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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, 2000

                                       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>
<CAPTION>
                   Georgia                                       58-2281338
<S>                                            <C>
       (State or other jurisdiction of                         (IRS Employer
       incorporation or organization)                       Identification No.)
       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. Yes [X] No [_]

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

   At July 17, 2000, 13,307,182 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 17, 2000) of the
shares held by nonaffiliates was approximately $10.9 million.

           DOCUMENTS INCORPORATED BY REFERENCE; LOCATION IN FORM 10-K

1. 2000 Proxy Statement into Part III.
2. Form S-1 Registration Statement No. 333-33385 into Part IV.
3. Form S-8 Registration Statement No. 333-62531 into Part IV.
4. Form S-8 Registration Statement No. 333-66773 into Part IV.

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<PAGE>

                                     PART I

Item 1. Business

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

Company Overview

   Logility, Inc. ("Logility" or the "Company") was incorporated as a Georgia
corporation in July 1996. Logility is a leading provider of e-Business
solutions for business-to-business (B2B) collaborative commerce that optimize
internal and external operating efficiencies of manufacturers, suppliers,
distributors, retailers and other organizations along the value chain. The
value chain refers to the complex network of relationships that organizations
maintain with trading partners to source, manufacture and deliver products to
the customer. Our 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. The
Company's Logility Voyager Solutions(TM) consists of an Internet-based,
integrated software suite that provides advanced supply chain management
including collaborative planning, supply chain execution, 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' value chains, private
Internet portals and public e-Business trading exchanges.

   Leveraging our value chain management expertise, Logility was an innovator
in developing and deploying B2B e-Business with our first Internet-based
collaborative planning solution implemented in 1996. The Company has continued
to invest and expand its e-Business offerings to incorporate Collaborative
Planning, Forecasting and Replenishment(R) (CPFR(R)) standards as well as
emerging collaborative supply chain execution standards for transportation and
distribution center management. Our Logility Voyager Solutions suite and
i-Community services are designed to power the emerging Internet trading
exchanges and marketplaces for collaborative planning and procurement of direct
materials. We believe that private and public Internet-based trading exchanges
and marketplaces will increase demand for our solutions. Logility will continue
to focus its efforts on the evolving market requirements for innovative B2B e-
Business solutions.

   The Company's software solution is modular and scaleable to meet the
management requirements of complex processes involving tens of thousands of
products across multiple sites. In addition, it can be integrated with existing
software systems and a variety of Internet and client-server operating
environments and platforms. The Company has 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, Heineken USA, Magneti Marelli, Mercury Marine, Pharmacia & Upjohn,
Pfizer International, Reynolds Metals, Sony Electronics and VF Corporation. The
Company sells its products through direct and indirect channels. The Company
derived approximately 11% of its revenues in the fiscal year ended April 30,
2000 from international sales.

                                       2
<PAGE>

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 "value chain" can realize significant competitive advantages in
the form of lower costs and greater customer responsiveness. Value chain
management refers to the process of managing the complex network of
relationships that organizations maintain with external trading partners
(suppliers, manufacturers, distributors and customers) to source, manufacture
and deliver goods and services to the end consumer. Value chain management
involves both the activities related to supplying products or services as well
as the sales and marketing activities that impact the demand for goods and
services, such as promotions, pricing and forecasting.

   Today several market trends are driving organizations to expand
collaboration with trading partners along the value chain. A general shift in
market power has forced manufacturers and distributors to become more
responsive to retailers and consumers, which has 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 value chain as they seek to improve manufacturing
efficiency and logistics operations while maintaining flexibility and
responsiveness to changing market conditions and customer demands. These
pressures are compounded by the increasing complexity and globalization of the
interactions among suppliers, manufacturers, distributors, retailers and
consumers.

   The growth and rapid adoption of the Internet has enhanced the ability of
organizations along the value 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
that facilitate B2B e-Business and the integration of value chains comprised of
suppliers, manufacturers, distributors and customers. These "networked" value
chains are rapidly 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 and
fulfillment of direct materials.

   AMR Research (AMR Research Report on e-Commerce Applications for 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."

   Additionally, Forrester Research reports that business-to-business e-
commerce is "set to surge" and predicts that "by 2002, 93% of firms expect to
transact business over the Net." (Forrester Research Report on eMarketplaces
Boost B2B Trade, February 2000.)

