As filed with The Securities and Exchange Commission on October 18, 2002
Registration No. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MANUGISTICS GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 52-1469385
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
9715 Key West Avenue
Rockville, Maryland 20850
(301) 255-5000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
------------------------
Gregory J. Owens
Chief Executive Officer
Manugistics Group, Inc.
9715 Key West Avenue
Rockville, Maryland 20850
(301) 255-5000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
------------------------
Copy to:
Merritt A. Cole, Esquire
John D. Kessler, Esquire
Dilworth Paxson LLP
3200 Mellon Bank Center
1735 Market Street
Philadelphia, Pennsylvania 19103-7595
(215) 575-7000
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SHARES TO BE OFFERING AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE FEE
---------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.002 per
share................................... 66,979 $2.26(1) $151,373(1) $13.93
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended, by taking
the average of the high and low prices of the Registrant's common stock
reported on the Nasdaq National Market on October 15, 2002.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The information in this prospectus is not complete and may be changed. A
Registration Statement relating to these securities has been filed with The
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus is not an offer to sell these securities nor a
solicitation of an offer to buy these securities in any state where the offer
and sale is not permitted.
SUBJECT TO COMPLETION, DATED OCTOBER 18, 2002
MANUGISTICS GROUP, INC.
[MANUGISTICS LOGO]
66,979 SHARES
COMMON STOCK
------------------------
We issued 66,979 shares of our common stock, $.002 par value per share, to
OneRelease.com, Inc., a Delaware corporation, in connection with
post-acquisition performance conditions relating to our acquisition on May 17,
2001 of substantially all of the assets of OneRelease.com, Inc., and its
affiliate, OneRelease.com, LLC, a Delaware limited liability company
(collectively, "One Release"). OneRelease.com, Inc. has advised us that it
intends to transfer the shares covered by this prospectus to its stockholders.
The selling stockholders named in this prospectus under the title "Selling
Stockholders" consist of persons who will be acquiring shares directly or
indirectly from One Release and will be offering and selling these shares
pursuant to this prospectus. The selling stockholders may sell the shares
offered by this prospectus directly to purchasers or through underwriters,
broker-dealers or agents, who may receive compensation in the form of discounts,
concessions or commissions.
We will not receive proceeds from the sale of the shares (sometimes
referred to in this prospectus as the "Shares") offered by the selling
stockholders.
Our common stock is listed on The Nasdaq National Market under the symbol
"MANU." On October 16, 2002, the closing sale price of our common stock, as
reported on The Nasdaq National Market, was $1.99 per share.
Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 5.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is , 2002
In connection with this offering, no person is authorized to give any
information or to make any representations not contained in this prospectus. If
information is given or representations are made, you may not rely on that
information or those representations as having been authorized by us. This
prospectus is neither an offer to sell nor a solicitation of an offer to buy any
securities other than those registered by this prospectus, nor is it an offer to
sell or a solicitation of an offer to buy securities where an offer or
solicitation would be unlawful. You may not imply from the delivery of this
prospectus, nor from any sale made under this prospectus, that our affairs are
unchanged since the date of this prospectus or that the information contained in
this prospectus is correct as of any time after the date of this prospectus.
Manugistics is a registered trademark, and the Manugistics logo and the
phrase "Leveraged Intelligence" are trademarks of Manugistics, Inc. All other
product or company names mentioned are used for identification purposes only,
and may be trademarks of their respective owners.
Unless the context otherwise requires, the terms "we," "our," "us",
"Manugistics" "the Company" or "Registrant" refers to Manugistics Group, Inc., a
Delaware corporation.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
In addition to the historical information contained in this prospectus,
this prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Such statements are based upon current expectations that
involve risks and uncertainties. Any statements contained herein that are not
statements of historical fact may be deemed forward-looking statements. For
example, words such as "may", "will", "should", "estimates", "predicts",
"potential", "continue", "strategy", "believes", "anticipates", "plans",
"expects", "intends", and similar expressions are intended to identify
forward-looking statements. Our actual results and the timing of certain events
may differ significantly from the results discussed in the forward-looking
statement. Factors that might cause or contribute to such a discrepancy include,
but are not limited to, those discussed under the heading "Risk Factors" and the
risks discussed in our future filings under the Exchange Act of 1934, as
amended.
You should read this prospectus completely and with the understanding that
actual future results may be materially different from what we expect. We will
not update these forward-looking statements, even though our situation may
change in the future, except to the extent required by law.
2
PROSPECTUS SUMMARY
The following is a summary of our business. You should carefully read the
section entitled "Risk Factors" in this prospectus for more information on our
business and the risks involved in investing in our stock.
OUR BUSINESS
We are a leading global provider of Enterprise Profit Optimization(TM)
(EPO) solutions. We provide solutions for supply chain management (SCM),
supplier relationship management (SRM), pricing and revenue optimization (PRO)
and service & parts management (S&PM). Our solutions help companies lower
operating costs, improve customer service, increase revenues, enhance
profitability and accelerate revenue and earnings growth. They do this by
creating efficiencies in how goods and services are brought to market (supplier
relationship management and supply chain management), how they are sold (pricing
and revenue optimization) and how they are serviced and maintained (service &
parts management). EPO solutions provide additional benefits by combining the
proven cost-reducing power of SRM, SCM and S&PM solutions with the
revenue-enhancing capability of PRO solutions. These solutions integrate
pricing, forecasting, and operational planning and execution to help companies
enhance margins across their enterprises and extended trading networks.
Our SCM solutions help companies plan, optimize and execute their supply
chain processes. These processes include manufacturing, distribution and service
operations, and collaboration with a company's extended trading network of
suppliers and customers. Our SRM solutions help improve the activities required
to design, source, and procure goods and to collaborate more effectively with
key suppliers of direct materials. Our PRO solutions help optimize a company's
demand chain, including pricing and promotions to all customers through all
channels, with the aim of balancing the trade-offs between profitability and
other strategic objectives such as market share. Our S&PM solutions help
companies optimize and manage their service and parts operations by effectively
planning and scheduling maintenance programs, parts, materials, tools, manpower
and repair facilities to profitably provide the highest levels of customer
service. We also provide strategic consulting, implementation and customer
support services to our clients as part of our solutions.
Increasing global competition, shortening product life cycles and more
demanding customers are forcing businesses to provide improved levels of
customer service while shortening the time it takes to bring their products and
services to market. We were an early innovator in solutions that allow
collaboration among our clients and their customers and suppliers. We focus the
development of our technology on addressing the changing needs of companies in
the markets we serve, including the need to do business in extended trading
networks. We offer solutions to companies in many industries including apparel;
automotive; chemical & energy; communications & high technology; consumer
packaged goods; food & agriculture; footwear & textiles; forest products;
government, aerospace & defense; industrials; life sciences; retail; third-party
logistics; transportation; travel, transport & hospitality; and utilities. Our
customer base of approximately 1,200 clients includes large, multinational
enterprises such as 3Com Corporation; AT&T; Amazon.com; BMW; Boeing Co.; BP;
Brown & Williamson Tobacco Corp.; Caterpillar Mexico S.A. de C.V.; Circuit City;
Cisco Systems Inc.; Coca-Cola Bottling Co. Consolidated; Compaq Computer
Corporation; Continental Airlines; DaimlerChrysler; Delta Air Lines; Diageo;
DuPont; Fairchild Semiconductor; Ford Motor Company; General Electric;
Harley-Davidson, Inc.; Hormel Foods Corp.; Kraft Foods, Inc.; Levi Strauss &
Co.; Nestle; Staples, Inc.; RadioShack Corporation; Texas Instruments
Incorporated; and Unilever Home & Personal Care, USA; as well as mid-sized
enterprises.
Our principal executive offices are located at 9715 Key West Avenue,
Rockville, Maryland 20850, and our main telephone number is (301) 255-5000. We
have offices in Atlanta, Chicago, Detroit, Irving, Philadelphia and San Carlos
in the United States, and internationally in Australia,
3
Belgium, Brazil, Canada, France, Germany, Hong Kong, Italy, Japan, Mexico,
Taiwan, The Netherlands, Singapore and the United Kingdom.
THE OFFERING
Common Stock Offered by the Selling
Stockholders............................... 66,979 shares
Common Stock Outstanding..................... 69,879,904 (1)
We will not receive any proceeds from any
Use of Proceeds.............................. resale of our common stock.
Nasdaq Symbol................................ MANU
---------------
(1) As of the close of business on October 16, 2002.
4
RISK FACTORS
An investment in the shares of our common stock involves a high degree of
risk. Before you decide to purchase shares of our common stock, you should
carefully consider these risk factors together with all of the other information
included in this prospectus. The risks and uncertainties described below are not
the only ones facing us. Additional risks and uncertainties that we do not
presently know or that we currently deem immaterial, may also impair our
business, results of operations and financial condition.
RISKS RELATED TO OUR BUSINESS
CONTINUED ADVERSE CHANGES IN GLOBAL ECONOMIC, POLITICAL AND MARKET CONDITIONS
COULD CAUSE FURTHER DECREASES IN DEMAND FOR OUR SOFTWARE AND RELATED SERVICES,
WHICH COULD NEGATIVELY AFFECT OUR REVENUE AND OPERATING RESULTS.
Our revenue and operating performance depend on the overall demand for our
software and related services. A regional and/or global adverse change in the
economy and financial markets could result in the delay or reconsideration of
customer purchases. Weak economic conditions have materially adversely affected
our financial results performance during the quarters ended August 31, 2001,
November 30, 2001, May 31, 2002 and August 31, 2002. If demand for our software
and related services continues to decrease, our revenues may decrease and our
operating results would be adversely affected, which may cause our stock price
to fall.
