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Filed Pursuant to Rule 424(b)3
Registration Statement # 333-53918
[MANUGISTICS LOGO]
$250,000,000
5% CONVERTIBLE SUBORDINATED NOTES DUE 2007 AND
COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES
------------------------
We issued the Notes in a private placement in October and November 2000.
Selling holders will use this Prospectus to sell the Notes and the shares of
common stock into which the Notes are convertible at any time at market prices
prevailing at the time of the sale or at privately negotiated prices. The
selling holders may sell the Notes or the common stock directly to purchasers or
through underwriters, broker-dealers or agents, who may receive compensation in
the form of discounts, concessions or commissions.
The holders of the Notes may convert the Notes into shares of our common
stock at any time at a conversion rate of approximately 22.695 shares per $1,000
principal amount of Notes. The conversion price is $44.0625 per share. Interest
on the Notes is payable on May 1 and November 1 of each year, commencing on May
1, 2001. At any time on or after November 7, 2003, we may redeem the Notes, in
whole or in part, at the redemption prices as set forth in this Prospectus.
However, we may not redeem the Notes unless the closing price of our stock
exceeds 120% of the conversion price for at least 20 trading days in a
consecutive 30-day period preceding the date we mail the redemption notice.
In the event of a change in control, as defined in this Prospectus, each
holder of Notes may require us to repurchase the Notes for cash at 100% of the
principal amount of the Notes plus accrued interest.
The Notes are unsecured obligations that are subordinated in right of
payment to all of our existing and future senior indebtedness. There are no
sinking fund provisions.
Our common stock is listed on The Nasdaq National Market under the symbol
"MANU." On March 7, 2001, the closing sale price of our common stock, as
reported on The Nasdaq National Market, was $26.94.
INVESTING IN THE NOTES AND OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 6.
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 March 12, 2001
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TABLE OF CONTENTS
PAGE
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Disclosure Regarding Forward Looking Statements............. 2
Prospectus Summary.......................................... 3
Risk Factors................................................ 6
Ratio of Earnings to Fixed Charges.......................... 18
Use of Proceeds............................................. 18
Price Range of Common Stock................................. 18
Dividend Policy............................................. 19
Selling Holders............................................. 19
Plan of Distribution........................................ 21
Description of Notes........................................ 23
Description of Capital Stock................................ 35
Certain United States Federal Income Tax Considerations..... 37
Legal Matters............................................... 44
Experts..................................................... 44
Where You Can Find More Information......................... 45
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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
phrases "Leveraged Intelligence," "Enterprise Profit Optimization," and
"NetWORKS" 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" or
"Manugistics" refers to Manugistics Group, Inc., a Delaware corporation.
All share numbers in this Prospectus reflect the Company's two-for-one
stock split effective December 7, 2000.
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, and Section 21E of the
Exchange Act of 1934, as amended. 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
statements. 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.
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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 for more information on our
business and the risks involved in investing in our securities.
MANUGISTICS
OUR BUSINESS
We are the leading global provider of Enterprise Profit Optimization(TM)
(EPO) and marketplace (electronic marketplace) solutions that help companies
lower operating costs, increase revenues, enhance profitability, and accelerate
growth by optimizing the supply-demand network from design and procurement
through pricing and delivery. We believe EPO is an important emerging market
made possible through the combination of the proven cost-reduction power of
supply chain management (SCM) solutions and the breakthrough revenue-generating
capacity of pricing and revenue optimization (PRO).
Our solutions, which include our family of marketplace and application
software products, strategic consulting, and implementation services, help our
clients monitor and streamline their core internal operational processes
involving the design, purchase, manufacture, storage, transportation, marketing,
and selling and pricing of their goods and services. Our solutions help
integrate clients' internal processes with those of their trading partners and
provide the collaboration and optimization required throughout the demand and
supply chains and across extended marketplaces. Our solutions also help our
clients improve customer service and improve resource allocation through more
effective operational decisions, driving revenue higher and costs lower.
Increasing global competition, shortening product life cycles and
developing marketplace initiatives of new and existing competitors are driving
enterprises to provide improved levels of customer service while shortening
their time-to-market. We were an early innovator in trading partner
collaboration, with our first Internet-ready products commercially available in
late 1997. Our technology initiatives continue to focus on the changing needs of
companies in the markets we serve, as well as the requirements of the new
marketplace economy. Our NetWORKS(TM) products are web enabled through our
WebWORKS(TM) architecture and have provided advanced integration to disparate
systems through our WebConnect products. Through our exchange platform
ExchangeWORKS(TM), we are now addressing the new marketplace processes enabled
by the Internet, such as auctions, dynamic pricing, procurement, track and
trace, as well as order and pipeline visibility.
We offer solutions to companies in a diverse array of industries including
agriculture, apparel, chemicals, consumer durables, consumer packaged goods,
electronics & high technology, energy, food & beverage, government, logistics,
metals, motor vehicles & parts, pharmaceuticals, pulp & paper, retail, services
and transport, travel & hospitality. Our customer base of over 1,100 clients
includes large, multinational enterprises such as 3Com, Cisco Systems, Coca-Cola
Bottling, Astec Power Division of Emerson, Ford, Fuji Photo Film USA,
Harley-Davidson, Levi Strauss & Co., Marriott, Texas Instruments, The Limited
and Unilever, as well as medium-sized enterprises and emerging marketplaces.
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, TX, Mountain View, CA, Wayne,
PA and San Mateo, CA in the United States, and internationally in Australia,
Belgium, Brazil, Canada, France, Germany, Italy, Japan, Mexico, The Netherlands,
Singapore, Spain, Sweden and the United Kingdom.
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RECENT DEVELOPMENTS
As previously announced, on December 21, 2000, we completed the acquisition
of Talus Solutions, Inc. ("Talus"), a Delaware corporation, in a stock-for-stock
merger (the "Merger"). Talus, headquartered in Atlanta, Georgia, is a leading
provider of Pricing and Revenue Optimization (PRO) products and services.
In connection with the closing of the Merger, we issued a total of
7,026,260 shares of our common stock on December 21, 2000. Of these shares, a
total of approximately 5,972,530 shares were delivered to the exchange agent for
direct transfer to the former Talus stockholders following closing of the
Merger. A total of approximately 1,053,730 shares were delivered to State Street
Bank and Trust Company, as escrow agent, to secure potential indemnification
claims we may have. To the extent that the escrowed shares are not subject to
indemnification claims, the escrowed shares will be delivered to the former
Talus stockholders in two installments, on October 31, 2001 and on July 2, 2002.
In addition, a total of approximately 1,373,608 shares have been reserved
for issuance upon exercise of Talus stock options and warrants assumed by us in
connection with the Merger.
Certain former Talus stockholders holding a total of approximately
5,456,460 shares of our common stock, including escrowed shares, have agreed not
to resell such shares prior to three staged release dates: January 18, 2001, May
31, 2001 and October 31, 2001. All remaining shares shall be released on October
31, 2001.
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The following historical consolidated statement of operations data for the
years ended February 29 or 28, 1998, 1999 and 2000 is derived from our audited
financial statements. The unaudited statement of operations data for the nine
months ended November 30, 1999 and 2000 and consolidated balance sheet data as
of November 30, 2000 is derived from our Quarterly Report on Form 10-Q filed on
January 16, 2001 with the Securities and Exchange Commission (the "SEC"). The
unaudited pro forma combined condensed financial data is derived from the
Current Report on Form 8-K filed with the SEC on January 18, 2001.
HISTORICAL HISTORICAL
------------------------------------------ PRO FORMA --------------------------- PRO FORMA
FISCAL YEAR ENDED ------------ ------------
FEBRUARY 29 OR 28, NINE MONTHS NINE MONTHS
------------------------------------------ FEBRUARY 29, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1998 1999 2000 2000(1),(2) 1999 2000 2000(1),(2)
---------- ---------- ---------- ------------ ------------ ------------ ------------
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenues:
License fees............... $107,547 $ 73,802 $ 60,421 $ 60,645 $ 38,423 $ 90,290 $ 92,217
Consulting, solution
support and other
services................. 72,716 103,762 92,012 129,638 70,359 88,375 118,338
-------- -------- -------- --------- -------- -------- ---------
Total revenues......... $180,263 $177,564 $152,433 $ 190,283 $108,782 $178,665 $ 210,555
-------- -------- -------- --------- -------- -------- ---------
Operating expenses:
Cost of license fees....... $ 11,102 $ 13,415 $ 13,685 $ 13,835 $ 9,596 $ 14,365 $ 14,365
Cost of consulting,
solution support and
other services........... 33,213 50,585 44,346 74,715 32,703 39,636 57,778
Sales and marketing........ 66,228 103,006 61,439 70,920 43,212 78,844 85,201
Product development........ 32,794 49,389 29,150 36,455 21,977 25,179 32,150
General and
administrative........... 14,639 19,828 15,837 114,393 11,736 16,282 92,329
Acquisition-related
expenses................. -- 3,095 -- -- -- -- --
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HISTORICAL HISTORICAL
------------------------------------------ PRO FORMA --------------------------- PRO FORMA
FISCAL YEAR ENDED ------------ ------------
FEBRUARY 29 OR 28, NINE MONTHS NINE MONTHS
------------------------------------------ FEBRUARY 29, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1998 1999 2000 2000(1),(2) 1999 2000 2000(1),(2)
---------- ---------- ---------- ------------ ------------ ------------ ------------
Non-cash stock compensation
expense.................. -- -- -- 7,597 -- 14,638(4) 20,986
Restructuring costs........ -- 33,775 (1,506) 2,450 (699) -- (211)
Purchased research and
development.............. 47,340 -- -- -- -- -- --
-------- -------- -------- --------- -------- -------- ---------
Total operating expenses.... $205,316 $273,093 $162,951 $ 320,365 $118,525 $188,944 $ 302,598
-------- -------- -------- --------- -------- -------- ---------
Loss from operations........ (25,053) (95,529) (10,518) (130,082) (9,743) (10,279) (92,043)
Other income -- net......... 2,863 2,362 1,389 (12,027) 1,235 1,021 (8,489)
-------- -------- -------- --------- -------- -------- ---------
Loss before income taxes.... (22,190) (93,167) (9,129) (142,109) (8,508) (9,258) (100,532)
Provision (Benefit) for
income taxes............... (9,025) 2,945 (184) (184) (657) 2,154 2,154
-------- -------- -------- --------- -------- -------- ---------
Net loss.................... $(13,165) $(96,112) $ (8,945) $(141,925) $ (7,851) $(11,412) $(102,686)
======== ======== ======== ========= ======== ======== =========
Basic loss per share........ $ (0.28) $ (1.82) $ (0.16) $ (2.29) $ (0.14) $ (0.20) $ (1.59)
======== ======== ======== ========= ======== ======== =========
Shares used in basic share
computation................ 46,968 52,804 54,972 61,998 54,594 57,378 64,404
======== ======== ======== ========= ======== ======== =========
Diluted loss per share...... $ (0.28) $ (1.82) $ (0.16) $ (2.29) $ (0.14) $ (0.20) $ (1.59)
======== ======== ======== ========= ======== ======== =========
Shares used in diluted share
computation................ 46,968 52,804 54,972 61,998 54,594 57,378 64,404
======== ======== ======== ========= ======== ======== =========
NOVEMBER 30, 2000
-----------------------
ACTUAL PRO FORMA(3)
-------- ------------
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and marketable securities............ $280,774 $293,105
Working capital............................................. 287,640 291,977
Total assets................................................ 434,132 834,337
Long-term debt (less current portion)....................... 250,116 254,054
Accumulated deficit......................................... (113,614) (113,614)
Total stockholders' equity.................................. 110,220 485,974
---------------
(1) The pro forma consolidated statement of operations data for the year ended
February 29, 2000 and the nine months ended November 30, 2000 reflects
Manugistics' acquisition of Talus Solutions, Inc. as if it had taken place
on March 1, 1999. See the Current Report on Form 8-K filed with the SEC on
January 18, 2001 which is incorporated herein by reference.
(2) The pro forma consolidated statement of operations data for the year ended
February 29, 2000 and nine months ended November 30, 2000 reflects the note
offering as if it had taken place on March 1, 1999. See the Current Report
on Form 8-K filed with the SEC on January 18, 2001 which is incorporated
herein by reference.
(3) The pro forma balance sheet data reflects Manugistics acquisition of Talus
Solutions, Inc. as if it had taken place on November 30, 2000. See the
Current Report Form 8-K filed with the SEC on January 18, 2001 which is
incorporated herein by reference.
