As filed with The Securities and Exchange Commission on February 21, 2002
Registration No. 333-75890
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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)
2115 East Jefferson Street
Rockville, Maryland 20852
(301) 984-5000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
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Gregory J. Owens
Chief Executive Officer
Manugistics Group, Inc.
2115 East Jefferson Street
Rockville, Maryland 20852
(301) 984-5000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
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Copy to:
Merritt A. Cole, 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. [ ]
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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.
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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 February 21, 2002
[MANUGISTICS LOGO]
597,000 SHARES
COMMON STOCK
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We are going to issue up to a maximum of 597,000 shares of our common
stock, $.002 par value per share, to Information Resources, Inc. a Delaware
corporation, ("IRI") in connection with the recent settlement of legal
proceedings brought against us by IRI. IRI, the selling stockholder, may sell
the shares offered by this Prospectus directly to purchasers or through
underwriters, brokers-dealers or agents, who may receive compensation in the
form of discounts, concessions or commissions.
We will not receive any proceeds from the sale of shares (sometimes
referred to in this Prospectus as the "Shares") offered by the selling
stockholder hereby.
Our common stock is listed on The Nasdaq National Market under the symbol
"MANU." On February 15, 2002, the closing sale price of our common stock, as
reported on The Nasdaq National Market, was $16.54.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 5.
The securities offered or sold under this Prospectus have not been approved
by the SEC or any state securities commission, nor have these organizations
determined that this Prospectus is accurate or complete. 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.
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PROSPECTUS SUMMARY
The following is a summary of our business. You should carefully read the
section entitled "Risk Factors" in this prospectus and our Annual Report on Form
10-K for the year ended February 28, 2001, and our Quarterly Report on Form 10-Q
for the fiscal quarter ended November 30, 2001, 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 supplier relationship management
(SRM), supply chain management (SCM), and pricing and revenue optimization
(PRO). 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 both how goods and
services are brought to market (supplier relationship management, supply chain
management) and how they are sold (pricing and revenue optimization). EPO
solutions provide additional benefits by combining the proven cost-reducing
power of SRM and SCM solutions and the revenue-enhancing capacity of PRO
solutions. These solutions integrate pricing, forecasting, and operational
planning and execution to help enhance margins across the enterprise and the
extended trading network.
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 SCM solutions enable a company to plan and execute its
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 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 profits and other strategic
objectives such as market share. We also provide strategic consulting and
implementation 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. Our first
Internet-ready products were commercially available in late 1997. We focus the
development of our technology on meeting the changing needs of companies in the
markets we serve, including the need to do business in new electronic
marketplaces. We offer solutions to companies in many industries including
apparel, footwear & textiles; automotive, chemical & energy; communications &
high technology; consumer packaged goods, food & agriculture; forest products;
financial services; government & public sector; life sciences; retail; third
party logistics; and travel, transport & hospitality. Our customer base of
approximately 1,100 clients includes large, multinational enterprises such as
3Com; Amazon.com; Boeing; BP; Brown & Williamson; Caterpillar; Cisco Systems
Inc.; Coca-Cola Bottling Co. Consolidated; Compaq; DuPont; eConnections;
Fairchild Semiconductor; Ford Motor Company; General Electric; Harley-Davidson,
Inc.; Hormel Foods Corp.; Levi Strauss & Co.; Marriott; Nestle; Staples, Inc.;
Texas Instruments; Timberland; Unilever Home & Personal Care, USA; and United
Airlines as well as mid-sized enterprises.
Our principal executive offices are located at 2115 East Jefferson Street,
Rockville, Maryland 20852, and our main telephone number is (301) 984-5000. We
have offices in Atlanta, Chicago, Denver, Irving, Mountain View, Philadelphia
and San Mateo in the United States, and internationally in Australia, Belgium,
Brazil, Canada, France, Germany, Hong Kong, Italy, Japan, Mexico, Taiwan, The
Netherlands, Singapore and the United Kingdom.
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THE OFFERING
Common Stock to be issued....................... up to a maximum of 597,000 shares (1)
Common Stock Outstanding........................ 68,759,766 (2)
Use of Proceeds................................. The Company will not receive any proceeds
from the sale of common stock offered
hereby.