THE TERRORIST ATTACKS THAT TOOK PLACE IN THE UNITED STATES ON SEPTEMBER 11, 2001
AND THE POST-ATTACK DOMESTIC AND GLOBAL ENVIRONMENT HAVE CREATED OR EXACERBATED
ECONOMIC AND POLITICAL UNCERTAINTIES, SOME OF WHICH HAVE HARMED OUR BUSINESS AND
PROSPECTS AND COULD HARM OUR ABILITY IN GENERAL TO CONDUCT BUSINESS IN THE
ORDINARY COURSE.
The terrorist attacks that took place in the United States on September 11,
2001, and thereafter in the United States and elsewhere in the world and the
resulting military actions have adversely affected many businesses, including
ours, in multiple ways. Further terrorist attacks, the anticipation of
additional terrorist attacks and future developments relating to these events
could further worsen the business climate. The potential national and global
responses to these terrorist attacks, including military actions, may materially
adversely affect us in ways we cannot predict at present. Some of the possible
material adverse impacts to our business include, but are not limited to:
- further possible reductions, delays or postponements, in capital
expenditures as a result of changes in priorities and approval processes;
- the reduced ability to do business in the ordinary course, resulting from
a variety of factors, including changes or disruptions in movement and
sourcing of materials, goods and components or the possible interruption
in the flow of information or monies;
- a lengthening of our sales cycles and implementations, which might result
from a number of factors, including among others changes in security
measures for passenger air travel and reductions in available commercial
flights which may make it more difficult for our sales force to schedule
face-to-face meetings with prospects and to negotiate and consummate
transactions; and
- increased credit and business risk for customers in industries that were
severely impacted by the attacks, including passenger airlines and other
travel and hospitality industries.
5
AS A RESULT OF OUR SIGNIFICANT LOSSES IN RECENT FISCAL PERIODS, YOU MAY HAVE
DIFFICULTY EVALUATING OUR FUTURE PROSPECTS.
We experienced operational difficulties in fiscal 1999 and the first half
of fiscal 2000. Problems with our direct sales operation and intense
competition, among other factors, contributed to net losses in fiscal 1999 and
fiscal 2000 and a decline in revenue in fiscal 2000. Late in our second quarter
of fiscal 2002 and into our third quarter of fiscal 2002, we experienced
declines in revenue, due to weakening economic conditions and the affects
resulting from the terrorist attacks of September 11, 2001. In our first two
quarters of fiscal 2003 we again experienced a decline in revenues due to
further weakening of economic conditions which severely impacted the timing of
capital spending decisions by clients and prospects for computer software,
particularly enterprise application software. Our ability to improve our
financial performance or maintain financial stability will be subject to a
number of risks and uncertainties, including the following:
- weakening economic conditions which materially adversely impacted our
operating performance during the quarters ended August 31, 2001, November
30, 2001, May 31, 2002 and August 31, 2002 that may continue into the
future;
- slower growth in the markets for SRM, SCM, PRO and S&PM solutions than
expected;
- our ability to introduce new software products and services to respond to
technological and client needs;
- our ability to manage through difficult economic and political
environments;
- our ability to hire, integrate, train and deploy our direct sales force
effectively;
- our ability to expand our distribution capability through indirect sales
channels;
- our ability to implement our cost reduction initiatives, including our
ability to contain or reduce operating costs without adversely impacting
revenue growth;
- our ability to respond to competitive developments and pricing; and
- our dependence on our current executive officers and key employees.
If we fail to successfully address these risks and uncertainties, our
business could be harmed and we could continue to incur significant losses.
WE HAVE EXPERIENCED SIGNIFICANT LOSSES IN RECENT YEARS. OUR FUTURE RESULTS WILL
BE ADVERSELY AFFECTED BY SEVERAL TYPES OF SIGNIFICANT NON-CASH CHARGES WHICH
COULD IMPAIR OUR ABILITY TO ACHIEVE OR MAINTAIN PROFITABILITY IN THE FUTURE.
We have recently incurred significant losses, including net losses of $74.8
in the six months ended August 31, 2002, $115.2 million during fiscal 2002,
$28.1 million in fiscal 2001 and $8.9 million in fiscal 2000. We will incur
significant non-cash charges in the future related to the amortization of
intangible assets, including acquired technology, relating to the Western Data
Systems of Nevada, Inc. ("WDS"), Digital Freight Exchange, Inc. ("DFE"), STG
Holdings, Inc. ("STG"), PartMiner Inc.'s CSD business, SpaceWorks, Inc. and
Talus acquisitions and non-cash stock compensation expenses associated with our
acquisition of Talus. In addition, we have incurred and may in the future incur
non-cash stock compensation charges related to our stock option repricing.
During fiscal 2002, we announced that we were required to write off our
investment in Converge, Inc., which resulted in a pre-tax charge of $10.2
million. In the three months ended August 31, 2002, we recorded a valuation
allowance for the full amount of our net deferred tax assets which resulted in a
$20.4 million non-cash charge to income tax expense. We may also incur non-cash
charges in future periods related to impairments of long-lived assets. We cannot
assure you that our revenue will grow or that we will achieve profitability in
the future. Our ability to increase revenue and achieve profitability will be
affected by the other risks and uncertainties described in this section. Our
failure to achieve profitability could cause our stock price to decline.
6
OUR OPERATING RESULTS FLUCTUATE, AND IF WE FAIL TO MEET THE EXPECTATIONS OF THE
INVESTMENT COMMUNITY IN ANY PERIOD, OUR STOCK PRICE COULD SUFFER FURTHER
SIGNIFICANT DECLINES.
Our revenue and operating results are difficult to predict and have become
more difficult to predict since global economic uncertainties and political
instability increased in fiscal 2002 and fiscal 2003. We believe that
period-to-period comparisons of our operating results will not necessarily be
indicative of future performance. The factors that may cause fluctuations of our
quarterly operating results include the following:
- the size, timing and contractual terms of licenses and sales of our
products and services;
- customer financial constraints and credit-worthiness;
- the potentially long and unpredictable sales cycle for our products;
- technical difficulties in our software that could delay the introduction
of new products or increase their costs;
- introductions of new products or new versions of existing products by us
or our competitors;
- delay or deferral of customer purchases and implementations of our
solutions due to weakening economic conditions which adversely impacted
our operating performance during the quarters ended August 31, 2001,
November 30, 2001, May 31, 2002 and August 31, 2002;
- increased economic uncertainty and political instability world-wide
following the terrorist attacks which began in the United States on
September 11, 2001;
- changes in prices or the pricing models for our products and services or
those of our competitors;
- changes in the mix of our software, services and support revenue;
- changes in the mix of software products we sell and related impact on
third-party royalty payments;
- changes in the mix of sales channels through which our products and
services are sold; and
- changes in rules relating to revenue recognition or in interpretations of
those rules.
Due to fluctuations from quarter to quarter, our operating results may not
meet the expectations of securities analysts or investors, as was the case for
the quarters ended August 31, 2001 and May 31, 2002. If this occurs, the price
of our common stock could suffer further significant declines.
IF OUR STOCK PRICE REMAINS NEAR OR LOWER THAN RECENT LEVELS FOR A SUSTAINED
PERIOD OF TIME, WE MAY BE REQUIRED TO RECORD SIGNIFICANT NON-CASH CHARGES
ASSOCIATED WITH GOODWILL IMPAIRMENTS.
On March 1, 2002, we adopted SFAS 142, which changed the accounting for
goodwill from an amortization method to an impairment-only method. Effective
March 1, 2002, the Company stopped amortizing goodwill, but will continue
amortizing other intangible assets with finite lives. As required by the
provisions of SFAS 142, we performed the initial goodwill impairment test
required during our first quarter of fiscal 2003. We consider ourselves to have
a single reporting unit. Accordingly, all of our goodwill is associated with our
entire Company. As of March 1, 2002, based upon the Company's implied fair
value, there was no impairment of goodwill recorded upon implementation of SFAS
142.
During the quarter ended August 31, 2002, we experienced adverse changes in
our stock price resulting from a decline in our financial performance and
adverse business conditions that
7
have affected the technology industry, especially application software
companies. Based on these factors, we performed a test for goodwill impairment
at August 31, 2002 and determined that based upon the implied fair value (which
includes factors such as, but not limited to, the Company's market
capitalization, control premium and recent stock price volatility) of the
Company as of August 31, 2002, there was no impairment of goodwill. We will
continue to test for impairment on an annual basis, coinciding with our fiscal
year end, or on an interim basis if circumstances change that would more likely
than not reduce the fair value of our reporting unit below its carrying value.
If our stock price remains near or lower than recent levels such that the
implied fair value of the Company is significantly less than stockholders'
equity for a sustained period of time, among other factors, we may be required
to record an impairment loss related to goodwill below its carrying amount.
Based on continued adverse changes in our stock price since August 31, 2002 and
adverse business conditions that continue to affect the application software
industry, we will also perform a test for goodwill impairment at November 30,
2002.
