<PAGE>

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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                               ----------------
                                   FORM 10-K

(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
  THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]

  For the fiscal year ended April 30, 1999

                                       OR

[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
  THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]

  For the transition period from           to

                         Commission File Number 0-23057

                               ----------------
                                 LOGILITY, INC.
             (Exact name of registrant as specified in its charter)

                Georgia                     470 East Paces Ferry Road, N.E.
    (State or other jurisdiction of                 Atlanta, Georgia
     incorporation or organization)         (Address of principal executive
                                                        offices)

               58-2281338                                30305
   (IRS Employer Identification No.)                   (Zip Code)

       Registrant's telephone number, including area code (404) 261-9777

Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
   Title of each class            Name of each exchange on which registered
   -------------------            -----------------------------------------
   <S>                           <C>
         None                                        None
</TABLE>

Securities registered pursuant to Section 12(g) of the Act:

                          Common Shares, No Par Value
                                (Title of class)

   Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]

   Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. Yes [X] No [_]

   At July 14, 1999, 13,398,200 Common Shares of the registrant were
outstanding. The aggregate market value (based upon the closing price of Common
Shares as quoted on the NASDAQ National Market System at July 14, 1999) of the
shares held by nonaffiliates was approximately $10.3 million.

           DOCUMENTS INCORPORATED BY REFERENCE; LOCATION IN FORM 10-K

1.1999 Proxy Statement into Part III.
2.Form S-1 Registration Statement No. 333-33385 into Part IV.
3.Form S-8 Registration Statement No. 333-62531 into Part IV.
4.Form S-8 Registration Statement No. 333-66773 into Part IV.

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<PAGE>

                                     PART I

Item 1. Business

   In addition to the historical information contained herein, the discussion
in this Form 10-K contains certain forward-looking statements, within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, that involve risks and uncertainties, such as
statements concerning: growth and future operating results; future customer
benefits attributable to the Company's products; developments in the Company's
markets and strategic focus; new products and product enhancements; potential
acquisitions and the integration of acquired businesses, products and
technologies; strategic relationships; and future economic, business and
regulatory conditions. The cautionary statements made in this Form 10-K should
be read as being applicable to all related forward-looking statements whenever
they appear in this Form 10-K. The Company's actual results could differ
materially from the results discussed in the forward-looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed under the section captioned "Risk Factors" in Item
1 of this Form 10-K as well as the cautionary statements and other factors set
forth elsewhere herein.

Company Overview

   Logility, Inc. ("Logility" or the "Company") was incorporated as a Georgia
corporation in July 1996. Logility develops, markets and supports software
applications that optimize the operating efficiencies of manufacturers,
suppliers, distributors, retailers and other organizations along the value
chain. The Company's Logility Value Chain Solutions(TM) consists of an
integrated software suite that provides advanced collaborative planning and
integrated logistics capabilities that are designed to reduce inventory costs,
improve forecast accuracy, decrease order cycle times, optimize production
scheduling, streamline logistics operations, reduce transportation costs and
improve customer service. The Company's software solution is modular and
scaleable to meet the management requirements of complex processes involving
tens of thousands of products across multiple sites. In addition, it can be
integrated with existing software systems and a variety of client-server
operating environments and platforms.

   The Company has licensed one or more modules of Logility Value Chain
Solutions to more than 350 companies worldwide, including Canandaigua Wine,
CITGO, ConAgra, Eastman Chemical Company, Heineken USA, Magneti Marelli,
Pharmacia & Upjohn, Pfizer International, Reynolds Metals, Sony Electronics and
VF Corporation. The Company sells its products through direct and indirect
channels in North America and outside North America. The Company derived
approximately 14% of its revenues in the fiscal year ended April 30, 1999 from
international sales.

Industry Background

 The Traditional Industry Approach

   Companies have traditionally applied information technology to supply chain
management through Manufacturing Resource Planning ("MRP") systems, which
provide limited flexibility to address rapidly changing business conditions and
customer needs. In order to respond to an increasingly competitive business
environment and related complex supply chain issues, many companies have
adopted Enterprise Resource Planning ("ERP") systems, which integrate MRP
solutions with other enterprise management applications such as financial,
accounting and human resources. Although ERP systems provide substantial
benefits primarily by integrating financial and other controls with multi-plant
manufacturing coordination, the supply chain decision support capabilities of
many ERP systems remain limited by the planning and scheduling methodologies
utilized in their MRP modules. Various ERP vendors are mitigating these
limitations by internally developing, or by acquiring or partnering with
independent developers of advanced planning and scheduling software.

                                       1
<PAGE>

   Some of the significant limitations of traditional MRP systems and the MRP
modules of ERP systems are as follows:

     Limited Decision Support. Traditional solutions collect and report large
  amounts of transactional data, rather than provide sophisticated analysis
  of relevant information to support critical business decisions in real-
  time. While these solutions help customers unify disparate information
  resources within the enterprise and contribute to business process
  reengineering efforts, the Company believes that they are not well suited
  to enable customers to make rapid, highly complex business decisions.

     Limited Representation of Supply Chain. The Company believes that
  traditional solutions often employ fixed assumptions regarding critical
  operating constraints such as available production capacity and supplier
  lead times. Since this approach cannot adequately capture complex real-
  world constraints and interdependencies, it may result in the development
  of infeasible or suboptimal plans. In addition, traditional solutions
  calculate plans and schedules for individual, local segments of the
  production and supply process, without considering the consequences to the
  entire process. For example, an increase in customer demand might result in
  the purchase of additional raw materials without determining whether
  manufacturing capacity is available to process those materials.

     Sequential Planning. Traditional planning methodologies model the supply
  chain as a sequence of discrete steps. For example, traditional solutions
  begin by developing a demand forecast from which a distribution plan is
  developed to determine the distribution center, warehouse or factory
  source, which will be used to manufacture/distribute the products without
  regard to transportation or manufacturing constraints. A transportation
  plan is then generated to determine the optimal transportation methods to
  be used to ship the products without addressing the constraints of the
  remaining parts of the supply chain. A master production schedule is then
  generated which is used to develop a materials requirement plan, which in
  turn is used to arrive at a capacity requirement plan. Because the process
  does not address all constraints simultaneously, the initial planning cycle
  is rarely optimal and often requires numerous manual iterations to develop
  a feasible solution. This time-consuming sequential planning process limits
  a manager's ability to rapidly evaluate subsequent changes, such as
  material shortages and revisions in customer orders. Accordingly, a
  manager's ability to respond to changes and to take corrective action may
  be delayed.

     Limited Integration and Functionality. Traditional solutions generally
  do not provide integrated functionality across the entire supply chain,
  including demand forecasting, manufacturing planning, plant scheduling,
  distribution and transportation. For example, several ERP vendors have
  acquired planning products that address specific supply chain challenges,
  but fail to provide global visibility and optimization across the entire
  supply chain. In addition, traditional solutions often offer only limited
  functionality within these areas. For example, MRP and ERP systems often
  provide limited "available-to-promise" functionality by simply processing
  orders on a "first-come, first-served" basis, without considering other
  constraints or business objectives. Furthermore, traditional solutions
  typically assume complete independence of supply and demand. Often,
  however, the overabundance or scarcity of a certain product can directly or
  indirectly impact demand for that product and related products. Complex
  interrelationships and interdependencies are not adequately accounted for
  in traditional planning methodologies, leading to potentially inaccurate
  conclusions and recommendations.

     Lengthy Implementation Cycles. Due to the broad scope, complexity and
  associated re-engineering requirements of ERP systems, many companies have
  found the implementation of such systems to be costly and time consuming.
  Such factors often delay or limit the realization of benefits associated
  with the implementation of ERP systems.

The Changing Industry Outlook

   In response to global competitive pressures, companies are continually
seeking new ways to enhance the productivity of their enterprise business
systems and processes. Significant competitive advantages in the form of lower
costs and greater customer responsiveness can be realized by those companies
that effectively

                                       2
<PAGE>

communicate, collaborate and integrate with their trading partners within the
"value chain." Value chain management refers to the process of managing the
complex network of relationships that organizations maintain with trading
partners to source, manufacture and deliver goods and services to the customer.
Value chain management involves both the activities related to supplying
products or services as well as the sales and marketing activities that impact
the demand for goods and services, such as promotions, pricing and forecasting.

   Today several market trends are driving organizations to expand
collaboration with trading partners along the value chain. A general shift in
market power has forced manufacturers and distributors to become more
responsive to retailers and consumers, which has created a need for improved
planning capabilities. At the same time, competitive pressures are forcing
manufacturers to reduce costs, decrease order cycle times and improve operating
efficiencies. As a result, manufacturers are increasingly under pressure to
better manage the value chain as they seek to improve manufacturing efficiency
and logistics operations while maintaining flexibility and responsiveness to
changing market conditions and customer demands. These pressures are compounded
by the increasing complexity and globalization of the interactions among
suppliers, manufacturers, distributors, retailers and consumers.

   Advances in communications and computing technology have enhanced the
ability of organizations along the value chain to integrate their processes
through collaborative information sharing and planning and to improve internal
operations through refined workflow management. These technology developments
include increasing use of the Internet and corporate intranets, the
proliferation of the client-server computing environment, the introduction of
data collection technology such as point of sale and radio frequency devices,
and the growth of the wide area network. In addition, businesses are beginning
to extend their corporate intranets to establish dedicated links, or extranets,
with suppliers and customers. Corporations are increasingly taking advantage of
this technology and the general availability of more powerful software
applications to improve the effectiveness of their information gathering and
analysis processes, which in turn is leading to improved decision-making
capabilities.

   To manage and facilitate enhanced collaboration among the various
participants in the value chain, organizations are increasingly deploying value
chain management software solutions to address their planning and execution
requirements. The planning function involves the proactive use of information
to facilitate the delivery of the right products on time to the correct
location and at the lowest cost. The planning process focuses on demand
forecasting, inventory simulation, event planning, distribution, transportation
and manufacturing planning and scheduling. Planning software is designed to
improve forecast accuracy, optimize production scheduling, reduce inventory
costs, decrease order cycle times, reduce transportation costs, and improve
customer service. The execution function addresses procuring, manufacturing and
distributing products throughout the value chain. Within the execution
function, increasing focus is being placed by organizations on the effective
management of warehouse and transportation operations and the need for their
integration with planning systems and other enterprise software applications.

   The market for value chain management solutions is relatively new and is
experiencing rapid growth. AMR Research, a leading industry research firm,
estimates that the supply chain planning and execution software market was $2.6
billion in 1998, and projects that the market will grow at a compound annual
growth rate of more than 48% to $18.6 billion by 2003.

   Organizations increasingly are recognizing that an integrated value chain
management solution has a measurable impact on productivity and is critical in
addressing changing market requirements. An important element of managing the
value chain is the ability to incorporate the requirements of a diverse group
of constituents both within and outside the organization to create an
integrated, accurate consensus plan that can be synchronized with the
manufacturing, distribution, transportation and warehousing processes. In
general, existing value chain management solutions do not provide robust,
integrated, end-to-end solutions that address the needs of the entire value
chain and do not synchronize demand opportunities with supply constraints and
logistics operations.

                                       3
<PAGE>

   In order to effectively manage and coordinate value chain activities,
companies require planning and execution software that provides for integrated
communication and collaboration among the various constituents along the value
chain. This enhanced collaboration synchronizes production plans with demand
forecasts, thereby minimizing bottlenecks that lead to production delays and
excess inventory. Companies who have implemented advanced collaboration
processes such as collaborative planning, forecasting and replenishment
("CPFR") have seen benefits such as increased revenues, lower operational costs
and shortened cycle time. According to the Voluntary Inter-industry Commerce
Standards ("VICS"), of which Logility is a participant on the CPFR
subcommittee, "CPFR is a business process model for value chain partners to
coordinate plans in order to reduce variance between supply and demand." VICS
developed this process in conjunction with major retailers, manufacturers and
suppliers to enable true collaboration. CPFR is a business model that changes
the nature of the relationship between trading partners.

   In addition, companies seek integrated planning and execution systems that
further optimize the flow of products to the customer through enhanced
transportation and warehouse management capabilities. Organizations are also
demanding solutions that are modular and scaleable to fit the changing needs of
the organization and that can be rapidly deployed.

Logility Products and Services

 Logility Value Chain Solutions and Services

   The Company's integrated product line, Logility Value Chain Solutions, is an
integrated suite of value chain management solutions that enables
manufacturers, distributors and retailers to more effectively manage the
activities along their respective value chains and enhance collaboration among
trading partners. Logility also provides i-Commerce products to expand the
number of business processes that can be executed via intranets, extranets and
the Internet. Logility's services include applications hosting and applications
management through the i-ConnectionSM for those companies who prefer that
Logility host their value chain management applications.

   The key benefits of the Company's software solutions and services include
the following:

     Integrated End-to-End Value Chain Solution. The Company's Logility Value
  Chain Solutions provides functionality that addresses both the flow of
  information and the flow of products throughout the value chain. By
  synchronizing its comprehensive planning software products with its
  transportation and warehouse management software solutions, the Company's
  product suite can more efficiently and accurately coordinate the delivery
  of products to the customer. This end-to-end approach allows maximum
  synchronization of activities along the value chain.

     Comprehensive Planning Solution. The Company's planning solution is
  comprised of demand, inventory, event, manufacturing, replenishment and
  transportation planning modules that balance demand opportunities with
  supply constraints through the synchronization of information gathered from
  value chain participants. A key component of the Company's planning
  solution is its emphasis on addressing the full range of complex demand
  planning requirements of its customers, including comprehensive forecasting
  capabilities that take into account each user's unique perspective of the
  value chain.

     Advanced Collaborative Planning Functionality. The Company's products
  allow for collaboration among the various levels within an organization and
  among external constituents throughout the value chain. The architecture of
  Logility Value Chain Solutions enables key constituents to participate in
  the planning process, including marketing, sales, manufacturing,
  procurement, logistics and transportation personnel, so that the
  requirements of all groups are factored in to create one consensus plan.
  The Company's collaborative planning functionality is further enhanced with
  i-Commerce tools such as the Company's Logility Voyager XPS(TM), which
  leverages Internet technology to facilitate information sharing directly
  with trading partners. Through the Company's i-CommunitySM a collaborative
  network of trading partners, customers will be able to exchange information
  and conduct collaborative planning, forecasting and replenishment.

                                       4
<PAGE>

     Robust Warehouse Management Solution. The Company's integrated
  WarehousePRO(R) solution is designed to optimize operations within the
  warehouse by improving inventory turnover, increasing inventory accuracy
  and customer service and reducing inventory levels. The solution's object-
  oriented design and user-configurable architecture allows for flexible and
  rapid implementation. In addition, the solution features a comprehensive
  library of industry best-practice workflows that can be configured by the
  customer, thereby minimizing the need for custom programming.

     Rapid Deployment. The Company's products utilize a modular design,
  thereby streamlining implementation and allowing deployment in a relatively
  short time frame. The comprehensive functionality of each module generally
  permits customers to implement the solutions with nominal modifications. In
  addition, the Company's software combines sophisticated techniques and
  tools with an intuitive, Windows-based interface to reduce training
  requirements and implementation tasks.

     Open, Scaleable, Client-Server Architecture. Logility's software has
  been designed to integrate with existing in-house and third-party software
  applications and a variety of operating environments and platforms. The
  software is scaleable to manage complex processes involving tens of
  thousands of products across multiple sites.

Strategy

   The Company's objective is to become the leading provider of value chain
management software solutions that are designed to enhance collaboration among
participants along the value chain and optimize the operations associated with
manufacturing and the distribution of products in select markets such as
consumer goods, pharmaceuticals, oil and gas and chemicals. The Company's
strategy includes the following key elements:

     Leverage and Expand Installed Base of Customers. The Company currently
  targets businesses in the consumer goods, chemicals and pharmaceuticals,
  food and beverage, and oil and gas industries. The Company intends to
  continue to leverage its installed base of more than 350 customers to
  introduce additional functionality, product upgrades, complementary
  modules, and application hosting services. In addition, the Company intends
  to expand sales to new customers in its existing vertical markets and to
  target additional vertical markets over time.

     Continue to Expand Sales and Marketing. The Company intends to continue
  to pursue an increased share of the market for value chain management
  software solutions by expanding its sales and marketing activities. The
  Company intends to continue building a direct sales force that is focused
  on selected vertical markets, such as consumer goods manufacturers.

     Maintain Technology Leadership. The Company believes that it is a
  technology leader in the field of value chain management software solutions
  and intends to continue to provide innovative, advanced solutions and
  services to this market. The Company believes that it was one of the
  earliest providers of value chain planning software solutions on a client-
  server platform and on Windows NT, and the first to introduce a value chain
  planning software solution that operates over the Internet and provides
  application hosting services. The Company intends to continue to develop
  and introduce new or enhanced products and keep pace with technological
  developments and emerging industry standards.

