<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, 2001

                                       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)

<TABLE>
<S>                                            <C>
                   Georgia                                       58-2281338
       (State or other jurisdiction of               (IRS Employer Identification No.)
       incorporation or organization)

       470 East Paces Ferry Road, N.E.                             30305
              Atlanta, Georgia                                   (Zip Code)
  (Address of principal executive offices)

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

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

<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. [X]

   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. [_]

   At July 12, 2001, 13,253,503 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 12, 2001) of the
shares held by nonaffiliates was approximately $6.4 million.

           DOCUMENTS INCORPORATED BY REFERENCE; LOCATION IN FORM 10-K

1. 2001 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; developments in our
markets and strategic focus; future economic, business and regulatory
conditions; strategic relationships; new products and product enhancements;
future customer benefits attributable to our products; and potential
acquisitions and the integration of acquired businesses, products and
technologies. The cautionary statements made in this Form 10-K should be read
as being applicable to all related forward-looking statements wherever they
appear in this Form 10-K. Our 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 provides e-Business solutions for business-
to-business (B2B) collaborative commerce that optimize internal and external
supply chain efficiencies of manufacturers, suppliers, distributors, retailers
and other organizations. The supply chain refers to the complex network of
relationships that organizations maintain with trading partners to source,
manufacture, and deliver products to the customer and includes demand chain,
supply chain, logistics, warehouse management and business-to-business process
management for collaborative relationships between customers, suppliers and
carriers. Logility's solutions enable enterprises to significantly improve
efficiencies, collaborate with suppliers and customers, respond to market
demands and engage in dynamic business relationships via the Internet. Logility
Voyager Solutions(TM) consists of an Internet-based, integrated software suite
that provides advanced supply chain management including collaborative
planning, strategic network design, optimized supply sourcing, warehouse
management, and collaborative logistics capabilities that are designed to
increase revenues, reduce inventory costs, improve forecast accuracy, decrease
order cycle times, optimize production scheduling, streamline logistics
operations, reduce transportation costs and improve customer service across our
customers' supply chains, corporate Internet portals and public e-Business
trading exchanges.

   Leveraging our supply chain management expertise, Logility has been an
innovator in developing and deploying B2B e-Business with our first Internet-
based collaborative planning solution implemented in 1996. We continue to
invest and expand our e-Business offerings and innovative solutions, which
support the Voluntary Interindustry Commerce Standards Association ("VICS"),
Collaborative Planning, Forecasting and Replenishment (CPFR(R)) standards, as
well as other emerging collaborative supply chain management standards for
transportation and distribution center management. Our Logility Voyager
Solutions suite and related services are designed to power the emerging
Internet trading exchanges and private marketplaces for collaborative planning
and procurement of direct materials and collaborative transportation
management. We believe that private and public Internet-based trading exchanges
and marketplaces will increase demand for our solutions. We will continue to
focus our efforts on the evolving market requirements for innovative B2B e-
Business solutions.

   Our software solution is modular and scaleable to meet the management
requirements of complex organizations involving tens of thousands of products
across multiple sites. In addition, customers can integrate our solution with
existing software systems and a variety of Internet and client-server operating
environments and platforms. We have licensed one or more modules of Logility
Voyager Solutions to more than 400 companies worldwide, including British
Telecommunications, Canandaigua Wine, CITGO, ConAgra, Eastman Chemical Company,
Epson America, Florida Power and Light, Heineken USA, The HoneyBaked Ham

                                       2
<PAGE>

Company, Komatsu America International, L'Oreal USA, Magneti Marelli, Mercury
Marine, Pharmacia & Upjohn, Pfizer International, Porsche, Rand McNally,
Reynolds Metals, Sony Electronics, VF Corporation, and Xpedex. We sell our
products through direct and indirect channels. We derived approximately 14% of
our revenues in the fiscal year ended April 30, 2001 from international sales.

Industry Background

   In response to global competitive pressures, companies are continually
seeking new ways to enhance the productivity of their enterprise business
systems and processes. Those companies that effectively communicate,
collaborate and integrate with their trading partners within the extended
enterprise or "supply chain" can realize significant competitive advantages in
the form of lower costs, greater customer responsiveness, and increased
revenue. Supply chain management refers to the process of managing the complex
network of relationships that organizations maintain with external trading
partners (suppliers, manufacturers, distributors and retailers) to source,
manufacture and deliver goods and services to the end consumer. Supply chain
management involves both the activities related to supplying products or
services (source, make, move, buy, store, and deliver) 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 supply chain. A general shift in
market power has forced manufacturers and distributors to become more
responsive to retailers and consumers, which has increased the demand 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 supply 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.

   The growth and rapid adoption of the Internet has enhanced the ability of
organizations along the supply chain to integrate their processes through
collaborative planning to synchronize internal assets and production with
external demand and supplier capabilities. Behind this rapid adoption are
technologies and concepts that are converging more quickly than ever before
toward the enormous opportunities to reduce costs, earn fees or sell products,
and optimize operations that facilitate e-Business and the integration of
supply chains comprised of suppliers, manufacturers, distributors, retailers
and customers. These "networked" supply chains are evolving into Internet-based
trading exchanges or marketplaces, re-engineering business processes to improve
flexibility and responsiveness to changing market conditions. The result is
business-to-business e-Business, focused on planning, forecasting, procurement
of direct materials and fulfillment and delivery of customer orders.

   AMR Research (AMR Research, "The Executive View," February 2001 and The
Report on e-Commerce Applications, April 2000) projects that B2B e-commerce
will reach $5.7 trillion by the end of 2004, representing 29% of the dollar
value of US-based commercial transactions. AMR states: "E-commerce does not
replace the need to improve internal Supply Chain Management (SCM) practices.
On the contrary, e-commerce is the next step in the evolution of advanced SCM
concepts. To take full advantage of B2B e-commerce's rapid adoption, companies
will have to step up the implementation of Advanced Planning and Scheduling
(APS), Available-to-Promise (ATP), Vendor-Managed Inventories (VMIs),
collaboration, and other supply chain management techniques."

   To leverage the Internet for commercial benefit and facilitate enhanced
collaboration among the various trading partners in the supply chain,
organizations are increasingly deploying business-to-business e-Business
solutions to address their planning and supply chain 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,

                                       3
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distribution, transportation and manufacturing planning and scheduling.
Planning software is designed to increase revenues, improve forecast accuracy,
optimize production scheduling, reduce inventory costs, decrease order cycle
times, reduce transportation costs, and improve customer service. The supply
chain execution function addresses procuring, manufacturing, order fulfillment
and distributing products throughout the supply chain. Within the supply chain
execution function, organizations are increasing their focus on the effective
management of warehouse and transportation operations and the need for
integration with planning systems and other enterprise applications, to
increase the efficient and effective fulfillment of customer orders in both the
business-to-business and the business-to-consumer sectors.

   In order to effectively manage and coordinate supply chain activities,
companies require planning and supply chain execution software that provides
for integrated communication, optimization and collaboration among the various
constituents along the supply chain. This enhanced collaboration synchronizes
production plans with demand forecasts, thereby minimizing bottlenecks that
lead to production delays and excess inventory. Companies that have implemented
our advanced collaboration processes such as Collaborative Planning,
Forecasting and Replenishment (CPFR) have seen benefits such as increased
revenues, lower operational costs and shortened cycle times. According to the
Voluntary Interindustry Commerce Standards Association, of which Logility is an
advisory board member on the CPFR subcommittee, "CPFR is a business process
model for supply 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 supply chain 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.

Strategy

   Our objective is to be the leading provider of business-to-business (B2B)
collaborative commerce solutions to power e-Business and optimize the supply
chain, enabling companies to optimize their operations associated with the
sourcing, manufacture and distribution of products in distribution-intensive
target markets such as consumer goods, retail and process manufacturing. Our
strategy includes the following key elements:

     Leverage and Expand Installed Base of Customers. We currently target
  businesses in the consumer goods, retail, chemicals, pharmaceuticals, food
  and beverage, and aftermarket distribution supply chains consisting of
  suppliers, manufacturers, distributors, and retailers. We intend to
  continue to leverage our installed base of more than 400 customers to
  introduce additional functionality, product upgrades, complementary
  modules, and application hosting services. In addition, we intend to expand
  sales to new customers in our existing vertical markets and to target
  additional vertical markets over time.

     Continue to Expand Sales and Marketing. We intend to continue to pursue
  an increased share of the e-Business market for business-to-business
  software solutions by focusing our sales and marketing activities on supply
  chain collaboration and optimization initiatives in distribution-intensive
  industries such as consumer products, retail, food and beverage, and
  aftermarket distribution. Our competitive advantage is providing the most
  rapid implementation, an easy-to-maintain configuration, and rapid time-to-
  benefit across the full suite of supply chain products. We intend to
  continue building a direct sales force that is focused on selected vertical
  markets, such as consumer goods, retail and manufacturing supply chains.

     Expand Indirect Channels to Increase Market Penetration. We believe that
  key relationships with value added resellers will increase sales and expand
  market penetration of our products. In the fiscal year ended April 30,
  2001, we established a strategic relationship with Microsoft Great Plains
  Business Solutions (formerly Great Plains Software) to market, sell,
  implement and support components of the Logility Voyager Solutions suite as
  the Supply Chain Series Powered by Logility. Additionally, we

                                       4
<PAGE>

  established reseller relationships with Pitney Bowes and 3Plex for
  marketing, sales and implementation of the transportation collaboration,
  planning and management components of the Logility Voyager Solutions suite.
  We also expanded our marketing relationship with IBM to include key
  business partners within the IBM distribution channel.

     Maintain Technology Leadership. We believe that we are a technology
  leader in the field of collaborative commerce and supply chain optimization
  solutions and intend to continue to provide innovative, advanced solutions
  and services to this market. We believe that we were one of the earliest
  providers of supply chain planning software solutions on a client-server
  platform and on Windows NT, and the first to introduce a collaborative
  supply chain planning solution that operates over the Internet. We intend
  to continue to develop and introduce new or enhanced products and keep pace
  with technological developments and emerging industry standards. The
  Logility Voyager Solutions suite is available on the Windows NT/2000, Unix
  and AS/400 server platforms and supports Oracle, Microsoft SQL Server and
  DB2 databases.

     Extend e-Business Strategy. We continued an e-Business initiative in
  fiscal year 2001 to deliver a full suite of products and services for
  Internet-based collaborative supply chain planning and execution to power
  business-to-business trading exchanges and marketplaces. Our collaborative
  commerce strategy includes four levels of products and services designed to
  enable the optimization of the customer's supply chain. These products and
  services include:

    . Logility Voyager Solutions--B2B collaborative commerce supply chain
      management business application solution suite for end-to-end supply
      chain management including network design, planning, forecasting,
      supply optimization, warehouse and transportation management

    . Supply Chain Collaboration--Expands the number of business processes
      that can be executed via intranets, extranets and the Internet to
      include both internal and external trading partners for automated,
      exception-based management of collaborative initiatives inside an
      organization as well as between buyer and seller trading partners

    . Supply Chain Event Management--Provides advanced exception-based
      management of supply chain performance by allowing trading partners
      to efficiently monitor, notify, control and measure supply chain
      processes to prioritize daily activities and ensure optimal
      performance within an organization and across the supply chain

    . i-CommunitySM--Logility's applications hosting service, enables
      companies to rapidly deploy and easily maintain their collaborative
      relationships with trading partners through a web-based network
      and/or Logility's traditional supply chain management offerings

     Invest Aggressively to Build Market Share. Logility will continue to
  make investments to expand our sales force, research and development
  efforts, and consulting infrastructure balanced with our goals for
  increasing profitability. We believe investments are necessary to increase
  our market share and to capitalize on the growth opportunities in the
  emerging business-to-business e-Business market.

     Acquire or Invest in Complementary Businesses, Products and
  Technologies. We believe that select acquisitions or investments may
  provide opportunities to broaden our product offering to provide more
  advanced solutions for e-Business which complement or expand our solutions
  and target markets.

     Focus on Integrated Planning and Supply Chain Execution Solution. We
  believe we are one of the few providers of integrated supply chain
  management software solutions addressing demand and supply planning as well
  as transportation and warehousing logistics requirements. We are focusing
  on providing the most comprehensive planning and execution solution aimed
  at optimizing operations along the supply chain. We intend to continue to
  focus our development initiatives on enhancing our end-to-end solution and
  introducing additional capabilities that complement our integrated
  solution.


                                       5
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     Focus on MidMarket. We have 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 our historical
  customer profile, and are prime candidates for the purchase and use of our
  unique full suite of integrated products operating on Windows NT/Windows
  2000, OS400, and UNIX platforms.

     Increase Penetration of International Markets. In the fiscal year ended
  April 30, 2001, we generated 14% of our total revenues from international
  sales, resulting from marketing relationships with a number of
  international distributors. We intend to expand our international presence
  by creating additional relationships with distributors in Latin America,
  Europe, and the Asia/Pacific region.

     Expand Strategic Relationships. We intend to expand the depth and number
  of strategic relationships with leading enterprise software, systems
  integrators and e-Business vendors to integrate the Logility Voyager
  Solutions suite into their services and products and to create joint
  marketing opportunities. We have a number of marketing alliances, including
  those with GERS Retail Systems, IBM, INSIGHT, Inc., Microsoft, Microsoft
  Great Plains Business Solutions (formerly Great Plains Software), Pitney
  Bowes, 3Plex, and Tompkins Associates. In addition, we have developed a
  network of international agents who assist in the sale and support of our
  products. We intend to utilize these and future relationships with software
  and service organizations to enhance our sales and marketing position.

     Continue to Focus on Providing High Quality Customer Service. Providing
  high quality customer service is a critical element of our strategy. We
  intend to continue to invest in technology and personnel to accommodate the
  needs of our growing customer base. Logility will continue to seek new ways
  to improve service to customers. By providing application hosting services,
  our customers have an alternative deployment option to managing their own
  Logility Voyager Solutions applications.

Logility Products and Services

 Key Benefits

   Our integrated product line, Logility Voyager Solutions, is an e-Business
suite of business-to-business collaborative commerce solutions that enables
end-to-end supply chain management within and between manufacturers, suppliers,
distributors and retailers to more effectively manage the activities along
their respective supply chains and enable collaboration among external trading
partners. Logility also provides collaborative commerce products to expand the
number of business processes that can be executed via intranets, extranets and
the Internet. Logility's services include the i-Community, which facilitates
CPFR-based collaborative commerce within a web-based network of trading
partners, including suppliers, manufacturers, retailers and customers. Logility
Voyager Solutions are also designed to power Internet-based trading exchanges,
marketplaces and private company portals. The i-Community is powered by the
Logility Voyager Solutions suite and enables companies to quickly reap the
benefits of collaboration with external trading partners.

   The key benefits of our software solutions and services include the
following:

     e-Business Solution for End-to-End Supply Chain Management. Our Logility
  Voyager Solutions provide functionality that addresses both the flow of
  information and the flow of products throughout the supply chain. By
  synchronizing our comprehensive planning software products with our
  transportation and warehouse management software solutions, our 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 supply chain including
  collaboration with external trading partners.