IN FISCAL 2002 AND IN THE SIX MONTHS ENDED AUGUST 31, 2002, WE HAVE TAKEN
CERTAIN RESTRUCTURING CHARGES AND HAVE ENACTED COST CONTAINMENT AND COST
REDUCTION MEASURES IN RESPONSE TO THE DOWNTURN IN THE GLOBAL ECONOMY. IF OUR
RESTRUCTURING PLANS AND OUR COST CONTAINMENT AND COST REDUCTION MEASURES FAIL TO
ACHIEVE THE DESIRED RESULTS OR RESULT IN UNANTICIPATED NEGATIVE CONSEQUENCES, OR
IF THE GLOBAL ECONOMY CONTINUES TO EXPERIENCE WEAKNESS, WE MAY SUFFER MATERIAL
HARM TO OUR BUSINESS.
As a result of progressive weakening of global economic conditions during
fiscal 2002 and in the first two quarters of fiscal 2003, we faced new
challenges in our ability to grow revenue, improve operating performance and
expand market share. In response to the global downturn in the economy and the
related impact on our financial performance, we implemented restructuring plans
and cost containment and cost reduction measures to reduce our cost structure,
which included workforce reductions and mandatory unpaid leave programs. In our
fiscal year 2002 and in our second quarter of fiscal 2003, we recorded
restructuring and impairment charges of $6.6 million and $8.8 million,
respectively. We expect to record a restructuring charge of approximately $2 to
$4 million in the quarter ending November 30, 2002 as a result of the
restructuring plan announced during our third quarter of fiscal 2003. If we fail
to achieve the desired results of our restructuring plans and our cost
containment and cost reduction measures or if the global economy continues to
experience weakness, we may suffer material harm to our business.
Our cost containment and cost reduction measures may yield unanticipated
consequences, such as attrition beyond our planned reduction in workforce,
reduced employee morale and decreased productivity. The recent trading levels of
our stock have decreased the value of our stock options granted to employees
under our stock option plans. As a result of these factors, our remaining
personnel may seek alternate employment, such as with larger, more established
companies or companies that they perceive as having less volatile stock prices.
Continuity of personnel can be a very important factor in sales and
implementation of our software and completion of our product development
efforts. Attrition beyond our planned reduction in workforce could have a
material adverse effect on our business, operating results, financial condition
and cash flows.
VARIATIONS IN THE TIME IT TAKES US TO LICENSE OUR SOFTWARE MAY CAUSE
FLUCTUATIONS IN OUR OPERATING RESULTS.
The time it takes to license our software to prospective clients varies
substantially, but typically has ranged historically between three and twelve
months. Variations in the length of our sales cycles could cause our revenue to
fluctuate widely from period to period. Because we typically recognize a
substantial portion of our software revenue in the last month of a quarter, any
delay in the license of our products could cause significant variations in our
revenue from quarter to
8
quarter. These delays have occurred on a number of occasions in the past,
including, most recently, in our quarters ended August 31, 2001, November 30,
2001, May 31, 2002 and August 31, 2002. Furthermore, these fluctuations could
cause our operating results to suffer in some future periods because our
operating expenses are relatively fixed over the short term and we devote
significant time and resources to prospective clients. The length of our sales
cycle depends on a number of factors, including the following:
- the complexities of the SRM, SCM, PRO and S&PM client challenges our
solutions address;
- the breadth of the solution required by the client, including the
technical, organizational and geographic scope of the license;
- the evaluation and approval processes employed by the clients and
prospects;
- the economic conditions in the United States and abroad;
- increased economic uncertainty and political instability world-wide
following the terrorist attacks which began in the United States on
September 11, 2001; and
- any other delays arising from factors beyond our control.
THE SIZE AND SCOPE OF OUR LARGEST CONTRACTS WITH CLIENTS HAVE INCREASED IN
RECENT YEARS, WHICH MAY CAUSE FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS.
Our clients and prospective clients are seeking to solve increasingly
complex SRM, SCM, PRO and S&PM challenges. Further, we are focused on providing
more comprehensive solutions for our clients, as opposed to only licensing
software. As the complexities of the problems our clients seek to solve
increases, the size and scope of our contracts with clients increase, as
evidenced by the increase in the number of software transactions of $5.0 million
or greater in fiscal 2002 and 2001. We recorded six software transactions of
$5.0 million or greater in fiscal 2002 as compared to three and zero software
transactions of $5.0 million or greater in fiscal 2001 and 2000, respectively.
We did not report any software transactions of $5.0 million or greater in the
six months ended August 31, 2002. As a result, our operating results could
fluctuate due to the following factors:
- the complexities of the contracting processes of our clients and
prospects;
- contractual terms may vary widely, which may result in differing methods
of accounting for revenue from each contract;
- the sales cycles related to larger contracts may be longer and subject to
greater delays; and
- losses of, or delays in concluding, larger contracts could have a
proportionately greater effect on our revenue for a particular period.
Any of these factors could cause our revenue to decline or fluctuate
significantly in any quarter and could cause a decline in our stock price.
A REDUCTION IN OUR REVENUE DERIVED FROM SOFTWARE LICENSES MAY RESULT IN REDUCED
SERVICES AND SUPPORT REVENUES IN FUTURE PERIODS.
Our ability to maintain or increase services and support revenue primarily
depends on our ability to increase the amount of software we license to
customers. Decreases or slowdowns in licensing activity may impact our
implementation service and support revenues in future periods.
A PORTION OF OUR REVENUE IS DERIVED FROM SUPPORT CONTRACTS. A REDUCTION IN THE
RENEWAL RATE OF ANNUAL SUPPORT CONTRACTS COULD MATERIALLY HARM OUR BUSINESS.
Our support revenue includes post-contract support and the rights to
unspecified software upgrades and enhancements. Support revenue as a percentage
of total revenue was 28.7% in the
9
six months ended August 31, 2002 and 23.8%, 20.6% and 29.8% in fiscal 2002, 2001
and 2000, respectively. Support contracts are generally renewable annually at
the option of our customers. In the past, we have experienced high rates of
renewed annual support contracts from our customers. If our customers fail to
renew their support agreements at historical rates, our support revenues could
materially decline.
WE HAVE EXPERIENCED DIFFICULTIES INTEGRATING ACQUISITIONS IN THE PAST AND MAY
EXPERIENCE PROBLEMS WITH FUTURE ACQUISITIONS THAT COULD MATERIALLY HARM OUR
BUSINESS.
Acquisitions involve the integration of companies that have previously
operated independently. During our first quarter of fiscal 2003, we acquired the
assets and businesses of WDS and DFE. In connection with these and any future
acquisitions, there can be no assurance that we will:
- effectively integrate employees, operations, products and systems;
- realize the expected benefits of the transaction;
- retain key employees;
- effectively develop and protect key technologies and proprietary
know-how;
- avoid conflicts with our clients and business partners that have
commercial relationships or compete with the acquired company;
- avoid unanticipated operational difficulties or expenditures or both; and
- effectively operate our existing business lines, given the significant
diversion of resources and management attention required to successfully
integrate acquisitions.
In addition, future acquisitions may result in a dilution to existing
shareholders and to earnings per share to the extent we issue shares of our
common stock as consideration.
IF THE MARKET FOR OUR PRODUCTS DOES NOT CONTINUE TO GROW, OUR BUSINESS WILL BE
MATERIALLY AND ADVERSELY AFFECTED.
Substantially all of our software, service and support revenue have arisen
from, or are related directly to, our SRM, SCM, PRO and S&PM solutions. We
expect to continue to be dependent upon these solutions in the future, and any
factor adversely affecting the solutions or the markets for SRM, SCM, PRO and
S&PM solutions, in general, would materially and adversely affect our ability to
generate revenue. While we believe the markets for SRM, SCM, PRO and S&PM
solutions will continue to expand as the economy improves, they may grow more
slowly than in the past. If the markets for our solutions do not grow as rapidly
as we expect, revenue growth, operating margins, or both, could be adversely
affected.
COMPANIES MAY RE-EVALUATE THEIR SUPPLIER AND CLIENT RELATIONSHIPS AND SOME MAY
ADJUST THEIR SERVICE LEVELS AND OTHER SUPPLY CHAIN MANAGEMENT SETTINGS AND
LEVELS IN A MANNER THAT MAY HAVE AN ADVERSE AFFECT ON OUR ABILITY TO SELL OUR
SRM, SCM, PRO AND S&PM SOLUTIONS.
Companies may re-evaluate the nature of their relationships with suppliers
and clients. They may adjust their service levels and other supply chain
management settings and levels to address risks arising out of the terrorists
attacks and resulting military actions and the increased economic and political
uncertainties in ways that may adversely affect the benefits historically
achieved through use of our solutions, which could have a material adverse
affect on our ability to market and sell our SRM, SCM, PRO and S&PM solutions.
OUR MARKETS ARE VERY COMPETITIVE, AND WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY.
The markets for our solutions are very competitive. The intensity of
competition in our markets has significantly increased, and we expect it to
increase in the future. Our current and
10
potential competitors may make acquisitions of other competitors and may
establish cooperative relationships among themselves or with third parties. Some
competitors are offering enterprise application software that compete with our
applications at no charge as components of bundled products or on a stand alone
basis. Further, our current or prospective clients and partners may become
competitors in the future. Increased competition could result in price
reductions, lower gross margins, longer sales cycles and the loss of market
share. Each of these developments could materially and adversely affect our
growth and operating performance.
MANY OF OUR CURRENT AND POTENTIAL COMPETITORS HAVE SIGNIFICANTLY GREATER
RESOURCES THAN WE DO, AND THEREFORE, WE MAY BE AT A DISADVANTAGE IN COMPETING
WITH THEM.
