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FILED PURSUANT TO RULE 424(b)(4)
File No. 333-96341
PROSPECTUS
38,376 SHARES
COMMON STOCK
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[i2 TECHNOLOGIES,
INC. LOGO] i2 TECHNOLOGIES, INC.
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This prospectus relates to the public offering, which is not being
underwritten, of 38,376 shares of our common stock underlying warrants held by
certain persons.
The prices at which such persons may sell the shares registered under this
prospectus will be determined by the prevailing market price for the shares or
in negotiated transactions. We will not receive any of the proceeds from the
sale of the shares.
Our common stock is quoted on the Nasdaq National Market under the symbol
"ITWO." On April 5, 2000, the closing sale price for our common stock was
$105.00.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE RISK FACTORS ON PAGE 3
TO READ ABOUT CERTAIN FACTORS YOU SHOULD CONSIDER BEFORE BUYING SHARES OF COMMON
STOCK BEING OFFERED BY THIS PROSPECTUS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
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The date of this prospectus is April 6, 2000.
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WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE A STATEMENT THAT DIFFERS FROM
WHAT IS IN THIS PROSPECTUS. IF ANY PERSON DOES MAKE A STATEMENT THAT DIFFERS
FROM WHAT IS IN THIS PROSPECTUS, YOU SHOULD NOT RELY ON IT. THIS PROSPECTUS IS
NOT AN OFFER TO SELL, NOR IS IT SEEKING AN OFFER TO BUY, THESE SECURITIES IN ANY
STATE IN WHICH THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION IN THIS
PROSPECTUS IS COMPLETE AND ACCURATE AS OF ITS DATE, BUT THE INFORMATION MAY
CHANGE AFTER THAT DATE.
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TABLE OF CONTENTS
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Where You Can Find More Information......................... 2
The Company................................................. 3
Risk Factors................................................ 3
Selling Stockholders........................................ 13
Plan of Distribution........................................ 13
Legal Matters............................................... 15
Experts..................................................... 15
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission, or SEC. You may read
and copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from our Web site at www.i2.com or at
the SEC's Web site at www.sec.gov. However, the information on our Web site does
not constitute a part of this prospectus.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to that information. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until this
offering is completed.
1. Our annual report on Form 10-K for the year ended December 31, 1999;
2. Our current reports on Form 8-K filed January 21 and March 14, 2000 (as
amended by Form 8-K/A filed March 17, 2000); and
3. The description of our common stock contained in our registration
statement on Form 8-A (File No. 0-28030), as filed with the SEC on March
20, 1996.
You may obtain a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Investor Relations
One i2 Place
11701 Luna Road
Dallas, Texas 75234
Telephone: (469) 357-1000
You should rely only on the information provided in this document or
incorporated in this document by reference. We have not authorized anyone to
provide you with different information. You should not assume that the
information in this document, including any information incorporated herein by
reference, is accurate as of any date other than that on the front of the
document.
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THE COMPANY
i2 is a leading global provider of intelligent eBusiness solutions that
help enterprises optimize business processes both internally and among trading
partners. Our solutions enable enterprises to significantly improve
efficiencies, collaborate with suppliers and customers, respond to market
demands and engage in dynamic business interactions over the Internet. Our
solutions consider the real conditions of companies to optimize key business
processes -- from product design to customer relationships. We have recently
launched TradeMatrix, a robust platform of business-to-business solutions,
services and marketplaces, which will allow customers, partners, suppliers and
service providers to do business together in real time. TradeMatrix offers a
full breadth of services that include planning, procurement, commerce,
fulfillment, customer care, retail, strategic sourcing and product development.
Our RHYTHM product suite principally includes solutions for supply chain
management, customer management, product lifecycle management, inter-process
planning and strategic planning, which provide the basis for these value-added
services offered to marketplace participants. We recently have signed agreements
to develop and host public and private Internet-based electronic marketplaces
with our customers and partners in the automotive, aerospace, high-tech,
softgoods and consumer packaged goods industries. Our RHYTHM software
applications, along with new software solutions and services designed
specifically for the TradeMatrix environment, are used to power these electronic
marketplaces. We also provide services such as consulting, training and
maintenance in support of these offerings.
Our principal executive offices are located at One i2 Place, 11701 Luna
Road, Dallas, Texas 75234, and our telephone number is (469) 357-1000.
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing our company. Additional risks and uncertainties that we do not
presently know or that we currently deem immaterial may also impair our business
operations.
OUR FINANCIAL RESULTS MAY VARY SIGNIFICANTLY FROM QUARTER-TO-QUARTER AND WE MAY
FAIL TO MEET EXPECTATIONS, WHICH MAY NEGATIVELY IMPACT THE PRICE OF OUR STOCK.
Our operating results have varied significantly from quarter-to-quarter in
the past, and we expect our operating results to continue to vary from
quarter-to-quarter in the future, due to a variety of factors, many of which are
outside of our control. Factors that could affect quarterly operating results
include:
- volume and timing of customer orders;
- length of the sales cycle;
- customer budget constraints;
- announcement or introduction of new products or product enhancements by
us or our competitors;
- changes in prices of our products and those of our competitors;
- foreign currency exchange rate fluctuations;
- market acceptance of new products;
- mix of direct and indirect sales;
- changes in our strategic relationships; and
- changes in our business strategy.
