For a reports Harry Connick Jr description ofthese harry connick jr cd tells non-GAAP financial measures, including the reasons why management useseach measure, and reconciliations of these non-GAAP financial measures to themost directly comparable GAAP financial measures, please see the section ofthe accompanying tables titled “Use of Non-GAAP Financial Information” as wellas the related tables. We anticipate disclosing forward-looking non-GAAPfinancial information in our conference call to discuss our third quarter offiscal year 2009 results, including an estimate of non-GAAP operating incomeand net earnings per share for the fourth quarter and full year fiscal 2009that excludes stock-based compensation expenses and amortization of purchasedintangible assets.We cannot readily estimate our expected stock-basedcompensation expenses for these future periods as they depend upon suchfactors as our future stock price for purposes of computation.A copy of this press release can be found on the investor relations pageof DemandTec’s website at DemandTec Investor Contact: Tim Shanahan (650) 226-4603 DemandTec Media Contact: Cassandra Moren (650) 226-4690 DemandTec and the DemandTec logo are registered trademarks of DemandTec,Inc.DemandTec TradePoint Network is a trademark of DemandTec, Inc.Source: DemandTec, Inc (DMAN) DemandTec, Inc. Consolidated Balance Sheets(in thousands)November 30,February 29,20082008 (unaudited) Current assets: Cash and cash equivalents $28,483 $43,257 Marketable securities48,36930,547 Accounts receivable, net of allowances 12,36118,227 Other current assets4,311 4,161 Total current assets 93,52496,192 Marketable securities, non-current8,848 2,085 Property, equipment and leaseholdimprovements, net5,235 5,139 Other assets 10,08110,380 Total assets $117,688$113,796 Current liabilities: Accounts payable and accruedexpenses $10,876$6,969 Deferred revenue 45,57944,006 Other current liabilities 451 478 Total current liabilities56,90651,453 Deferred revenue, non-current 4,52511,369 Other long-term liabilities 516 677 Stockholders’ equity: Common stock130,919 122,725 Accumulated other comprehensive income660 – Accumulated deficit (75,838)(72,428) Total stockholders’ equity 55,74150,297 Total liabilities and stockholders’equity$117,688$113,796DemandTec, Inc. Consolidated Statements of Operations(in thousands, except per share data)(unaudited)Three Months EndedNine Months EndedNovember 30,November 30, 2008 2007 2008 2007 Revenue $18,989$15,945$55,675$43,866 Cost of revenue 5,8345,560 17,335 14,898 Gross profit 13,155 10,385 38,340 28,968 Operating expenses: Research and development6,6595,598 19,772 15,736 Sales and marketing 4,8394,697 15,250 12,316 General and administrative2,6621,9567,3334,354 Amortization of acquiredintangible assets331 89751271 Total operating expenses 14,491 12,340 43,106 32,677 Loss from operations (1,336)(1,955)(4,766)(3,709) Other income (expense), net 4371,1691,357708 Loss before provision(benefit) for income taxes(899)(786)(3,409)(3,001) Provision (benefit) forincome taxes (91) 1811319 Net loss (808)(967)(3,410)(3,320) Net loss per share -basic and diluted $(0.03)$(0.04)$(0.13)$(0.23) Weighted shares used inper share calculation,basic and diluted27,681 26,167 27,192 14,705 DemandTec, Inc. Consolidated Statements of Cash Flows(in thousands) (unaudited)Three Months Ended Nine Months EndedNovember 30, November 30, 2008 20072008 2007Operating activities:Net loss $(808) $(967)$(3,410) $(3,320)Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation 743532 2,1491,390Stock-based compensation expense 1,8102,064 5,8453,065Amortization and revaluation to fair value of warrants issued in conjunction with debt — -183Amortization of acquired intangible assets 483243 1,208727Amortization of financing costs 3-12 93Charge on early extinguishment of debt(10) – -504Other 54(92)167 19Changes in operating assets and liabilities:Accounts receivable (165)(4,297)5,955 (3,269)Prepaid expenses and other current assets 97(86) (115)(661)Deferred commissions 407298 844 (114)Other assets 1,029-(366) (30)Accounts payable and accrued expenses159 (345)3,372 (1,841)Accrued compensation(662) 168 4031,056Deferred revenue(9) 5,035(5,274)10,426Net cash provided by operating activities3,1312,55310,7908,228Investing activities:Purchases of property, equipment, and leasehold improvements (810)(679) (2,294)(2,976)Purchase of marketable securities(33,750)(2,459)(69,805) (56,652)Maturities of marketable securities 14,500 11,65045,220 15,750Acquisition of TradePoint, net of cash received- (1,325)- (1,325)Purchase of intangible assets (800) -(1,000) -Removal of cash restriction– 200-Net cash provided by (used in) investing activities(20,860) 7,187 (27,679) (45,203)Financing activities:Proceeds from issuance of common stock, net of repurchases723142 2,319284Net cash (uses) proceeds from initial public offering-(91)- 57,611Decrease (increase) in liability associated with offering costs- (1,791)-166Payments on line of credit — – (3,000)Payments on notes payable–(8) (10,400)Net cash provided by (used in) financing activities723 (1,740)2,311 44,661Effect of exchange rate changes on cash and cash equivalents(7)85(196)40Net increase (decrease) in cash and cash equivalents(17,013) 8,085 (14,774) 7,726Cash and cash equivalents at beginning of period45,496 20,67743,257 21,036Cash and cash equivalents at end of period $28,483$28,762 $28,483$28,762Supplemental information:Cash paid for interest$9 $-$9 $956Cash paid for income taxes $31$75$208 $200Reclassification of preferred stock warrant from liability to additional