We directly compete with other enterprise application software vendors
including: Adexa, Inc., Aspen Technology, Inc., The Descartes Systems Group,
Inc., Global Logistics Technologies, Inc., i2 Technologies, Inc., JDA Software,
Inc., Khimetrics, Logility, Inc., Logisitics.com, Mercia, Metreo, PROS Revenue
Management, Retek, Inc., Sabre, Inc., SAP AG, SynQuest and YieldStar Technology.
In addition, some ERP companies such as Invensys plc (which acquired Baan
Company N.V.), J.D. Edwards & Company, Oracle Corporation, PeopleSoft, Inc. and
SAP AG have acquired or developed and are developing SCM, SRM, PRO and S&PM
solutions. Some of our current and potential competitors, particularly the ERP
vendors, have significantly greater financial, marketing, technical and other
competitive resources than us, as well as greater name recognition and a larger
installed base of clients. In addition, many of our competitors have
well-established relationships with our current and potential clients and have
extensive knowledge of our industry. As a result, they may be able to adapt more
quickly to new or emerging technologies and changes in client requirements or to
devote greater resources to the development, promotion and sale of their
products than we can. Any of these factors could materially impair our ability
to compete and adversely affect our revenue growth and operating performance.
IF THE DEVELOPMENT OF OUR PRODUCTS AND SERVICES FAILS TO KEEP PACE WITH OUR
INDUSTRY'S RAPIDLY EVOLVING TECHNOLOGY, OUR FUTURE RESULTS MAY BE MATERIALLY AND
ADVERSELY AFFECTED.
The markets for SRM, SCM, PRO and S&PM solutions are subject to rapid
technological change, changing client needs, frequent new product introductions
and evolving industry standards that may render existing products and services
obsolete. Our growth and future operating results will depend, in part, upon our
ability to enhance existing applications and develop and introduce new
applications or capabilities that:
- meet or exceed technological advances in the marketplace;
- meet changing client requirements;
- comply with changing industry standards;
- achieve market acceptance;
- integrate third-party software effectively; and
- respond to competitive offerings.
Our product development and testing efforts have required, and are expected
to continue to require, substantial investments. We may not possess sufficient
resources to continue to make the necessary investments in technology. In
addition, we may not successfully identify new software opportunities or develop
and bring new software to market in a timely and efficient manner. If we are
unable, for technological or other reasons, to develop and introduce new and
enhanced software in a timely manner, we may lose existing clients and fail to
attract new clients, which may adversely affect our performance.
11
DEFECTS IN OUR SOFTWARE OR PROBLEMS IN THE IMPLEMENTATION OF OUR SOFTWARE COULD
LEAD TO CLAIMS FOR DAMAGES BY OUR CLIENTS, LOSS OF REVENUE OR DELAYS IN THE
MARKET ACCEPTANCE OF OUR SOLUTIONS.
Our software is complex and is frequently integrated with a wide variety of
third-party software. This integration process can be complex, time consuming
and expensive and may cause delays in the development of our products. As a
result, some customers may have difficulty or be unable to implement our
products successfully or otherwise achieve the benefits attributable to our
products. We may license software that contains undetected errors or failures
when new software is first introduced or as new versions are released. We may
not discover errors in our software until our customers install and use a given
product or until the volume of services that a product provides increases. These
problems may result in claims for damages suffered by our clients, a loss of, or
delays in, the market acceptance of our solutions, client dissatisfaction and
potentially lost revenue and collection difficulties during the period required
to correct these errors.
WE ARE DEPENDENT ON THIRD-PARTY SOFTWARE THAT WE INCORPORATE INTO AND INCLUDE
WITH OUR PRODUCTS AND SOLUTIONS, AND IMPAIRED RELATIONS WITH THESE THIRD
PARTIES, DEFECTS IN THIRD-PARTY SOFTWARE OR THE INABILITY TO ENHANCE THEIR
SOFTWARE OVER TIME COULD HARM OUR BUSINESS.
We incorporate and include third-party software into and with our products
and solutions. We are likely to incorporate and include additional third-party
software into and with our products and solutions as we expand our product
offerings. The operation of our products would be impaired if errors occur in
the third-party software that we utilize. It may be more difficult for us to
correct any defects in third-party software because the software is not within
our control. Accordingly, our business could be adversely affected in the event
of any errors in this software. There can be no assurance that these third
parties will continue to invest the appropriate levels of resources in their
products and services to maintain and enhance the software capabilities.
Furthermore, it may be difficult for us to replace any third-party software
if we lose the ability to license or support the third-party software. Any
impairment in our relationship with these third parties could adversely impact
our business, results of operations and financial condition.
WE ARE SUBSTANTIALLY DEPENDENT ON THIRD PARTIES TO INTEGRATE OUR SOFTWARE WITH
OTHER SOFTWARE PRODUCTS AND PLATFORMS. IF ANY OF THESE THIRD PARTIES SHOULD
CEASE TO PROVIDE INTEGRATION SERVICES TO US, OUR BUSINESS, RESULTS OF OPERATIONS
AND FINANCIAL CONDITION COULD BE MATERIALLY ADVERSELY AFFECTED.
We depend on companies such as Acta Technology, Inc., Peregrine
Connectivity, Inc., Tibco Software, Inc., Vignette Corporation, and webMethods,
Inc. to integrate our software with software and platforms developed by third
parties. If these companies are unable to develop or maintain software that
effectively integrates our software and is free from errors, our ability to
license our products and provide solutions could be impaired. In September 2002,
Peregrine Connectivity, Inc., filed a voluntary petition to reorganize under
Chapter 11 of the U.S. Bankruptcy Code. Although they have received financing
which will fund their ongoing business operations, the loss of the services of
Peregrine Connectivity, Inc., or of any other company that we use to integrate
our software products could adversely affect our business, results of operations
and financial condition.
OUR EFFORTS TO DEVELOP AND SUSTAIN RELATIONSHIPS WITH VENDORS SUCH AS SOFTWARE
COMPANIES, CONSULTING FIRMS, RESELLERS AND OTHERS TO IMPLEMENT AND PROMOTE OUR
SOFTWARE PRODUCTS MAY FAIL, WHICH COULD HAVE A MATERIAL ADVERSE AFFECT ON OUR
BUSINESS.
We are developing, maintaining and enhancing significant working
relationships with complementary vendors, such as software companies, consulting
firms, resellers and others that we believe can play important roles in
marketing our products and solutions. We are currently
12
investing, and intend to continue to invest, significant resources to develop
and enhance these relationships, which could adversely affect our operating
margins. We may be unable to develop relationships with organizations that will
be able to market our products effectively. Our arrangements with these
organizations are not exclusive and, in many cases, may be terminated by either
party without cause. Many of the organizations with which we are developing or
maintaining marketing relationships have commercial relationships with our
competitors. Therefore, there can be no assurance that any organization will
continue its involvement with us and our products. The loss of relationships
with important organizations could materially and adversely affect our business,
results of operations and financial condition.
AS A RESULT OF THE WDS ACQUISITION, AN INCREASED PERCENTAGE OF OUR REVENUE WILL
BE DERIVED FROM CONTRACTS WITH THE GOVERNMENT. GOVERNMENT CONTRACTS ARE SUBJECT
TO COST AUDITS BY THE GOVERNMENT AND TERMINATION FOR THE CONVENIENCE OF THE
GOVERNMENT. A GOVERNMENT AUDIT OR GOVERNMENT TERMINATION OF ANY OF OUR CONTRACTS
WITH THE GOVERNMENT COULD MATERIALLY HARM OUR BUSINESS.
Although we have existing engagements for the Defense Logistics Agency,
United States Navy and United States Airforce, the WDS acquisition will
significantly increase the percentage of our revenue derived from contracts with
the Government. Government contractors are commonly subject to various audits
and investigations by Government agencies. One agency that oversees or enforces
contract performance is the Defense Contract Audit Agency ("DCAA"). The DCAA
generally performs a review of a contractor's performance on its contracts, its
pricing practices, costs and compliance with applicable laws, regulations and
standards and to verify that costs have been properly charged to the Government.
Although the DCAA has completed an initial review of our accounting practices
and procedures allowing us to invoice the government, it has yet to exercise its
option to perform an audit of our actual invoicing of Government contracts.
These audits may occur several years after completion of the audited work. If an
audit were to identify significant unallowable costs, we could have a material
charge to our earnings or reduction to our cash position as a result of the
audit and this could materially harm our business.
In addition, Government contracts may be subject to termination by the
Government for its convenience, as well as termination, reduction or
modification in the event of budgetary constraints or any change in the
Government's requirements. If one of our time-and-materials or fixed-priced
contracts were to be terminated for the Government's convenience, we would only
receive the purchase price for items delivered prior to termination,
reimbursement for allowable costs for work-in-progress and an allowance for
profit on the contract, or an adjustment for loss if completion of performance
would have resulted in a loss. Government contracts are also conditioned upon
the continuing availability of Congressional appropriations. Congress usually
appropriates funds on a fiscal-year basis, even though the contract performance
may extend over many years. Consequently, at the outset of a program, the
contract is usually only partially funded and Congress must annually determine
if additional funds will be appropriated to the program. As a result, long-term
contracts are subject to cancellation if appropriations for future periods
become unavailable. We have not historically experienced any significant
material adverse effects as a result of the Government's failure to fund
programs awarded to us. If the Government were to terminate some or all of our
contracts or reduce and/or cancel appropriations to a program we have a contract
with, our business could be materially harmed.