   To leverage the Internet for commercial benefit and facilitate enhanced
collaboration among the various trading partners in the value 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, 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 and distributing products throughout the value chain. Within the
supply chain execution function, increasing focus is being placed by
organizations on the effective management

                                       3
<PAGE>

of warehouse and transportation operations and the need for their integration
with planning systems and other enterprise software applications, to increase
the efficient and effective fulfillment of customer orders in both business-to-
business and business-to-consumer sectors.

   In order to effectively manage and coordinate value chain activities,
companies require planning and supply chain execution software that provides
for integrated communication and collaboration among the various constituents
along the value chain. This enhanced collaboration synchronizes production
plans with demand forecasts, thereby minimizing bottlenecks that lead to
production delays and excess inventory. Companies who have implemented 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 ("VICS"), of which Logility is an advisory
board member on the CPFR subcommittee, "CPFR is a business process model for
value chain partners to coordinate plans in order to reduce variance between
supply and demand." VICS developed this process in conjunction with major
retailers, manufacturers and suppliers to enable true collaboration. CPFR is a
business model that changes the nature of the relationship between trading
partners.

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

Strategy

   The Company's objective is to become the leading provider of e-Business
solutions for business-to-business collaborative commerce and advanced supply
chain management, enabling companies to optimize their operations associated
with the manufacture and distribution of products in target markets such as
consumer goods, retail and process manufacturing. The Company's strategy
includes the following key elements:

     Leverage and Expand Installed Base of Customers. The Company currently
  targets businesses in the consumer goods, retail, chemicals,
  pharmaceuticals, food and beverage, and oil and gas value chains consisting
  of suppliers, manufacturers, distributors, and retailers. The Company
  intends to continue to leverage its installed base of more than 400
  customers to introduce additional functionality, product upgrades,
  complementary modules, and application hosting services. In addition, the
  Company intends to expand sales to new customers in its existing vertical
  markets and to target additional vertical markets over time.

     Continue to Expand Sales and Marketing. The Company intends to continue
  to pursue an increased share of the e-Business market for business-to-
  business software solutions by expanding its sales and marketing
  activities. The Company intends to continue building a direct sales force
  that is focused on selected vertical markets, such as consumer goods,
  retail and process manufacturing value chains. In fiscal year 2000, the
  Company expanded its total sales and marketing staff by 34%.

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

     Extend e-Business Strategy. The Company launched an e-Business
  initiative in fiscal year 2000 to deliver a full suite of products and
  services for Internet-based supply chain planning and execution to power
  business-to-business trading exchanges and marketplaces. The Company's
  Collaborative Commerce strategy includes four levels of products and
  services designed to enable the optimization of the customer's value chain
  and improve collaboration. These products and services include:


                                       4
<PAGE>

    .  Logility Voyager Solutions -- Business solution for end-to-end value
       chain management including planning and supply chain execution

    .  Collaborative Commerce Solutions--expands the number of business
       processes that can be executed via intranets, extranets and the
       Internet to include both internal and external trading partners

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

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

     Invest Aggressively to Build Market Share. We have made and continue to
  make substantial investments to expand our sales force, research and
  development efforts, and consulting and administrative 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. The Company believes 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. The
  Company believes it is one of the few providers of integrated value chain
  management software solutions addressing both demand and supply planning as
  well as transportation and warehousing logistics requirements. The Company
  is focusing on providing the most comprehensive planning and execution
  solution aimed at optimizing operations along the value chain. The Company
  intends to continue to focus its development initiatives on enhancing its
  end-to-end solution and introducing additional capabilities that complement
  its integrated solution.

     Focus on MidMarket. The Company has defined as "MidMarket" those
  corporations or divisions of corporations that have annual revenues ranging
  from $200 million to $2 billion. Organizations of this size fit the
  Company's historical customer profile, and are prime candidates for the
  purchase and use of the Company's unique full suite of integrated products
  operating on UNIX, Windows NT/Windows 2000 and OS400. Focus on the
  MidMarket was reinforced with the March 2000 announcement of a strategic
  partnership between the Company and IBM to jointly target the MidMarket for
  specific vertical markets. Additionally, the Company anticipates that its
  e-Business strategy will be well accepted in this market segment.

     Increase Penetration of International Markets. In fiscal year ended
  April 30, 2000, the Company generated 11% of its total revenues from
  international sales and has marketing relationships with a number of
  international distributors. The Company intends to expand its international
  presence by adding additional direct sales personnel to address
  international markets and has created additional relationships with
  distributors in Europe, Latin America and the Asia/Pacific region.