Furthermore, customers may defer or cancel their purchases of products if
they experience a downturn in their business or if there is a downturn in the
general economy. We will continue to determine our investment and expense levels
based on expected future revenues. A significant portion of our expenses is not
variable in
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the short term, and we cannot reduce our costs quickly to respond to decreases
in revenues. Therefore, if revenues are below expectations, this shortfall is
likely to adversely and disproportionately affect our operating results. In
addition, we may reduce our prices or accelerate investment in research and
development efforts in response to competitive pressures or to pursue new market
opportunities. Any of these activities may further limit our ability to adjust
spending in response to revenue fluctuations. Revenues may not grow at
historical rates in future periods, or they may not grow at all. Accordingly, we
may not maintain positive operating margins in future quarters. Any of these
factors could cause our operating results to be below the expectations of public
market analysts and investors, and the price of our common stock may fall.
WE ANTICIPATE SEASONAL FLUCTUATIONS IN REVENUES, WHICH MAY CAUSE VOLATILITY IN
OUR STOCK PRICE.
The market price of our common stock has been volatile in the past, and the
market price of our common stock may be volatile in the future. Historically,
our revenues have tended to be strongest in the fourth quarter of the year. We
believe that our seasonality is due to the calendar year budgeting cycles of
many of our customers and our compensation policy that rewards sales personnel
for achieving annual revenue quotas. In future periods, these seasonal trends
may cause our quarter-to-quarter operating results to vary, which may result in
failing to meet the expectations of public market analysts and investors.
WE DEPEND ON SIGNIFICANT INDIVIDUAL LICENSE SALES. THEREFORE, OUR OPERATING
RESULTS FOR A GIVEN PERIOD COULD SUFFER SERIOUS HARM IF WE FAIL TO CLOSE THE
LARGE SALES WE TARGETED FOR THAT PERIOD.
We generally derive a significant portion of revenues in each quarter from
a small number of relatively large sales. For example, in each quarter of 1999,
in the last three quarters of 1998 and in each quarter of 1997, one or more
customers individually accounted for at least 10% of our total software license
revenues in each respective quarter. Moreover, due to customer purchasing
patterns, we typically realize a significant portion of our software license
revenues in the last few weeks of a quarter. As a result, we are subject to
significant variations in license revenues and results of operations if we incur
any delays in customer orders. If in any future period we fail to close one or
more substantial license sales that we have targeted to close in that period,
this failure could seriously harm our operating results for that period.
WE MAY NOT REMAIN COMPETITIVE, AND INCREASED COMPETITION COULD SERIOUSLY HARM
OUR BUSINESS.
Our competitors offer a variety of eBusiness including supply chain and
other core processes. These competitors include:
- vendors establishing electronic marketplaces and indirect procurement
capabilities, such as Ariba and Commerce One;
- enterprise resource application software vendors such as SAP AG,
PeopleSoft Inc., Oracle Corporation and Baan Company, N.V., each of which
currently offers sophisticated enterprise resource planning, or ERP,
solutions that currently or may in the future incorporate applications
competitive with our products;
- supply chain software vendors including Manugistics Group, Inc. and
Logility, Inc.;
- other business application software vendors which may broaden their
product offerings by internally developing, or by acquiring or partnering
with independent developers of, advanced planning and scheduling
software;
- internal development efforts by corporate information technology
departments; and
- companies offering standardized or customized products for mainframe
and/or mid-range computer systems.
Historically, a number of enterprise resource planning vendors have from
time to time jointly marketed our products as a complement to their own systems.
However, as we attempt to increase our market share and expand our product
offerings, and as enterprise resource planning vendors expand their own product
offerings,
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our relationships with these vendors have and may continue to become more
competitive. We believe that enterprise resource planning vendors are focusing
significant resources on establishing and increasing the functionality of their
own eBusiness solutions, and other enterprise resource planning vendors have
recently acquired independent developers of advanced planning and scheduling
software which compete with RHYTHM.
Relative to us, many of our competitors have:
- longer operating histories;
- significantly greater financial, technical, marketing and other
resources;
- greater name recognition;
- a broader range of products to offer; and
- a larger installed base of customers.
Current and potential competitors have established, or may establish,
cooperative relationships among themselves or with third parties to enhance
their products, which may result in increased competition. In addition, we
expect to experience increasing price competition as we compete for market
share, and we may not be able to compete successfully with our existing or new
competitors. If we experience increased competition, substantial harm may result
to our business, operating results and financial condition.
OUR STRATEGY OF ESTABLISHING AND PROMOTING OUR TRADEMATRIX IS UNPROVEN AND MAY
BE UNSUCCESSFUL.
As part of our business strategy, we are offering the TradeMatrix platform
to trading community participants in digital marketplaces. This strategy is
unproven, and currently we are providing only a limited portion of our intended
TradeMatrix services in only a small number of digital trading communities. We
have limited experience developing and operating digital marketplaces, and we
cannot be certain that these trading communities will be operated effectively,
that enterprises will join and remain in these trading communities, that we will
develop and provide successfully all intended TradeMatrix services, or that we
will generate significant revenues from these services. To date, we have not
generated significant revenues from these services. If this business strategy is
flawed, or if we are unable to execute effectively, our business, operating
results and financial condition could be substantially harmed.
In addition, we expect to rely on third parties' efforts to promote our
TradeMatrix platform. Because our revenues from these sources are likely to be
largely based on subscriptions to or utilization of our digital marketplaces,
any failure by these third parties to successfully promote our TradeMatrix
platform, or any reluctance to participate in our digital marketplaces on the
part of suppliers, manufacturers, distributors, logistics providers or
customers, could harm our business, results of operations and financial
condition.