     Implement i-Commerce Strategy. The Company has launched an i-Commerce
  initiative that will enable it to build on current applications while
  moving to total Internet-based value chain management. The Company's i-
  Commerce strategy includes four levels of products and services designed to
  enable the optimization of the customer's value chain and improve
  collaboration. These products and services include:

   .  LVCS--Internet-enabled end-to-end value chain applications through
      Logility Value Chain Solutions

   .  i-Commerce Collaboration Solutions--expands the number of business
      processes that can be executed via intranets, extranets and the
      Internet

                                       5
<PAGE>

   .  i-ConnectionSM--Logility's applications hosting service and
      applications management resources

   .  i-CommunitySM--enables companies to collaborate with trading partners
      through a web-based network

     Focus on Integrated Planning and Logistics Execution Solution. The
  Company believes it is one of the few providers of integrated value chain
  management software solutions addressing both demand and supply planning as
  well as transportation and warehousing logistics requirements. The Company
  is focusing on providing the most comprehensive planning and execution
  solution aimed at optimizing operations along the value chain. The Company
  intends to continue to focus its development initiatives on enhancing its
  end-to-end solution and introducing additional capabilities that complement
  its integrated solution.

     Focus on MidMarket. The Company has defined as "MidMarket" those
  corporations or divisions of corporations that have annual revenues ranging
  from $200 million to $2 billion. Organizations of this size fit the
  Company's historical customer profile, and are prime candidates for the
  purchase and use of the Company's unique full suite of integrated products
  operating on Windows NT. Additionally, the Company anticipates that its i-
  Commerce strategy will be well accepted in this market segment.

     Increase Penetration of International Markets. In fiscal year ended
  April 30, 1999, the Company generated 14% of its total revenues from
  international sales and has marketing relationships with a number of
  international distributors. The Company intends to expand its international
  presence by adding additional direct sales personnel to address
  international markets and has created additional relationships with
  distributors in Europe, Latin America and the Asia/Pacific region.

     Expand Strategic Relationships. The Company has a number of varying
  marketing and/or product relationships with ERP vendors, systems
  integrators and service organizations, including Arthur Andersen, Clarkston
  Potomac, INSIGHT, Inc., Microsoft, Oracle, SAP, and Ross Systems. In
  addition, the Company has developed a network of international agents who
  assist in the selling of the Company's products. The Company intends to
  utilize these and future relationships with software and service
  organizations to enhance its sales and marketing position.

     Continue to Focus on Providing High Quality Customer Service. Providing
  high quality customer service is a critical element of the Company's
  strategy. The Company intends to continue to invest in technology and
  personnel to accommodate the needs of its growing customer base. Logility
  will continue to seek new ways to improve service to customers. By
  providing application hosting services through Logility's i-Connection,
  customers will have an alternative to managing their own Logility Value
  Chain Solutions applications.

Products

   Logility Value Chain Solutions is an integrated suite of value chain
management solutions designed to synchronize demand opportunities with supply
constraints and logistics operations. The suite is comprised of a series of
integrated modules. These modules can be implemented individually in certain
cases, as well as in combinations or as a full solution suite. Logility Value
Chain Solutions(TM) supports multiple communications protocols and is designed
to operate with industry-standard open technologies, including leading web-
based and client-server environments, such as HP9000, IBM RS/6000 and Intel-
based servers running Windows NT on Oracle and Microsoft SQL Server 7.

                                       6
<PAGE>

   The following table summarizes the Company's product line:

<TABLE>
<CAPTION>
          Module           Features
          ------           --------
     Demand Planning       .Item and Group forecasting
 <S>                       <C>
                           .Self-selecting forecast models
                           .Personalized data views
                           .Item stratification
                           .Product life cycle management with simulation
                           .Drag and drop data manipulation

    Inventory Planning     .Time-phased view of inventory
<CAPTION>
                           .Graphical simulations of inventory trade-off
                           .Views of dependent and independent demand
                           .Inventory management variables

 <S>                       <C>
      Event Planning       .Promotion planning
<CAPTION>
                           . Self-learning capabilities using artificial
                             intelligence
                           .Causal-based forecasting
                           .Promotion profitability simulations

 <S>                       <C>
 Demand Chain Voyager(TM)  . Forecast retrieval and modifications via the Internet
                             and Corporate Intranets
<CAPTION>
                           .Tight integration with Demand Planning
 <S>                       <C>
                           .Promotion planning calendars
                           .Comprehensive security features
                           .Collaborative planning with trading partners

  Manufacturing Planning   .Enterprise-wide capacity planning
                           .Plant-level scheduling
                           .Supports activity-based costing
                           .Optimizes sourcing decisions' actual costs
                           .Interactive simulation
                           .Real-time, in memory model
                           .Distributed and remote visual capacity planning
                           .Remote and collaborative manufacturing

  Replenishment Planning   .Supports continuous replenishment strategies
                           . Constrained, time-phased distribution requirements
                             planning
                           .Proactive action messages
                           .EDI integration
                           .Available-to-promise methodologies
                           .Multi-site sourcing and allocation

 Transportation Planning   .Load Control Center
                           .Shipment planning and consolidation
                           .Freight rating and routing
                           .Carrier selection

      Transportation
        Management         .Load tendering
                           .Shipment confirmation
                           .Freight audit and payment control
                           .Shipment documentation and tracking
</TABLE>

                                       7
<PAGE>

<TABLE>
<CAPTION>
         Module           Features
         ------           --------
<S>                       <C>
Logility Voyager XPS(TM)  . Collaborative Planning, Forecasting and Replenishment
                            (CPFR) compliant
                          .Collaborative planning with trading partners
                          .Configurable deployment
                          .Open integration architecture
                          .Value Chain Workflow(TM)
                          .Universal Exception Builder for managing exceptions
Value Chain Designer(TM)  .Strategic distribution network optimization
                          .Customer assignment
                          .Facility location
                          .Balancing customer service levels and cost
                          .Sourcing selection and capacity planning
    Warehouse PRO(R)      .Object oriented architecture
                          .User configurable options
                          .Advanced workflow technology
                          .Dynamic label and report printing
                          .Integrated graphical user interface
</TABLE>

   Demand Planning. The Demand Planning module reconciles demand history,
existing customer orders, point-of-sale data, market forecasts and other
information to generate a graphical representation of demand by item, location,
customer and/or group. Demand Planning has an automatic self-correcting, self-
selecting modeling process that utilizes a number of advanced forecasting
models to generate sales, marketing, logistics and other forecasts. The system
allows for user-override of certain modeling parameters, such as quantities or
percentages, to account for promotions, supply constraints and other "what-if"
scenarios.

   Inventory Planning. The Inventory Planning module is designed to determine
the optimal balance between inventory and service levels. With extensive
simulation capabilities, Inventory Planning helps manufacturers and
distributors reduce inventory costs while meeting customer service requirements
at the individual stock keeping unit ("SKU") level. Built around industry best
practices, Inventory Planning can enhance planning and scheduling of inventory
while taking into consideration replenishment frequency and order size,
seasonal build and manufacturing plans. Service level targets and policies can
be applied individually to every product within an enterprise or uniformly
throughout the various product lines.

   Event Planning. Event Planning is a causal-based forecasting solution
designed to facilitate product life-cycle management and promotion planning,
and provide forecasting capabilities to help determine the impact of
promotions, price changes or other events, enabling manufacturers to adjust
production to match changing demand. Event Planning utilizes advanced
algorithms based on neural network techniques that allow the system to refine
forecasting by incorporating the results of ongoing promotions and other
activities.

   Demand Chain Voyager. Through the use of the Internet, the Demand Chain
Voyager module extends the reach of Demand Planning by allowing remote users to
view corporate forecasts and to input demand data in real-time. Demand Chain
Voyager provides an online, updated schedule of events including promotions,
product launches and holidays. In addition, it allows for the revision of
inventory goals and objectives such as service levels and turns.

   Manufacturing Planning. The Manufacturing Planning module is designed as a
constraint-based planning solution that balances manufacturing processes and
resources with demand priorities and corporate objectives. Manufacturing
Planning models the operations of a business by capturing capacity constraints
such as equipment capabilities, intermediate storage limitations, shop floor
calendars and raw material availability and production constraints such as
synchronization of multi-step operations, product sequencing, production

                                       8
<PAGE>

changeovers and inventory policies. Manufacturing Planning enables
collaborative decision-making by comparing the feasibility and cost
effectiveness of various scheduling strategies through the use of simulation.

   Replenishment Planning. The Replenishment Planning module addresses the
planning needs of an organization to determine the optimal balance between
customer service levels and inventory. Replenishment Planning takes into
account manufacturing constraints, inventory investment, desired service
levels, and current orders and commitments. Features of Replenishment Planning
include automatic detailed item planning to balance delivery loads and orders,
filtered order review, SKU change simulation and constrained distribution
requirements planning. The benefits of Replenishment Planning include, among
others, faster inventory turns, optimized inventory levels and the ability to
allocate customer orders based on user-defined priorities. Replenishment
Planning provides support for continuous replenishment strategies, such as
Vendor Managed Inventory, Quick Response and Efficient Consumer Response.

   Transportation Planning. The Transportation Planning module synchronizes
transportation plans with demand, inventory, manufacturing and replenishment
strategies. Transportation Planning consolidates shipments and determines the
optimal transportation mode and carrier while providing a list of alternatives.
The solution includes a Load Control Center that reviews all inbound, outbound
and inter-facility shipments and provides an integrated view of all orders
requiring shipping decisions. The product is designed to reduce freight costs,
improve customer service levels and increase responsiveness to customer
requirements.

   Transportation Management. Transportation Management facilitates the timely
execution of the optimized shipping plan developed by the Transportation
Planning module. Load tendering and shipment tracking are included via
Electronic Data Interchange ("EDI"), E-mail or automatic fax. The freight audit
and payment capabilities enable flexible reporting of landed cost by shipment,
customer or product group. The module is designed to reduce freight costs,
improve carrier utilization and provide comprehensive freight management
reporting.

   Logility Voyager XPS. Voyager XPS is an Internet-based value chain
management application that allows the user to implement a business process for
Collaborative Planning, Forecasting and Replenishment (CPFR) that eliminates
traditional barriers among trading partners. Voyager XPS is a completely
CPFR-compliant application that provides configurable deployment, scalability,
Microsoft-centric architecture, open-integration architecture, value chain
workflow and a universal exception builder for managing exceptions.

   Value Chain Designer. The Value Chain Designer module provides a strategic
view of the Supply Chain Network. Companies can optimize location decisions,
resource allocation, customer assignment and transportation strategies to
minimize costs or maximize profitability.

   WarehousePRO. WarehousePRO incorporates advanced workflow technology,
industry-specific best practices and radio frequency data collection terminals
to optimize warehouse operations. The software's object-oriented design allows
users to define the properties of specific items, locations, or processes,
thereby reducing the need for custom programming. The solution is highly
flexible and can be reconfigured by the user to adapt to changing business
requirements. WarehousePRO features an extensive workflow library of
user-selected templates incorporating industry-specific best-practice
warehousing techniques. With built-in standard interfaces to major radio
frequency data collection systems, the software delivers more accurate
inventory accountability and improved warehouse efficiency. WarehousePROs
performance analysis tools generate graphical reports that illustrate
productivity gains, warehouse efficiency and inventory controls, enabling users
to make real-time management decisions. A Windows NT version of WarehousePRO
was made generally available in the fourth quarter of the Company's fiscal year
1998.

   The price for the Company's products typically is determined based upon the
number of modules licensed and the number of servers, users and/or sites for
which the solution is designed. During fiscal year ended April 30, 1999,
license fees for a new customer ranged from $100,000 to $675,000.

                                       9
<PAGE>

Customers

   The Company primarily targets businesses in the consumer-packaged goods,
chemicals and pharmaceuticals and other manufacturing industries. No single
customer accounted for 10% or greater of the Company's revenues in the three
years ended April 30, 1999. A sample of companies who have purchased one or
more of the Company's products is as follows:

<TABLE>
<CAPTION>
                           Chemicals, Oil &
   Consumer Goods          Gas, Pharmaceuticals Manufacturing and Others
   --------------          -------------------- ---------------------------
   <S>                     <C>                  <C>
   Bausch & Lomb           CITGO                Appleton Paper
   Broyhill Furniture      CONDEA Vista         British Telecommunications
   Canandaigua Wine        Eastman Chemical Co. Koch Industries
   ConAgra, Inc.           FINA Inc.            Magneti Marelli
   Eagle Family Foods      Nordic Synthesis AB  Mercury Marine
   Heineken USA            Pfizer, Inc.         Reynolds Metals
   Nestle France           Pharmacia & Upjohn   Robert Horne Paper
   Sara Lee Knit Products  Sigma-Aldrich Corp.  Siecor
   S.C. Johnson & Sons                          Sony Electronics
   Seagram's                                    Subaru of America, Inc.
   Tiffany's                                    Technologistica
   Unilever                                     Tyco Plastics and Adhesives
   Value City Furniture                         Union Camp
   VDK Frozen Foods                             US Ceramic Tile Company
   VF Corporation
   Wickes Furniture
   W.S. Badcock Furniture
</TABLE>

Sales and Marketing

   The Company markets its products through direct and indirect sales channels
in North America and outside North America. The Company conducts its principal
sales and marketing activities from corporate headquarters in Atlanta, Georgia,
and has sales and/or support offices in Boston, Chicago, Minneapolis, and
Raleigh. Sales channels outside of North America are managed from Logility's
international offices in the United Kingdom.

   The Company has a number of varying marketing and/or product relationships
with ERP vendors, systems integrators and service organizations, including
Arthur Andersen, Clarkston Potomac, INSIGHT, Inc., Microsoft, Oracle, SAP, and
Ross Systems. The Company intends to utilize these and future relationships
with software and service organizations to enhance its sales and marketing
position.

   The Company has arrangements with independent distributors and resellers
throughout Europe and the Asia/Pacific region, who distribute the Company's
product line in foreign countries. These vendors typically sell their own
consulting and systems integration services in conjunction with the licensing
of the Company's products.

   To support its direct sales force, the Company conducts marketing programs
that include public relations, direct mail, advertising campaigns, trade shows,
product seminars, user group conferences and ongoing customer communication
programs.

Customer Service and Support

   The Company provides the following services and support to its customers:

     Implementation Support: ExpressROI(TM). The Company offers its customers
  a professional and proven implementation program that facilitates rapid
  implementation of the Company's software products.

                                       10
<PAGE>

  Logility consultants, through the ExpressROI program, help customers define
  the nature of their project, and subsequently proceed through the
  implementation process. The Company provides training for all users and
  managers involved. The Company first establishes measurable financial and
  logistics performance indicators, then evaluates them for conformance
  during and after implementation. Additional services beyond implementation
  provide for post-implementation reviews to further enhance the benefits to
  customers.

     Implementation; General Training Services. The Company offers its
  customers post-delivery professional services consisting primarily of
  implementation and training services, for which the Company typically
  charges on a daily basis. Customers that choose to purchase implementation
  services receive assistance in integrating the Company's solution with
  existing software applications and databases. Implementation of Logility
  Value Chain Solutions typically requires three to nine months, depending on
  factors such as the complexity of a customer's existing system, the number
  of modules purchased, and the number of end users.

     Product Maintenance and Updates; Support Services. The Company provides
  its customers with ongoing product support services. Support or maintenance
  contracts typically are sold to customers for one to three year terms at
  the time of the initial product license and may be renewed for additional
  periods. Under these contracts, the Company provides telephone consulting,
  product updates and releases of new versions of products previously
  purchased by the customer, as well as error reporting and correction
  services. The Company provides ongoing support and maintenance services on
  a seven-day-a-week, 24-hours-a-day basis through telephone, electronic mail
  and web-based support, using a call logging and tracking system for quality
  assurance.

Research and Product Development

   The Company believes that its future success depends in part upon its
ability to continue to enhance existing products, respond to changing customer
requirements, develop and introduce new or enhanced products and keep pace with
technological developments and emerging industry standards. The Company's
development efforts are focused on, but are not limited to, enhancing
operability of its products across distributed and changing heterogeneous
hardware platforms, operating systems and relational databases and the addition
of new functionality to existing products. These development efforts will
continue to focus on deploying applications in an N-Tier environment, including
the internet.

   The current release of Logility Value Chain Solutions is version 5.3. This
version is based on an integrated object-oriented architecture for maximum
scalability and messaging functionality that supports the increasingly
distributed nature of value chain planning. The Company has developed
interfaces with leading ERP vendors such as SAP, Oracle and PeopleSoft's
manufacturing application.

Competition

   The Company's products are targeted at emerging markets within the
application software market, which is intensely competitive and characterized
by rapid technological change. The Company's competitors are diverse and offer
a variety of solutions directed at various aspects of the value chain, as well
as the enterprise as a whole. The Company's existing competitors include
application software vendors, such as i2 Technologies and Manugistics. In
addition, the Company faces potential competition for the Logility Value Chain
Solutions from (i) enterprise resource application software vendors such as
SAP, PeopleSoft, JD Edwards, Oracle and Baan, each of which currently offers
sophisticated ERP solutions that currently or may in the future incorporate
supply chain management modules or advanced planning and scheduling software;
(ii) internal development efforts by corporate information technology
departments; (iii) smaller independent companies that have developed, or are
attempting to develop, value chain management software that compete with the
Company's software solution; and (iv) other business application software
vendors that may broaden their product offerings by internally developing, or
by acquiring or partnering with independent developers of value chain
management software.

