MANUGISTICS GROUP INC, 424B1, 1997-08-13

MANUGISTICS GROUP INC
424B1, 1997-08-13
PREPACKAGED SOFTWARE

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<PAGE> 1
Pursuant to
Rule 424(b)(i)
Registration Statement
No. 333-31949
1,900,000 SHARES

[MANUGISTICS GROUP LOGO]

COMMON STOCK
------------------

Of the shares of Common Stock offered hereby (the "Offering"), 1,600,000
shares are being sold by Manugistics Group, Inc. ("Manugistics" or the
"Company") and 300,000 shares are being sold by a stockholder of the Company
(the "Selling Stockholder"). The Company's Common Stock is listed on the Nasdaq
National Market ("Nasdaq") under the symbol "MANU." On August 12, 1997, the last
reported sale price for the Common Stock on Nasdaq was $41.25 per share. See
"Price Range of Common Stock and Dividend Policy."
------------------

SEE "RISK FACTORS" COMMENCING ON PAGE 7 HEREOF FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON
STOCK OFFERED HEREBY.
------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===============================================================================================
PRICE UNDERWRITING PROCEEDS PROCEEDS TO
TO DISCOUNTS AND TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDER
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share........... $41.00 $2.05 $38.95 $38.95
- -----------------------------------------------------------------------------------------------
Total(3)............ $77,900,000 $3,895,000 $62,320,000 $11,685,000
===============================================================================================
</TABLE>

(1) See "Underwriting" for information relating to indemnification of the
Underwriters.
(2) Before deducting expenses of the Offering payable by the Company estimated
at $500,000.
(3) The Selling Stockholder and certain other stockholders have granted the
Underwriters a 30-day option to purchase up to a total of 285,000
additional shares of Common Stock solely to cover over-allotments, if any.
To the extent that the option is exercised, the Underwriters will offer the
additional shares at the Price to Public shown above. If the option is
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions, Proceeds to Company and Proceeds to Selling Stockholder will
be $89,585,000, $4,479,250, $62,320,000 and $22,785,750, respectively. See
"Underwriting."
------------------

The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the offices
of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about August 18,
1997.

ALEX. BROWN & SONS
INCORPORATED

MORGAN STANLEY DEAN WITTER

ROBERTSON, STEPHENS & COMPANY

THE DATE OF THIS PROSPECTUS IS AUGUST 13, 1997.
<PAGE> 2

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF COMMON STOCK TO COVER
SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
NASDAQ IN ACCORDANCE WITH RULE 103 OF REGULATION M UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). SEE "UNDERWRITING."

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the public reference
facilities maintained by the Commission at 7 World Trade Center, Suite 1300, New
York, New York 10048, and at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such materials can also be obtained
from the Public Reference Section of the Commission, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. Such reports, proxy
statements and other information can also be inspected at the offices of Nasdaq,
1735 K Street, N.W., Washington, D.C. 20006, on which the Company's Common Stock
is listed. The Commission maintains an Internet Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission, located at http://www.sec.gov.

The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is made to the Registration Statement, copies of which are available from the
Public Reference Section of the Commission at prescribed rates as described
above. Statements contained herein concerning the provisions of documents filed
with, or incorporated by reference in, the Registration Statement as exhibits
are necessarily summaries of such provisions and documents and each such
statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, filed with the Commission by the Company, are
incorporated in this Prospectus by reference: (i) the Company's Annual Report on
Form 10-K for the fiscal year ended February 28, 1997 ("1997 Form 10-K"); (ii)
the Company's Quarterly Report on Form 10-Q for the three months ended May 31,
1997; (iii) the Company's Current Report on Form 8-K dated May 12, 1997; and
(iv) the description of the Company's Common Stock contained in the Company's
Registration Statement on Form 8-A filed under Section 12 of the Exchange Act.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offering shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of the filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.

The Company undertakes to provide without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus has been delivered, on
written or oral request, a copy of any and all of the documents incorporated in
this Prospectus by reference, other than exhibits to such documents not
specifically incorporated by reference therein. Requests for such copies should
be directed to Manugistics Group, Inc., at its principal executive offices
located at 2115 East Jefferson Street, Rockville, Maryland 20852, Attention:
Investor Relations (telephone: (301) 984-5000).

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements included elsewhere or incorporated by
reference in this Prospectus. Except as set forth in the financial statements or
otherwise noted herein, the information in this Prospectus assumes that there
will be no exercise of the Underwriters' over-allotment option and stock options
held by employees and directors of the Company. Also, unless otherwise indicated
herein, all information with regard to the capital stock of the Company,
including share and per share data, has been restated to reflect a two-for-one
split of the Company's Common Stock (the "Common Stock") effected by means of a
stock dividend paid on June 11, 1997 to stockholders of record as of May 23,
1997. In addition, effective July 29, 1997, the Company's Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation") was amended to
increase the number of authorized shares of Common Stock from 30,000,000 shares
to 100,000,000 shares.

THE COMPANY

Manugistics Group, Inc. develops, markets and supports software products
for synchronized supply chain management(TM) and provides related services.
Synchronized supply chain management refers to managing the complex interactions
involved in the flows of products through a supply chain, and involves
forecasting product demand and coordinating the timing of distribution,
manufacturing, procurement and transportation activities to meet this demand,
not only across an entire enterprise, but also among an enterprise and its
suppliers and customers. The Company believes it is the only provider of an
integrated suite of strategic, tactical and operational supply chain planning
tools and products that address the four key operational areas of supply chain
management: demand planning, supply planning, manufacturing scheduling and
transportation management.

Supply chain management software enables companies to plan their supply and
manufacturing activities to meet anticipated customer demand, while considering
capacity and materials constraints and other factors. Supply chain management
software complements Enterprise Resource Planning ("ERP") systems and provides
companies with information not only about their own enterprise, but also about
demand from customers and other information relating to suppliers and
transportation providers. Because of the potential for significant returns on
investment from supply chain management software and the rapid payback period
relative to ERP systems, one industry research firm has recently recommended
that, rather than implementing ERP systems first, companies should implement
their supply chain planning solution first or simultaneously with ERP
applications so that they can begin capturing the benefits of managing their
supply chains sooner. Companies in many different industries now recognize that
effective supply chain management is a source of competitive advantage, and
these companies are seeking software that can help them achieve these benefits.

The Company's supply chain management software provides strategic, tactical
and operational supply chain planning tools and includes the Supply Chain
Navigator(TM), the Manugistics Integrator for SAP(R) and four major families:
Demand Planning, Supply Planning, Manufacturing Scheduling and Transportation
Management. The software operates in most major operating environments and
supports database software from leading relational database software vendors.
The United States list price for the Company's supply chain management software
products ranges from $200,000 for a single product to several million dollars
for the complete product suite. The Company has installed various combinations
of its supply chain

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management software products at more than 1,000 locations worldwide. The
Company's customers include E.I. du Pont de Nemours and Company, Frito-Lay,
Inc., General Motors Service Parts Operations, Hewlett-Packard Company, Lever
Brothers Company, Levi Strauss & Co., Wal-Mart Stores, Inc. and Warner Lambert
Company.

The Company also offers a wide range of product-related services, including
business operations consulting, change management consulting, end-user and
system administrator education and training, and customer support to help
clients reengineer their operations to take maximum advantage of the Company's
software and effective supply chain management. Customers may obtain support
services and maintenance for an annual fee that is approximately 18% of the
then-current license fee.

The Company licenses its supply chain management solutions in North and
South America through a direct sales organization and in various regions outside
of the Americas primarily through subsidiaries. The Company has also begun using
indirect sales channels, such as complementary software vendors, third-party
alliances and distributorships.

The Company's principal executive offices are located at 2115 East
Jefferson Street, Rockville, Maryland 20852, and its telephone number is (301)
984-5000.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company................ 1,600,000 shares
Common Stock offered by the Selling Stockholder.... 300,000 shares
Common Stock to be outstanding after the
Offering......................................... 23,455,010 shares(1)
Use of proceeds by the Company..................... For working capital and other general
corporate purposes, including possible
acquisitions. See "Use of Proceeds."
Nasdaq symbol...................................... MANU
</TABLE>

- ---------------
(1) Based upon 21,855,010 shares outstanding on May 31, 1997.

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SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED FEBRUARY 28 OR 29, MAY 31,
--------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1996 1997
------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................. $28,284 $37,961 $49,410 $62,322 $94,722 $18,441 $ 34,180
Income from operations.... 5 3,466 4,318 6,060 8,286 (2,070) 2,997
Net income (loss)......... (275) 2,152 3,221 4,448 4,342 (2,578) 2,040
Earnings (loss) per
share(1)................ (0.02) 0.12 0.16 0.21 0.19 (0.12) 0.09
</TABLE>

<TABLE>
<CAPTION>
MAY 31, 1997
--------------------------
ACTUAL AS ADJUSTED(2)
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<S> <C> <C>
BALANCE SHEET DATA:
Net working capital......................................................... $30,850 $ 92,670
Total assets................................................................ 82,439 144,259
Stockholders' equity........................................................ 56,472 118,292
</TABLE>

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(1) Net income for fiscal 1997 and for the three months ended May 31, 1996
included a non-recurring charge to operations in the amount of $3,697,000,
or $0.16 and $0.17 per share, respectively. This charge, which was not
deductible for income tax purposes, was incurred in connection with the
write-off of purchased in-process research and development costs as a
result of the acquisition of Avyx, Inc. in May 1996.
(2) Adjusted to give effect to the 23,455,010 shares of Common Stock to be
outstanding after the Offering and the receipt by the Company of
approximately $61,820,000 of net proceeds from the sale by the Company of
1,600,000 shares of Common Stock pursuant to the Offering.

5
<PAGE> 6

CERTAIN FORWARD-LOOKING STATEMENTS

This Prospectus (including the documents incorporated herein by reference)
contains or may contain certain forward-looking statements and information that
are based on beliefs of, and information currently available to, the Company's
management as well as estimates and assumptions made by the Company's
management. When used in this Prospectus, words such as "anticipate," "believe,"
"estimate," "expect," "future," "intend," "plan" and similar expressions as they
relate to the Company or the Company's management, identify forward-looking
statements. Such statements reflect the current views of the Company with
respect to future events and are subject to certain risks, uncertainties and
assumptions relating to the Company's operations and results of operations,
shifts in market demand, the timing of product releases, economic conditions in
foreign countries, competitive products and pricing and other risks and
uncertainties including, in addition to any uncertainties specifically
identified in the text surrounding such statements, uncertainties with respect
to changes or developments in social, economic, business, industry, market,
legal and regulatory circumstances and conditions and actions taken or omitted
to be taken by third parties, including the Company's stockholders, customers,
suppliers, business partners, competitors, and legislative, regulatory, judicial
and other governmental authorities and officials. Should one or more of these
risks or uncertainties materialize, or should the underlying estimates or
assumptions prove incorrect, actual results or outcomes may vary significantly
from those anticipated, believed, estimated, expected, intended or planned.

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RISK FACTORS

In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus.

Potential Fluctuations in Quarterly Results; Seasonality. The Company's
quarterly operating results have varied in the past and might vary significantly
in the future because of factors such as business conditions or the general
economy, the timely availability and acceptance of the Company's products,
technological change, the effect of competitive products and pricing, changes in
Company strategy, the mix of direct and indirect sales, changes in operating
expenses, personnel changes and foreign currency exchange rate fluctuations. The
Company has experienced and might continue to experience from time to time very
large, individual license sales which can cause significant variations in
quarterly license revenues. For example, a total of approximately 60% of the
Company's software license revenues for the first quarter of fiscal 1998 were
derived from five licensing contracts.

The Company typically ships software products shortly after license
agreements are signed and, therefore, does not maintain any material contract
backlog. Furthermore, the Company has typically recognized a substantial portion
of its revenues in the last month of a quarter. As a result, software products
revenues in any quarter are substantially dependent on orders booked and shipped
in that quarter, and the Company cannot predict software products revenues for
any future quarter with any significant degree of certainty.

The Company's software products revenues are also difficult to forecast
because the market for business application software products is evolving
rapidly, and the Company's sales cycles vary substantially from customer to
customer. Because the licensing of the Company's products generally involves a
significant capital expenditure by the customer, the Company's sales process is
subject to the delays and lengthy approval processes that are typically involved
in such expenditures. In addition, the Company expects that sales derived
through indirect channels, the timing of which is harder to predict than for
direct sales because there is less direct contact with the prospective customer,
will increase as a percentage of total revenues. For these and other reasons,
the sales cycle associated with the licensing of the Company's products varies
substantially from customer to customer and typically lasts between four and six
months, during which time the Company might devote significant time and
resources to a prospective customer, including costs associated with multiple
site visits, product demonstrations and feasibility studies, and might
experience a number of significant delays, over which the Company has no
control.