     Advanced Collaborative Planning and Supply Chain Execution
  Functionality. Our products allow for collaboration among the various
  levels within an organization and among external constituents (trading
  partners) throughout the supply chain. The architecture of Logility Voyager
  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

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  consensus plan. Our collaborative planning functionality is further
  enhanced with collaborative commerce tools such as Logility Voyager
  Collaborate(TM) (formerly Logility Voyager XPS(TM), eXtensible Planning
  Solution), which leverages Internet technology to facilitate information
  sharing directly with trading partners. Voyager Collaborate supports the
  business processes and practices defined in the VICS' CPFR guidelines,
  enabling B2B collaborative commerce via the Internet between two or more
  trading partners. Complementing Voyager Collaborate for supply chain
  planning is Logility Voyager Fulfill(TM) (formerly Logility Voyager
  XES(TM), eXtensible Execution Solution) on the supply chain execution side.
  Voyager Fulfill extends collaboration to transportation and distribution
  center management trading partners. Through our i-CommunitySM, a
  collaborative network of trading partners, customers will be able to
  exchange information and conduct collaborative planning, forecasting and
  replenishment as well as streamline the order fulfillment process through
  collaboration amongst warehouse, transportation and carrier trading
  partners. Voyager Fulfill supports emerging industry standards for
  collaborative transportation management.

     Comprehensive Planning Solution. Our planning solution is comprised of
  demand, inventory, event, life cycle, replenishment, supply, manufacturing,
  and transportation planning modules that balance demand opportunities with
  supply constraints through the synchronization of information gathered from
  supply chain participants. A key benefit of our planning solution
  components is its emphasis on addressing the full range of complex demand
  planning requirements of our customers, including comprehensive forecasting
  capabilities that take into account each user's unique perspective of the
  supply chain. Additionally, the solution implements and manages key
  business initiatives like profit maximization or cost minimization,
  advancing traditional distribution resource planning (DRP), and advanced
  planning systems (APS) by applying financial and optimization capabilities
  to sourcing decisions, enabling companies with complex supply chains to
  balance profits, costs, and service while simultaneously considering all
  supply chain constraints.

     Robust Supply Chain Execution Solution. The Supply Chain Execution
  components of Logility Voyager Solutions support the needs of single or
  multi-site operations by systematically balancing logistics strategies,
  customer service policies, carrier effectiveness and inventory levels to
  optimize warehouse and transportation operations. During fiscal year 2001,
  Logility introduced the industry's first Internet-based collaborative
  transportation management solution, Voyager Fulfill, that incorporates the
  carrier in the buyer/seller relationship to optimize order fulfillment,
  increase on-time shipments, and provide greater visiblity of the status of
  customer orders.

     Rapid Deployment. Our products utilize a modular design centered around
  proven business processes that streamline implementation and accelerate
  deployment. The comprehensive functionality of each module generally
  permits customers to implement the solutions with nominal modifications. In
  addition, our software combines sophisticated techniques and tools with
  intuitive, Windows-and browser-based interfaces to reduce training
  requirements and implementation tasks. The Logility i-Community provides a
  complete solution for web-based networking of trading partners that
  facilitates collaboration with suppliers, manufacturers, distributors,
  retailers and customers. The i-Community allows trading partners to quickly
  access and leverage the Logility Voyager Solutions suite and gain the
  benefits of e-Business via a hosted deployment with a web-browser access.

     Open, Scaleable, Internet and Client-Server Architecture. Logility's
  software has been designed to leverage the Internet to reach remote
  corporate users and incorporate external trading partners. The application
  suite integrates 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.

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 Product Features

   Logility Voyager Solutions is designed to synchronize demand opportunities
with supply constraints and logistics operations. The suite is comprised of a
series of Internet-based, integrated modules that provide a robust solution for
supply chain management resulting in both external and internal collaboration
to streamline the supply chain. These modules can be implemented individually,
as well as in combinations or as a full solution suite. Logility Voyager
Solutions supports multiple communications protocols and is designed to operate
with industry-standard open technologies, including leading web-based and
client-server environments, such as UNIX, AS/400 and Intel-based servers
running Windows NT/Windows 2000 on Oracle, Microsoft SQL Server 2000 and DB2
databases. The following table summarizes our product line:

           Module            Features
  -----------------------    --------
   SUPPLY CHAIN
   COLLABORATION
   Logility Voyager          . VICS Collaborative Planning, Forecasting and
   Collaborate (formerly       Replenishment (CPFR) compliant
   Logility Voyager XPS)     . Collaborative planning with trading partners
                               (customers and suppliers)
                             . Configurable deployment
                             . Open integration architecture supports rapid
                               integration with any forecasting scenario
                             . Value Chain Workflow
                             . Exception-based management of business
                               conditions across the supply chain
                             . Deployable in both private and public trading
                               exchanges

   Logility Voyager          . Collaborative warehouse and transportation
   Fulfill (formerly           planning with trading partners (suppliers,
   Logility Voyager XES)       customers, and carriers)
                             . Configurable deployment
                             . Open integration architecture
                             . Value Chain Workflow
                             . Exception-based management of order fulfillment
                               business conditions
                             . Deployable in both private and public trading
                               exchanges

   Logility Voyager          . Optimizes transportation performance and
   Select(TM)                  pricing for total landed cost calculations
                             . Targets private and public trading exchanges
                             . Extends order sourcing, procurement and
                               logistics offerings

   SUPPLY CHAIN EVENT
   MANAGEMENT
   Logility Voyager          . Provides supply chain event management for
   Navigate(TM)                increased visibility
                             . Exception-based management of the supply chain
                             . Efficiently monitors, notifies, controls and
                               measures supply chain performance
                             . Incorporates any Open Data Base Connectivity
                               (ODBC)-compliant data source for an accurate
                               view of key business conditions

   VALUE CHAIN STRATEGY
   Value Chain               . Strategic distribution network optimization
   Designer(TM)              . Customer assignment
                             . Facility location
                             . Balancing customer service levels and cost
                             . Sourcing selection and capacity planning

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            Module           Features
  -----------------------    --------
   DEMAND CHAIN PLANNING
   Life Cycle Planning       . Plans each phase of a product's life cycle from
                               introduction, maturity, replacement,
                               substitution and retirement
                             . Flexible demand profile definition
                             . Self-correcting model management automatically
                               reforecasts based on POS data
                             . Exception-based management alerts users of key
                               business conditions

   Demand Planning           . Item and Group forecasting
                             . 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
                             . Graphical simulations of inventory trade-off
                             . Views of dependent and independent demand
                             . Inventory management variables

   Event Planning            . Promotion planning
                             . Self-learning capabilities using artificial
                               intelligence
                             . Causal-based forecasting
                             . Promotion profitability simulations

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

   SUPPLY CHAIN PLANNING
   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

   Supply Planning           . Comprehensive constraint-based management of
                               sourcing process
                             . Supports business goals such as profit
                               maximization or cost minimization
                             . Provides available-to-promise (ATP), capable to
                               promise (CTP) and profitable to promise (PTP)
                               methodologies
                             . Exception-based management of supply chain
                               conditions

   Replenishment Planning    . Supports continuous replenishment strategies
                             . Provides time-phased distribution requirements
                               planning
                             . Proactive action messages
                             . EDI integration
                             . ATP methodologies
                             . Multi-site sourcing and allocation

                                       9
<PAGE>

           Module            Features
  -----------------------    --------
   Transportation Planning   . Load Control Center
                             . Shipment planning and consolidation
                             . Freight rating and routing
                             . Carrier selection
                             . Optimized inbound and outbound planning

   SUPPLY CHAIN EXECUTION
   Transportation            . Load tendering
   Management                . Shipment confirmation
                             . Freight audit and payment control
                             . Shipment documentation and tracking

   WarehousePRO(R)           . Customizable workflows and attributes
                               incorporate best-of-breed warehouse practices
                             . Directs all pick, pack, and ship activities
                               through hand-held radio frequency devices
                             . User terminals support a variety of languages
                             . Dynamic label and report printing
                             . Integrated graphical user interface

LOGILITY VOYAGER SOLUTIONS FOR B2B COLLABORATIVE COMMERCE

   These e-Business applications allow companies to execute and manage
strategic trading partner relationships for direct material procurement,
logistics and customer order fulfillment via the Internet, intranets and
extranets.

 SUPPLY CHAIN COLLABORATION

   Logility Voyager Collaborate (formerly Logility Voyager XPS) enables
companies to communicate easily and share real-time information with trading
partners by uniting suppliers, manufacturers, distributors and retailers under
the power of common goals, common business processes and VICS Collaborative
Planning, Forecasting and Replenishment (CPFR) standards that eliminates
traditional barriers among trading partners. Voyager Collaborate is a
completely CPFR-compliant application that provides configurable deployment,
scaleability, Microsoft-centric architecture, open-integration architecture,
value chain workflow and an exception-based management of business conditions
both within the enterprise and across the supply chain network.

   Logility Voyager Fulfill (formerly Logility Voyager XES) extends
collaboration to transportation and distribution center management trading
partners to allow real-time information sharing and collaboration between
customers, suppliers and carriers to ensure that customer orders are
efficiently scheduled, executed and tracked for on-time delivery. Voyager
Fulfill is compliant with emerging collaborative transportation management
standards and provides configurable deployment, scaleability, Microsoft-centric
architecture, open-integration architecture, value chain workflow and an
exception-based management of business conditions.

   Logility Voyager Select optimizes transportation performance and pricing for
private and public trading exchanges by enabling a total landed cost
calculation within order sourcing, procurement and logistics processes.


                                       10
<PAGE>

 SUPPLY CHAIN EVENT MANAGEMENT

   Logility Voyager Navigate provides the benefits of Supply Chain Event
Management (SCEM) by allowing trading partners to efficiently monitor, notify,
control and measure supply chain processes on an exception basis, both within
the company and throughout the supply chain to improve the efficiency and
effectiveness of the overall operation.

 VALUE CHAIN STRATEGY

   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.

 DEMAND CHAIN PLANNING

   These solutions provide the visibility to increase forecast accuracy by as
much as 40%. They create a comprehensive overview of demand. With demand
patterns revealed, companies can build plans that are totally attuned to the
market.

   Life Cycle Planning provides collaborative life cycle planning, enabling the
supply chain to effectively control each phase in a product's sunrise-to-sunset
cycle--including introduction, maturity, replacement, substitution and
retirement--to ensure that the right products are available at the point of
customer demand.

   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.

   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 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.

 SUPPLY CHAIN PLANNING

   Logility offers support for optimizing assets, synchronizing supply, and
planning order fulfillment. With multiple and simultaneous sourcing
capabilities, supply issues and alternatives are immediately visible.

                                       11
<PAGE>

   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 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.

   Supply Planning supports sourcing options based on business goals such as
profit maximization or cost minimization, balances manufacturing constraints,
and applies advanced financial and optimization capabilities to sourcing
decisions. Supply Planning also enables companies with complex supply chains to
balance profits, costs, and service while simultaneously considering all supply
chain constraints to satisfy business requirements.

   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.

   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. This product is designed to reduce freight costs, improve customer
service levels and increase responsiveness to customer requirements.

 SUPPLY CHAIN EXECUTION

   Logility provides capabilities for managing both inventory and
transportation with our Supply Chain Execution Solution. With these
applications, companies can systematically balance logistics strategies,
customer service policies, carrier effectiveness and inventory 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.

   WarehousePRO incorporates advanced workflow technology, industry-specific
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. WarehousePRO's performance analysis tools generate
graphical reports that illustrate productivity gains, warehouse efficiency and
inventory controls, enabling users to make real-time management decisions.

                                       12
<PAGE>

   The price for our 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, 2001, license fees for
new customers ranged from $123,000 to $1.2 million.

Customers

   We primarily target businesses in distribution-intensive markets such as
consumer-packaged goods, retail and manufacturing supply chains, including
suppliers, manufacturers, distributors and retailers. A sample of companies
that have purchased one or more of our products follows:

<TABLE>
<CAPTION>
                                     Chemicals, Oil & Gas,
   Consumer Goods                       Pharmaceuticals            Manufacturing and Others
   --------------             ----------------------------------- ---------------------------
   <S>                        <C>                                 <C>
   Ashley Furniture           BOC Distribution Services Ltd.      Appleton Paper
   Aurora Foods               CITGO Petroleum Corporation         British Telecommunications
   Bell Sports                Eastman Chemical Company            Corning Cable Systems
   Canandaigua Wine Company   Nordic Synthesis AB                 Dal-Tile Corporation
   ConAgra, Inc.              Pfizer, Inc.                        Florida Power & Light
   Eagle Family Foods         Pharmacia & Upjohn                  Koch Industries
   Heineken USA               Sigma-Aldrich Corporation           Magneti Marelli
   Haverty Furniture Company                                      Mercury Marine
   L'Oreal USA                                                    Mohawk Paper
   Maybelline Inc.                                                Peugeot International
   McCormick & Company                                            Powerware Corporation
   Nestle France                                                  Rand McNally & Company
   Pharmavite Corporation                                         Raytheon Marine Company
   Saks Incorporated                                              Reynolds Metals
   Sara Lee Knit Products                                         Robert Horne Paper Company
   S.C. Johnson & Sons, Inc.       After Market Distribution      RJ Reynolds
   Seagram's                       -------------------------      Sprint PCS
   The Franklin Mint          Epson America, Inc.                 Subaru of America, Inc.
   The HoneyBaked Ham         Komatsu America International       Tyco Plastics and Adhesives
    Company                   Porsche Cars of North America, Inc. US Ceramic Tile Company
   Tiffany & Co.              Rheem Manufacturing                 Xpedx
   Unilever Research          Sony Electronics
   VF Corporation
   Wickes Furniture

</TABLE>

   No single customer accounted for 10% or more of our total revenues during
fiscal year 2001.

Sales and Marketing

   We market our products through direct and indirect sales channels. We
conduct our principal sales and marketing activities from corporate
headquarters in Atlanta, Georgia, and have sales and/or support offices in
Boston, Chicago, Dallas, Pittsburgh and Raleigh. Sales channels outside of
North America are managed from Logility's international offices in the United
Kingdom, France, Spain and Australia.

   We have a number of marketing alliances, including those with GERS Retail
Systems, IBM, INSIGHT, Inc., Microsoft, Microsoft Great Plains Business
Solutions (formerly Great Plains Software), Pitney Bowes, 3Plex, and Tompkins
Associates. In addition, we have developed a network of international agents
who assist in selling our products in 25 countries. We intend to utilize these
and future relationships with software and service organizations to enhance our
sales and marketing position. These independent distributors and resellers
throughout Latin America, Europe and the Asia/Pacific region distribute our
product lines in foreign countries.

                                       13
<PAGE>

These vendors typically sell their own consulting and systems integration
services in conjunction with licensing our products.

   To support our direct sales force, we conduct marketing programs that
include public relations, direct marketing, advertising, trade shows, product
seminars, industry speakers, user group conferences and ongoing customer
communication programs.

Customer Service and Support

   We provide the following services and support to our customers:

     Implementation Support: ExpressROI(TM). We offer our customers a
  professional and proven implementation program that facilitates rapid
  implementation of our software products. Logility consultants, through the
  ExpressROI program, help customers define the nature of their project, and
  subsequently proceed through the implementation process. We provide
  training for all users and managers involved. We first establish measurable
  financial and logistical performance indicators, then evaluate them for
  conformance during and after implementation. Additional services beyond
  implementation can include post-implementation reviews and benchmarks to
  further enhance the benefits to customers.

     Implementation: General Training Services. We offer our customers post-
  delivery professional services consisting primarily of implementation and
  training services, for which we typically charge on a daily basis.
  Customers that choose to purchase implementation services receive
  assistance in integrating our solution with existing software applications
  and databases. Implementation of Logility Voyager 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. We provide our
  customers with ongoing product support services. Support or maintenance
  contracts typically are sold to customers for an initial three year term at
  the time of the product license with renewal for additional periods
  thereafter. Under these contracts, we provide telephone consulting, product
  updates and releases of new versions of products previously purchased by
  the customer, as well as error reporting and correction services. We
  provide 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

   During fiscal 2001, 2000, and 1999, we expensed approximately $5.2 million,
$4.9 million, and $6.2 million, respectively, for research and development. In
addition, we capitalized $3.0 million, $3.4 million, and $3.9 million in
software development costs during fiscal years 2001, 2000, and 1999,
respectively, in accordance with the Statement of Financial Accounting
Standards No. 86. Our internal new product development and enhancements of
existing products include two categories: research and development expenditures
and additions to capitalized computer software development costs. These
combined categories totaled $8.2 million, $8.3 million, and $10.1 million in
fiscal years 2001, 2000, and 1999, respectively, and represented 29%, 26%, and
37%, respectively, of total revenues in those years.