Nasdaq Symbol................................... MANU
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(1) The number of shares to be issued shall be determined by dividing $3,875,000
by the closing price of our common stock reported by the Nasdaq National
Market System on the day the registration statement of which this Prospectus
is a part becomes effective. Based on the closing price of our common stock
on February 15, 2002, of $16.54 we would issue approximately 234,000 shares
to the selling stockholder.
(2) As of the close of business on February 15, 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
THE TERRORIST ATTACKS THAT TOOK PLACE IN THE UNITED STATES ON SEPTEMBER 11, 2001
WERE UNPRECEDENTED EVENTS THAT HAVE CREATED MANY ECONOMIC AND POLITICAL
UNCERTAINTIES, SOME OF WHICH MAY HARM OUR BUSINESS AND PROSPECTS AND 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 have
adversely impacted many businesses, including the Company, in multiple ways. The
national and global responses to these terrorist attacks, some of which are
still being formulated, 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:
- the reduced ability to do business in the ordinary course as it is
customarily conducted, 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;
- 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; and
- possible reductions, delays or postponements, if any, in capital
expenditures as a result of changes in priorities and approval processes.
AS A RESULT OF SIGNIFICANT CHANGES IN OUR MANAGEMENT, PERSONNEL AND PRODUCTS,
YOU MAY HAVE DIFFICULTY EVALUATING OUR PROSPECTS BASED ON OUR SIGNIFICANT LOSSES
IN RECENT FISCAL YEARS.
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. Since late in our second
quarter of fiscal 2002, we have again experienced a decline in revenue, due to
weakening economic conditions and the affects resulting from the terrorist
attacks of September 11, 2001. Since April 1999, we hired a new executive
management team, enhanced our supply chain optimization products and services,
expanded the scope of our product and service offerings to include supplier
relationship management, pricing and revenue optimization and improved our
direct sales organization. Our ability to continue to achieve operational
improvements and improve our financial performance will be subject to a number
of risks and uncertainties, including the following:
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- weakening economic conditions which adversely impacted our operating
performance during the quarters ended August 31, and November 30, 2001;
- slower growth in the markets for SRM, SCM, and PRO solutions;
- 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 and deploy our direct sales force
effectively;
- our ability to expand our distribution capability through indirect sales
channels;
- 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 RECENTLY EXPERIENCED SIGNIFICANT LOSSES. OUR FUTURE RESULTS WILL BE
ADVERSELY AFFECTED BY SEVERAL TYPES OF NON-CASH CHARGES. IF WE DO NOT ACHIEVE OR
MAINTAIN PROFITABILITY IN THE FUTURE, OUR STOCK PRICE MAY DECLINE.
We have recently incurred significant losses, including net losses of $90.1
million for the nine months ended November 30, 2001, $28.1 million in fiscal
2001, $8.9 million in fiscal 2000 and $96.1 million in fiscal 1999. We will
incur non-cash charges in the future related to the amortization of intangible
assets, including acquired technology and non-cash stock compensation expenses
associated with our acquisition of Talus Solutions, Inc. (Talus). We will also
incur non-cash charges related to the amortization of intangible assets,
including acquired technology, relating to the acquisition of STG Holdings,
Inc., and certain assets of One Release LLC, PartMiner Inc.'s CSD business and
SpaceWorks Inc. In addition, we have incurred and may in the future incur
non-cash stock compensation charges related to our stock option repricing.
During the quarter ended November 30, 2001, 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. 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, and our ability to finance
our operations could be impaired.
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 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;
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- 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, and
November 30, 2001;
- increased economic uncertainty and political instability 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 quarter ended August 31, 2001. If this occurs, the price of our common stock
could suffer further significant declines.
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 four 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 quarter. These delays have occurred on a number of
occasions in the past, including, most recently, in our quarters ended August
31, and November 30, 2001. 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 and PRO problems 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 process employed by the client;
- the sales channel through which the solution is sold;
- the economic conditions in the United States and abroad;
- increased economic uncertainty and political instability 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 CONTRACTS WITH CLIENTS ARE INCREASING, WHICH MAY CAUSE
FLUCTUATIONS IN OUR OPERATING RESULTS.
Our clients and prospective clients are seeking to solve increasingly
complex SRM, SCM and PRO problems. Further, we are focused on providing more
comprehensive solutions for our clients, as opposed to only licensing software.
