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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): January 18, 2001
MANUGISTICS GROUP, INC.
(Exact name of issuer as specified in its charter)
Delaware 0-22154 52-1469385
(STATE OR OTHER JURISDICTION OF (COMMISSION (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) FILE NUMBER) IDENTIFICATION NUMBER)
2115 East Jefferson Street
Rockville, Maryland 20852
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
(301) 984-5000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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ITEM 5. OTHER EVENTS.
As previously reported, on December 21, 2000, Manugistics Group, Inc.
("Manugistics") through its wholly-owned subsidiary, Manu Acquisition Corp., a
Delaware corporation, acquired all of the then outstanding capital stock of
Talus Solutions, Inc. ("Talus"), a Delaware corporation, in a stock-for-stock
merger (such transaction being referred to as the "Merger") pursuant to a
certain Agreement and Plan of Merger dated as of September 21, 2000. Talus,
headquartered in Atlanta, Georgia, is a provider of Pricing and Revenue
Optimization (PRO) products and services. Manugistics is filing the following
supplemental information relating to the acquisition.
(a) Pro Forma Financial Information
MANUGISTICS GROUP, INC.
PRO FORMA FINANCIAL INFORMATION
UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL INFORMATION
Manugistics completed its acquisition of Talus on December 21, 2000. The
acquisition will be accounted for as a purchase.
The accompanying unaudited pro forma combined condensed balance sheet has
been prepared as if the acquisition had been consummated as of November 30,
2000. The unaudited pro forma combined condensed statements of operations for
nine months ended November 30, 2000 and the fiscal year ended February 29, 2000,
have been prepared as if the acquisition had occurred on March 1, 1999, and
combines Manugistics' and Talus' statements of operations.
Adjustments have been made to Talus' financial statements to conform to
Manugistics' presentation. Manugistics has a fiscal year end of February 28 or
29 and Talus has a fiscal year end of December 31. The twelve month period ended
December 31, 1999 for Talus was combined with the twelve month period ended
February 29, 2000 for Manugistics. The unaudited balance sheet for Talus as of
September 30, 2000 was combined with the unaudited balance sheet for Manugistics
as of November 30, 2000. The unaudited pro forma combined statement of
operations includes the nine month period ended September 30, 2000 for Talus
combined with the nine month period ended November 30, 2000 for Manugistics.
The unaudited pro forma combined condensed financial information has been
prepared using the purchase method of accounting whereby the assets and
liabilities of Talus are adjusted to estimated fair value, based upon
preliminary estimates, which are subject to change as additional information is
obtained. The allocation of the purchase price is subject to final
determination based upon estimates and other evaluations of fair market value,
identification and valuation of identifiable intangible assets. Therefore, the
allocations reflected in the following unaudited pro forma combined condensed
financial information may differ from the amounts ultimately determined.
The method of combining historical financial statements for the preparation
of the unaudited pro forma combined condensed financial statements is for
presentation only. Actual statements of operations of the companies will be
consolidated commencing on the date of acquisition. The unaudited pro forma
combined condensed financial information does not purport to represent what
Manugistics' operations or financial position actually would have been had the
acquisition occurred on the dates specified, or to project Manugistics' results
of operation or financial position for any future period or date.
In the opinion of management, all material adjustments necessary to reflect
the acquisition of Talus by Manugistics have been made. The accompanying
unaudited pro forma combined condensed financial statements should be read in
conjunction with the historical financial statements and related notes thereto
for both Manugistics and Talus.
The "As Adjusted" column reflects the issuance of a total of $250.0 million
5% convertible subordinated notes in October and November 2000.
The accompanying pro forma financial information reflects the impact of
Manugistics' stock split completed on December 7, 2000.