   We believe that our future success depends in part upon our 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. Our development
efforts are focused on, but are not limited to, enhancing operability of our
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 within a multi-tiered supply chain environment,
including the Internet.

   The current release of Logility Voyager Solutions is version 6.0. This
version is based on an integrated object-oriented architecture for maximum
scaleability and messaging functionality that supports the

                                       14
<PAGE>

increasingly distributed nature of supply chain planning, supply chain
execution and collaborative commerce. Logility Voyager Solutions easily
interfaces with leading ERP vendors such as SAP, Oracle and PeopleSoft.

Competition

   Our products are targeted at emerging markets within the application
software market, which is intensely competitive and characterized by rapid
technological change. Our 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. Our existing competitors include vendors focusing on the
supply chain application software market, such as i2 Technologies and
Manugistics. In addition, we face potential competition from (i) large
enterprise resource planning (ERP) application software vendors such as SAP,
PeopleSoft, JD Edwards, and Oracle, each of which currently offers
sophisticated ERP solutions that currently or may in the future incorporate
supply chain management modules, advanced planning and scheduling or
collaboration software; (ii) application hosting services vendors;
(iii) vendors that establish electronic marketplaces and indirect procurement
capabilities; (iv) other business application software vendors that may broaden
their product offerings by internally developing, or by acquiring or partnering
with independent developers of supply chain management software; and (v)
internal development efforts by corporate information technology departments.

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

   We also expect to face additional competition as other established and
emerging companies enter the market for collaborative commerce and supply 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 our
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 fewer customer
orders, reduced gross margins and loss of market share.

   Many of our competitors and potential competitors have significant worldwide
presence, longer operating histories, significantly greater financial,
technical, marketing and other resources, greater name recognition and a larger
installed base of customers than ours. Some competitors have become more
aggressive with their prices, payment terms and issuance of contractual
implementation terms or guarantees. In order to be successful in the future, we
must continue to develop innovative software solutions and respond promptly and
effectively to technological change and competitors' innovations. We may also
have to lower prices or offer other favorable terms. Our 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. The principal competitive factors affecting the
market for our 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

   Logility's success and ability to compete is dependent in part upon its
proprietary technology. To protect our proprietary technology, we rely 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 we rely on the limited protection
afforded by such confidential and contractual procedures and intellectual
property laws, we also believe that factors such as the knowledge, ability, and
experience of our personnel, new product developments, frequent product
enhancements, reliable maintenance and timeliness and quality of support
services are essential to establishing and maintaining a technology leadership
position. We presently have no

                                       15
<PAGE>

patents or patent applications pending. The source code for our proprietary
software is protected both as a trade secret and as a copyrighted work. We
generally enter into confidentiality or license agreements with our employees,
consultants and customers, and generally control access to and distribution of
our software, documentation and other proprietary information.

   We provide our software products to customers under non-exclusive license
agreements. As is customary in the software industry, in order to protect our
intellectual property rights, we do not sell or transfer title to our products
to our customers. Although the license agreements place restrictions on the use
by the customer of our products, there can be no assurance that unauthorized
use of our products will not occur. In addition, we have licensed the source
code for our 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 us in connection with the formation of Logility.

   Despite the measures taken to protect our proprietary rights, unauthorized
parties may attempt to reverse engineer or copy aspects of our products or to
obtain and use information that we regard as proprietary. Policing unauthorized
use of our products is difficult. In addition, litigation may be necessary in
the future to enforce our intellectual property rights, to protect our 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 our business, operating results and
financial condition.

   In the future, we may increasingly be subject to claims of intellectual
property infringement as the number of products and competitors in our industry
segment grows and the functionality of products in different industry segments
overlaps. Although we are not aware that any of our products infringe upon the
proprietary rights of third parties, there can be no assurance that third
parties will not claim infringement by us with respect to current or future
products. In addition, we may initiate claims or litigation against third
parties for infringement of our proprietary rights or to establish the validity
of our proprietary rights. Any such claims against us, with or without merit,
as well as claims initiated by us 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 us 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, require us
to enter into royalty arrangements or require us to cease the marketing or use
of certain products, any of which would have a material adverse effect on our
business, operating results and financial condition. To the extent that we
desire or are 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 us, if at all.

   We have relicensed, and expect in the future to relicense, certain software
from third parties for use in connection with our products. There can be no
assurance that these third-party software vendors will not change their product
offerings or that these software licenses will continue to be available to us
on commercially reasonable terms, if at all. The termination of any such
licenses or product offerings, or the failure of the third-party licensors to
adequately maintain or update their products, could result in delay in our
ability to ship certain of our products while we seek to implement technology
offered by alternative sources. Any required replacement licenses could prove
costly. Further, any such delay, if it becomes extended, could result in a
material adverse effect on our results of operations.

Employees

   As of April 30, 2001, Logility had 167 full-time employees, consisting of 49
in sales and marketing, 53 in product development, 59 in customer support and
implementation services and 6 in administration and finance. In addition, we
share a number of administrative and finance personnel with American Software.
None of our employees are represented by a labor union or are subject to a
collective bargaining agreement. Logility believes its employee relations are
good.

                                       16
<PAGE>

                                  RISK FACTORS

Factors That May Affect Future Results and Market Price of Stock.

   We have included certain forward-looking statements in the Management's
Discussion and Analysis of Financial Condition and Results of Operations and
elsewhere in this Form 10-K. We may also make oral and written forward-looking
statements from time to time, in reports filed with the Securities and Exchange
Commission, and otherwise. Actual results may differ materially from those
projected in any such forward-looking statements due to a number of factors,
including those set forth below and elsewhere in this Form 10-K.

   We operate in a dynamic and rapidly changing environment that involves
numerous risks and uncertainties. The following section lists some, but not
all, of the risks and uncertainties that may have a material adverse effect on
our business, financial condition or results of operations. This section should
be read in conjunction with the audited Consolidated Financial Statements and
Notes thereto, and Management's Discussion and Analysis of Financial Condition
and Results of Operations for the fiscal years ended April 30, 1999, 2000 and
2001 contained elsewhere in this Form 10-K.

We Could Experience Fluctuations in Quarterly Operating Results That Could
Adversely Impact Our Stock Price.

   Our revenues and results of operations are difficult to predict and may
fluctuate substantially from quarter to quarter. License revenues in any
quarter depend substantially upon our ability to recognize revenues in that
quarter in accordance with our revenue recognition policies.

   Our contracting activity is difficult to forecast for a variety of reasons,
including the following:

  . a significant portion of our license agreements are completed within the
    last few weeks of each quarter;

  . our sales cycle is relatively long and variable because of the complex
    and mission-critical nature of our products;

  . the size of our license transactions can vary significantly;

  . the possibility of economic downturns, both domestic and international,
    characterized by decreased product demand, price erosion, technological
    shifts, work slowdowns and layoffs, may substantially reduce customer
    demand and contracting activity;

  . customers may unexpectedly postpone or cancel system replacement or new
    system evaluations due to changes in their strategic priorities, project
    objectives, budgetary constraints or company management;

  . customer evaluations and purchasing processes vary from company to
    company, and a customer's internal approval and expenditure authorization
    process can be difficult and time consuming, even after selection of a
    vendor; and

  . the number, timing and significance of software product enhancements and
    new software product announcements by us and by our competitors may
    affect purchase decisions.

   Several factors may require us to defer recognition of license revenue for a
significant period of time after entering into a license agreement, including:

  . whether the license agreement relates to then unavailable software
    products;

  . whether transactions include both currently deliverable software products
    and software products that are under development or other undeliverable
    elements;

  . whether the customer demands services that include significant
    modifications, customizations or complex interfaces that could delay
    product delivery or acceptance;

                                       17
<PAGE>

  . whether the transaction involves acceptance criteria that may preclude
    revenue recognition or if there are identified product-related issues,
    such as known defects; and

  . whether the transaction involves payment terms or fees that depend upon
    contingencies.

   Because of the factors listed above and other specific requirements under
Generally Accepted Accounting Principles (GAAP) for software revenue
recognition, we must have very precise terms in our license agreements in order
to recognize revenue when we initially deliver software or perform services.
Although we have a standard form of license agreement that meets the criteria
under GAAP for current revenue recognition on delivered elements, we negotiate
and revise these terms and conditions in some transactions. Negotiation of
mutually acceptable terms and conditions can extend the sales cycle, and
sometimes we do not obtain terms and conditions that permit revenue recognition
at the time of delivery or even as work on the project is completed.

   Variances or slowdowns in our contracting activity in prior quarters may
affect current and future consulting, training and maintenance service revenues
since these revenues typically follow license fee revenues. Our ability to
maintain or increase services revenue primarily depends on our ability to
increase the number of our licensing agreements. In addition, our expense
levels, operating costs and hiring plans are based on projections of future
revenues and are relatively fixed. If our actual revenues fall below
expectations, our net income is likely to be disproportionately adversely
affected.

There Is Intense Competition in Our Industry, Which Requires Us to Constantly
Create New Products, Improve Our Existing Products and Sell Our Products at
Competitive Prices.

   We compete with a variety of software vendors, including:

  . vendors focusing on the supply chain application software market segment;

  . large ERP software vendors;

  . application hosting services vendors;

  . vendors that establish electronic marketplaces and indirect procurement
    capabilities; and

  . numerous other firms that offer products and services with new or
    advanced features.

   We also face competition from internal development efforts by corporate
information technology departments. As a result, the market for business
application software and related services has been and continues to be
intensely competitive. Some competitors have become more aggressive with their
prices and payment terms and issuance of contractual implementation terms or
guarantees. We may be unable to continue to compete successfully with new and
existing competitors without lowering prices or offering other favorable terms.

   In addition, we believe we must differentiate ourselves through different or
more subtle architectural and technological factors.

   Some of our competitors may have the following advantages over us:

  . significant worldwide presence;

  . longer operating and product development history;

  . substantially greater financial, technical and marketing resources than
    ours;

  . greater name recognition; and

  . a larger installed customer base than ours.


                                       18
<PAGE>

   Furthermore, potential customers may consider outsourcing options, including
application service providers, data center outsourcing and service bureaus as
viable alternatives to licensing our software products.

We May Derive a Significant Portion of Our Revenue in any Quarter from a
Limited Number of Large, Non-Recurring License Sales.

   We expect to continue to experience from time to time large, individual
license sales, which may cause significant variations in quarterly license
fees. We also believe that purchasing our products is relatively discretionary
and generally involves a significant commitment of a customer's capital
resources. Therefore, a downturn in any potential customer's business could
result in order cancellations that could have a significant adverse impact on
our revenue and quarterly results. Moreover, declines in general economic
conditions could precipitate significant reductions in corporate spending for
information technology, which could result in delays or cancellations of orders
for our products.

We Are Dependent Upon Key Personnel, and Need to Hire Additional Personnel in
All Areas.

   Our future operating results depend significantly upon the continued service
of a relatively small number of key senior management and technical personnel,
including our Chief Executive Officer, J. Michael Edenfield. None of our key
personnel are bound by long-term employment agreements. The loss of
Mr. Edenfield or one or more other key individuals could have an adverse effect
on us.

   Our future success also depends on our continuing ability to attract and
retain other highly qualified managerial and technical personnel. Competition
for these personnel is intense, and at times we have experienced difficulty in
recruiting and retaining qualified personnel. We may be unable to retain our
key managerial and technical employees and we may not be successful in
attracting, assimilating and retaining other highly qualified managerial and
technical personnel in the future. If our competitors increase their use of
non-compete agreements, the pool of available sales and technical personnel may
further narrow in certain areas, even if the non-compete agreements ultimately
prove to be unenforceable. We may grant large numbers of stock options to
attract and retain personnel, which could be highly dilutive to our
stockholders. The loss of key management and technical personnel or the
inability to attract and retain additional qualified personnel would have an
adverse effect on us.

We Rely to a Large Extent on Services Provided by American Software and Are
Subject to Effective Control by American Software.

   We operated as a division of American Software, Inc. until we went public in
1997. Today, we are approximately 85% owned by American Software. We receive a
substantial amount of financial, accounting, sales and management services from
American Software. Although the bulk of our sales are generated by our direct
sales force, we have relied, and we expect that we will continue to rely, to a
substantial extent on our sales relationship with American Software. We also
rely heavily on financial, accounting and management services provided by
American Software. With few exceptions, American Software has no obligation to
continue providing these services to us. Therefore, our business, operating
results and financial condition may be adversely affected by a reduction or
discontinuation of services from American Software.

   As long as American Software owns a majority of our Common Stock, it will be
able to determine, without the consent of our other stockholders, the outcome
of any corporate action requiring stockholder approval, including the election
of our entire Board of Directors. In addition, through its ownership of a
majority of our Common Stock and control of our Board of Directors, American
Software will be able to control our management and affairs, including all
determinations with respect to acquisitions, dispositions, mergers, and other
business combinations, borrowings, issuances of our Common Stock or other
equity securities, our dividend policy, and any change in control of Logility.

                                       19
<PAGE>

The Impact of Changes in Global Economic Conditions on Our Customers May Cause
Us to Fail to Meet Expectations, Which Would Negatively Impact the Price of Our
Stock.

   Our operating results can vary significantly based upon the effect of
changes in global economic conditions on our customers. In particular, the
current macro-economic environment is more uncertain than in recent periods and
has the potential to materially and adversely affect us. The revenue growth and
profitability of our business depends on the overall demand for computer
software and services, particularly in the areas in which we compete. Because
we sell primarily to major corporate customers whose businesses fluctuate with
general economic and business conditions, a softening of demand for computer
software caused by a weakening economy has resulted, and may continue to
result, in decreased revenues and lower growth rates. Because historically we
have relied upon relatively large license transactions, we may be especially
prone to this risk. Customers have, and may continue to, defer or reconsider
purchasing products if they experience a downturn in their business or if there
is a downturn in the general economy.

We Have Recently Expanded Our Technology into Several New Business Areas and
Cannot Be Certain that Our Expansion Will Be Successful.

   Our future success depends to a large degree on the Internet being accepted
and widely used for commerce. We have recently expanded our technology into a
number of new business areas to foster long-term growth, including electronic
commerce, on-line business services and other products and services that can be
offered over the Internet. These areas are relatively new to our product
development, sales and marketing personnel and we cannot be assured that the
markets for these products will develop or that we will be able to compete
effectively or will generate significant revenues in these new areas. As a
result, our success in these areas is difficult to predict.

Future Regulation of the Internet May Slow its Growth, Resulting in Decreased
Demand for Our Products and Services and Increased Costs of Doing Business.

   Due to increasing popularity of the Internet, it is possible that state,
federal and international regulators could adopt laws and regulations that
impose additional burdens on companies conducting business online. For example,
the growth and development of the market for Internet-based services may prompt
calls for more stringent consumer protection laws. Moreover, the applicability
to the Internet of existing laws in various jurisdictions governing issues such
as property ownership, sales tax, libel and personal privacy is uncertain and
may take years to resolve. Any new legislation or regulation, the application
of laws and regulations from jurisdictions whose laws do not currently apply to
our business, or the application of existing laws and regulations to the
Internet and other online services could inhibit the expansion of the Internet,
causing our costs to increase and our growth to be harmed.

The Viability of Electronic Marketplaces Is Uncertain.

