Manatron Announces Fiscal 2007 Third Quarter Results

Highlights:








KALAMAZOO, Mich., March 12  /PRNewswire-FirstCall/ -- Manatron, Inc. (NASDAQ:MANA) a leading provider of property tax solutions for State and local governments announced its financial results for the third quarter of fiscal 2007, which ended on January 31, 2007.

For the third quarter, the Company reported net revenues of $10.3 million, a 28.7 percent increase over net revenues of $8.0 million recognized in last year's same period.  Operating income improved to $589,046 for the quarter, a positive swing of $2.8 million versus the operating loss of $2.2 million that was reported for third quarter of the prior fiscal year.  Net income after taxes was $393,662 or $0.08 per diluted share for the third quarter compared to a net loss of $1.3 million or $(0.31) per diluted share for the three months ended January 31, 2006.

For the nine months ended January 31, 2007, the Company reported net revenues of $31.7 million, a 20.1 percent increase over net revenues of $26.4 million posted for the nine months ended January 31, 2006.  Operating income improved to $900,719 for the nine-month period, representing a positive swing of $5.5 million over the operating loss of $4.6 million reported for the first nine months of the prior fiscal year.  Net income was $618,220 or $0.12 per diluted share for the nine months ended January 31, 2007 versus a net loss of $2.7 million or $(0.64) per diluted share for the comparable prior year period.

"Our acquisitions of ASIX and Plexis combined with solid organic growth and the impact of our cost reduction efforts have resulted in significant improvements in our financial performance," said Paul R. Sylvester, Manatron's Chief Executive Officer.  "Accelerating market acceptance for our products and a strong portfolio of referenceable accounts has enabled us to exceed the $10 million mark in revenues for each of the first three quarters of our current fiscal year.  More importantly, the revenue growth and our continued focus on managing expenses has allowed us to demonstrate sequential improvement in our gross profit, gross margins, operating income and net income during the first three quarters.  Our gross margin increased to 51.6 percent for the third quarter versus 27.0 percent in the comparable prior-year quarter primarily because of our ability to leverage our costs against a higher base of revenue.  Our margins have also benefited from the favorable change in our revenue mix, our restructuring initiative last April and the positive impact of certain changes in our GRM(R) software amortization.  All of this has enabled us to add almost $700,000 to our cash balances in the last twelve months after paying out approximately $6.6 million for acquisitions and repurchasing $436,000 of our common stock."

"The market readiness for legacy system upgrades has been increasing this year," said Bill McKinzie, Manatron's President and Chief Operating Officer. "This is evident by our solid increases in software license fees for both the third quarter and nine months ended January 31, 2007.  In addition, our backlog has grown by $2.2 million at the end of the quarter compared to January 31, 2006 and we have signed approximately $5.5 million of contracts since then for our GRM(R) solution in Beaufort County, South Carolina; Sedgwick County, Kansas; and The Unified Government of Wyandotte County, Kansas along with a few additional upgrades in our core markets."

"We also recognized an increase in our recurring software maintenance fees of 26.3 percent to $4.6 million for the third quarter versus the comparable prior year period," Mr. McKinzie continued.  "This was due to the acquisitions of ASIX and Plexis, software maintenance recently initiated on new clients and annual price increases approved in the prior year.  Our total recurring revenue from software maintenance, hardware maintenance, e-government subscriptions, and printing and processing contracts on an annualized basis currently stands at approximately $22 million, up from $20 million at October 31, 2006.  This amount will continue to grow as the current year price increases, which approximate $2 million on an annual basis, are just beginning to take effect and, more importantly, as we add new clients."

The Company also reported that it has extended the useful life of its capitalized GRM(R) software from three years to five years given that GRM(R) is a national product, its operational in three states, is currently being implemented in six others and is targeted as the product for new markets.  The impact of this change was a reduction of software amortization expense of approximately $350,000, which lowered the Company's cost of revenues.  This change in accounting estimate had a $219,000 positive impact on net income or $0.04 per diluted share for the three months ended January 31, 2007.

Backlog for license fees and services at the end of the third quarter was $18.3 million compared to $16.1 million at January 31, 2006.  The Company reported that this growth has primarily been driven by sales to new name accounts, such as Clay County, Missouri; Clinton County, Pennsylvania; Vigo County, Indiana; four counties in Oregon; Oconee County, South Carolina; and several upgrades in the Company's core markets of Florida, Indiana, Illinois and Ohio.

The Company finished the quarter with working capital of $5.4 million, $4.5 million in cash and no bank debt.  Shareholders' equity was $23.9 million compared to $23.0 million as of April 30, 2006.  Manatron also paid down $1.7 million of seller-financed notes payable associated with the ASIX acquisition and repurchased 35,101 shares of its common stock totaling $306,000 during the third quarter.

"Our Board of Directors has also reviewed Constellation Software, Inc.'s revised proposal to purchase all of our outstanding stock for $10 per fully diluted share, which we received on March 2nd," Mr. Sylvester continued. "Once again, we have concluded that pursuing their proposal at this point is not in the best interests of the Company, its shareholders and our other stakeholders.  We do not believe the additional $1 per share warrants any significant change in our thinking given that it has been less than 90 days since Constellation's initial offer and we have made continued progress on our three-year operating and growth plan as evidenced by our third quarter financial results."