IF WE FAIL TO FIELD AN EFFECTIVE SALES ORGANIZATION, OUR ABILITY TO GROW WILL BE
LIMITED, WHICH COULD ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE.
We have reduced our sales force in fiscal 2002 and fiscal 2003 as a result
of weakening economic conditions. In order to grow our revenue, our existing
sales force will have to be more productive, and we will likely expand our sales
force in future periods. Our past efforts to expand our sales organization have
required significant resources. New sales personnel require training and
13
may take a long time to achieve full productivity. There is no assurance that we
will successfully attract and retain qualified sales people at levels sufficient
to support our growth. Any failure to adequately sell our products could limit
our growth and adversely affect our financial performance.
THE LIMITED ABILITY OF LEGAL PROTECTIONS TO SAFEGUARD OUR INTELLECTUAL PROPERTY
RIGHTS COULD IMPAIR OUR ABILITY TO COMPETE EFFECTIVELY.
Our success and ability to compete are substantially dependent on our
internally developed technologies and trademarks, which we protect through a
combination of confidentiality procedures, contractual provisions, patent,
copyright, trademark and trade secret laws. Despite our efforts to protect our
proprietary rights, unauthorized parties may copy aspects of our products or
obtain and use information that we regard as proprietary. Policing unauthorized
use of our products is difficult. We are unable to determine the extent to which
piracy of our software products exists. In addition, the laws of some foreign
countries do not protect our proprietary rights to the same extent as the laws
of the United States. Furthermore, our competitors may independently develop
technology similar to ours.
OUR PRODUCTS MAY INFRINGE UPON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS, WHICH
MAY CAUSE US TO INCUR UNEXPECTED COSTS OR PREVENT US FROM SELLING OUR PRODUCTS.
The number of intellectual property claims in our industry may increase as
the number of competing products grows and the functionality of products in
different industry segments overlaps. In recent years, there has been a tendency
by software companies to file substantially increasing numbers of patent
applications, including those for business methods and processes. We have no way
of knowing what patent applications third parties have filed until the
application is filed or until a patent is issued. Patent applications are often
published within 18 months of filing, but it can take as long as three years or
more for a patent to be granted after an application has been filed. Although we
are not aware that any of our products infringe upon the proprietary rights of
third parties, there can be no assurance that third parties will not claim
infringement by us with respect to current or future products. Any of these
claims, with or without merit, could be time-consuming to address, result in
costly litigation, cause product shipment delays or require us to enter into
royalty or license agreements. These royalty or license agreements might not be
available on terms acceptable to us or at all, which could materially and
adversely affect our business.
OUR INTERNATIONAL OPERATIONS POSE RISKS FOR OUR BUSINESS AND FINANCIAL
CONDITION.
We currently conduct operations in a number of countries around the world.
These operations require significant management attention and financial
resources and subject us to risks inherent in doing business internationally,
such as:
- regulatory requirements;
- difficulties in managing foreign operations and appropriate levels of
staffing;
- longer collection cycles;
- foreign currency risk;
- legal uncertainties regarding liability, ownership and protection of
intellectual property;
- tariffs and other trade barriers;
- seasonal reductions in business activities;
- potentially adverse tax consequences; and
- increased economic uncertainty and political instability following the
terrorist attacks in the United States on September 11, 2001.
14
Any of the above factors could adversely affect the success of our
international operations. One or more of these factors could have a material
adverse effect on our business and operating results.
CHANGES IN THE VALUE OF THE U.S. DOLLAR, AS COMPARED TO THE CURRENCIES OF
FOREIGN COUNTRIES WHERE WE TRANSACT BUSINESS, COULD HARM OUR OPERATING RESULTS.
In the six months ended August 31, 2002, 23.0% of our total revenue was
derived from outside the United States. Our international revenue and expenses
are denominated in foreign currencies, typically the local currency of the
selling business unit. Therefore, changes in the value of the U.S. Dollar as
compared to these other currencies may adversely affect our operating results.
As our international operations expand, we expect to use an increasing number of
foreign currencies, causing our exposure to currency exchange rate fluctuations
to increase. We generally do not implement hedging programs to mitigate our
exposure to currency fluctuations affecting international accounts receivable,
cash balances and intercompany accounts, and we do not hedge our exposure to
currency fluctuations affecting future international revenues and expenses and
other commitments. For the foregoing reasons, currency exchange rate
fluctuations have caused, and likely will continue to cause, variability in our
foreign currency denominated revenue streams and our cost to settle foreign
currency denominated liabilities, which could have a material adverse effect on
our business and operating results.
IF WE LOSE OUR KEY PERSONNEL, THE SUCCESS AND GROWTH OF OUR BUSINESS MAY SUFFER.
Our success depends significantly on the continued service of our executive
officers. Two of our executive officers have recently left the Company. Gregory
Cudahy, former Executive Vice President of Pricing and Revenue Management
resigned in May 2002. Richard Bergmann, our former President, who had been on a
personal leave of absence since June 2002, resigned effective October 15, 2002.
Andrew Hogenson, who has been with the Company since 1997, most recently as our
Senior Vice President of Product Development, has replaced Gregory Cudahy.
Gregory Owens, Chairman and Chief Executive Officer, has assumed certain of
Richard Bergmann's duties. We do not have fixed-term employment agreements with
any of our executive officers, and we do not maintain key person life insurance
on our executive officers. The loss of services of any of our executive officers
for any reason could have a material adverse effect on our business, operating
results, financial condition and cash flows.
THE FAILURE TO HIRE AND RETAIN QUALIFIED PERSONNEL WOULD HARM OUR BUSINESS.
We believe that our success also will depend significantly on our ability
to attract, integrate, motivate and retain highly skilled technical, managerial,
sales, marketing and services personnel. Competition for skilled personnel is
intense, and there can be no assurance that we will be successful in attracting,
motivating and retaining the personnel required to grow and operate profitably.
In addition, the cost of hiring and retaining skilled employees is high. Failure
to attract and retain highly skilled personnel could materially and adversely
affect our business. An important component of our employee compensation is
stock options. Recent trading levels of our stock have decreased the value of
our stock options granted to employees under our stock option plan. As a result,
our personnel may seek employment with larger, more established companies or
companies that they perceive as having less volatile stock prices. Sustained
levels or further declines in our stock price could adversely affect our ability
to attract and retain employees, as it has in the past.
WE MAY BE SUBJECT TO FUTURE LIABILITY CLAIMS, AND THE REPUTATIONS OF OUR COMPANY
AND PRODUCTS MAY SUFFER.
Many of our implementations involve projects that are critical to the
operations of our clients' businesses and provide benefits that may be difficult
to quantify. Any failure in a client's system
15
could result in a claim for substantial damages against us, regardless of our
responsibility for the failure. We have entered into and plan to continue to
enter into agreements with software vendors, consulting firms, resellers and
others whereby they market our solutions. If these vendors fail to meet their
clients' expectations or cause failures in their clients' systems, the
reputation of our company and products could be materially and adversely
affected even if our software products perform in accordance with their
functional specifications.
IF REQUIREMENTS RELATING TO ACCOUNTING TREATMENT FOR EMPLOYEE STOCK OPTIONS ARE
CHANGED, WE MAY BE FORCED TO CHANGE OUR BUSINESS PRACTICES.
We currently account for the issuance of stock options under APB Opinion
No. 25, "Accounting for Stock Issued to Employees." If proposals currently under
consideration by accounting standards organizations and governmental authorities
are adopted, we may be required to treat the value of the stock options granted
to employees as a compensation expense. As a result, we could decide to reduce
the number of stock options granted to employees or to grant options to fewer
employees. This could affect our ability to retain existing employees and
attract qualified candidates, and increase the cash compensation or benefits we
would have to pay to them. In addition, such a change could have a material
effect on our operating results.
IT MAY BECOME INCREASINGLY EXPENSIVE TO OBTAIN AND MAINTAIN INSURANCE.
We obtain insurance to cover a variety of potential risks and liabilities.
In the current market, insurance coverage is becoming more restrictive and when
insurance coverage is offered, the deductible for which we are responsible is
larger and premiums have increased substantially. As a result, it may become
more difficult to maintain insurance coverage at historical levels, or if such
coverage is available, the cost to obtain or maintain it may increase
substantially. This may result in our being forced to bear the burden of an
increased portion of risks for which we have traditionally been covered by
insurance, which could have a material effect on our operating results.
RISKS RELATED TO OUR INDUSTRY
LACK OF GROWTH OR DECLINE IN INTERNET USAGE COULD BE DETRIMENTAL TO OUR FUTURE
OPERATING RESULTS.
The growth of the Internet has increased demand for SRM, SCM, PRO and S&PM
solutions, as well as created markets for new and enhanced product offerings.
Therefore, our future sales and profits are substantially dependent upon the
Internet as a viable commercial medium. The continued success of the Internet as
a viable commercial medium may be adversely affected for a number of reasons,
including:
- potentially inadequate development of network infrastructure, delayed
development of enabling technologies, performance improvements and
security measures;
- delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity;
- concerns that may develop among businesses and consumers about
accessibility, security, reliability, cost, ease of use and quality of
service;
- increased taxation and governmental regulation; or
- changes in, or insufficient availability of, communications services to
support the Internet, resulting in slower Internet user response times.
The occurrence of any of these factors could require us to modify our
technology and our business strategy. Any such modifications could require us to
expend significant amounts of
16
resources. In the event that the Internet does not remain a viable commercial
medium, our business, financial condition and results of operations could be
materially and adversely affected.