The Company determines its expense levels based, at least in part, on its
expectations as to future revenues. A substantial portion of the Company's
revenues in any quarter are typically derived from a limited number of large
contracts. Therefore, if revenues in a period are below expectations, operating
results are likely to be adversely affected. Net income might be
disproportionately affected by a reduction in revenues because a proportionately
smaller amount of the Company's expenses varies directly with revenues. As a
result of the foregoing factors, it is likely that in some quarters, the
Company's operating results will be below the published expectations of
financial research analysts. In that event, the price of the Common Stock would
likely be materially adversely affected.

The Company has generally realized lower revenues in its first fiscal
quarter (ending in May) than in the immediately preceding quarter. The Company
believes that these fluctuations are caused primarily by customer budgeting and
purchasing patterns and by the Company's sales commission policies, which
compensate personnel for meeting or exceeding annual performance quotas.

Competition. The market for business applications software is highly
competitive and subject to rapid change. Many application software vendors offer
products that are directly competitive with some of the software products
marketed by the Company. Some of the Company's current and potential competitors
have significantly greater financial, marketing, technical and other competitive
resources than the Company. As a result, they may be able to adapt more quickly
to new or emerging technologies and changes in customer requirements, or to
devote greater resources to the promotion and sale of their

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products than can the Company. In addition, certain ERP system vendors have
announced plans to develop new products or to incorporate additional
functionality into their current products that, if successfully developed and
marketed, could compete with the products offered by the Company. Furthermore,
current and potential competitors may make acquisitions of other competitors or
may establish cooperative relationships among themselves or with third parties
to increase the ability of their products to address the supply chain management
needs of the Company's prospective customers. Accordingly, it is possible that
new competitors may emerge and rapidly acquire significant market share. If this
were to occur, the business, operating results, financial condition and cash
flows of the Company could be materially adversely affected.

Dependence on New Products and Rapid Technological Change; Risk of Product
Defects. The market for the Company's products is characterized by rapidly
changing technologies, frequent new product introductions, rapid changes in
customer requirements and evolving industry standards. The Company believes that
its future financial performance will depend in large part on its ability to
maintain and enhance its current product line, develop new products that achieve
market acceptance, maintain technological competitiveness and meet an expanding
range of customer requirements. There can be no assurance, however, that the
Company will be successful in developing and marketing new products or product
enhancements that respond to technological change or evolving industry
standards, that the Company will not experience difficulties that could delay or
prevent the successful development, introduction and marketing of these
products, or that its new products and product enhancements will adequately meet
the requirements of prospective customers and achieve market acceptance. If the
Company is unable, for technological or other reasons, to successfully develop
and introduce new products or product enhancements, the Company's business,
operating results, financial condition and cash flows would be materially
adversely affected.

In addition, software products as complex as those offered by the Company
might contain undetected errors or failures when first introduced or when new
versions are released. There can be no assurance, despite testing by the Company
and by current and prospective customers, that errors will not be found in new
products or product enhancements after commercial release, resulting in loss of
or delay in market acceptance, which could have a material adverse effect upon
the Company's business, operating results, financial condition and cash flows.

Management of Growth. The Company has recently experienced a period of
rapid growth in revenues that has placed a significant strain upon its
management systems and resources. The Company's ability to compete effectively
and to manage future growth, if any, will require the Company to continue to
improve its financial and management controls, reporting systems and procedures
on a timely basis. The Company has recently hired a significant number of
employees, and in order to maintain its ability to grow in the future, the
Company will be required to increase significantly its total number of employees
and to train and manage its employee work force. There can be no assurance that
the Company will be able to do so successfully. The Company's failure to do so
could have a material adverse effect upon the Company's business, operating
results, financial condition and cash flows.

International Operations. The Company is currently conducting operations
in a number of countries in Europe, Asia and South America and plans to conduct
operations in additional regions outside the United States, which will require
significant management attention and financial resources and could adversely
affect the Company's operating margins. The Company plans to accelerate the
growth of, and increase its investment in, its international operations. There
can be no assurance that the Company will be able to generate, maintain or
increase demand for the Company's products in new geographic markets. Certain
risks are inherent in international operations. The majority of the Company's
contracts are denominated in U.S. currency. Most of the revenues from sales
outside the United States have been denominated in foreign currencies, typically
the local currency of Manugistics' business unit. The Company anticipates that
the proportion of its 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 translations. In connection with
transactions denominated in foreign currency, the Company has taken steps to
minimize the risks associated with such foreign currency in the past and might
take such steps in

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similar circumstances in the future. With respect to the Company's international
sales that are U.S. dollar-denominated, currency fluctuations could make the
Company's products and services less price competitive. The Company's
international sales and operations might be adversely affected by the imposition
of government controls, political and economic instability, difficulties in
staffing and managing international operations and general economic conditions
in foreign countries.

Expansion of Indirect Channels. The Company is building and maintaining
significant working relationships with ERP system vendors and consulting firms
that the Company believes can play important roles in marketing the Company's
products. The Company is currently investing, and intends to continue to invest,
significant resources to develop these relationships, which could adversely
affect the Company's operating margins. There can be no assurance that the
Company will be able to attract organizations that will be able to market the
Company's products effectively or that will be qualified to provide timely and
cost-effective customer support and service. In addition, the Company's
arrangements with these organizations are not exclusive and, in many cases, may
be terminated by either party without cause, and many of these organizations are
also involved with competing products. Certain ERP system vendors have announced
plans to develop new products or to incorporate additional functionality into
their current products. Therefore, there can be no assurance that any
organization will continue its involvement with the Company and its products,
and the loss of important organizations could materially adversely affect the
Company's results of operations. In addition, if the Company is successful in
selling products as a result of these relationships, any material increase in
the Company's indirect sales as a percentage of total revenues would be likely
to adversely affect the Company's average selling prices and gross margins
because of the lower unit prices that the Company receives when selling through
indirect channels.

Lack of Product Diversification. The Company's future results depend on
continued market acceptance of supply chain management software and services as
well as the Company's ability to continue to adapt and modify this software to
meet the evolving needs of its prospects and customers. Any reduction in demand
or increase in competition in the market for supply chain management software
products could have a material adverse effect on the Company's business,
operating results, financial condition and cash flows.

Dependence Upon Key Personnel. The loss of the services of one or more of
the Company's executive officers could have a material adverse effect on the
Company's business, operating results and financial condition. The Company does
not have employment contracts with any of its executive officers and does not
maintain key person insurance. There can be no assurance that the Company will
be able to retain its key personnel. The Company's future success also depends
on its continuing ability to attract, assimilate and retain highly qualified
sales, technical and managerial personnel. Competition for such personnel is
intense, and there can be no assurance that the Company can attract, assimilate
or retain such personnel in the future.

Intellectual Property and Proprietary Rights. The Company regards its
software as proprietary and relies on a combination of trade secret, copyright
and trademark laws, license agreements, nondisclosure and other contractual
provisions, technical measures and other methods to protect its proprietary
rights in its products. There can be no assurance that these protections will be
adequate to protect its proprietary rights or that the Company's competitors
will not independently develop products that are substantially equivalent or
superior to the Company's products. In addition, the laws of certain countries
in which the Company's products are or may be licensed do not protect the
Company's products and intellectual property rights to the same extent as the
laws of the United States. Although the Company believes that its products,
trademarks and other proprietary rights do not infringe upon the proprietary
rights of third parties, there can be no assurance that third parties will not
assert infringement claims against the Company.

Possible Volatility of Stock Price. Factors such as announcements of new
products or technological innovations by the Company or its competitors, as well
as quarterly variations in the Company's operating results, may cause the market
price of the Common Stock to fluctuate significantly. In addition, the stock
market in recent years has experienced price and volume fluctuations which have
particularly affected the

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market prices of many high technology stock issues and which have often been
unrelated or disproportionate to the operating performance of such companies.
These broad market fluctuations, as well as general economic conditions, may
adversely affect the market price of the Common Stock.

Anti-Takeover Protections. The Company's Certificate of Incorporation and
Amended and Restated By-Laws (the "By-Laws") contain provisions which may be
deemed to be "anti-takeover" in nature or effect in that such provisions may
deter, discourage or make more difficult the assumption of control of the
Company by another person by means of a tender offer, merger, proxy contest or
similar transaction. The Certificate of Incorporation authorizes the issuance,
without shareholder approval, of up to 4,620,253 shares of "blank check"
preferred stock, with such designations, rights, preferences, privileges and
restrictions, including voting rights, of such shares as may be determined from
time to time by the Company's Board of Directors. Accordingly, the Board is
empowered, without shareholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which could materially adversely
affect the voting power or other rights of the holders of the Common Stock
(including those of the purchasers in the Offering). Holders of the Common Stock
issued and sold in the Offering will have no preemptive rights to subscribe for
a pro rata portion of preferred stock or any other capital stock which may be
issued by the Company. In the event of issuance, such preferred stock could be
utilized, under certain circumstances, as a method of discouraging, delaying or
preventing a change in control of the Company. Although the Company has no
present intention to issue any shares of preferred stock, there can be no
assurance that the Company will not do so in the future. See "Description of
Capital Stock-- Delaware Law and Certain Charter and By-Law Provisions."

The By-Laws provide that the Board of Directors is divided into three
classes and for the staggered election of directors to serve for three-year
terms. Each director is subject to removal only for cause upon the vote of at
least 67% of the outstanding shares of Common Stock. Furthermore, the Company is
subject to certain anti-takeover provisions of the General Corporation Law of
Delaware. The existence of these provisions would be expected to have an
anti-takeover effect, including possibly discouraging takeover attempts that
might result in a premium over the market price for the Common Stock. See
"Description of Capital Stock--Delaware Law and Certain Charter and By-Law
Provisions.

Shares Eligible for Future Sale. Sales of a substantial amount of the
Company's Common Stock in the public market after the Offering could adversely
affect the market price of the Common Stock. Upon completion of the Offering,
the Company will have 23,455,010 shares of Common Stock outstanding (based upon
21,855,010 shares outstanding on May 31, 1997). All of the shares sold in this
Offering will be available for resale in the public market without restriction,
except for any such shares which may be purchased by affiliates of the Company.
The Company's directors, executive officers and certain stockholders have
agreed, subject to certain limitations, not to offer, sell or otherwise dispose
of any shares of Common Stock for a period of 90 days after the date of this
Prospectus. At May 31, 1997, such persons beneficially owned an aggregate of
9,497,920 shares of Common Stock (including 567,326 shares issuable upon
exercise of options) that may be resold in accordance with Rule 144 under the
Securities Act following the expiration of this 90-day period.

At May 31, 1997, there were a total of approximately 6,641,017 registered
shares of Common Stock reserved for issuance upon exercise of outstanding stock
options and options that may be granted in the future under the Company's stock
option plans or for issuance under the Company's Employee Stock Purchase Plan.

10
<PAGE> 11

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Common Stock offered
by the Company hereby are estimated to be approximately $61,820,000, after
deducting the estimated underwriting discounts and commissions and estimated
offering expenses payable by the Company. The net proceeds will be used for
working capital and other general corporate purposes, including financing the
Company's growth through further expansion into international markets,
acceleration of product releases and possible acquisitions. The Company
investigates potential candidates for acquisition, joint venture opportunities
or other relationships on an ongoing basis. However, the Company is not
presently conducting discussions or negotiations with respect to any such
specific transactions. The allocation of the net proceeds of this Offering will
be influenced by such factors as the needs of clients, market factors and the
international economic climate. Accordingly, the Company cannot predict the
allocation of the net proceeds of this Offering among the foregoing uses.
Pending such uses, the net proceeds will be invested in short-term investment
grade and government securities. The Company will not receive any proceeds from
the sale of shares of Common Stock offered by the Selling Stockholder.

CAPITALIZATION

The following table sets forth the capitalization of the Company as of May
31, 1997, and as adjusted to reflect the sale of the 1,600,000 shares of Common
Stock offered by the Company hereby and the application of the estimated net
proceeds therefrom. See "Use of Proceeds." This table should be read in
conjunction with the Company's financial statements and the other information
included and incorporated by reference in this Prospectus.

<TABLE>
<CAPTION>
MAY 31, 1997
----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt......................................................... $ 188 $ 188
Stockholders' equity:
Preferred Stock, $.01 par value; 4,620,253 shares authorized...... -- --
Common Stock, $.002 par value; 30,000,000 shares authorized(1);
shares issued, 22,607,520; 24,207,520, as adjusted; shares
outstanding, 21,855,010; 23,455,010, as adjusted................. 45 48
Additional paid-in capital........................................ 39,635 101,452
Retained earnings................................................. 17,002 17,002
Translation adjustment............................................ 507 507
Treasury stock -- 752,510 shares, at cost......................... (717) (717)
------- ---------
Total stockholders' equity................................... 56,472 118,292
------- ---------
Total capitalization.................................... $56,660 $ 118,480
======= =========
</TABLE>

- ---------------
(1) Effective July 29, 1997, the Company's Certificate of Incorporation was
amended to increase the number of authorized shares of Common Stock from
30,000,000 shares to 100,000,000 shares.