RAPID GROWTH IN OUR OPERATIONS COULD CONTINUE TO STRAIN OUR MANAGERIAL AND
OPERATIONAL RESOURCES.
We have experienced rapid growth. Revenues have increased to $571.1 million
in 1999 from $369.2 million in 1998 and from $221.8 million in 1997. Our
employee count has increased to approximately 2,800 at December 31, 1999, from
approximately 2,200 at December 31, 1998, and from approximately 1,200 at
December 31, 1997. We have also increased the scope of our operating and
financial systems and the geographic distribution of our operations and
customers. This growth has strained our management and operations, and they will
continue to be strained if rapid growth continues. Our officers and other key
employees will need to implement and improve our operational, customer support
and financial control systems and effectively expand, train and manage our
employee base. Further, we expect that we will be required to manage an
increasing number of relationships with various customers and other third
parties. We may not be able to manage future expansion successfully, and our
inability to do so would harm our business, operating results and financial
condition.
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ANY DECREASE IN DEMAND FOR OUR RHYTHM SUITE OF PRODUCTS AND SERVICES COULD
SIGNIFICANTLY REDUCE OUR REVENUES.
We derive substantially all of our revenues from licenses of our RHYTHM
suite of products and related services. RHYTHM-related revenues, including
maintenance and consulting contracts, will continue to account for substantially
all of our revenues for the foreseeable future. As a result, our future
operating results will depend upon continued market acceptance of RHYTHM and
enhancements thereto. However, RHYTHM may not achieve continued market
acceptance. Competition, technological change or other factors could decrease
demand for, or market acceptance of, RHYTHM. Any decrease in demand or market
acceptance of RHYTHM could substantially harm our business, operating results
and financial condition.
WE ARE INVESTING SIGNIFICANT RESOURCES IN DEVELOPING AND MARKETING OUR
INTELLIGENT EBUSINESS SOLUTIONS. THE MARKET FOR THESE SOLUTIONS IS NEW AND
EVOLVING, AND, IF THIS MARKET DOES NOT DEVELOP AS WE ANTICIPATE, OR IF WE ARE
UNABLE TO DEVELOP ACCEPTABLE SOLUTIONS, SERIOUS HARM WOULD RESULT TO OUR
BUSINESS.
We currently derive a substantial portion of our revenues from licenses for
decision-support software products associated with supply chain management
software and related services. However, we are investing significant resources
in further developing and marketing enhanced products and services to facilitate
eBusiness over public and private networks. For the first few months after we
introduce new products and services, the demand for and market acceptance of
those products and services are subject to a high level of uncertainty,
especially where acquisition of our products or services requires a large
capital commitment or other significant commitment of resources. Adoption of
eBusiness software solutions, particularly by those individuals and enterprises
that have historically relied upon traditional means of commerce and
communication, will require a broad acceptance of new and substantially
different methods of conducting business and exchanging information. These
products and services involve a new approach to the method of conducting
business, and, as a result, intensive marketing and sales efforts may be
necessary to educate prospective customers regarding the uses and benefits of
these products and services in order to generate demand. The market for this
broader functionality may not develop, competitors may develop superior products
and services, or we may not develop acceptable solutions to address this
functionality. Any one of these events could seriously harm our business,
operating results and financial condition.
RAPID ADOPTION OF OUR TRADEMATRIX PLATFORMS COULD REDUCE OUR SOFTWARE LICENSING
REVENUES.
Our current revenue model is mainly focused on license revenue, with
additional revenues earned from consulting, maintenance and training. The
TradeMatrix platform offers a more diverse and expansive set of service
offerings that will generate additional revenue streams for hosting, transaction
processing and set-up fees. The TradeMatrix pricing model differs from our
historical model of deriving revenues from licenses of the RHYTHM suite of
products, which we largely recognize upon executing a contract and delivering
software. Under the TradeMatrix model, up-front license fees may be less
substantial and the fees derived from subscriptions to our utilization of the
digital marketplace services may be more robust. We can not predict the rate at
which our customers will adopt the TradeMatrix platform or whether these
expanded service offerings will adversely impact our license revenues.
WE DO NOT HAVE SIGNIFICANT EXPERIENCE IN HOSTING ELECTRONIC MARKETPLACES AND MAY
NOT ADEQUATELY PREDICT THE VOLUME OF TRAFFIC.
If the volume of traffic on the web site for our TradeMatrix platform
increases, the platform may experience slower response times or other problems.
We will rely on several third parties to expand, manage and maintain the
necessary computer equipment, software, Internet and telecommunication services
required for efficient access to TradeMatrix as demand increases. Any delays in
response time or performance problems could cause TradeMatrix users to perceive
this service as not functioning properly and therefore cause them to reduce or
discontinue use of our products and services.
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OUR TRADEMATRIX PLATFORM MAY EXPERIENCE PERFORMANCE PROBLEMS OR DELAYS AS A
RESULT OF SERVICE INTERRUPTIONS.
We must protect our network infrastructure and equipment against damage
from human error, physical or electronic security breaches, power loss and other
facility failures, fire, earthquake, flood, telecommunications failure,
sabotage, vandalism and other similar events. Despite precautions we have taken,
a natural disaster or other unanticipated problems at our data centers could
result in interruptions in our services or significant damage to equipment
supporting the platform. In addition, failure of any of our telecommunications
providers to provide consistent data communications capacity could result in
interruptions in our services. Each of these could experience outages, delays
and other difficulties due to system failures unrelated to our systems. Any
damage to or failure of our systems or service providers could result in
reductions in, or terminations of, services supplied to our customers, which
could have a material adverse effect on our business.
