Manhattan Associates and SAP

A COMPARATIVE ANALYSIS IMAN TAYLOR, NICK ANTONUCCI, SERGE NGATTA, VLAD RUSANOV

Background Information

SAP

Manhattan Associates

Founded in 1972 Based in Walldorf, Germany Leader in enterprise software and software-related services

Founded in 1989 Based in Atlanta, GA Develops and markets supply chain commerce software

Global presence with locations in more than 130 countries

Member of the S&P 600 Technology Sector

* Data compiled from Value Line, SAP 10k, MANH 10k

Background Information Offerings

SAP

Manhattan Associates

* Data compiled from Value Line, SAP 10k, MANH 10k

Top Line Financial Summary - Balance Sheet

SAP

Manhattan Associates

Market Cap: $95 billion LT Debt: $16 billion Working Capital: $594 million Current Ratio: 1.07 Quick Ratio: 0.94 Do not carry inventory Leverage Ratio (Assets/Equity): 670.60

Market Cap: $1 billion LT Debt: $0 Working Capital: $90 million Current Ratio: 1.99 Quick Ratio: 1.81 Do not carry inventory Leverage Ratio (Assets/Equity): 4.24

* Data compiled from Bloomberg data

Top Line Financial Summary - Income Statement

SAP

Manhattan Associates

3 Yr Sales Growth: 11.92% 3 Yr Earnings Growth: 14.20% Profit Margin: 18.59% 2012 Revs: $22 billion ($4.21/shr) 2012 EPS: $3.42

3 Yr Sales Growth: 15.11% 3 Yr Earnings Growth: 27.11% Profit Margin: 3.66% 2012 Revs: $376 million ($4.91/shr) 2012 EPS: $0.68

Tech Sector Rev Growth: 9.24%

* Data compiled from Bloomberg data

Tech Sector Ern Growth: 13.30%

Profit Margin Trends

SAP
SAP Profit Margin (Millions)
30 25 20 15 10 5 0 2012 2011 2010 2009 2008 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

Manhattan Associates
MANH Profit Margin (Percent)

2012

2011

2010

2009

2008

* Data compiled from Bloomberg data

Revenue Analysis

SAP Revenue (Millions)

25000 20000 15000 10000 5000 0 2012 2011 2010 2009 2008 400 350

MANH Revenue (Millions)

300
250 200 150 100 50 0 2012 2011 2010 2009 2008

Net Income Analysis

SAP Net Income (Millions)

6000 5000 4000 3000 2000 1000 0 2012 2011 2010 2009 2008 16 14 12 10 8 6 4 2 0 2012

MANH Net Income (Millions)

2011

2010

2009

2008

Top Line Financial Summary Cash Flow Statement

SAP

Manhattan Associates

Return on Assets: 11.28% Return on Equity: 21.02% FCF/ Share: $3.54 (2.62% CAGR) CFO/ Liabilities: 30.18 Interest Coverage: 28.39x

Return on Assets: 19.89% Return on Equity: 32.05% FCF/ Share: $3.42 (11% CAGR) CFO/ Liabilities: 75.04 Interest Coverage: No debt

* Data compiled from Bloomberg data

Operational, Market, and Economic Risks in the National Setting

SAP MANH

Operational, Market, and Economic Risks in the Global Setting

SAP MANH

Solutions and Strategies to Handle Risks

SAP

MANH

Financial Performance: Valuation and Volatility

SAP

MANH

Beta (3yr): 1.11 P/E Ratio: 25.70 Long-Term Growth Rate: 12.24% PEG Ratio: 2.10 P/B: 4.47 *In-line with 3-year average P/S: 5.13 *In-line with 3-year average Dividend Yield: 1.72% *Covered 2.78x

Beta (3yr): 1.02 P/E Ratio: 23.48 Long-Term Growth Rate: 21.74% PEG Ratio: 1.08 P/B: 3.15 *In-line with 3-year average P/S: 7.33 *In-line with 3-year average Dividend Yield: 0%

Tech Sector Avg P/E: 14.50

* Data compiled from Bloomberg data

Software Industry Avg P/E 14.13

Financial Performance: DuPont Analysis

ROE = Profit Margin * Total Asset Turnover * Equity Multiplier SAP

MANH

ROE: 21.09% Profit Margin: 21.98% Total Asset Turnover: 0.65 Equity Multiplier: 1.86

ROE: 32.05% Profit Margin: 13.08% Total Asset Turnover: 1.44 Equity Multiplier: 1.61

So what does it mean?

* Data compiled from Bloomberg data

Financial Performance: Comparative Analysis

MANH SAP S&P500

Security MANH SAP Technology Sector S&P 500

1-Year Return 3-Year Return 5-Year Return 49.06% 55.38% 14.81% 15.99% 34.28% 21.27% 8.71% 10.47% 18.30% 11.03% 3.31% 1.51%

** Data as of 12/31/2012

* Data compiled from Bloomberg data

Investment Recommendation

With both companies being in the same industry, they face many of the same qualitative risks. As a result, we focused largely on the quantitative metrics of each and came to the conclusion that while both companies appear to be sound investments that will likely outperform the S&P 500 in the coming year, we would prefer to own Manhattan Associates due to its higher expected growth, lower relative valuation, and seemingly stronger balance sheet.

SAP Tgt Price: $97

23% premium

MANH Tgt Price: $85

41% premium

Questions?

Thank you!