11
<PAGE> 12

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Common Stock trades on Nasdaq under the symbol "MANU." The following
table sets forth, for each quarterly period indicated, the high and low sales
prices for the Common Stock as reported by Nasdaq.

<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
Fiscal Year 1996:
First Quarter........................................................... 7 1/4 5 1/8
Second Quarter.......................................................... 8 1/4 5 3/8
Third Quarter........................................................... 10 1/4 7
Fourth Quarter.......................................................... 8 3/4 4 3/4
Fiscal Year 1997:
First Quarter........................................................... 8 1/2 5 5/8
Second Quarter.......................................................... 14 1/2 7 1/4
Third Quarter........................................................... 24 1/8 13 13/16
Fourth Quarter.......................................................... 26 7/8 15 5/8
Fiscal Year 1998:
First Quarter........................................................... 33 5/8 16 1/4
Second Quarter (June 1 through August 12)............................... 48 1/2 30 3/4
</TABLE>

On August 12, 1997, the closing sales price of the Common Stock on Nasdaq
was $41 1/4 per share.

The Company has never declared or paid any cash dividends on its Common
Stock and does not intend to do so in the foreseeable future. The Company's
present intention is to retain any future earnings to provide funds for the
operation and expansion of its business. The Company has an unsecured committed
revolving credit facility with a commercial bank that will expire on September
30, 1997, unless it is renewed. During the term of the facility, the Company is
prohibited from declaring or paying cash dividends to holders of Common Stock.

12
<PAGE> 13

SELECTED FINANCIAL DATA

The selected financial data set forth below should be read in conjunction
with the Company's financial statements and the other information included or
incorporated by reference in this Prospectus. The Statement of Operations Data
for the years ended February 28 or 29, 1995, 1996 and 1997 and the Balance Sheet
Data as of February 28 or 29, 1996 and 1997 have been derived from the audited
financial statements included in the 1997 Form 10-K incorporated by reference in
this Prospectus. See "Incorporation of Certain Documents by Reference." The
Statement of Operations Data for the years ended February 28, 1993 and 1994 and
the Balance Sheet Data as of February 28, 1993, 1994 and 1995 have been derived
from audited financial statements of the Company. The data for the three months
ended May 31, 1996 and 1997 have been derived from unaudited interim financial
statements of the Company included in the Quarterly Report on Form 10-Q, for the
quarter ended May 31, 1997, incorporated by reference in this Prospectus. The
unaudited financial statements have been prepared by the Company on a basis
consistent with the Company's audited financial statements and, in the opinion
of management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of such data.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED FEBRUARY 28 OR 29, MAY 31,
--------------------------------------------------- ------------------
1993 1994 1995 1996 1997 1996 1997
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Software products.................................. $14,731 $19,590 $24,758 $29,494 $50,778 $ 8,732 $19,840
Consulting, maintenance and other services......... 13,553 18,371 24,652 32,828 43,944 9,709 14,340
-------- ------- ------- ------- ------- -------- -------
Total revenues................................. 28,284 37,961 49,410 62,322 94,722 18,441 34,180
Operating expenses:
Cost of software sold.............................. 2,357 2,878 2,842 2,974 4,532 1,344 2,181
Cost of consulting, maintenance and other
services......................................... 7,850 9,518 12,990 14,614 19,101 4,042 6,571
Sales and marketing................................ 10,538 13,374 16,580 21,365 32,909 6,134 13,152
Product development................................ 4,097 5,011 7,550 11,229 17,380 3,557 6,225
General and administrative......................... 3,437 3,714 5,130 6,080 8,817 1,737 3,054
Purchased research and development................. -- -- -- -- 3,697 3,697 --
-------- ------- ------- ------- ------- -------- -------
Total operating expenses....................... 28,279 34,495 45,092 56,262 86,436 20,511 31,183
-------- ------- ------- ------- ------- -------- -------
Income from operations............................... 5 3,466 4,318 6,060 8,286 (2,070) 2,997
Other income (expense)............................... (92) 146 643 1,097 1,016 216 324
-------- ------- ------- ------- ------- -------- -------
Income (loss) before income taxes.................... (87) 3,612 4,961 7,157 9,302 (1,854) 3,321
Provision for income taxes........................... 188 1,460 1,740 2,709 4,960 724 1,281
-------- ------- ------- ------- ------- -------- -------
Net income (loss).................................... $ (275) $ 2,152 $ 3,221 $ 4,448 $ 4,342 $(2,578) $ 2,040
======== ======= ======= ======= ======= ======== =======
Earnings (loss) per share(1)......................... $ (0.02) $ 0.12 $ 0.16 $ 0.21 $ 0.19 $ (0.12) $ 0.09
======== ======= ======= ======= ======= ======== =======
Weighted average number of shares outstanding........ 14,926 18,442 20,574 21,628 22,964 20,980 23,705
</TABLE>
<TABLE>
<CAPTION>
MAY 31,
1997
FEBRUARY 28 OR 29, -------
---------------------------------------------------
1993 1994 1995 1996 1997 ACTUAL
------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Net working capital.................................... $ 240 $21,274 $30,484 $29,201 $32,499 $30,850
Total assets........................................... 14,046 34,665 49,759 60,431 84,323 82,439
Long-term debt, less current portion................... 795 528 337 182 220 188
Total stockholders' equity(3).......................... 2,374 24,899 36,512 42,942 53,593 56,472

AS
ADJUSTED(2)
-----------

<S> <C>
BALANCE SHEET DATA:
Net working capital.................................... $ 92,670
Total assets........................................... 144,259
Long-term debt, less current portion................... 188
Total stockholders' equity(3).......................... 118,292
</TABLE>

- ---------------
(1) Net income for fiscal 1997 and for the three months ended May 31, 1996
included a non-recurring charge to operations in the amount of $3,697,000,
or $0.16 and $0.17 per share, respectively. This charge, which was not
deductible for income tax purposes, was incurred in connection with the
write-off of purchased in-process research and development costs as a
result of the acquisition of Avyx, Inc. in May 1996.
(2) Adjusted to give effect to the 23,455,010 shares of Common Stock to be
outstanding after the Offering (based on 21,855,010 shares outstanding on
May 31, 1997), and the receipt by the Company of approximately $61,820,000
of net proceeds from the sale by the Company of 1,600,000 shares of Common
Stock pursuant to the Offering.
(3) Total stockholders' equity for 1993 is adjusted to give effect to the
conversion of all outstanding shares of Series A and Series B Preferred
Stock into shares of Common Stock.

13
<PAGE> 14

QUARTERLY RESULTS OF OPERATION

The following tables set forth the Company's Statement of Operations Data
for each of the five quarters in the period ended May 31, 1997, including such
amounts expressed as a percentage of total revenues. This unaudited quarterly
information has been prepared on the same basis as the Company's audited
consolidated financial statements included in the 1997 Form 10-K incorporated by
reference in this Prospectus and, in the opinion of management, reflects all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the information for the periods presented. The operating
results for any quarter are not necessarily indicative of results for any future
period.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------
MAY 31, AUG. 31, NOV. 30, FEB. 28, MAY 31,
1996 1996 1996 1997 1997
------- -------- -------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Software products........................................... $ 8,732 $10,376 $12,281 $19,389 $19,840
Consulting, maintenance and other services.................. 9,709 10,559 11,407 12,269 14,340
------- ------- ------- ------- -------
Total revenues.......................................... 18,441 20,935 23,688 31,658 34,180
Operating expenses:
Cost of software sold....................................... 1,344 893 1,053 1,242 2,181
Cost of consulting, maintenance and other services.......... 4,042 4,621 4,915 5,523 6,571
Sales and marketing......................................... 6,134 7,287 8,237 11,251 13,152
Product development......................................... 3,557 3,996 4,432 5,395 6,225
General and administrative.................................. 1,737 2,014 2,161 2,905 3,054
Purchased research and development.......................... 3,697 -- -- -- --
------- ------- ------- ------- -------
Total operating expenses................................ 20,511 18,811 20,798 26,316 31,183
------- ------- ------- ------- -------
Income from operations........................................ (2,070) 2,124 2,890 5,342 2,997
Other income (expense)........................................ 216 244 277 279 324
------- ------- ------- ------- -------
Income (loss) before income taxes............................. (1,854) 2,368 3,167 5,621 3,321
Provision for income taxes.................................... 724 921 1,220 2,095 1,281
------- ------- ------- ------- -------
Net income (loss)(1).......................................... $(2,578) $ 1,447 $ 1,947 $ 3,526 $ 2,040
======= ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------
MAY 31, AUG. 31, NOV. 30, FEB. 28, MAY 31,
1996 1996 1996 1997 1997
------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
PERCENTAGE OF REVENUES:
Revenues:
Software products........................................... 47.4% 49.6% 51.8% 61.2% 58.0%
Consulting, maintenance and other services.................. 52.6 50.4 48.2 38.8 42.0
------ ------ ------ ------ ------
Total revenues.......................................... 100.0 100.0 100.0 100.0 100.0
Costs and operating expenses:
Cost of software sold....................................... 7.3 4.3 4.4 3.9 6.4
Cost of consulting, maintenance and other services.......... 21.9 22.1 20.7 17.4 19.2
Sales and marketing......................................... 33.4 34.8 34.9 35.6 38.5
Product development......................................... 19.3 19.1 18.7 17.0 18.2
General and administrative.................................. 9.4 9.6 9.1 9.2 8.9
Purchased research and development.......................... 20.0 -- -- -- --
------ ------ ------ ------ ------
Total operating expenses................................ 111.3 89.9 87.8 83.1 91.2
Income from operations........................................ (11.2) 10.1 12.2 16.9 8.8
Other income (expense)........................................ 1.2 1.2 1.2 0.9 0.9
------ ------ ------ ------ ------
Income (loss) before income taxes............................. (10.1) 11.3 13.4 17.8 9.7
Provision for income taxes.................................... 3.9 4.4 5.2 6.7 3.7
------ ------ ------ ------ ------
Net income (loss)(1).......................................... (14.0)% 6.9% 8.2% 11.1% 6.0%
====== ====== ====== ====== ======
</TABLE>

- ---------------
(1) Net income for the three months ended May 31, 1996 included a non-recurring
charge to operations in the amount of $3,697,000, or 20.0% of revenues, in
connection with the write-off of purchased in-process research and
development costs taken as a result of the acquisition of Avyx, Inc. in May
1996. This charge was not deductible for income tax purposes.

14
<PAGE> 15

BUSINESS

Manugistics Group, Inc. develops, markets and supports software products
for synchronized supply chain management and provides related services.
Synchronized supply chain management refers to managing the complex interactions
involved in the flows of products through a supply chain and involves
forecasting product demand and coordinating the timing of distribution,
manufacturing, procurement and transportation activities to meet this demand,
not only across an entire enterprise, but also among an enterprise and its
suppliers and customers. The Company believes it is the only provider of an
integrated suite of strategic, tactical and operational supply chain planning
tools including a high-level optimizer and products that address the four key
operational areas of supply chain management: demand planning, supply planning,
manufacturing scheduling and transportation management. The Company was
incorporated in Delaware in 1986 and completed its initial public offering in
August 1993.

INDUSTRY BACKGROUND

Many companies have faced increased competition and more demanding customer
service requirements in recent years. Customers have had the leverage to demand
better service from suppliers, partially because bargaining power has shifted to
retailers and consumers from manufacturers and distributors over the past
decade. This shift followed the consolidation of significant portions of the
retail industry into large, powerful department store chains, the advent of
"superstores" and specialty category stores, and the rapid proliferation in the
number and variety of products. Also, many companies have contended with shorter
product life cycles in recent years. During the short window of market demand
for a product, insufficient supply could result in lost sales, while excess
inventories after demand declines could result in write-downs. In addition,
manufacturing companies in a number of industries have incurred substantial
costs to build, acquire, maintain and operate plants and equipment. Given these
costs and increased competition, many companies have sought ways to increase the
returns from their significant investments in manufacturing assets.

As business conditions have become more challenging, the processes for
manufacturing products and bringing them to market have become more complex.
Many companies conduct manufacturing and distribution operations at multiple
sites around the world. Their supply chains frequently involve suppliers,
warehouses, plants and customers on different continents. These operations have
traditionally been managed by various functional departments, and there has
often been incomplete coordination among them. There has also frequently been
imperfect communication, both within a single enterprise and among a company and
its suppliers and customers.