   Electronic marketplaces that allow collaboration over the Internet among
trading partners are relatively new and unproven. There can be no assurance
that trading partners will adopt electronic marketplaces as a method of doing
business. Trading partners may fail to participate in electronic marketplaces
for a variety of reasons, including:

  . concerns about the confidentiality of information provided electronically
    to electronic marketplaces;

  . the inability of technological advances to keep pace with the volume of
    information processed by electronic marketplaces; and

  . regulatory issues, including antitrust issues that may arise when trading
    partners collaborate through electronic marketplaces.

                                       20
<PAGE>

   Any of these factors could limit the growth of electronic marketplaces as an
accepted means of commerce. Slower growth or the abandonment of the electronic
marketplace concept in one or more industries could have a material adverse
effect on our results of operations and financial condition.

We Depend on Third-Party Technology that Could Result in Increased Costs or
Delays in the Production and Improvement of Our Products.

   We license critical third-party software products that we incorporate into
our own software products. If any of the third-party software vendors were to
change their product offerings or terminate our licenses, we might need to
incur additional development or acquisition costs to ensure continued
performance of our products. In addition, if the cost of licensing any of these
third-party software products significantly increases, our gross margin levels
could significantly decrease.

   We rely on existing relationships with certain other software vendors who
are also competitors. If these vendors change their business practices in the
future, we may be compelled to find alternative vendors with complementary
software, which may not be available on attractive terms, or may not be as
widely accepted or as effective as the software provided by our existing
vendors.

Services Revenues Carry Lower Gross Margins Than License Revenues and an
Overall Increase in Services Revenue as a Percentage of Total Revenues Could
Have an Adverse Impact on Our Business.

   Because service revenues have lower gross margins than license revenues, an
increase in the percentage of total revenue represented by service revenues
could have a detrimental impact on our overall gross margins and could
adversely affect operating results. As a result, our gross margins can be
negatively affected based on the percentage of service revenues as a percentage
of total revenue and the mix between services that are provided by our
employees versus services provided by third-party consultants.

We May Change Our Pricing Practices, Which Could Impact Operating Margins or
Customer Ordering Patterns.

   In the future, we may choose to make changes to our pricing practices. For
example, we may (i) offer additional discounts to customers, (ii) increase (or
decrease) the use of pricing that involves periodic fees based on the number of
users of a product, or (iii) change maintenance pricing. Such changes could
reduce margins or inhibit our ability to sell our products.

Recent Accounting Pronouncements Could Adversely Impact Our Profitability by
Delaying Some Revenue Recognition into Future Periods.

   In recent years, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 97-2, "Software Revenue Recognition", and
SOP 98-9, "Modification of SOP 97-2, Software Revenue Recognition, With Respect
to Certain Transactions." These standards address software revenue recognition
matters primarily from a conceptual level and do not include specific
implementation guidance. We believe that we currently comply with SOPs 97-2 and
98-9.

   The American Institute of Certified Public Accountants has issued
implementation guidelines for these standards and the accounting profession is
still discussing a wide range of potential interpretations. These
implementation guidelines, once finalized, could lead to unanticipated changes
in our current revenue accounting practices that could cause us to recognize
lower profits. As a result, we may change our business practices significantly
in order to continue to recognize a substantial portion of our license revenues
when we deliver our software products and services. Such changes may adversely
affect our business.

   In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" ("SAB 101") and amended it in March 2000. We

                                       21
<PAGE>

were required to adopt the provisions of SAB 101 in our fourth quarter of
fiscal 2001. SAB 101 does not supercede the software industry specific revenue
recognition guidance, with which we believe we comply.

Our Continued Growth Depends Upon Our Ability to Build and Maintain Strategic
Relationships with Third Parties.

   A key aspect of our sales and marketing strategy is to build and maintain
strong working relationships with businesses that we believe play an important
role in the successful marketing of our software products and services. Our
current and potential customers often rely on third-party system integrators to
implement, deploy and manage client/server and other platform-based
applications. We believe that our marketing and sales efforts are enhanced by
the worldwide presence of these companies. However, these companies, most of
which have significantly greater financial and marketing resources than us, may
start, or in some cases increase, the marketing of business application
software in competition with us, or may otherwise discontinue their
relationships with or support of us. In addition, if these strategic partners
are unable to recruit and adequately train a sufficient number of consulting
personnel to support the implementation of our software products, we may lose
customers.

   As we have done in the past, in the future we may enter into various
development or joint business arrangements to develop new software products or
extensions to our existing software products. Under these joint business
arrangements, we may distribute ourself or jointly sell with our business
partners an integrated software product and pay a royalty to the business
partner based on end-user license fees. While we intend to develop business
applications that are integrated with our software products, these software
products may in fact not be integrated or brought to market or the market may
not accept the integrated enterprise solution. As a result, we may not achieve
the revenues that we anticipated at the time we entered into the joint business
arrangement.

Our Software Products and Product Development Are Complex, Which Make It
Increasingly Difficult to Innovate, Extend Our Product Offerings, and Avoid
Costs Related to Correction of Program Errors.

   The market for our software products is characterized by rapid technological
change, evolving industry standards, changes in customer requirements and
frequent new product introductions and enhancements. Our future success will
depend in part upon our ability to:

  . continue to enhance and expand our core applications;

  . continue to sell our products;

  . continue to successfully integrate third-party products;

  . enter new markets; and

  . develop and introduce new products that keep pace with technological
    developments, including developments related to the Internet, satisfy
    increasingly sophisticated customer requirements and achieve market
    acceptance. We may not be able to enhance existing products or develop
    and introduce new products in a timely manner.

   Our software products can be licensed for use with a variety of popular
industry standard database management systems. There may be future or existing
database management system platforms that achieve popularity within the
business application marketplace and on which we may desire to offer our
applications. These future or existing database management system products may
or may not be architecturally compatible with our software product design. We
may not be able to develop software products on additional platforms with the
specifications and within the time frame necessary for market success.

   Despite testing by us, our software programs, like all software programs
generally, may contain a number of undetected errors when they are first
introduced or as new releases are subsequently released. This may

                                       22
<PAGE>

result in increased costs to correct such errors and reduced acceptance of our
software products in the marketplace. The effort and expense of developing,
testing, implementing and maintaining software product lines will increase with
the increasing number of possible combinations of:

  . vendor hardware platforms;

  . operating systems and updated versions;

  . application software products and updated versions; and

  . database management system platforms and updated versions.

   Developing consistent software product performance characteristics across
all of these combinations could place a significant strain on our development
resources and software product release schedules.

Future Acquisitions May Not Be Successful.

   We may acquire or invest in complementary companies, products and
technologies, and enter into joint ventures and strategic alliances with other
companies. Risks commonly encountered in such transactions include:

  . the difficulty of assimilating the operations and personnel of the
    combined companies;

  . the risk that we may not be able to integrate the acquired technologies
    or products with our current products and technologies;

  . the potential disruption of our ongoing business;

  . the inability to retain key technical and managerial personnel;

  . the inability of management to maximize our financial and strategic
    position through the successful integration of acquired businesses;

  . adverse impact on our annual effective tax rate;

  . dilution of existing equity holders caused by capital stock issuances to
    the stockholders of acquired companies or to retain employees of the
    acquired companies;

  . difficulty in maintaining controls, procedures and policies;

  . potential adverse impact on our relationships with partner companies or
    third-party providers of technology or products;

  . the impairment of relationships with employees and customers; and

  . issues with product quality, product architecture, legal contingencies,
    product development issues, or other significant issues that may not be
    detected through our due diligence process.

   Recent changes in the law require the use of the purchase method of
accounting in all new business acquisitions. The purchase method of accounting
for business combinations may require large write-offs of any in-process
research and development costs related to companies being acquired, as well as
ongoing amortization costs for certain intangible assets and potential
impairment charges for goodwill valued in combinations of companies. Such
write-offs and ongoing amortization and other charges may have a significant
negative impact on operating margins and net income in the quarter of the
combination and for several subsequent years. We may not be successful in
overcoming these risks or any other problems encountered in connection with
such transactions.

                                       23
<PAGE>

Our International Operations and Sales Subject Us to Risks Associated with
Unexpected Activities Outside of the United States.

   The global reach of our business could cause us to be subject to unexpected,
uncontrollable and rapidly changing events and circumstances in addition to
those experienced in locations within the United States. Changes in the
following factors, among others, could have an adverse impact on our business
and earnings:

  . conducting business in currencies other than United States dollars
    subjects us to factors such as currency controls and fluctuations in
    currency exchange rates;

  . we may be unable to hedge some transactions because of uncertainty or the
    inability to reasonably estimate our foreign exchange exposure;

  . we may hedge some anticipated transactions and transaction exposures, but
    could experience losses if exchange rates move in the opposite direction;

  . differing foreign technical standards;

  . increased cost and development time required to localize our products;

  . lack of experience in a particular geographic market;

  . regulatory, social, political, labor or economic conditions in a specific
    country or region;

  . laws, policies and other regulatory requirements affecting trade and
    investment including loss or modification of exemptions for taxes and
    tariffs, and import and export license requirements;

  . exposure to different legal standards; and

  . operating costs in many countries are higher than in the United States.

We Have Limited Protection of Intellectual Property and Proprietary Rights and
May Potentially Infringe Third-Party Intellectual Property Rights.

   We consider certain aspects of our internal operations, software and
documentation to be proprietary, and rely on a combination of contract,
copyright, trademark and trade secret laws and other measures to protect this
information. Existing copyright laws afford only limited protection. We believe
that the rapid pace of technological change in the computer software industry
has made trade secret and copyright protection less significant than factors
such as:

  . knowledge, ability and experience of our employees;

  . frequent software product enhancements; and

  . timeliness and quality of support services.

   Our competitors may independently develop technologies that are
substantially equivalent or superior to our technology. The laws of some
countries in which our software products are or may be licensed do not protect
our software products and intellectual property rights to the same extent as
the laws of the United States. Defending our rights could be costly.

   Third parties may assert infringement claims against us. These assertions
could distract management, require us to enter into royalty arrangements, and
could result in costly and time consuming litigation, including damage awards.

We May Experience Liability Claims Arising Out of Licensing Our Software and
Providing Our Services.

   Our agreements normally contain provisions designed to limit our exposure to
potential liability claims. However, these provisions could be invalidated by
unfavorable judicial decisions or by federal, state, local or

                                       24
<PAGE>

foreign laws or ordinances. For example, we may not be able to avoid or limit
liability for disputes relating to product performance or the provision of
services. If a claim against us were to be successful, we may be required to
incur significant expense and pay substantial damages. Even if we prevailed,
the accompanying publicity could adversely impact the demand for our software.

Concerns That Our Products Do Not Adequately Protect the Privacy of Consumers
Could Inhibit Sales of Our Products.

   One of the features of our customer management software applications is the
ability to develop and maintain profiles of customers for use by businesses.
Typically, these products capture profile information when customers and
employees visit an Internet web-site and volunteer information in response to
survey questions concerning their backgrounds, interests and preferences. Our
products augment these profiles over time by collecting usage data. Although
our customer management products are designed to operate with applications that
protect user privacy, privacy concerns may nevertheless cause visitors to
resist providing the personal data necessary to support this profiling
capability. If we cannot adequately address customers' privacy concerns, these
concerns could seriously harm our business, financial condition and operating
results.

Increased Rate of Growth in Our Operations Could Increase Demands on Our
Managerial and Operational Resources.

   If the rate of growth in the scope of our operating and financial systems
and the geographic distribution of our operations and customers increases
dramatically, it may increase demands on our management and operations. Our
officers and other key employees will need to implement and improve our
operational, customer support and financial control systems and effectively
expand, train and manage our employee base. Further, we may be required to
manage an increasing number of relationships with various customers and other
third parties. We may not be able to manage future expansion successfully, and
our inability to do so could harm our business, operating results and financial
condition.

Our Stock Price Is Volatile and There Is a Risk of Litigation.

   The trading price of our common stock has in the past and may in the future
be subject to wide fluctuations in response to factors such as the following:

  . revenue or results of operations in any quarter failing to meet the
    expectations, published or otherwise, of the investment community;

  . announcements of technological innovations by us or our competitors;

  . new products or the acquisition of significant customers by us or our
    competitors;

  . developments with respect to our patents, copyrights or other proprietary
    rights or those of our competitors;

  . changes in recommendations or financial estimates by securities analysts;

  . changes in management;

  . conditions and trends in the software industry generally;

  . the announcement of acquisitions or other significant transactions by us
    or our competitors;

  . adoption of new accounting standards affecting the software industry; and

  . general market conditions and other factors.

   Fluctuations in the price of our common stock may expose us to the risk of
securities class action lawsuits. Although no such lawsuits are currently
pending against us and we are not aware that any such lawsuit is

                                       25
<PAGE>

threatened to be filed in the future, there is no assurance that we will not be
sued based on fluctuations in the price of our common stock.

Item 2. Facilities

   We maintain our headquarters in Atlanta, Georgia. Some of our 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. We also lease approximately 30,175 square feet of
office space in the United Kingdom. We believe our existing facilities are
adequate for our current needs and that suitable additional or substitute space
will be available as needed on commercially reasonable terms.

Item 3. Legal Proceedings

   We are 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 our recently completed fiscal year.

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

   Logility's Common Shares are listed on the NASDAQ Stock Market--National
Market under the symbol LGTY. As of July 12, 2001, there were 2,384
shareholders that hold their stock in nominee or "street" names through various
brokerage firms. The table below presents the quarterly high and low sales for
Logility, Inc.'s common stock as reported by NASDAQ, for our last two fiscal
years:

<TABLE>
<CAPTION>
   Fiscal Year 2001                                                  High   Low
   ----------------                                                 ------ -----
   <S>                                                              <C>    <C>
   First Quarter................................................... $ 7.88 $3.56
   Second Quarter.................................................. $ 4.91 $2.63
   Third Quarter................................................... $ 4.25 $1.13
   Fourth Quarter.................................................. $ 4.38 $2.34

<CAPTION>
   Fiscal Year 2000                                                  High   Low
   ----------------                                                 ------ -----
   <S>                                                              <C>    <C>
   First Quarter................................................... $ 5.75 $3.88
   Second Quarter.................................................. $ 4.88 $2.75
   Third Quarter................................................... $23.63 $3.00
   Fourth Quarter.................................................. $20.63 $5.88
</TABLE>

Dividends

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

Transfer Agent

   First Union National Bank
   Equity Services Group
   1525 West W.T. Harris Blvd, 3C3
   Charlotte, NC 28288
   Phone: (800) 829-8432
   www.firstunion.com/corptrust

                                       26
<PAGE>

   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:

Gruntal & Co., Incorporated
Herzog, Heine, Geduld, Inc.
Jefferies & Company, Inc.
Knight Securities L.P.
REDIBook ECN LLC.
Schwab Capital Markets
Sherwood Securities Corp.
Spear, Leeds & Kellogg
Wachovia Securities, Inc.

                                       27
<PAGE>

Item 6. Selected Combined Financial Data

   The selected combined financial data presented below for the fiscal years
ended April 30, 2001, 2000, 1999, 1998, and 1997 are derived from the audited
combined financial statements of Logility.

