we look forward, just as we try to build our models and make them educated guesses around what we think license revenue is going to be, clearly that has an impact on margin, right?

Sure, it is a – first, let me state I think we have got a pretty good track record of managing our margins, okay, and protecting our earnings, but it is a performance-based bonus accrual that is tied to our budget of revenue and EPS and it is x number of bonus participants at a bonus potential. Brad Reback – Oppenheimer: Okay, great. And as we think about 4Q and sort of the ability and where the conversion rate on the pipe might be as that relates to incentive comp, should we not think about the ability for you guys to earn any sort of bonuses for 4Q whatsoever regardless of where license comes in?

Sure. Well, with respect to Q3 year to date, we feel we are adequately accrued for bonus. As you know, we introduced the supplemental plan, bonus plan on earnings per share in Q2. So we are adequately accrued for Q3 and we felt on our forecast that we are adequately – have provided for in Q4. Sorry about that. Brad Reback – Oppenheimer: Got it. And the last question on the – as it relates – you know what, I'll have to come back – Pete, the last question on your comments around pricing on Scope. Is there – was the implication that you think you can actually sell the Scope for a higher price than that you are getting currently?

Well, we would expect over time, Brad, that will be providing substantially greater value and believe that we should be compensated for that greater value. So time will tell whether we can pull that off or not, but that is certainly my expectation. Brad Reback – Oppenheimer: Okay, thanks a lot, guys.

Thanks, Brad.

Thanks, Brad.

Next question comes from the line of Mark Schappel with Benchmark. Mark Schappel – Benchmark: Pete, starting with you, with the Scope architecture initiative winding down, I was wondering if you could give us some insight into where your R&D efforts are going to be focused over the next year or two.

Sure, I would be happy to, Mark. Firstly, I wouldn't suggest that they are winding down, certainly we are completing a very important component of that and moving WMS to the platform, but I would want to be clear that there is still ample opportunities for us to continue to improve the value of the solutions we provide, so I wouldn't look for a significant reduction in R&D expense. There may be some modifications of that, but what we would hope to do is, we direct that investment to other areas that can increase incremental revenue and customer value. So certainly, there should be some opportunities for efficiencies, but would also be disappointed if we don't find other innovative ways to bring more value to the market. Mark Schappel – Benchmark: Okay, and Dennis, with respect to foreign exchange, what was the impact on revenue this quarter?

It was about 1%, Mark. Mark Schappel – Benchmark: Thank you.

Next question comes from Terry Tillman with Raymond James. Andrew Shaw – Raymond James: This is actually Andrew Shaw on for Terry. First question on the cost control, sort of across the board, does any of that loosen up now given some of the stabilization in the environment or are you going to continue the tightly managed costs in order to keep the earnings stable?

I think we have a very good heritage of managing costs, so we will continue to be aggressive. Andrew Shaw – Raymond James: All right, thanks. And then, you give us an update on the sales force. Would you be looking to add ahead there, potentially given the improvement or is it still too early and would you think there is still sort of significant excess capacity there?

Yes, at the moment, we wouldn't plan to add the headcount and we think we have capacity, both in sales and in professional services. We would like to think though towards the lower half of 2010, things would improve and there would be higher growth rates than we are currently planning for and provide an opportunity for that, but at the moment, we think we have reasonable capacity in sales and professional services to handle the outcomes we expect for Q4 and 2010. Andrew Shaw – Raymond James: All right, thanks. That is it.

Thank you.

Next question comes from the line of Yun Kim with Broadpoint AmTech. Yun Kim – Broadpoint AmTech: First of all, congratulations on finally being back on track.

Thank you. Yun Kim – Broadpoint AmTech: So Pete and Dennis, can you talk about the overall sales environment out there for large deals, especially those in seven figures range, you know, how is the pipeline for those deals, how's the pricing environment, whether the customers are still looking to find both to get a better discount or are you may be seeing some trend towards some of them splitting those large deals up into smaller ones?