                                       11
<PAGE>

   In addition, the Company may face competition from other application
software vendors, including ERP vendors that from time to time jointly market
the Company's products as a complement to their own systems. To the extent such
vendors develop or acquire systems with functionality comparable or superior to
the Company's products, their significant installed customer base, long-
standing customer relationships and ability to offer a broad solution could
provide a significant competitive advantage over the Company.

   The Company also expects to face additional competition as other established
and emerging companies enter the market for value chain management software and
new products and technologies are introduced. In addition, current and
potential competitors may make strategic acquisitions or establish cooperative
relationships among themselves or with third parties, thereby increasing the
ability of their products to address the needs of the Company's prospective
customers. Accordingly, it is possible that new competitors or alliances among
current and new competitors may emerge and rapidly gain significant market
share. Increased competition could result in price reductions, fewer customer
orders, reduced gross margins and loss of market share.

   Many of the Company's competitors and potential competitors have longer
operating histories, significantly greater financial, technical, marketing and
other resources, greater name recognition and a larger installed base of
customers than the Company. In order to be successful in the future, the
Company must continue to respond promptly and effectively to technological
change and competitors' innovations. The Company's competitors may be able to
respond more quickly to new or emerging technologies and changes in customer
requirements or devote greater resources to the development, promotion and sale
of their products than the Company. The principal competitive factors affecting
the market for the Company's products include vendor and product reputation;
product architecture, functionality and features; costs; ease and speed of
implementation; return on investment; product quality; price and performance;
and level of support.

Proprietary Rights and Licenses

   The Company's success and ability to compete is dependent in part upon its
proprietary technology. To protect its proprietary technology, the Company
relies on a combination of copyright and trade secret laws, confidentiality
procedures and contractual provisions, which may afford only limited
protection. In addition, effective copyright and trade secret protection may be
unavailable or limited in certain foreign countries. Although the Company
relies on the limited protection afforded by such confidential and contractual
procedures and intellectual property laws, it also believes that factors such
as the technological and creative skills of its personnel, new product
developments, frequent product enhancements and reliable maintenance are
essential to establishing and maintaining a technology leadership position. The
Company presently has no patents or patent applications pending. The source
code for the Company's proprietary software is protected both as a trade secret
and as a copyrighted work. The Company generally enters into confidentiality or
license agreements with its employees, consultants and customers, and generally
controls access to and distribution of its software, documentation and other
proprietary information.

   The Company provides its software products to customers under non-exclusive
license agreements. As is customary in the software industry, in order to
protect its intellectual property rights, the Company does not sell or transfer
title to its products to its customers. Under the Company's current standard
form of license agreement, licensed software may be used solely for the
customer's internal operations. Although the license agreements place
restrictions on the use by the customer of the Company's products, there can be
no assurance that unauthorized use of the Company's products will not occur. In
addition, the Company has licensed the source code for its software to American
Software on a limited basis to enable American Software to perform warranty,
maintenance and support obligations for certain customers, for which it is
responsible under certain license agreements that were not assigned to the
Company in connection with the formation of the Company.

   Despite the measures taken by the Company to protect its proprietary rights,
unauthorized parties may attempt to reverse engineer or copy aspects of the
Company's products or to obtain and use information that the Company regards as
proprietary. Policing unauthorized use of the Company's products is difficult.
In

                                       12
<PAGE>

addition, litigation may be necessary in the future to enforce the Company's
intellectual property rights, to protect the Companys trade secrets, to
determine the validity and scope of the proprietary rights of others, or to
defend against claims of infringement or invalidity. Such litigation could
result in substantial costs and diversion of resources and could have a
material adverse effect on the Company's business, operating results and
financial condition.

   In the future, the Company may increasingly be subject to claims of
intellectual property infringement as the number of products and competitors in
the Company's industry segment grows and the functionality of products in
different industry segments overlaps. Although the Company is not aware that
any of its products infringes upon the proprietary rights of third parties,
there can be no assurance that third parties will not claim infringement by the
Company with respect to current or future products. In addition, the Company
may initiate claims or litigation against third parties for infringement of the
Company's proprietary rights or to establish the validity of the Company's
proprietary rights. Any such claims against the Company, with or without merit,
as well as claims initiated by the Company against third parties, can be time
consuming and expensive to defend, prosecute or resolve. Moreover, an adverse
outcome in litigation or similar adversarial proceedings could subject the
Company to significant liabilities to third parties, require the expenditure of
significant resources to develop non-infringing technology, require a
substantial amount of attention from management, require disputed rights to be
licensed from others or require the Company to cease the marketing or use of
certain products, any of which would have a material adverse effect on the
Company's business, operating results and financial condition. To the extent
the Company desires or is required to obtain licenses to patents or proprietary
rights of others, there can be no assurance that any such licenses will be made
available on terms acceptable to the Company, if at all.

   The Company has relicensed and expects in the future to relicense certain
software that it licenses from third parties for use in connection with the
Company's products. There can be no assurance that these third-party software
licenses will continue to be available to the Company on commercially
reasonable terms, if at all. The termination of any such licenses, or the
failure of the third-party licensors to adequately maintain or update their
products, could result in delay in the Companys ability to ship certain of its
products while it seeks to implement technology offered by alternative sources.
Any required replacement licenses could prove costly. Further, any such delay,
to the extent it becomes extended, could result in a material adverse effect on
the Company's results of operations.

Employees

   As of April 30, 1999, the Company had 170 full-time employees, consisting of
36 in sales and marketing, 57 in product development, 75 in customer support
and implementation services and 2 in administration and finance. In addition,
the Company shares a number of administrative and finance personnel with
American Software. None of the Company's employees is represented by a labor
union or is subject to a collective bargaining agreement. The Company believes
its employee relations are good.

Risk Factors

   The Company operates in a dynamic and rapidly changing environment that
involves numerous risks and uncertainties. The following section and the
preceding sections list some, but not all, of the risks and uncertainties, that
may have a material adverse effect on the Company's business, operating results
or financial condition. This section should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," the audited Combined Financial Statements and Notes thereto for
the three years ended April 30, 1999, 1998 and 1997 and the "Forward Looking
Statements" section contained elsewhere in this Annual Report on Form 10-K.

   Continuing Reliance on American Software. Because the Company has
historically operated as a division of American Software, until 1997 it
received substantially all of its financial, accounting, marketing and
management services from American Software. The Company and American Software
have entered into an

                                       13
<PAGE>

agreement whereby American Software has agreed to act as a sales and marketing
agent for the Company. The Company expects that it will continue to rely on
this sales and marketing relationship with American Software as well as the
financial, accounting and management services provided by American Software.
The Company's business, operating results and financial condition may be
adversely affected by a reduction or discontinuation of services from American
Software.

   Potential Fluctuations in Quarterly Results; Seasonality. The Company's
quarterly operating results have varied in the past and are expected to vary
substantially 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 typically ships software products shortly after
license agreements are signed and, therefore, does not maintain any material
contract backlog. Furthermore, the Company typically has 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 rapidly
evolving, 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 that 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. 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 possible 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
Company's common stock would likely be materially adversely affected.

   Management of Growth. The Company is expecting a period of significant
growth in revenues which may place 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. In order to maintain its ability to grow in the future, the
Company will be required to significantly increase the 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 and financial condition.

   Expansion of Indirect Channels. The Company is building and hopes to
maintain strong 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-

                                       14
<PAGE>

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. In addition, many of these
organizations have marketing and other relationships with competitors of the
Company. Therefore, there can be no assurance that any organization that sells
or markets the Company's products 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.

   Rapid Technological Change and New Products. The market for the Company's
software products is characterized by rapid technological advances, evolving
industry standards in computer hardware and software technology, changes in
customer requirements and frequent new product introductions and enhancements.
The Company's future success will depend upon its ability to continue to
enhance its current product line, to maintain and extend compatibility with
leading ERP systems and with widely used hardware and operating system
platforms, and to develop and introduce new products that keep pace with
technological developments, satisfy increasingly sophisticated customer
requirements and achieve market acceptance. The introduction of products using
new technologies and the emergence of new industry standards could render the
Company's existing products, and products currently under development, obsolete
and unmarketable. In addition, there are special risks associated with
products, such as the Demand Chain Voyager and Logility Voyager XPS modules,
that must comply with rapidly changing Internet standards. There can be no
assurance that the Company will be successful in developing and marketing, on a
timely and cost-effective basis, fully functional product enhancements or new
products that respond to technological advances by others, or that its new
products will achieve market acceptance. The Company's failure to successfully
develop and market product enhancements or new products could have a material
adverse effect on the Company's business, operating results and financial
condition.

   As a result of the complexities inherent in client/server computing
environments and the broad functionality and performance demanded by customers
for value chain management products, major new products and product
enhancements can require long development and testing periods. Software
products as complex as those offered by the Company often encounter development
delays and may contain undetected defects when introduced or when new versions
are released.

   The Company may encounter product development delays in the future and,
despite testing by the Company, there may be errors in new products or product
enhancements after commencement of commercial shipments. Either of these
problems could result in damage to the Company's reputation, loss of revenue,
loss of market share, delay in market acceptance or warranty claims, any of
which could have a material adverse effect upon the Company's business, results
of operations and financial condition. Although the Company generally attempts
to limit by contract its exposure to incidental and consequential damages, if a
court failed to enforce the liability limiting provisions of the Company's
contracts for any reason, or if liabilities arose which were not effectively
limited, the Company's business, results of operations and financial condition
could be materially and adversely affected.

   Dependence on Emerging Market for Value Chain Management Software. The
Company currently derives, and expects to continue to derive, substantially all
of its revenues from licenses and services related to value chain management
software products. The market for value chain management software is still
emerging. There can be no assurance that this market will continue to grow or,
even if it does grow, that businesses will purchase the Company's products. The
Company has spent, and intends to continue to spend, considerable resources
educating potential customers generally about value chain management software
solutions and specifically about the Company's products. There can be no
assurance, however, that such expenditures will enable the Company to achieve
any additional degree of market acceptance. If the market for value chain
management software fails to grow or grows more slowly than the Company
currently anticipates, the Company's business, operating results and financial
condition would be materially and adversely affected.

                                       15
<PAGE>

   Implementation of i-Commerce Strategy. The Company intends to devote
significant resources to the implementation of its i-Commerce strategy.
Expanding the number of business processes that can be executed via intranets,
extranets and the Internet is a key component of the i-Commerce strategy.
Because of the special risks associated with developing and marketing products
intended for this market segment noted in "Rapid Technological Change and New
Products" above, there can be no assurance that the Company will be successful
in the implementation of its i-Commerce strategy.

   Dependence upon Successful Expansion of Marketing, Sales, Support and
Service Organizations. Many of the personnel in the Company's marketing, sales,
support and service organizations have been employed by the Company for less
than two years, particularly those in the sales and marketing organizations.
The Company's future success depends upon the successful expansion of these
organizations and its ability to establish indirect distribution channels,
including resellers, systems solution vendors, application software vendors and
systems integrators. The Company currently plans to expand its direct sales
force, to develop additional indirect distribution channels and to expand its
customer service and support organizations. Although the Company believes that
such initiatives ultimately will improve the Company's operating results, to
the extent related expenditures are incurred and revenues do not
correspondingly increase the Company's operating results may be materially and
adversely affected. There can be no assurance that these steps will be
successful. Further, competition for experienced and effective sales personnel
in the software industry has increased substantially and continues to increase,
making expansion of a sales organization more difficult and expensive. If the
Company is unable to expand its marketing, sales, support and service
organizations and develop additional distribution channels on a timely basis,
the Company's business, operating results and financial condition could be
materially and adversely affected.

   International Operations. The Company derived approximately 14%, 9%, and 12%
of its total revenues from international sales in the fiscal years ended April
30, 1999, 1998 and 1997, respectively. The Company believes that continued
growth and profitability will require increased international sales. The
Company must establish additional foreign operations and hire additional
personnel, as well as expand its indirect sales channels in markets outside
North America. To the extent that the Company is unable to do so in a timely
and effective manner, the Company's growth, if any, in international sales will
be limited, and the Company's business, operating results and financial
condition could be materially adversely affected. In addition, even if
international operations are successfully expanded, there can be no assurance
that the Company will be able to maintain or increase international market
demand for its products or that such operations will be profitable.

   The Company's international operations are subject to risks inherent in
international business activities, including, in particular, management and
staffing of an organization spread over various countries, longer accounts
receivable payment cycles in certain countries, compliance with a variety of
foreign laws and regulations, unexpected changes in regulatory requirements,
overlap of different tax structures, foreign currency exchange rate
fluctuations and general economic and political conditions. To date, the
Company's revenues from international operations have primarily been
denominated in United States dollars. Other risks associated with international
operations include import and export licensing requirements, trade restrictions
and changes in tariff rates.

   Dependence on Proprietary Technology. The Company relies on a combination of
trade secrets, copyright and trademark laws, nondisclosure and other
contractual provisions and technical measures to protect its proprietary rights
in its products. The Company has not sought to patent its software products and
thus does not have the protection that patents might provide. There can be no
assurance that the protections relied upon by the Company will be adequate to
protect its proprietary rights. Despite the Company's efforts to protect its
proprietary rights, unauthorized parties, including customers, may attempt to
reverse engineer or copy aspects of the Company's products or to obtain and use
information that the Company regards as proprietary. In addition, the laws of
certain foreign 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. As a result, there can be
no assurance that the Company's means of protecting its proprietary rights will
be adequate or that the Company's competitors will not independently develop
similar technology. Although

                                       16
<PAGE>

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. Defense of such claims, with or without merit, could be time-
consuming, result in costly litigation, cause product shipment delays or
require the Company to enter into royalty or licensing agreements. Such royalty
or licensing agreements, if required, may not be available on terms acceptable
to the Company or at all, which could have a material adverse effect upon the
Company's business, results of operation and financial condition.

   Certain software used in the Company's products is licensed by the Company
from third parties. There can be no assurance that the Company will continue to
be able to resell this software under its licenses or, if any licensor
terminates its agreement with the Company, that the Company will be able to
develop or otherwise procure replacement software from another supplier on a
timely basis or on commercially reasonable terms. In addition, such third-party
software may contain errors that would be difficult for the Company to detect
and correct.

Year 2000 Readiness Disclosure

   The Company has reviewed and continues to evaluate any potential Year 2000
readiness issues relating to its corporate infrastructure and to the software
products that it licenses to customers. The Company believes that it has
allocated adequate resources for this purpose and expects its Year 2000
readiness program to be completed by the Year 2000.

   Based on management's assessment, the Company believes that the current
versions of its software products are Year 2000 ready. However, the Company
believes some of its customers may be running earlier versions of the Company's
products that are not Year 2000 ready, and the Company has been encouraging
such customers to migrate to current product versions. Moreover, the Company's
products are generally integrated into other systems involving complex software
products developed by other vendors. Year 2000 problems inherent in a
customer's other software programs might significantly limit that customer's
ability to utilize the Company's products.

   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, including products believed to be Year 2000 ready. While the Company
believes that it has assessed, corrected and tested its products to address the
Year 2000 issue, there can be no assurance that the Company's software products
contain or will contain all necessary date code changes or that errors will not
be found in new products or product enhancements after commercial release,
resulting in loss of or delay in market acceptance. In addition, the Company
might experience difficulties that could delay or prevent the continued
successful development and release of products that are Year 2000 compliant or
that meet the Year 2000 requirements of customers. If the Company is unable or
is delayed in its efforts to make the necessary date code changes, there could
be a material adverse effect upon the Company's business, operating results,
financial condition and cash flows.

   The Company may in the future be subject to claims based on Year 2000
problems in its own, as well as in others' products, and issues arising from
the integration of multiple products within an overall system. Although the
Company has not been a party to any litigation involving its products or
services related to Year 2000 compliance issues, there can be no assurance that
the Company will not in the future be required to defend its products or
services in such proceedings, or otherwise address claims based on Year 2000
issues. The costs of defending and resolving Year 2000-related disputes, and
any liability of the Company for Year 2000-related damages, including
consequential damages, could have a material adverse effect on the Company's
business, operating results, and financial condition.

   In addition, the Company is working closely with American Software, the
Company's parent, which serves as its largest supplier, to identify and
remediate all internal systems of American Software which are noncompliant and
which may impact the operations of the Company. The cost of converting American

                                       17
<PAGE>

Software's internal systems utilized by the Company is not expected to be
material as American Software is providing internal resources to meet their
Year 2000 readiness needs.