As the complexity of the problems our clients seek to solve
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increases, the size and scope of our contracts with clients increase. As a
result, our operating results could fluctuate due to the following factors:
- the complexities of the contracting process of our clients;
- contractual terms may vary widely, which may result in differing methods
of accounting for revenue from each contract;
- losses of, or delays in concluding larger contracts could have a
proportionately greater effect on our revenue for a particular period;
and
- the sales cycles related to larger contracts may be longer and subject to
greater delays.
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.
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. In connection with any acquisition, 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, including the acquisition of Talus in December
2000.
We experienced significant difficulties with the integration of the
products and operations of ProMIRA Software, Inc. (ProMIRA) and TYECIN Systems,
Inc. (TYECIN), which we acquired in fiscal 1998 and 1999, respectively. These
difficulties included problems integrating the prior ProMIRA sales forces and
the delayed releases of the in-process technology acquired as part of the
transaction. In addition, as a result of the poor financial performance we
experienced in fiscal 1999, the technology acquired in conjunction with the
TYECIN acquisition was not integrated into our solutions and, therefore, revenue
generated from this technology has been nominal. Similar difficulties with
future acquisitions could materially and adversely affect our business, results
of operations and financial condition.
WE MAY ENCOUNTER PROBLEMS EFFECTIVELY INTEGRATING TALUS.
On December 21, 2000, we completed the acquisition of Talus, a
privately-held company that provided PRO products and services. This acquisition
was substantially larger than all of our prior acquisitions, not all of which
have been successful. In addition to the risks described above in connection
with acquisitions generally, the ultimate success of our acquisition of Talus is
dependent on factors which include the following:
- our ability to complete future releases of our PRO solutions;
- our ability to protect and maintain Talus' intellectual property rights;
- our ability to successfully integrate Talus' technologies;
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- our ability to retain and motivate Talus' employees;
- market acceptance of the products Talus has commercially developed to
date;
- our ability to fulfill our strategic plan for the acquisition of Talus by
integrating our SRM and SCM capabilities and products with Talus' PRO
products;
- market acceptance of EPO solutions;
- our ability, together with Talus, to cross-sell products and services
into our respective markets; and
- the outcome of disputes and litigation which have arisen in the ordinary
course of business.
OUR ACQUISITION OF TALUS WILL ADVERSELY AFFECT OUR COMBINED FINANCIAL RESULTS.
We have incurred and will continue to incur substantial dilution to our
earnings per share in accordance with generally accepted accounting principles
for the foreseeable future as a result of the Talus Acquisition. In connection
with the acquisition, we will amortize approximately $22.8 million of deferred
compensation related to unvested stock options over four years. Further, we
expect to incur an amortization charge of approximately $82 million related to
goodwill and other intangible assets during our fiscal year ending February 28,
2002.
WE DEPEND ON SALES OF OUR SRM, SCM AND PRO SOLUTIONS, AND OUR BUSINESS WILL BE
MATERIALLY AND ADVERSELY AFFECTED IF THE MARKET FOR OUR PRODUCTS DOES NOT
CONTINUE TO GROW.
Substantially all of our software revenue, service revenue and support
revenue have arisen from, or are related directly to, our SRM, SCM and PRO
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 and PRO solutions, in general, would materially and adversely affect our
ability to generate revenue. While we believe the markets for SRM, SCM and PRO
solutions will continue to expand, 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 ARE RE-EVALUATING THEIR SUPPLIER AND CLIENT RELATIONSHIPS AND SOME ARE
ADJUSTING 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 AND SCM SOLUTIONS.
Since September 11, 2001, companies are re-evaluating the nature of their
relationships with suppliers and clients and some are adjusting their service
levels and other supply chain management settings and levels to address risks
arising out of the terrorists attacks and the resulting 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 and SCM solutions.
OUR MARKETS ARE VERY COMPETITIVE, AND WE MAY NOT BE ABLE TO EFFECTIVELY COMPETE.
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 potential competitors may make
acquisitions of other competitors and may establish cooperative relationships
among themselves or with third parties. 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.