Sure, I would be happy to take a crack at that, Yun. I think the environment beginning to show in Q3 and our expectations for Q4 is a return to a more normal environment that we have seen in the past in 2007, 2008, but probably it is just at a lower level of overall volume, but the environment is similar. Large deal activity continues to be okay, we will see what the close rate is, but we have multiple large deals in the pipeline that we are optimistic about closing in the quarter, many of those are for multiple products within our scope solution. Many clients are still looking to buy one or two products first and then add to that later as they implement those solutions. So they limit the amount of capital that needs to be invested up front, so that hasn't changed much. I would suggest to you that the price competition continues to be pretty challenging. So we would expect that to continue, particularly in a continuing difficult capital environment and we would expect some of our competitors, particularly some of the other best of breeds begin to continue to be quite aggressive on price. Can I suggest to you our pipeline for larger deals in Q4 is quite attractive? I would suggest to you the deal environment is comparable or getting comparable to what it was a couple of years ago, but with a lower level of overall activity. So we set into a lower level of activity in total, we believe our position in that marketplace, our competitive strength, should allow us to perform pretty well in that environment. Yun Kim – Broadpoint AmTech: Okay. Is it still safe to assume that you probably have to close at least three seven-figure deals to hit $10 million to $12 million range for any given quarter?

Well, it is hard to say for sure. It depends on the size of those within that million plus range, but that is not a bad assumption, two to three or something like that would not be a bad assumption doing the math. You can see the difference between having none in Q1 and Q2 and having three in Q3. Yun Kim – Broadpoint AmTech: Okay, great. And then quickly onto your consulting business, you got a 10% to 12% sequential decline for Q4 for the services revenue, which obviously I think implies that the consulting business will be down sequentially, but I believe you also did make some comment in your opening remarks that some deferred projects could be underway. So is there a possibility that your consulting business could come in much better than what you're planning at this point, if some of these projects do get underway during the quarter?

It is probably unlikely, Yun, because we are already into the latter part of October. The encouraging thing about that is that business begins to fold back into our activities and our backlog and the things we have visibility to over the two, three, or four quarters, that is encouraging. So unlikely to have a material impact, even though we only have eight or so weeks left in the quarter and there are many holidays within that or absence of business working days in that time period, unlikely to have material upside, but it is encouraging for us to look out over the next year or two. Yun Kim – Broadpoint AmTech: Okay, and then just switching to another gear again, just curious, do you see Oracle out there as a competitor? You know, obviously, you've got time, but obviously Oracle is coming out with their new fusion app for next year, making, it sounds like they are in a little bit of a stronger position to supply chain with more order management type of solutions out there. And then obviously, they acquired (inaudible) a few years back. Just wondering if you guys are seeing Oracle much at all out there.

Oracle is a very, very strong company, powerful company. We'll know how much true energy they are focusing on supply chain. Certainly, I guess Allison's comments last week at OracleWorld on their launch of fusion applications has some potential implications, but we're kind of in a wait-and-see mode. We believe that our capability differentiates us from the component parts that Oracle have to put together in a fusion app world and I think they got a way to go to get there. But we certainly recognize they are a very formidable potential competitor and certainly have our antenna up to watch everything and anything they do. Yun Kim – Broadpoint AmTech: Okay, and then finally, any update on your acquisition or M&A strategy with about – more than $100 million in cash on your balance sheet? I believe it has been a while since you guys have done anything sizable.

You know, that is a fair question, Yun. We would like to be more acquisitive, but as we have said on a couple of these calls, we are fairly disciplined about our strategy and the role acquisitions play in our strategy. And we believe the world is looking for a solution provider to provide a complete suite of supply chain solutions on a common supply chain process platform and there is real value to be gained by customers from that, so we would look primarily for acquisitions to be complementary to our footprint. We're not excluding anything, so we will certainly evaluate opportunities to improve shareholder value, but as a general kind of strategic direction, we would be looking for those things that are complementary to our product and technology direction. We continue to invest meaningful time and energy evaluating different possibilities, but as you pointed out, we haven't done anything of any size recently and we would like to change that, but we will continue to be disciplined about our approach to M&A. Yun Kim – Broadpoint AmTech: Okay, great. Thank you so much.

Thank you, Yun. Operator, I think it is time for us to move on, so I would like to thank everyone for joining us for our Q3 conference call and we look forward to speaking with everyone in 90 days or so. Thanks. Good evening.

Thank you for joining today's conference call. You may now disconnect.