NEW LAWS OR REGULATIONS AFFECTING THE INTERNET OR COMMERCE IN GENERAL COULD
REDUCE OUR REVENUE AND ADVERSELY AFFECT OUR GROWTH.
Congress and other domestic and foreign governmental authorities have
adopted and are considering legislation affecting the use of the Internet,
including laws relating to the use of the Internet for commerce and
distribution. The adoption or interpretation of laws regulating the Internet, or
of existing laws governing such things as taxation of commerce, consumer
protection, libel, property rights and personal privacy, could hamper the growth
of the Internet and its use as a communications and commercial medium. If this
occurs, companies may decide not to use our products or services, and our
business, operating results and financial condition could suffer.
RISKS RELATED TO OUR INDEBTEDNESS AND FINANCIAL CONDITION
OUR INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.
In November 2000, we completed a convertible debt offering of $250.0
million in 5% subordinated convertible notes (the "Notes") that are due November
2007. Our indebtedness could have important consequences for investors. For
example, it could:
- increase our vulnerability to general adverse economic and industry
conditions;
- limit our ability to obtain additional financing;
- require the dedication of a substantial portion of our cash flows from
operations to the payment of principal of, and interest on, our
indebtedness, thereby reducing the availability of capital to fund our
growth strategy, working capital, capital expenditures, acquisitions and
other general corporate purposes;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry; and
- place us at a competitive disadvantage relative to our competitors with
less debt.
Although we have no present plans to do so, we may incur substantial
additional debt in the future. While the terms of our credit facility imposes
certain limits on our ability to incur additional debt, we are permitted to
incur additional debt subject to compliance with the terms and conditions set
forth in the loan agreement. Moreover, the terms of the Notes set forth no
limits on our ability to incur additional debt. If a significant amount of new
debt is added to our current levels, the related risks described above could
intensify.
WE MAY HAVE INSUFFICIENT CASH FLOW TO MEET OUR DEBT SERVICE OBLIGATIONS.
We will be required to generate cash sufficient to pay all amounts due on
the Notes and to conduct our business operations. We have net losses, and we may
not be able to cover our anticipated debt service obligations. This may
materially hinder our ability to make principal and interest payments on the
Notes. Our ability to meet our future debt service obligations will be dependent
upon our future performance, which will be subject to financial, business and
other factors affecting our operations, many of which are beyond our control.
17
WE MAY CHOOSE TO PURCHASE A PORTION OF OUR CONVERTIBLE SUBORDINATED NOTES IN THE
OPEN MARKET OR AUTHORIZE A STOCK REPURCHASE PROGRAM WHICH COULD ADVERSELY EFFECT
OUR FINANCIAL CONDITION.
Although we have no present plans to do so, we may choose to purchase a
portion of our convertible subordinated notes outstanding from time to time in
the open market in future periods. We may also authorize a stock repurchase
program where we would buy back shares of our common stock from time to time at
prevailing market prices, through open market or unsolicited negotiated
transactions, depending upon market conditions. Either of these actions would be
contingent on approval of our Board of Directors and on compliance with the
conditions of applicable securities laws. While the terms of our revolving
credit facility imposes certain limits on our ability to repurchase our debt and
equity securities, we are permitted to do so subject to compliance with the
terms and conditions set forth in the loan agreement. Purchases of convertible
subordinated notes or stock repurchases in the open market would be funded from
available cash and cash equivalents and could have a materially adverse effect
on our liquidity and financial condition.
RISKS RELATED TO OUR COMMON STOCK
OUR STOCK PRICE HAS BEEN AND IS LIKELY TO CONTINUE TO BE VOLATILE.
The trading price of our common stock has been and is likely to be highly
volatile. Our stock price could be subject to wide fluctuations in response to a
variety of factors, including the following:
- actual or anticipated variations in quarterly operating results and
continuing losses;
- continued weak economic conditions;
- increased economic and political uncertainty following the terrorist
attacks in the United States on September 11, 2001;
- announcements of technological innovations;
- new products or services offered by us or our competitors;
- changes in financial estimates and ratings by securities analysts;
- conditions or trends in the market for SRM, SCM, PRO and S&PM solutions;
- changes in the performance and/or market valuations of our current and
potential competitors and the software industry in general;
- our announcement or a competitors announcement of significant
acquisitions, strategic partnerships, joint ventures or capital
commitments;
- adoption of industry standards and the inclusion of our technology in, or
compatibility of our technology with, such standards;
- adverse or unfavorable publicity regarding us or our products;
- adverse or unfavorable publicity regarding our competitors, including
their products and implementation efforts;
- additions or departures of key personnel;
- sales or anticipated sales of additional equity securities;
- the potential issuance of common stock related to the WDS acquisition;
and
- other events or factors that may be beyond our control.
18
In addition, the stock markets in general, The Nasdaq National Market and
the equity markets for software companies in particular, have experienced
extraordinary price and volume volatility in recent years including significant
declines recently. Such volatility has adversely affected the stock prices for
many companies irrespective of or disproportionately to the operating
performance of these companies. These broad market and industry factors may
materially and adversely further affect the market price of our common stock,
regardless of our actual operating performance.
OUR CHARTER AND BYLAWS AND DELAWARE LAW CONTAIN PROVISIONS THAT COULD DISCOURAGE
A TAKEOVER EVEN IF BENEFICIAL TO STOCKHOLDERS.
Our charter and our bylaws, in conjunction with Delaware law, contain
provisions that could make it more difficult for a third party to obtain control
of us even if doing so would be beneficial to stockholders. For example, our
bylaws provide for a classified board of directors and allow our board of
directors to expand its size and fill any vacancies without stockholder
approval. Furthermore, our board has the authority to issue preferred stock and
to designate the voting rights, dividend rate and privileges of the preferred
stock, all of which may be greater than the rights of common stockholders.
USE OF PROCEEDS
We will not receive any proceeds from any resale of our common stock by the
selling stockholders. The selling stockholders will receive all of the net
proceeds from the sale of the common stock owned by them.
PRICE RANGE OF COMMON STOCK
Our common stock, $.002 par value per share, trades on The Nasdaq Stock
Market under the symbol "MANU". The following table sets forth the high and low
sales prices in dollars per share for the respective quarterly periods over the
last two fiscal years and for the current fiscal year through the date indicated
below, as reported in published financial sources. These prices reflect
inter-dealer prices, without retail markup, markdown or commission and may not
necessarily represent actual transactions. Prices have been restated to give
effect to the Company's two-for-one stock split, effective December 7, 2000.
HIGH LOW
------ ------
FISCAL YEAR 2001
First Quarter (ended May 31, 2000)........................ $35.13 $12.53
Second Quarter (ended August 31, 2000).................... 46.66 11.25
Third Quarter (ended November 30, 2000)................... 66.06 30.88
Fourth Quarter (ended February 28, 2001).................. 64.38 26.94
FISCAL YEAR 2002
First Quarter (ended May 31, 2001)........................ $41.90 $15.38
Second Quarter (ended August 31, 2001).................... 42.38 11.65
Third Quarter (ended November 30, 2001)................... 13.70 4.94
Fourth Quarter (ended February 28, 2002).................. 22.70 11.07
FISCAL YEAR 2003
First Quarter (ended May 31, 2002)........................ $22.75 $ 7.50
Second Quarter (ended August 31, 2002).................... 8.07 2.50
Third Quarter (September 1, 2002 through October 16,
2002).................................................. 4.45 1.54
19
On October 16, 2002, the last reported sale price of our common stock as
reported on The Nasdaq National Market was $ 1.99 per share. On October 16,
2002, there were approximately 323 holders of record of our common stock.
DIVIDEND POLICY
We have never paid any cash dividends on our capital stock. We currently
anticipate that we will retain earnings to support our operations and to finance
the growth and development of our business, and we do not anticipate paying any
cash dividends for the foreseeable future. We have an unsecured committed
revolving credit facility with a commercial bank that will expire on February
28, 2003, unless it is renewed. Under the terms of the credit facility, we are
prohibited from declaring or paying cash dividends on our common stock.
SELLING STOCKHOLDERS
This prospectus is to be used in connection with the sale by the selling
stockholders of a total of up to 66,979 shares of our common stock. We issued
the shares to be sold under this prospectus to OneRelease in connection with
certain post-acquisition performance conditions relating to our acquisition on
May 17, 2001 of substantially all of the assets of OneRelease. We issued these
shares in transactions exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) of the Securities Act. One Release has
advised us that it intends to transfer the shares to its former stockholders,
certain of whom may transfer shares to their respective equity holders and other
persons.
The following table sets forth certain information regarding the beneficial
ownership of shares of common stock by the selling stockholders as of October
16, 2002; each of the selling stockholders owned less than one percent of the
shares of our common stock then outstanding. The shares being offered by this
prospectus constitute all of the shares of the common stock issued effective as
of May 17, 2002 pursuant to the post-acquisition performance conditions. We
previously issued and registered for resale 135,793 shares of our common stock
in connection with our acquisition of the assets of OneRelease. We have assumed
that all of the shares being offered by this prospectus will be sold; however,
the selling stockholders have the right to reduce the number of shares offered
for sale or to otherwise decline to sell any or all of the shares registered
hereunder.
To the best of our knowledge, none of the selling stockholders have not
held any office or maintained any material relationship with us or any of our
affiliates over the past three years, with the exception of certain individuals
who are or were our employers subsequent to our acquisition of substantially all
of the assets of OneRelease.