In response to these business conditions, and in an attempt to manage the
complexity of their own operations and supply chains, many companies are seeking
to improve customer service, lower operating costs and increase returns on
assets through more effective management of their supply chains. Some of the
first companies to recognize the need for effective supply chain management were
companies that were significantly affected by the increase in competition and
the shift in market power from manufacturers to retailers: consumer packaged
goods and food and beverage firms. These companies generally make product to
stock in inventory ("make to stock"). Many of these companies produce their
finished goods using process manufacturing, and sell their products through
retail channels. Also, because their customers began demanding better service
and lower prices, these consumer packaged goods and other companies began
working more closely with their suppliers and customers as part of their efforts
to manage their supply chains. Thus, suppliers to consumer-oriented process
manufacturers, such as chemical companies, which generally use process
manufacturing and sell to industrial customers, have also been significantly
affected by the changed business environment.

Companies in the apparel and consumer electronics industries, among others,
have also contended with more difficult business conditions and have been
particularly affected by shorter product life cycles and the associated
difficulty of forecasting product demand. Companies such as these manufacture
products for consumers in discrete or high volume repetitive manufacturing
environments, and generally make or assemble their products upon receipt of a
customer order ("make to order"). These companies, as well as discrete
manufacturers that sell to industrial customers, have begun to recognize that
they can

15
<PAGE> 16

provide better service to their customers, have lower operating costs and
increase their return on assets by effective management of their supply chains.

According to a recent study of 225 chemical, computers/electronic
equipment, consumer packaged goods and other companies, the top 20% of these
companies, as measured by several supply chain management benchmarks, recovered
expenses equal to as much as 7% of their annual revenues from managing their
supply chains more effectively. When compared to the median of surveyed
companies, these top companies used 60% fewer days' supply in inventory, had up
to a 60% advantage in cash-to-cash cycle time (i.e., from the payment of cash
for raw materials until the receipt of cash for finished goods) and spent 50%
less on material acquisition. As the study shows, companies in many different
industries now recognize that effective supply chain management is a source of
competitive advantage and is critical to delivering the right product to the
right place at the right time at the lowest possible cost. As a result, many
companies are seeking software that can help them achieve these benefits.

The advent of sophisticated software to address the complex issues of
supply chain management was preceded by software designed to address the
information needs of manufacturing and distribution companies, which first came
into widespread use in the 1970s. Many large manufacturers used Material
Requirements Planning ("MRP") and later Manufacturing Resource Planning
("MRP-II") systems in individual plants to initiate inventory withdrawals and to
generate the necessary manufacturing orders, for example. Distribution Resource
Planning ("DRP") software managed the transactions involved in ordering,
receiving, warehousing and delivering goods. More recently, ERP systems have
evolved that connect the MRP, MRP-II and DRP systems with purchasing,
accounting, financial and human resources systems. ERP systems provide managers
with the ability to access, for example, inventory levels and locations for a
product throughout an enterprise. Because ERP systems were specifically designed
to generate and maintain detailed records of transactions, however, they are
limited in their ability to assist managers in making supply chain planning and
scheduling decisions.

The data created and maintained by these ERP systems can serve as input for
a variety of analytical tools contained in supply chain management software, the
development of which the Company helped pioneer. Supply chain management
software enables companies to plan their supply and manufacturing activities to
meet anticipated customer demand, while considering capacity and materials
constraints and other factors. Supply chain software complements ERP systems and
provides companies with information not only about their own enterprise, but
also about demand from customers and other information relating to suppliers and
transportation providers. Because of the potential for significant returns on
investment from supply chain management software and the rapid payback period
relative to ERP systems, one industry research firm has recently recommended
that, rather than implementing ERP systems first, companies should implement
their supply chain planning solution first or simultaneously with ERP
applications so that they can begin capturing the benefits of managing their
supply chains sooner.

As companies have pursued these benefits, they have increasingly recognized
that the information technology that they choose to support their efforts must
enable them to take into account the effects of various events, such as an
unexpected customer order, in real time, so that they can instantly adjust their
distribution and manufacturing activities accordingly. Many companies have also
recognized that in order to capture the advantages of effective supply chain
management, it is critical that the chosen technology provide capabilities
covering all levels of supply chain issues, including strategic and operational,
and that it contain functionality addressing all of the key aspects of supply
chain planning, including demand forecasting, planning of supply and production
activities, scheduling of manufacturing operations and transportation
management. In addition, many companies have realized that the information
technology they choose as their tool for supply chain management must provide
users around the world with current, common information, so that all planners
throughout an enterprise are basing their decisions on the same set of facts,
rather than old or inconsistent data. Lastly, companies have increasingly
realized the advantages of choosing best-in-class vendors for different types of
applications and integrating the applications of these vendors, rather than
selecting a single vendor to provide a wide range of generally less robust
functionality. In particular, for companies evaluating supply chain management
software, there are important benefits available if the supply chain planning
application contains technology enabling integration with ERP and other systems.

16
<PAGE> 17

THE MANUGISTICS SOLUTION

Manugistics develops, markets and supports software products for
synchronized supply chain management and provides related services. Synchronized
supply chain management refers to managing the complex interactions involved in
the flows of products through a supply chain, and involves forecasting product
demand and coordinating the timing of distribution, manufacturing, procurement
and transportation activities to meet this demand, not only across an entire
enterprise, but also among an enterprise and its suppliers and customers. The
Company's solutions consider and balance relevant demand, customer service,
production, constraints, cost and profitability information within and across
these extended supply chains. Manugistics' integrated suite of supply chain
management software includes (i) strategic tools, such as Supply Chain
Navigator's functionality for determining the initial setup of a supply chain
network, (ii) tactical capabilities, such as Constrained Production Planning's
functionality for performing production planning across multiple facilities, and
(iii) operational capabilities, such as Advanced Manufacturing Scheduling's
functionality for producing specified quantities of product within given time
parameters. See "--Products." The Company's solution provides the following key
benefits:

Synchronized Supply Chain Management. The Company's software immediately
alerts planners to changes that occur along the supply chain, enabling them to
evaluate and incorporate the effects of the changes and rapidly adjust the
appropriate components of the supply chain planning process. This software thus
enables them to synchronize their companies' supply planning and manufacturing
scheduling activities with the revised forecast of customer demand. For example,
after an unexpected event leads to an increase in anticipated product demand,
Manugistics' supply chain software incorporates the expected effect of the event
into the forecast and assists planners in quickly re-optimizing the supply chain
network and coordinating the timing of manufacturing and distribution operations
to meet the revised demand forecast. The software immediately updates inventory
levels throughout the network and revises manufacturing schedules.

End-to-End Supply Chain Functionality. Manugistics' integrated supply
chain software suite includes strategic, tactical and operational
decision-making tools and includes demand forecasting, supply planning,
manufacturing scheduling and transportation management capabilities. This
software provides planners with a picture of their company's entire supply chain
and its links to suppliers and customers. This picture of the whole supply chain
provides critical real-time information about all of the effects of supply chain
actions, which empowers users to make superior decisions.

Rapid Time-to-Benefit. The Company's supply chain management software
products frequently deliver cost savings and improvements in customer service
within one year after implementation. (Implementation typically requires three
to twelve months, depending on the products licensed and the complexity and
geographic scope of the project.) As a result, customers typically receive a
quick payback on their investment.

Constantly-Updated Supply Chain Information Common to All
Users. Manugistics' Supply Chain Architecture(TM) is a distributed
client/server architecture that enables users throughout a company, regardless
of their location, to access the same, constantly-updated supply chain
information at the same time. This architecture connects the distributed user
interface (client), the application server and the database, enabling global
access, a single view of the supply chain and rapid communication of information
and decisions. The architecture can also enable users to take advantage of the
communication capabilities available through the Internet and the World Wide
Web, capabilities which the Company believes will foster more collaborative
supply chain activities. In addition, this architecture and the Company's
advanced integration technology extend the availability of a company's view of
the supply chain to its suppliers and customers, which is becoming a critical
component of effective inter-enterprise supply chain management.

Tight Integration with Complementary ERP Systems. Manugistics'
architecture, its object-oriented foundation (which enables sophisticated
communication between applications) and its mutual interest with ERP vendors in
enabling clients to derive the maximum benefits from both their Manugistics and
ERP systems, permits tight integration of the Manugistics software to the ERP
systems of leading vendors. See "--Strategy," "--Products," and "--Alliances and
Partnering." These offerings enable customers to select

17
<PAGE> 18

the Company's supply chain suite and leading ERP solutions with the knowledge
that there is tight integration between the products.

STRATEGY

The Company's objective is to be the leading provider of supply chain
management solutions to companies worldwide. The Company's strategy to achieve
its objective includes the following elements:

Provide Comprehensive Solutions. As more companies recognize the potential
for significant and rapidly achievable benefits from effective supply chain
management, Manugistics' strategy is to deliver comprehensive solutions that
enable customers to fully realize these benefits. The Company delivers a robust
supply chain planning software suite and continuously seeks to expand and
enhance its product offerings. The Company also provides consulting and
implementation services, education and training, and product support and other
services. Through Manugistics' unique supply chain management experience and its
collaboration with customers in a variety of industries for more than a decade,
the Company has developed extensive knowledge of supply chain management issues
and solutions. Based on this knowledge, the Company is continuing to define
comprehensive supply chain solutions and is delivering these solutions to the
market.

At the core of these solutions is the Company's software. The Company has
introduced, and plans to continue to introduce, new applications and
functionality in order to address specific aspects of supply chain planning more
completely. An important aspect of these solutions is the Company's ability to
deliver new features and functions to the market rapidly in response to emerging
market opportunities and requirements. During fiscal 1997, the Company
introduced Advanced Manufacturing Scheduling, which creates superior production
schedules for a wide variety of manufacturing environments, and Supply Chain
Navigator, a strategic and tactical optimizer to support decision-making about
the entire supply chain network, within 10 months after embarking on these
development projects. The Company also emphasizes reliability in its schedule of
releases because of the importance of predictability to customers. Based in part
on its ISO 9001-certified product development processes, the Company believes
that it has a relatively high degree of reliability in its schedule of planned
releases. This reliability and rapid product development are important aspects
of the Company's solutions.

Customers have increasingly demanded the services offered by the Company.
To reduce the need to hire additional professional services employees necessary
to meet maximum anticipated demand for services, the Company offers an extensive
education and training program to third-party consultants from firms such as
Andersen Consulting LLP, Booz Allen & Hamilton, Inc., Ernst & Young LLP and
Price Waterhouse LLP. The availability of these third-party consultants to
provide implementation services will assist the Company to ensure that, during
periods of increased demand, customers will continue to receive effective and
timely professional services.

Capitalize on Leadership Position. The Company seeks to take advantage of
its leadership position in the market for supply chain management software by
expanding its business to include new geographic markets, new industries and
mid-sized companies.

New geographic markets. The Company believes that companies
outside North America face similar supply chain management
issues as North American companies, and, accordingly, the
Company plans to take advantage of its knowledge of these issues
to provide solutions to companies in other geographic markets.
The Company believes that, although they trail their North
American counterparts in terms of the rate of their adoption of
supply chain management practices, companies in South America,
Europe, Australia and Asia, as well as international
subsidiaries of North American companies, are increasingly
seeking the benefits of effective supply chain management. To
position itself to meet anticipated demand, the Company
maintains offices in Australia, Brazil, France, Germany,
Ireland, Japan, The Netherlands and the United Kingdom. The
Company believes that companies in these and other geographic
markets will increasingly demand supply chain management
solutions.

18
<PAGE> 19

New industries. The Company believes it can capitalize on its
experience with, and operational knowledge of, certain types of
customers to attract others. The Company's current customers are
primarily process manufacturers that target consumers (such as
consumer packaged goods and food and beverage firms) and process
manufacturers that target the industrial sector (such as
chemical companies). The Company intends to further penetrate
other industries, including discrete and high-volume repetitive
manufacturers that target consumers (such as firms that make
apparel and consumer durables) or the industrial sector.

Mid-sized companies. The Company believes it can capitalize on
its supply chain management knowledge and the price/performance
profile of client/server products to provide solutions to
mid-sized companies that recognize the benefits available from
effective supply chain management. Client/server product
offerings have enabled the Company to expand its target market
to include mid-sized companies with annual revenues ranging from
$250 million to $1 billion.

Expand Product Distribution Through Alliances and Partnering. The Company
is building and maintaining strong working relationships with organizations that
the Company believes can play important roles in marketing the Company's
products. These include: (i) ERP system vendors, such as The Baan Company, N.V.
("Baan"), Marcam Corporation ("Marcam"), Oracle Corporation ("Oracle") and SAP
AG ("SAP"), whose solutions maintain the data used by the Company's supply chain
planning products; (ii) consulting firms, such as Andersen Consulting LLP, Booz
Allen & Hamilton, Inc., Ernst & Young LLP and Price Waterhouse LLP, that are
active in the selection and implementation of large information systems; (iii)
point-of-sale data providers, such as Information Resources, Inc. ("IRI"), whose
current or planned products also complement those of the Company; (iv) other
complementary solution providers, such as Microsoft Corporation; and (v)
hardware vendors, such as Hewlett-Packard, IBM, Digital Equipment Corporation
and Sun Microsystems, that offer hardware products on which the Company's
products run. See "--Alliances and Partnering."