(4) During the nine months ended November 30, 2000, we incurred non-cash stock
compensation expense totaling $14.6 million in connection with the
application of FASB Interpretation No. 44 (FIN 44) "Accounting for Certain
Transactions Involving Stock Compensation" to the January 1999 repriced
stock options. See our Quarterly Report on Form 10-Q filed on January 16,
2001 for the impact of the non-cash stock compensation on the various
expense line items.
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RISK FACTORS
An investment in the Notes or the shares of common stock into which the
Notes are convertible involves a high degree of risk. Before you decide to
purchase the Notes or the shares of common stock into which the Notes are
convertible, you should carefully consider these risk factors together with all
of the other information included in this Prospectus.
RISKS RELATED TO OUR BUSINESS
AS A RESULT OF RECENT 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 for the nine months ended November 30, 2000. In response to our
problems, we hired a new executive management team, enhanced our supply chain
optimization and marketplace products and services, expanded the scope of our
product and service offerings to include 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:
- slower growth in the market for supply chain management, pricing/revenue
optimization and marketplace solutions;
- our ability to introduce new software products and services to respond to
technological and client needs;
- our ability to manage our anticipated growth;
- 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 EXPERIENCED SIGNIFICANT LOSSES IN RECENT FISCAL YEARS. 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 $11.4
million for the nine-months ended November 30, 2000, $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 and non-cash compensation
expenses associated with our acquisition of Talus and the amortization of
intangible assets relating to our acquisition of STG Holdings Inc., and related
to investment banking fees associated with our private placement of 5%
subordinated convertible notes. In addition, we may incur non-cash compensation
charges related to our stock option repricing as discussed in more detail on
page 14. We cannot assure you that our revenues will grow or that we will
achieve or maintain profitability in the future. Our ability to increase
revenues 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.
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OUR OPERATING RESULTS FLUCTUATE, AND IF WE FAIL TO MEET THE EXPECTATIONS OF THE
INVESTMENT COMMUNITY IN ANY PERIOD, OUR STOCK PRICE COULD DECLINE SIGNIFICANTLY.
Our revenues 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;
- 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;
- changes in prices or the pricing models for our products and services or
those of our competitors;
- changes in the mix of our software license revenues, consulting revenues
and solution support revenues;
- 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. If this occurs, the
price of our common stock could decline significantly.
VARIATIONS IN THE TIME IT TAKES US TO SELL OUR SOLUTIONS MAY CAUSE FLUCTUATIONS
IN OUR OPERATING RESULTS.
The time it takes to sell our solutions to prospective clients varies
substantially, but typically ranges between six and twelve months. Variations in
the length of our sales cycles could cause our revenues to fluctuate widely from
period to period. Because we typically recognize a substantial portion of our
license revenues in the last month of a quarter, any delay in the sale of our
products could cause significant variations in our revenues from quarter to
quarter. Furthermore, because our operating expenses are relatively fixed over
the short term and we devote significant time and resources to prospective
clients, these fluctuations could cause our operating results to suffer in some
future periods. The length of our sales cycle depends on a number of factors,
including the following:
- the complexities of the supply chain, pricing/revenue and marketplace
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; 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 supply chain, pricing/revenue and marketplace problems. Further, we are
now focusing on providing total
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solutions to our clients, as opposed to only licensing software. As the
complexity of the problems our clients seek to solve 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 complexity of our contracts;
- 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 revenues 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 revenues 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 who have commercial relationships or
compete with the acquired company;
- avoid unanticipated operational difficulties or expenditures; 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 the first half of calendar year 1998. 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,
revenues generated from this technology have 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 provides pricing and revenue optimization products and
services. This acquisition is 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 the commercial release of Talus' custom-developed
products;
- our ability to protect and maintain Talus' intellectual property rights;
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- our ability to successfully market and license the products Talus has
developed and is developing for commercial release;
- our ability to successfully integrate Talus' technologies;
- 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 supply chain and marketplace capabilities and products
with Talus' pricing and revenue optimization products and services;
- market acceptance of our combined supply chain and pricing and revenue
optimization 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 will 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 $23 million of deferred compensation related to unvested
stock options over four years. Further, we will incur an annual amortization
charge of approximately $92 million related to goodwill and intangible assets
over the next four years.
WE DEPEND ON SALES OF OUR SUPPLY CHAIN MANAGEMENT, PRICING/REVENUE OPTIMIZATION
AND MARKETPLACE 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 license fees, consulting revenues and
solution support revenues have arisen from, or are related directly to, our
supply chain management, pricing/revenue optimization and marketplace solutions.
We expect to continue to be dependent upon these products in the future, and any
factor adversely affecting the products or the market for supply chain
management, pricing/revenue optimization and marketplace solutions, in general,
would materially and adversely affect our ability to generate revenues. While we
believe the market for supply chain management, pricing/revenue optimization and
marketplace solutions will continue to expand, it may grow more slowly than in
the past. If the market for our products does not grow as rapidly as we expect,
revenue growth, operating margins or both could be adversely affected.
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
is likely to 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 MORE 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. Micros Systems, Inc., PROS Revenue
Management, Sabre, Inc., SynQuest and YieldStar Technology. Some marketplace
software companies that do not currently offer competitive products or
solutions, such as Ariba, Inc. and Commerce One, may begin to compete directly
with us. In addition, some enterprise resource planning (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
continuing to develop supply chain planning software products. 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 WE FAIL TO DEVELOP NEW PRODUCTS AND SERVICES IN THE FACE OF OUR INDUSTRY'S
RAPIDLY EVOLVING TECHNOLOGY, OUR FUTURE RESULTS MAY BE MATERIALLY AND ADVERSELY
AFFECTED.
The markets for supply chain management, pricing/revenue optimization and
marketplace 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 investment. 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 REVENUES OR DELAYS IN THE
MARKET ACCEPTANCE OF OUR PRODUCTS.
Our software products are complex and are frequently integrated with a wide
variety of third-party software. We may license products that contain undetected
errors or failures when new products are first introduced or as new versions are
released. We may also be unable to meet client expectations in implementing our
solutions. These problems may result in claims for damages suffered by our
clients or a loss of, or delays in, the market acceptance of our products.
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In the past, we have discovered software errors in our new releases and new
products after their introduction. In the event that we experience significant
software errors in future releases, we could experience claims for damages,
delays in product releases, client dissatisfaction and potentially lost revenues
during the period required to correct these errors. In the future, we may
discover errors or limitations in new releases or new products after the
commencement of commercial shipments. Any of these errors, defects or delays
could materially harm our business.
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. Any impairment in our
relationship with these third parties could adversely impact our business 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 Extricity, 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 an important role in
marketing our products. 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 whom 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 results of operations.
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 revenues may be derived from
government agency clients.
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Obtaining government contracts may involve long purchase cycles, competitive
bidding, qualification requirements, performance bond requirements, delays in
funding, budgetary constraints and extensive specification development and price
negotiations. In order to facilitate doing business with the federal government,
we have submitted a schedule of prices for our products and services to the
General Services Administration. We are permitted to update our schedule of
prices only on an annual basis. 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 revenues 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 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 renegotiation 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 EFFECTIVELY EXPAND OUR SALES ORGANIZATION, OUR ABILITY TO GROW
WILL BE LIMITED.
Our continuing efforts to expand our sales organization will require
significant resources. New sales personnel will require training and may take a
long time to achieve full productivity. Further, the competition for qualified
sales personnel is intense, and 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 and support our products could limit our growth and
adversely affect our 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 overlaps. In recent years, there has been a tendency
by software companies to file substantially
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increasing numbers of patent applications. We have no way of knowing what patent
applications third parties have filed until a patent is issued. It can take as
long as three years 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;
- different accounting practices;
- problems in collecting accounts receivable;
- legal uncertainty regarding liability, ownership and protection of
intellectual property;
- tariffs and other trade barriers;
- seasonal reductions in business activities;
- potentially adverse tax consequences; and
- political instability.
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.
FLUCTUATIONS IN FOREIGN CURRENCIES COULD ADVERSELY AFFECT OUR OPERATING RESULTS.
Although the majority of our contracts are denominated in U.S. dollars,
most of the revenues from licenses with customers outside the United States have
been denominated in foreign currencies, typically in the local currency of our
selling business unit. We anticipate that the proportion of our revenues
denominated in foreign currencies will increase. A decrease in the value of
foreign currencies relative to the U.S. dollar could result in losses from
foreign currency fluctuations. With respect to our international sales that are
U.S. dollar-denominated, an increase in the value of the U.S. dollar relative to
the value of foreign currencies could make our products and services less
competitive with respect to price.
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.
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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 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, revenues 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. The effect of this repricing resulted in options to
acquire approximately 3,040,000 shares being repriced and the four-year vesting
period starting 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 increase in our common
stock market price since the FASB-mandated measurement date of July 1, 2000
resulted in a non-cash stock compensation expense of $14.6 million being
recorded for the nine months ended November 30, 2000. This non-cash stock
compensation expense caused what would otherwise have been reported as net
income for the nine months of $3.2 million, or $0.05 per basic and diluted
share, to be reported as a net loss of $11.4 million, or $0.20 per basic and
diluted share. In each future quarter, we will record the additional expense or
benefit related to the repriced stock options still outstanding 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.
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RISKS RELATED TO OUR INDUSTRY
LACK OF GROWTH OR DECLINE IN INTERNET USAGE OR MARKETPLACES COULD BE DETRIMENTAL
TO OUR FUTURE OPERATING RESULTS.
The growth of the Internet has increased demand for supply chain
management, pricing/revenue optimization and marketplace 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 marketplace. The Internet may not succeed in becoming a viable
marketplace 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
become and remain a viable commercial marketplace, our business, financial
condition and results of operations could be materially and adversely affected.
NEW LAWS OR REGULATIONS AFFECTING THE INTERNET, MARKETPLACES OR COMMERCE IN
GENERAL COULD REDUCE OUR REVENUES 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 and operating results
could suffer.
THE VIABILITY OF ELECTRONIC MARKETPLACES IS UNCERTAIN.
Electronic marketplaces that allow collaboration over the Internet among
trading partners are relatively new and unproven. There can be no assurance that
trading partners will adopt marketplaces as a method of doing business. Trading
partners may fail to participate in marketplaces for a variety of reasons,
including:
- concerns about the confidentiality of information provided electronically
to marketplaces;
- the inability of technological advances to keep pace with the volume of
information processed by marketplaces; and
- regulatory issues, including antitrust issues that may arise when trading
partners collaborate through marketplaces.
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Any of these factors could limit the growth of marketplaces as an accepted
means of commerce. Slower growth or the abandonment of the marketplace concept
in one or more industries could have a material adverse affect on our results of
operations and financial condition.
RISKS RELATED TO THE NOTES
OUR INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.
In November 2000, we completed a debt offering of $250 million in 5%
subordinated convertible notes. 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 flow from
operations to the payment of principal of, and interest on, our
indebtedness, thereby reducing the availability of such cash flow to fund
our growth strategy, working capital, capital expenditures 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 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.
RESALES OF SIGNIFICANT AMOUNTS OF OUR COMMON STOCK ISSUED IN CONNECTION WITH THE
ACQUISITION OF TALUS SOLUTIONS MAY CAUSE OUR STOCK PRICE TO DECLINE.
In connection with the acquisition of Talus Solutions, Inc., we issued
7,026,260 new shares of our common stock. Of these shares, a total of 5,972,530
shares were delivered to Manugistics' exchange agent for direct transfer to the
former Talus stockholders and a total of 1,053,730 shares were delivered to
State Street Bank and Trust Company, as escrow agent, to secure potential
indemnification claims of Manugistics. To the extent that the escrowed shares
are not subject to indemnification claims, the escrowed shares will be released,
subject to existing claims, in two installments, on October 31, 2001 and July 2,
2002. Of the 5,972,530 shares delivered to the exchange agent, approximately 1.3
million shares were freely tradable upon completion of the acquisition. The
remaining approximately 4.6 million shares are subject to share transfer
restrictions and will become available for sale in three stages in accordance
with the terms of the share transfer restriction agreements signed by certain
principals of Talus Solutions, Inc. The first release date was January 18, 2001,
at which time approximately 1.4 million shares were released. The balance of
these shares will be released, in accordance with the terms of the share
transfer restriction agreements, on May 31, 2001 and October 31, 2001.
