KALAMAZOO – Manatron, which creates software products and services for local governments, posted lower net income for the three-month period ended Jan. 31, despite posting sharply higher revenues.

Manatron reported Monday that its net income fell to $511,890, or 12 cents per diluted share, compared to $800,873, or 18 cents per diluted share, for the prior fiscal third quarter. Revenues increased 14.4 percent to $10.4 million from $9.1 million for the comparable quarter a year ago.

The prior year third quarter includes an after tax non-recurring gain of $312,000 or 7 cents per diluted share related to the sale of the Company’s Financial Product line. In addition, the prior year third quarter included $752,000 of operating income related to the settlement of the Allegheny County lawsuit. This settlement pumped up profits by $451,000 or 10 cents per diluted share.

Manatron said the increase in third quarter revenues was due primarily to the recognition of software licenses and related professional service revenues on several new accounts, including the Duval County Tax Collector’s Office in Jacksonville, Florida; the Arizona Department of Revenue; and the Tax Commissioner’s and Assessor’s Office in Gwinnett County, Georgia.

For the nine months ended January 31, net revenues increased 4.5 percent to $28.4 million versus $27.1 million for the first nine months of the prior fiscal year.

Net income for the nine-month period in the prior fiscal year was $3.6 million or 84 cents per diluted share, and includes an after tax non-recurring gain of $2.7 million or 62 cents per diluted share related to the sale of the Company’s Financial Product line in May 2003 and the $451,000 or 11 cents per diluted share Allegheny County settlement noted above.

“Excluding the revenues related to our divested Financial and Judicial product lines, as well as our hardware and third-party software sales from all the periods in both years, our pro forma net revenues for the current three and nine-month periods increased by 19.8 percent and 13.0 percent versus the respective periods in the prior fiscal year,?? said Paul Sylvester, President and Chief Executive Officer of Manatron. ?In addition, our operating and net income comparisons for the third quarter are quite favorable when you exclude the impact of the two non-recurring items noted above from the prior year.

“While some of our costs were higher due to the overall complexity of developing and deploying new software, the majority of the increases emanated from implementing our new business strategy,?? he said. ?We are continuing to add professional, qualified and experienced people to the Manatron team, the most recent being our director of national support. This is another new position for the Company and is consistent with our strategy of centralizing our support function, not only to leverage our costs more effectively, but to upgrade the level and quality of service we have been providing.”