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MANUGISTICS GROUP, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
NOVEMBER 30, 2000
(IN THOUSANDS, EXCEPT PAR VALUE)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
MANUGISTICS TALUS ADJUSTMENTS MANUGISTICS
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..... $ 25,779 $ 12,057 $ 37,836
Marketable securities......... 254,995 274 255,269
Accounts receivable -- net.... 72,094 10,526 82,620
Other current assets.......... 6,314 1,307 7,621
--------- -------- ---------
Total current assets...... 359,182 24,164 383,346
Property and equipment -- net... 14,529 4,506 19,035
Noncurrent Assets:
Software development
costs -- net................ 16,046 -- 16,046
Intangibles and other
assets -- net............... 18,210 1,703 $369,832 (c) 389,745
Deferred tax asset............ 26,165 -- -- (e) 26,165
--------- -------- -------- ---------
Total assets.............. $ 434,132 $ 30,373 $369,832 $ 834,337
========= ======== ======== =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Accounts payable.............. $ 5,613 $ 2,013 $ 4,000 (c) $ 11,626
Accrued compensation.......... 12,761 4,337 17,098
Other current liabilities..... 18,902 2,933 3,786 (c) 26,539
918 (h)
Restructuring accruals........ 1,674 918 (918)(h) 1,674
Current portion of long-term
debt........................ -- 1,076 1,076
Deferred revenue.............. 32,592 764 33,356
--------- -------- -------- ---------
Total current
liabilities............ 71,542 12,041 7,786 91,369
Long-term debt.................. 250,116 1,836 2,102 (h) 254,054
Long-term restructuring
accrual....................... 2,254 2,102 (2,102)(h) 2,254
ESOP put obligation............. -- 2,166 (2,166)(k) --
Convertible redeemable preferred
stock, $.0001 par value....... -- 7,162 (7,162)(c) --
Common stock put warrant........ -- 686 -- 686
Stockholders' equity:
Preferred stock............... -- 2 (2)(b) --
Common stock.................. 116 2 (2)(b) 130
14 (c)
Additional paid-in-capital.... 230,444 46,008 340,001 (c) 628,974
(46,008)(b)
58,529 (c)
Accumulated deficit........... (113,614) (39,627) 39,627 (b) (113,614)
Treasury stock................ (717) (2,005) 2,005 (b) (717)
Deferred compensation......... (5,151) -- (22,790)(c) (27,941)
Accumulated other
comprehensive loss.......... (858) -- (858)
--------- -------- -------- ---------
Total stockholders'
equity................. 110,220 4,380 371,374 485,974
--------- -------- -------- ---------
Total liabilities and
stockholders' equity... $ 434,132 $ 30,373 $369,832 $ 834,337
========= ======== ======== =========
</TABLE>
SEE NOTES TO THE UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION.
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MANUGISTICS GROUP, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
NINE MONTHS ENDED NOVEMBER 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AS ADJUSTED
HISTORICAL HISTORICAL PRO FORMA PRO FORMA AS PRO FORMA
MANUGISTICS(a) TALUS(a) ADJUSTMENTS MANUGISTICS ADJUSTED MANUGISTICS
-------------- ---------- ----------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
License fees................... $ 90,290 $ 1,927 $ 92,217 $ 92,217
Consulting, solution support
and other services........... 88,375 29,963 118,338 118,338
-------- ------- -------- --------
Total revenues............. 178,665 31,890 210,555 210,555
-------- ------- -------- --------
OPERATING EXPENSES:
Cost of license fees........... 14,365 -- 14,365 14,365
Cost of consulting, solution
support and other services... 39,636 18,142 57,778 57,778
Sales and marketing............ 78,844 6,357 85,201 85,201
Product development............ 25,179 6,971 32,150 32,150
General and administrative..... 16,282 7,503 68,544 (a)(d) 92,329 92,329
Restructuring income........... -- (211) (211) (211)
Non-cash stock compensation
expense...................... 14,638 (i) 650 5,698 (g) 20,986 20,986
-------- ------- -------- -------- --------
Total operating expenses... 188,944 39,412 74,242 302,598 302,598
-------- ------- -------- -------- --------
Loss from operations........... (10,279) (7,522) (74,242) (92,043) (92,043)
Other income(expense) -- net... 1,021 690 1,711 $(10,200)(l) (8,489)
Increase in common stock put
warrant...................... -- (590) 590 (j) -- --
-------- ------- -------- -------- ------- --------
Net loss before income taxes... (9,258) (7,422) (73,652) (90,332) (10,200) (100,532)
Provision for income taxes..... 2,154 -- -- 2,154 -- 2,154
-------- ------- -------- -------- ------- --------
Net loss....................... $(11,412) $(7,422) $(73,652) $(92,486) $(10,200) $(102,686)
======== ======= ======== ======== ======= ========
Net loss per share -- basic and
diluted...................... $ (0.20) -- -- $ (1.44) -- $ (1.59)
Shares used in share
computation basic and
diluted...................... 57,378 -- 7,026 (f) 64,404 -- 64,404
</TABLE>
SEE NOTES TO THE UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION.