<TABLE>
<CAPTION>
                                               Years Ended April 30,
                                      -----------------------------------------
                                       2001     2000    1999     1998    1997
                                      -------  ------- -------  ------- -------
                                                  (in thousands)
<S>                                   <C>      <C>     <C>      <C>     <C>
Combined Statements of Operations
 Data:
Revenues:
  Licenses..........................  $ 8,587  $13,501 $11,384  $20,138 $12,359
  Maintenance.......................   10,491    9,418   7,967    7,167   5,051
  Services..........................    9,128    9,370   7,666    7,357   4,414
                                      -------  ------- -------  ------- -------
    Total revenues..................   28,206   32,289  27,017   34,662  21,824
                                      -------  ------- -------  ------- -------
Cost of Revenues:
  Licenses..........................    3,985    3,218   4,433    5,299   3,970
  Maintenance.......................    1,645    1,775   2,194    1,582   1,219
  Services..........................    6,227    5,144   3,468    3,683   1,969
                                      -------  ------- -------  ------- -------
    Total cost of revenues..........   11,857   10,137  10,095   10,564   7,158
                                      -------  ------- -------  ------- -------
Gross margin........................   16,349   22,152  16,922   24,098  14,666
Operating expenses:
  Research and development..........    5,211    4,949   6,165    5,592   3,484
  Sales and marketing...............   13,618   12,898  14,507   13,676  10,628
  General and administrative........    3,954    3,054   4,302    3,111   2,508
  Charge for restructuring/asset
   impairment.......................      476      --    1,230      --      --
                                      -------  ------- -------  ------- -------
    Total operating expenses........   23,259   20,901  26,204   22,379  16,620
                                      -------  ------- -------  ------- -------
Operating income (loss).............   (6,910)   1,251  (9,282)   1,719  (1,954)
Other income, net...................    1,218    1,137   1,274      863     --
                                      -------  ------- -------  ------- -------
Income (loss) before income taxes...   (5,692)   2,388  (8,008)   2,582  (1,954)
Income tax expense..................      --       --      100      --      --
                                      -------  ------- -------  ------- -------
Net income (loss)...................  $(5,692) $ 2,388 $(8,108) $ 2,582 $(1,954)
                                      =======  ======= =======  ======= =======
Net income (loss) per common share--
 Basic..............................  $ (0.43) $  0.18 $ (0.60) $  0.20 $ (0.17)
                                      =======  ======= =======  ======= =======
    Diluted.........................  $ (0.43) $  0.17 $ (0.60) $  0.20 $ (0.17)
                                      =======  ======= =======  ======= =======
Weighted average common shares--
 Basic..............................   13,289   13,333  13,486   12,671  11,300
                                      =======  ======= =======  ======= =======
    Diluted.........................   13,289   13,698  13,486   12,676  11,300
                                      =======  ======= =======  ======= =======
</TABLE>

<TABLE>
<CAPTION>
                                                     As of April 30,
                                         ---------------------------------------
                                          2001    2000    1999    1998    1997
                                         ------- ------- ------- ------- -------
                                                     (in thousands)
<S>                                      <C>     <C>     <C>     <C>     <C>
Combined Balance Sheet Data:
  Cash and cash equivalents............. $ 5,376 $ 3,524 $ 9,695 $ 1,006 $   732
  Investments, short-term...............  10,420  14,425  14,024  29,559     --
  Working capital.......................  14,469  17,307  22,814  33,006     557
  Total assets..........................  40,841  44,534  40,678  50,830  16,367
  Total shareholders' equity............  26,788  31,213  29,468  39,237   6,668
</TABLE>

                                       28
<PAGE>

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

   The discussion and analysis below contains 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 of our plan, objectives, expectations and intentions. Such
forward-looking statements generally are accompanied by words such as "plan,"
"estimate," "expect," "believe," "should," "would," "could," "anticipate,"
"may" or other words that convey uncertainty of future events or outcomes. The
forward-looking statements in this discussion and analysis are made in reliance
upon safe harbor provisions of the Private Securities Litigation Reform Act of
1995. The section above entitled "Risk Factors" sets forth certain factors that
could cause our actual future results to differ materially from those
statements.

   We recognize revenue in accordance with Statement of Position (SOP) 97-2,
Software Revenue Recognition, and SOP 98-9, Software Revenue Recognition with
Respect to Certain Transactions. 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 defer any revenue related to undelivered 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.

   The following table sets forth certain revenue and expense items as a
percentage of total revenues for the three years ended April 30, 2001 and the
percentage increases and decreases in those items for the years ended April 30,
2001 and 2000:

Years Ended April 30, 2001, 2000, and 1999:

<TABLE>
<CAPTION>
                                                                        2001 vs 2000 vs
Percentage of total revenues                        2001   2000  1999    2000    1999
----------------------------                        ----   ----  ----   ------- -------
<S>                                                 <C>    <C>   <C>    <C>     <C>
Revenues:
  License fees.....................................  31%    42%   42%     (36)%    19%
  Maintenance......................................  37     29    30       11      18
  Services.........................................  32     29    28       (3)     22
                                                    ---    ---   ---      ---     ---
    Total revenues................................. 100    100   100      (13)     20
                                                    ---    ---   ---      ---     ---
Cost of revenues:
  License fees.....................................  14     10    16       24     (27)
  Maintenance......................................   6      5     8       (7)    (19)
  Services.........................................  22     16    13       21      48
                                                    ---    ---   ---      ---     ---
    Total cost of revenues.........................  42     31    37       17     --
                                                    ---    ---   ---      ---     ---
Gross margin.......................................  58     69    63      (26)     31
Operating expenses
   Research and development, net...................  18     15    23        5     (20)
  Sales and marketing..............................  48     40    54        6     (11)
  General and administrative.......................  14     10    16       29     (29)
  Charge for restructuring/asset impairment........   2    --      5       nm      nm
                                                    ---    ---   ---      ---     ---
    Total operating expenses.......................  82     65    98       11     (20)
                                                    ---    ---   ---      ---     ---
Operating income (loss)............................ (24)     4   (35)      nm      nm
Other income, net..................................   4      3     5        7     (11)
                                                    ---    ---   ---      ---     ---
Income (loss) before income taxes.................. (20)     7   (30)      nm      nm
Income tax expense................................. --     --    --        nm      nm
                                                    ---    ---   ---      ---     ---
Net income (loss).................................. (20)%    7%  (30)%     nm      nm
                                                    ===    ===   ===      ===     ===
</TABLE>
--------
nm-not meaningful

                                       29
<PAGE>

 Revenues:

   Our total revenues decreased 13% to $28.2 million from $32.3 million for the
prior year. This was primarily the result of decreased license fees compared to
the prior year, partially offset by an increase in maintenance revenues.

   Licenses. License fee revenues decreased 36% from a year ago, to $8.6
million. This decrease was primarily the result of the reorganization of our
sales management team, which was completed in fiscal 2001, as well as slower
general economic conditions. Our direct sales channel provided approximately
70% of the license fee revenues for fiscal 2001, compared to 81% for the prior
year. Our indirect sales channel is principally through American Software. To
date, sales of software licenses have been derived principally from direct
sales to customers. Although we believe that direct sales will continue to
account for a majority of software license revenues, our strategy is to
increase the level of indirect sales activities. We expect that sales of our
software products through sales alliances, distributors, resellers, and other
indirect channels will increase as a percentage of license fee revenues.
However, our efforts to expand indirect sales may not be successful, or these
relationships may not continue in the future.

   Maintenance. Maintenance revenues increased 11% to $10.5 million from a year
ago, due to an increase in the installed base of customers, from license sales
in prior periods. Maintenance revenues are directly related to license fee
revenues, since new licenses are the potential source of new maintenance
customers.

   Services. Services revenues decreased 3% to $9.1 million from a year ago as
a result of slightly lower utilization of our implementation, training, and
consulting services. Services revenues as a percentage of total revenue have
fluctuated, and are expected to continue to fluctuate, on a period-to-period
basis based upon the demand for implementation, training, and consulting
services.

   Concentration of Revenues. In fiscal year 2001, no single customer accounted
for more than 10% of our total revenues. In fiscal 2000, one customer, ConAgra
Inc., accounted for approximately 13% of total revenues. We generally derive a
significant portion of our software license revenues in each quarter from a
small number of relatively large sales. While we believe that the loss of any
one of these customers would not seriously harm our business, operating results
or financial condition, our inability to consummate one or more substantial
license sales in any future period could seriously harm our operating results
for that period.

   International Revenues. We recognized approximately $4.0 million of
international revenues in fiscal 2001, representing approximately 14% of total
revenues, and approximately $3.7 million in fiscal 2000, representing
approximately 11% of total revenues. The increase in revenues from
international sources as a percentage of total revenues was due primarily to
lower overall levels of total revenues. We believe that continued growth and
profitability may require further expansion in international markets. To
increase the level of international sales, we have utilized and may continue to
utilize substantial resources to expand existing international operations and
establish additional international operations. We cannot be certain that our
investments in international operations will produce desired levels of revenues
or profitability.

 Gross Margin:

   Total gross margin in 2001 was 58% compared to 69% a year ago, due primarily
to decreases in gross margins on license fees and service revenues. The gross
margin on license fees decreased to 54% from 76% a year ago, due to the
combination of lower license fees and relatively fixed amortization of
capitalized software expense. Maintenance gross margin increased to 84% from
81% a year ago, primarily as a result of increased maintenance revenue.
Services gross margin decreased to 32% from 45% a year ago, due primarily to
higher staffing and infrastructure costs incurred in anticipation of higher
levels of license fees.

                                       30
<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            April
                                                         30,    Percent   30,
                                                        2001    Change   2000
                                                       -------  ------- -------
                                                           (in thousands)
<S>                                                    <C>      <C>     <C>
Gross product development costs....................... $ 8,177     (2%) $ 8,322
  Percentage of total revenues........................      29%              26%
Less: capitalized development......................... $(2,966)   (12%) $(3,373)
  Percentage of gross product development costs.......      36%              41%
Product development expenses.......................... $ 5,211      5%  $ 4,949
  Percentage of total revenues........................      18%              15%
</TABLE>

   Gross product development costs decreased 2% in 2001 compared to a year ago
as a result of continued cost containment efforts. Fiscal 2001's expense of 29%
of total revenues is within our normal historical rate of approximately 25%-30%
of total revenues. Capitalized development decreased as well, declining 12%
from a year ago, while the rate of capitalized development also decreased to
36% from 41% a year ago. Product development expenses, as a percentage of total
revenues, increased to 18% due to lower overall revenues, while net product
development expenses increased 5% due to the lower rate of capitalized
development. We expect development expenses to increase slightly in the future,
as we continue to invest in developing new product applications, and further
enhance existing products.

   Sales and Marketing. Sales and marketing expenses increased 6% from a year
ago. As a percentage of total revenues, sales and marketing expenses were 48%
for the year compared to 40% for 2000. This increase was due primarily to lower
overall levels of revenue, as well as increased sales and marketing
expenditures.

   General and Administrative. General and administrative expenses increased
29% to approximately $4.0 million from a year ago. This increase was mainly due
to an increased allocation of shared intercompany expenses from American
Software, which is based on the proportion of Logility employees to total
American Software employees. This proportion increased in fiscal 2001, which
resulted in a higher intercompany allocation. Higher utility costs, insurance
expense and bad debt expense compared to the prior year period also contributed
to the increase. General and administrative expenses as a percentage of total
revenues increased to 14% from 10% during the same period. This increase was
due primarily to increased levels of general and administrative expenses, as
well as lower overall levels of revenue.

 Other Income, Net:

   Other income, net was $1.2 million in fiscal 2001, representing 4.3% of
total revenues, and $1.1 million in fiscal 2000, representing 3.5% of total
revenues. Other income is principally comprised of investment earnings. Our
investments are generally short term in nature. In fiscal 2001, we generated a
yield of approximately 6.1% on our investments, compared to approximately 6.0%
in fiscal 2000.

 Income Taxes:

   We are included in the consolidated federal income tax return filed by
American Software; however we provide for income taxes as if we were filing a
separate income tax return. Due to our loss in fiscal 2001 we did not record a
tax obligation. Our income for fiscal 2000 was offset by losses in fiscal 1999.

Fourth Quarter of Fiscal Year 2001:

   In the fourth quarter of Fiscal Year 2001, we recorded positive operating
income of $129,000 and positive net income of $467,000. Total revenues
increased 19% over the prior year period, driven primarily by a 99% increase in
license fees, from $1.3 million to $2.6 million.

                                       31
<PAGE>

Years Ended April 30, 2000 and 1999:

 Revenues:

   Our total revenues increased 20% to $32.3 million from $27.0 million for the
prior year. We realized increases in all revenue categories for the year, the
result of improved sales of our suite of Business-to-Business Collaborative
Commerce products, and associated maintenance and services.

   Licenses. License fee revenues increased 19% from fiscal 1999, to $13.5
million. Our direct sales channel provided approximately 81% of the license fee
revenues for fiscal 2000, compared to 83% for the prior year. Our indirect
sales channel is principally through American Software.

   Maintenance. Maintenance revenues increased 18% to $9.4 million from 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 22% to $9.4 million from the prior
year as a result of the increased utilization of our implementation, training,
and consulting services, which in turn resulted from the growth in our customer
base. Services revenues as a percentage of total revenue have fluctuated, and
are expected to continue to fluctuate, on a period-to-period basis based upon
the demand for implementation, training, and consulting services.

   Concentration of Revenues. In fiscal year 2000, one customer, ConAgra Inc.,
accounted for approximately 13% of total revenues. No other customer accounted
for more than 10% of total revenues.

   International Revenues. We recognized approximately $3.7 million of
international revenues in fiscal 2000, representing approximately 11% of total
revenues, and approximately $3.9 million in fiscal 1999, representing
approximately 14% of total revenues. The decrease in revenues from
international sources as a percentage of total revenues was due primarily to
higher overall levels of total revenues.

 Gross Margin:

   Total gross margin in 2000 was 69% compared to 63% in 1999, due primarily to
increases in gross margins on license fees and maintenance revenues. The gross
margin on license fees increased to 76% from 61% for the prior year, due to the
combination of higher license fees and lower amortization of capitalized
software expense. Maintenance gross margin increased to 81% from 72% for the
prior year, primarily as a result of increased maintenance revenue. Services
gross margin decreased to 45% from 55% in 1999, due primarily to increased
investment in staffing towards the end of the fiscal year in anticipation of
future projects.

 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            April
                                                        30,    Percent   30,
                                                       2000    Change   1999
                                                      -------  ------- -------
                                                          (in thousands)
<S>                                                   <C>      <C>     <C>
Gross product development costs...................... $ 8,322    (18%) $10,117
  Percentage of total revenues.......................      26%              37%
Less: capitalized development........................ $(3,373)   (15%) $(3,952)
Percentage of gross product development costs........      41%              39%
Product development expenses......................... $ 4,949    (20%) $ 6,165
  Percentage of total revenues.......................      15%              23%
</TABLE>


                                       32
<PAGE>

   Gross product development costs decreased 18% in 2000 compared to 1999 as a
result of our cost containment efforts during the Year 2000 slowdown. Fiscal
2000's expense of 26% of total revenues is within our normal historical rate of
approximately 25%-30% of total revenues. Fiscal 1999's rate of 37% of total
revenues was unusually high due to lower comparable revenue levels, as well as
the existence of several key development efforts. Capitalized development
decreased as well, declining 15% from the prior year, while the rate of
capitalized development increased slightly to 41% from 39% in 1999. Product
development expenses, as a percentage of total revenues, declined to 15%, while
net product development expenses decreased 20% due to the factors noted above.

   Sales and Marketing. Sales and marketing expenses declined 11% from the
prior year period. As a percentage of total revenues, sales and marketing
expenses were 40% for the year compared to 54% for 1999. This decrease was due
to our cost containment efforts during the Year 2000 slowdown, and lower levels
of comparable revenue for 1999.

   General and Administrative. General and administrative expenses decreased
29% to approximately $3.0 million from the prior year. This decrease was again
due to our cost containment efforts during the Year 2000 slowdown, and lower
levels of comparable revenue for 1999. General and administrative expenses as a
percentage of total revenues decreased to 10% from 16% during the same period.
Again this decrease was due to our cost containment efforts during the Year
2000 slowdown, and lower levels of comparable revenue for 1999.