   The Company utilizes third-party vendor equipment, telecommunication
products and software products that may or may not be Year 2000 ready. Although
the Company has taken and continues to take steps to address the impact, if
any, of the Year 2000 compliance issue surrounding such third-party products,
failure of any critical technology components to be Year 2000 ready may have a
material adverse impact on business operations or require the Company to incur
unanticipated expenses to remedy any problems.

   The Company believes that Year 2000 issues have affected and may continue to
affect the purchasing decisions of customers and potential customers of the
Company's products. Many businesses are expending significant resources on
projects to make their current hardware and software systems Year 2000 ready.
Such expenditures may result in reduced funding for projects to purchase
software products such as those offered by the Company. Potential customers may
also choose to defer purchasing Year 2000 ready products until they believe it
is absolutely necessary, thus resulting in potentially stalled market sales
within the industry. Any of the foregoing could have a material adverse effect
on the Company's business, operating results and financial condition.

   The Company's evaluation of its Year 2000 readiness includes the development
of contingency plans for business functions that are susceptible to a
substantive risk of disruption resulting from a Year 2000 related event.
Because the Company has not yet identified any business function that is
materially at risk of Year 2000 related disruption, it has not yet developed
detailed contingency plans specific to Year 2000 events for any business
function. The Company is prepared for the possibility, however, that certain
business functions may be hereafter identified as at risk and will develop
contingency plans for such business functions when and if such determinations
are made.

   Forward-looking statements contained in this Year 2000 Readiness Discussion
should be read in conjunction with the Company's disclosure below under the
heading of Forward Looking Statements.

Item 2. Facilities

   The Company maintains its headquarters in Atlanta, Georgia. Some of the
Company's offices are occupied pursuant to the Facilities Agreement with
American Software, the terms of which are summarized in "Part III, Item 13--
Certain Relationships and Related Transactions," below. The Company believes
its existing facilities are adequate for its current needs and that suitable
additional or substitute space will be available as needed on commercially
reasonable terms.

Item 3. Legal Proceedings

   The Company is not a party to any material legal proceedings.

Item 4. Submission of Matters to a Vote of Security Holders

   There were no matters submitted to a vote of shareholders during the fourth
quarter of the Company's recently completed fiscal year.

                                       18
<PAGE>

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

   The Company's Common Shares are listed on the NASDAQ Stock Market--National
Market under the symbol LGTY. As of July 9, 1999, there were approximately
1,650 shareholders which hold their stock in nominee or "street" names through
various brokerage firms. The table below presents the high and low sales
for Logility, Inc. common stock as reported by NASDAQ, for each of the quarters
since the Company went public in October 1997:

<TABLE>
<CAPTION>
      Fiscal Year 1999                                        High      Low
      ----------------                                        ----      ---
      <S>                                                     <C>       <C>
      First Quarter.......................................... $12 1/4   $6 3/8
      Second Quarter......................................... $ 7 1/8   $2 7/16
      Third Quarter.......................................... $ 6 1/2   $2 1/2
      Fourth Quarter......................................... $ 6 1/4   $3 3/8
<CAPTION>
      Fiscal Year 1998                                        High      Low
      ----------------                                        ----      ---
      <S>                                                     <C>       <C>
      Second Quarter......................................... $17 11/16 $13
      Third Quarter.......................................... $15 7/8   $9 15/16
      Fourth Quarter......................................... $13 3/4   $7 5/8
</TABLE>

Dividends

   The Company has not paid any dividends since its initial public offering.
The payment of future dividends will be at the sole discretion of the Board of
Directors and will depend on the Company's profitability, financial condition,
cash requirements, future prospects and other factors deemed relevant by the
Board of Directors.

Transfer Agent

  Equiserve Trust Company, N.A.
  P.O. Box 8217
  Boston, MA 02266-8217
  1-800-633-4236
  www.equiserve.com

   Inquiries regarding stock transfers, lost certificates or address changes
should be directed to the above address.

Market Makers

   The following firms make a market in the common shares of Logility:

  Bank of America Securities LLC
  Cowen & Company
  Herzog, Heine, Geduld, Inc.
  IJL Wachovia Securities, Inc.
  Knight Securities LP
  Mayer & Schweitzer, Inc.
  The Robinson-Humphrey Company, Inc.
  Spear, Leeds & Kellogg Capital
  USCC Trading (Divison of Fleet Securities Inc.)

                                       19
<PAGE>

Item 6. Selected Combined Financial Data

   The selected combined financial data presented below for the years ended
April 30, 1999, 1998, 1997, 1996 and 1995 are derived from the audited combined
financial statements of the Company.

<TABLE>
<CAPTION>
                                            Years Ended April 30,
                                   ------------------------------------------
                                    1999     1998    1997     1996     1995
                                   -------  ------- -------  -------  -------
                                               (in thousands)
<S>                                <C>      <C>     <C>      <C>      <C>
Combined Statements of Operations
 Data:
Revenues:
  Licenses........................ $11,384  $20,138 $12,359  $10,700  $ 5,767
  Maintenance.....................   7,967    7,167   5,051    3,797    2,628
  Services........................   7,666    7,357   4,414    2,136    1,815
                                   -------  ------- -------  -------  -------
    Total revenues................  27,017   34,662  21,824   16,633   10,210
                                   =======  ======= =======  =======  =======
Cost of Revenues:
  Licenses........................   4,433    5,299   3,970    4,016    2,184
  Maintenance.....................   2,194    1,582   1,219      876      624
  Services........................   3,468    3,683   1,969    1,131    1,030
                                   -------  ------- -------  -------  -------
    Total cost of revenues........  10,095   10,564   7,158    6,023    3,838
                                   =======  ======= =======  =======  =======
Gross margin......................  16,922   24,098  14,666   10,610    6,372
                                   =======  ======= =======  =======  =======
Operating expenses:
  Research and development........   6,165    5,592   3,484    1,452    1,168
  Sales and marketing.............  14,507   13,676  10,628    9,892    6,295
  General and administrative......   4,302    3,111   2,508    2,140    2,155
  Charge for asset impairment.....   1,230       --      --       --       --
                                   -------  ------- -------  -------  -------
    Total operating expenses......  26,204   22,379  16,620   13,484    9,618
                                   =======  ======= =======  =======  =======
Operating income (loss)...........  (9,282)   1,719  (1,954)  (2,874)  (3,246)
Other income, net.................   1,274      863      --       --       --
                                   -------  ------- -------  -------  -------
Income (loss) before income
 taxes............................  (8,008)   2,582  (1,954)  (2,874)  (3,246)
Income tax expense................     100       --      --       --       --
Net income (loss)................. $(8,108) $ 2,582 $(1,954) $(2,874) $(3,246)
                                   =======  ======= =======  =======  =======
Net income (loss) per common
 share--basic and diluted......... $ (0.60) $  0.20 $ (0.17) $ (0.25) $ (0.29)
                                   =======  ======= =======  =======  =======
Weighted average common shares--
 Diluted..........................  13,486   12,676  11,300   11,300   11,300
                                   =======  ======= =======  =======  =======
<CAPTION>
                                               As of April 30,
                                   ------------------------------------------
                                    1999     1998    1997     1996     1995
                                   -------  ------- -------  -------  -------
                                               (in thousands)
<S>                                <C>      <C>     <C>      <C>      <C>
Combined Balance Sheet Data:
  Cash and cash equivalents....... $ 9,695  $ 1,006 $   732  $    13  $    66
  Investments, short-term.........  14,024   29,559      --       --       --
  Working capital.................  22,814   33,006     557    1,223   (1,705)
  Total assets....................  40,678   50,830  16,367   14,170   10,081
  Total shareholders' equity......  29,468   39,237   6,668    7,224    6,302
</TABLE>

                                       20
<PAGE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

   Logility develops, markets and supports software applications that optimize
the operating efficiencies of manufacturers, suppliers, distributors, retailers
and other organizations along the "value chain." The value chain refers to the
complex network of relationships that organizations maintain with trading
partners to source, manufacture and deliver products to the customer. The
Company's solution, Logility Value Chain Solutions, consists of an integrated
client-server software suite that provides advanced collaborative planning and
integrated logistics capabilities that are designed to reduce inventory costs,
improve forecast accuracy, decrease order cycle times, optimize production
scheduling, streamline logistics operations, reduce transportation costs and
improve customer service. The Company markets its solution worldwide, primarily
to large enterprises that require a comprehensive planning and execution
solution. Sales are made through a dedicated sales force and through
relationships with third-party vendors (including American Software) and
service providers.

   Until 1997, the Company conducted its business and operations as three
separate business units of American Software: a supply chain planning software
group, a warehouse management software group and a transportation management
software group. Effective January 1997, American Software transferred
substantially all of the business, operations (including research and
development), assets and associated liabilities of its Supply Chain Planning
division to the Company. Effective August 1997, American Software transferred
to the Company the WarehousePRO software and substantially all associated
operations, assets and liabilities. Effective August 1997, American Software's
wholly owned subsidiary, Distribution Sciences, Inc., was merged into the
Company, transferring its business, operations, assets and liabilities,
including the Transportation Planning and Transportation Management software,
to the Company. The Company's financial statements included herein present the
combined assets, liabilities and results of operations for the three business
units for all periods.

   Prior to August 1, 1997 (except for the Tax Sharing Agreement, which was
effective January 23, 1997), American Software provided marketing services,
employees, and office space to the Company, allowed the Company to participate
in insurance coverage and benefit plans, and provided certain other
administrative services to the Company. The combined statements of operations
include the allocation of these expenses incurred by American Software to the
Company based on percentage of license fees, specific identification, direct
labor hours, head count, product license fees to total license fees, and square
footage of leased properties. Management believes the methods of allocation are
reasonable. Effective August 1, 1997 (except for the Tax Sharing Agreement,
which was effective January 23, 1997), the Company entered into certain
contractual arrangements with American Software.

   The Company recognizes revenue in accordance with Statement of Position 97-
2, Software Revenue Recognition. License revenues in connection with license
agreements for standard proprietary and tailored software are recognized upon
delivery of the software, provided collection is considered probable, the fee
is fixed or determinable, there is evidence of an arrangement, and vendor
specific evidence exists to allocate the total fee to all elements of the
arrangement. Maintenance fees are generally billed annually in advance and the
resulting revenues are recognized ratably over the term of the maintenance
agreement. Revenues derived from services primarily include consulting,
implementation, and training. Fees are billed under both time and materials and
fixed fee arrangements and are recognized as services are performed. Deferred
revenues represent advance payments or billings for software licenses,
services, and maintenance billed in advance of the time revenues are
recognized.

                                       21
<PAGE>

   The following table sets forth certain revenue and expense items as a
percentage of total revenues for the three years ended April 30, 1999 and the
percentage increases and decreases in those items for the years ended April 30,
1999 and 1998:

<TABLE>
<CAPTION>
Percentage of total revenues         1999   1998  1997   1999 vs 1998 1998 vs 1997
----------------------------         ----   ----  ----   ------------ ------------
<S>                                  <C>    <C>   <C>    <C>          <C>
Revenues:
  License fees......................  42 %   58%   57 %      (43)%         63%
  Maintenance.......................  30     21    23         11           42
  Services..........................  28     21    20          4           67
                                     ---    ---   ---        ---          ---
    Total revenues.................. 100    100   100        (22)          59
                                     ===    ===   ===        ===          ===
Cost of revenues:
  License fees......................  16     15    18        (16)          33
  Maintenance.......................   8      4     6         39           30
  Services..........................  13     11     9         (6)          87
                                     ---    ---   ---        ---          ---
    Total cost of revenues..........  37     30    33         (4)          48
                                     ===    ===   ===        ===          ===
Gross margin........................  63     70    67        (30)          64
                                     ---    ---   ---        ---          ---
Operating expenses
  Research and development, net.....  23     16    16         10           61
  Sales and marketing...............  54     40    49          6           29
  General and administrative........  16      9    11         38           24
  Charge for asset impairment.......   5     --    --         nm           --
                                     ---    ---   ---        ---          ---
    Total operating expenses........  98     65    76         17           35
Operating income (loss)............. (35)     5    (9)        nm           nm
Other income, net...................   5      2    --         nm           nm
                                     ---    ---   ---        ---          ---
Income (loss) before income taxes... (30)     7    (9)        nm           nm
Income tax expense..................  --     --    --         nm           nm
                                     ---    ---   ---        ---          ---
Net income (loss)....................(30)%    7%   (9)%       nm           nm
                                     ===    ===   ===        ===          ===
</TABLE>
--------
nm-not meaningful

General Market Conditions:

   Beginning in 1998, many application software companies began to experience
slowdowns in the sales of their software products. These companies, as well as
industry experts, have identified the following factors as contributors to this
slowdown in the buying market:

  .  Significant financial commitments devoted to Year 2000 readiness, which
     have led to limited discretionary financial resources available for the
     purchase of software products such as the Company's.

  .  Weakness in the overall global economy, which has affected certain
     customers' businesses and their buying tendencies.

  .  Public announcements by large Enterprise Resource Planning (ERP)
     software vendors regarding plans for introduction of new products within
     the Company's target markets which have led to confusion and indecision
     by prospective buyers.

   The Company believes these factors, as well as possibly others, have to some
degree contributed to the Company's reduced revenues in fiscal 1999,
particularly in the area of software license fees.

   As a result of the adverse market conditions previously noted, the Company
took several steps in the second quarter of fiscal 1999 to reduce its expense
structure in an attempt to return to operating profitability as

                                       22
<PAGE>

soon as possible. These steps included reducing the Company's direct sales
force in order to improve sales effectiveness through the use of the Company's
most productive sales executives. Additionally, the Company reduced other
operating expenses, mainly sales and marketing expenditures, during the latter
portion of the Company's second fiscal quarter.

   In the second half of the year ended April 30, 1999, total revenues
increased 28% to $15.2 million, from $11.9 million for the first half of the
year. License fee revenues increased 63%, to $7.1 million from $4.3 million,
while maintenance revenues increased 10%, to $4.2 million from $3.8 million,
and services revenues increased 6%, to $3.9 million from $3.7 million. For the
same periods, operating income rose to $222,000 from a loss of $9.5 million,
while net income increased to $665,000 from a loss of $8.8 million. The Company
believes it continues to realize results from the measures taken previously to
utilize its sales force in a more focused and efficient manner, and to manage
its overall cost structure.

Years Ended April 30, 1999 and 1998:

 Revenues:

   The Company's total revenues decreased 22% to $27.0 million from $34.7
million for the prior year. This decrease was largely due to a reduction in the
Company's product sales in the first half of the fiscal year, partially offset
by improved sales in the last half of the fiscal year as well as an increase in
implementation and training services. International revenues represented
approximately 14% of total revenues in the year ended April 30, 1999 compared
to 9% in 1998.

   Licenses. License fee revenues decreased 43% to $11.4 million from a year
ago. The Company believes that in the first half of the fiscal year, several of
its potential customers continued to delay purchase decisions due to a variety
of factors, including concern over global economic conditions and limited
resources due to the allocation of resources to Year 2000 system projects. The
direct sales channel provided approximately 83% of the license fee revenues for
fiscal 1999, compared to 65% for the prior year. This increase was due to
better opportunities available to the Company to sell through its direct
channel. The Company's indirect sales channel is principally through American
Software.

   Maintenance. Maintenance revenues increased 11% to $8.0 million from a year
ago, due to an increase in the installed base of customers. Maintenance
revenues are directly related to license fee revenues, since new licenses are
the potential source of new maintenance customers.

   Services. Services revenues increased 4% to $7.7 million from a year ago as
a result of the increased utilization of the Company's implementation and
training services, which in turn resulted from the growth in the Company's
customer base.

 Gross Margin:

   Total gross margin in 1999 was 63% compared to 70% a year ago. This decrease
was largely due to the reduced margin from license fee revenues, which fell to
61% from 74% a year ago. The decreased margin was attributable to the drop in
license fee revenues for the year which, because of a relatively high fixed
license fees cost component, resulted in a lower incremental gross margin. The
gross margin on maintenance revenues decreased to 72% compared to 78% a year
ago. The gross margin on services revenues increased to 55% compared to 50% in
1998 due to a number of fixed-fee services contracts relating to customer
system modifications in the third quarter.

                                       23
<PAGE>

  Operating Expenses:

   Research and Development. Gross product development costs include all non-
capitalized and capitalized software development costs. A breakdown of the
research and development costs is as follows:

<TABLE>
<CAPTION>
                                                             Years Ended
                                                     -------------------------------
                                                     April 30,   Percent   April 30,
                                                       1999      Change      1998
                                                     ---------   -------   ---------
                                                           (in thousands)
<S>                                                   <C>      <C>     <C>
Gross product development costs...................... $10,117      15%      $8,761
Percentage of total revenues ........................      37%                  25%
Less: capitalized development........................  (3,952)     25%      (3,169)
Percentage of gross prod. dev. costs ................      39%                  36%
Product development expenses ........................ $ 6,165      10%      $5,592
Percentage of total revenues ........................      23%                  16%
</TABLE>

   Gross product development costs increased 15% in 1999 compared to a year ago
as a result of the Company's continued investment in new product development.
Capitalized development increased as well, growing 25% from a year ago, while
the rate of capitalized development increased slightly to 39% from 36% a year
ago. Product development expenses, as a percentage of total revenues, rose to
23%, while net product development expenses increased 10% as the Company
continued to invest in new product development.