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In addition, at closing, a total of approximately 1.4 million shares were
reserved for issuance upon exercise of outstanding Talus Solution's stock
options and warrants which were assumed by Manugistics. Options to purchase a
total of approximately 700,000 shares were exercisable at the time of completion
of the acquisition. In addition, a total of approximately 370,000 of these
shares were subject to share transfer restrictions which expired January 18,
2001.
SALES OF SIGNIFICANT AMOUNTS OF OUR COMMON STOCK BY OUR EXECUTIVE OFFICERS AND
DIRECTORS 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. Thereafter, they will sell up to approximately
300,000 shares per fiscal quarter pursuant to their trading plans. These
quarterly sales will continue until the trading plans are modified or
terminated. Certain of our other executive officers and directors are
considering establishing similar plans to sell shares on a quarterly basis. The
sale of these shares may cause the market price of our stock price 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. In addition, our bylaws require a two-thirds vote of stockholders to
remove a director from office. 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;
- announcements of technological innovations;
- new products or services offered by us or our competitors;
- changes in financial estimates by securities analysts;
- conditions or trends in the market for supply chain management,
pricing/revenue optimization and marketplace 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;
- additions or departures of key personnel;
- our sales of additional capital stock; and
- other events or factors that may be beyond our control.
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In addition, the stock markets in general, The Nasdaq National Market and
the market for software companies in particular, have recently experienced
extreme price and volume volatility and a significant cumulative decline in
recent months. Such volatility and decline have affected 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.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for the years ended February 29,
1996 and February 28, 1997 was 57x and 22x, respectively. Our earnings were
insufficient to cover fixed charges in the years ended February 29 or 28, 1998,
1999 and 2000 and the nine-month periods ended November 30, 1999 and 2000.
Additional earnings of $13.2 million, $96.1 million, $8.9 million, $7.9 million
and $11.4 million were necessary to provide a 1:1 coverage ratio for the years
ended February 29 or 28, 1998, 1999 and 2000 and for the nine-month periods
ended November 30, 1999 and 2000, respectively. For the purpose of these
calculations, "earnings" consist of income before taxes, plus fixed charges, and
"fixed charges" consist of interest expense incurred and the amortization of
capitalized expenses related to indebtedness..
USE OF PROCEEDS
We will not receive any proceeds from the sale of the Notes or the common
stock into which the Notes are convertible. The selling holders will receive all
of the net proceeds from the sale of the Notes and the common stock into which
the Notes are convertible, which they respectively own.
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 (March 1 through March 7)................... $31.38 $21.50
On March 7, 2001, the last reported sale price of our common stock as
reported on The Nasdaq National Market was $26.94 per share. On March 7, 2001,
there were approximately 370 holders of record of our common stock.
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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 September
30, 2001, 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 HOLDERS
We originally issued the Notes to, and the Notes were sold by, the initial
purchasers in a transaction exempt from the registration requirements of the
Securities Act to persons reasonably believed by the initial purchasers to be
qualified institutional buyers as defined by Rule 144A under the Securities Act
or to persons other than U.S. persons. Selling holders, including their
transferees, pledges or donees or their successors, may from time to time offer
and sell pursuant to this Prospectus any or all of the Notes and common stock
into which the Notes are convertible. We agreed to use reasonable efforts to
keep the registration statement effective until October 20, 2002. Our
registration of the Notes and the shares of common stock into which the Notes
are convertible does not necessarily mean that the selling holders will sell any
or all of the Notes or the shares of the common stock into which the Notes are
convertible.
The following table sets forth information, as of March 9, 2001, with
respect to the selling holders and the principal amounts of Notes beneficially
owned by each selling holder that may be offered under this Prospectus. The
information is based on information provided by or on behalf of the selling
holders. The selling holders may offer all, some or none of the Notes or common
stock into which the Notes are convertible. Because the selling holders may
offer all or some portion of the Notes or the common stock, no estimate can be
given as to the amount of the Notes or the common stock that will be held by the
selling holders upon termination of any sales. In addition, the selling holders
identified below may have sold, transferred or otherwise disposed of all or a
portion of their Notes since the date on which they provided the information
regarding their Notes in transactions exempt from the registration requirements
of the Securities Act.
Each selling holder proposes to sell up to all of the common stock issuable
to such holder upon conversion of the Notes.
PRINCIPAL AMOUNT COMMON STOCK
OF NOTES ISSUABLE UPON
BENEFICIALLY OWNED CONVERSION OF
SELLING HOLDER AND OFFERED THE NOTES(1)
-------------- ------------------ -----------------
1976 Distribution Trust FBO A.R. Lauder/Zinterhofer...... $ 14,000 317
1976 Distribution Trust FBO Jane A. Lauder............... 14,000 317
AAM/Zazoye Institutional Income Fund L.P. (BS)........... 1,000,000 22,695
ACM Offshore Fund........................................ 1,150,000 26,099
AFTRA Health Fund........................................ 166,000 3,767
AIG/National Union Fire Insurance........................ 550,000 12,482
Alexandra Global Investment Fund 1 Ltd................... 7,000,000 158,865
American Motorist Insurance Corporation.................. 528,000 11,982
American Skandia Trust................................... 100,000 2,269
Arapahoe County Colorado................................. 52,000 1,180
B.C. McCabe Foundation................................... 150,000 3,404
BNP Cooper Neff Convertible Securities Fund, L.P......... 214,000 4,856
BNP Paribas Equity Strategies, Inc....................... 1,286,000 29,185
Boulder II Limited....................................... 15,800,000 358,581
BP Amoco PLC, Master Trust............................... 933,000 21,174
British Virgin Island Social Security Board.............. 40,000 907
Brown & Williamson Tobacco Master Retirement Trust....... 33,000 748
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PRINCIPAL AMOUNT COMMON STOCK
OF NOTES ISSUABLE UPON
BENEFICIALLY OWNED CONVERSION OF
SELLING HOLDER AND OFFERED THE NOTES(1)
-------------- ------------------ -----------------
CIBC World Markets....................................... 4,500,000 102,127
City of New Orleans...................................... 217,000 4,924
City University of New York.............................. 129,000 2,927
Credit Research & Trading LLC............................ 3,875,000 87,943
Delaware PERS............................................ 635,000 14,411
Deutsche Banc Alex. Brown Inc............................ 11,733,000 266,280
Elf Aquitaine............................................ 100,000 2,269
F.R. Convt Sec Fn........................................ 35,000 794
Grady Hospital Foundation................................ 113,000 2,564
Greyhound Amalgamated Trust.............................. 75,000 1,702
HFR Master Fund Ltd...................................... 120,000 2,723
Hotel Union & Hotel Industry of Hawaii................... 345,000 7,829
ICI American Holdings Trust.............................. 340,000 7,716
Island Holdings.......................................... 30,000 680
ITG, Inc................................................. 144,000 3,268
J.P. Morgan Securities, Inc. ............................ 45,000,000 1,021,276
Jefferies & Company Inc.................................. 8,000 181
JMG Capital Partners, LP................................. 2,500,000 56,737
JMG Triton Offshore Fund, Ltd............................ 3,750,000 85,106
Julius Baer Securities Inc............................... 387,000 8,782
KBC Financial Products USA............................... 1,100,000 24,964
LDG Limited.............................................. 500,000 11,347
Lexington Vantage Fund................................... 50,000 1,134
Lipper Convertibles, L.P. ............................... 9,633,000 218,621
Local Initiatives Support Corporation.................... 50,000 1,134
Lord Abbett Bond Debenture Fund.......................... 5,000,000 113,475
Mainstay Convertible Fund................................ 1,865,000 42,326
Mainstay Strategic Value Fund............................ 250,000 5,673
Mainstay VP Convertible Portfolio........................ 411,000 9,327
McMahan Securities Co. L.P. ............................. 1,998,000 45,344
Merrill Lynch Insurance Group............................ 230,000 5,219
MSD Portfolio LP -- Investments.......................... 16,125,000 365,957
Municipal Employees...................................... 118,000 2,678
Nabisco Holdings......................................... 32,000 726
Nalco Chemical Company................................... 175,000 3,971
New Orleans Firefighters Pension/Relief Fund............. 116,000 2,632
New York Life Separate Account #7........................ 275,000 6,241
Occidental Petroleum Corporation......................... 212,000 4,811
Onex Industrial Partners Limited......................... 8,035,000 182,354
Oxford, Lord Abbett & Co................................. 900,000 20,425
Pebble Capital Inc....................................... 3,215,000 72,964
PGEP IV, LLC............................................. 81,000 1,838
Policemen and Firemen Retirement System of the City of
Detroit................................................ 586,000 13,299
Pro-Mutual............................................... 557,000 12,641
R(2) Investments, LDC.................................... 7,500,000 170,212
Raytheon Master Pension Trust............................ 574,000 13,026
RJR Reynolds............................................. 100,000 2,269
Salomon Brothers Asset Management, Inc................... 8,000,000 181,560
San Diego County Employees Retirement Association........ 1,950,000 44,255
Shell Pension Trust...................................... 463,000 10,507
Silvercreek Limited Partnership.......................... 6,750,000 153,191
Southern Farm Bureau Life Insurance...................... 370,000 8,397
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PRINCIPAL AMOUNT COMMON STOCK
OF NOTES ISSUABLE UPON
BENEFICIALLY OWNED CONVERSION OF
SELLING HOLDER AND OFFERED THE NOTES(1)
-------------- ------------------ -----------------
Starvest Combined Portfolio.............................. 675,000 15,319
State of Maryland Retirement System...................... 2,713,000 61,571
State of Oregon -- Equity................................ 2,030,000 46,070
The Class 1C Company Ltd. ............................... 2,000,000 45,390
The Estate of James Campbell............................. 318,000 7,217
The Grable Foundation.................................... 100,000 2,269
TQA Master Fund, Ltd..................................... 4,275,000 97,021
TQA Master Plus Fund, Ltd................................ 1,000,000 22,695
Tribeca Investments LLC.................................. 2,000,000 45,390
UBS AG London Branch..................................... 17,500,000 397,163
Van Kampen Harbor Fund................................... 5,340,000 121,191
Viacom Inc. Pension Plan Master Trust.................... 48,000 1,089
Zeneca AG Products Inc................................... 61,000 1,384
Zeneca Holdings Trust.................................... 170,000 3,858
Zurich Institutional Benchmarks Master Fund L.P. ........ 130,000 2,950
------------ ---------
Total.......................................... $218,647,000 492,162
============ =========
---------------
(1) Assumes a conversion rate of approximately 22.695 shares of common stock per
$1,000 principal amount of Notes and a cash payment in lieu of any
fractional interest.
To the best of our knowledge, none of the Selling holders nor any of their
affiliates, officers, directors or principal equity holders has held any
position or office or has had any material relationship with us within the past
three years. The selling holders purchased all of the Notes in a private
transaction. All of the Notes and the shares of common stock into which the
Notes are convertible are "restricted securities" under the Securities Act.
Information concerning the selling holders may change from time to time and
any changed information will be set forth in supplements to this Prospectus if
and when necessary. In addition, the conversion price, and therefore the number
of shares of common stock issuable upon conversion of the Notes, is subject to
adjustment under certain circumstances. Accordingly, the aggregate principal
amount of Notes and the number of shares of common stock into which the Notes
are convertible may increase or decrease.
PLAN OF DISTRIBUTION
The selling holders and their successors, including their transferees,
pledgees, or donees or their successors, may sell the Notes and the common stock
into which the Notes are convertible directly to purchasers or through
underwriters, broker-dealers or agents, who may receive compensation in the form
of discounts, concessions or commissions from the selling holders or the
purchasers. These discounts, concessions or commissions as to any particular
underwriter, broker-dealer or agent may be in excess of those customary in the
types of transactions involved.
The Notes and the common stock into which the Notes are convertible may be
sold in one or more transactions at fixed prices, at prevailing market prices at
the time of sale, at prices related to the prevailing market prices, at varying
prices determined at the time of sale, or at negotiated prices. These sales may
be effected in transactions, which may involve crosses or block transactions:
- on any national securities exchange or U.S. inter-dealer system of a
registered national securities association on which the Notes or the
common stock may be listed or quoted at the time of sale;
- in the over-the-counter market;
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- in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
- through the writing of options, whether the options are listed on an
options exchange or otherwise;
- by pledge to secure debts and other obligations;
- through the settlement of short sales; or
- a combination of any of the above transactions.