NAME OF SELLING NUMBER OF SHARES
STOCKHOLDERS OWNED AND OFFERED
--------------- -----------------
OneRelease.com, LLC......................................... 7,000
Sigma Partners V, L.P. ..................................... 31,399
Sigma Associates V, L.P. ................................... 13,059
Sigma Investors V, L.P. .................................... 1,838
Kevin Hall.................................................. 3,085
David Borgman............................................... 83
Christina Chiaramonte....................................... 30
Ele Croze................................................... 66
Andrew Deitz................................................ 1,157
David Duffield.............................................. 2,314
Steven Hanley............................................... 288
20
NAME OF SELLING NUMBER OF SHARES
STOCKHOLDERS OWNED AND OFFERED
--------------- -----------------
Brobeck, Phleger & Harrison LLP............................. 617
John Heck................................................... 66
Larry Hollister............................................. 72
Scott Karchmer.............................................. 38
Jeff Peterson............................................... 89
Maya Raber.................................................. 115
Rose Reilly................................................. 60
Mary Kaye Reynolds.......................................... 143
Arlene Roberg............................................... 63
Greg Schroeder.............................................. 267
Amanda Swint................................................ 33
Margaret L. Taylor.......................................... 2,314
Tracy Thompson.............................................. 46
Trevor Tice................................................. 1,157
Pine Family Trust (UDT 3/16/93)............................. 1,542
The Phleger Family Trust (U/D/T 9/23/94).................... 38
------
Total....................................................... 66,979
======
PLAN OF DISTRIBUTION
We have agreed to register the shares of the selling stockholders for
resale under the Securities Act at our own expense, other than commissions, fees
and discounts of brokers, dealers and agents. We have agreed to keep the
registration statement, of which this prospectus is a part, effective at least
until the first to occur of (i) the sale of all of the shares pursuant to the
registration statement; or (ii) May 17, 2003.
The selling stockholder may sell or otherwise transfer the Shares pursuant
to this prospectus, in accordance with the provisions of Rule 144 under the
Securities Act or in transactions otherwise exempt from registration under the
Securities Act.
All of the shares issued in connection with the post-acquisition
performance conditions are covered by this prospectus and are eligible to be
resold upon the effectiveness of the registration statement of which this
prospectus is a part.
OneRelease.com, Inc. has advised us that it intends to transfer the shares
covered by this prospectus to its former stockholders, certain of whom may
transfer the shares to their respective equity holders and certain other related
persons. We have agreed to amend the aforementioned list of persons named as
selling stockholders not more than two times after the registration statement,
of which this prospectus is a part, is declared effective by the Securities and
Exchange Commission to reflect such transfers or any such additional transfers
as may be permitted under the terms of the acquisition.
The common stock is presently listed for trading on The Nasdaq National
Market. Any resale of the Shares covered by this prospectus will not be
underwritten. The selling stockholders may resell the Shares covered by this
prospectus from time to time in ordinary brokers' transactions through the
facilities of Nasdaq, in block transactions, in privately negotiated
transactions, through the writing of options or otherwise. Sales of Shares may
be effected at market prices prevailing at the time of sale, at negotiated
prices, or otherwise. There will be no charges or commissions paid
21
to us by the selling stockholders in connection with the issuance of the Shares.
It is anticipated that usual and customary brokerage fees will be paid by the
selling stockholders upon sale of the common stock offered under this
prospectus. In connection with any sales, the selling stockholder and any
brokers participating in such sales may be deemed to be underwriters within the
meaning of the Securities Act, in which event commissions received by such
brokers may be deemed underwriting commissions under the Securities Act.
Pursuant to the registration rights agreement under which we agreed to
register the Shares for resale, we have agreed to indemnify the selling
stockholders, their officers, directors or partners and controlling persons
against certain liabilities that could arise in connection with the resale of
the Shares, including liabilities under the Securities Act, or to make
contribution to them with respect to payments they may be required to make. The
selling stockholders have agreed to indemnify us for liabilities arising under
the Securities Act with respect to written information furnished to us by them
or to make contribution to us in connection with these liabilities.
The selling stockholders have agreed that they will not take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or might reasonably be expected to constitute, the manipulation or stabilization
of the price of our common stock or of any of our other securities. In
particular, Regulation M under the Securities Act imposes certain restrictions
on issuers, selling stockholders and other participants in a distribution of
securities that are intended to prohibit such persons from facilitating the
distribution by "conditioning" the market for such securities.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 300,000,000 shares of common
stock, par value $0.002 per share, and 4,620,253 shares of preferred stock, par
value $0.01 per share.
COMMON STOCK
As of October 14, 2002, there were 69,879,904 shares of our common stock
outstanding which were held of record by approximately 323 holders.
The holders of our common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of our stockholders. Holders
of our common stock do not have the right to cumulate their votes. Directors are
elected by a plurality of votes cast; except as otherwise provided under the
Delaware General Corporation Law, all other matters are approved by a majority
of the votes cast.
Subject to preferences that may be applicable to any outstanding shares of
our preferred stock, the holders of our common stock are entitled to receive
ratably such dividends as may be declared by our board of directors out of funds
legally available therefor. See "Dividend Policy." In the event of a
liquidation, dissolution or winding up of our company, holders of our common
stock are entitled to share ratably in all assets remaining after payment of
liabilities and the liquidation preferences of any outstanding shares of our
preferred stock. Holders of our common stock have no preemptive rights and no
right to convert our common stock into any other securities. There are no
redemption or sinking fund provisions applicable to our common stock. All
outstanding shares of our common stock are fully paid and non-assessable.
PREFERRED STOCK
We may, by resolution of our board of directors, and without any further
vote or action by our stockholders, authorize and issue, subject to certain
limitations prescribed by law, up to an aggregate of 4,620,253 shares of
preferred stock. The preferred stock may be issued in one or more classes or
series of shares of any class or series. With respect to any classes or series,
our board of directors may determine the designation and the number of shares,
preferences,
22
limitations and special rights, including dividend rights, conversion rights,
voting rights, redemption rights and liquidation preferences. Because of the
rights that may be granted, the issuance of preferred stock may delay, defer or
prevent a change of control. No shares of preferred stock are outstanding and we
presently have no plans to issue shares of preferred stock.
LIMITATION ON LIABILITY
Our certificate of incorporation limits or eliminates the liability of our
directors to us or our stockholders for monetary damages to the fullest extent
permitted by the Delaware General Corporation Law. As permitted by the Delaware
General Corporation Law, our certificate of incorporation provides that our
directors shall not be personally liable to us or our stockholders for monetary
damages for a breach of fiduciary duty as a director, except for liability:
- for any breach of such person's duty of loyalty;
- for acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law;
- for the payment of unlawful dividends and certain other actions
prohibited by Delaware corporate law; and
- for any transaction resulting in receipt by such person of an improper
personal benefit.
Our certificate of incorporation also contains provisions indemnifying our
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law. We also have directors' and officers' liability insurance to
provide our directors and officers with insurance coverage for losses arising
from claims based on breaches of duty, negligence, errors and other wrongful
acts.
CERTAIN ANTI-TAKEOVER PROVISIONS
Our by-laws provide for the division of our board of directors into three
classes. Each class must be as nearly equal in number as possible. Additionally,
each class must serve a three-year term. The terms of each class are staggered
so that each term ends in a different year over a three-year period. Any
director not elected by holders of preferred stock may be removed only for cause
and only by the vote of a majority of the shares entitled to vote for the
election of directors.
Our certificate of incorporation provides that our board of directors may
establish the rights of, and cause us to issue, substantial amounts of preferred
stock without the need for stockholder approval. Further, our board of directors
may determine the terms, conditions, rights, privileges and preferences of the
preferred stock. Our board is required to exercise its business judgment when
making such determinations. Our board of directors' use of the preferred stock
may inhibit the ability of third parties to acquire Manugistics. Additionally,
our board may use the preferred stock to dilute the common stock of entities
seeking to obtain control of Manugistics. The rights of the holders of common
stock will be subject to, and may be adversely affected by, any preferred stock
that may be issued in the future. Our preferred stock provides desirable
flexibility in connection with possible acquisitions, financings and other
corporate transactions. However, it may have the effect of discouraging,
delaying or preventing a change in control of Manugistics. We have no present
plans to issue any shares of preferred stock. The existence of the foregoing
provisions in our certificate of incorporation and by-laws could make it more
difficult for third parties to acquire or attempt to acquire control of us or
substantial amounts of our common stock.
Section 203 of the Delaware General Corporation Law applies to Manugistics.
Section 203 of the Delaware General Corporation Law generally prohibits certain
"business combinations" between a Delaware corporation and an "interested
stockholder." An "interested stockholder" is generally defined as a person who,
together with any affiliates or associates of such person, beneficially owns, or
within three years did own, directly or indirectly, 15% or more of the
23
outstanding voting shares of a Delaware corporation. The statute broadly defines
business combinations to include:
- mergers;
- consolidations;
- sales or other dispositions of assets having an aggregate value in excess
of 10% of the consolidated assets of the corporation or aggregate market
value of all outstanding stock of the corporation; and
- certain transactions that would increase the "interested stockholder's"
proportionate share ownership in the corporation.