The Company believes that these relationships will enable prospective
customers to select various hardware systems, operating environments, ERP or
transaction systems and databases that can be easily integrated and rapidly
implemented with the Company's products, and that these relationships will
provide benefits to customers, the Company and these partners, including
enhanced potential for increased market penetration.

Provide Advanced Technological Leadership. Manugistics' technology
strategy is to offer products based on the Company's unique set of software
objects developed specifically to support the business processes involved in
supply chain planning and scheduling. The Company's software provides customers
with highly accurate models of their supply chains and superior flexibility,
scalability and performance. Manugistics' applications incorporate a variety of
advanced decision sciences, including constraint-based optimization, heuristics
and linear programming, providing customers with the most appropriate solver
techniques for different types of supply chain problems. The Company's user
interface technology provides a state-of-the-art "look and feel" to enhance user
productivity and support visualization of the supply chain. The Company's
leading-edge integration technology enables seamless interchange among
Manugistics applications, ERP systems, and suppliers and customers.

The Company offers products for distributed, open systems enabling
customers to use the Company's supply chain management software with various
combinations of hardware systems, operating environments, complementary software
and databases. Open operating systems such as Windows NT and UNIX enable
customers to take advantage of portability, scalability and interoperability of
operating environments. Distributed computing such as that associated with
client/server architectures moves the Company's decision-making capabilities
closer to the user by providing a distributed user interface, distributed
processing (rather than more centralized processing) and distributed database
access. As more companies expand their operations and supply chains globally,
the Company's distributed approach supports customers in their global supply
chain planning activities.

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The Company's products incorporate standards-based technologies, which
provide a flexible foundation and leverage the technology investments of
customers. The Company's use of object-oriented technology for product
development enables it to develop new software program code with modular
components, which permits and encourages developers to re-use these components
and improves quality while shortening the time required to develop or enhance
products.

PRODUCTS

During the fourth quarter of fiscal 1997, the Company released the fifth
version of its client/server software, Manugistics5. The Company's supply chain
management software provides strategic, tactical and operational supply chain
planning tools and includes the Supply Chain Navigator, the Manugistics
Integrator for SAP and four major families: Demand Planning, Supply Planning,
Manufacturing Scheduling and Transportation Management. The software operates in
most major environments and supports database software from leading relational
database software vendors.

SUPPLY CHAIN NAVIGATOR. Manugistics Supply Chain Navigator ("SCN")
features a graphical representation of a company's entire supply chain network
and enables executives to make longer-term business planning decisions about the
configuration of the supply chain network and network-wide capacity, production,
inventory and distribution, as well as shorter-term tactical planning decisions.
SCN can produce an optimized network or an optimized plan for the ideal mix of
products to be produced at each plant and distributed to each warehouse over
multiple time periods that maximizes the profitability of a portfolio of
products or minimizes the costs of raw materials, manufacturing, inventory and
distribution. The strategic and tactical planning functionality of SCN is fully
integrated with the other tactical and operational products in Manugistics'
suite, giving users the ability to implement immediately the strategic supply
chain decisions that SCN supports. The Company introduced SCN during the fourth
quarter of fiscal 1997.

Supply Chain Navigator is a strategic and tactical optimizer of the flows
of materials through a supply chain which uses detailed, constraint-based
models. By simultaneously evaluating both manufacturing-related and
distribution-related constraints, and using powerful optimization routines, SCN
generates the optimal solution given user-defined goals (such as maximizing
product profitability or minimizing costs), and can be used to solve a wide
array of strategic and tactical supply chain problems.

For example, at the strategic level, SCN can be used to determine the
overall setup of a supply chain network or to rationalize an existing setup. By
either simultaneously constraining both manufacturing and distribution, or only
one, SCN can evaluate the addition, removal or relocation of a plant or
distribution center. SCN can also be used to rationalize capacity, including the
addition or removal of facilities space at a plant or distribution center, the
number of shifts, shipping capacity or the introduction or removal of new
suppliers. Another use of SCN is to generate the optimal allocation of capacity
during periods of severe shortage, including cost-minimized outsourcing, or to
generate optimal sourcing, through dynamic updating of sourcing relationships.

For tactical level issues, SCN can be used to choose the optimal production
method from among multiple choices, and can determine which machine or
manufacturing line to use for which product. SCN can also optimize inventory
levels and locations given manufacturing, materials and distribution
constraints, and can optimize inventory prebuilds based on constraints including
product shelf life and materials expiration life.

DEMAND PLANNING. Manugistics Demand Planning addresses a key element of
successful supply chain planning: forecasting demand with a high degree of
accuracy. There are two products in the Demand Planning family: Demand Planning
and Demand Planning Extended Edition.

Demand Planning. Using advanced statistical techniques, Demand Planning
develops sophisticated demand forecasts for specific products at specific
locations. Users can adjust forecasts for market intelligence, financial
projections, sales promotion impact, or other information about expected demand
at any level of aggregation, and the software automatically disaggregates this
information to individual

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products. The resulting demand forecasts are critical to meeting customers'
service expectations and become the basis for inventory, distribution,
production and transportation plans. In addition, the software provides the
capability to track and manage forecast accuracy.

Demand Planning Extended Edition. Demand Planning Extended Edition
("DP/EE") utilizes advanced forecasting methods developed at Manugistics' Demand
Management Center of Expertise in Essen, Germany to extend the capabilities of
the Company's Demand Planning product. DP/EE produces a forecast that
incorporates causal factors, such as the effects of changes in price and the
effects of non-seasonal holidays. To improve precision, DP/EE also recognizes
both long-term and short-term trends in product demand and selects an
appropriate technique to forecast demand more accurately. To simplify
forecasting demand for a new product over the course of its life cycle, DP/EE
can synthesize and analyze life-cycle information from other, similar products
to produce a forecast for the new product. This capability is very important in
industries that conduct some discrete and high-volume repetitive manufacturing
operations, such as apparel or consumer durables, in which product life cycles
are short and life-cycle management is crucial to the success of new products.

The Company is also developing a new capability in its Demand Planning
product family to incorporate point-of-sale ("POS") checkout scanner data. As
part of its agreements with Information Resources, Inc. ("IRI") signed during
the first quarter of fiscal 1998, the Company is working to enhance its Demand
Planning products to be able to use IRI's daily, store-level POS data. With its
exclusive rights (except as against IRI) among supply chain software vendors to
this more detailed and timely census data, the Company is seeking to enhance
Demand Planning to incorporate these data. The Company believes that using these
POS data will provide more accurate forecasts, thereby helping companies make
superior planning decisions, particularly in demand-sensitive,
consumer-oriented, process manufacturing industries.

SUPPLY PLANNING. Manugistics Supply Planning provides managers with the
ability to plan supply activities across multiple facilities to meet demand
requirements, and contains extensive continuous replenishment and Vendor Managed
Inventory capabilities. The software considers the interdependencies between
distribution and manufacturing activities and uses this information as the basis
for decisions about stocking levels, sourcing, location, movement and use of
available materials and inventory. As a result, customer service can be improved
while inventories and cycle times are reduced. The software also facilitates
effective management of production, considering constraints such as capacity,
raw materials, components and labor. Supply Planning enables managers to review
planned manufacturing activities at all manufacturing facilities for time
periods up to several years long, and allows them to analyze the ability of
their companies to meet demand and supply requirements and customer service
goals given aggregate capacity and materials constraints.

Supply Planning synthesizes demand planning, inventory planning and
distribution network data to produce a distribution plan--a schedule of shipping
requirements for each source and destination to meet the demand for every
product at every location in each planning period. Supply Planning constructs a
daily operational plan recommending a schedule of shipments to implement the
distribution plan that makes the best use of available inventory.

To satisfy the distribution plan, Supply Planning assists managers in
developing long-term and short-term enterprise-wide production plans and
detailed daily production schedules while calculating materials needs. In
addition, this software assists managers in making cost-effective decisions
regarding the use of manufacturing and materials resources.

The Supply Planning family includes Constrained Production Planning
("CPP"), a tool for longer-term, aggregate planning across multiple facilities
that produces a master supply plan considering aggregate capacity and materials
constraints. CPP uses inputs from several sources, including the unconstrained,
planned orders that are produced by Supply Planning, to develop a feasible
master production plan (for multiple weeks or months) that fits within capacity
and materials constraints. This master production plan then provides input for
production planning and manufacturing scheduling. If CPP indicates that product
should be manufactured at an alternate plant, appropriate adjustments are made
throughout Supply Planning. CPP can also identify capacity constraints and
materials shortages at times in the future, enabling

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planners to take corrective action, such as leveling production load over time
or across lines, before problems develop.

During fiscal 1997, the Company released the critical materials allocation
feature of Constrained Production Planning, which, for companies such as
personal computer makers, determines the highest profit or lowest cost mix of
products to produce based on longer-term materials availability. The Company
also released the critical constrained materials feature, which addresses
short-term materials shortages for process manufacturing companies with
restricted capacity or with projected materials shortages in future periods.

Supply Planning links customer requirements and production capabilities by
producing a master schedule for each plant or contract producer which best meets
demand while considering multiple constraints, such as capacity, materials and
labor, and minimizing inventory levels. The software translates that master
schedule into time-phased materials requirements schedules for raw materials and
intermediate or component products. The software produces an enterprise-wide
replenishment schedule of time-phased requirements for each vendor, listing the
planned and firm orders for each item. In addition, the software can recommend
the optimal source for raw materials or components, and contains
"available-to-promise" functionality which provides managers who are responsible
for sourcing or supplying raw materials or components (both within and outside
an enterprise) with information about the ability to satisfy production plans
based on anticipated future levels of raw materials or components. This
capability enables these managers to work proactively to find alternate
materials or components or alternative production cycles to minimize the effect
of any anticipated shortages.

ADVANCED MANUFACTURING SCHEDULING. Manugistics Advanced Manufacturing
Scheduling ("AMS") delivers realistic, executable manufacturing schedules for
producing specified quantities of product within the time parameters contained
in the production plan. AMS is integrated with the rest of the Manugistics
supply chain planning software suite, giving users the same constantly updated
demand and supply information available to planners throughout an organization.
Correspondingly, planners elsewhere in the organization have current information
about manufacturing schedules. AMS optimizes production schedules given certain
user-defined constraints for multiple process, high-volume repetitive and
discrete manufacturing environments, enabling schedulers to maximize customer
service and asset utilization, minimize cost and reduce cycle time. AMS
incorporates the advanced manufacturing scheduling technologies acquired from
Avyx, Inc. during the first quarter of fiscal 1997. Users can configure AMS to
model the unique manufacturing environments of their enterprises for various
short- to medium-term time periods, including large, complex processes,
production of either small or large numbers of products, a range of constraints
including materials, labor, machine and storage capacity and environmental
restrictions. AMS generates a manufacturing schedule meeting defined objectives
while respecting constraints.

AMS enables users to employ a range of methods to respond to the frequent
changes to the manufacturing schedule, from regenerative scheduling to
incremental rescheduling. A key feature of AMS is its rescheduling capability.
AMS identifies the best location and time period to schedule a job. For example,
when a company receives a new order, AMS searches in real time for the optimal
plant and date to run the job, preserving the existing schedule and enabling the
scheduler to quote a delivery date immediately. AMS also addresses floating
capacity-constrained resources or bottlenecks, again by leveraging the existing
schedule, preserving the parts that are unaffected by the change and revising
other elements as necessary to meet the updated requirements. The Company
believes that the evolutionary nature of AMS's rescheduling capability enables
users to have greater control, because the schedule remains stable, and greater
speed, because the software reschedules only the necessary portion of the entire
schedule.

TRANSPORTATION MANAGEMENT. Manugistics Transportation Management provides
managers with decision-making and optimization tools to determine how to assign
transportation resources so as to minimize costs while meeting customer service
requirements. This software allows for the coordination of material and product
movements on an enterprise-wide basis.

Transportation Management enables companies to plan and integrate inbound,
outbound and inter-company moves in a coordinated way and to build feasible,
cost-effective, consolidated loads that meet

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customer service and business operating requirements and minimize
enterprise-wide transportation costs. This product also assists managers to
determine the best available mix of transportation modes and common carriers. In
addition, Transportation Management enables managers to integrate private fleet
operations into the shipment planning process to optimize transportation asset
utilization and customer service.