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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 application software vendors including:
Adexa, Inc., Aspen Technology, Inc., The Descartes Systems Group Inc., i2
Technologies, Inc., Logility, Inc., PROS Revenue Management, Retek, Inc., Sabre,
Inc., SAP AG, SynQuest and YieldStar Technology. Some eMarketplace software
companies that do not currently offer directly competitive products or
solutions, such as Ariba, Inc. and Commerce One, may begin to compete directly
with us. In addition, some ERP companies such as Invensys plc (which acquired
Baan Company N.V.), J.D. Edwards & Company, Oracle Corporation and PeopleSoft,
Inc. have acquired or developed and are developing supply chain planning,
pricing/revenue optimization or SCM, SRM and PRO 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 and PRO 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.
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. 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 be able to 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
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clients, a loss of, or delays in, the market acceptance of our solutions, client
dissatisfaction and potentially lost revenue 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 a vendor seeks to terminate our license to the software or ability to license
the software to others. 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.
We depend on companies such as Peregrine Systems, 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. Further, we rely on these companies to maintain relationships with the
companies that provide the external software that is vital to the functioning of
our products and solutions. The loss of any company that we use to integrate our
software products could adversely affect our business, results of operations and
financial condition.
OUR EFFORTS TO DEVELOP RELATIONSHIPS WITH VENDORS SUCH AS SOFTWARE COMPANIES,
CONSULTING FIRMS, RESELLERS AND OTHERS TO IMPLEMENT AND PROMOTE OUR SOFTWARE
PRODUCTS MAY FAIL.
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 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.
WE HAVE ONLY RECENTLY ENTERED INTO CONTRACTS WITH GOVERNMENTAL AGENCIES. THESE
CONTRACTS OFTEN INVOLVE LONG PURCHASE CYCLES AND COMPETITIVE PROCUREMENT
PROCESSES.
We have recently begun providing our solutions to government agencies and
expect that a significant portion of our future revenue may be derived from
government agency clients. Obtaining government contracts may involve long
purchase cycles, competitive bidding, qualification require-
11
ments, congressional appropriations, delays in funding, budgetary constraints
and extensive specification development and price negotiations. In order to
facilitate the sales of our commercial software and services to the federal
government we hold a Government Services Administration Federal Supply Services
Schedule for Information Technology (IT) and Management Organizational and
Business Improvement Services (MOBIS). Each government agency maintains its own
rules and regulations with which we must comply and which can vary significantly
among agencies. Government agencies also often retain a significant portion of
fees payable upon completion of a project and collection of such fees may be
delayed for several months. Accordingly, our revenue could decline as a result
of these government procurement processes. In addition, it is possible that, in
the future, some of our government contracts may be fixed price contracts which
may prevent us from recovering costs incurred in excess of our budgeted costs.
Fixed price contracts may require us to estimate the total project cost based on
preliminary projections of the project's requirements. The financial viability
of any given project depends in large part on our ability to estimate such costs
accurately and to complete the project on a timely basis. In the event our
actual costs exceed the fixed contract cost, we will not be able to recover the
excess costs. If we fail to properly anticipate costs on fixed price contracts,
our profit margins will decrease. Some government contracts are also subject to
termination or re-negotiation at the convenience of the government, which could
result in a large decline in revenue in any given quarter. Multi-year contracts
are contingent on overall budget approval by Congress and may be terminated due
to lack of funds.
INCREASED SALES THROUGH INDIRECT CHANNELS MAY ADVERSELY AFFECT OUR OPERATING
PERFORMANCE.
Even if our marketing efforts through indirect channels are successful and
result in increased sales, our average selling prices and operating margins
could be adversely affected because of the lower unit prices that we receive
when selling through indirect channels.
IF WE FAIL TO FIELD AN EFFECTIVE SALES ORGANIZATION, OUR ABILITY TO GROW WILL BE
LIMITED.
We have recently reduced our sales force 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 have to 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 may take a long time to
achieve full productivity. There is no assurance that we can 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 and, although we are unable to determine the
extent to which piracy of our software products exists, we expect software
piracy to be a problem. 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
12
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 staffing and managing foreign operations;
- 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 and political instability following the terrorist
attacks in the United States on September 11, 2001.
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.
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. 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 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 additional 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, and this reduces our profitability. 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.
A
13
decline in our stock price could adversely affect our ability to attract and
retain employees, as it has in the past.
WE HAVE RECENTLY EXPERIENCED SIGNIFICANT CHANGES IN OUR SENIOR MANAGEMENT TEAM
AND THERE IS NO ASSURANCE THE TEAM WILL WORK TOGETHER EFFECTIVELY.