The statute prohibits any such business combination for a period of three
years commencing on the date the "interested stockholder" becomes an "interested
stockholder," unless:
- the business combination is approved by the corporation's board of
directors prior to the date the "interested stockholder" becomes an
"interested stockholder"; or
- the "interested stockholder" acquired at least 85% of the voting stock of
the corporation (other than stock held by directors who are also officers
or by certain employee stock plans) in the transaction in which it
becomes an "interested stockholder"; or
- the business combination is approved by a majority of the board of
directors and by the affirmative vote of at least two-thirds of the
outstanding voting stock that is not owned by the "interested
stockholder."
The Delaware General Corporation Law contains provisions enabling a
corporation to avoid Section 203's restrictions if stockholders holding a
majority of the corporation's voting stock approve an amendment to the
corporation's certificate of incorporation or by-laws to avoid the restrictions.
We have not and do not currently intend to "elect out" of the application of
Section 203 of the Delaware General Corporation Law.
LEGAL MATTERS
Certain legal matters with respect to the validity of the common stock to
be issued under this prospectus are being passed upon for us by Dilworth Paxson
LLP, Philadelphia, Pennsylvania. Joseph H. Jacovini, Chairman and a member of
Dilworth Paxson LLP, is a member of our board of directors. On September 30,
2002, Mr. Jacovini was the beneficial owner of 174,600 shares of our common
stock (including 2,672 shares of common stock held by his spouse 36,000 shares
held in a retirement savings account and a total of 105,928 shares of common
stock issuable upon exercise of certain options).
EXPERTS
The consolidated financial statements and the related financial statement
schedule incorporated in this prospectus by reference from the Company's Annual
Report on Form 10-K for the period ended February 28, 2002 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports, which
are incorporated herein by reference, and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
The consolidated balance sheets of Talus Solutions, Inc. and its subsidiary
as of December 31, 1999 and 1998, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1999, have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of
24
KPMG LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any materials we file with the
SEC at the SEC's public reference room at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as at the SEC's regional offices at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 233 Broadway, New York,
NY 10279. You can request copies of these documents by writing to the SEC and
paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for
more information about the operation of the public reference rooms. Our SEC
filings are also available at the SEC's Internet website at
"http://www.sec.gov." In addition, you can read and copy our SEC filings at the
office of the National Association of Securities Dealers, Inc. at 1735 K Street,
Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" information that we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings we will make with
the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act:
- Current Report on Form 8-K, filed January 4, 2001;
- Current Report on Form 8-K, filed January 18, 2001;
- Annual Report on Form 10-K for the year ended February 28, 2002;
- Quarterly Report on Form 10-Q for the quarter ended May 31, 2002
- Quarterly Report on Form 10-Q/A for the quarter ended May 31, 2002
- Current Report on Form 8-K, filed June 5, 2002;
- Current Report on Form 8-K, filed June 28, 2002
- Quarterly Report on Form 10-Q for the quarter ended August 31, 2002
- The description of our common stock contained in our Registration
Statement on Form 8-A, as amended, including any amendment or report
filed to update the description.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
INVESTOR RELATIONS
MANUGISTICS GROUP, INC.
9715 KEY WEST AVENUE
ROCKVILLE, MD 20850
(301) 255-5049
This Prospectus is part of a Registration Statement we filed with the SEC.
You should rely only on the information incorporated by reference or provided in
this Prospectus and the Registration Statement. We have authorized no one to
provide you with different information. You should not assume that the
information in this Prospectus is accurate as of any date other than the date on
the front of the document.
We have not authorized any dealer, sales person or other person to give any
information or to make any representations other than those contained in this
Prospectus or any Prospectus Supplement. You must not rely on any unauthorized
information. This Prospectus is not an offer of these securities in any state
where an offer is not permitted. The information in this Prospectus is current
as of October , 2002. You should not assume that this Prospectus is accurate
as of any other date.
25
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is a list of the estimated expenses to be incurred by the
Registrant in connection with the registration of the common stock. All amounts
are estimated, except the SEC registration fee.
SEC Registration............................................ $ 14
Printing Expenses........................................... 10,000
Legal Fees and Expenses..................................... 20,000
Accountants' Fees and Expenses.............................. 20,000
Transfer Agent.............................................. 1,000
Miscellaneous............................................... 986
-------
Total..................................................... $52,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
We have adopted the provisions of Section 102(b)(7) of the Delaware GCL,
which eliminate or limit the personal liability of a director to us or our
stockholders for monetary damages for breach of fiduciary duty under certain
circumstances. Furthermore, under Section 145 of the Delaware GCL, we shall
indemnify each of our directors and officers against expenses (including
reasonable costs, disbursements and counsel fees) in connection with any
proceeding involving such person by reason of having been an officer or
director, to the extent such person acted in good faith and in a manner
reasonably believed to be in, or not opposed to, our best interest, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
such person's conduct was unlawful. The determination of whether indemnification
is proper under the circumstances, unless made by a court, shall be made by a
majority of a quorum of disinterested members of our Board of Directors, our
independent legal counsel or our stockholders.
Our Certificate of Incorporation states that our directors shall not be
personally liable to us or our stockholders for monetary damages for breach of
fiduciary duty as a director, except that this provision shall not eliminate or
limit a director's liability for any breach of the director's duty of loyalty to
us or our stockholders, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, under Section 174 of the
Delaware GCL, or for any transaction from which the director derived an improper
personal benefit.
Our bylaws further provide that we shall indemnify our officers, directors
and employees to the fullest extent permitted by law. The bylaws also permit us
to purchase insurance on behalf of any such person against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not we would have the
power to indemnify such person against such liability under the foregoing
provision of the bylaws. We maintain such insurance.
II-1
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4 Form of Registration Rights Agreement between Manugistics
Group, Inc., OneRelease.com, LLC and OneRelease.com, Inc.,
dated as of May 17, 2001 (incorporated by reference to
Exhibit 4 to our Registration Statement on Form S-3, File
No. 333-66104).
5* Opinion of Dilworth Paxson LLP.
23.1 Consent of Deloitte & Touche LLP regarding the Consolidated
Financial Statements of Manugistics Group, Inc. and
subsidiaries.
23.2 Consent of KPMG LLP regarding the Consolidated Financial
Statements of Talus Solutions, Inc. and subsidiary.
23.3* Consent of Dilworth Paxson LLP (included in Exhibit 5).
24 Power of Attorney (reference is made to the signature page
of this Registration Statement).
---------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby further undertakes:
(1) to file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement; and
(iii) include any additional material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do
not apply if the registration statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) that, for the purpose of determining liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
II-2
(3) to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction, the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Rockville, State of Maryland, on the 18th day of
October, 2002.
MANUGISTICS GROUP, INC.
By: /s/ GREGORY J. OWENS
------------------------------------
Gregory J. Owens Chief Executive
Officer
POWER OF ATTORNEY
Each of the undersigned officers and directors of Manugistics Group, Inc.
whose signature appears below hereby appoints Gregory J. Owens and Raghavan
Rajaji, jointly and individually, as attorneys-in-fact for the undersigned with
full power of substitution, to execute in his or her name and on behalf of such
person, individually, and in each capacity stated below, this Registration
Statement on Form S-3 and one or more amendments (including post-effective
amendments) to this Registration Statement and any related registration
statement under Rule 462(b) (including in each case exhibits hereto and thereto)
as the attorney-in-fact shall deem appropriate, and to file all such
registration statements and any such amendments with the Securities and Exchange
Commission, granting unto said attorneys-in-fact, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact, or either of them, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ GREGORY J. OWENS Chairman of the Board of Directors October 18, 2002
--------------------------------------------- and Chief Executive Officer
Gregory J. Owens (Principal Executive Officer)
/s/ RAGHAVAN RAJAJI Executive Vice President and October 18, 2002
--------------------------------------------- Chief Financial Officer
Raghavan Rajaji (Principal Financial Officer)
/s/ JEFFREY T. HUDKINS Vice President, Controller and October 18, 2002
--------------------------------------------- Chief Accounting Officer
Jeffrey T. Hudkins (Principal Accounting Officer)
/s/ J. MICHAEL CLINE Director October 18, 2002
---------------------------------------------
J. Michael Cline
/s/ STEVEN A. DENNING Director October 18, 2002
---------------------------------------------
Steven A. Denning
II-4
SIGNATURE TITLE DATE
--------- ----- ----
/s/ LYNN C. FRITZ Director October 18, 2002
---------------------------------------------
Lynn C. Fritz
/s/ JOSEPH H. JACOVINI Director October 18, 2002
---------------------------------------------
Joseph H. Jacovini
/s/ HAU L. LEE Director October 18, 2002
---------------------------------------------
Hau L. Lee
/s/ WILLIAM G. NELSON Director October 18, 2002
---------------------------------------------
William G. Nelson
/s/ THOMAS A. SKELTON Director October 18, 2002
---------------------------------------------
Thomas A. Skelton
II-5
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4 Form of Registration Rights Agreement between Manugistics
Group, Inc., OneRelease.com, LLC and OneRelease.com, Inc.,
dated as of May 17, 2001 (incorporated by reference to
Exhibit 4 to our Registration Statement on Form S-3, File
No. 333-66104).
5* Opinion of Dilworth Paxson LLP.
23.1 Consent of Deloitte & Touche LLP regarding the Consolidated
Financial Statements of Manugistics Group, Inc. and
subsidiaries.
23.2 Consent of KPMG LLP regarding the Consolidated Financial
Statements of Talus Solutions, Inc. and subsidiary.
23.3* Consent of Dilworth Paxson LLP (included in Exhibit 5).
24 Power of Attorney (reference is made to the signature page
of this Registration Statement).
---------------
* To be filed by amendment.
II-6