Communication among trading partners, particularly communication about the
status of transportation activities, is essential to effective supply chain
management. During fiscal 1997, the Company introduced Manugistics Intelligent
Messenger, which provides electronic commerce capabilities by collecting and
distributing supply chain data among trading partners. The Manugistics
Intelligent Messenger evaluates messages from the supply chain planning
applications, recognizes key business events, determines required action and
sends timely notification messages to appropriate decision makers. This product
was developed in partnership with Frontec AMT, Inc., a leading provider of
intelligent messaging solutions.

The Company's Transportation Management family also includes the Routing
and Scheduling product, which provides automated daily routing and is designed
for private fleet managers whose main concern is developing the best possible
distribution routes in order to maximize customer service and minimize operating
costs such as fuel, equipment and personnel.

The Company has recently released the Manugistics Bulk Distribution
Planning product, which addresses the needs of the bulk chemical, petroleum and
industrial gas industries. Bulk Distribution Planning includes extensive
transportation management capabilities, as well as specialized demand planning,
unique inventory management features and dynamic sourcing to meet demand,
enabling companies in these industries to improve customer service and reduce
inventory and transportation costs.

MANUGISTICS INTEGRATOR FOR SAP. During the third quarter of fiscal 1997,
the Company released the Manugistics Integrator for SAP, a software application
that integrates SAP's R/3(R) ERP application with several Manugistics supply
chain planning products. Developed jointly by Manugistics and SAP, the
Integrator enables customers to implement an integrated supply chain software
and ERP solution that uses functionality from both applications without the need
to develop custom interface programming. The Integrator reduces companies'
integration costs, which can shorten the payback period on their investments in
supply chain planning and ERP systems, and it is fully supported and maintained
by Manugistics and SAP, which reduces the risk of problems with forward
compatibility of future versions.

Rather than simply transferring flat files, the Manugistics Integrator for
SAP facilitates true "communication" between the two applications about what
information each application needs and, when an event occurs, the effects of the
event. Using "publish/subscribe" object-based messaging, when a triggering event
occurs, data that are needed by both applications are "published" by the source
application using a message-based integration architecture. The target
application "subscribes" to events, processes the data associated with them, and
then publishes the results. For example, SAP's R/3 stores information about
items and stockkeeping units (SKUs) in the material master tables. Additions,
deletions and updates to the material master tables can be communicated to
Demand Planning for processing. Correspondingly, Manugistics Supply Planning
generates a feasible, cost-effective distribution requirements plan, which is
expressed as a set of planned orders. These orders can be communicated to SAP's
R/3 Production Planning as independent requirements.

STATGRAPHICS SOFTWARE. Additionally, the Company markets and supports
STATGRAPHICS, a software application containing a comprehensive set of
statistical tools to control, manage and improve the quality of production
processes in manufacturing companies. It utilizes statistical quality control
and design of experiments to implement quality management in individual
locations throughout an enterprise or plant. In response to decreased demand,
the Company has decreased the resources dedicated to marketing STATGRAPHICS.

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CUSTOMERS

The Company's supply chain management software historically has been
licensed by large organizations in the process manufacturing industries, such as
the consumer packaged goods, food, beverage, chemicals and pharmaceuticals
industries. More recently, the Company has licensed its software to customers in
the discrete and high-volume repetitive industries, including the paper,
apparel, electronics/high technology, automotive and consumer durables
industries. The Company has installed various combinations of its supply chain
management software products at more than 1,000 locations worldwide. The
following customers are representative of the Company's customer base in terms
of their size and the magnitude of revenues generated by their license
agreements with the Company. All of these customers have licensed software
products from the Company (or from Oracle pursuant to the Company's arrangement
with Oracle) or these customers have purchased maintenance, consulting or other
services from the Company within the last twelve months. See "--Sales and
Marketing."

CONSUMER PACKAGED GOODS
Eveready Battery Co.
General Electric Company
The Gillette Company
Lever Brothers Company
The Procter & Gamble Company
Revlon Consumer Products
Corporation

FOOD & BEVERAGE
Frito-Lay, Inc.
Nabisco Brands Inc.
Ocean Spray Cranberries, Inc.
PepsiCo, Inc.
Starbucks Corporation

PHARMACEUTICALS
Bristol-Myers Squibb Company
Eli Lilly and Company
Glaxo Wellcome
Schering-Plough HealthCare
Products, Inc.
Warner Lambert Company

RETAIL DRUG/MASS
MERCHANDISE/SPECIALTY
RETAIL
Dayton Hudson Corporation
Kmart Corporation
Revco D.S., Inc.
Rite Aid Corporation
Toys 'R' Us, Inc.
Wal-Mart Stores, Inc.

GROCERY
Food Lion, Inc.
Giant Eagle, Inc.
The Kroger Co.
Richfood, Inc.
Safeway Stores, Inc.
Winn-Dixie Stores, Inc.

CHEMICALS AND
PETROCHEMICALS
BASF Corporation
Dow Chemical Company,
Limited
E. I. du Pont de Nemours and
Company
Exxon Company, International
Mobil Oil Corporation
Rohm & Haas Company

CONSUMER ELECTRONICS/
HIGH TECHNOLOGY
Analog Devices, Inc.
Hewlett-Packard Company
IBM
Lucent Technologies, Inc.
Xilinx, Inc.

AUTOMOTIVE
Automobile Products plc
BMW AG
General Motors Service Parts
Operations
Harley-Davidson, Inc.
Deere & Co.
Tenneco Automotive-Monroe
Auto Equipment

APPAREL
Fruit of the Loom, Inc.
Levi Strauss & Co.
NIKE, Inc.
Russell Corporation
The Timberland Company

PAPER
Georgia-Pacific Corporation
James River Corporation
Mead Corp.
Sweetheart Cup Company, Inc.

OTHER
Baxter Healthcare Corporation
Black & Decker (U.S.) Inc.
Bridgestone/Firestone, Inc.
British Airways
Eastman Kodak Company
Owens & Minor Medical, Inc.

PRODUCT-RELATED SERVICES

A key element of the Company's business is to provide clients with
comprehensive solutions to their supply chain planning problems by combining
software with professional services that enable clients to derive the maximum
benefit from Manugistics' supply chain products. Typically, a client will make
many changes to its overall operations, including its planning functions, while
implementing the Company's software. To assist clients in making these changes,
the Company offers a wide range of product-related services, including business
operations consulting, change management consulting, end-user and system
administrator education and training, and, in certain circumstances, software
product modification. These services help clients reengineer their operations to
take maximum advantage of the Company's software and of effective supply chain
management. These product-related services generally are not included in the
Company's software license fees and are provided on a time and materials basis.

CUSTOMER SUPPORT

Another element of the Company's comprehensive solution is to provide
on-going support to existing customers. Substantially all of the Company's
supply chain management customers enter into annual product maintenance
agreements entitling them to receive product support, including access to a
hotline

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and an electronic bulletin board, and to receive product revisions and
enhancements. The Company also uses its customer support function to collect
information to assist in focusing future product development efforts and
identifying market demand.

In June 1997, the Company acquired all of the outstanding capital stock of
Synchronology Group Limited ("SGL"), a closely-held firm that provides
manufacturing planning and scheduling consulting services. SGL maintains offices
at its headquarters in the United Kingdom and in Belgium. SGL is continuing to
operate as an independent consulting group that helps clients identify
production planning needs, reengineer production control processes, select
software and systems (including offerings by vendors other than the Company) and
implement and project manage the selected solution. SGL will provide the Company
with additional domain knowledge about manufacturing planning and scheduling and
additional resources to serve clients in Europe and other regions.

PRODUCT DEVELOPMENT

The Company directs its current product development efforts toward the
development of new, complementary products, the enhancement of the features and
functions of existing products (including new Internet/Intranet capabilities,
enhancements for use in foreign countries and foreign language translations),
and the development of products tailored to particular industries. To date, most
of the Company's supply chain products have been developed by its internal
staff. Product documentation is generally created internally.

In developing new products or enhancements, the Company works closely with
current and prospective customers, as well as with other industry leaders, to
determine their requirements. The Company believes that these collaborative
efforts will lead to improved software functionality and will result in superior
products likely to have greater market demand. The Company maintains committees
of users and developers for its products. Among other things, these committees
discuss product enhancement priorities and directions and define and rank issues
associated with products.

Since its inception, the Company has made substantial investments in
product development. The Company believes that getting products to market
quickly, without compromising quality, is critical to the success of the
products. The Company is continuing to make significant product development
expenditures that it believes are necessary for it to deliver new product
features and functions rapidly.

The Company conducts a Product Launch Program for new applications and
major enhancements which allows customers to review design specifications and
prototypes and participate in product testing. The Company has also established
channels for customer feedback which include periodic surveys and focus groups.
In addition, the Company's product development staff works closely with the
Company's marketing, sales, support and services groups to develop supply chain
management software products that meet the needs of its current and prospective
customers.

The Company's research and development expenses were approximately $17.4
million, $11.2 million and $7.6 million for fiscal years 1997, 1996 and 1995,
representing 18.3%, 18.0% and 15.4%, respectively, of total revenues. In
addition, the Company capitalized software development costs of $6.8 million,
$4.9 million and $2.4 million for fiscal years 1997, 1996 and 1995. The Company
amortizes capitalized software development costs over a product's estimated
economic life, generally two years, commencing when a product is available for
general commercial release.

SALES AND MARKETING

The Company's supply chain management sales operation for North and South
America is headquartered at the Company's offices in Rockville, Maryland and
includes field sales personnel in the Atlanta, Boston, Charlotte, Chicago,
Cleveland, Columbus, Dallas, Houston, Los Angeles, Milwaukee, Philadelphia and
San Francisco metropolitan areas. The Company's direct sales organization
focuses on sales of supply chain management software to large, global companies,
as well as mid-sized companies with significant supply chain issues.

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The Company markets its products in regions outside of North and South
America primarily through subsidiaries. The Company's British subsidiary, with
offices in the London and Dublin metropolitan areas, provides direct sales and
customer support primarily to customers and prospective customers in the United
Kingdom and Ireland. The Company's German, French and Dutch subsidiaries,
located in Essen, Germany, Paris, France, and Utrecht, The Netherlands,
respectively, provide direct sales of supply chain management software primarily
to customers located in continental Europe. The Company also maintains offices
in Australia for sales and support to customers in the Pacific Rim and has
recently established operations in Brazil and, through a subsidiary, in Japan.
The Company adapts its software for use in international markets by addressing
different languages, different standards of weights and measures and other
operational considerations. In fiscal 1997, approximately 23.4% of the Company's
total revenues were attributable to sales outside the United States and Canada.

The Company has also begun using indirect sales channels, such as
complementary software vendors, third-party alliances and distributorships. See
"--Alliances and Partnering." Using these channels, Manugistics seeks to
increase the market penetration of its supply chain management products by
leveraging the installed base and prospective customers of these parties. During
fiscal 1997, the Company joined an initiative by Oracle, a large database and
enterprise application software vendor, under which Oracle has the nonexclusive
right to conduct marketing and sales activities on behalf of Manugistics (and on
behalf of a small number of other complementary vendors) to potential customers
in the consumer packaged goods industry. With this initiative, these companies
are seeking to provide a more complete offering that incorporates many
capabilities and satisfies many of the supply chain planning, ERP and other
needs of customers and prospective customers in that industry.

The Company supports its supply chain management sales activities by
conducting a variety of marketing activities, including an annual clients'
conference, product "steering committees," appearances at industry conferences
such as those organized by the American Production and Inventory Control
Specialists (APICS) organization and the North American Wholesale Grocers
Association, client conferences hosted by complementary software vendors and
product demonstration seminars. In addition, the Company conducts lead
generation programs including public relations, direct mail, telemarketing,
advertising, seminars and ongoing customer and dealer communication programs.

ALLIANCES AND PARTNERING

The Company continues to implement its strategy of establishing business
alliances or partnering with leading software companies, consulting firms and
other complementary vendors. During fiscal 1997, in addition to joining the
Oracle initiative, the Company entered into an agreement with SAP, a large ERP
application software vendor. Manugistics and SAP have jointly developed, and
Manugistics has released, the Manugistics Integrator for SAP, which enables
customers to implement an integrated supply chain software solution that uses
functionality from both Manugistics' suite and SAP's R/3 without the need to
develop custom interface programming. See "--Products."

The Company has also entered into joint marketing agreements with Baan and
Marcam, which generally provide that Manugistics and these companies will
conduct joint marketing activities.

The Company continues to develop relationships with leading consulting
firms in order to provide marketing leverage to the Company's own marketing
efforts. For example, Andersen Consulting LLP in North America displays the
Company's supply chain management software at Logistics 2020, its logistics
Center of Excellence in Atlanta, Georgia, and at its SAP Center of Excellence in
Cincinnati, Ohio. Similarly, the Company works closely with Ernst & Young LLP,
Booz Allen & Hamilton, Inc. and Price Waterhouse LLP. In addition to formal
programs, the Company cooperates with professional services firms informally on
a client-by-client basis, which involves cooperation at the field level.