Teleconference Information

Management will discuss the results in a conference call, scheduled for 4:15 p.m. Eastern Time, on Monday, March 12.  Anyone interested in participating should call 888-694-4641 if calling within the United States or 973-582-2734 if calling internationally.  There will be a playback available until March 19, 2007.  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 8521175 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 12, 2007 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 is primarily focused on providing software and services to enable state and local governments in North America to completely, fairly and efficiently assess real and personal property, and to bill and collect the related property taxes in their jurisdictions.  The Company's software manages the entire property life cycle, which includes deed recording, land records, GIS (Geographic Information System) integration, valuation, assessment administration, personal property, business licenses, cashiering, tax billing and collection, delinquents and tax sales, and e-government. Manatron's revenues are primarily generated from software license fees, software maintenance fees, professional services, and sales of hardware, forms and supplies.  Professional services consist of data conversions, installation, training, project management, hardware maintenance, forms processing and printing, consulting and appraisal services. Manatron is headquartered in Portage, Michigan and has offices in Florida, Georgia, Illinois, Indiana, Minnesota, Ohio, Pennsylvania and Washington. Manatron currently serves approximately 1,300 customers in 30 states and two Canadian territories. More information about Manatron, Inc. is available at the Company's site on the World Wide Web at http://www.manatron.com/.

About GRM(R): GRM(R) is Manatron's fully integrated property management suite of software designed to manage and support the entire property life cycle, which includes deed recording, land records, GIS (Geographic Information System) integration, valuation, assessment administration, personal property, business licenses, cashiering, tax billing and collection, delinquents and tax sales, and e-government. Manatron GRM automates the operational, information and planning needs for Assessors, Auditors, Treasurers, Tax Collectors, Recorders and other state and local governmental officials so that they can completely, fairly and efficiently assess real and personal property and bill and collect the related property taxes in their jurisdictions. More information on this product is available at http://www.manatron.com/solutions/GRM.aspx.

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/.

                             Tables to Follow



                      MANATRON, INC. AND SUBSIDIARY
                  CONDENSED CONSOLIDATED BALANCE SHEETS

                                               January 31,      April 30,
                                                  2007            2006
                                               (Unaudited)      (Audited)

                          ASSETS
  CURRENT ASSETS:

    Cash and equivalents                        $4,504,910     $4,209,831

    Accounts receivable, net                    10,877,516      7,556,313

    Income tax receivable                               --      2,182,248

    Revenues earned in excess of billings
     on long-term contracts                      5,192,455      6,151,346

    Unbilled retainages on long-term contracts     939,787      1,105,320

    Notes receivable                               281,435        450,565

    Inventories                                     99,625        146,800

    Deferred tax assets                          1,153,651      1,153,651

    Other current assets                           389,293        485,525

      Total current assets                      23,438,672     23,441,599

  NET PROPERTY AND EQUIPMENT                     2,382,758      2,618,588

  OTHER ASSETS:

    Notes receivable, less current portions        143,091        272,261

    Computer software development costs,
     net of accumulated amortization             3,316,904      2,610,216

    Goodwill                                    12,022,385     12,022,385

    Intangible assets, net of accumulated
     amortization                                2,481,306      3,202,935

    Other, net                                     288,465        253,980

      Total other assets                        18,252,151     18,361,777

      Total assets                             $44,073,581    $44,421,964

      LIABILITIES AND SHAREHOLDERS' EQUITY

  CURRENT LIABILITIES:
    Accounts payable                              $651,919       $898,301

    Current portion of notes payable               818,760      2,700,000

    Billings in excess of revenues earned on
     long-term contracts                         1,287,093      3,373,271

    Billings for future services                12,162,832      8,369,114

    Accrued liabilities                          3,147,845      3,419,286

      Total current liabilities                 18,068,449     18,759,972

  DEFERRED INCOME TAXES                            284,963        284,963

  LONG-TERM PORTION OF NOTES PAYABLE             1,849,416      2,334,228

  SHAREHOLDERS' EQUITY:

    Common stock                                 16,748,215     16,538,483

    Retained earnings                             7,122,538      6,504,318

      Total shareholders' equity                 23,870,753     23,042,801

      Total liabilities and
       shareholders' equity                     $44,073,581    $44,421,964



                      MANATRON, INC. AND SUBSIDIARY
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                               (Unaudited)

                          Three Months Ended         Nine Months Ended
                              January 31,                January 31,
                           2007         2006          2007         2006
  NET REVENUES         $10,324,099   $8,024,451   $31,715,423  $26,414,813

  COST OF REVENUES       4,997,650    5,858,868    16,638,237   18,398,909

      Gross profit       5,326,449    2,165,583    15,077,186    8,015,904

  SELLING, GENERAL
   AND ADMINISTRATIVE
   EXPENSES              4,737,403    4,368,023    14,176,467   12,638,649

      Income (loss)
       from operations     589,046   (2,202,440)      900,719   (4,622,745)

  OTHER INCOME, NET         40,616       54,213        90,101      207,078

  Income (loss)
   before provision
   (credit) for income
   taxes                   629,662   (2,148,227)      990,820   (4,415,667)

  PROVISION (CREDIT)
   FOR INCOME TAXES        236,000     (816,000)      372,600   (1,677,440)

  NET INCOME (LOSS)       $393,662  $(1,332,227)     $618,220  $(2,738,227)

  BASIC EARNINGS
   (LOSS) PER SHARE           $.08        $(.31)         $.13        $(.64)

  DILUTED EARNINGS
   (LOSS) PER SHARE           $.08        $(.31)         $.12        $(.64)

  BASIC WEIGHTED
   AVERAGE SHARES
   OUTSTANDING           4,909,756    4,322,363     4,897,821    4,297,453

  DILUTED WEIGHTED
   AVERAGE SHARES
   OUTSTANDING           5,088,126    4,322,363     4,968,896    4,297,453


DATASOURCE: Manatron, Inc.



CONTACT:  Paul Sylvester, Co-Chairman and CEO of Manatron, Inc.,

[phone], ; or Cameron Donahue of Hayden

Communications, Inc., [phone], , for Manatron,

Inc.



Web site:  http://www.viavid.net/ 

Web site:  http://www.manatron.com/ 

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