Commencing in the first quarter of fiscal 2000, we have completely changed
our senior management team. Gregory J. Owens, our Chief Executive Officer,
joined us in April 1999. With one exception, all of our other present executive
officers joined us after Mr. Owens. Our success depends on the ability of our
management team to work together effectively. Our business, revenue and
financial condition will be materially and adversely affected if our senior
management team does not manage our company effectively or if we are unable to
retain our senior management.
EXPENSES ARISING FROM OUR STOCK OPTION REPRICING MAY HAVE A MATERIAL ADVERSE
IMPACT ON FUTURE PERFORMANCE.
In response to the poor performance of our stock price between May 1998 and
January 1999, we offered to reprice employee stock options, other than those
held by our executive officers or directors, effective January 29, 1999, to
bolster employee retention. As a result of our offer, options to acquire
approximately 3.0 million shares were repriced, of which options to purchase a
total of approximately 1,045,350 shares are currently outstanding as of November
30, 2001. In addition, the four-year vesting period of the repriced options
started over. The recently adopted FASB Interpretation No. 44 of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees,"
requires us to record compensation expense or benefit associated with the change
in the market price of these options. The changes in our common stock market
price since the FASB-mandated measurement date of July 1, 2000 resulted in a
non-cash stock benefit of $0.0 million and $8.0 million during the three and
nine-month periods ended November 30, 2001, respectively, and an expense of
$11.1 million being recorded for the year ended February 28, 2001. In each
future quarter, we will record the additional expense or benefit related to the
repriced stock options still outstanding, to the extent that our stock price is
greater than $22.19, based on the change in our common stock price as compared
to the measurement date. As a result, the repricing may continue to have a
material adverse impact on reported financial results and could therefore
negatively affect our stock price.
WE MAY BE SUBJECT TO FUTURE LIABILITY CLAIMS, AND OUR COMPANY'S AND PRODUCTS'
REPUTATION 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 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.
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 and PRO
solutions, as well as created markets for new and enhanced product offerings.
Therefore, our future sales and profits
14
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 or delayed
development of enabling technologies and performance improvements;
- 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 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 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 THE NOTES
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 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. Neither the terms of our credit facility nor the
terms of these Notes fully prohibit us from
15
doing so. 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.
RISKS RELATED TO THE SALE OF OUR COMMON STOCK
SCHEDULED SALES OF SIGNIFICANT AMOUNTS OF OUR COMMON STOCK BY OUR EXECUTIVE
OFFICERS MAY CAUSE OUR STOCK PRICE TO DECLINE.
Certain of our executive officers have entered into pre-established trading
plans pursuant to which they sold a total of approximately 515,000 shares of our
common stock in January 2001, approximately 253,000 shares in April 2001, and
approximately 318,000 shares in the three months ended August 31, 2001. (Some of
these executive officers have terminated their plans.) Our executive officers
who maintain trading plans are scheduled to sell up to approximately 70,000
shares per quarter, subject to the terms of their trading plans, which terms
include price floors below which no shares or a reduced amount of shares will be
sold. The quarterly sales will continue until the trading plans are modified or
terminated. Certain of our other executive officers and directors may establish
similar plans to sell shares on a quarterly basis. The sale of these shares may
cause the market price of our stock to decline.
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.
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;
- weakening 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 by securities analysts;
16
- conditions or trends in the market for EPO, SRM, SCM and PRO solutions;
- changes in the performance and/or market valuations of our current and
potential competitors and the software industry in general;
- our 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;
- our sales of additional equity securities; and
- other events or factors that may be beyond our control.
In addition, the stock markets in general, The Nasdaq National Market and
the equity markets for software companies in particular, have recently
experienced extraordinary price and volume volatility and a significant
cumulative decline in recent months. Such volatility and decline have 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.
RECENT DEVELOPMENTS
SETTLEMENT OF LITIGATION WITH IRI
By a series of agreements dated as of March 7, 1997, Manugistics, Inc., our
principal subsidiary, acquired various assets and reseller rights from IRI
and/or a related subsidiary. By Complaint dated January 15, 1999, IRI sued
Manugistics, Inc. in the Circuit Court for Cook County, Illinois for alleged
breach of two of the March 7th agreements. Manugistics moved to compel
arbitration on IRI's claims, which motion was granted as to one of IRI's two
claims. Arbitration proceedings were commenced under the auspices of the
American Arbitration Association. In the arbitration, IRI sought approximately
$15.9 million in damages while in the Circuit Court for Cook County, IRI sought
damages for an amount in excess of $100,000.