   Sales and Marketing. Sales and marketing expenses rose 6% from a year ago.
As a percentage of total revenues, sales and marketing expenses were 54% for
the year compared to 40% for 1998. This increase was due to a decrease in
overall revenues, as well as increased sales and marketing expenditures.
Increased sales and marketing expenditures were mainly due to increased
staffing over a year ago, particularly in the areas of international sales and
increased trade show marketing commitments.

   General and Administrative. General and administrative expenses increased
38% to approximately $4.3 million from a year ago, mainly as a result of the
Company's growth in the number of employees and the resulting growth in
administrative costs. General and administrative expenses as a percentage of
total revenues increased to 16% from 9% during the same period.

  Other Income:

   Other income is principally comprised of investment earnings from the net
proceeds of the Company's initial public offering. The Company's investments
are generally short term in nature. In fiscal 1999, the Company generated a
yield of approximately 5.1% on its investments, compared to approximately 5.5%
in fiscal 1998.

  Income Taxes:

   In accordance with FASB Statement No. 109 "Accounting for Income Taxes", the
Company was required to apply a separate company approach in calculating its
income tax provision. The Company's Tax Sharing Agreement with American
Software does not allow the Company to utilize its net operating loss
carryforwards. Income taxes in fiscal 1999 were related to state income tax
obligations.

  Subsequent Event--Significant Sale Closed:

   Subsequent to the Company's fiscal year end of April 30, 1999, the Company
closed the sale of the largest software licensing transaction in its history,
with license fee revenue totaling over $3.0 million. The transaction was with
ConAgra Inc., a NYSE-listed corporation and one of the world's largest
agribusiness companies.


                                       24
<PAGE>

Years Ended April 30, 1998 and 1997:

 Revenues:

   The Company's total revenues increased 59% to $34.7 million from $21.8
million for the prior year. This increase was largely due to the rise in the
Company's product sales as well as a significant increase in implementation and
training services. International revenues represented approximately 9% of total
revenues in the year ended April 30, 1998 compared to 12% in 1997.

   Licenses. License fee revenues increased 63% to $20.1 million for the prior
year, primarily as a result of successful sales efforts by the Company's direct
sales force. The direct sales channel provided approximately 65% of the license
fee revenues for the year. The Company's indirect sales channel is principally
through American Software.

   Maintenance. Maintenance revenues increased 42% to $7.2 million for the
prior year, due to an increase in the installed base of customers. Maintenance
revenues are directly related to license fee revenues, since new licenses are
the potential source of new maintenance customers.

   Services. Services revenues increased 67% to $7.4 million for the prior year
as a result of the increased utilization of the Company's implementation and
training services, which in turn resulted from the growth in the Company's
customer base.

 Gross Margin:

   Total gross margin in fiscal year 1998 was 70% compared to 67% for fiscal
1997. This increase was largely due to the expanded margin from license fee
revenues, which grew to 74% from 68% for the prior year. The expanded margin
was attributable to the significant rise in license fee revenues which, because
of a relatively high fixed license fees cost component, resulted in a higher
incremental gross margin. The gross margin on maintenance revenues increased
slightly to 78% compared to 76% for the prior year. The gross margin on
services revenues decreased to 50% compared to 55% in fiscal 1997 due to a
decrease in the utilization rate of the service staff particularly in one
portion of the Company's business in the third quarter in fiscal 1998. In
addition, the Company invested heavily in completing service implementation
work on one large customer in the third and fourth quarters of fiscal 1998 in
anticipation of additional service projects for prospective customers in a
similar industry.

 Operating Expenses:

   Research and Development. Gross product development costs include all non-
capitalized and capitalized software development costs. A breakdown of the
research and development costs is as follows:

<TABLE>
<CAPTION>
                                                        Years Ended
                                                 ---------------------------
                                                 April 30, Percent April 30,
                                                   1998    Change    1997
                                                 --------- ------- ---------
                                                       (in thousands)
<S>                                              <C>       <C>     <C>       <C>
Gross product development costs.................  $8,761      40%   $ 6,279
Percentage of total revenues....................      25%                29%
Less: capitalized development...................  (3,169)     13%   ( 2,795)
Percentage of gross prod. dev. costs............      36%                45%
Product development expenses....................  $5,592      61%   $ 3,484
Percentage of total revenues....................      16%                16%
</TABLE>

   Gross product development costs increased 40% in fiscal 1998 compared to the
prior year as a result of the Company's continued investment in new product
development. Capitalized development increased as well, growing 13% from the
prior year, while the rate of capitalized development decreased to 36% from 45%
in the prior year. Product development expenses, as a percentage of total
revenues, remained comparable at 16% although the Company's net product
development expenses increased 61% as the Company continued its investment in
new product development.

                                       25
<PAGE>

   Sales and Marketing. Sales and marketing expenses rose 29% from the prior
year as a result of increased license fees and an increased sales force. As a
percentage of total revenues, sales and marketing expenses were 40% for 1998
compared to 49% for 1997. An increase in the productivity of the Company's
sales force was the primary cause of this decrease. Previously, the Company
shared its sales force with American Software. The mix of revenues generated
between the direct and indirect (mainly American Software) sales channels also
contributed to the decrease in the cost of sales and marketing as a percentage
of total revenues. For sales generated from the direct sales force, the Company
generally incurs sales commissions which are substantially lower than those
charged by the indirect channel. As a result, when the Company increases its
revenues generated from its direct sales force, as it did in fiscal 1998, the
Company achieves expense leverage.

   General and Administrative. General and administrative expenses increased
24% to approximately $3.1 million from the prior year, mainly as a result of
the Company's growth in the number of employees and the resulting growth in
administrative costs. General and administrative expenses as a percentage of
total revenues decreased to 9% from 11% during the same period.

 Liquidity, Capital Resources and Financial Condition:

   By November 6, 1997, the Company had completed its initial public offering,
in which the Company received aggregate net proceeds of approximately $33.2
million after deducting underwriting discounts and offering expenses.

   The Company's operating activities provided cash of approximately $363,000
in the year ended April 30, 1999, compared to approximately $3.6 million in the
same period of the prior year. The cash provided by operations during the year
ended April 30, 1999 was primarily attributable to non-cash depreciation and
amortization expense of $3.9 million, a decrease in accounts receivable of $3.4
million, the non-cash portion of the software development cost write-off of
$1.2 million, an increase in deferred revenues of approximately $553,000, and a
decrease in prepaid expenses and other current assets of approximately
$320,000. This was partially offset by an decrease in accounts payable and
amount due to American Software of $1.1 million. Cash provided by operations
during the prior year totaled $3.6 million, resulting from net income of $2.6
million, non-cash depreciation and amortization expense of $4.7 million, an
increase in deferred revenues of approximately $271,000 and a net increase in
accounts payable, accrued costs and other current liabilities of $950,000,
which were partially offset by an increase in accounts receivable of $4.2
million and an increase in other assets of approximately $613,000.

   Cash provided by (used in) in investing activities was approximately $10.0
million and ($34.1 million) for the years ended April 30, 1999 and 1998,
respectively. In Fiscal 1999, cash was provided primarily by the maturity of
investments. In the prior year, the majority of the cash was used for
investments and computer software development costs.

   Cash used in financing activities for the year ended April 30, 1999 totaled
$1.7 million, used primarily for the Company's repurchase of 205,500 shares of
its common stock. For the prior year, cash provided by financing activities was
approximately $30.8 million, due primarily to the net proceeds received from
the issuance of common stock in the initial public offering. Also in fiscal
1998 the Company repurchased 205,300 shares of its common stock for
approximately $1.9 million. Days sales outstanding in accounts receivable were
90 days as of April 30, 1999, compared to 94 days as of April 30, 1998. This
reduction was the result of improved collection efforts by the Company.

   The Company's current ratio on April 30, 1999, was 3.6 to 1 and the Company
has no long-term debt. The Company believes that its sources of liquidity and
capital resources will be sufficient to satisfy its cash requirements for at
least the next twelve months. To the extent that such amounts are insufficient
to finance the Company's capital requirements, the Company will be required to
raise additional funds through equity or debt financing. The Company does not
currently have a bank line of credit. No assurance can be given that bank

                                       26
<PAGE>

lines of credit or other financing will be available on terms acceptable to the
Company. If available, such financing may result in further dilution to the
Company's shareholders and higher interest expense.

   On December 15, 1997, Logility, Inc.'s Board of Directors approved a
resolution authorizing the Company to repurchase up to 350,000 shares of the
Company's common stock through open market purchases at prevailing market
prices. The Company completed this repurchase plan in November 1998. In
November 1998 the Company adopted an additional repurchase plan for up to
800,000 shares. The timing of any repurchases would depend on market
conditions, the market price of Logility's common stock and management's
assessment of the Company's liquidity and cash flow needs. For both plans,
through July 9, 1999, the Company had purchased a cumulative total of 431,800
shares at a total cost of $3.6 million.

 Recent Accounting Pronouncements:

   In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities". The Statement will be effective for the Company beginning June 15,
2000. The new Statement requires all derivatives to be recorded on the balance
sheet at fair value and establishes accounting treatment for three types of
hedges: hedges of changes in the fair value of assets, liabilities, or firm
commitments; hedges of the variable cash flows of forecasted transactions; and
hedges of foreign currency exposures of net investments in foreign operations.
The Company has not invested in derivative instruments nor participated in
hedging activities and therefore does not anticipate there will be a material
impact on the results of operations or financial position from Statement No.
133.

   In December 1998, the AICPA issued SOP No. 98-9, Modification of SOP No. 97-
2, Software Revenue Recognition, with Respect to Certain Transactions. This SOP
amends SOP No. 97-2 to, among other matters, require recognition of revenue
using the "residual method" in circumstances outlined in the SOP. Under the
residual method, revenue is recognized as follows: (1) the total fair value of
undelivered elements, as indicated by vendor-specific objective evidence, is
deferred and subsequently recognized in accordance with the relevant sections
of SOP No. 97-2 and (2) the difference between the total arrangement fee and
the amount deferred for the undelivered elements is recognized as revenue
related to the delivered elements. SOP No. 98-9 is effective for fiscal years
beginning after March 15, 1999. The Company does not believe that the adoption
of SOP No. 98-9 will have a material effect on its revenue recognition.

 Forward-looking Statements:

   It should be noted that this discussion contains forward-looking statements,
which are subject to substantial risks and uncertainties. A variety of factors
could cause the Company's actual results to differ materially from those
anticipated by statements made herein. The timing of releases of the Company's
software products can be affected by client needs, marketplace demands and
technological advances. Development plans frequently change, and it is
difficult to predict with accuracy the release dates for products in
development. Other factors include changes in general economic conditions, the
growth rate of the market for the Company's products and services, the timely
availability and market acceptance of these products and services, the effect
of competitive products and pricing, and the irregular pattern of revenues, as
well as a number of other risk factors which could affect the future
performance of the Company.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

   Foreign Currency. For the year ended April 30, 1999, the Company generated
14% of its revenues outside the United States. International sales usually are
made by the Company's foreign subsidiaries and are denominated typically in
U.S. Dollars or British Pounds Sterling. However, the expense incurred by
foreign subsidiaries is denominated in the local currencies.

                                       27
<PAGE>

   Interest rates. The Company manages its interest rate risk by maintaining an
investment portfolio of held-to-maturity instruments with high credit quality
and relatively short average maturities. These instruments include, but are not
limited to, money-market instruments, bank time deposits, and taxable and tax-
advantaged variable rate and fixed rate obligations of corporations,
municipalities, and national, state, and local government agencies, in
accordance with an investment policy approved by the Company's Board of
Directors. These instruments are denominated in U.S. dollars. The fair value of
securities held at April 30, 1999 was approximately $14.0 million.

   The Company also holds cash balances in accounts with commercial banks in
the United States and foreign countries. These cash balances represent
operating balances only and are invested in short-term time deposits of the
local bank. Such operating cash balances held at banks outside the United
States are denominated in the local currency.

   Many of the Company's investments carry a degree of interest rate risk. When
interest rates fall, the Company's income from investments in variable-rate
securities declines. When interest rates rise, the fair market value of the
Company's investments in fixed-rate securities declines. The Company attempts
to mitigate risk by holding fixed-rate securities to maturity, but should its
liquidity needs force it to sell fixed-rate securities period to maturity, the
Company may experience a loss of principal.

Item 8. Financial Statements and Supplementary Data

   The information required by this item is included in Part IV Item 14 (a) (1)
and (2).

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

   None.

                                    PART III

Item 10. Directors and Executive Officers of Registrant

   The information relating to the members of the Board of Directors of the
Company is set forth in the Caption "Election of Directors and Information
Regarding Directors" in the Company's 1999 Proxy Statement (the "Proxy
Statement"), which information is incorporated herein by reference.

   The executive officers of the Company are as follows:

<TABLE>
<CAPTION>
Name                       Age                     Position
----                       ---                     --------
<S>                        <C> <C>
J. Michael Edenfield......  41 Chief Executive Officer, President and Director
James M. Modak............  42 Chief Financial Officer and Senior Vice President
Larry R. Olin.............  47 Vice President--Sales, The Americas
Donald L. Thomas..........  52 Vice President--Customer Service
Andrew G. White...........  34 Vice President--Product Strategy
</TABLE>

   J. Michael Edenfield has served as a Director and as President and Chief
Executive Officer of the Company since January 1997. He also serves as a
Director of INSIGHT, Inc., in which the Company owns a minority interest. In
addition, he serves as Executive Vice President of American Software, Inc., a
position he has held since June 1994. From June 1994 to October 1997, Mr.
Edenfield served as Chief Operating Officer of American Software, Inc., and
American Software USA, Inc. Prior to June 1994, Mr. Edenfield served in the
following positions with American Software USA, Inc.: Senior Vice President of
North American Sales and Marketing from July 1993 to June 1994, Senior Vice
President of North American Sales from August 1992 to July 1993, Group Vice
President from May 1991 to August 1992 and Regional Vice President from May
1987

                                       28
<PAGE>

to May 1991. Mr. Edenfield holds a Bachelor of Industrial Management degree
from the Georgia Institute of Technology. Mr. Edenfield is the son of James C.
Edenfield, Chairman of the Board of Directors of the Company.

   James M. Modak has served as Chief Financial Officer and Senior Vice
President of the Company since August 1997. Commencing June, 1999, he also
serves as Chief Financial Officer and Senior Vice President of American
Software, Inc. From January 1996 to July 1997, Mr. Modak served as Senior Vice
President--Finance of Total System Services, Inc., a New York Stock Exchange-
listed credit card processing company. From September 1993 to January 1996, Mr.
Modak served as Senior Vice President--Financial Analysis of First Financial
Management Corp., a financial services processing company. From February 1993
to August 1993 he was Chief Financial Officer of Shop N Chek, a quality service
provider for the retail industry. From July 1991 to February 1993, Mr. Modak
was Senior Vice President--Controller of DF Southeastern, Inc., a savings bank
holding company. From 1979 to 1991 he was a CPA with KPMG Peat Marwick. Mr.
Modak is a Certified Public Accountant with a Bachelor of Business
Administration degree from the University of Notre Dame.

   Larry R. Olin has served as Vice President, Sales, The Americas of the
Company since January 1997. From November 1996 to January 1997, Mr. Olin served
as Vice President of Sales of the Supply Chain Planning division of American
Software USA, Inc. From August 1992 to November 1996, he was Group Vice
President of American Software USA, Inc. He holds a B.S. degree in Business
Administration from Lake Superior State University and an M.B.A. in Finance
from Central Michigan University.

   Donald L. Thomas has served as Vice President, Customer Service of the
Company since January 1997. From October 1976 to January 1997, he served in a
variety of positions with American Software, most recently as Vice President,
Customer Service of the Supply Chain Planning division of American Software
USA, Inc. He holds a degree in Industrial Engineering from Auburn University.

   Andrew G. White has served as Vice President of Product Strategy of the
Company since March 1998. From January 1997 to March 1998, he served as Vice
President of Research and Development. From March 1992 to January 1997, Mr.
White was employed by American Software (UK) Ltd. He holds a Bachelor of Arts
(Honors) degree in Economics from The Open University in the United Kingdom.

Item 11. Executive Compensation

   This information is set forth under the caption "Certain Information
Regarding Executive Officers and Directors" in the Company's 1999 Proxy
Statement, which information is incorporated herein by reference.

Item 12. Security Ownership of Certain Benefical Owners and Management

   This information is set forth under the caption "Voting Securities--Security
Ownership" in the Proxy Statement, which information is incorporated herein by
reference.

Item 13. Certain Relationships and Related Transactions

Relationship with American Software, Inc.