In connection with the sale of the Notes and the common stock into which
the Notes are convertible or otherwise, the selling holders may enter into
hedging transactions with broker-dealers or other financial institutions, which
may in turn engage in short sales of the Notes or the common stock into which
the Notes are convertible in the course of hedging the positions they assume.
The selling holders may also sell the Notes or the common stock into which the
Notes are convertible short and deliver these securities to close out their
short positions, or loan or pledge the Notes or the common stock into which the
Notes are convertible to broker-dealers that in turn may sell these securities.
The aggregate proceeds to the selling holders from the sale of the Notes or
common stock into which the Notes are convertible offered by them will be the
purchase price of the Notes or common stock less discounts and commissions, if
any. Each of the selling holders reserves the right to accept and, together with
their agents from time to time, to reject, in whole or in part, any proposed
purchase of Notes or common stock to be made directly or through agents. We will
not receive any of the proceeds from this offering.
Our outstanding common stock is listed for trading on The Nasdaq National
Market. We do not intend to list the Notes for trading on any national
securities exchange or on The Nasdaq National Market and can give no assurance
about the development of any trading market for the Notes.
In order to comply with the securities laws of some states, if applicable,
the Notes and common stock into which the Notes are convertible may be sold in
these jurisdictions only through registered or licensed brokers or dealers. In
addition, in some states the Notes and common stock into which the Notes are
convertible may not be sold unless they have been registered or qualified for
sale or an exemption from registration or qualification requirements is
available and is complied with.
The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the Notes and common stock into which the Notes are
convertible may be "underwriters" within the meaning of Section 2(11) of the
Securities Act. Any discounts, commissions, concessions or profit they earn on
any resale of the shares may be underwriting discounts and commissions under the
Securities Act. Selling holders who are "underwriters" within the meaning of
Section of 2(11) of the Securities Act will be subject to the Prospectus
delivery requirements of the Securities Act. The selling holders have
acknowledged that they understand their obligations to comply with the
provisions of the Exchange Act and the rules thereunder relating to stock
manipulation, particularly Regulation M.
In addition, any securities covered by this Prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than pursuant to this Prospectus. A selling holder
may not sell, transfer, gift, or otherwise dispose of any Notes or common stock
described in this Prospectus by any means other than as described in this
Prospectus.
To the extent required, the specific Notes or common stock to be sold, the
names of the selling holders, the respective purchase prices and public offering
prices, the names of any agent,
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dealer or underwriter, and any applicable commissions or discounts with respect
to a particular offer will be set forth in an accompanying prospectus supplement
or, if appropriate, a post-effective amendment to the registration statement of
which this Prospectus is a part.
We entered into a registration rights agreement for the benefit of holders
of the Notes to register their Notes and common stock under applicable federal
and state securities laws under specific circumstances and at specific times.
The registration rights agreement provides for cross-indemnification of the
selling holders and us and their and our respective directors, officers and
controlling persons against specific liabilities in connection with the offer
and sale of the Notes and the common stock, including liabilities under the
Securities Act.
A Prospectus has not been and will not be filed under the securities laws
of any province or territory of Canada to qualify the sale of Notes in such
jurisdictions. The Notes are not being offered and may not be offered or sold,
directly or indirectly, in Canada or to or for the account of any resident of
Canada except in compliance with or pursuant to an exemption from the
registration and prospectus requirements of applicable securities laws in
Canada.
DESCRIPTION OF NOTES
The Notes were issued under an Indenture between Manugistics Group, Inc.
and State Street Bank and Trust Company, as trustee. The following description
is only a summary of the material provisions of the Indenture, the Notes and the
registration rights agreement. We urge you to read the Indenture, the Notes and
the registration rights agreement in their entirety because they, and not this
description, define your rights as holders of the Notes. You may request copies
of these documents at our address shown under the caption "Where You Can Find
More Information." The terms of the Notes include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended. For purposes of this section, references to "we," "us," "ours"
and "Manugistics" include only Manugistics Group, Inc. and not its subsidiaries.
GENERAL
We issued the Notes with a principal amount of $250,000,000. The Notes are
unsecured, subordinated obligations of Manugistics and will mature on November
1, 2007, unless earlier redeemed at our option as described under "-- Optional
Redemption of the Notes" or repurchased by us at a holder's option upon a change
in control of Manugistics as described under "-- Right to Require Purchase of
Notes upon a Change in Control." Interest on the Notes will accrue at the rate
per annum shown on the cover page of this Prospectus and will be payable
semiannually in arrears on May 1 and November 1 of each year, commencing on May
1, 2001. Interest on the Notes will accrue from the date of original issuance
or, if interest has already been paid, from the date it was most recently paid.
We will make each interest payment to the holders of record of the Notes on the
immediately preceding April 15 and October 15, whether or not this day is a
business day. Interest on the Notes will be computed on the basis of a 360-day
year comprised of twelve 30-day months. The Indenture does not contain any
restriction on:
- the payment of dividends;
- the issuance of Senior Indebtedness (as defined below) or other
indebtedness; or
- the repurchase of securities of Manugistics;
and does not contain any financial covenants. Other than as described under
"-- Right to Require Purchase of Notes upon a Change in Control," the Indenture
contains no covenants or other provisions to afford protection to holders of
Notes in the event of a highly leveraged transaction or a change in control of
Manugistics.
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We will pay the principal of, premium, if any, and interest on the Notes at
the office or agency maintained by us in the Borough of Manhattan in New York
City. Holders may register the transfer of their Notes at the same location. We
reserve the right to pay interest to holders of the Notes by check mailed to the
holders at their registered addresses or by wire transfer to holders of at least
$5,000,000 aggregate principal amount of Notes. Except under the limited
circumstances described below, the Notes will be issued only in fully-registered
book-entry form, without coupons, and will be represented by one or more Global
Notes. There will be no service charge for any registration of transfer or
exchange of Notes. We may, however, require holders to pay a sum sufficient to
cover any tax or other governmental charge payable in connection with any
transfer or exchange.
CONVERSION RIGHTS
A holder may, at any time after January 18, 2001 and before the close of
business on October 31, 2007, convert a Note or any portion of a Note (if the
portions are $1,000 or whole multiples of $1,000) into shares of common stock
initially at the conversion price of $44.0625 per share (which is equivalent to
a conversion rate of approximately 22.695 shares per $1,000 principal amount of
Notes), unless the Note or a portion of the Note has been previously redeemed or
repurchased. The right to convert a Note called for redemption will terminate at
the close of business on the business day immediately preceding the date fixed
for redemption, unless we default in making the payment due on the redemption
date. For information as to notices of redemption, see "-- Optional Redemption
of the Notes." If a holder of a Note has delivered notice of its election to
have the Note repurchased as a result of a Change in Control, the Note may be
converted only if the notice of election is withdrawn as described under
"-- Right to Require Purchase of Notes upon a Change in Control."
We will adjust the conversion price if (without duplication):
(1) we issue common stock as a dividend or distribution on our common
stock;
(2) we subdivide, combine or reclassify our common stock;
(3) we issue to substantially all holders of our common stock rights,
warrants or options entitling them to subscribe for or purchase common
stock at less than the then current market price;
(4) we distribute to substantially all holders of common stock
evidences of our indebtedness, shares of capital stock (other than common
stock), securities, cash, property, rights, warrants or options, excluding:
- those rights, warrants or options referred to in clause (3) above;
- any dividend or distribution paid exclusively in cash not referred to
in clause (5) below; and
- any dividend or distribution referred to in clause (1) above;
(5) we make a cash distribution to substantially all holders of our
common stock, that together with all other all-cash distributions and
consideration payable in respect of any tender or exchange offer by us or
one of our subsidiaries for our common stock made within the preceding
twelve months exceeds 10% of our aggregate market capitalization on the
date of the distribution; or
(6) we complete a repurchase (including by way of a tender offer) of
our common stock which involves an aggregate consideration that, together
with:
- any cash and other consideration payable in respect of any tender or
exchange offer by us or one of our subsidiaries for our common stock
concluded within the preceding twelve months; and
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- the amount of any all-cash distributions to all holders of our common
stock made within the preceding twelve months,
exceeds 10% of our aggregate market capitalization on the expiration of the
tender or exchange offer.
The conversion price will not be adjusted until adjustments amount to 1% or
more of the conversion price as last adjusted. We will carry forward any
adjustment we do not make and will include it in any future adjustment.
If our common stock is converted into the right to receive other
securities, cash or other property as a result of reclassifications,
consolidations, mergers, sales or transfers of assets or other transactions,
each Note then outstanding would, without the consent of any holders of Notes,
become convertible only into the kind and amount of securities, cash and other
property receivable upon the transaction by a holder of the number of shares of
common stock which would have been received by a holder immediately prior to the
transaction if the holder had converted the Note.
We will not issue fractional shares of common stock to a holder who
converts a Note. In lieu of issuing fractional shares, we will pay cash based
upon the market price.
Except as described in this paragraph, no holder of Notes will be entitled,
upon conversion of the Notes, to any actual payment or adjustment on account of
accrued and unpaid interest or on account of dividends on shares of common stock
issued in connection with the conversion. If any holder surrenders a note for
conversion between the close of business on any record date for the payment of
an installment of interest and the opening of business on the related interest
payment date the holder must deliver payment to us of an amount equal to the
interest payable on the interest payment date on the principal amount converted
together with the note being surrendered. The foregoing sentence shall not apply
to Notes called for redemption on a redemption date within the period between
and including the record date and interest payment date.
If we make a distribution of property to our stockholders which would be
taxable to them as a dividend for federal income tax purposes and the conversion
price of the Notes is reduced, this reduction may be deemed to be the receipt of
taxable income to holders of the Notes.
In addition, we may make any reductions in the conversion price that our
board of directors deems advisable to avoid or diminish any income tax to
holders of our common stock resulting from any dividend or distribution of
stock, or rights to acquire stock, or from any event treated as such for income
tax purposes or for any other reasons.
SUBORDINATION
The payment of the principal or, premium, if any, and interest on the Notes
will, to the extent described in the Indenture, be subordinated in right of
payment to the prior payment in full of all our Senior Indebtedness. The holders
of all Senior Indebtedness will first be entitled to receive payment in full of
all amounts due or to become due on the Senior Indebtedness, or provision for
payment in money or money's worth, before the holders of the Notes will be
entitled to receive any payment in respect of the Notes, when there is a payment
or distribution of assets to creditors upon our:
- liquidation;
- dissolution;
- winding up;
- reorganization;
- assignment for the benefit of creditors;
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- marshaling of assets;
- bankruptcy;
- insolvency; or
- similar proceedings.
In addition, because our subsidiaries are not obligated under the Notes,
the Notes will be effectively subordinated to all existing and future
indebtedness and other liabilities of our subsidiaries.
No payments on account of the Notes or on account of the purchase or
acquisition of Notes may be made if a default in any payment with respect to
Senior Indebtedness has occurred and is continuing. If (1) there is a default on
any Designated Senior Indebtedness other than a payment default that occurs that
permits the holders of that Designated Senior Indebtedness to accelerate its
maturity and (2) the Trustee and Manugistics receive the notice required by the
Indenture, no payments may be made on the Notes for up to 179 days in any
365-day period unless the default is cured or waived. By reason of this
subordination, in the event of our insolvency, holders of the Notes may recover
less ratably than holders of our Senior Indebtedness.
"Senior Indebtedness" means:
- the principal of and premium, if any, and interest on, and fees, costs,
enforcement expenses, collateral protection expenses and other
reimbursement or indemnity obligations in respect of all of our
indebtedness or obligations of us to any person for money borrowed that
is evidenced by a note, bond, debenture, loan agreement, or similar
instrument or agreement;
- commitment or standby fees due and payable to lending institutions with
respect to credit facilities available to us;
- all of our noncontingent obligations (1) for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction, (2) under interest rate swaps, caps, collars, options, and
similar arrangements, and (3) under any foreign exchange contract,
currency swap agreement, futures contract, currency option contract or
other foreign currency hedge;
- all of our obligations for the payment of money relating to capitalized
lease obligations;
- any liabilities of others described in the preceding clauses that we have
guaranteed or which are otherwise our legal liability; and
- renewals, extensions, refundings, refinancings, restructurings,
amendments and modifications of any such indebtedness or guarantee, other
than any indebtedness or other obligation of ours that by its terms is
not superior in right of payment to the Notes.