LICENSE AGREEMENTS AND PRICING

Software product revenues consist principally of fees generated from
licenses of software products. In consideration of the payment of license fees,
the Company generally grants nonexclusive, nontransferable,

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perpetual licenses which are primarily computer, site or user specific. License
fee arrangements vary depending upon the type of software product being licensed
and the computer environment. License fees are based primarily on which products
are licensed and on the number of users or locations in the case of
client/server implementations and on a per CPU basis in the case of mainframe
installations. The United States list price for the Company's supply chain
management software products ranges from $200,000 for a single product to
several million dollars for the complete product suite.

Customers may obtain support services and maintenance for an annual fee
that is approximately 18% of the then-current license fee. The support and
maintenance fee is billed monthly or annually and is subject to changes in
software license list prices. The Company also provides pre-installation
assistance, systems administration, training and other product-related services,
generally on a time and materials basis. This allows the customer to determine
the level of support appropriate for its needs.

COMPETITION

The market for supply chain management software is highly competitive.
However, the Company believes that no single competitor markets an integrated
set of products that provides strategic, tactical and operational capabilities
and covers demand planning, supply planning, manufacturing scheduling and
transportation management like the Company. In certain functional areas, other
applications software vendors and certain professional services organizations,
including such vendors as American Software, Inc., InterTrans Logistics
Solutions, i2 Technologies, Inc., Logility, Inc., Numetrix, Inc. and Weseley
Software Development Corp., offer products that are directly competitive with
some of the software applications marketed by the Company. The principal
competitive factors in the supply chain management software market served by the
Company include product functionality and quality, product suite integration,
ease of use, customer service and satisfaction, product support, product-related
services, compliance with industry standards, vendor reputation and, in
international markets, availability in foreign languages. The Company believes
that it currently competes favorably with respect to these factors, and that its
principal competitive advantages are its comprehensive, integrated solution, its
substantial investment in product development, its client support and its
extensive knowledge of supply chain planning and scheduling.

PROPRIETARY RIGHTS AND LICENSES

The Company regards its software as proprietary and relies on a combination
of trade secret, copyright and trademark laws, license agreements, nondisclosure
and other contractual provisions and technical measures to protect its
proprietary rights in its products. The Company distributes its supply chain
management software under software license agreements which typically grant
customers nonexclusive, nontransferable licenses to the Company's products and
have perpetual terms unless terminated for breach. Under these license
agreements, the Company retains all rights to market its products. Use of the
licensed software is usually restricted to the customer's internal operations on
designated computers at specified sites unless the customer obtains a site
license for use of the software that is restricted to designated users. Use is
subject to terms and conditions prohibiting unauthorized reproduction or
transfer of the software. The Company also seeks to protect the source code of
its software as a trade secret and as an unpublished, copyrighted work.

EMPLOYEES

As of May 31, 1997, the Company had 693 full-time regular employees. None
of the Company's employees is represented by a labor union. The Company has
experienced no work stoppages and believes that its employee relations are
generally good. In addition, the Company utilizes consultants, independent
contractors and temporary employees to meet its staffing needs.

27
<PAGE> 28

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The name, age and position held by each of the executive officers and
directors of the Company or Manugistics, Inc., its principal operating
subsidiary, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------- --- ------------------------------------------------------------
<S> <C> <C>
William M. Gibson...... 52 President, Chief Executive Officer and Chairman of the Board
of Directors
Joseph E. Broderick.... 52 Executive Vice President, Client Sales and Services
Kenneth S. Thompson.... 41 Executive Vice President, Supply Chain Products
Keith J. Enstice....... 46 Senior Vice President, Field Operations Division, Americas
Mary Lou Fox........... 54 Senior Vice President, Consumer Products Marketing Division
and Professional Services Division
Peter Q. Repetti....... 36 Vice President, Finance and Administration and Chief
Financial Officer
Jack A. Arnow.......... 69 Director
J. Michael Cline....... 37 Director
Lynn C. Fritz.......... 55 Director
Joseph H. Jacovini..... 56 Director
William G. Nelson...... 63 Director
Thomas A. Skelton...... 50 Director
</TABLE>

Mr. Gibson has served as President, Chief Executive Officer and Chairman of
the Board of Directors of the Company since its formation in 1986. From 1983
until 1986, when it was purchased by the Company, Mr. Gibson served as
President, Chief Executive Officer and Chairman of the Board of Directors of
STSC, Inc. (now Manugistics, Inc.). He joined STSC, Inc. as Executive Vice
President and Chief Operating Officer in 1982.

Mr. Broderick has served as Executive Vice President, Client Sales and
Services, since December 1995. From 1991 to 1995, Mr. Broderick served as
President and Chief Operating Officer of Netwise, Inc., a communications systems
software company. From 1990 to 1991, Mr. Broderick served as Vice President of
Sales and Marketing for XA Systems, a productivity tools software company.

Mr. Thompson has served as Executive Vice President, Supply Chain Products,
since January 1996. From 1990 to 1996, Mr. Thompson served as Senior Vice
President, Supply Chain Products. Mr. Thompson joined the Company in 1990 upon
the Company's acquisition of The ROVER Technology Company, a transportation
software products and services company, of which Mr. Thompson had served as
Chief Executive Officer.

Mr. Enstice has served as Senior Vice President, Field Operations Division,
Americas, since October 1995. From 1994 to 1995, he served as Senior Vice
President, Channels and Alliances Division, and from 1991 to 1994, Mr. Enstice
served as Vice President, Worldwide Sales. From 1989 until 1991, he served as
Vice President, Marketing. Mr. Enstice joined STSC, Inc. in 1983.

Ms. Fox has served as Senior Vice President, Consumer Products Marketing
Division and Professional Services Division, since April 1993. She joined the
Company in 1982 as a Senior Systems Analyst and subsequently served in various
technical and professional services roles and as Vice President, Professional
Services, from March 1990 through March 1993.

Mr. Repetti has served as Vice President, Finance and Administration and
Chief Financial Officer since April 1996. From 1994 to 1996, Mr. Repetti served
as Vice President, Finance. From 1990 to 1994, he served as Director of
Financial Planning and Analysis for USAir Group, Inc.

Mr. Arnow has served as a director of the Company since 1986. Mr. Arnow is
an independent investor.

28
<PAGE> 29

Mr. Cline was elected to serve as a director of the Company in July 1996.
Since 1989, Mr. Cline has been a managing member of General Atlantic Partners,
LLC ("GAP LLC") (or its predecessor in interest), a private investment firm with
a primary focus on software and related information technologies. Mr. Cline was
nominated as a director to the Company's Board of Directors pursuant to the
request of GAP LLC, which acquired an 8.8% ownership interest in the Company in
1996. Prior to 1989, Mr. Cline was an associate with McKinsey & Company, Inc., a
global strategic consulting firm. Mr. Cline serves on a number of boards,
including Scopus Technology, Inc., a company that specializes in client server
customer service management systems; FICS, the leading company in electronic
banking, electronic services delivery and reporting systems; SQRIBE Technologies
Corp., a company that focuses on reporting tools; and Richter Systems
International Inc., a company that engages in the retail systems business.

Mr. Fritz has served as a director of the Company since January 1995. Since
1965, Mr. Fritz has been Chairman and Chief Executive Officer of Fritz
Companies, Inc., a publicly-held company that specializes in freight forwarding
and customhouse brokerage on a global basis.

Mr. Jacovini has served as a director of the Company since 1986. He is a
partner in Dilworth, Paxson, Kalish & Kauffman LLP based in Philadelphia,
Pennsylvania, where he has practiced law since 1965. He has served as
Co-Chairman of that firm since 1995 and as Chairman of that firm's Corporate
Department since 1993. Mr. Jacovini has been a Trustee of Drexel University
since 1990. He also served as a member of the Board of the Philadelphia Regional
Port Authority from 1992 to early 1995 and as its Chairman, as well as Vice
Chairman of the Ports of Philadelphia and Camden, Inc., during 1994-95.

Mr. Nelson has served as a director of the Company since 1986. Since
September 1996, Mr. Nelson has served as the President, Chief Executive Officer
and Chairman of the Board of Directors of Geac Computer Corporation, Limited. He
also serves as a director to HRP Inc. and Project Software & Development, Inc.
From December 1991 to December 1994, Mr. Nelson was President and Chief
Executive Officer of Pilot Software, Inc. From April 1990 to December 1991, Mr.
Nelson served in several executive capacities at OnLine Software International,
Inc., including President, Chief Operating Officer and Chief Executive Officer.

Mr. Skelton has served as a director of the Company since April 1992. Mr.
Skelton served as President of Knowledge Systems Corporation from April 1996 to
April 1997. From January 1995 to March 1996, he was the Division President of
Global Software, Inc. in Raleigh, North Carolina. From 1983 to 1994, Mr. Skelton
worked in various management capacities with Manugistics, Inc., the principal
operating subsidiary of the Company. In May 1983, he joined STSC, Inc. (now
Manugistics, Inc.) as Vice President of Sales; he became Senior Vice President
in 1986, Executive Vice President in March 1991 and Chief Operating Officer in
March 1992.

There are no family relationships among any of the executive officers or
directors of the Company. Executive officers of the Company are elected by the
Board of Directors on an annual basis and serve at the discretion of the Board
of Directors.

BOARD OF DIRECTORS

The By-Laws provide that the Company's Board of Directors shall consist of
not less than five and not more than nine directors, with the number of
directors to be fixed by the Board of Directors from time to time. The Board of
Directors has fixed the number of directors which shall constitute the entire
Board of Directors at seven.

The By-Laws also provide that the Company's Board of Directors is divided
into three classes, with members of each class serving for staggered terms of
three years. The term of office of one class of directors expires each year in
rotation so that one class is elected at each annual meeting of shareholders for
a three year term. The Board of Directors presently consists of three Class I
directors (Messrs. Arnow, Cline and Fritz), two Class II directors (Messrs.
Jacovini and Skelton) and two Class III directors (Messrs. Gibson and Nelson),
whose current terms shall expire at the 1999, 2000 and 1998 annual meetings of
shareholders, respectively.

29
<PAGE> 30

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of May 31, 1997, and as adjusted to give effect
to the sale of the shares offered hereby, (i) by each stockholder known by the
Company to be the beneficial owner of more than five percent of the Company's
Common Stock, (ii) by the Selling Stockholder, (iii) by each director and each
executive officer of the Company, and (iv) by all directors and executive
officers as a group. Except as indicated in the footnotes to the table, the
persons and entities named in the table have sole voting and investment power
with respect to all shares which they respectively beneficially owned.

The address of each person who is an executive officer or director of the
Company is 2115 East Jefferson Street, Rockville, MD 20852.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED PRIOR TO SHARES BENEFICIALLY
OFFERING(1) OWNED AFTER OFFERING(1)
----------------------- -----------------------
NUMBER PERCENT SHARES NUMBER PERCENT
NAME OF SHARES OF CLASS OFFERED OF SHARES OF CLASS
- --------------------------------- --------- -------- ------- --------- --------
<S> <C> <C> <C> <C> <C>
William M. Gibson(2)............. 5,794,530 26.5 300,000 5,494,530 23.4
Kenneth S. Thompson(3)........... 681,846 3.1 -- 681,846 2.9
Joseph E. Broderick(4)........... 60,300 * -- 60,300 *
Keith J. Enstice(5).............. 151,162 * -- 151,162 *
Mary Lou Fox(6).................. 187,900 * -- 187,900 *
Peter Q. Repetti(7).............. 27,356 * -- 27,356 *
Jack A. Arnow(8)................. 112,000 * -- 112,000 *
J. Michael Cline(9).............. 10,000 * -- 10,000 *
Lynn C. Fritz(10)................ 25,000 * -- 25,000 *
Joseph H. Jacovini(11)........... 62,000 * -- 62,000 *
William G. Nelson(12)............ 266,000 1.2 -- 266,000 1.1
Thomas A. Skelton(13)............ 681,826 3.1 -- 681,826 2.9
General Atlantic Partners,
LLC(14)........................ 1,838,000 8.4 -- 1,838,000 7.8
All directors and executive
officers as a group (12
persons)....................... 8,059,920 35.9% 300,000 7,759,920 32.3
</TABLE>

- ------------------------------
*Less than 1% of the outstanding Common Stock.

(1) Based on 21,855,010 outstanding shares of Common Stock and shares of Common
Stock deemed beneficially owned as of May 31, 1997. Under applicable rules
of the Commission, a person is deemed to be the beneficial owner of shares
of Common Stock if, among other things, he or she directly or indirectly
has or shares voting power or investment power with respect to such shares.
A person is also considered to beneficially own shares of Common Stock
which he or she does not actually own but has the right to acquire
presently or within the next 60 days, by exercise of stock options or
otherwise.