     Expand Strategic Relationships. The Company intends 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. The Company has a number of marketing
  alliances, including those with Arthur Andersen, Adusa, Inc., Clarkston
  Potomac, EDS, GERS Retail Systems, Great Plains Software, Inc., IBM,
  Infinium, INSIGHT, Inc., Microsoft, Oracle, Tompkins Associates, and
  WaveBend Solutions (formerly BDO Seidman). In addition, the Company has
  developed a network of international agents who assist in the sale and
  support of the Company's products. The Company intends to utilize these and
  future relationships with software and service organizations to enhance its
  sales and marketing position.


                                       5
<PAGE>

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

Logility Products and Services

 Key Benefits

   The Company's 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 value 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 the Company's software solutions and services include
the following:

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

     Advanced Collaborative Planning and Supply Chain Execution
  Functionality. The Company's products allow for collaboration among the
  various levels within an organization and among external constituents
  (trading partners) throughout the value 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 consensus plan. The Company's collaborative
  planning functionality is further enhanced with collaborative commerce
  tools such as the Company's Logility Voyager XPS(TM) (eXtensible Planning
  Solution), which leverages Internet technology to facilitate information
  sharing directly with trading partners. Voyager XPS supports the business
  processes and practices defined in the CPFR guideline, enabling B2B
  collaborative commerce via the Internet between two or more trading
  partners. Complementing Voyager XPS on the supply chain planning side is
  Logility Voyager XES(TM) (eXtensible Execution Solution) on the supply
  chain execution side. This solution extends collaboration to transportation
  and distribution center management trading partners. Through the Company's
  i-CommunitySM, a collaborative network of trading partners, customers will
  be able to exchange information and conduct collaborative planning,
  forecasting and replenishment as well as streamline the order fulfillment
  process through collaboration amongst warehouse, transportation and carrier
  trading partners.

     Comprehensive Planning Solution. The Company's planning solution is
  comprised of demand, inventory, event, manufacturing, replenishment and
  transportation planning modules that balance demand opportunities with
  supply constraints through the synchronization of information gathered from
  value

                                       6
<PAGE>

  chain participants. A key component of the Company's planning solution is
  its emphasis on addressing the full range of complex demand planning
  requirements of its customers, including comprehensive forecasting
  capabilities that take into account each user's unique perspective of the
  value chain.

     Robust Supply Chain Execution Solution. The Company's 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.

     Rapid Deployment. The Company's products utilize a modular design,
  thereby streamlining implementation and allowing deployment in a relatively
  short time frame. The comprehensive functionality of each module generally
  permits customers to implement the solutions with nominal modifications. In
  addition, the Company's software combines sophisticated techniques and
  tools with 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 CPFR-based collaboration with suppliers, manufacturers,
  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 web-browser.

     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.

 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
value chain management resulting in both external and internal collaboration to
streamline the supply chain. These modules can be implemented individually in
certain cases, 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 HP9000, IBM RS/6000, AS/400 and Intel-
based servers running Windows NT/Windows 2000 on Oracle, Microsoft SQL Server
and DB2. The following table summarizes the Company's product line:

            Module           Features
  -----------------------    -----
   Logility Voyager          . Collaborative Planning, Forecasting and
XPS(TM)                      Replenishment (CPFR)
                              compliant
                             . Collaborative planning with trading partners
                             . Configurable deployment
                             . Open integration architecture
                             . Value Chain Workflow(TM)
                             . Universal Exception Builder for managing
                             exceptions

   Logility Voyager          . Collaborative warehouse and transportation
XES(TM)                      planning
                              with trading partners
                             . Configurable deployment
                             . Open integration architecture
                             . Value Chain Workflow(TM)
                             . Universal Exception Builder for managing
                             exceptions