   In November, 1997, the Company completed an initial public offering of
2,530,000 shares of common stock. Prior to that time, the Company was a wholly
owned subsidiary of American Software, Inc. (American Software--Nasdaq--AMSWA)
operating as the supply chain planning software group, warehouse management
software group and transportation management group. In anticipation of such
offering, the Company and American Software entered into a number of agreements
for the purpose of defining certain relationships between the parties (the
"Intercompany Agreements"). The more significant of the Intercompany Agreements
are summarized below. As a result of American Software's ownership interest in
the Company, the terms of such agreements were not the result of arms-length
negotiation.

                                       29
<PAGE>

Services Agreement

   The Company and American Software have entered into a Services Agreement
(the "Services Agreement") with respect to certain services to be provided by
American Software (or subsidiaries of American Software) to the Company. The
Services Agreement provides that such services are provided in exchange for
fees which management of American Software believes would not exceed fees that
would be paid if such services were provided by independent third parties. The
services initially provided by American Software to the Company under the
Services Agreement include, among other things, certain accounting, cash
management, corporate development, employee benefit plan administration, human
resources and compensation, general and administration services, and risk
management and tax services. In addition to these services, American Software
has agreed to allow eligible employees of the Company to participate in certain
of American Software's employee benefit plans.

   The Company has agreed to reimburse American Software for American
Software's costs (including any contributions and premium costs and including
third-party expenses and allocations of certain personnel expenses), generally
in accordance with past practice, relating to the participation by the
Company's employees in any of American Software's benefit plans.

   The Services Agreement has an initial term of three years and is renewed
automatically thereafter for successive one-year terms unless either the
Company or American Software elects not to renew its term by giving proper
notice. The Company will indemnify American Software against any damages that
American Software may incur in connection with its performance of services
under the Services Agreement (other than those arising from American Software's
gross negligence or willful misconduct), and American Software will indemnify
the Company against any damages arising out of American Software's gross
negligence or willful misconduct in connection with its rendering of services
under the Services Agreement.

Facilities Agreement

   American Software and the Company have entered into a Facilities Agreement
(the "Facilities Agreement"), which provides that the Company may occupy space
located in certain facilities owned or leased by American Software (or
subsidiaries of American Software). The Facilities Agreement has an initial
term of two years and is renewed automatically thereafter for successive one-
year terms unless either American Software or the Company elects not to renew
its term. The Facilities Agreement may be terminated by the Company for any
reason with respect to any particular facility upon thirty days' written
notice. The Company's lease of space at any facility under the Facilities
Agreement is limited by the term of the underlying lease between American
Software and a landlord with respect to any facility leased by American
Software and by the disposition by American Software of any facility owned by
American Software.

Tax Sharing Agreement

   The Company is included in American Software's federal consolidated income
tax group, and the Company's federal income tax liability will be included in
the consolidated federal income tax liability of American Software and its
subsidiaries. The Company and American Software have entered into a Tax Sharing
Agreement (the "Tax Sharing Agreement") pursuant to which American Software,
Inc. and the Company will make payments between them such that the amount of
taxes to be paid by the Company, subject to certain adjustments, will be
determined as though the Company were to file separate federal, state, and
local income tax returns, rather than as a consolidated subsidiary of American
Software. Pursuant to the Tax Sharing Agreement, under certain circumstances,
the Company will be reimbursed for tax attributes that it generates after
deconsolidation of Logility from the consolidated tax group of American
Software Inc., such as net operating losses and loss carryforwards.
Deconsolidation is effective if and when American Software's ownership of
Logility falls below 80%. No such deconsolidation is in process currently. Such
reimbursement, if any, will be made for utilization of the Company's losses
only after such losses are utilized by American Software. For that purpose, all
losses of American Software and its consolidated income tax group will be

                                       30
<PAGE>

deemed utilized in the order in which they are recognized. The Company will pay
American Software a fee intended to reimburse American Software for all direct
and indirect costs and expenses incurred with respect to American Software's
share of the overall costs and expense incurred by American Software with
respect to tax related services.

Technology License Agreement

   American Software and the Company have entered into a Technology License
Agreement (the "Technology License Agreement") pursuant to which the Company
has granted American Software a non-exclusive, worldwide license to use,
execute, reproduce, display, modify, and prepare derivatives of the Logility
Value Chain Solutions product line, provided such license is limited to
maintaining and supporting users that have licensed Logility Value Chain
Solutions products from American Software. Pursuant to the Technology License
Agreement, American Software and the Company are required to disclose to one
another any and all enhancements and improvements which they may make or
acquire in relation to a Logility Value Chain Solutions product, subject to
confidentiality requirements imposed by third parties. The term of the
Technology License Agreement is indefinite, although the Company may terminate
the Technology License Agreement for cause, and American Software may terminate
the Technology License Agreement at any time upon 60 days' prior written notice
to the Company. Upon termination of the Technology License Agreement, all
rights to Logility Value Chain Solutions products licensed by the Company to
American Software revert to the Company, while all rights to enhancements and
improvements made by American Software to Logility Value Chain Solutions
products revert to American Software.

Marketing License Agreement

   American Software USA, Inc. ("USA"), a wholly-owned subsidiary of American
Software, and the Company have entered into a Marketing License Agreement (the
"Marketing License Agreement") pursuant to which USA has agreed to act as a
non-exclusive marketing representative of the Company for the solicitation of
license agreements relating to the Logility Value Chain Solutions product line.
The Marketing License Agreement provides for the payment to USA of a commission
equal to 30% (or 50% for affiliates of USA located in the United Kingdom and
France if they carry out installation and provide first-line support services)
of the net license revenue collected by the Company under license agreements
for the Logility Value Chain Solutions product line with certain end-users who
are also licensees of software products of American Software which are secured
and forwarded to the Company by USA and accepted by the Company. The Marketing
License Agreement has a five-year term, although the Company may terminate the
Marketing License Agreement for cause, and either party may terminate the
Marketing License Agreement at any time upon twelve months' prior written
notice to the other party.

   See also the information set forth under the caption "Certain Information
Regarding Executive Officers and Directors--Certain Transactions; Compensation
Committee and Relationship to Company" in the Company's 1999 Proxy Statement,
which information is incorporated herein by reference.

                                       31
<PAGE>

                                    PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-k

   (a) The following documents are filed as part of this Form 10-K:

   1.  The following combined financial statements of Logility, Inc. are filed
as part of this Form 10-K on the pages indicated:

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
Combined Balance Sheets as of April 30, 1999 and 1998....................   35
Combined Statements of Operations for the Years ended April 30, 1999,
 1998, and 1997..........................................................   36
Combined Statements of Shareholders' Equity for the Years ended April 30,
 1999, 1998, and 1997....................................................   37
Combined Statements of Cash Flows for the Years ended April 30, 1999,
 1998, and 1997..........................................................   38
Notes to the Combined Financial Statements...............................   39
Independent Auditors' Report.............................................   50

   2. Combined financial statement schedule included in Part IV of this Form:

<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
Schedule I --Valuation and Qualifying Accounts--for the three years ended
 April 30, 1999..........................................................   51
Independent Auditors' Report.............................................   52
</TABLE>

All other financial statements and schedules not listed above are omitted as
the required information is not applicable or the information is presented in
the financial statements or related notes.

   3. Exhibits

   The following exhibits are filed herewith or incorporated herein by
reference:

<TABLE>
 <C>  <S>
  3.1 The Company's Amended and Restated Articles of Incorporation, and
      amendments included as Exhibit 3.1 to the Company's Registration
      Statement No. 333-33385 on Form S-1 (the "S-1 Registration Statement")
      and incorporated herein by this reference.
  3.2 The Company's Amended and Restated By-Laws, included as Exhibit 3.1 to
      the S-1 Registration Statement and incorporated herein by this reference.
 10.1 1997 Stock Plan, Amended and Restated as of August 26, 1998, included as
      Exhibit 4.1 to the Company's Form S-8 Registration Statement No. 333-
      62531 and incorporated herein by this reference.
 10.2 Subsidiary Formation Agreement among the Company, American Software, and
      certain subsidiaries of American Software, as amended, included as
      Exhibit 10.3 to the S-1 Registration Statement, and incorporated herein
      by this reference.
 10.3 Merger Agreement between the Company and Distribution Sciences, Inc.,
      included as Exhibit 10.4 to the S-1 Registration Statement, and
      incorporated herein by this reference.
 10.4 Services Agreement between the Company and American Software, included as
      Exhibit 10.5 to the S-1 Registration Statement, and incorporated herein
      by this reference.
 10.5 Facilities Agreement between the Company and American Software, included
      as Exhibit 10.6 to the
      S-1 Registration Statement, and incorporated herein by this reference.
 10.6 Tax Sharing Agreement between the Company and American Software, included
      as Exhibit 10.7 to the S-1 Registration Statement, and incorporated
      herein by this reference.
 10.7 Stock Option Agreement between the Company and American Software,
      included as Exhibit 10.8 to the S-1 Registration Statement, and
      incorporated herein by this reference.
 10.8 Technology License Agreement between the Company and American Software,
      as amended, included as Exhibit 10.9 to the S-1 Registration Statement,
      and incorporated herein by this reference.
</TABLE>

                                       32
<PAGE>

<TABLE>
 <C>   <S>
 10.9  Marketing License Agreement between the Company and American Software,
       as amended, included as Exhibit 10.10 to the S-1 Registration Statement,
       and incorporated herein by this reference.
 10.10 Employment Agreement and Offer Letter from the Company to James M.
       Modak, included as Exhibit to the S-1 Registration Statement, and
       incorporated herein by this reference.
 10.11 Employee Stock Purchase Plan dated September 30, 1998, included as
       Exhibit 4.1 to the Company's Form S-8 Registration Statement No. 333-
       66773 and incorporated herein by this reference.
 11.1  Statement re: Computation of Per Share Earnings (Loss).
 23.1  Independent Auditors' Consent.
 27.1  Financial Data Schedule
</TABLE>

    (b) Reports on Form 8-K

The Company did not file a report on Form 8-K during the fourth quarter of the
recently completed fiscal year.

                                       33
<PAGE>

                                   SIGNATURES

   Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amended report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                          LOGILITY, INC.

                                                /s/ J. Michael Edenfield
                                          By: _________________________________
                                                   J. Michael Edenfield
                                                President, Chief Executive
                                                          Officer

Date:

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

            Signature               Title                      Date
            ---------               -----                      ----

  /s/ J. Michael Edenfield     President, Chief
By: _________________________   Executive Officer
     J. Michael Edenfield

   /s/ James C. Edenfield      Chairman of the
By: _________________________   Board of Directors
      James C. Edenfield

    /s/ Parker H. Petit        Director
By: _________________________
       Parker H. Petit

    /s/ Dr. John A. White      Director
By: _________________________
       Dr. John A. White

    /s/ James M. Modak         Chief Financial
By: _________________________   Officer and Principal
       James M. Modak           Accounting Officer


                                       34
<PAGE>

                                 LOGILITY, INC.

                            Combined Balance Sheets
                       (In thousands, except share data)
                            April 30, 1999 and 1998

<TABLE>
<CAPTION>
                                                                     1999     1998
                              Assets                               --------  ------
<S>                                                                <C>       <C>
Current assets:
  Cash and cash equivalents....................................... $  9,695   1,006
  Investments.....................................................   14,024  29,559
  Trade accounts receivable, less allowance for doubtful accounts
   of $447 and $421 at April 30, 1999 and 1998, respectively:
    Billed........................................................    5,471   7,754
    Unbilled......................................................    1,931   3,040
  Prepaid expenses and other current assets.......................      444     731
                                                                   --------  ------
      Total current assets........................................   31,565  42,090
Furniture and equipment, less accumulated depreciation............    1,889   1,583
Intangible assets, less accumulated amortization..................    6,202   6,865
Other assets, net.................................................    1,022     292
                                                                   --------  ------
                                                                   $ 40,678  50,830
                                                                   ========  ======
<CAPTION>
               Liabilities and Shareholders' Equity
<S>                                                                <C>       <C>
Current liabilities:
  Accounts payable................................................ $    990   1,144
  Accrued compensation and related costs..........................    1,827   1,436
  Other current liabilities.......................................    1,224   1,386
  Due to American Software, Inc...................................      --      961
  Deferred revenues...............................................    4,710   4,157
                                                                   --------  ------
      Total current liabilities...................................    8,751   9,084
  Deferred income taxes...........................................    2,459   2,509
                                                                   --------  ------
      Total liabilities...........................................   11,210  11,593
                                                                   --------  ------
Shareholders' equity:
  Preferred stock; 2,000,000 shares authorized; no shares issued..      --      --
  Common stock, no par value; 20,000,000 shares authorized;
   13,830,000 shares issued as of April 30, 1999 and 1998.........      --      --
  Additional paid-in capital......................................   43,187  43,187
  Accumulated deficit.............................................  (10,176) (2,068)
  Treasury stock, at cost: 410,800 and 205,300 shares as of
   April 30, 1999 and 1998, respectively..........................   (3,543) (1,882)
                                                                   --------  ------
      Total shareholders' equity..................................   29,468  39,237
Commitments and contingencies.....................................      --      --
                                                                   --------  ------
                                                                   $ 40,678  50,830
                                                                   ========  ======
</TABLE>


            See accompanying notes to combined financial statements.


                                       35
<PAGE>

                                 LOGILITY, INC.

                       Combined Statements of Operations
                     (In thousands, except per share data)
                   Years ended April 30, 1999, 1998, and 1997

<TABLE>
<CAPTION>
                                                        1999     1998   1997
                                                       -------  ------ ------
<S>                                                    <C>      <C>    <C>
Revenues:
  License............................................. $11,384  20,138 12,359
  Maintenance.........................................   7,967   7,167  5,051
  Services............................................   7,666   7,357  4,414
                                                       -------  ------ ------
    Total revenues....................................  27,017  34,662 21,824
                                                       -------  ------ ------
Cost of revenues:
  License.............................................   4,433   5,299  3,970
  Maintenance.........................................   2,194   1,582  1,219
  Services............................................   3,468   3,683  1,969
                                                       -------  ------ ------
    Total cost of revenues............................  10,095  10,564  7,158
                                                       -------  ------ ------
    Gross margin......................................  16,922  24,098 14,666
Operating expenses:
  Research and development............................   6,165   5,592  3,484
  Sales and marketing.................................  14,507  13,676 10,628
  General and administrative..........................   4,302   3,111  2,508
  Charge for asset impairment.........................   1,230     --     --
                                                       -------  ------ ------
    Total operating expenses..........................  26,204  22,379 16,620
                                                       -------  ------ ------
    Operating income (loss)...........................  (9,282)  1,719 (1,954)
Other income, net.....................................   1,274     863     --
                                                       -------  ------ ------
    Income (loss) before income taxes.................  (8,008)  2,582 (1,954)
Income tax expense....................................     100     --     --
                                                       -------  ------ ------
    Net income (loss)................................. $(8,108)  2,582 (1,954)
                                                       =======  ====== ======
Basic and diluted net earnings (loss) per common
 share................................................ $ (0.60)   0.20  (0.17)
                                                       =======  ====== ======
Shares used in the calculation of net earnings (loss)
 per common share:
  Basic...............................................  13,486  12,671 11,300
                                                       =======  ====== ======
  Diluted.............................................  13,486  12,676 11,300
                                                       =======  ====== ======
</TABLE>

            See accompanying notes to combined financial statements.

                                       36
<PAGE>

                                 LOGILITY, INC.

                  Combined Statements of Shareholders' Equity
                       (in thousands, except share data)
                     Years ended April 30, 1999, 1998, 1997

<TABLE>
<CAPTION>
                            Common stock    Additional                                     Total
                          -----------------  paid-in   Divisional Accumulated Treasury shareholders'
                            Shares   Amount  capital     equity     deficit    stock      equity
                          ---------- ------ ---------- ---------- ----------- -------- -------------
<S>                       <C>        <C>    <C>        <C>        <C>         <C>      <C>
Balance at April 30,
 1996...................         --  $ --      3,664      6,698      (3,138)      --       7,224
Contribution from
 (dividend to) American
 Software, Inc..........         --    --       (798)     2,196         --        --       1,398
Issuance of common stock
 in connection with
 formation..............  11,300,000   --      5,053     (5,053)        --        --         --
Net loss................         --    --        --      (1,970)         16       --      (1,954)
                          ---------- -----    ------     ------     -------    ------     ------
Balance at April 30,
 1997...................  11,300,000   --      7,919      1,871      (3,122)      --       6,668
Contribution from
 (dividend to) American
 Software, Inc..........         --    --        115       (346)        --        --        (231)
Proceeds from initial
 public offering........   2,530,000   --     33,152        --          --        --      33,152
Divisional equity
 contribution...........         --    --      2,001     (2,001)        --        --         --
Repurchase of 205,300
 common shares..........         --    --        --         --          --     (1,882)    (1,882)
Distribution to American
 Software, Inc. under
 Tax Sharing Agreement..         --    --        --         --       (1,052)      --      (1,052)
Net earnings............         --    --        --         476       2,106       --       2,582
                          ---------- -----    ------     ------     -------    ------     ------
Balance at April 30,
 1998...................  13,830,000   --     43,187        --       (2,068)   (1,882)    39,237
Repurchase of 205,500
 common shares..........         --    --        --         --          --     (1,661)    (1,661)
Net loss................         --    --        --         --       (8,108)      --      (8,108)
                          ---------- -----    ------     ------     -------    ------     ------
Balance at April 30,
 1999...................  13,830,000 $ --     43,187        --      (10,176)   (3,543)    29,468
                          ========== =====    ======     ======     =======    ======     ======
</TABLE>


            See accompanying notes to combined financial statements.