"Designated Senior Indebtedness" means our obligations under any particular
Senior Indebtedness in which the instrument creating or evidencing the same or
the assumption or guarantee thereof, or related agreements or documents to which
we are a party, expressly provides that such indebtedness shall be designated
Senior Indebtedness for purposes of the Indenture. The instrument, agreement or
other document evidencing any Designated Senior Indebtedness may place
limitations and conditions of the right of such senior debt to exercise the
rights of Designated Senior Indebtedness.
As of December 31, 2000, we had no indebtedness that would have constituted
Senior Indebtedness. We expect from time to time to incur additional
indebtedness. The Indenture does not limit or prohibit us from incurring
additional Senior Indebtedness or other indebtedness. See "Risk Factors -- We
may not be able to repurchase the Notes in the event of a change in control."
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OPTIONAL REDEMPTION OF THE NOTES
At any time on or after November 7, 2003, we may redeem the Notes in whole,
or from time to time, in part, at our option on at least 30 days' notice if the
trading price of our common stock for 20 trading days in a period of 30
consecutive trading days ending on the day prior to the mailing of notice of
redemption exceeds 120% of the conversion price of the Notes. The redemption
price, expressed as a percentage of the principal amount, will be as follows:
REDEMPTION
REDEMPTION PERIOD PRICE
----------------- ----------
November 7, 2003 through October 31, 2004................... 103.0%
November 1, 2004 through October 31, 2005................... 102.0%
November 1, 2005 through October 31, 2006................... 101.0%
and 100% of the principal amount on and after November 1, 2006.
If we opt to redeem less than all of the Notes at any time, the trustee
will select or cause to be selected the Notes to be redeemed by any method that
it deems fair and appropriate. In the event of a partial redemption, the trustee
may provide for selection for redemption of portions of the principal amount of
any Note of a denomination larger than $1,000.
MANDATORY REDEMPTION
Except as set forth below under "-- Right to Require Purchase of Notes upon
a Change of Control," we are not required to make mandatory redemption of, or
sinking fund payments with respect to, the Notes.
RIGHT TO REQUIRE PURCHASE OF NOTES UPON A CHANGE IN CONTROL
If a Change in Control (as defined below) occurs, each holder of Notes may
require that we repurchase the holder's Notes on the date fixed by us that is
not less than 45 nor more than 60 days after we give notice of the Change in
Control. We will repurchase the Notes for an amount of cash equal to 100% of the
principal amount of the Notes on the date of purchase, plus accrued and unpaid
interest, if any, to the date of repurchase.
"Change in Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of
Manugistics and its subsidiaries, taken as a whole, to any person or group of
related persons, as defined in Section 13(d) of the Securities Exchange Act of
1934, (a "Group"); (ii) the approval by the holders of capital stock of
Manugistics of any plan or proposal for the liquidation or dissolution of
Manugistics (whether or not otherwise in compliance with the provisions of the
applicable indenture); (iii) any person or Group shall become the owner,
directly or indirectly, beneficially or of record, of shares representing more
than 50% of the aggregate ordinary voting power represented by Manugistics'
issued and outstanding voting stock of, or any successor to, all or
substantially all of Manugistics' assets; or (iv) the first day on which a
majority of the members of Manugistics' board of directors are not Continuing
Directors.
The definition of Change in Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of Manugistics and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all", there is no precise established definition of the phrase under applicable
law. Accordingly, the ability of a holder of Notes to require Manugistics to
repurchase such Notes as a result of a sale, lease, transfer, conveyance or
other disposition of less than all of the assets of Manugistics and its
subsidiaries taken as a whole to another person or group may be uncertain.
"Continuing Directors" means, as of any date of determination, any member
of the board of directors of Manugistics who (i) was a member of such board of
directors on the date of the
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original issuance of the Notes or (ii) was nominated for election or elected to
such board of directors with the approval of a majority of the Continuing
Directors who were members of such board at the time of such nomination or
election.
On or prior to the date of repurchase, we will deposit with a paying agent
an amount of money sufficient to pay the aggregate repurchase price of the Notes
which is to be paid on the date of repurchase.
We may not repurchase any Note at any time when the subordination
provisions of the Indenture otherwise would prohibit us from making payments of
principal in respect of the Notes. If we fail to repurchase the Notes when
required under the preceding paragraph, this failure will constitute an event of
default under the Indenture whether or not repurchase is permitted by the
subordination provisions of the Indenture.
On or before the 30th day after the Change in Control, we must mail to the
trustee and all holders of the Notes a notice of the occurrence of the Change in
Control, stating:
- the repurchase date;
- the date by which the repurchase right must be exercised;
- the repurchase price for the Notes; and
- the procedures which a holder of Notes must follow to exercise the
repurchase right.
To exercise the repurchase right, the holder of a Note must deliver, on or
before the third business day before the repurchase date, a written notice to us
and the trustee of the holder's exercise of the repurchase right. This notice
must be accompanied by certificates evidencing the Note or Notes with respect to
which the right is being exercised, duly endorsed for transfer. This notice of
exercise may be withdrawn by the holder at any time on or before the close of
business on the business day preceding the repurchase date.
The effect of these provisions granting the holders the right to require us
to repurchase the Notes upon the occurrence of a Change in Control may make it
more difficult for any person or group to acquire control of us or to effect a
business combination with us. Moreover, under the Indenture, we will not be
permitted to pay principal of or interest on, or otherwise acquire the Notes,
including any repurchase at the election of the holders of Notes upon the
occurrence of a Change in Control, if a payment default on our Senior
Indebtedness has occurred and is continuing, or if our Senior Indebtedness is
not paid in full in the event of our insolvency, bankruptcy, reorganization,
dissolution or other winding up. Our ability to pay cash to holders of Notes
following the occurrence of a Change in Control may be limited by our then
existing financial resources. We cannot assure you that sufficient funds will be
available when necessary to make any required repurchases. See "Risk
Factors -- We may not be able to repurchase the Notes in the event of a change
in control."
If a Change in Control occurs and the holders exercise their rights to
require us to repurchase Notes, we intend to comply with applicable tender offer
rules under the Exchange Act with respect to any repurchase.
The term "beneficial owner" shall be determined in accordance with Rules
13d-3 and 13d-5 promulgated by the SEC under the Securities Exchange Act or any
successor provision, except that a person shall be deemed to have "beneficial
ownership" of all shares that the person has the right to acquire, whether
exercisable immediately or only after the passage of time.
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CONSOLIDATION, MERGER AND SALE OF ASSETS
We may, without the consent of the holders of any of the Notes, consolidate
with or merge into any other person or convey, transfer or lease our properties
and assets substantially as an entirety to, any other person, if:
- we are the resulting or surviving corporation or the successor,
transferee or lessee, if other than us, is a corporation organized under
the laws of any U.S. jurisdiction and expressly assumes our obligations
under the Indenture and the Notes by means of a supplemental Indenture
entered into with the trustee; and
- after giving effect to the transaction, no event of default and no event
which, with notice or lapse of time, or both, would constitute an event
of default, shall have occurred and be continuing.
Under any consolidation, merger or any conveyance, transfer or lease of our
properties and assets as described in the preceding paragraph, the successor
company will be our successor and shall succeed to, and be substituted for, and
may exercise every right and power of, Manugistics under the Indenture. Except
in the case of a lease, if the predecessor is still in existence after the
transaction, it will be released from its obligations and covenants under the
Indenture and the Notes.
MODIFICATION AND WAIVER
We and the trustee may enter into one or more supplemental Indentures that
add, change or eliminate provisions of the Indenture or modify the rights of the
holders of the Notes with the consent of the holders of at least a majority in
principal amount of the Notes then outstanding. However, without the consent of
each holder of an outstanding Note, no supplemental Indenture may, among other
things:
- change the stated maturity of the principal of, or any installment of
interest on, any Note;
- reduce the principal amount of, or the premium or rate of interest on,
any Note;
- change the currency in which the principal of any Note or any premium or
interest is payable;
- impair the right to institute suit for the enforcement of any payment on
or with respect to any Note when due;
- adversely affect the right provided in the Indenture to convert any Note;
- modify the subordination provisions of the Indenture in a manner adverse
to the holders of the Notes;
- modify the provisions of the Indenture relating to our requirement to
offer to repurchase Notes upon a Change in Control in a manner adverse to
the holders of the Notes;
- reduce the percentage in principal amount of the outstanding Notes
necessary to modify or amend the Indenture or to consent to any waiver
provided for in the Indenture; or
- waive a default in the payment of principal of, or any premium or
interest on, any Note.
The holders of a majority in principal amount of the outstanding Notes may,
on behalf of the holders of all Notes:
- waive compliance by us with restrictive provisions of the Indenture other
than as provided in the preceding paragraph; and
- waive any past default under the Indenture and its consequences, except a
default in the payment of the principal of or any premium or interest on
any Note or in respect of a
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provision which under the Indenture cannot be modified or amended without
the consent of the holder of each outstanding Note affected.
Without the consent of any holders of Notes, we and the trustee may enter
into one or more supplemental Indentures for any of the following purposes:
- to cure any ambiguity, omission, defect or inconsistency in the
Indenture;
- to evidence a successor to us and the assumption by the successor of our
obligations under the Indenture and the Notes;
- to make any change that does not adversely affect the rights of any
holder of the Notes;
- to comply with any requirement in connection with the qualification of
the Indenture under the Trust Indenture Act; or
- to complete or make provision for certain other matters contemplated by
the Indenture.
EVENTS OF DEFAULT
Each of the following is an "event of default":
(1) a default in the payment of any interest upon any of the Notes
when due and payable, continued for 30 days;
(2) a default in the payment of the principal of and premium, if any,
on any of the Notes when due, including on a redemption date;
(3) failure to pay when due the principal of or interest on
indebtedness for money borrowed by us or our subsidiaries in excess of
$20.0 million, or the acceleration of that indebtedness that is not
withdrawn within 15 days after the date of written notice to us by the
trustee or to us and the trustee by the holders of at least 25% in
principal amount of the outstanding Notes;
(4) a default by us in the performance, or breach, of any of our other
covenants in the Indenture which are not remedied by the end of a period of
60 days after written notice to us by the trustee or to us and the trustee
by the holders of at least 25% in principal amount of the outstanding
Notes; or
(5) events of bankruptcy, insolvency or reorganization of Manugistics
or any Significant Subsidiary of Manugistics.
If an event of default described in clauses (1), (2), (3) or (4) occurs and
is continuing, either the trustee or the holders of at least 25% in principal
amount of the outstanding Notes may declare the principal amount of and accrued
interest on all Notes to be immediately due and payable. This declaration may be
rescinded if the conditions described in the Indenture are satisfied. If an
event of default of the type referred to in clause (5) occurs, the principal
amount of and accrued interest on the outstanding Notes will automatically
become immediately due and payable.
"Significant Subsidiary" means a "significant subsidiary" as defined in
Regulation S-X under the Securities Exchange Act.
Within 90 days after a default, the trustee must give to the registered
holders of Notes notice of all uncured defaults known to it. The trustee will be
protected in withholding the notice if it in good faith determines that the
withholding of the notice is in the best interests of the registered holders,
except in the case of a default in the payment of the principal of, or premium,
if any, or interest on, any of the Notes when due or in the payment of any
redemption obligation.
The holders of not less than a majority in principal amount of the
outstanding Notes may direct the time, method and place of conducting any
proceedings for any remedy available to the trustee,
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or exercising any trust or power conferred on the trustee. Subject to the
provisions of the Indenture relating to the duties of the trustee, if an event
of default occurs and is continuing, the trustee will be under no obligation to
exercise any of the rights or powers under the Indenture at the request or
direction of any of the holders of the Notes unless the holders have offered to
the trustee reasonable indemnity or security against any loss, liability or
expense. Except to enforce the right to receive payment of principal, premium,
if any, or interest when due or the right to convert a Note in accordance with
the Indenture, no holder may institute a proceeding or pursue any remedy with
respect to the Indenture or the Notes unless it complies with the conditions
provided in the Indenture, including:
- holders of at least 25% in principal amount of the outstanding Notes have
requested the trustee to pursue the remedy; and
- holders have offered the trustee security or indemnity satisfactory, to
the trustee against any loss, liability or expense.
We are required to deliver to the trustee annually a certificate indicating
whether the officers signing the certificate know of any default by us in the
performance or observance of any of the terms of the Indenture. If the officers
know of a default, the certificate must specify the status and nature of all
defaults.