IF WE PUBLISH INACCURATE CATALOG CONTENT DATA, OUR BUSINESS COULD SUFFER.
The accurate publication of catalog content is critical to our customers'
businesses. Our TradeMatrix platform contains content management tools that help
suppliers manage the collection and publication of catalog content. Any defects
or errors in these tools or the failure of these tools to accurately publish
catalog content could deter businesses from participating in the TradeMatrix
marketplaces, damage our business reputation, harm our ability to win new
customers and potentially expose us to legal liability. In addition, from time
to time some of our customers may submit inaccurate pricing or other inaccurate
catalog information. Even though such inaccuracies are not caused by our work
and are not within our control, such inaccuracies could deter current and
potential customers from using our products and could harm our business,
operating results and financial condition.
THE MARKETS IN WHICH WE COMPETE EXPERIENCE RAPID TECHNOLOGICAL CHANGE. IF WE DO
NOT RESPOND TO THE TECHNOLOGICAL ADVANCES WE COULD SERIOUSLY HARM OUR BUSINESS.
Enterprises are increasing their focus on decision-support solutions for
eBusiness challenges. As a result, they are requiring their application software
vendors to provide greater levels of functionality and broader product
offerings. Moreover, competitors continue to make rapid technological advances
in computer hardware and software technology and frequently introduce new
products, services and enhancements. We must continue to enhance our current
product line and develop and introduce new products and services that keep pace
with the technological developments of our competitors. We must also satisfy
increasingly sophisticated customer requirements. If we cannot successfully
respond to the technological advances of others, or if our new products or
product enhancements and services do not achieve market acceptance, these events
could seriously harm our business, operating results and financial condition.
IF USE OF THE INTERNET FOR COMMERCE AND COMMUNICATION DOES NOT INCREASE AS WE
ANTICIPATE, OUR BUSINESS WILL SUFFER.
We are offering new and enhanced products and services, which depend on
increased acceptance and use of the Internet as a medium for commerce and
communication. Rapid growth in the use of the Internet is a recent phenomenon.
As a result, acceptance and use may not continue to develop at historical rates,
and a sufficiently broad base of business customers may not adopt or continue to
use the Internet as a medium of commerce. Demand and market acceptance for
recently introduced services and products over the Internet are subject to a
high level of uncertainty, and there exist few proven services and products.
Our business could be seriously harmed if:
- use of the Internet and other online services does not continue to
increase or increases more slowly than expected;
- the necessary communication and computer network technology underlying
the Internet and other online services does not effectively support any
expansion that may occur;
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- new standards and protocols are not developed or adopted in a timely
manner; or
- for any other reason -- such as concerns about security, reliability,
cost, ease of use, accessibility or quality of service -- the Internet
does not create a viable commercial marketplace, inhibiting the
development of electronic commerce and reducing the need for and
desirability of our products and services.
FUTURE REGULATION OF THE INTERNET MAY SLOW ITS GROWTH, RESULTING IN DECREASED
DEMAND FOR OUR PRODUCTS AND SERVICES AND INCREASED COSTS OF DOING BUSINESS.
Due to increasing popularity and use of the Internet, it is possible that
state and federal regulators could adopt laws and regulations that impose
additional burdens on companies conducting business online. For example, the
growth and development of the market for Internet-based services may prompt
calls for more stringent consumer protection laws. Moreover, the applicability
to the Internet of existing laws in various jurisdictions governing issues such
as property ownership, sales tax, libel and personal privacy is uncertain and
may take years to resolve. Any new legislation or regulation, the application of
laws and regulations from jurisdictions whose laws do not currently apply to our
business, or the application of existing laws and regulations to the Internet
and other online services could decrease the expansion of the Internet, causing
our costs to increase and our growth to be harmed.
CONCERNS THAT OUR PRODUCTS DO NOT ADEQUATELY PROTECT THE PRIVACY OF CONSUMERS
COULD INHIBIT SALES OF OUR PRODUCTS.
One of the principal features of our customer management software
applications is the ability to develop and maintain profiles of consumers for
use by businesses. Typically, these products capture profile information when
consumers, business customers and employees visit a web site and volunteer
information in response to survey questions concerning their backgrounds,
interests and preferences. Our products augment these profiles over time by
collecting usage data. Although we have designed our customer management
products to enable the development of applications that permit web site visitors
to prevent the distribution of any of their personal data beyond that specific
web site, privacy concerns may nevertheless cause visitors to resist providing
the personal data necessary to support this profiling capability. If we cannot
adequately address consumers' privacy concerns, these concerns could seriously
harm our business, financial condition and operating results.
IF OUR ENCRYPTION TECHNOLOGY FAILS TO ENSURE THE SECURITY OF OUR CUSTOMERS'
ONLINE TRANSACTIONS, SERIOUS HARM TO OUR BUSINESS COULD RESULT.
The secure exchange of value and confidential information over public
networks is a significant concern of consumers engaging in online transactions
and interaction. Our customer management software applications use encryption
technology to provide the security necessary to effect the secure exchange of
value and confidential information. Advances in computer capabilities, new
discoveries in the field of cryptography or other events or developments could
result in a compromise or breach of the algorithms that these applications use
to protect customer transaction data. If any compromise or breach were to occur,
it could seriously harm our business, financial condition and operating results.