 Other Income, Net:

   Other income, net was $1.1 million in fiscal 2000, representing 3.5% of
total revenues, and $1.3 million in fiscal 1999, representing 4.7% of total
revenues. Other income is principally comprised of investment earnings from the
net proceeds of our initial public offering. Our investments are generally
short term in nature. In fiscal 2000, we generated a yield of approximately
6.0% on our investments, compared to approximately 5.1% in fiscal 1999.

 Income Taxes:

   We are included in the consolidated federal income tax return filed by
American Software; however we provide for income taxes as if we were filing a
separate income tax return. Our income for fiscal 2000 was offset by losses in
fiscal 1999. Income taxes in fiscal 1999 were related to state income tax
obligations.

 Liquidity, Capital Resources and Financial Condition:

   The following table shows information about our cash flows for the fiscal
years ended April 30, 2001 and April 30, 2000. This table and the discussion
that follows should be read in conjunction with our condensed consolidated
statements of cash flows contained in this report.

<TABLE>
<CAPTION>
                                                              Years Ended
                                                               April 30,
                                                             ---------------
                                                              2001    2000
                                                             ------  -------
   <S>                                                       <C>     <C>
   Net cash (used in) provided by operating activities
    before changes in operating assets and liabilities...... (1,695)   5,873
   Change in operating assets and liabilities...............    683     (253)
                                                             ------  -------
   Net cash (used in) provided by operating activities...... (1,012)   5,620
   Net cash provided by (used in) investing activities......  2,396  (11,451)
   Net cash provided by (used in) financing activities......    468     (340)
                                                             ------  -------
     Net increase (decrease) in cash and cash equivalents...  1,852   (6,171)
                                                             ======  =======
</TABLE>


                                       33
<PAGE>

   We normally fund our operations and capital expenditures primarily with cash
generated from operating activities. The changes in net cash used for operating
activities generally reflect the changes in net income and non-cash operating
items plus the effect of changes in operating assets and liabilities,
especially trade accounts receivable, trade accounts payable, accrued expenses
and deferred revenue.

   Cash (used in) provided by operating activities was approximately ($1.0)
million in the year ended April 30, 2001, compared to approximately $5.6
million in the same period of the prior year. The cash used by operations
during the fiscal year ended April 30, 2001 was primarily attributable to a net
loss of $5.7 million, an increase in receivable from American Software of
$712,000, and a decrease in current liabilities of $500,000. This was partially
offset by non-cash depreciation and amortization expense of $3.5 million,
decrease in accounts receivable of $1.2 million, increase in deferred revenues
of $673,000, and the write-off of a minority investment in business of
$300,000. Cash provided by operations during the prior year was primarily
attributable to non-cash depreciation and amortization expense of $3.5 million,
net earnings of $2.4 million, an increase in deferred revenues of approximately
$995,000, an increase in accrued liabilities of approximately $578,000, and a
decrease in accounts receivable of approximately $245,000. This was partially
offset by an increase in receivable from American Software of $2.2 million and
an increase in prepaid expenses and other assets of $102,000.

   Cash provided by (used in) investing activities was approximately $2.4
million and ($11.5) million for the years ended April 30, 2001 and 2000,
respectively. In fiscal 2001, approximately $5.8 million was provided by the
net sale of investments, while $3.0 million was used for computer software
development costs. In the prior year, approximately $7.1 million was used for
net purchases of investments, and $3.4 million was used for computer software
development costs.

   Cash provided by financing activities for the year ended April 30, 2001
totaled $468,000. Approximately $559,000 was provided by deferred income taxes
resulting from the Tax Sharing Agreement, while $105,000 was used for the
repurchase of 56,000 shares of our common stock. For the prior year, cash used
in financing activities was approximately $340,000. $768,000 was used for the
repurchase of 154,000 shares of our common stock. This was partially offset by
Deferred Income Taxes resulting from the Tax Sharing Agreement of $303,000, and
$125,000 in proceeds from the exercise of stock options. Days sales outstanding
in accounts receivable were 66 days as of April 30, 2001, compared to 94 days
as of April 30, 2000. This decrease was primarily due to decreased overall
revenues for fiscal 2001, as well as improved collection efforts.

   Our current ratio on April 30, 2001 was 2.3 to 1 and we have no long-term
debt. We believe that our sources of liquidity and capital resources will be
sufficient to satisfy our cash requirements for at least the next twelve
months. To the extent that such amounts are insufficient to finance our capital
requirements, we will be required to raise additional funds through equity or
debt financing. We do not currently have a bank line of credit. No assurance
can be given that bank lines of credit or other financing will be available on
terms acceptable to us. If available, such financing may result in further
dilution to our shareholders and higher interest expense.

   On December 15, 1997, our Board of Directors approved a resolution
authorizing us to repurchase up to 350,000 shares of our common stock through
open market purchases at prevailing market prices. We completed this repurchase
plan in November 1998, at which time we 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 our liquidity and cash flow needs. For both plans, through July
12, 2001, we had purchased a cumulative total of 636,000 shares at a total cost
of $4.5 million.

 Recent Accounting Pronouncements:

   In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities." This Statement was amended in June 2000 by Statement No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities."
These Statements

                                       34
<PAGE>

were effective for us beginning May 1, 2001. These new Statements require 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. We have not invested in derivative
instruments nor participated in hedging activities and therefore we do not
anticipate a material impact on the results of operations or financial position
from Statements No. 133 or No. 138.

   In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" ("SAB 101") and amended it in March 2000, and again in June 2000.
We adopted the provisions of SAB 101 in our fourth quarter of fiscal 2001, and
there was not a material impact on the results of operations or financial
position as a result of the adoption.

 Forward-looking Statements:

   This discussion contains forward-looking statements, which are subject to
substantial risks and uncertainties. A variety of factors could cause our
actual results to differ materially from those anticipated by statements made
herein. The timing of releases of our 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 our 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 Logility's future performance.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

   Foreign Currency. For the fiscal year ended April 30, 2001, we generated 14%
of our revenues outside of the United States. International sales usually are
made by our foreign subsidiaries and are denominated typically in U.S. Dollars
or British Pounds Sterling. However, the expenses incurred by foreign
subsidiaries are denominated in the local currencies. There was no material
impact on our revenues or expenses from foreign currency fluctuations in fiscal
2001. In addition, a 10% movement in foreign currency rates would not have a
material impact on our financial position or results of operations.

   Interest rates. We manage our 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 our Senior Management. These
instruments are denominated in U.S. dollars. The fair market value of
securities held at April 30, 2001 was approximately $15.3 million.

   We also hold 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 our investments carry a degree of interest rate risk. When interest
rates fall, our income from investments in variable-rate securities declines.
When interest rates rise, the fair market value of our investments in fixed-
rate securities declines. We attempt to mitigate risk by holding fixed-rate
securities to maturity, but should our liquidity needs force us to sell fixed-
rate securities prior to maturity, we may experience a loss of principal. A 10%
change in average interest rates would not have a material impact on our
financial position or results of operations.


                                       35
<PAGE>

Item 8. Financial Statements and Supplementary Data

   The following schedule represents results for each quarter in the years
ended April 30, 2001 and 2000 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
                                           Net Earnings (Loss)   Diluted net
                          Total  Operating   Attributable to   earnings (loss)
                         Revenue  Income   Common Shareholders    per share
                         ------- --------- ------------------- ---------------
<S>                      <C>     <C>       <C>                 <C>
Quarter ended:
July 31, 2000........... $ 6,922  $(1,082)       $  (759)          $(0.06)
October 31, 2000........   6,612   (2,853)        (2,694)           (0.20)
January 31, 2001........   6,485   (3,104)        (2,706)           (0.20)
April 30, 2001..........   8,187      129            467             0.03
                         -------  -------        -------           ------
Year ended April 30,
 2001................... $28,206  $(6,910)       $(5,692)          $(0.43)
                         =======  =======        =======           ======
Quarter ended:
July 31, 1999........... $ 8,369  $   501        $   828           $ 0.06
October 31, 1999........   8,554      667            959             0.07
January 31, 2000........   8,513      944          1,247             0.09
April 30, 2000..........   6,853     (861)          (646)           (0.05)
                         -------  -------        -------           ------
Year ended April 30,
 2000................... $32,289  $ 1,251        $ 2,388           $ 0.17
                         =======  =======        =======           ======
</TABLE>

   Other 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.

                                       36
<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of Registrant

   The information relating to the members of our Board of Directors is set
forth in the Caption "Election of Directors and Information Regarding
Directors" in Logility's 2001 Proxy Statement (the "Proxy Statement"), which
information is incorporated herein by reference.

   The executive officers of Logility are as follows:

<TABLE>
<CAPTION>
     Name                Age                        Position
     ----                ---                        --------
<S>                      <C> <C>
J. Michael Edenfield....  43 Chief Executive Officer, President and Director
Vincent C. Klinges......  38 Chief Financial Officer
H. Allan Dow............  37 Executive Vice President, Worldwide Sales and Marketing
Donald L. Thomas........  54 Vice President, Customer Service
Andrew G. White.........  36 Vice President, Product Strategy
</TABLE>

   J. Michael Edenfield has served as a Director and as President and Chief
Executive Officer of Logility since January 1997. He also serves as a Director
of INSIGHT, Inc., in which we own 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 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 Logility.

   Vincent C. Klinges joined Logility in February, 1998 as Vice President of
Finance, and was appointed Chief Financial Officer in September, 1999. From
July 1995 to February 1998, Mr. Klinges was employed by Indus International,
Inc. (formerly known as TSW International, Inc.), as Controller. From November
1986 to July 1995, Mr. Klinges held various positions with Dun & Bradstreet,
Inc. including Controller of Sales Technologies, a software division of Dun &
Bradstreet Inc. Mr. Klinges holds a Bachelor of Business Administration from
St. Bonaventure University.

   H. Allan Dow joined Logility in October 2000 as Executive Vice President of
Worldwide Sales and Marketing. From January 1998 to September 2000, Mr. Dow was
employed by Structural Dynamics Research Corporation as Regional Vice President
and General Manager of the southern United States, Latin America and South
American operations. From November 1986 to January 1998, Mr. Dow held various
positions with Honeywell (formerly Measurex Systems, Inc.), most recently as
Director of North American Operations. Mr. Dow holds a Bachelor of Science
degree in Chemical Engineering from the University of Maine.

   Donald L. Thomas has served as Vice President, Customer Service of Logility
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 Logility
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.


                                       37
<PAGE>

 Section 16(a) Beneficial Ownership Reporting Compliance

   Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires our executive officers and directors, and persons who own more than
10% of a registered class of our equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission"). Officers, directors and holders of more than 10% of our
Common Stock are required under regulations promulgated by the Commission to
furnish us with copies of all Section 16(a) forms they file.

   Based upon a review by Logility of filings made under Section 16(a) of the
Exchange Act, not all of the reports required to be filed during fiscal 2001
were filed on a timely basis. We are aware of the following report that was
filed by an officer, director or 10% stockholder of Logility after its due
date: H. Allan Dow (Initial Statement of Beneficial Ownership). Based upon our
review of copies of filings received by us, we believe that since May 1, 2000,
all other Section 16(a) filing requirements applicable to our directors,
officers and greater than 10% beneficial owners were complied with.

Item 11. Executive Compensation

   This information is set forth under the caption "Certain Information
Regarding Executive Officers and Directors" in the 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, we completed an initial public offering of 2,530,000
shares of common stock. Prior to that time, Logility was a wholly-owned
subsidiary of American Software, Inc. (Nasdaq--AMSWA) operating as the supply
chain planning software group, warehouse management software group and
transportation management group. In anticipation of such offering, Logility 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
Logility, the terms of such agreements were not the result of arms-length
negotiation.

Services Agreement

   Logility 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 Logility. 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 us under the Services
Agreement include, among other things, certain accounting, cash management,
corporate development, employee benefit plan administration, human resources
and compensation, general and administrative services, and risk management and
tax services. In addition to these services, American Software has agreed to
allow eligible employees of Logility to participate in certain of American
Software's employee benefit plans.

   We have agreed to reimburse American Software for American Software's costs
(including any contributions and insurance premium costs and including third-
party expenses and allocations of certain

                                       38
<PAGE>

personnel expenses), generally in accordance with past practice, relating to
the participation by our 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 Logility
or American Software elects not to renew its term by giving proper notice. We
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 us 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. For the fiscal years ended April 30, 2001 and 2000, the amounts paid
by us to American Software pursuant to this agreement were $1.6 and $1.0
million, respectively.

Facilities Agreement

   American Software and Logility have entered into a Facilities Agreement (the
"Facilities Agreement"), which provides that we 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 Logility elects not to renew its term. The
Facilities Agreement may be terminated upon 30 days' written notice by us for
any reason with respect to any particular facility. Our leasing 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. For the fiscal years ended
April 30, 2001 and 2000, the amounts paid by us to American Software pursuant
to this agreement were $763,000 and $418,000, respectively. Included in these
amounts are lease expense, utilities expense, telephone expense, and security
expense.

Tax Sharing Agreement

   We are included in American Software's federal consolidated income tax
group, and our federal income tax liability will be included in the
consolidated federal income tax liability of American Software and its
subsidiaries. Logility and American Software have entered into a Tax Sharing
Agreement (the "Tax Sharing Agreement") pursuant to which American Software and
Logility will make payments between them such that the amount of taxes to be
paid by Logility, subject to certain adjustments, will be determined as though
we 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, we will be reimbursed for tax
attributes that we generate after deconsolidation of Logility from the
consolidated tax group of American Software, 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
currently in process. Such reimbursement, if any, will be made for utilization
of our 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 deemed utilized in the order in which they are recognized. We
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 Logility have entered into a Technology License
Agreement (the "Technology License Agreement") pursuant to which we have
granted American Software a non-exclusive, worldwide license to use, execute,
reproduce, display, modify, and prepare derivatives of the Logility Voyager
Solutions product line, provided such license is limited to maintaining and
supporting users that have licensed Logility Voyager Solutions products from
American Software. Pursuant to the Technology License Agreement,

                                       39
<PAGE>

American Software and Logility are required to disclose to one another any and
all enhancements and improvements which they may make or acquire in relation to
a Logility Voyager Solutions product, subject to confidentiality requirements
imposed by third parties. The term of the Technology License Agreement is
indefinite, although we 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 us. Upon termination of the
Technology License Agreement, all rights to Logility Voyager Solutions products
licensed by Logility to American Software revert to Logility, while all rights
to enhancements and improvements made by American Software to Logility Voyager
Solutions products revert to American Software.

Marketing License Agreement

   American Software USA, Inc. ("USA"), a wholly-owned subsidiary of American
Software, and Logility 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 for the solicitation of license
agreements relating to the Logility Voyager 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 us under license agreements for the
Logility Voyager Solutions product line with certain end-users who are also
licensees of software products of American Software which are secured and
forwarded to us by USA and accepted by us. The Marketing License Agreement has
a five-year term, although we 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. For the
fiscal years ended April 30, 2001 and 2000, the cost of services related to
this agreement were $367,000 and $731,000, respectively.

   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 Proxy Statement, which
information is incorporated herein by reference.

                                       40
<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, 2001 and 2000....................   44
Combined Statements of Operations for the Years ended April 30, 2001,
 2000, and 1999..........................................................   45
Combined Statements of Shareholders' Equity for the Years ended April 30,
 2001, 2000, and 1999....................................................   46
Combined Statements of Cash Flows for the Years ended April 30, 2001,
 2000, and 1999..........................................................   47
Notes to the Combined Financial Statements...............................   48
Independent Auditors' Report.............................................   60
</TABLE>

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

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
Schedule II--Valuation and Qualifying Accounts--for the three years ended
 April 30, 2001..........................................................   61
Independent Auditors' Report.............................................   62
</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 Logility's Amended and Restated Articles of Incorporation, and
          amendments included as Exhibit 3.1 to Logility's Registration
          Statement No. 333-33385 on Form S-1 (the "S-1 Registration
          Statement") and incorporated herein by this reference.