BOOK-ENTRY, DELIVERY AND FORM
We issued the Notes sold in the United States in reliance on Rule 144A, or
in offshore transactions in reliance on Regulation S, in the form of Global
Notes. The Global Notes were deposited with, or on behalf of, the clearing
agency registered under the Exchange Act that is designated to act as depositary
for the Notes and registered in the name of the depositary or its nominee. The
DTC was the initial depositary.
Investors who are "qualified institutional buyers" (as defined in Rule 144A
under the Securities Act) and who purchase Notes in reliance on Rule 144A under
the Securities Act may hold their interests in a Global Note directly through
DTC if they are DTC participants, or indirectly through organizations that are
DTC participants.
Investors who purchase Notes in offshore transactions in reliance on
Regulation S under the Securities Act may hold their interests in a Global Note
directly through Morgan Guaranty Trust Company of New York, Brussels office, as
operator of, the Euroclear System and Clearstream Banking, if they are
participants in these systems, or indirectly through organizations that are
participants in these systems. Euroclear and/or Clearstream Banking will hold
interests in a Global Note on behalf of their participants through their
respective depositaries, which in turn will hold the interests in a Global Note
in customers' securities accounts in the depositaries' names on the books of
DTC. Citibank, N.A., is acting initially as depositary for Clearstream Banking
and The Chase Manhattan Bank is acting initially as, depositary for Euroclear.
Except as set forth below, a Global Note may be transferred, in whole or in
part, only to another nominee of DTC or to a successor of DTC or its nominee.
DTC has advised us that DTC is:
- a limited-purpose trust company organized under the laws of the State of
New York;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
- a "clearing agency" registered pursuant to the provisions of Section 17A
of the Securities Exchange Act.
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DTC was created to hold securities of institutions that have accounts with
DTC and to facilitate the clearance and settlement of securities transactions
among its participants in securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations.
Access to DTC's book-entry system is also available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, whether directly or indirectly.
Pursuant to the procedures established by DTC (1) upon the issuance of a
Global Note, DTC credited, on its book-entry registration and transfer system,
the respective principal amount of the individual beneficial interests
represented by the Global Note to the accounts of participants and (2) ownership
of beneficial interests in a Global Note will be shown on, and the transfer of
those ownership interests will be effected only through, records maintained by
DTC (with respect to participants' interests) and the participants (with respect
to the owners of beneficial interests in the Global Note other than
participants). The accounts credited were designated by the initial purchasers
of the beneficial interests. Ownership of beneficial interests in a Global Note
is limited to participants or persons that may hold interests through
participants.
So long as DTC or its nominee is the registered holder and owner of a
Global Note, DTC or its nominee, as the case may be, will be considered the sole
legal owner of the Notes represented by the Global Note for all purposes under
the Indenture and the Notes. Except as set forth below, owners of beneficial
interests in a Global Note will not be entitled to receive definitive Notes and
will not be considered to be the owners or holders of any Notes under the Global
Note. We understand that under existing industry practice, in the event an owner
of a beneficial interest in a Global Note desires to take any action that DTC,
as the holder of the Global Note, is entitled to take, DTC would authorize the
participants to take the action, and that participants would authorize
beneficial owners owning through the participants to take the action or would
otherwise act upon the instructions of beneficial owners owning through them. No
beneficial owner of an interest in a Global Note will be able to transfer the
interest except in accordance with DTC's applicable procedures, in addition to
those provided for under the indenture and, if applicable, those of Euroclear
and Clearstream Banking.
We will make payments of the principal of, and interest on, the Notes
represented by a Global Note registered in the name of and held by DTC or its
nominee to DTC or its nominee, as the case may be, as the registered owner and
holder of the Global Note.
We expect that DTC or its nominee, upon receipt of any payment of principal
or interest in respect of a Global Note, will credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of the Global Note as shown on the records of DTC or its
nominee. We also expect that payments by participants and indirect participants
to owners of beneficial interests in a Global Note held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for accounts of customers registered in
the names of nominees for these customers. The payments, however, will be the
responsibility of the participants and indirect participants, and neither we,
the trustee nor any paying agent will have any responsibility or liability for:
- any aspect of the records relating to, or payments made on account of,
beneficial ownership interests in a Global Note;
- maintaining, supervising or reviewing any records relating to the
beneficial ownership interests;
- any other aspect of the relationship between DTC and its participants; or
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- the relationship between the participants and indirect participants and
the owners of beneficial interests in a Global Note.
Unless and until it is exchanged in whole or in part for definitive Notes,
a Global Note may not be transferred except as a whole by DTC to a nominee of
DTC or by a nominee of DTC to DTC or another nominee of DTC.
Participants in DTC will effect transfers with other participants in the
ordinary way in accordance with DTC rules and will settle transfers in same-day
funds. Participants in Euroclear and Clearstream Banking will effect transfers
with other participants in the ordinary way in accordance with the rules and
operating procedures of Euroclear and Clearstream Banking, as applicable. If a
holder requires physical delivery of a definitive Note for any reason, including
to sell Notes to persons in jurisdictions which require physical delivery or to
pledge Notes, the holder must transfer its interest in a Global Note in
accordance with the normal procedures of DTC and the procedures set forth in the
indenture.
Cross-market transfers between DTC, on the one hand, and directly or
indirectly through Euroclear or Clearstream Banking participants, on the other,
will be effected in DTC in accordance with DTC rules on behalf Euroclear or
Clearstream Banking, as the case may be, by its respective depositary; however,
these cross-market transactions will require delivery of instructions to
Euroclear or Clearstream Banking, as the case may be, by the counterparty in the
system in accordance with its rules and procedures and within its established
deadlines (Brussels time). Euroclear or Clearstream Banking, as the case may be,
will, if the transaction meets its settlement requirements, deliver instructions
to its respective depositary to take action to effect final settlement on its
behalf by delivering or receiving interests in a Global Note in DTC, and making
or receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Euroclear participants and Clearstream Banking
participants may not deliver instructions directly to the depositaries for
Euroclear or Clearstream Banking.
Because of time zone differences, the securities account of a Euroclear or
Clearstream Banking participant purchasing an interest in a Global Note from a
DTC participant will be credited during the securities settlement processing day
(which must be a business day for Euroclear or Clearstream Banking, as the case
may be) immediately following the DTC settlement date, and the credit of any
transactions interests in a Global Note settled during the processing day will
be reported to the relevant Euroclear or Clearstream Banking participant on that
day. Cash received in Euroclear or Clearstream Banking as a result of sales of
interests in a Global Note by or through a Euroclear or Clearstream Banking
participant to a DTC participant will be received with value on the DTC
settlement date, but will be available in the relevant Euroclear or Clearstream
Banking cash account only as of the business day following settlement in DTC.
We expect that DTC will take any action permitted to be taken by a holder
of Notes (including the presentation of Notes for exchange as described below)
only at the direction of one or more participants to whose accounts at the DTC
interests in a Global Note are credited and only in respect of the portion of
the aggregate the principal amount of the Notes as to which the participant or
participants has or have given direction. However, if there is an event of
default under the Notes, DTC will exchange the Global Notes for definitive
Notes, which it will distribute to its participants. These definitive Notes are
subject to certain restrictions on registration of transfers and will bear
appropriate legends restricting their transfer. Although we expect that DTC,
Euroclear and Clearstream Banking will agree to the foregoing procedures in
order to facilitate transfers of interests in Global Notes among their
participants, DTC, Euroclear and Clearstream Banking are under no obligation to
perform or continue to perform these procedures, and these procedures may be
discontinued at any time. Neither we nor the Trustee have any responsibility for
the performance by DTC, Euroclear or Clearstream Banking or their participants
or indirect participants of their obligations under the rules and procedures
governing their operations.
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If DTC is at any time unwilling or unable to continue as a depositary for
Global Notes or ceases to be a clearing agency registered under the Securities
Exchange Act and we do not appoint a successor depositary within 90 days, we
will issue definitive Notes in exchange for the Global Notes. The definitive
Notes will be subject to certain restrictions on registration of transfers and
will bear appropriate legends concerning these restrictions.
CONVERTIBLE NOTES
In October and November 2000, we issued an aggregate $250,000,000 of 5%
Convertible Subordinate Notes due in November 2007. The Notes are convertible
into shares of common stock at a conversion price of $44.0625 per share at any
time on or 90 days following the last day of original issuance through maturity,
unless previously redeemed or repurchased. We may redeem some or all of the
Notes at any time on or after November 7, 2003 at the redemption prices set
forth in this Prospectus, if the closing price of our stock exceeds 120% of the
conversion price for at least 20 trading days within a period of 30 consecutive
trading days ending on the trading day prior to the date of mailing of the
redemption notice. Interest is payable semiannually.
REGISTRATION RIGHTS
Pursuant to a registration rights agreement between us and the holders of
the Notes, we agreed to, at our cost:
- on or prior to January 18, 2001, file a shelf registration statement with
the SEC covering resales of the Notes and the common stock issuable on
conversion of the Notes;
- use all reasonable efforts to cause the shelf registration statement to
be declared effective under the Securities Act no later than April 18,
2001; and
- use all reasonable efforts to keep the shelf registration statement
effective after its effective date for as long as required to permit
sales under Rule 144(k) under the Securities Act or any successor rule or
regulation.
We have the right to suspend use of the shelf registration statement,
during specified periods of time relating to pending corporate developments and
public filings with the SEC and similar events. If, after the shelf registration
statement has been declared effective, we fail to keep the shelf registration
statement effective or usable in accordance with and during the periods
specified in the registration rights agreement, then we will pay liquidated
damages to all holders of Notes and all holders of common stock issued on
conversion of the Notes equal to 0.5% of the aggregate principal amount of Notes
per annum until such failure is cured.
A holder who elects to sell any securities pursuant to the shelf
registration statement:
- will be required to be named as selling security holder;
- will be required to deliver a Prospectus to purchasers;
- will be subject to the civil liability provisions under the Securities
Act in connection with any sales; and
- will be bound by the provisions of the registration rights agreement,
which are applicable, including indemnification obligations.
We refer to the Notes and the common stock issuable on conversion of the
Notes as registrable securities. Promptly upon request from any holder of
registrable securities, we will provide a form of notice and questionnaire to be
completed and delivered by that holder to us at least three business days before
any intended distribution of registrable securities under the shelf registration
statement. If we receive from a holder of registrable securities a completed
questionnaire, together with such other information as may be reasonably
requested by us, after the effectiveness of the shelf registration statement, we
will file an amendment to the shelf registration
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statement or supplement to, the related Prospectus to permit the holder to
deliver a Prospectus to purchasers of registrable securities. Any holder that
does not complete and deliver a questionnaire or provide such other information
will not be named as a selling security holder in the Prospectus and therefore
will not be permitted to sell any registrable securities under the shelf
registration statement.
GOVERNING LAW
The Indenture and the Notes will be governed by and construed in accordance
with the laws of the State of New York without regard to principles of conflict
of laws.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 100,000,000 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 28, 2001, there were 66,680,600 shares of our common stock
outstanding held of record by approximately 373 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; 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
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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 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.
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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 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.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income tax
considerations relating to the purchase, ownership and disposition of the Notes
and common stock into which Notes may be converted, but does not purport to be a
complete analysis of all the potential tax considerations relating thereto. This
summary is based on laws, regulations, rulings and decisions now in effect, all
of which are subject to change or differing interpretation possibly with
retroactive effect. Except as specifically discussed below with regard to
Non-U.S. Holders (as defined below), this summary applies only to beneficial
owners that will hold Notes and common stock into which Notes may be converted
as "capital assets" (within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended (the "Code")) and who, for U.S. federal income tax
purposes, are (i) individual citizens or residents of the U.S., (ii)
corporations, partnerships or other entities created or organized in or under
the laws of the U.S. or of any political subdivision thereof (unless, in the
case of a partnership, Treasury Regulations otherwise provide), (iii) estates,
the incomes of which are subject to U.S. federal income taxation regardless of
the source of such income or (iv) trusts subject to the primary supervision of a
U.S. court and the control of one or more U.S. persons or any trust that has a
valid election in effect under applicable Treasury Regulations to be treated as
a U.S. person ("U.S. Holders"). Persons other than U.S. Holders ("Non-U.S.