                                       37
<PAGE>

                                 LOGILITY, INC.

                       Combined Statements of Cash Flows
                                 (In thousands)
                   Years ended April 30, 1999, 1998, and 1997
<TABLE>
<CAPTION>
                                                       1999     1998     1997
                                                     --------  -------  ------
<S>                                                  <C>       <C>      <C>
Cash flows from operating activities:
  Net income (loss)................................. $ (8,108)   2,582  (1,954)
  Adjustments to reconcile net income (loss) to net
   cash
   provided by operating activities:
    Depreciation and amortization...................    3,862    4,737   3,258
    Charge for asset impairment.....................    1,230      --      --
    (Increase) decrease in assets:
      Accounts receivable...........................    3,392   (4,214) (1,248)
      Prepaid expenses and other assets.............      320     (613)   (111)
    Increase (decrease) in liabilities:
      Accounts payable..............................     (154)    (122)  1,165
      Accrued liabilities...........................      229    1,072     647
      Deferred revenues.............................      553      271     933
      Due to American Software, Inc.................     (961)     (91)    --
                                                     --------  -------  ------
        Net cash provided by operating activities...      363    3,622   2,690
                                                     --------  -------  ------
Cash flows from investing activities:
  Additions to capitalized computer software
   development costs................................   (3,952)  (3,169) (2,795)
  Additions to purchased computer software costs....      (28)    (235)    (36)
  Purchases of furniture and equipment..............     (755)  (1,136)   (545)
  Purchase of minority investment in business.......     (763)     --      --
  Proceeds from maturities of investments...........   97,718      --      --
  Purchases of investments..........................  (82,183) (29,559)    --
                                                     --------  -------  ------
        Net cash provided by (used in) investing
         activities.................................   10,037  (34,099) (3,376)
                                                     --------  -------  ------
Cash flows from financing activities:
  Deferred income taxes resulting from Tax Sharing
   Agreement........................................      (50)    (288)      7
  Contributions from (dividends to) American
   Software, Inc....................................      --      (231)  1,398
  Proceeds from initial public offering.............      --    33,152     --
  Repurchases of common stock.......................   (1,661)  (1,882)    --
                                                     --------  -------  ------
        Net cash provided by (used in) financing
         activities.................................   (1,711)  30,751   1,405
                                                     --------  -------  ------
        Net increase in cash and cash equivalents...    8,689      274     719
Cash and cash equivalents at beginning of year......    1,006      732      13
                                                     ========  =======  ======
Cash and cash equivalents at end of year............ $  9,695    1,006     732
                                                     ========  =======  ======
Supplemental disclosure:
  Cash paid for income taxes........................ $    102      --      --
                                                     ========  =======  ======
</TABLE>


            See accompanying notes to combined financial statements.

                                       38
<PAGE>

                                 LOGILITY, INC.

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                         April 30, 1999, 1998, and 1997

(1) Presentation and Summary of Significant Accounting Policies

 (a) Business and Presentation

   Logility, Inc. (the "Company") develops, markets, and supports an integrated
suite of client-server value chain management software products. This suite of
products is designed to manage the flow of information and products along the
entire value chain of an enterprise, from raw materials, manufacturing, and
warehousing to final consumption. The Company's products and services are used
by customers within the United States and certain international markets.

   The Company is headquartered in Atlanta, Georgia, and is approximately an
84%-owned subsidiary of American Software, Inc. ("ASI"). Prior to the
contribution of the following operations by ASI to the Company, the Company's
operations consisted of the following divisions and subsidiary of ASI which
were derived from ASI's consolidated financial statements: Supply Chain
Planning and WarehousePRO divisions of ASI; and Distribution Sciences Inc., a
wholly owned subsidiary of ASI. Effective January 23, 1997, in connection with
the purchase of 11,300,000 shares of the common stock of the Company, ASI
formally contributed its Supply Chain Planning division to the Company.
Accordingly, divisional equity was reduced by $5,053,000 and that same amount
was transferred to additional paid-in capital to reflect the contribution of
the Supply Chain Planning division to the Company.

   Divisional equity reflects each division's net equity and net income (loss)
prior to the division being contributed to the Company inasmuch as the
divisions are not separate legal entities. On January 23, 1997, the Supply
Chain Planning division was contributed to the Company and the Supply Chain
Planning's divisional equity was reclassified to additional paid-in capital.
The net income (loss) for the Supply Chain Planning division since January 23,
1997 has been included in accumulated deficit. The WarehousePro division's net
equity and results of operations are reflected in divisional equity as of April
30, 1997. Effective August 1, 1997, ASI contributed its WarehousePRO division
to the Company. In conjunction with this contribution, divisional equity was
eliminated and transferred to additional paid-in capital on the effective date.

   Distribution Sciences, Inc. was merged into the Company on August 5, 1997.
This merger was accounted for in a manner similar to a pooling of interests
and, therefore, Distribution Sciences' results of operations are included for
all periods presented and are reflected in accumulated deficit.

   The accompanying combined financial statements include the historical cost
of the assets and liabilities and the results of operations of the Company's
constituent businesses as reflected in ASI's consolidated financial statements.
The Supply Chain Planning and WarehousePRO divisions required certain estimates
and allocations which ASI believes approximate costs that relate to the
Company's operations. Balance sheet amounts were generally derived based upon
specific identification of assets and liabilities and certain allocations
relating to the Supply Chain Planning division and WarehousePRO division. Since
Distribution Sciences, Inc. was a separate business, no allocations were
necessary, other than income taxes.

 (b) Revenue Recognition

   The Company recognizes revenue in accordance with Statement of
Position 97-2, Software Revenue Recognition.

   License. License revenues in connection with license agreements for standard
proprietary and tailored software are recognized upon delivery of the software,
provided collection is considered probable, the fee is fixed or determinable,
there is evidence of an arrangement, and vendor specific evidence exists to
allocate the total fee to all elements of the arrangement.

                                       39
<PAGE>

                                 LOGILITY, INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

                         April 30, 1999, 1998, and 1997


   Maintenance. Maintenance fees are generally billed annually in advance and
the resulting revenues are recognized ratably over the term of the maintenance
agreement.

   Services. Revenues derived from services primarily include consulting,
implementation, and training. Fees are billed under both time and materials and
fixed fee arrangements and are recognized as services are performed.

   Deferred Revenues. Deferred revenues represent advance payments or billings
for software licenses, services, and maintenance billed in advance of the time
revenues are recognized.

 (c) Cost of Revenues

   Cost of revenues for licenses include amortization of capitalized computer
software development costs and purchased computer software costs, salaries and
benefits, and royalties paid to third-party software vendors. Costs for
maintenance and services include the cost of personnel to conduct
implementations and customer support, consulting, and other personnel-related
expenses.

 (d) Cash and Cash Equivalents

   The Company considers all highly liquid investments with maturities of three
months or less when purchased to be cash equivalents.

 (e) Investments

   Investments at April 30, 1999 consist of commercial paper and debt
securities. The Company accounts for its investments under the provisions of
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities ("SFAS No. 115"). In accordance with
SFAS No. 115, the Company has classified its investment portfolio as "held-to-
maturity," and has accounted for these investments at amortized cost.
Accordingly, no adjustment for unrealized holding gains or losses has been
reflected in the Company's financial statements.

 (f) Furniture and Equipment

   Furniture and equipment are recorded at cost, less accumulated depreciation.
Depreciation of computer and communications equipment and furniture and
fixtures is calculated using the straight-line method based upon an estimated
useful life of three to five years.

 (g) Intangible Assets

   Capitalized Computer Software Development Costs. The Company capitalizes
certain computer software development costs in accordance with Statement of
Financial Accounting Standards No. 86, Accounting for the Costs of Computer
Software to Be Sold, Leased, or Otherwise Marketed. Costs incurred internally
to create a computer software product or to develop an enhancement to an
existing product are charged to expense when incurred as research and
development expense until technological feasibility for the respective product
is established. Thereafter, all software development costs are capitalized and
reported at the lower of unamortized cost or net realizable value.
Capitalization ceases when the product or enhancement is available for general
release to customers. The Company makes ongoing evaluations of the
recoverability of its capitalized software projects by comparing the amount
capitalized for each product to the estimated net realizable value of the

                                       40
<PAGE>

                                 LOGILITY, INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

                         April 30, 1999, 1998, and 1997

product. If such evaluations indicate that the unamortized software development
costs exceed the net realizable value, the Company writes off the amount by
which the unamortized software development costs exceed net realizable value.
Capitalized computer software development costs are being amortized ratably
based on the projected revenue associated with the related software or on a
straight-line basis over three years, whichever method results in a higher
level of amortization.

   Purchased Computer Software Costs. Purchased computer software costs
represent the cost of acquiring computer software. Amortization of purchased
computer software costs is calculated using the straight-line method over
periods of three to five years.

   Total Expenditures, Amortization, and Write-offs. Total expenditures for
capitalized computer software development costs, total research and development
expense, total amortization of capitalized computer software development costs,
total amortization of purchased computer software costs and write-off of
capitalized computer software costs are as follows:

<TABLE>
<CAPTION>
                                                          Years ended April 30,
                                                         ------------------------
                                                           1999     1998   1997
                                                         --------- --------------
                                                             (in thousands)
<S>                                                      <C>       <C>    <C>
Total capitalized computer software development costs..  $   3,952  3,169  2,795
Total research and development expense.................      6,165  5,592  3,484
                                                         --------- ------ ------
Total research and development expense and capitalized
 computer software development costs...................  $  10,117  8,761  6,279
                                                         --------- ------ ------
Total amortization of capitalized computer software
 development costs.....................................  $   3,169  4,057  2,828
                                                         --------- ------ ------
Total amortization of purchased computer software
 costs.................................................  $     244    251    233
                                                         --------- ------ ------
Write-off of capitalized computer software costs as a
 result
 of net realizable value analysis......................  $   1,230    --     --
                                                         --------- ------ ------
</TABLE>

 (h) Income Taxes

   The Company accounts for income taxes using Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes ("SFAS No. 109").
SFAS No. 109 requires an asset and liability method of accounting for income
taxes. Under the asset and liability method of SFAS No. 109, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes
the enactment date. The Company's results of operations are included in the
consolidated Federal income tax return filed by ASI.

 (i) Use of Estimates

   Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these combined financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from these estimates.

                                       41
<PAGE>

                                 LOGILITY, INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

                         April 30, 1999, 1998, and 1997


 (j) Fair Value of Financial Instruments

   The Company uses financial instruments in the normal course of its business.
The carrying values of cash equivalents, trade accounts receivable and accounts
payable approximate fair value due to the short-term maturities of these assets
and liabilities. See note 2 for disclosures regarding the fair value of the
Company's investments.

 (k) Stock Compensation Plans

   The Company has adopted Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation ("SFAS No. 123"), which encourages
entities to recognize as compensation expense over the vesting period the fair
value of all stock-based awards on the date of grant. Alternatively, SFAS
No. 123 allows entities to apply the provisions of Accounting Principles Board
("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and provide
pro forma disclosures for employee stock option grants as if the fair-value-
based method as defined in SFAS No. 123 had been applied. Under APB Opinion No.
25, compensation expense is recorded on the date of grant if the current market
price of the underlying stock granted exceeds the exercise price. The Company
has elected to apply the provisions of APB Opinion No. 25 and provide the pro
forma disclosures under the provisions of SFAS No. 123.

 (l) Impairment of Long-Lived Assets

   The Company accounts for long-lived assets in accordance with Statement of
Financial Accounting Standards No. 121, Accounting for Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of ("SFAS No. 121"), which
requires that long-lived assets and certain identifiable intangibles held and
used by a company be reviewed for possible impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. SFAS No. 121 also requires that long-lived assets and certain
identifiable intangibles held for sale, other than those related to
discontinued operations, be reported at the lower of carrying amount or fair
value less cost to sell.

 (m) Comprehensive Income

   On May 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 ("SFAS No. 130"), Reporting Comprehensive Income. SFAS No.
130 establishes standards for reporting and presentation of comprehensive
income and its components in a full set of financial statements. No statements
of comprehensive income (loss) have been included in the accompanying combined
financial statements since comprehensive income (loss) and net income (loss)
presented in the accompanying combined statements of operations would be the
same.

 (n) Net Earnings (Loss) Per Common Share

   On January 31, 1998, the Company adopted Statement of Financial Accounting
Standards No. 128, Earnings Per Share ("SFAS No. 128"), which prescribes the
calculation methodology and financial reporting requirements for basic and
diluted earnings per share. Basic earnings (loss) per common share available to
common stockholders are based on the weighted-average number of common shares
outstanding. Diluted earnings (loss) per common share available to common
stockholders are based on the weighted-average number of common shares
outstanding and dilutive potential common shares, such as dilutive stock
options. For the year ended April 30, 1999, options to purchase 555,446 shares
of common stock were excluded from the computation of diluted earnings (loss)
per share because they were antidilutive.

                                       42
<PAGE>

                                 LOGILITY, INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

                         April 30, 1999, 1998, and 1997


 (o) Industry Segments

   On February 1, 1999, the Company adopted Statement of Financial Accounting
Standards No. 131, Disclosures About Segments of an Enterprise and Related
Information. The Company operates and manages its business in one segment, that
being providing value chain management software solutions to participants along
the value chain.

(2) Investments

   Investments, which are classified as held-to-maturity, consist of the
following at April 30, 1999 and 1998 (in thousands):

<TABLE>
<CAPTION>
                                      1999                       1998
                           -------------------------- --------------------------
                                           Unrealized
                           Carrying  Fair     gain    Carrying  Fair  Unrealized
                            value   value    (loss)    value   value     gain
                           -------- ------ ---------- -------- ------ ----------
<S>                        <C>      <C>    <C>        <C>      <C>    <C>
Commercial paper.......... $  5,229  5,236      7      11,182  11,229     47
Corporate bonds...........    8,795  8,780    (15)     16,377  16,520    143
Other.....................      --     --     --        2,000   2,000    --
                           -------- ------    ---      ------  ------    ---
                           $ 14,024 14,016     (8)     29,559  29,741    190
                           ======== ======    ===      ======  ======    ===
</TABLE>

   The maturity of all investments as of April 30, 1999 is within one year.

(3) Furniture and Equipment

   Furniture and equipment consist of the following at April 30, 1999 and 1998
(in thousands):

<TABLE>
<CAPTION>
                                                                    1999   1998
                                                                   ------- -----
   <S>                                                             <C>     <C>
   Computer and communications equipment.......................... $ 2,780 2,205
   Furniture and fixtures.........................................     404   224
                                                                   ------- -----
                                                                     3,184 2,429
   Less accumulated depreciation..................................   1,295   846
                                                                   ------- -----
                                                                   $ 1,889 1,583
                                                                   ======= =====
</TABLE>

(4) Intangible Assets

   Intangible assets consist of the following at April 30, 1999 and 1998 (in
thousands):

<TABLE>
<CAPTION>
                                                                   1999    1998
                                                                  ------- ------
   <S>                                                            <C>     <C>
   Capitalized computer software development costs............... $14,632 14,949
   Purchased computer software costs.............................   1,158  1,130
                                                                  ------- ------
                                                                   15,790 16,079
   Less accumulated amortization.................................   9,588  9,214
                                                                  ------- ------
                                                                  $ 6,202  6,865
                                                                  ======= ======
</TABLE>

   During the year ended April 30, 1999, a charge of $1.23 million was recorded
to write off certain capitalized software development costs, which mainly
relate to legacy technology within the Company's warehouse management product
line. These costs were determined to be unrecoverable based upon an evaluation
of the net recoverable value of the related software products.


                                       43
<PAGE>

                                 LOGILITY, INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

                         April 30, 1999, 1998, and 1997

(5) Purchase of Minority Investment in Business

   During the year ended April 30, 1999, the Company acquired 10% of the
outstanding common stock of INSIGHT, INC., a leading provider of optimization
technology for support chain modeling and logistics systems, for $763,000. The
investment in INSIGHT, INC. is accounted for on the cost basis of accounting
and is included in other assets.


(6) Income Taxes

   The Company is included in the consolidated Federal income tax return filed
by ASI; however, the Company has provided for income taxes as if it were filing
a separate income tax return.