WE MAY NOT SUCCESSFULLY INTEGRATE OR REALIZE THE INTENDED BENEFITS OF OUR RECENT
ACQUISITIONS.
We acquired InterTrans Logistics Solutions Limited, or ITLS, in April 1998
and SMART in July 1999. In addition, we have acquired other businesses and
products to help broaden and strengthen our product portfolio. The success of
these acquisitions will depend primarily on our ability to:
- retain, motivate and integrate the acquired personnel;
- integrate multiple information systems; and
- integrate acquired software with our existing products and services.
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We may encounter difficulties in integrating our operations and products
with those of ITLS, SMART and others. We may not realize the benefits that we
anticipated when we made these acquisitions. Our failure to successfully
integrate our operations and products with those of ITLS, SMART and others could
seriously harm our business, operating results and financial condition.
WE MAY MAKE FUTURE ACQUISITIONS OR ENTER INTO JOINT VENTURES THAT MAY NOT BE
SUCCESSFUL.
In the future, we may acquire additional businesses, products and
technologies, or enter into joint venture arrangements, that could complement or
expand our business. In furtherance of this strategy, in March 2000 we entered
into agreements to acquire Aspect and SupplyBase. Management's negotiations of
potential acquisitions or joint ventures and management's integration of
acquired businesses, products or technologies could divert their time and
resources. Future acquisitions could cause us to issue dilutive equity
securities, incur debt or contingent liabilities, amortize goodwill and other
intangibles, or write off in-process research and development and other
acquisition-related expenses that could seriously harm our financial condition
and operating results. We expect that we will be required to amortize a
significant amount of goodwill and write-off significant amounts of in-process
research and development and other acquisition-related expenses if we complete
the pending Aspect and SupplyBase acquisitions. Further, we may not be able to
integrate any acquired business, product or technology with our existing
operations or train, retain and motivate personnel from the acquired business.
If we are unable to fully integrate an acquired business, product or technology
or train, retain and motivate personnel from the acquired business, we may not
receive the intended benefits of that acquisition.
WE FACE RISKS ASSOCIATED WITH INTERNATIONAL SALES AND OPERATIONS THAT COULD HARM
OUR COMPANY.
Our international operations are subject to risks inherent in international
business activities. In addition, we may expand our international operations in
the future which would increase our exposure to these risks. The risks we face
internationally include:
- difficulties and costs of staffing and managing geographically disparate
operations;
- longer accounts receivable payment cycles in certain countries;
- compliance with a variety of foreign laws and regulations;
- unexpected changes in regulatory requirements;
- overlap of different tax structures;
- greater difficulty in safeguarding intellectual property;
- import and export licensing requirements;
- trade restrictions;
- changes in tariff rates;
- political instability; and
- general economic conditions in international markets.
CHANGES IN THE VALUE OF THE U.S. DOLLAR, AS COMPARED TO THE CURRENCIES OF
FOREIGN COUNTRIES WHERE WE TRANSACT BUSINESS, COULD HARM OUR OPERATING RESULTS.
To date, our international revenues have been denominated primarily in U.S.
dollars. The majority of our international expenses and some revenues have been
denominated in currencies other than the U.S. dollar. Therefore, changes in the
value of the U.S. dollar as compared to these other currencies may adversely
affect our operating results. As our international operations expand, we will
use an increasing number of foreign currencies, causing our exposure to currency
exchange rate fluctuations to increase. Although we have implemented limited
hedging programs to mitigate our exposure to currency fluctuations, currency
exchange rate fluctuations have caused, and will continue to cause, currency
transaction gains and losses. While these
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transactional gains and losses have not been material to date, they may harm our
business, results of operations or financial condition in the future.
WE DEPEND ON OUR STRATEGIC PARTNERS AND OTHER THIRD PARTIES. IF WE FAIL TO
DERIVE BENEFITS FROM OUR EXISTING AND FUTURE STRATEGIC RELATIONSHIPS, OUR
BUSINESS WILL SUFFER.
From time to time, we have collaborated with other companies, including IBM
and PricewaterhouseCoopers, in areas such as product development, marketing,
distribution and implementation. Maintaining these and other relationships is a
meaningful part of our business strategy. However, some of our current and
potential strategic partners are either actual or potential competitors, which
may impair the viability of these relationships. In addition, some of our
relationships have failed to meet expectations and may fail to meet expectations
in the future. We may not be able to enter into successful new strategic
relationships in the future.
THE LOSS OF ANY OF OUR KEY PERSONNEL OR OUR FAILURE TO ATTRACT ADDITIONAL
PERSONNEL COULD SERIOUSLY HARM OUR COMPANY.
We rely upon the continued service of a relatively small number of key
technical and senior management personnel, particularly Sanjiv Sidhu, our
chairman and chief executive officer. Our future success depends on retaining
our key employees and our continuing ability to attract, train and retain other
highly qualified technical and managerial personnel. Very few of our key
technical personnel and none of our senior management personnel are bound by
employment agreements. As a result, our employees could leave with little or no
prior notice. In the past, we have had difficulty recruiting qualified
personnel. We may not be able to attract, assimilate or retain other highly
qualified technical and managerial personnel in the future. Our loss of any of
our key technical and senior management personnel or our inability to attract,
train and retain additional qualified personnel could seriously harm our
business, operating results and financial condition.
IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS OR FACE A
CLAIM OF INTELLECTUAL PROPERTY INFRINGEMENT BY A THIRD PARTY, WE COULD LOSE OUR
INTELLECTUAL PROPERTY RIGHTS OR BE LIABLE FOR SIGNIFICANT DAMAGES.
We rely primarily on a combination of copyright, trademark and trade secret
laws, confidentiality procedures and contractual provisions to protect our
proprietary rights. In addition, we generally license RHYTHM products to end
users in object code (machine-readable) format, and our license agreements
generally allow the use of RHYTHM products solely by the customer for internal
purposes without the right to sublicense or transfer the RHYTHM products.
However, these measures afford only limited protection. Unauthorized parties may
attempt to copy aspects of our products or to obtain and use information that we
regard as proprietary. Although we believe software piracy may be a problem, we
are not able to determine the extent to which piracy of our software products
exists. Policing unauthorized use of our products is difficult, and we cannot be
certain that the steps we have taken will prevent misappropriation of our
technology. This is particularly true in foreign countries where the laws may
not protect proprietary rights to the same extent as the laws of the United
States and may not provide us with an effective remedy against piracy.
As the number of products and competitors continues to grow, the
functionality of products in different industry segments is increasingly
overlapping. As a result, we increasingly may be subject to claims of
intellectual property infringement. Although we are not aware that any of our
products infringe upon the proprietary rights of third parties, third parties
may claim infringement by us with respect to current or future products. Any
infringement claims, with or without merit, could be time-consuming, result in
costly litigation or damages, cause product shipment delays or the loss or
deferral of sales, or require us to enter into royalty or licensing agreements.
If we enter into royalty or licensing agreements in settlement of any litigation
or claims, these agreements may not be on terms acceptable to us. Unfavorable
royalty and licensing agreements could seriously harm our business, operating
results and financial condition.
We resell some software that we license from third parties. Although we may
continue this practice, third-party software licenses may not continue to be
available to us on commercially reasonable terms. Our
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inability to maintain or obtain any of these software licenses will delay or
reduce our product shipments until we can identify, license and integrate
equivalent software. Any loss of these licenses or delay or reduction in product
shipments could harm our business, operating results and financial condition.
OUR PRODUCTS' FAILURE TO REMAIN COMPATIBLE WITH EXISTING AND NEW COMPUTERS AND
SOFTWARE OPERATING SYSTEMS WOULD SERIOUSLY HARM OUR BUSINESS.
Our RHYTHM software can operate on hardware platforms from Digital
Equipment, Hewlett-Packard, IBM and Sun Microsystems and operating systems from
Sun Microsystems and Microsoft. RHYTHM can access data from most widely-used
structured query language databases, including Informix, Oracle and Sybase. If
additional hardware or software platforms gain significant market acceptance, we
may be required to attempt to adapt RHYTHM to those platforms in order to remain
competitive. However, those platforms may not be architecturally compatible with
RHYTHM's software product design, and we may not be able to adapt RHYTHM to
those additional platforms on a timely basis, or at all. Any failure to maintain
compatibility with existing platforms or to adapt to new platforms that achieve
significant market acceptance would seriously harm our business, operating
results and financial condition.
OUR SOFTWARE IS COMPLEX AND MAY CONTAIN UNDETECTED ERRORS.
Our software programs are complex and may contain undetected errors or
"bugs." Although we conduct extensive testing, we may not discover bugs until
our customers install and use a given product or until the volume of services
that a product provides increases. On occasion, we have experienced delays in
the scheduled introduction of new and enhanced products because of bugs.
Undetected errors could result in loss of customers or reputation, adverse
publicity, loss of revenues, delay in market acceptance, diversion of
development resources, increased insurance costs or claims against us by
customers, any of which could seriously harm our business, operating results and
financial condition.
RELEASES AND PROBLEMS WITH NEW PRODUCTS MAY CAUSE PURCHASING DELAYS, WHICH WOULD
HARM OUR REVENUES.
Customers may delay their purchasing decisions in anticipation of our new
or enhanced products, or products of competitors. Delays in customer purchasing
decisions could seriously harm our business and operating results. Moreover,
significant delays in the general availability of new releases, significant
problems in the installation or implementation of new releases, or customer
dissatisfaction with new releases could seriously harm our business, operating
results and financial condition.
OUR FAILURE TO SUCCESSFULLY RECRUIT AND RETAIN TECHNICAL AND IMPLEMENTATION
PERSONNEL COULD REDUCE OUR LICENSE REVENUES OR LIMIT THE GROWTH OF OUR LICENSE
REVENUES.
A shortage of qualified technical sales support personnel could harm our
ability to expand sales and enter into new vertical markets. We will depend on
our trained implementation personnel or those of independent consultants to
implement our products and services. A shortage in the number of trained
implementation personnel could limit our ability to implement our software and
services on a timely and effective basis. Delayed or ineffective implementation
of our software and services may limit our ability to expand our revenues and
may result in customer dissatisfaction and harm to our reputation. Any of these
events could seriously harm our business, operating results and financial
condition.
WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS.
Our license agreements typically seek to limit our exposure to product
liability claims from our customers. However, these contract provisions may not
preclude all potential claims. Additionally, our general liability insurance may
be inadequate to protect us from all liabilities that we may face. Product
liability claims could require us to spend significant time and money in
litigation or to pay significant damages. As a result, any claim, whether or not
successful, could harm our reputation and business, operating results and
financial condition.