Holders") are subject to special U.S. federal income tax considerations, some of
which are discussed below. This discussion does not address tax considerations
applicable to an investor's particular circumstances or to investors that may be
subject to special tax rules, such as banks or other financial institutions,
holders subject to the alternative minimum tax, tax-exempt organizations,
insurance companies, regulated investment companies, foreign persons or entities
(except to the extent specifically set forth below), dealers in securities,
commodities or currencies, initial holders whose "functional currency" is not
the U.S. dollar, persons that will hold Notes as a position in a hedging
transaction, "straddle" or "conversion transaction" for tax purposes or persons
deemed to sell Notes or common stock under the constructive sale provisions of
the Code. This summary discusses the tax considerations applicable to initial
holders of the Notes who purchase the Notes at their "issue price" as defined in
Section 1273 of the Code and certain tax considerations applicable to subsequent
purchasers of the Notes. We have not sought any ruling from the Internal Revenue
Service (the "IRS") or an opinion of counsel with respect to the statements made
and the conclusions reached in the following summary, and there can be no
assurance that the IRS will agree with such statements and conclusions. In
addition, the IRS is not precluded from successfully adopting a contrary
position. This summary does not consider the effect of the federal estate or
gift tax laws or the tax
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laws (except as set forth below with respect to Non-U.S. Holders) of any
applicable foreign, state, local or other jurisdiction.
INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX
LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING
UNDER THE FEDERAL, ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE,
LOCAL OR FOREIGN TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
U.S. HOLDERS
TAXATION OF INTEREST
Interest paid on the Notes will be included in the income of a U.S. Holder
as ordinary income at the time it is treated as received or accrued, in
accordance with such holder's regular method of accounting for U.S. federal
income tax purposes. Under Treasury Regulations, the possibility of an
additional payment under a Note may be disregarded for purposes of determining
the amount of interest or original issue discount income to be recognized by a
holder in respect of such Note (or the timing of such recognition) if the
likelihood of the payment, as of the date the Notes are issued, is remote. Our
failure to file or cause to be declared effective a shelf registration statement
as described under "Description of Notes-Registration Rights" may result in the
payment of predetermined liquidated damages in the manner described therein. In
addition, a holder may require us to redeem any and all of his Notes in the
event of a Change in Control. We believe that the likelihood of a liquidated
damages payment with respect to the Notes is remote and do not intend to treat
such possibility as affecting the yield to maturity of any Note. Similarly, we
intend to take the position that a Change in Control is remote under the
Treasury Regulations, and likewise do not intend to treat the possibility of a
"Change in Control" as affecting the yield to maturity of any Note. In the event
either contingency occurs, it would affect the amount and timing of the income
that must be recognized by a U.S. Holder of Notes. There can be no assurance
that the IRS will agree with such positions. Our determination that there is a
remote likelihood of paying additional interest on the Notes is binding on each
U.S. Holder unless the holder explicitly discloses in the manner required by
applicable Treasury Regulations that its determination is different from ours.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
Upon the sale, exchange (other than a conversion) or redemption of a Note,
a U.S. Holder generally will recognize capital gain or loss equal to the
difference between (i) the amount of cash proceeds and the fair market value of
any property received on the sale, exchange or redemption (except to the extent
such amount is attributable to accrued interest income not previously included
in income, which will be taxable as ordinary income, or is attributable to
accrued interest that was previously included in income, which amount may be
received without generating further income) and (ii) such holder's adjusted tax
basis in the Note. A U.S. Holder's adjusted tax basis in a Note generally will
equal the cost of the Note to such holder. Such capital gain or loss will be
long-term capital gain or loss if the U.S. Holder's holding period in the Note
is more than one year at the time of sale, exchange or redemption. Long term
capital gains recognized by certain non-corporate U.S. Holders, including
individuals, will generally be subject to a maximum federal rate of tax of 20%.
The deductibility of capital losses is subject to limitations.
MARKET DISCOUNT
The resale of the Notes may be affected by the impact on a purchaser of the
"market discount" provisions of the Code. For this purpose, the market discount
on the Notes generally will be equal to the amount, if any, by which the stated
redemption price at maturity of the Notes immediately after acquisition (other
than at original issue) exceeds the holder's adjusted tax basis
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in the Notes. Subject to a de minimis exception, these provisions generally
require a U.S. Holder who acquires Notes at a market discount to treat as
ordinary income any gain recognized on the disposition of such Notes to the
extent of the "accrued market discount" on such Notes at the time of
disposition, unless the holder elects to include accrued market discount in
income currently. This election to include market discount in income currently,
once made, applies to all market discount obligations acquired on or after the
first day of the first taxable year to which the election applies and may not be
revoked without the consent of the IRS. In general, market discount will be
treated as accruing on a straight-line basis over the remaining term of the
Notes at the time of acquisition, or, at the election of the holder, under a
constant yield method. A holder who acquires Notes at a market discount and who
does not elect to include accrued market discount in income currently may be
required to defer the deduction of a portion of the interest on any indebtedness
incurred or maintained to purchase or carry the Notes until such Notes are
disposed of in a taxable transaction. If a holder acquires Notes with market
discount and receives our common stock upon conversion of such Notes, the amount
of accrued market discount not previously included in income with respect to the
converted Notes through the date of conversion will be treated as ordinary
income upon the disposition of the common stock.
Under the President's fiscal year 2001 budget proposal, accrual basis
taxpayers could be required to accrue market discount currently, subject to
certain limitations. No such legislation is currently pending.
AMORTIZABLE PREMIUM
A holder who purchases a Note at a premium over its stated principal
amount, plus accrued interest, generally may elect to amortize such premium
("Section 171 premium") from the purchase date to the Note's maturity date under
a constant-yield method that reflects semiannual compounding based on the Note's
payment period. Amortizable premium, however, will not include any premium
attributable to a Note conversion feature. The premium attributable to the
conversion feature is the excess, if any, of the Note's purchase price over what
the Note's fair market value would be if there were no conversion feature.
Amortized Section 171 premium is treated as an offset to interest income on a
Note and not as a separate deduction. The election to amortize a premium on a
constant yield method, once made, applies to all debt obligations held or
subsequently acquired by the electing U.S. Holder on or after the first day of
the first taxable year to which the election applies and may not be revoked
without the consent of the IRS.
DEDUCTIBILITY OF INTEREST
Generally, under Section 279 of the Code, an interest deduction in excess
of $5.0 million per year is not permitted with respect to certain "corporate
acquisition indebtedness." Corporate acquisition indebtedness includes any
indebtedness that is:
- issued to provide consideration for the direct or indirect acquisition of
stock or assets of another corporation;
- subordinated;
- convertible directly or indirectly into the stock of the issuing
corporation; and
- issued by a corporation that has a debt to equity ratio that exceeds 2 to
1.
Our ability to deduct all of the interest payable on the Notes will depend
on the application of the foregoing tests to us. The availability of an interest
deduction with respect to the Notes was not determinative in our issuance of the
Notes pursuant to this offering.
Under Section 163(l) of the Code, no deduction is permitted for interest
paid or accrued on any indebtedness of a corporation that is "payable in equity"
of the issuer or a related party. Debt is treated as debt payable in equity of
the issuer if the debt is part of an arrangement designed to
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result in payment of the instrument with or by reference to the equity. Such
arrangements could include debt instruments that are convertible at the holder's
option if it is substantially certain that the option will be exercised. The
legislative history indicates that it is not expected the provision will affect
debt with a conversion feature where the conversion price is significantly
higher than the market price of the stock on the date of the debt issuance.
Accordingly, we do not believe that our interest deduction with respect to
interest payments on the Notes will be adversely affected by these rules.
CONVERSION OF THE NOTES
A U.S. Holder generally should not recognize any income, gain or loss upon
conversion of a Note into common stock except with respect to cash received in
lieu of a fractional share of common stock and with respect to market discount,
as described above under "Market Discount." A U.S. Holder's tax basis in the
common stock received on conversion of a Note should be the same as such
holder's adjusted tax basis in the Note at the time of conversion (reduced by
any basis allocable to a fractional share interest), and the holding period for
the common stock received on conversion should generally include the holding
period of the Note converted.
Cash received in lieu of a fractional share of common stock upon conversion
will be treated as a payment in exchange for the fractional share of common
stock. Accordingly, the receipt of cash in lieu of a fractional share of common
stock generally will result in capital gain or loss (measured by the difference
between the cash received for the fractional share and the holder's adjusted tax
basis in the fractional share).
DISTRIBUTIONS ON COMMON STOCK
Distributions, if any, made on the common stock after a conversion
generally will be included in the income of a U.S. Holder as ordinary dividend
income to the extent of our current or accumulated earnings and profits.
Distributions in excess of our current and accumulated earnings and profits will
be treated as a return of capital to the extent of the U.S. Holder's basis in
the common stock and thereafter as capital gain. A dividend distribution to a
corporate U.S. Holder may qualify for a dividends received deduction.
ADJUSTMENT OF CONVERSION PRICE
Holders of convertible debt instruments such as the Notes may, in certain
circumstances, be deemed to have received distributions of stock if the
conversion price of such instruments is adjusted. Adjustments to the conversion
price made pursuant to a bona fide reasonable adjustment formula which has the
effect of preventing the dilution of the interest of the holders of the debt
instruments, however, will generally not be considered to result in a
constructive distribution of stock. Certain of the possible adjustments provided
in the Notes (including, without limitation, adjustments in respect of taxable
dividends to our stockholders) will not qualify as being pursuant to a bona fide
reasonable adjustment formula. If such adjustments are made, the U.S. Holders of
Notes will be deemed to have received constructive distributions taxable as
dividends to the extent of our current and accumulated earnings and profits even
though they have not received any cash or property as a result of such
adjustments. In certain circumstances, the failure to provide for such an
adjustment may result in taxable dividend income to the U.S. Holders of common
stock.
SALE OF COMMON STOCK
Upon the sale or exchange of common stock a U.S. Holder generally will
recognize capital gain or loss equal to the difference between (i) the amount of
cash and the fair market value of any property received upon the sale or
exchange and (ii) such U.S. Holder's adjusted tax basis in the common stock.
Such capital gain or loss will be long-term capital gain or loss if the U.S.
Holder's holding period in common stock is more than one year at the time of the
sale or exchange. Long-
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term capital gains recognized by certain non-corporate U.S. Holders, including
individuals, will generally be subject to a maximum federal rate of tax of 20%.
A U.S. Holder's basis and holding period in common stock received upon
conversion of a Note are determined as discussed above under "Conversion of the
Notes." The deductibility of capital losses is subject to limitations.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Backup withholding of U.S. federal income tax at a rate of 31% may apply to
payments pursuant to the terms of a Note or common stock to a U.S. Holder that
is not an "exempt recipient" and that fails to provide certain identifying
information (such as the holder's taxpayer identification number ("TIN")) in the
manner required. Generally, individuals are not exempt recipients, whereas
corporations and certain other entities are exempt recipients. Payments made in
respect of a Note or common stock must be reported to the IRS, unless the U.S.
Holder is an exempt recipient or otherwise establishes an exemption. The amount
of any backup withholding from a payment to a U.S. Holder will be allowed as a
credit against the U.S. Holder's federal income tax liability and may entitle
such holder to a refund, provided that the required information is furnished to
the IRS.
Treasury Regulations, generally effective after December 31, 2000, subject
to certain transition rules, modify the currently effective information
withholding and backup withholding procedures and requirements. U.S. Holders
should consult their own tax advisors concerning the application of the new
withholding regulations.
SPECIAL TAX RULES APPLICABLE TO NON-U.S. HOLDERS
TAXATION OF INTEREST
In general, subject to the discussion below concerning backup withholding:
payments of interest on the Notes by us or any paying agent to a beneficial
owner of a Note that is a Non-U.S. Holder will not be subject to U.S.
withholding tax, provided that, (i) such Non-U.S. Holder does not own, actually
or constructively, 10% or more of our total combined voting power of all classes
of stock entitled to vote within the meaning of Section 871(h)(3) of the Code,
(ii) such Non-U.S. Holder is not a "controlled foreign corporation" with respect
to which we are a "related person" within the meaning of the Code, (iii) such
Non-U.S. Holder is not a bank receiving interest described in Section
881(c)(3)(A) of the Code, and (iv) the certification requirements under Section
871(h) or Section 881(c) of the Code and Treasury Regulations thereunder
(discussed below) are satisfied.
Interest on Notes not excluded from U.S. withholding tax as described above
generally will be subject to U.S. withholding tax at a 30% rate, except where an
applicable tax treaty provides for the reduction or elimination of such
withholding tax.