      3.2 Logility'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 Logility's Form S-8 Registration
          Statement No. 333-62531 and incorporated herein by this reference.

     10.2 Subsidiary Formation Agreement among Logility, 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 Logility 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 Logility 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 Logility 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 Logility 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 Logility and American Software,
          included as Exhibit 10.8 to the S-1 Registration Statement, and
          incorporated herein by this reference.
</TABLE>

                                       41
<PAGE>

<TABLE>

     <C>   <S>
     10.8  Technology License Agreement between Logility and American Software,
           as amended, included as Exhibit 10.9 to the S-1 Registration
           Statement, and incorporated herein by this reference.

     10.9  Marketing License Agreement between Logility and American Software,
           as amended, included as Exhibit 10.10 to the S-1 Registration
           Statement, and incorporated herein by this reference.

     10.10 Employee Stock Purchase Plan dated September 30, 1998, included as
           Exhibit 4.1 to Logility's Form S-8 Registration Statement No. 333-
           66773 and incorporated herein by this reference.

     23.1  Independent Auditors' Consent.
</TABLE>

   (b) Reports on Form 8-K

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

                                       42
<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.

                                          By:  /s/ J. Michael Edenfield
                                            ___________________________________
                                                J. Michael Edenfield
                                               Chief Executive Officer

Date: July 23, 2001

   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.

<TABLE>
<CAPTION>
             Signature                             Title                     Date
             ---------                             -----                     ----

<S>                                  <C>                                <C>
      /s/ J. Michael Edenfield       President, Chief Executive         July 23, 2001
____________________________________  Officer
        J. Michael Edenfield

       /s/ James C. Edenfield        Chairman of the Board of           July 23, 2001
____________________________________  Directors
         James C. Edenfield

      /s/ Frederick E. Cooper        Director                           July 23, 2001
____________________________________
        Frederick E. Cooper

        /s/ Parker H. Petit          Director                           July 23, 2001
____________________________________
          Parker H. Petit

       /s/ Dr. John A. White         Director                           July 23, 2001
____________________________________
         Dr. John A. White

       /s/ Vincent C. Klinges        Chief Financial Officer            July 23, 2001
____________________________________
         Vincent C. Klinges

      /s/ Deirdre J. Lavender        Controller and Principal           July 23, 2001
____________________________________  Accounting Officer
        Deirdre J. Lavender
</TABLE>

                                       43
<PAGE>

                                 LOGILITY, INC.

                            COMBINED BALANCE SHEETS
                       (In thousands, except share data)
                            April 30, 2001 and 2000

<TABLE>
<CAPTION>
                                                                2001     2000
                                                              --------  ------
<S>                                                           <C>       <C>
                           Assets
                           ------
Current assets:
  Cash and cash equivalents.................................. $  5,376   3,524
  Investments--current.......................................   10,420  14,425
  Trade accounts receivable, less allowance for doubtful
   accounts of $552 and $684 at April 30, 2001 and 2000,
   respectively:
    Billed...................................................    4,353   4,599
    Unbilled.................................................    1,636   2,558
  Due from American Software, Inc............................    2,916   2,204
  Prepaid expenses and other current assets..................      500     556
                                                              --------  ------
      Total current assets...................................   25,201  27,866
Investments--noncurrent......................................    4,910   6,738
Furniture and equipment, less accumulated depreciation.......    1,497   1,870
Intangible assets, less accumulated amortization.............    8,219   6,748
Other assets, net............................................    1,014   1,312
                                                              --------  ------
                                                              $ 40,841  44,534
                                                              ========  ======

            Liabilities and Shareholders' Equity
            ------------------------------------
Current liabilities:
  Accounts payable........................................... $  1,074   1,225
  Accrued compensation and related costs.....................    1,749   1,879
  Other current liabilities..................................    1,531   1,750
  Deferred revenues..........................................    6,378   5,705
                                                              --------  ------
      Total current liabilities..............................   10,732  10,559
  Deferred income taxes......................................    3,321   2,762
                                                              --------  ------
      Total liabilities......................................   14,053  13,321
                                                              --------  ------
Shareholders' equity:
  Preferred stock; 2,000,000 shares authorized; no shares
   issued....................................................      --      --
  Common stock, no par value; 20,000,000 shares authorized;
   13,878,714 and 13,873,454 shares issued as of April 30,
   2001 and 2000, respectively...............................      --      --
  Additional paid-in capital.................................   44,684  43,312
  Accumulated deficit........................................  (13,480) (7,788)
  Treasury stock, at cost: 621,011 and 564,811 shares as of
   April 30, 2001 and 2000, respectively.....................   (4,416) (4,311)
                                                              --------  ------
      Total shareholders' equity.............................   26,788  31,213
Commitments and contingencies (note 9)
                                                              --------  ------
                                                              $ 40,841  44,534
                                                              ========  ======
</TABLE>

            See accompanying notes to combined financial statements.

                                       44
<PAGE>

                                 LOGILITY, INC.

                       COMBINED STATEMENTS OF OPERATIONS
                     (In thousands, except per share data)
                   Years ended April 30, 2001, 2000, and 1999

<TABLE>
<CAPTION>
                                                        2001     2000   1999
                                                       -------  ------ ------
<S>                                                    <C>      <C>    <C>
Revenues:
  License............................................. $ 8,587  13,501 11,384
  Maintenance.........................................  10,491   9,418  7,967
  Services............................................   9,128   9,370  7,666
                                                       -------  ------ ------
    Total revenues....................................  28,206  32,289 27,017
                                                       -------  ------ ------
Cost of revenues:
  License.............................................   3,985   3,218  4,433
  Maintenance.........................................   1,645   1,775  2,194
  Services............................................   6,227   5,144  3,468
                                                       -------  ------ ------
    Total cost of revenues............................  11,857  10,137 10,095
                                                       -------  ------ ------
    Gross margin......................................  16,349  22,152 16,922
Operating expenses:
  Research and development............................   5,211   4,949  6,165
  Sales and marketing.................................  13,618  12,898 14,507
  General and administrative..........................   3,954   3,054  4,302
  Charge for restructuring............................     476     --     --
  Charge for asset impairment.........................     --      --   1,230
                                                       -------  ------ ------
    Total operating expenses..........................  23,259  20,901 26,204
                                                       -------  ------ ------
    Operating income (loss)...........................  (6,910)  1,251 (9,282)
Other income, net.....................................   1,218   1,137  1,274
                                                       -------  ------ ------
    Income (loss) before income taxes.................  (5,692)  2,388 (8,008)
Income tax expense....................................     --      --     100
                                                       -------  ------ ------
    Net income (loss)................................. $(5,692)  2,388 (8,108)
                                                       =======  ====== ======
Earnings (loss) per common share:
  Basic............................................... $ (0.43)   0.18  (0.60)
                                                       =======  ====== ======
  Diluted............................................. $ (0.43)   0.17  (0.60)
                                                       =======  ====== ======
Shares used in the calculation of net earnings (loss)
 per common share:
  Basic...............................................  13,289  13,333 13,486
                                                       =======  ====== ======
  Diluted.............................................  13,289  13,698 13,486
                                                       =======  ====== ======
</TABLE>

            See accompanying notes to combined financial statements.

                                       45
<PAGE>

                                 LOGILITY, INC.

                  COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
                       (In thousands, except share data)
                   Years ended April 30, 2001, 2000, and 1999

<TABLE>
<CAPTION>
                            Common stock    Additional             Treasury stock       Total
                          -----------------  paid-in   Accumulated ---------------  shareholders'
                            Shares   Amount  capital     deficit   Shares  Amount      equity
                          ---------- ------ ---------- ----------- ------- -------  -------------
<S>                       <C>        <C>    <C>        <C>         <C>     <C>      <C>
Balance at April 30,
 1998...................  13,830,000  $--     43,187      (2,068)  205,300 $(1,882)    39,237
Repurchase of 205,500
 common shares..........         --    --        --          --    205,500  (1,661)    (1,661)
Net loss................         --    --        --       (8,108)      --      --      (8,108)
                          ----------  ----    ------     -------   ------- -------     ------
Balance at April 30,
 1999...................  13,830,000   --     43,187     (10,176)  410,800  (3,543)    29,468
Repurchase of 154,011
 common shares..........         --    --        --          --    154,011    (768)      (768)
Proceeds from exercise
 of stock options.......      43,454   --        125         --        --      --         125
Net income..............         --    --        --        2,388       --      --       2,388
                          ----------  ----    ------     -------   ------- -------     ------
Balance at April 30,
 2000...................  13,873,454   --     43,312      (7,788)  564,811  (4,311)    31,213
Contribution of software
 from American Software,
 Inc....................         --    --      1,173         --        --      --       1,173
Proceeds from exercise
 of stock options.......       5,260   --         14         --        --      --          14
Repurchase of 56,200
 common shares..........         --    --        --          --     56,200    (105)      (105)
Compensation expense
 resulting from
 acceleration of vesting
 of ASI options held by
 employee...............         --    --        185         --        --      --         185
Net loss................         --    --        --       (5,692)      --      --      (5,692)
                          ----------  ----    ------     -------   ------- -------     ------
Balance at April 30,
 2001...................  13,878,714  $--     44,684     (13,480)  621,011  (4,416)    26,788
                          ==========  ====    ======     =======   ======= =======     ======
</TABLE>


            See accompanying notes to combined financial statements.

                                       46
<PAGE>

                                 LOGILITY, INC.

                       COMBINED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                   Years ended April 30, 2001, 2000, and 1999

<TABLE>
<CAPTION>
                                                      2001     2000     1999
                                                    --------  -------  -------
<S>                                                 <C>       <C>      <C>
Cash flows from operating activities:
 Net income (loss)................................. $ (5,692)   2,388   (8,108)
 Adjustments to reconcile net income (loss) to net
  cash (used in) provided by operating activities:
  Depreciation and amortization....................    3,512    3,485    3,862
  Noncash compensation expense.....................      185      --       --
  Charge for write-off of minority investment in
   business........................................      300      --       --
  Charge for asset impairment......................      --       --     1,230
  (Increase) decrease in assets:
   Accounts receivable.............................    1,168      245    3,392
   Due from American Software, Inc.................     (712)  (2,204)     --
   Prepaid expenses and other assets...............       54     (102)     320
  Increase (decrease) in liabilities:
   Accounts payable................................     (151)     235     (154)
   Accrued compensation and other liabilities......     (349)     578      229
   Deferred revenues...............................      673      995      553
   Due to American Software, Inc...................      --       --      (961)
                                                    --------  -------  -------
    Net cash (used in) provided by operating
     activities....................................   (1,012)   5,620      363
                                                    --------  -------  -------
Cash flows from investing activities:
  Additions to capitalized computer software
   development costs...............................   (2,966)  (3,373)  (3,952)
  Additions to purchased computer software costs...     (171)    (100)     (28)
  Purchases of furniture and equipment.............     (300)    (539)    (755)
  Purchase of minority investment in business......      --      (300)    (763)
  Proceeds from maturities of investments..........   93,365   53,791   97,718
  Purchases of investments.........................  (87,532) (60,930) (82,183)
                                                    --------  -------  -------
    Net cash (used in) provided by investing
     activities....................................    2,396  (11,451)  10,037
                                                    --------  -------  -------
Cash flows from financing activities:
  Deferred income taxes resulting from Tax Sharing
   Agreement.......................................      559      303      (50)
Proceeds from exercise of stock options............       14      125      --
  Repurchases of common stock......................     (105)    (768)  (1,661)
                                                    --------  -------  -------
    Net cash (used in) provided by financing
     activities....................................      468     (340)  (1,711)
                                                    --------  -------  -------
    Net change in cash and cash equivalents........    1,852   (6,171)   8,689
Cash and cash equivalents at beginning of year.....    3,524    9,695    1,006
Cash and cash equivalents at end of year........... $  5,376    3,524    9,695
                                                    ========  =======  =======
Supplemental disclosure--cash paid for income
 taxes............................................. $     26       84      102
                                                    ========  =======  =======
Supplemental disclosure of noncash transactions--
 contribution of software from American Software,
 Inc............................................... $  1,173      --       --
                                                    ========  =======  =======
</TABLE>

            See accompanying notes to combined financial statements.

                                       47
<PAGE>

                             LOGILITY, INCORPORATED

                     NOTES TO COMBINED FINANCIAL STATEMENTS

Presentation and Summary of Significant Accounting Policies

 (a) Business and Presentation

   Logility, Inc. (the "Company") develops, markets, and supports an integrated
suite of business-to-business collaborative commerce software products. This
suite of products is designed to manage the flow of information and products
along the entire supply 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 an approximately
85%-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, ASI formally
contributed its Supply Chain Planning division to the Company. Effective August
1, 1997, ASI contributed its WarehousePRO division to the Company. Distribution
Sciences, Inc. was merged into the Company on August 5, 1997.

 (b) Revenue Recognition

   The Company recognizes revenue in accordance with Statement of Position
("SOP") 97-2, Software Revenue Recognition, and SOP 98-9, Software Revenue
Recognition With Respect to Certain Transactions.

   License. License revenues in connection with license agreements for standard
proprietary and tailored software are recognized upon delivery of the software,
providing collection is considered probable, the fee is fixed or determinable,
there is evidence of an arrangement, and vendor specific evidence exists to
defer any revenue related to undelivered elements of the arrangement.

   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 original maturities
of three months or less when purchased to be cash equivalents.

                                       48
<PAGE>

                             LOGILITY INCORPORATED

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)


 (e)  Investments

   Investments at April 30, 2001 consist of commercial paper, corporate bonds,
and government securities. The Company accounts for its investments under the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 115,
Accounting for Certain Investments in Debt and Equity Securities. 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 estimated
useful lives ranging from three to seven years.

 (g)  Intangible Assets

   Capitalized Computer Software Development Costs. The Company capitalizes
certain computer software development costs in accordance with SFAS 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 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.

                                       49
<PAGE>

                             LOGILITY INCORPORATED

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)


   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,
                                                           -------------------
                                                            2001  2000   1999
                                                           ------ ----- ------
                                                             (in thousands)
<S>                                                        <C>    <C>   <C>
Total capitalized computer software development costs..... $2,966 3,373  3,952
Total research and development expense....................  5,211 4,949  6,165
                                                           ------ ----- ------
Total research and development expense and capitalized
 computer software development costs...................... $8,177 8,322 10,117
                                                           ====== ===== ======
Total amortization of capitalized computer software
 development costs........................................ $2,704 2,761  3,169
                                                           ====== ===== ======
Total amortization of purchased computer software costs... $  135   106    244
                                                           ====== ===== ======
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 the asset and liability method.
Under the asset and liability method, 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. 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 accounting principles generally accepted in the
United States of America. Actual results could differ from these estimates.

 (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 SFAS No. 123, Accounting for Stock-Based
Compensation, 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

                                       50
<PAGE>

                             LOGILITY INCORPORATED

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

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 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 SFAS No. 121,
Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of, 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

   SFAS No. 130, Reporting Comprehensive Income, 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

   Basic earnings (loss) per common share available to common shareholders are
based on the weighted-average number of common shares outstanding. Diluted
earnings (loss) per common share available to common shareholders are based on
the weighted-average number of common shares outstanding and dilutive potential
common shares, such as dilutive stock options.