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OUR EXECUTIVE OFFICERS AND DIRECTORS HAVE VOTING CONTROL.
Our executive officers and directors together beneficially own
approximately 43% of the total voting power of our company. Accordingly, these
stockholders will be able to determine the composition of our Board of
Directors, will retain the voting power to approve all matters requiring
stockholder approval and will continue to have significant influence over our
affairs.
OUR CHARTER AND BY-LAWS HAVE ANTI-TAKEOVER PROVISIONS.
Provisions of our Certificate of Incorporation and our Bylaws as well as
the Delaware General Corporation Law could make it more difficult for a third
party to acquire us, even if doing so would be beneficial to our stockholders.
We are subject to the provisions of Section 203 of the Delaware General
Corporation Law, which restricts certain business combinations with interested
stockholders. The combination of these provisions may inhibit a non-negotiated
merger or other business combination.
OUR STOCK PRICE HISTORICALLY HAS BEEN VOLATILE, WHICH MAY MAKE IT MORE DIFFICULT
FOR YOU TO RESELL OUR COMMON STOCK WHEN YOU WANT AT PRICES YOU FIND ATTRACTIVE.
The market price of our common stock has been volatile in the past, and the
market price of our common stock may be volatile in the future. The following
factors may significantly affect the market price of the common stock:
- quarterly variations in our results of operations;
- the announcement of new products, product enhancements, joint ventures
and other alliances by us or our competitors;
- technological innovations by us or our competitors; and
- general market conditions or market conditions specific to particular
industries.
In particular, the stock prices of many companies in the technology and
emerging growth sectors have fluctuated widely due to events unrelated to their
operating performance. These fluctuations may harm the market price of our
common stock.
IF WE ARE REQUIRED TO REGISTER AS AN INVESTMENT COMPANY, WE WOULD BECOME SUBJECT
TO SUBSTANTIAL REGULATION, WHICH WOULD INTERFERE WITH OUR ABILITY TO IMPLEMENT
OUR BUSINESS PLAN.
We have substantial cash, cash equivalents and short-term investments. We
plan to continue investing these assets in short- term instruments consistent
with prudent cash management policy and not primarily for the purpose of
achieving investment returns. Investment in securities primarily for the purpose
of achieving investment returns could result in our being classified as an
"investment company" under the Investment Company Act of 1940. The Investment
Company Act requires the registration of companies that are primarily in the
business of investing, reinvesting or trading securities or that fail to meet
certain statistical tests regarding their composition of assets and sources of
income, even though they consider themselves not to be primarily engaged in
investing, reinvesting or trading securities. We believe that we are primarily
engaged in a business other than investing, reinvesting or trading securities
and, therefore, are not an investment company within the meaning of the
Investment Company Act. If the Investment Company Act required us to register as
an investment company, we would become subject to substantial regulation with
respect to our capital structure, management, operations, and transactions with
affiliated persons and other matters. Application of the provisions of the
Investment Company Act to us may materially and adversely affect our business,
prospects and operating results.
THE PRICE OF OUR COMMON STOCK MAY DECLINE DUE TO SHARES ELIGIBLE FOR FUTURE
SALE.
Sales of substantial amounts of common stock in the public market, or the
appearance that a large number of shares is available for sale, could adversely
affect the market price for our common stock. In addition to the adverse effect
a price decline could have on holders of common stock, that decline would likely
impede our ability to raise capital by issuing additional shares of common stock
or other equity securities.
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SELLING STOCKHOLDERS
The following table sets forth the number of shares owned by each of the
selling stockholders. None of the selling stockholders has had a material
relationship with us within the past three years other than as a result of the
ownership of the shares or other securities of i2. No estimate can be given as
to the amount of shares that will be held by the selling stockholders after
completion of this offering because the selling stockholders may offer all or
some of the shares and because there currently are no agreements, arrangements
or understandings with respect to the sale of any of the shares. The shares
offered by this prospectus may be offered from time to time by the selling
stockholders named below.
<TABLE>
<CAPTION>
NUMBER OF SHARES
TO BE OWNED
NUMBER OF SHARES NUMBER OF AFTER THE OFFERING
OWNED BEFORE THE SHARES BEING ------------------
NAME OF SELLING STOCKHOLDER OFFERING(1) OFFERED(2) NUMBER PERCENT
- --------------------------- ---------------- ------------ ------- --------
<S> <C> <C> <C> <C>
Austin Ventures IV-A, L.P......................... 26,930 676 26,254 *
Austin Ventures IV-B, L.P......................... 56,500 1,420 55,790 *
Internet Capital Group............................ 30,708 30,708 0 *
Technology Development Corporation................ 4,014 4,014 0 *
Richard E. Anderson............................... 13,000 390 12,610 *
Kitychco, Inc. ................................... 18,000 390 17,610 *
Kenneth A. Fox.................................... 390 390 0 *
Charles A. Anderson............................... 192 192 0 *
Billy Rose Parrish and James Michael Parrish...... 196 196 0 *
</TABLE>
- ---------------
* Represents beneficial ownership of less than one percent.
(1) Includes shares issuable upon the exercise of warrants.
(2) This prospectus also shall cover any additional shares of common stock which
become issuable in connection with the shares registered for sale by this
prospectus by reason of any stock dividend, stock split, recapitalization or
other similar transaction effected without the receipt of consideration
which results in an increase in the number of our outstanding shares of
common stock.