To satisfy the certification requirements referred to in (iv) above,
Sections 871(h) and 881(c) of the Code and currently effective Treasury
Regulations thereunder require that either (i) the beneficial owner of a Note
must certify, under penalties of perjury, to us or our paying agent, as the case
may be, that such owner is a Non-U.S. Holder and must provide such owner's name
and address, and U.S. TIN, if any, or (ii) a securities clearing organization,
bank or other financial institution that holds customer securities in the
ordinary course of its trade or business (a "Financial Institution") and holds
the Note on behalf of the beneficial owner thereof must certify, under penalties
of perjury, to us or our paying agent, as the case may be, that such certificate
has been received from the beneficial owner and must furnish the payor with a
copy thereof. Such requirement will be fulfilled if the beneficial owner of a
Note certifies on IRS Form W-8BEN or successor form, under penalties of perjury,
that it is a Non-U.S. Holder and provides its name and address or any Financial
Institution holding the Note on behalf of the beneficial owner files a statement
with the withholding agent to the effect that it has received such a statement
from the beneficial owner (and furnishes the withholding agent with a copy
thereof).
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Treasury Regulations effective for payments made after December 31, 2000,
will provide alternative methods for satisfying the certification requirements
described above and below, subject to certain grandfathering provisions. These
new regulations also require, in the case of Notes held by a foreign
partnership, that (i) the certification be provided by the partners rather than
by the foreign partnership and (ii) the partnership provide certain information,
including a TIN. A look-through rule will apply in the case of tiered
partnerships.
If a Non-U.S. Holder of a Note is engaged in a trade or business in the
U.S. and if interest on the Note is effectively connected with the conduct of
such trade or business (and, if certain tax treaties apply, is attributable to a
U.S. permanent establishment maintained by the Non-U.S. Holder in the U.S.), the
Non-U.S. Holder will generally be subject to U.S. federal income tax on such
interest on a net income basis in the same manner as if it were a U.S. Holder.
In lieu of the certificate described above, such a Non-U.S. Holder will be
required, under currently effective Treasury Regulations, to provide us with a
properly executed IRS Form W-8ECI or 4224 or successor form in order to claim an
exemption from any applicable withholding tax. In addition, if such Non-U.S.
Holder is a foreign corporation, it may be subject to a branch profits tax equal
to 30% (or such lower rate provided by an applicable treaty) of its effectively
connected earnings and profits for the taxable year, subject to certain
adjustments.
CONVERSION OF THE NOTES
A Non-U.S. Holder generally will not be subject to U.S. federal withholding
tax on the conversion of a Note into common stock. To the extent a Non-U.S.
Holder receives cash in lieu of a fractional share of common stock upon
conversion, such cash may give rise to gain that would be subject to the rules
described above with respect to the sale or exchange of a Note or common stock.
See "Sale, Exchange or Redemption of the Notes or Common Stock" below.
ADJUSTMENT OF CONVERSION PRICE
The conversion price of the Notes is subject to adjustment in certain
circumstances. Any such adjustment could, in certain circumstances, give rise to
a deemed distribution to Non-U.S. Holders of the Notes. See "U.S.
Holders -- Adjustment of Conversion Price" above. In such case, the deemed
distribution would be subject to the rules below regarding withholding of U.S.
federal tax on dividends in respect of common stock.
DISTRIBUTIONS ON COMMON STOCK
Distributions on common stock will constitute a dividend for U.S. federal
income tax purposes to the extent of our current or accumulated earnings and
profits as determined under U.S. federal income tax principles. Dividends paid
on common stock held by a Non-U.S. Holder will be subject to U.S. federal
withholding tax at a rate of 30% (or lower treaty rate, if applicable) unless
the dividend is effectively connected with the conduct of a U.S. trade or
business by the Non-U.S. Holder and, if required by a tax treaty, is
attributable to a permanent establishment maintained in the United States, in
which case the dividend will be subject to U.S. federal income tax on net income
that applies to U.S. persons generally (and with respect to corporate holders
under certain circumstances, the branch profits tax). A Non-U.S. Holder may be
required to satisfy certain requirements in order to claim a reduction of or
exemption from withholding under the foregoing rules. However, prior to January
1, 2001, for purposes of an applicable tax treaty, if a stockholder's address is
outside the United States it will be assumed that such stockholder is a citizen
or resident of that country absent the payor's knowledge to the contrary.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES OR COMMON STOCK
A Non-U.S. Holder of a Note or common stock will not be subject to U.S.
federal income tax on gains realized on the sale, exchange or other disposition
of such Note or common stock unless
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(i) such Non-U.S. Holder is an individual who is present in the U.S. for 183
days or more in the taxable year of sale, exchange or other disposition, and
certain conditions are met, (ii) such gain is effectively connected with the
conduct by the Non-U.S. Holder of a trade or business in the U.S. and, if
certain U.S. income tax treaties apply, is attributable to a U.S. permanent
establishment maintained by the Non-U.S. Holder, (iii) the Non-U.S. Holder is
subject to Code provisions applicable to certain U.S. expatriates, or (iv) in
the case of a Note or common stock held by a person who holds more than 5% of
our stock, we are or have been, at any time within the shorter of the five-year
period preceding such sale or other disposition or the period such Non-U.S.
Holder held the common stock, a U.S. real property holding corporation (a
"USRPHC") for U.S. federal income tax purposes. We do not believe that we
currently are a USRPHC or that we will become one in the future.
U.S. FEDERAL ESTATE TAX
A Note held by an individual who at the time of death is not a citizen or
resident of the U.S. (as specially defined for U.S. federal estate tax purposes)
will not be subject to U.S. federal estate tax if the individual did not
actually or constructively own 10% or more of the total combined voting power of
all classes of our stock and, at the time of the individual's death, payments
with respect to such Note would not have been effectively connected with the
conduct by such individual of a trade or business in the U.S. Common stock held
by an individual who at the time of death is not a citizen or resident of the
U.S. (as specially defined for U.S. federal estate tax purposes) will be
included in such individual's estate for U.S. federal estate tax purposes,
unless an applicable estate tax treaty otherwise applies.
Non-U.S. Holders should consult with their tax advisors regarding U.S. and
foreign tax consequences with respect to the Notes and common stock.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In the case of payments of interest on a Note to a Non-U.S. Holder,
Treasury Regulations provide that backup withholding and information reporting
will not apply to payments with respect to which either requisite certification
has been received or an exemption has otherwise been established (provided that
neither we nor our paying agent has actual knowledge that the holder is a U.S.
Holder or that the conditions of any other exemption are not in fact satisfied).
Dividends on common stock paid to Non-U.S. Holders that are subject to U.S.
withholding tax, as described above, generally will be exempt from U.S. backup
withholding tax but will be subject to certain information reporting.
Payments of the proceeds of the sale of a Note or common stock to or
through a foreign office of a U.S. broker or a foreign broker that is a
"controlled foreign corporation" within the meaning of the Code or a foreign
person, 50% or more of whose gross income from all sources for the three-year
period ending with the close of its taxable year preceding the payment was
effectively connected with the conduct of a trade or business within the U.S.
are currently subject to certain information reporting requirements, unless the
payee is an exempt recipient or such broker has evidence in its records that the
payee is a non-U.S. Holder and no actual knowledge that such evidence is false
and certain other conditions are met. Temporary Treasury Regulations indicate
that such payments are not currently subject to backup withholding.
Under current Treasury Regulations, payments of the proceeds of a sale of a
Note or common stock to or through the U.S. office of a broker will be subject
to information reporting and backup withholding unless the payee certifies under
penalties of perjury as to his or her status as a Non-U.S. Holder and satisfies
certain other qualifications (and no agent of the broker who is responsible for
receiving or reviewing such statement has actual knowledge that it is incorrect)
and provides his or her name and address or the payee otherwise establishes an
exemption.
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Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder of a Note or common stock will be allowed as a credit against
such holder's U.S. federal income tax, if any, or will be otherwise refundable
provided that the required information is furnished to the IRS in a timely
manner.
As noted above, new regulations will generally be applicable to payments
made after December 31, 2000. In general, these new regulations do not
significantly alter the substantive withholding and information reporting
requirements but unify current certification procedures and forms and clarify
reliance standards. Under these new regulations, special rules apply which
permit the shifting of primary responsibility for withholding to certain
financial intermediaries acting on behalf of beneficial owners. A Non-U.S.
Holder of a Note or common stock should consult with its tax advisor regarding
the application of the backup withholding rules to its particular situation, the
availability of an exemption therefrom, the procedure for obtaining such an
exemption, if available, and the impact of these new regulations on payments
made with respect to Notes or common stock after December 31, 2000.
THE PRECEDING DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH
PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISER AS TO THE PARTICULAR
U.S. FEDERAL, STATE, AND LOCAL TAX CONSEQUENCES OF PURCHASING, HOLDING AND
DISPOSING OF THE NOTES AND OUR COMMON STOCK. TAX ADVISORS SHOULD ALSO BE
CONSULTED AS TO THE U.S. ESTATE AND GIFT TAX CONSEQUENCES AND THE FOREIGN TAX
CONSEQUENCES OF PURCHASING, HOLDING OR DISPOSING OF OUR NOTES AND COMMON STOCK,
AS WELL AS THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Notes and the
common stock issuable upon conversion of the Notes offered by this Prospectus
are being passed upon for Manugistics 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 28, 2001, Mr.
Jacovini was the beneficial owner of 142,000 shares of common stock (including
2,672 shares of common stock held by his spouse and a total of 76,328 shares of
common stock issuable upon exercise of certain options).
EXPERTS
The consolidated financial statements of Manugistics as of February 29,
2000 and February 28, 1999 and for each of the three years in the period ended
February 29, 2000, incorporated in this Prospectus by reference from the
Manugistics Annual Report on Form 10-K for the period ended February 29, 2000,
have been audited by Deloitte & 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 Deloitte & Touche LLP given upon
their authority as experts in accounting and auditing. The consolidated
financial statements give retroactive effect to the merger of Manugistics and
TYECIN Systems, Inc. ("TYECIN"), which has been accounted for as a pooling of
interests as described in Note 11 to the consolidated financial statements. We
did not audit the statements of income, stockholders' equity and cash flows of
TYECIN for the year ended December 31, 1997, which consolidated statements
reflect total revenues of $4,597,200 for the year ended December 31, 1997. Those
consolidated statements were audited by other auditors whose report has been
furnished to us and our opinion, insofar as it related to the amounts included
for TYECIN for 1997 is based solely upon the report of such auditors.
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The consolidated balance sheets of Talus Solutions 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.
The consolidated financial statements of TYECIN Systems, Inc., not
separately presented in this Prospectus, have been audited by
PricewaterhouseCoopers LLP, independent accountants whose report thereon is
incorporated by reference herein. Such consolidated financial statements, to the
extent they have been included in the financial statements of Manugistics, have
been so incorporated by reference in reliance on the report of such independent
accountants given on the authority of said firm as experts in auditing and
accounting.
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 7 World Trade Center,
Suite 1300, New York, NY 10048. 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:
- Annual Report on Form 10-K for the year ended February 29, 2000;
- Current Report on Form 8-K, filed March 2, 2000;
- Current Report on Form 8-K, filed April 27, 2000;
- Quarterly Report on Form 10-Q for the quarter ended May 31, 2000;
- Current Report on Form 8-K, filed September 22, 2000;
- Current Report on Form 8-K/A, filed October 10, 2000;
- Current Report on Form 8-K, filed October 11, 2000;
- Current Report on Form 8-K/A, filed October 11, 2000;
- Quarterly Report on Form 10-Q for the quarter ended August 31, 2000;
- Current Report on Form 8-K, filed October 20, 2000;
- Current Report on Form 8-K, filed November 1, 2000;
- Current Report on Form 8-K, filed November 2, 2000;
- Current Report on Form 8-K, filed November 8, 2000;
- Current Report on Form 8-K, filed November 28, 2000;
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- Current Report on Form 8-K, filed December 7, 2000;
- Current Report on Form 8-K, filed December 8, 2000;
- Current Report on Form 8-K, filed December 21, 2000;
- Current Report on Form 8-K, filed December 22, 2000;
- Current Report on Form 8-K, filed January 4, 2001;
- Quarterly Report on Form 10-Q for the quarter ended November 30, 2000;
- Current Report on Form 8-K/A, filed January 16, 2001;
- Current Report on Form 8-K, filed January 18, 2001;
- Current Report on Form 8-K, filed March 7, 2001;
- Current Report on Form 8-K, filed March 8, 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, except
where otherwise specified, current as of March 12, 2001. You should not assume
that this Prospectus is accurate as of any other date.
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