In December 2001, Manugistics, Inc. and IRI reached a settlement of their
disputes. Manugistics, Inc. has agreed to pay to IRI an aggregate of $8,625,000
in various installments in or before September 2002. The payment obligation has
two components. Manugistics, Inc. has agreed to make cash payments in the total
amount of $4.75 million in installments to IRI, the last of which shall be made
on or before April 2002. In addition, the Company has agreed to issue shares of
its common stock to IRI in payment of the remaining $3,875,000 to be paid to
IRI. The number of shares to be issued shall be determined by dividing
$3,875,000 by the closing price of our common stock reported by the Nasdaq
National Market System on the day the registration statement of which this
Prospectus is a part becomes effective. Based on the closing price of our common
stock on February 15, 2002, of $16.54 we would issue approximately 234,000
shares to the selling stockholder. We will issue the shares to IRI shortly
before the registration statement becomes effective. (Manugistics, Inc. has the
right to pay all or a part of such remaining amount in cash in lieu of shares.
In addition, IRI has the right, under certain circumstances in the future, to
require Manugistics, Inc. to pay cash in lieu of all or a portion of the
shares.)
17
As part of the settlement, we also agreed to prepare and file with the
United States Securities and Exchange Commission (the "SEC"), a registration
statement on Form S-3 under the Securities Act relating to the resale of the
shares by IRI.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock offered
hereby. IRI will receive all of the net proceeds from the sale of shares of
common stock under this Prospectus.
PRICE RANGE OF COMMON STOCK
Our common stock trades on The Nasdaq National Market under the symbol
"MANU." The following table sets forth, for the periods indicated, the high and
low sales prices per share for our common stock, as reported on The Nasdaq
National Market for the periods indicated.
HIGH LOW
------- -------
FISCAL YEAR 2000
First Quarter............................................. $ 5.63 $ 2.63
Second Quarter............................................ 8.00 4.34
Third Quarter............................................. 8.94 4.53
Fourth Quarter............................................ 29.06 8.50
FISCAL YEAR 2001
First Quarter............................................. $ 35.13 $ 12.53
Second Quarter............................................ 46.66 11.25
Third Quarter............................................. 66.06 30.88
Fourth Quarter............................................ 64.38 26.94
FISCAL YEAR 2002
First Quarter............................................. $ 41.90 $ 15.38
Second Quarter............................................ 42.38 11.65
Third Quarter............................................. 13.70 4.94
Fourth Quarter (December 1, 2001 through February 15,
2002).................................................. 22.70 11.07
On February 15, 2002, the last reported sale price of our common stock as
reported on The Nasdaq National Market was $16.54 per share. On February 15,
2002, there were approximately 329 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, 2002, 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 STOCKHOLDER
This Prospectus is to be used in connection with the sale by the selling
stockholder of a total of up to 597,000 shares of common stock. Pursuant to the
Settlement Agreement we will issue the shares to be sold under this Prospectus
to the selling stockholder. The issuance of the shares
18
to the selling stockholder is intended to be a transaction exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) of the
Securities Act.
The following table sets forth certain information regarding the beneficial
ownership of shares of common stock by the selling stockholder as of February
, 2002; the selling stockholder 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 common stock which we will issue to the selling
stockholder in connection with the Settlement Agreement. We have assumed that
all of the shares being offered by this Prospectus will be sold; however, the
selling stockholder has 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, the selling stockholder has 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 its contractual relationship
with Manugistics, Inc. under a series of agreements dated as of March 7, 1997.
These agreements were the subject of the legal proceedings described under
"Recent Developments" above .
NUMBER OF SHARES
NAME OF SELLING OWNED AND
STOCKHOLDER OFFERED
--------------- ----------------
Information Resources, Inc. ................................
PLAN OF DISTRIBUTION
We have agreed to register the shares of the selling stockholder for resale
under the Securities Act at our own expense. 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 the shares pursuant to the
Registration Statement; or (ii) one year from the date of the effective date of
the Registration Statement.
All of the Shares which we will issue pursuant to the Settlement Agreement
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.