(2) Includes 6,130 shares issuable upon exercise of options, 581,000 shares of
Common Stock held by his wife and 200,000 shares held in a non-profit
corporation, with respect to which Mr. Gibson shares voting and dispositive
control. Mr. Gibson has served as President, Chief Executive Officer and
Chairman of the Board of Directors of the Company since its formation in
1986. See "Management."

(3) Includes 18,780 shares issuable upon exercise of options. Excludes 6,408
shares of Common Stock held by Mr. Thompson's wife of which he disclaims
beneficial ownership.

(4) Includes 41,254 shares issuable upon exercise of options.

(5) All shares issuable upon exercise of options.

(6) Includes 153,900 shares issuable upon exercise of options.

(7) Includes 23,100 shares issuable upon exercise of options.

(8) Includes 44,000 shares issuable upon exercise of options.

(9) All shares issuable upon exercise of options. Excludes shares beneficially
owned by General Atlantic Partners, LLC ("GAP LLC"), of which Mr. Cline is
a managing member.

(10) All shares issuable upon exercise of options.

(11) Includes 4,000 shares held by his wife and 38,000 shares of Common Stock
held of record by Prudential Bank & Trust Co. in a retirement savings plan
for Mr. Jacovini. Excludes 20,000 shares issuable upon exercise of options
beneficially owned by Dilworth, Paxson, Kalish & Kauffman LLP of which Mr.
Jacovini is Co-Chairman and a partner, as to which shares Mr. Jacovini has
disclaimed any beneficial interest; subsequent to May 31, 1997, Mr.
Jacovini acquired beneficial ownership of currently exercisable options
relating to 12,664 of such shares.

(12) Includes 68,000 shares issuable upon exercise of options.

(13) Includes 26,000 shares issuable upon exercise of options, 27,288 shares
held by his wife and 17,244 shares held by his wife for his children.

(14) The address of GAP LLC is 3 Pickwick Plaza, Greenwich, CT 06830. Share
amounts include 1,583,314 shares of Common Stock held by General Atlantic
Partners 26, L.P., of which GAP LLC is the general partner and 254,686
shares of Common Stock held by GAP Coinvestment Partners, L.P. ("GAPCO").
The managing members of GAP LLC are the general partners of GAPCO. J.
Michael Cline disclaims beneficial ownership of all such shares of Common
Stock except to the extent of his pecuniary interest therein.

30
<PAGE> 31

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, par value $.002 per share, and 4,620,253 shares of Preferred
Stock, par value $.01 per share.

COMMON STOCK

As of May 31, 1997, there were 21,855,010 shares of Common Stock issued and
outstanding and a total of approximately 6,641,017 shares of Common Stock
reserved for issuance upon exercise of outstanding stock options and options
that may be granted in the future under the Company's stock option plans or for
issuance under the Company's Employee Stock Purchase Plan. Based upon the number
of shares outstanding as of that date and after giving effect to the issuance of
the 1,600,000 shares of Common Stock offered by the Company hereby, there will
be 23,455,010 shares of Common Stock outstanding.

Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared by the Board of Directors out of
funds legally available therefor, subject to any preferential dividend rights of
outstanding Preferred Stock. Upon the liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to receive ratably the net
assets of the Company available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding Preferred Stock.
Holders of Common Stock, as such, have no preemptive, subscription, redemption
or conversion rights. The outstanding shares of Common Stock are, and the shares
offered by the Company in the Offering will be, when issued and paid for, fully
paid and nonassessable. The rights, preferences and privileges of holders of
Common Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate and issue from time to time.

PREFERRED STOCK

The Board of Directors is authorized, subject to certain limitations
prescribed by law, without further stockholder approval, to issue from time to
time up to an aggregate of 4,620,253 shares of Preferred Stock in one or more
series and to fix or alter the designations, preferences, rights and any
qualifications, limitations or restrictions on the shares of each such series
thereof, including the dividend rights, dividend rates, conversion rights,
voting rights, terms of redemption (including sinking fund provisions),
redemption price or prices, liquidation preferences and the number of shares
constituting any series or designations of such series. The issuance of
Preferred Stock may have the effect of delaying, deferring or preventing a
change of control of the Company.

There are no shares of Preferred Stock issued and outstanding. The Company
has no plans to issue any shares of Preferred Stock.

DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS

The Company is subject to the provisions of Section 203 of the General
Corporation Law of Delaware, as amended (the "Delaware GCL"). Section 203
prohibits a publicly-held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
"Business combination" includes mergers, asset sales and other transactions
either caused by the interested stockholder or resulting in a financial benefit
to the interested stockholder which is not shared pro rata with the other
stockholders of the Company. Subject to certain exceptions, an "interested
stockholder" is a person who, together with affiliates and associates, owns, or
within three years did own, 15% or more of the corporation's voting stock. The
statute contains provisions enabling a corporation to avoid the statute's
restrictions if stockholders holding a majority of the corporation's voting
stock approve an amendment to the corporation's certificate of incorporation or

31
<PAGE> 32

by-laws to avoid the restrictions. The Company has not and does not currently
intend to "elect out" of the application of this statute.

The Certificate of Incorporation contains certain provisions permitted
under the Delaware GCL which eliminate the personal liability of directors for
monetary damages for a breach of the director's fiduciary duty, except for: (i)
breach of a director's duty of loyalty, (ii) acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii) the
unlawful payment of dividends, stock purchase or stock redemption, or (iv) any
transaction from which the director derives any improper personal benefit. The
Certificate of Incorporation and By-Laws also contain provisions indemnifying
the Company's directors, officers and employees to the fullest extent permitted
by the Delaware GCL. The Company believes that these provisions will assist the
Company in attracting and retaining qualified individuals to serve as directors,
officers and employees. The Certificate of Incorporation provides that a
director's liability shall be eliminated or limited to the fullest extent
permitted by the Delaware GCL, as amended from time to time.

The By-Laws provide for the division of the Board of Directors into three
classes as nearly equal in number as possible with staggered three-year terms.
The classification of the Board of Directors could make it more difficult for a
third party to acquire, or discourage a third party from attempting to acquire,
control of the Company. Any director may be removed only for cause and only by
the vote of at least 67% of the shares entitled to vote for the election of
directors.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Boston EquiServe,
Canton, Massachusetts.

32
<PAGE> 33

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters"), through their Representatives,
Alex. Brown & Sons Incorporated, Morgan Stanley & Co. Incorporated and
Robertson, Stephens & Company LLC (collectively, the "Representatives"), have
severally agreed to purchase from the Company the following respective number of
shares of Common Stock at the public offering price less the underwriting
discounts and commissions set forth on the cover page of this Prospectus:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
------------------------------------------------------------------------- ---------
<S> <C>
Alex. Brown & Sons Incorporated.......................................... 655,600
Morgan Stanley & Co. Incorporated........................................ 655,600
Robertson, Stephens & Company LLC........................................ 327,800
Deutsche Morgan Grenfell Inc. ........................................... 45,000
Lazard Freres & Co. LLC.................................................. 45,000
Montgomery Securities.................................................... 45,000
Cowen & Company.......................................................... 21,000
Everen Securities, Inc. ................................................. 21,000
First Albany Corporation................................................. 21,000
Gerard Klauer Mattison & Co., Inc. ...................................... 21,000
Josephthal Lyon & Ross Incorporated...................................... 21,000
Wessels, Arnold & Henderson, L.L.C. ..................................... 21,000
---------
Total.......................................................... 1,900,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all of the shares of Common Stock offered hereby, if
any of such shares are purchased.

The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Common Stock to the public at the public offering
price set forth on the cover page of this Prospectus and to certain dealers at
such price less a concession not in excess of $1.20 per share. The Underwriters
may allow, and such dealers may reallow, a concession not in excess of $0.10 per
share to certain other dealers. After the public offering, the offering price
and other selling terms may be changed by the Representatives.

The Selling Stockholder and certain other stockholders have granted to the
Underwriters an option, exercisable not later than 30 days after the date of
this Prospectus, to purchase up to 285,000 additional shares of Common Stock at
the public offering price less the underwriting discounts and commissions set
forth on the cover page of this Prospectus. To the extent that the Underwriters
exercise such option, each of the Underwriters will have a firm commitment to
purchase approximately the same percentage thereof that the number of shares of
Common Stock to be purchased by it in the above table bears to the total number
of shares offered hereby, and the Company will be obligated, pursuant to the
option, to sell such shares to the Underwriters. The Underwriters may exercise
such option only to cover over-allotments made in connection with the sale of
the Common Stock offered hereby. If purchased, the Underwriters will offer such
additional shares on the same terms as those on which the 1,900,000 shares are
being offered hereby.

In connection with the Offering, certain Underwriters may engage in passive
market making transactions in the Common Stock on Nasdaq immediately prior to
the commencement of sales in the Offering in accordance with Rule 103 of
Regulation M under the Exchange Act. Passive market making consists of
displaying bids on Nasdaq limited by the bid prices of independent market makers
and making purchases limited by such prices and effected in response to order
flow. Net purchases by a passive market maker on each day are limited to a
specified percentage of the passive market maker's average daily trading volume
in the Common Stock during a specified period and must be discontinued when such
limit is

33
<PAGE> 34

reached. Passive market making may stabilize the market price of the Common
Stock at a level above that which might otherwise prevail and, if commenced, may
be discontinued at any time.

Subject to applicable limitations, the Underwriters, in connection with the
Offering, may place bids for or make purchases of the Common Stock in the open
market or otherwise, for long or short account, or cover short positions
incurred, to stabilize, maintain or otherwise affect the price of the Common
Stock, which may be higher than the price that might otherwise prevail in the
open market. There can be no assurance that the price of the Common Stock will
be stabilized, or that stabilizing, if commenced, will not be discontinued at
any time. Subject to applicable limitations, the Underwriters may also place
bids or make purchases on behalf of the underwriting syndicate to reduce a short
position created in connection with the Offering. The Underwriters are not
required to engage in these activities and may end these activities at any time.

The Underwriting Agreement contains covenants of indemnity and contribution
between the Underwriters and the Company regarding certain liabilities,
including liabilities under the Securities Act.

The Company has agreed that until 90 days after the date of this
Prospectus, it will not, without the prior written consent of Alex. Brown & Sons
Incorporated, sell, offer to sell, issue, or otherwise distribute any shares of
Common Stock or any options, rights or warrants with respect to any Common
Stock, except for options granted under the Company's stock option plans and
shares of Common Stock issued upon exercise of such options or pursuant to the
Company's Employee Stock Purchase Plan. In addition, during the 90-day period,
the Company may offer to issue (but may not issue) shares of Common Stock in
connection with then-proposed acquisitions. Further, the directors, the
executive officers, the Selling Stockholder and certain other stockholders of
the Company have agreed, subject to certain limitations, not to directly or
indirectly sell or offer for sale or otherwise dispose of any Common Stock which
they own for a period of 90 days after the date of this Prospectus without the
prior written consent of Alex. Brown & Sons Incorporated. See "Risk
Factors--Shares Eligible for Future Sale."

The Representatives have advised the Company that the Underwriters do not
intend to confirm sales to any account over which they exercise discretionary
authority.

LEGAL MATTERS

Certain legal matters in connection with the shares of Common Stock offered
hereby will be passed upon for the Company and the Selling Stockholder by
Dilworth, Paxson, Kalish & Kauffman LLP, Philadelphia, Pennsylvania. Certain
legal matters will be passed upon for the Underwriters by Piper & Marbury
L.L.P., Baltimore, Maryland.

EXPERTS

The financial statements and the related financial statement schedule
incorporated in this Prospectus by reference from the Company's Annual Report on
Form 10-K for the year ended February 28, 1997 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports, which are
incorporated herein by reference, and have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.

34
<PAGE> 35

================================================================================

NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Prospectus Summary.................... 3
Certain Forward-Looking Statements.... 6
Risk Factors.......................... 7
Use of Proceeds....................... 11
Capitalization........................ 11
Price Range of Common Stock and
Dividend Policy..................... 12
Selected Financial Data............... 13
Business.............................. 15
Management............................ 28
Principal and Selling Stockholders.... 30
Description of Capital Stock.......... 31
Underwriting.......................... 33
Legal Matters......................... 34
Experts............................... 34
</TABLE>

================================================================================

1,900,000 SHARES

[MANUGISTICS GROUP LOGO]
COMMON STOCK
------------------------

P R O S P E C T U S
------------------------
ALEX. BROWN & SONS
INCORPORATED

MORGAN STANLEY DEAN WITTER

ROBERTSON, STEPHENS & COMPANY

August 13, 1997

================================================================================