PLAN OF DISTRIBUTION
We are registering all 38,376 shares to be sold under this prospectus on
behalf of the holders of certain warrants. All of the shares will be issued upon
exercise of warrants to acquire shares of our common stock. The warrants became
exercisable for shares of our common stock in connection with our acquisition of
Sales Marketing Administration Research Tracking Technologies, Inc., or SMART
Technologies. We acquired SMART Technologies through a merger of one of our
wholly-owned subsidiaries with and into SMART Technologies. We will receive no
proceeds from this offering. The selling stockholders named in the table above
or pledgees, donees, transferees or other successors-in-interest selling shares
received from a named selling stockholder as a gift, partnership distribution or
other non-sale-related transfer after the date of this prospectus (collectively,
the "Selling Stockholders") may sell the shares from time to time. The Selling
Stockholders will act independently of us in making decisions with respect to
the timing, manner and size of each sale. The sales may be made on one or more
exchanges or in the over-the-counter market or otherwise, at prices and at terms
then prevailing or at prices related to the then current market price, or in
negotiated transactions. The Selling Stockholders may effect such transactions
by selling the shares to or through broker-dealers. The shares may be sold by
one or more of, or a combination of, the following:
- a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;
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<PAGE> 14
- an exchange distribution in accordance with the rules of such exchange;
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
- in privately negotiated transactions.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the Selling Stockholders may arrange for other
broker-dealers to participate in the resales.
The Selling Stockholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
such transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with Selling Stockholders. The
Selling Stockholders also may sell shares short and redeliver the shares to
close out such short positions. The Selling Stockholders may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus. The Selling Stockholders also
may loan or pledge the shares to a broker-dealer. The broker-dealer may sell the
shares so loaned, or upon a default the broker-dealer may sell the pledged
shares pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from Selling Stockholders. Broker-dealers
or agents may also receive compensation from the purchasers of the shares for
whom they act as agents or to whom they sell as principals, or both.
Compensation as to a particular broker-dealer might be in excess of customary
commissions and will be in amounts to be negotiated in connection with the sale.
Broker-dealers or agents and any other participating broker-dealers or the
Selling Stockholders may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, or the Securities Act, in
connection with sales of the shares. Accordingly, any such commission, discount
or concession received by them and any profit on the resale of the shares
purchased by them may be deemed to be underwriting discounts or commissions
under the Securities Act. Because Selling Stockholders may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, the
Selling Stockholders will be subject to the prospectus delivery requirements of
the Securities Act. In addition, any securities covered by this prospectus which
qualify for sale pursuant to Rule 144 promulgated under the Securities Act may
be sold under Rule 144 rather than pursuant to this prospectus.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Securities Exchange Act of
1934, or the Exchange Act, any person engaged in the distribution of the shares
may not simultaneously engage in market making activities with respect to our
common stock for a period of two business days prior to the commencement of such
distribution. In addition, each Selling Stockholder will be subject to
applicable provisions of the Exchange Act and the associated rules and
regulations under the Exchange Act, including Regulation M, which provisions may
limit the timing of purchases and sales of shares of our common stock by the
Selling Stockholders. We will make copies of this prospectus available to the
Selling Stockholders and have informed them of the need for delivery of copies
of this prospectus to purchasers at or prior to the time of any sale of the
shares.
We will file a supplement to this prospectus, if required, pursuant to Rule
424(b) under the Securities Act upon being notified by a Selling Stockholder
that any material arrangement has been entered into with a broker-dealer for the
sale of shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer. Such supplement will
disclose:
- The name of each such Selling Stockholder and of the participating
broker-dealer(s);
- The number of shares involved;
- The price at which such shares were sold;
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- The commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
- That such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this prospectus;
and
- Other facts material to the transaction.
In addition, upon being notified by a Selling Stockholder that a donee or
pledgee intends to sell more than 500 shares, we will file a supplement to this
prospectus.
We will bear all costs, expenses and fees in connection with the
registration of the shares. The Selling Stockholders will bear all commissions
and discounts, if any, attributable to the sales of the shares. The Selling
Stockholders may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act.
LEGAL MATTERS
The validity of the securities offered by this prospectus will be passed
upon for us by Brobeck, Phleger & Harrison LLP, Austin, Texas. Certain partners
of Brobeck, Phleger & Harrison LLP own in the aggregate approximately 11,000
shares of our common stock.
EXPERTS
The consolidated financial statements included in our Report on Form 10-K
dated December 31, 1999, incorporated by reference in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
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WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE A STATEMENT THAT DIFFERS FROM
WHAT IS IN THIS PROSPECTUS. IF ANY PERSON DOES MAKE A STATEMENT THAT DIFFERS
FROM WHAT IS IN THIS PROSPECTUS, YOU SHOULD NOT RELY ON IT. THIS PROSPECTUS IS
NOT AN OFFER TO SELL, NOR IS IT SEEKING AN OFFER TO BUY, THESE SECURITIES IN ANY
STATE IN WHICH THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION IN THIS
PROSPECTUS IS COMPLETE AND ACCURATE AS OF ITS DATE, BUT THE INFORMATION MAY
CHANGE AFTER THAT DATE.
---------------------
<TABLE>
<S> <C> <C>
[i2 TECHNOLOGIES,
INC. LOGO] i2 TECHNOLOGIES, INC.
</TABLE>
38,376 SHARES
OF COMMON STOCK
---------------------
PROSPECTUS
---------------------
APRIL 6, 2000