The selling stockholder has informed the Company that, subject to market
conditions and other factors, it presently intends to sell the Shares to be
issued to it under this Prospectus. However, the selling stockholder may
determine not to resell all or any portion of the Shares.
The common stock is presently listed for trading on The Nasdaq National
Market. The sale of the Shares offered under this Prospectus will not be
underwritten. The selling stockholder may sell 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, 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 to us by the selling stockholder in connection
with the issuance of the Shares. It is anticipated that usual and customary
brokerage fees will be paid by the selling stockholder upon any 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.
The selling stockholder has agreed that it 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
19
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 February 15, 2002, there were 68,759,766 shares of our common stock
which were held of record by approximately 329 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, 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
20
- 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 more than 67% 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
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" if the business
21
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 the board of directors of Manugistics. On
February 15, 2002, Mr. Jacovini was the beneficial owner of 158,000 shares of
common stock (including 2,672 shares of common stock held by his spouse and a
total of 79,328 shares of common stock issuable upon exercise of certain
options).
EXPERTS
The consolidated financial statements of Manugistics as of February 28,
2001 and February 29, 2000 and for each of the three years in the period ended
February 28, 2001, incorporated in this prospectus by reference from the
Manugistics Annual Report on Form 10-K for the period ended February 28, 2001,
have been audited by Deloitte and Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report 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 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
22
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 March 7, 2001;
- Current Report on Form 8-K, filed March 8, 2001;
- Annual Report on Form 10-K for the year ended February 28, 2001;
- Quarterly Report on Form 10-Q for the quarter ended May 31, 2001;
- Current Report on Form 8-K, filed September 6, 2001;
- Quarterly Report on Form 10-Q for the quarter ended August 31, 2001;
- Current Report on Form 8-K, filed December 21, 2001;
- Quarterly Report on Form 10-Q for the quarter ended November 30, 2001;
and
- 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.
2115 EAST JEFFERSON STREET
ROCKVILLE, MD 20852
(301) 984-5000
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 February , 2002. You should not assume that this Prospectus is accurate
as of any other date.
23
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............................................ $ 2,444
Printing Expenses........................................... 10,000
Legal Fees and Expenses..................................... 20,000
Accountants' Fees and Expenses.............................. 20,000
Transfer Agent.............................................. 1,000
Miscellaneous............................................... 1,556
-------
Total............................................. $55,000
=======
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 executed Amended and Restated Registration Rights
Agreement between Manugistics Group, Inc. and Information
Resources, Inc., dated as of December 14, 2001.
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).
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 that:
(i) For purposes of determining any liability under the Securities Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was declared effective.
(ii) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of Prospectus 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 offers or sales are being made, a
post-effective amendment to this Registration Statement to include any
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;
(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
(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,
II-2
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 21th day of
February, 2002.
MANUGISTICS GROUP, INC.
By: /s/ GREGORY J. OWENS
------------------------------------
Gregory J. Owens Chief Executive
Officer
POWER OF ATTORNEY
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 February 21, 2002
--------------------------------------------- Directors and Chief Executive
Gregory J. Owens Officer (Principal Executive
Officer)
/s/ RAGHAVAN RAJAJI Executive Vice President and February 21, 2002
--------------------------------------------- Chief Financial Officer
Raghavan Rajaji (Principal Financial Officer)
* Vice President, Controller and February 21, 2002
--------------------------------------------- Chief Accounting Officer
Jeffrey T. Hudkins (Principal Accounting Officer)
* Director February 21, 2002
---------------------------------------------
J. Michael Cline
* Director February 21, 2002
---------------------------------------------
Steven A. Denning
* Director February 21, 2002
---------------------------------------------
Esther Dyson
* Director February 21, 2002
---------------------------------------------
Lynn C. Fritz
* Director February 21, 2002
---------------------------------------------
Joseph H. Jacovini
* Director February 21, 2002
---------------------------------------------
Hau L. Lee
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SIGNATURE TITLE DATE
--------- ----- ----
* Director February 21, 2002
---------------------------------------------
William G. Nelson
* Director February 21, 2002
---------------------------------------------
Thomas A. Skelton
/s/ RAGHAVAN RAJAJI
---------------------------------------------
Attorney-in-fact
II-5
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4 Form of executed Amended and Restated Registration Rights
Agreement between Manugistics Group, Inc. and Information
Resources, Inc., dated as of December 14, 2001.
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).
II-6