   The Company's effective tax rate differs from the "expected" income tax
expense (benefit) calculated by applying the Federal statutory rate of 34% to
earnings (loss) before income taxes as follows:

<TABLE>
<CAPTION>
                                                      Years ended April 30,
                                                      --------------------------
                                                        1999     1998    1997
                                                      --------  -------  -------
                                                          (in thousands)
<S>                                                   <C>       <C>      <C>
Computed "expected" income tax expense (benefit)..... $ (2,723)     878   (664)
Increase (decrease) in income taxes resulting from:
  State income taxes, net of Federal income tax
   effect............................................       66      102    (78)
  Change in the beginning-of-year balance of the
   valuation allowance for deferred tax assets.......    2,872   (1,045)   719
  Other, net.........................................     (115)      65     23
                                                      --------  -------  -----
                                                      $    100      --     --
                                                      ========  =======  =====

   The significant components of deferred income tax expense (benefit)
attributable to earnings (loss) before income taxes for the years ended April
30, 1999, 1998, and 1997, are as follows:

<CAPTION>
                                                      Years ended April 30,
                                                      --------------------------
                                                        1999     1998    1997
                                                      --------  -------  -------
                                                          (in thousands)
<S>                                                   <C>       <C>      <C>
Deferred income tax expense (benefit)................ $ (2,872)   1,045   (719)
  Increase (decrease) in beginning-of-year balance of
     the valuation allowance for deferred tax
     assets..........................................    2,872   (1,045)   719
                                                      --------  -------  -----
                                                      $    --       --     --
                                                      ========  =======  =====
</TABLE>

                                       44
<PAGE>

                                 LOGILITY, INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

                         April 30, 1999, 1998, and 1997


   The income tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax liabilities
computed on a separate return basis and before consideration of the Company's
Tax Sharing Agreement with ASI at April 30, 1999 and 1998 are presented as
follows:

<TABLE>
<CAPTION>
                                                                Years ended
                                                                 April 30,
                                                                -----------
                                                                1999  1998
                                                                ----- -----
                                                                (in thousands)
<S>                                                             <C>   <C>   <C>
Deferred income tax assets:
  Compensated absences and other expenses, due to accrual
   for financial reporting purposes............................ $ 249   292
  Accounts receivable, due to allowance for doubtful accounts..   170   160
  Net operating loss carryforwards............................. 6,838 3,983
    Total gross deferred income tax assets..................... 7,257 4,435
  Less valuation allowance..................................... 4,798 1,926
    Net deferred income tax assets............................. 2,459 2,509
Deferred income tax liabilities:
  Capitalized computer software development costs.............. 2,292 2,461
  Property and equipment, primarily due to differences in
   depreciation................................................   167    48
                                                                ----- -----
    Total gross deferred income tax liabilities................ 2,459 2,509
                                                                ----- -----
    Net deferred income tax asset (liability).................. $ --    --
                                                                ===== =====
</TABLE>

   In accordance with the Company's Tax Sharing Agreement with ASI, the Company
computes a separate, stand-alone income tax provision and settles balances due
to or from ASI on this basis. All benefits derived from deferred tax assets as
defined in the Tax Sharing Agreement (which include net operating loss and tax
credit carryforwards) that arose prior to the initial public offering were
allocated to ASI. Accordingly, the Company will not receive any benefit from
the $5,768,000 of gross deferred tax assets calculated on a separate return
basis at April 30, 1997. However, deferred tax liabilities were allocated to
the Company (which gave rise to the Company's net deferred tax liability of
$2,459,000 at April 30, 1999 and $2,509,000 at April 30, 1998). After the
initial public offering, to the extent the tax computation produces a tax
benefit for the Company, ASI will be required to pay such amounts to the
Company only if and when realized by ASI by the reduction in income taxes
payable with respect to the current tax period. The Company had net stand-alone
taxable income for 1998, therefore, the corresponding calculated income taxes
due are recorded as a distribution to ASI in the combined statement of
shareholders' equity. At April 30, 1999, ASI had net operating loss
carryforwards of approximately $20,000,000 which must be utilized by ASI before
the Company would receive payment for any currently generated tax benefits.
Such net operating losses expire in varying amounts through 2019.

(7)Stockholders' Equity

 (a) Completion of Initial Public Offering

   On October 10, 1997, the Company successfully completed its initial public
offering of common stock. The Company sold 2.2 million shares of common stock
in the initial public offering for approximately $31.9 million less issuance
costs of $3.1 million.

   On November 6, 1997, the Company sold 330,000 shares of common stock as part
of the underwriters' overallotment from the initial public offering for $4.8
million less issuance costs of approximately $400,000.

                                       45
<PAGE>

                                 LOGILITY, INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

                         April 30, 1999, 1998, and 1997


 (b) Stock Compensation

   As of April 30, 1997, the Company had not issued any stock options; however,
certain employees of the Company received stock options of ASI. Effective
August 7, 1997, the Company adopted the Logility, Inc. 1997 Stock Plan ("Stock
Plan"). The Stock Plan provides for grants of incentive stock options and
nonqualified stock options to certain key employees and directors of the
Company. The Stock Plan also allows for stock appreciation rights in lieu of or
in addition to stock options. Options to purchase a maximum of 1,200,000 shares
of common stock and a maximum of 300,000 units of Stock Appreciation Rights
("SARs"), as defined, may be granted under the Stock Plan. The options and SARs
generally vest over a four-year period. The terms of the options generally are
for ten years, and the terms of the SARs generally are for five years.

   During the year ended April 30, 1999, the Company granted a total of 600,130
options of which 136,280 options were issued in exchange for the surrender of
an equal number of previously issued options which had exercise prices ranging
from $7.13 to $14.50. These repriced options, which excluded executive
management, were issued at the fair market value of the stock at the date of
grant of $2.75.

   A summary of the status of the Company's Stock Plan as of April 30, 1999 and
1998, and changes during the years then ended is presented below:

<TABLE>
<CAPTION>
                                                                    Weighted-
                                                         Shares   average price
                                                        --------  -------------
<S>                                                     <C>       <C>
Outstanding at April 30, 1997..........................      --      $   --
Granted................................................  267,890       12.97
Forfeited/canceled.....................................   (5,820)      13.67
                                                        --------     -------
Outstanding at April 30, 1998..........................  262,070       12.96
Granted................................................  600,130        2.93
Forfeited/canceled..................................... (306,754)       8.78
                                                        --------     -------
Outstanding at April 30, 1999..........................  555,446     $  4.22
                                                        --------     -------
Options exercisable at April 30, 1999..................   28,150     $ 11.76
                                                        --------     -------
Weighted-average fair value of options granted during:
  1999.................................................              $  1.71
                                                                     =======
  1998.................................................              $ 10.74
                                                                     =======
</TABLE>

   The following table summarizes information about fixed stock options
outstanding at April 30, 1999:

<TABLE>
   <S>                <C>            <C>              <C>            <C>            <C>
                         Options outstanding                              Options exercisable
   -----------------------------------------------------------------------------------------------
                                        Weighted-
                          Number         average        Weighted-        Number       Weighted-
       Range of       outstanding at    remaining        average     exercisable at    average
    exercise prices   April 30, 1999 contractual life exercise price April 30, 1999 exercise price
   ----------------   -------------- ---------------- -------------- -------------- --------------
      $2.75 -  5.00          491,210              9.4 $         2.91          6,000 $         3.65
       5.01 - 15.13           64,236              8.4          14.23         22,150          13.96
                      --------------                                 --------------
                             555,446              9.3 $         4.22         28,150 $        11.76
                      ==============                                 ==============
</TABLE>


                                       46
<PAGE>

                                 LOGILITY, INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

                         April 30, 1999, 1998, and 1997

   ASI and the Company apply the provisions of APB Opinion No. 25 and related
interpretations in accounting for its stock option plans. Accordingly, no
compensation cost has been recognized for ASI's and the Company's stock option
plans. Had compensation cost for the Company's share of ASI's stock-based
compensation plans and its own stock option plan been determined consistent
with SFAS No. 123, the Company's net income (loss) and net income (loss) per
common share would have been reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                       Years ended April 30,
                                                      -------------------------
                                                       1999     1998     1997
                                                      -------  -------  -------
                                                       (in thousands, except
                                                          per share data)
<S>                                                   <C>      <C>      <C>
Net income (loss):
  As reported........................................ $(8,108)   2,582   (1,954)
  Pro forma..........................................  (9,254)   1,176   (2,759)
Diluted net income (loss) per common share:
  As reported........................................ $  (.60)     .20     (.17)
  Pro forma..........................................    (.69)     .09     (.24)

   The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions:

<CAPTION>
                                                       1999     1998     1997
                                                      -------  -------  -------
<S>                                                   <C>      <C>      <C>
Dividend yield.......................................       0%       0%       0%
Expected volatility..................................   131.4%    62.1%   211.9%
Risk-free interest rate..............................     5.6%     5.6%     6.1%
Expected life........................................ 8 years  8 years  8 years
</TABLE>

 (c) Employee Stock Purchase Plan

   In November 1998 the Company began an Employee Stock Purchase Plan that
offers employees the right to purchase shares of the Company's common stock at
85% of the market price, as defined, pursuant to the Employee Stock Purchase
Plan (the "Purchase Plan"). Under the Purchase Plan, full-time employees,
except persons owning 5% or more of the Company's common stock, are eligible to
participate after one month of employment. Employees may contribute up to 15%
of their annual salary toward the Purchase Plan up to a maximum of $15,000 per
year. Common stock is purchased in the open market on behalf of the
participants. The Company contributes to the purchase price by funding a 15%
discount to market price. A maximum of 200,000 shares of common stock may be
purchased under the Purchase Plan. During the fiscal year ended April 30, 1999,
12,874 shares were purchased on the open market, at a cost to the Company of
$12,615, representing the the funded discount from market price.

(8) International Revenues

   International revenues were $3,893,000 or 14%, $3,197,000 or 9%, and
$2,574,000 or 12% of combined revenues for the years ended April 30, 1999,
1998, and 1997, respectively, and were derived primarily from customers in
Europe.

                                       47
<PAGE>

                                 LOGILITY, INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

                         April 30, 1999, 1998, and 1997


(9) Commitments and Contingencies

 (a) 401(k) Profit Sharing Plan

   The employees of the Company are offered the opportunity to participate in
the ASI 401(k) Profit Sharing Plan (the "401(k) Plan"), which is intended to be
a tax-qualified defined contribution plan under Section 401(k) of the Internal
Revenue Code. Under the 401(k) Plan, employees who have completed one year of
service are eligible to participate. Eligible employees may contribute up to
15% of pretax income to the 401(k) Plan. Subject to certain limitations, the
Company may make a discretionary matching contribution at an amount determined
by the Board of Directors of the Company. The Company did not make
contributions for 1999, 1998, or 1997.

 (b) Lease Commitments

   The Company occupies its principal office facilities under a facilities
agreement with ASI dated August 1, 1997, that is cancelable upon 90-day notice
by either party (see note 10). Amounts allocated to the Company for rent
expense for these facilities was $342,000, $342,000, and $524,000 for the years
ended April 30, 1999, 1998, and 1997, respectively. In addition, the Company
has various other operating leases. Rent expense under these facility leases
was $529,000, $401,000, and $332,000 for the years ended April 30, 1999, 1998,
and 1997, respectively.

   Future minimum lease payments under noncancelable operating leases (excludes
cancelable leases with ASI) are as follows (in thousands):

<TABLE>
<CAPTION>
            Year ending April 30,
            ---------------------
            <S>                                     <C>
            2000................................... $ 317
            2001...................................   114
            2002...................................    29
                                                    -----
                                                    $ 460
                                                    =====
</TABLE>

 (c) Contingencies

   The Company is involved in various claims arising in the ordinary course of
business. In the opinion of management, the ultimate disposition of these
matters will not have a material adverse effect on the financial position or
results of operations of the Company.

(10) Agreements with ASI

   Prior to August 1, 1997 (except for the Tax Sharing Agreement which was
effective January 23, 1997), ASI provided marketing services, employees, and
office space to the Company, allowed the Company to participate in insurance
coverage and benefit plans, and provided certain other administrative services
to the Company. The combined statements of operations include the allocation of
these expenses incurred by ASI to the Company based on percentage of license
fees, specific identification, direct labor hours, head count, product license
fees to total license fees, and square footage of leased properties. Management
believes the methods of allocation are reasonable.

                                       48
<PAGE>

                                 LOGILITY, INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

                         April 30, 1999, 1998, and 1997


   Effective August 1, 1997 (except for the Tax Sharing Agreement, which was
effective January 23, 1997), the Company entered into certain contractual
arrangements with ASI related to the following:

     Tax Sharing Agreement--The terms and payments under the Tax Sharing
  Agreement are described in note 6.

     Services Agreement--Commencing August 1, 1997, the Company began
  purchasing (or selling) various services from (to) ASI based upon various
  cost methodologies as described below:

<TABLE>
<CAPTION>
                                                         Expense for the   Expense from
                                                           year ended     August 1, 1997
Service                       Cost methodology           April 30, 1999  to April 30, 1998
----------------------------  -------------------------- --------------- -----------------
<S>                           <C>                        <C>             <C>
 . General corporate services  Apportioned based on         $1,167,000         530,000
                              apportionment formula
                              to all ASI subsidiaries
 . Professional services to    Cost plus billing with the      219,000         472,000
  customers on behalf of the  percentage of costs and
  Company (services are       expenses to be negotiated
  available unless ASI
  determines it is not
  economic or otherwise
  feasible)
 . Employee benefits services  Apportioned based on             95,000          65,000
                              apportionment formula
                              to all ASI subsidiaries
</TABLE>

<TABLE>
<S>                                                   <C>            <C>
Facilities Agreement--The Company leases various          342,000        330,000
properties from ASI for specified square foot rates.
The stated term of the agreement is for two years;
however, they may be terminated by either party
after a 90-day notice.
Stock Option Agreement--The Company has granted ASI   Not applicable Not applicable
an option to purchase Company common stock to enable
ASI to maintain the necessary ownership percentage
required to consolidate the Company in ASI's
consolidated Federal income tax return. The purchase
price of the option is the average of the closing
price on each of the five business days immediately
preceding the date of payment.
Technology License Agreement--The Company granted     Not applicable Not applicable
ASI a nonexclusive, nontransferable, worldwide
perpetual right and license to use, execute,
reproduce, display, etc. its Value Chain Planning
and Execution Solutions (which ASI had transferred
to the Company) so that ASI may maintain and support
end-users of the software products. The license is
fully paid and royalty-free.
Marketing License Agreement--The Company utilizes         308,000      1,108,000
ASI as a nonexclusive marketing representative for
licensing of its products and pays ASI 30% (50% for
certain international licenses) of net license fees
for its services. The stated term of the agreement
is for five years, but may be terminated at either
party's discretion upon 12 months' notice.
</TABLE>


                                       49
<PAGE>

                          Independent Auditors' Report

The Board of Directors and Shareholders
Logility, Inc.:

   We have audited the accompanying combined balance sheets of Logility, Inc.
as of April 30, 1999 and 1998, and the related combined statements of
operations, shareholders' equity, and cash flows for each of the years in the
three-year period ended April 30, 1999. These combined financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these combined financial statements based on our audits.

   We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

   In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Logility, Inc. as
of April 30, 1999 and 1998, and the results of its operations and its cash
flows for each of the years in the three-year period ended April 30, 1999, in
conformity with generally accepted accounting principles.

                                          /s/ KPMG LLP

Atlanta, Georgia
June 18, 1999

                                       50
<PAGE>

                                                                      Schedule I

                                 LOGILITY, INC.

                       Valuation and Qualifying Accounts
                   Years ended April 30, 1997, 1998, and 1999
                                 (in thousands)

                        Allowance for Doubtful Accounts

<TABLE>
<CAPTION>
                                 Balance at Additions                Balance at
                                 beginning   charged                   end of
                                 of period  to expense Deductions(1)   period
                                 ---------- ---------- ------------  ----------
<S>                              <C>        <C>        <C>           <C>
Year ended April 30, 1997.......    $330       302         211          421
Year ended April 30, 1998.......     421       --          --           421
Year ended April 30, 1999.......     421       907         881          447
</TABLE>
--------
(1) Write-off of uncollectible accounts

                                       51
<PAGE>

                          Independent Auditors' Report

The Board of Directors and Shareholders
Logility, Inc.:

   Under date of June 18, 1999, we reported on the combined balance sheets of
Logility, Inc. as of April 30, 1999 and 1998, and the related combined
statements of operations, shareholders' equity, and cash flows for each of the
years in the three-year period ended April 30, 1999, which are included in the
April 30, 1999, annual report on Form 10-K. In connection with our audits of
the aforementioned combined financial statements, we also audited the related
combined financial statement schedule included in the Form 10-K. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audits.

   In our opinion, such financial statement schedule, when considered in
relation to the basic combined financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.

                                          /s/ KPMG LLP

Atlanta, Georgia
June 18, 1999

                                       52