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MANUGISTICS GROUP, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 29, 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
As Adjusted
Historical Historical Pro Forma Pro Forma As Pro Forma
Manugistics Talus Adjustments Manugistics Adjusted Manugistics
----------- -------------- ----------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
License fees................. $ 60,421 $ 224 $ 60,645 $ 60,645
Consulting, solution support
and other services......... 92,012 37,626 129,638 129,638
-------- -------- --------- ---------
Total revenues........... 152,433 37,850 190,283 190,283
-------- -------- --------- ---------
OPERATING EXPENSES:
Cost of license fees......... 13,685 150 13,835 13,835
Cost of consulting, solution
Support and other
services................... 44,346 30,369 74,715 74,715
Sales and marketing.......... 61,439 9,481 70,920 70,920
Product development.......... 29,150 7,305 36,455 36,455
General and administrative... 15,837 6,098 92,458(d) 114,393 114,393
Restructuring expense (income) (1,506) 3,956 2,450 2,450
Non-cash stock compensation
expense(i)................. -- -- 7,597(g) 7,597 7,597
-------- -------- -------- --------- ---------
Total operating
expenses.............. 162,951 57,359 100,055 320,365 320,365
-------- -------- -------- --------- ---------
Loss from operations......... (10,518) (19,509) (100,055) (130,082) (130,082)
Other income
(expense) -- net........... 1,389 284 -- 1,673 $(13,700)(l) (12,027)
-------- -------- -------- --------- -------- ---------
Net loss before income
taxes...................... (9,129) (19,225) (100,055) (128,409) (13,700) (142,109)
Benefit for income taxes..... (184) -- -- (184) -- (184)
-------- -------- -------- --------- -------- ---------
Net loss..................... $ (8,945) $(19,225) $(100,055) $(128,225) $(13,700) $(141,925)
======== ======== ======== ========= ======== =========
Net loss per share -- basic
and diluted................ $ (0.16) -- -- $ (2.07) -- $ (2.29)
Shares used in share
computation basic and
diluted.................... 54,972 -- 7,026(f) 61,998 -- 61,998
</TABLE>
SEE NOTES TO THE UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION.
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MANUGISTICS GROUP, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL INFORMATION
The unaudited pro forma combined condensed financial information is based
upon the following:
(a) Talus' historical column for the nine months ended September 30, 2000
includes Talus' results of operations from January 1, 2000. Manugistics'
historical column for the nine months ended November 30, 2000 includes
Manugistics' results of operations from March 1, 2000.
(b) Manugistics acquired all of the outstanding shares of Talus common
stock in exchange for shares of Manugistics common stock. All series of Talus
preferred stock were converted to Talus common stock using conversion ratios
set forth in the Talus Certificate of Incorporation and acquired by
Manugistics through the issuance of Manugistics common stock in connection
with the merger. Talus had issued options to purchase Talus common stock to
its employees and directors. These options were exchanged for options to
acquire Manugistics common stock with the same terms as the original options
(as adjusted for the exchange ratio set forth in the merger agreement). In
addition, Talus had issued warrants to purchase Talus common stock to certain
service providers and customers. These warrants were exchanged for Manugistics
stock warrants with similar terms (as adjusted for the exchange ratio set
forth in the merger agreement).
Manugistics issued approximately 7.0 million shares of its common stock
for all outstanding classes of Talus common and preferred stock as discussed
above. Manugistics issued options and warrants for the purchase of
approximately 1.4 million shares of Manugistics common stock in exchange for
Talus options and warrants.
In accordance with FASB Interpretation No. 44 (FIN 44) "Accounting for
Stock Transactions involving Stock Compensation," the estimated fair value of
Manugistics' stock options and warrants that are fully vested are included as
part of the purchase price. Unearned (deferred) compensation has been recorded
for unvested stock options to the extent that service is required subsequent
to the consummation date of the acquisition in order to vest in the
Manugistics stock option. The amount allocated to unearned (deferred)
compensation has been based on the intrinsic value at the consummation date
related to future vesting (service) period. The intrinsic value of the
Manugistics' replacement awards allocated to unearned (de-
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ferred) compensation has been deducted from the estimated fair value of stock
options awards for purposes of the allocation of the purchase price to the
assets acquired.