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

                                       7
<PAGE>

            Module           Features
  -----------------------    -----
   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
   Manufacturing Planning    . Enterprise-wide capacity planning
                             . Plant-level scheduling
                             . Supports activity-based costing
                             . Optimizes sourcing decisions' actual costs
                             . Interactive simulation
                             . Real-time, in memory model
                             . Distributed and remote visual capacity planning
                             . Remote and collaborative manufacturing
   Replenishment Planning    . Supports continuous replenishment strategies
                             . Constrained, time-phased distribution
                             requirements planning
                             . Proactive action messages
                             . EDI integration
                             . Available-to-promise methodologies
                             . Multi-site sourcing and allocation
   Transportation Planning   . Load Control Center
                             . Shipment planning and consolidation
                             . Freight rating and routing
                             . Carrier selection
                             . Optimized inbound and outbound planning
   Transportation            . Load tendering
Management                   . Shipment confirmation
                             . Freight audit and payment control
                             . Shipment documentation and tracking
   Warehouse PRO(R)          . Object oriented architecture
                             . User configurable options
                             . Advanced workflow technology
                             . Dynamic label and report printing
                             . Integrated graphical user interface

                                       8
<PAGE>

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

   Logility Voyager XES. Voyager XES (eXtensible Execution Solution) extends
collaboration to include transportation and distribution center management
trading partners. Voyager XES includes tools to manage communications related
to customer orders, freight shipments, suppliers' products, and more. Voyager
XES optimizes warehousing and shipping plans to ensure that customer orders are
efficiently scheduled, executed and tracked for on-time delivery.

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

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

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

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

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

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


                                       9
<PAGE>

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

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

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

   WarehousePRO. WarehousePRO incorporates advanced workflow technology,
industry-specific best practices and radio frequency data collection terminals
to optimize warehouse operations. The software's object-oriented design allows
users to define the properties of specific items, locations, or processes,
thereby reducing the need for custom programming. The solution is highly
flexible and can be reconfigured by the user to adapt to changing business
requirements. WarehousePRO features an extensive workflow library of user-
selected templates incorporating industry-specific best-practice warehousing
techniques. With built-in standard interfaces to major radio frequency data
collection systems, the software delivers more accurate inventory
accountability and improved warehouse efficiency. 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.

   The price for the Company's products typically is determined based upon the
number of modules licensed and the number of servers, users and/or sites for
which the solution is designed. During fiscal year ended April 30, 2000,
license fees for a new customer ranged from $125,000 to $3.0 million.

                                       10
<PAGE>

Customers

   The Company primarily targets businesses in the consumer-packaged goods,
retail and process manufacturing value chains. A sample of companies that have
purchased one or more of the Company's products follows:

<TABLE>
<CAPTION>
                           Chemicals, Oil & Gas,
   Consumer Goods             Pharmaceuticals      Manufacturing and Others
   --------------          ---------------------- ---------------------------
   <S>                     <C>                    <C>
   Aurora Foods            BOC Distribution Svcs. Appleton Paper
   Broyhill Furniture      CITGO                  British Telecommunications
   Canandaigua Wine        Eastman Chemical Co.   Koch Industries
   ConAgra, Inc.           Nordic Synthesis AB    Magneti Marelli
   Eagle Family Foods      Pfizer, Inc.           Mercury Marine
   French Fragrances       Pharmacia & Upjohn     Peugeot International
   Heineken USA            Sigma-Aldrich Corp.    Powerware Corporation
   L'Oreal USA                                    Raytheon Marine Company
   Maybelline Inc.                                Reynolds Metals
   McCormick & Company                            Robert Horne Paper
   Nestle France                                  Siecor
   Saks Incorporated                              Sony Electronics
   Sara Lee Knit Products                         Sprint PCS
   S.C. Johnson & Sons                            Subaru of America, Inc.
   Seagram's                                      Tyco Plastics and Adhesives
   SmarterKids.com                                Union Camp
   Tiffany's                                      US Ceramic Tile Company
   Unilever
   VF Corporation
   Wickes Furniture
   W.S. Badcock Furniture
</TABLE>

   In fiscal year 2000, one customer, ConAgra, Inc., accounted for
approximately 13% of total revenues. No other customer accounted for 10% or
more of the Company's total revenues during that fiscal year.

Sales and Marketing

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

   The Company has a number of marketing alliances, including those with Arthur
Andersen, Adusa, Inc., Clarkston Potomac, EDS, GERS Retail Systems, Great
Plains Software, Inc., IBM, Infinium, INSIGHT, Inc., Microsoft, Oracle,
Tompkins Associates, and WaveBend Solutions (formerly BDO Seidman). In
addition, the Company has developed a network of international agents who
assist in the selling of the Company's products. The Company intends to utilize
these and future relationships with software and service organizations to
enhance its sales and marketing position.