paid-in capital$- $-$- $712Conversion of preferred stock to common stock and additional paid-in capital$- $-$-$51,144DemandTec, Inc. Reconciliation of GAAP to Non-GAAP Financial Measures(in thousands, except per share data) (unaudited)Three Months Ended Nine Months EndedNovember 30, November 30, 2008 20072008 2007 GAAP cost of revenue $5,834 $5,560 $17,335$14,898 Deduct: Stock-based compensation (389)(539) (1,243)(839) Amortization ofpurchased intangible assets (152)(154) (457)(456) Non-GAAP cost of revenue $5,293 $4,867 $15,635$13,603 GAAP gross profit $13,155$10,385 $38,340$28,968 Add back: Stock-based compensation389539 1,243839 Amortization of purchasedintangible assets152154 457456 Non-GAAP gross profit $13,696$11,078 $40,040$30,263 GAAP gross margin69.3%65.1% 68.9%66.0% Add back: Stock-based compensation2.0% 3.4%2.2% 2.0% Amortization of purchasedintangible assets0.8% 1.0%0.8% 1.0% Non-GAAP gross margin72.1%69.5% 71.9%69.0% GAAP research anddevelopment expense $6,659 $5,598 $19,772$15,736 Deduct stock-basedcompensation(509)(580) (1,681)(827) Non-GAAP research anddevelopment expense $6,150 $5,018 $18,091$14,909 GAAP sales and marketingexpense $4,839 $4,697 $15,250$12,316 Deduct stock-basedcompensation(488)(605) (1,699)(830) Non-GAAP sales andmarketing expense $4,351 $4,092 $13,551$11,486 GAAP general andadministrative expense$2,662 $1,956$7,333 $4,354 Deduct stock-based compensation(424)(340) (1,222)(569) Non-GAAP general andadministrative expense$2,238 $1,616$6,111 $3,785 GAAP total operating expense$14,491$12,340 $43,106$32,677 Deduct: Stock-based compensation (1,421)(1,525) (4,602)(2,226) Amortization of purchasedintangible assets (331) (89) (751)(271) Non-GAAP total operating expense$12,739$10,726 $37,753$30,180 GAAP loss from operations $(1,336) $(1,955)$(4,766) $(3,709) Add back stock-basedcompensation and amortizationof purchased intangible assets 2,2932,307 7,0533,792 Non-GAAP income from operations$957 $352$2,287$83 GAAP net loss $(808) $(967)$(3,410) $(3,320) Add back stock-basedcompensation and amortizationof purchased intangible assets 2,2932,307 7,0533,792 Non-GAAP net income$1,485 $1,340$3,643 $472 GAAP net loss per share, diluted $(0.03)$(0.04) $(0.13)$(0.23) Non-GAAP net income per share,diluted$0.05$0.04 $0.12$0.02 GAAP weighted sharesoutstanding, diluted27,681 26,16727,192 14,705 Add back dilutive effectof common stock equivalentson non-GAAP net income basis 4,0866,239 4,486 13,293 Non-GAAP weighted sharesoutstanding, diluted31,767 32,40631,678 27,998 GAAP cash flow from operations $3,131 $2,553 $10,790 $8,228 Deduct purchases of property,equipment and leaseholdimprovements(810)(679) (2,294)(2,976) Non-GAAP free cash flow$2,321 $1,874$8,496 $5,252Use of Non-GAAP Financial MeasuresThe accompanying press release dated January 8, 2009 contains non-GAAPfinancial measures.

The above table reconciles the non-GAAP financial measuresin the press release to the most directly comparable financial measuresprepared in accordance with Generally Accepted Accounting Principles (GAAP).These non-GAAP measures include non-GAAP cost of revenue, gross profit, grossmargin, operating expenses, income from operations, net income, net income pershare amounts, weighted average shares outstanding and free cash flow.Our non-GAAP financial measures generally exclude costs and expenses for(i) amortization of purchased intangible assets related to our acquisition ofTradePoint Solutions, Inc christmas? harry connick jr . and our acquisition of rights to assortmentoptimization technology and (ii) stock-based compensation:Amortization of Purchased Intangible Assets harry connick jr only you . In accordance with GAAP, weamortize intangible assets acquired in connection with our acquisition ofTradePoint Solutions, Inc harry connick jr tour . and our acquisition of rights to assortmentoptimization technology over the estimated useful lives of the assets harry connick jr nola . Weexclude these amortization costs in our non-GAAP financial measures becausethey (i) result from prior acquisitions, rather than the ongoing operatingperformance of our business, and (ii) absent additional acquisitions, areexpected to decline over time as the remaining carrying amounts of theseassets are amortized. We believe excluding these costs helps investors compareour financial performance with that of other companies with differentacquisition histories.

However, we recognize that amortization costs provide ahelpful measure of the financial impact and performance of prior acquisitionsand consider our non-GAAP financial measures in conjunction with our GAAPfinancial results that include amortization costs.Stock-Based Compensation Expenses . We exclude stock-based compensationexpense associated with equity incentives granted to employees, non-employeesand non-executive directors in our non-GAAP financial measures harry connick jr films . While stock-based compensation is a significant component of our expenses, we believe thatinvestors may wish to exclude the effects of stock-based compensation expensein comparing our financial performance with that of other companies.Non-GAAP financial measures should not be considered as a substitute for,or superior to, GAAP financial measures, which should be considered as theprimary financial metrics for evaluating our financial performance.Significantly, non-GAAP financial measures are not based on a comprehensiveset of accounting rules or principles harry connick jr movies . Instead, they are based on subjectivedeterminations by management designed to supplement our GAAP financialmeasures .