(c) Below is a table of the estimated acquisition cost (dollar amounts in
thousands):
<TABLE>
<S> <C>
Manugistics stock to be issued (approximately 7.0 million
shares)................................................... $340,001
Manugistics stock options and warrants to be issued
(approximately 1.4 million shares)........................ 58,529
Estimated intrinsic value of unvested options at
consummation date related to future service............... (22,790)
Estimated acquisition fees.................................. 4,000
--------
Total estimated acquisition cost to be allocated.......... $379,740
========
Acquisition cost to be allocated.......................... $379,740
Less: Historical cost basis of the following at September
30, 2000
Net assets of Talus.................................... (4,380)
Preferred stock and ESOP put obligation................ (9,328)
Adjustments to assets and liabilities
Employment severance................................... 1,400
Facility closures and relocation....................... 2,100
Other.................................................. 300
--------
Excess of purchase price over historical cost basis of net
liabilities acquired...................................... $369,832
========
</TABLE>
Manugistics is in the process of identifying the fair values of tangible
and intangible assets that will be acquired. It is expected that the intangible
assets will include the following: developed technology, assembled workforce,
trademarks, customer base and goodwill. The intangible assets are expected to
have estimated lives ranging from 2 to 5 years. The unaudited pro forma combined
condensed financial information has assumed a composite life of 4 years for
purposes of computing amortization expense.
(d) The amortization expense is estimated using a composite average life of
4 years. See note (c). Acquisition-related expenses incurred by Talus prior to
consummation have been eliminated since they are non-recurring.
(e) Manugistics has not recorded an additional tax benefit in the unaudited
pro forma combined condensed financial information because of the uncertainty as
to the recoverability of the amounts. Any deferred tax liabilities that may
result from the final valuation and allocation of the excess purchase price have
not been recorded.
(f) This represents the number of Manugistics shares of common stock
issued in connection with the acquisition of Talus. Manugistics stock options
and warrants issued in the acquisition have been excluded because the impact
would be anti-dilutive.
(g) This amount represents the amortization of the deferred compensation
over the estimated average remaining vesting period, which is approximately 3
years. See notes (b) and (c).
(h) This amount represents a reclassification of the restructuring accrual
of Talus to the current and long-term liabilities of Manugistics.
(i) The non-cash stock compensation expense of $14.6 million is recorded as
a result of the July 1, 2000 effective date of FASB Interpretation No. 44. This
$14.6 million is aggregated on a single line in the operating expenses and
therefore is excluded from the individual operating expense lines to which the
charge relates.
The components of this expense are (dollar amounts in thousands):
<TABLE>
<S> <C>
Cost of consulting, solution support and other services..... $ 4,864
Sales and marketing......................................... 4,349
Product development......................................... 4,103
General and administrative.................................. 1,322
-------
Non-cash stock compensation expense....................... $14,638
=======
</TABLE>
(j) An adjustment for the fair value of approximately 14,000 Manugistics
stock warrants will be recorded each quarter subsequent to the transaction. The
amount of this fair value adjustment has not been estimated for purposes of this
unaudited pro forma combined condensed financial information. See note (b).
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(k) An ESOP put obligation is recorded for a put right at $5.54 per share
on approximately 390,000 shares of common stock, which relates to the
termination of an employee stock ownership plan in 1999. This potential
obligation is expected to expire no later than January 31, 2001. This pro
forma financial information assumes that the ESOP put obligation will expire.
(l) A 5% convertible subordinated note offering was completed in October
and November 2000 in the total amount of $250.0 million. Interest expense
totaling $9.3 million for the nine-month period ended November 30, 2000 and
$12.5 millon for the year ended February 29, 2000 were also included.
Amortization of the deferred financing cost and related interest of
approximately $900,000 for the nine-month period ended November 30, 2000 and
$1.2 million for the year ended February 29, 2000 is also included. See note
(e) for tax consideration.
The pro forma statement of operations data does not include estimated
interest income from the net proceeds received from the convertible debt
offering. If the net proceeds from the convertible debt offering were assumed
to be invested at Manugistics' historical investment rate of 5.13% and 5.40% for
the year ended February 29, 2000 and the nine months ended November 30, 2000,
respectively, pro forma loss and pro forma loss per basic and diluted share
would have been $129,485 and $2.09, respectively, for the year ended February
29, 2000 and $92,865 and $1.44, respectively, for the nine months ended
November 30, 2000.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Rockville, State of
Maryland, on the 18th day of January, 2001.
MANUGISTICS GROUP, INC.
By: /s/ Raghavan Rajaji
---------------------------------
Raghavan Rajaji
Executive Vice President and
Chief Financial Officer
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