   The numerator in calculating both basic and diluted earnings (loss) per
common share for each year is the same as net income (loss). The denominator is
based on the following number of common shares:

<TABLE>
<CAPTION>
                                                          Years ended April
                                                                 30,
                                                         --------------------
                                                          2001   2000   1999
                                                         ------ ------ ------
                                                            (in thousands)
   <S>                                                   <C>    <C>    <C>
   Weighted average common shares outstanding used for
    basic............................................... 13,289 13,333 13,486
   Dilutive effect of outstanding stock options.........    --     365    --
                                                         ------ ------ ------
   Total used for diluted............................... 13,289 13,698 13,486
                                                         ====== ====== ======
</TABLE>

   For the years ended April 30, 2001 and 1999, options to purchase 779,000 and
555,000 shares of common stock were excluded from the computation of diluted
earnings (loss) per share as the impact was antidilutive.

 (o) Industry Segment

   The Company operates and manages its business in one segment, that being
providing supply chain management software solutions to participants along the
supply chain.

                                       51
<PAGE>

                                 LOGILITY INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)


(2) Investments

   Investments, which are classified as held-to-maturity, consist of the
following at April 30, 2001 and 2000 (in thousands):

<TABLE>
<CAPTION>
                                       2001                       2000
                            -------------------------- --------------------------
                                                                       Unrealized
                            Carrying  Fair  Unrealized Carrying  Fair     gain
                             value   value     gain     value   value    (loss)
                            -------- ------ ---------- -------- ------ ----------
   <S>                      <C>      <C>    <C>        <C>      <C>    <C>
   Commercial paper........ $ 7,175   7,175    --        7,958   7,988     30
   Corporate bonds.........   5,406   5,507    101      10,725  10,702    (23)
   Government securities...   2,749   2,778     29       2,480   2,473     (7)
                            -------  ------    ---      ------  ------    ---
                            $15,330  15,460    130      21,163  21,163    --
                            =======  ======    ===      ======  ======    ===
</TABLE>

   The maturity of investments as of April 30, 2001 is $10,420,000 in fiscal
2002 and $4,910,000 in fiscal 2003.

(3) Furniture and Equipment

   Furniture and equipment consist of the following at April 30, 2000 and 1999
(in thousands):

<TABLE>
<CAPTION>
                                                                     2001  2000
                                                                    ------ -----
   <S>                                                              <C>    <C>
   Computer and communications equipment........................... $3,429 3,310
   Furniture and fixtures..........................................    411   413
                                                                    ------ -----
                                                                     3,840 3,723
   Less accumulated depreciation...................................  2,343 1,853
                                                                    ------ -----
                                                                    $1,497 1,870
                                                                    ====== =====
</TABLE>

(4) Intangible Assets

   Intangible assets consist of the following at April 30, 2001 and 2000 (in
thousands):

<TABLE>
<CAPTION>
                                                                   2001    2000
                                                                  ------- ------
   <S>                                                            <C>     <C>
   Capitalized computer software development costs............... $22,144 18,005
   Purchased computer software costs.............................   1,411  1,258
                                                                  ------- ------
                                                                   23,555 19,263
   Less accumulated amortization.................................  15,336 12,515
                                                                  ------- ------
                                                                  $ 8,219  6,748
                                                                  ======= ======
</TABLE>

   During the year ended April 30, 2001, ASI contributed to the Company $1.17
million of capitalized software costs which was recorded as an increase to
additional paid-in capital.

   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
related 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.

                                       52
<PAGE>

                                 LOGILITY INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)


(5) Purchase of Minority Investment in Businesses

   During the year ended April 30, 2000, the Company acquired 30% of the
outstanding common stock of ShipSolutions, Inc. ("SSI") for $300,000. During
the year ended April 30, 2001, it was determined that the investment in SSI had
no value and the investment was written off.

   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
due to immateriality 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,
                                                         ---------------------
                                                          2001    2000   1999
                                                         -------  ----  ------
                                                           (in thousands)
   <S>                                                   <C>      <C>   <C>
   Computed "expected" income tax expense (benefit)....  $(1,935)  812  (2,723)
   Increase (decrease) in income taxes resulting from:
     State income taxes, net of Federal income tax
      effect...........................................     (231)  120      66
     Change in the valuation allowance for deferred tax
      assets...........................................    2,204  (827)  2,872
     Other, net........................................      (38) (105)   (115)
                                                         -------  ----  ------
                                                         $   --    --      100
                                                         =======  ====  ======
</TABLE>

   The significant components of deferred income tax expense (benefit)
attributable to earnings (loss) before income taxes for the years ended April
30, 2001, 2000, and 1999, are as follows:

<TABLE>
<CAPTION>
                                                         Years ended April
                                                                30,
                                                        ---------------------
                                                         2001    2000   1999
                                                        -------  ----  ------
                                                          (in thousands)
   <S>                                                  <C>      <C>   <C>
   Deferred income tax expense (benefit)............... $(2,204)  827  (2,872)
   Increase (decrease) in the valuation allowance for
    deferred tax assets................................   2,204  (827)  2,872
                                                        -------  ----  ------
                                                        $   --    --      --
                                                        =======  ====  ======
</TABLE>


                                       53
<PAGE>

                                 LOGILITY INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

   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, 2001 and 2000 are presented as
follows:

<TABLE>
<CAPTION>
                                                                  Years ended
                                                                   April 30,
                                                                  ------------
                                                                   2001  2000
                                                                  ------ -----
                                                                      (in
                                                                   thousands)
   <S>                                                            <C>    <C>
   Deferred income tax assets:
     Compensated absences and other expenses, due to accrual for
      financial reporting purposes............................... $  243   280
     Deferred revenue............................................    421   421
     Accounts receivable, due to allowance for doubtful
      accounts...................................................    259   260
     Prepaid maintenance.........................................    754   453
     Net operating loss carryforwards............................  7,819 5,319
                                                                  ------ -----
       Total gross deferred income tax assets....................  9,496 6,733
     Less valuation allowance....................................  6,175 3,971
                                                                  ------ -----
       Net deferred income tax assets............................  3,321 2,762
                                                                  ------ -----
   Deferred income tax liabilities:
     Capitalized computer software development costs.............  3,051 2,524
     Prepaid royalties...........................................     39   --
     Property and equipment, primarily due to differences in
      depreciation...............................................    228   236
     Other.......................................................      3     2
                                                                  ------ -----
       Total gross deferred income tax liabilities...............  3,321 2,762
                                                                  ------ -----
       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 (of
$5,768,000) were allocated to ASI. Accordingly, the Company will not receive
any benefit from the $5,768,000 of contributed gross deferred tax assets. In
addition, certain deferred tax liabilities that arose prior to the initial
public offering were allocated to the Company (which gives rise to the
Company's net deferred tax liability of $3,321,000 at April 30, 2001 and
$2,762,000 at April 30, 2000 recorded in the accompanying combined balance
sheets). 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 a reduction in
income taxes payable with respect to the current tax period. At April 30, 2001,
ASI had net operating loss carryforwards of approximately $43.0 million 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 2021.

(7) Stockholders' Equity

 (a) Stock Compensation

   Prior to August 7, 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

                                       54
<PAGE>

                                 LOGILITY INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

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.

   The Stock Plan further limits stock option grants by providing that the
number of outstanding option shares, when added to the outstanding shares held
by shareholders other than American Software, may not exceed 20% of the issued
and outstanding shares, if it were assumed that all of the stock options were
exercised. As of April 30, 2001, this limitation resulted in a maximum
aggregate number of option shares that had been exercised, were outstanding or
were available for grant of 94,997 shares.

   In September 1998, the Company granted 136,280 options which 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, 2001,
2000, and 1999 and changes during the years then ended is presented below:

<TABLE>
<CAPTION>
                                                                       Weighted-
                                                                        average
                                                              Shares     price
                                                             --------  ---------
<S>                                                          <C>       <C>
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
Granted.....................................................  415,400     5.04
Exercised...................................................  (43,454)    2.88
Forfeited/canceled.......................................... (163,303)    4.28
                                                             --------
Outstanding at April 30, 2000...............................  764,089     4.73
Granted.....................................................  132,000     3.17
Exercised...................................................   (5,260)    2.75
Forfeited/canceled.......................................... (111,808)    5.53
                                                             --------
Outstanding at April 30, 2001...............................  779,021   $ 4.37
                                                             ========   ======
Options exercisable at April 30, 2001.......................  326,841   $ 4.87
                                                             ========   ======
Weighted-average fair value of options granted during:
    2001....................................................            $ 2.94
                                                                        ======
    2000....................................................            $ 2.63
                                                                        ======
    1999....................................................            $ 1.71
                                                                        ======
</TABLE>

                                       55
<PAGE>

                                 LOGILITY INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)


   The following table summarizes information about fixed stock options
outstanding at April 30, 2000:

<TABLE>
<CAPTION>
                        Options outstanding         Options exercisable
                 --------------------------------- ---------------------
                              Weighted-
                   Number      average   Weighted-   Number    Weighted-
     Range of    outstanding  remaining   average  exercisable  average
     exercise     at April   contractual exercise   at April   exercise
      prices      30, 2001      life       price    30, 2001     price
   ------------  ----------- ----------- --------- ----------- ---------
   <S>           <C>         <C>         <C>       <C>         <C>
   $1.69-- 3.25    359,706       7.0      $ 2.71     170,781    $ 2.78
    3.26-- 4.87    301,225       8.0        3.97      92,498      4.10
    4.88--16.25    118,090       6.8       10.43      63,562     11.58
                   -------                           -------
                   779,021       7.3      $ 4.37     326,841    $ 4.87
                   =======                           =======
</TABLE>

   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 changed to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                           Years ended April
                                                                  30,
                                                          ---------------------
                                                           2001    2000   1999
                                                          -------  ----- ------
                                                             (in thousands,
                                                            except per share
                                                                 data)
   <S>                                                    <C>      <C>   <C>
   Net income (loss):
     As reported......................................... $(5,692) 2,388 (8,108)
     Pro forma...........................................  (6,498) 1,063 (9,254)
   Diluted net income (loss) per common share:
     As reported......................................... $  (.43)   .17   (.60)
     Pro forma...........................................    (.49)   .08   (.69)
</TABLE>

   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:

<TABLE>
<CAPTION>
                                                       2001     2000     1999
                                                      -------  -------  -------
   <S>                                                <C>      <C>      <C>
   Dividend yield....................................       0%       0%       0%
   Expected volatility...............................   121.2%   150.9%   131.4%
   Risk-free interest rate...........................     5.8%     5.6%     5.6%
   Expected life..................................... 8 years  8 years  8 years
</TABLE>

 (b) Employee Stock Purchase Plan

   In November 1998, the Company adopted an Employee Stock Purchase Plan (the
"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
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 subject 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 years ended April 30, 2001, 2000
and 1999, 48,397, 23,361, and 12,874 shares, respectively, were purchased on
the open market, at a cost to the Company of $73,607, $147,782 and $12,615,
respectively, representing the funded discount from market price.

                                       56
<PAGE>

                                 LOGILITY INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)


(8) International Revenues and Significant Customer

   International revenues were $4,038,000 or 14%, $3,658,000 or 11%, and
$3,893,000 or 14% of combined revenues for the years ended April 30, 2001,
2000, and 1999, respectively, and were derived primarily from customers in
Europe.

   One customer accounted for approximately 13% of combined revenues for the
year ended April 30, 2000. No individual customer accounted for more than 10%
of combined revenues for the year ended April 30, 2001 or 1999.

(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 are eligible to participate on
the first day of the month following the date of hire. 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 profit sharing contribution
at an amount determined by the Board of Directors of the Company. The Company
did not make profit sharing contributions for 2001, 2000, or 1999.

   Effective January 1, 1999, the Company contributes an employer match in an
amount equal to 25% of the eligible participant's compensation contributed to
the Plan subject to a maximum of 6% of compensation. The Company's matching
contributions totaled $160,000, $153,000, and $49,000 for 2001, 2000, and 1999,
respectively.

 (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 $763,000, $418,000, and $342,000 for the years
ended April 30, 2001, 2000, and 1999, respectively. In addition, the Company
has various other operating leases. Rent expense under these facility leases
was $702,000, $433,000, and $529,000 for the years ended April 30, 2001, 2000,
and 1999, 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>
   2002.................................................................. $  463
   2003..................................................................    454
   2004..................................................................    306
   2005..................................................................    237
   2006..................................................................     65
                                                                          ------
                                                                          $1,525
                                                                          ======
</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.

                                       57
<PAGE>

                                 LOGILITY INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)


(10) Agreements with ASI

   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 for the Expense for the
                                      year ended      year ended      year ended
   Service       Cost methodology   April 30, 2001  April 30, 2000  April 30, 1999
   -------      ------------------- --------------- --------------- ---------------
<S>             <C>                 <C>             <C>             <C>
 . General       Apportioned based     $1,050,000       $622,000        $530,000
  corporate     on formula to all
  services,     ASI subsidiaries
  including
  accounting
  and
  insurance
  expense

 . Professional  Cost plus billing        452,000        345,000         472,000
  services to   with the percentage
  customers on  of costs and
  behalf of     expenses to be
  the Company   negotiated
  (services
  are
  available
  unless ASI
  determines
  it is not
  economic or
  otherwise
  feasible)

 . Employee      Apportioned based         50,000         40,000          65,000
  benefits      on formula to all
  services      ASI subsidiaries
</TABLE>


                                       58
<PAGE>

                                 LOGILITY INC.

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

<TABLE>
<CAPTION>
                                    Expense for    Expense for    Expense for
                                   the year ended the year ended the year ended
                                   April 30, 2001 April 30, 2000 April 30, 1999
                                   -------------- -------------- --------------
<S>                                <C>            <C>            <C>
Facilities Agreement--The Company        $763,000       $418,000      $ 330,000
 leases various properties from
 ASI for specified square foot
 rates. The stated term of the
 agreement is for two years;
 however, it may be terminated by
 either party after a 90-day
 notice. In 2001 and 2000, ASI
 allocated utility expenses based
 on the Company's percentage of
 occupancy. Also included in
 these costs is utilities,
 telephone, and security expense.

Stock Option Agreement--The        Not applicable Not applicable Not applicable
 Company has granted ASI 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  Not applicable Not applicable Not applicable
 Company granted ASI a
 nonexclusive, nontransferable,
 worldwide perpetual right and
 license to use, execute,
 reproduce, display, etc. its
 Supply 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          367,000        731,000      1,108,000
 Company utilizes 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>

                                       59
<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, 2001 and 2000, 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, 2001. 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 auditing standards generally
accepted in the United States of America. 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, 2001 and 2000, and the results of its operations and its cash
flows for each of the years in the three-year period ended April 30, 2001, in
conformity with accounting principles generally accepted in the United States
of America.

                                          /s/ KPMG LLP

Atlanta, Georgia
June 14, 2001

                                       60
<PAGE>

                                                                     Schedule II

                                 LOGILITY, INC.

                       VALUATION AND QUALIFYING ACCOUNTS
                   Years ended April 30, 1999, 2000, and 2001
                                 (in thousands)

                        Allowance for Doubtful Accounts

<TABLE>
<CAPTION>
                         Balance at Additions                               Balance at
                         beginning   charged       Other                      end of
                         of period  to expense additions (1) Deductions (2)   period
                         ---------- ---------- ------------- -------------- ----------
<S>                      <C>        <C>        <C>           <C>            <C>
Year ended April 30,
 1999...................    $421       907          --            881          447
Year ended April 30,
 2000...................     447       120          232           115          684
Year ended April 30,
 2001...................     684       483           55           670          552
</TABLE>
--------
(1) Recovery of previously written-off amounts.
(2) Write-off of uncollectible accounts.


                                       61
<PAGE>

                          Independent Auditors' Report

The Board of Directors and Shareholders
Logility, Inc.:

   Under date of June 14, 2001, we reported on the combined balance sheets of
Logility, Inc. as of April 30, 2001 and 2000, 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, 2001, which are included in the
April 30, 2001, 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 14, 2001


                                       62