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

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

                                       11
<PAGE>

Customer Service and Support

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

     Implementation Support: ExpressROI(TM). The Company offers its customers
  a professional and proven implementation program that facilitates rapid
  implementation of the Company's software products. Logility consultants,
  through the ExpressROI program, help customers define the nature of their
  project, and subsequently proceed through the implementation process. The
  Company provides training for all users and managers involved. The Company
  first establishes measurable financial and logistics performance
  indicators, then evaluates them for conformance during and after
  implementation. Additional services beyond implementation can include post-
  implementation reviews to further enhance the benefits to customers.

     Implementation; General Training Services. The Company offers its
  customers post-delivery professional services consisting primarily of
  implementation and training services, for which the Company typically
  charges on a daily basis. Customers that choose to purchase implementation
  services receive assistance in integrating the Company's solution with
  existing software applications and databases. Implementation of Logility
  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. The Company provides
  its customers with ongoing product support services. Support or maintenance
  contracts typically are sold to customers for one to three year terms at
  the time of the initial product license and may be renewed for additional
  periods. Under these contracts, the Company provides telephone consulting,
  product updates and releases of new versions of products previously
  purchased by the customer, as well as error reporting and correction
  services. The Company provides ongoing support and maintenance services on
  a seven-day-a-week, 24-hours-a-day basis through telephone, electronic mail
  and web-based support, using a call logging and tracking system for quality
  assurance.

Research and Product Development

   During fiscal 2000, 1999, and 1998, the Company expensed approximately $4.9
million, $6.2 million, and $5.6 million, respectively, for research and
development. In addition, the Company capitalized $3.4 million, $3.9 million,
and $3.2 million in software development costs during fiscal years 2000, 1999,
and 1998, respectively, in accordance with the Statement of Financial
Accounting Standards No. 86. The Company's new internal 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 $8.3 million, $10.1
million, and $8.8 million in fiscal years 2000, 1999 and 1998, respectively,
and represented 26%, 37%, and 25%, respectively, of total revenues in those
years.

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

   The current release of Logility Voyager Solutions is version 5.4. This
version is based on an integrated object-oriented architecture for maximum
scalability and messaging functionality that supports the increasingly
distributed nature of value chain planning. The Company has developed
interfaces with leading ERP vendors such as SAP, Oracle and PeopleSoft.

                                       12
<PAGE>

Competition

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

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

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

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

Proprietary Rights and Licenses

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

                                       13
<PAGE>

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

   Despite the measures taken by the Company to protect its proprietary rights,
unauthorized parties may attempt to reverse engineer or copy aspects of the
Company's products or to obtain and use information that the Company regards as
proprietary. Policing unauthorized use of the Company's products is difficult.
In addition, litigation may be necessary in the future to enforce the Company's
intellectual property rights, to protect the Company's trade secrets, to
determine the validity and scope of the proprietary rights of others, or to
defend against claims of infringement or invalidity. Such litigation could
result in substantial costs and diversion of resources and could have a
material adverse effect on the Company's business, operating results and
financial condition.

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

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

Employees

   As of April 30, 2000, the Company had 206 full-time employees, consisting of
51 in sales and marketing, 81 in product development, 68 in customer support
and implementation services and 6 in administration and finance. In addition,
the Company shares a number of administrative and finance personnel with
American Software. None of the Company's employees is represented by a labor
union or is subject to a collective bargaining agreement. The Company believes
its employee relations are good.

                                       14
<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 forward-looking statements
from time to time. 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 these 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 Combined Financial Statements
and Notes thereto, and Management's Discussion and Analysis of Financial
Condition and Results of Operations for the years ended April 30, 1998, 1999
and 2000 contained elsewhere in this Form 10-K.

Our Success Is Dependent on the Emerging Market for Value Chain Management
Software.

   We currently derive, and expect to continue to derive, substantially all of
our revenues from licenses and services related to value chain management
software products. The market for value chain management software is still
emerging. There can be no assurance that this market will continue to grow or,
even if it does grow, that businesses will purchase our products. We have
spent, and intend to continue to spend, considerable resources educating
potential customers generally about value chain management software solutions
and specifically about our products. There can be no assurance, however, that
such expenditures will enable us to achieve any additional degree of market
acceptance. If the market for value chain management software fails to grow or
grows more slowly than we currently anticipate, our business, operating results
and financial condition would be materially and adversely affected.

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 business-to-
business electronic commerce, and other products and services that can be
offered over the Internet. These areas are relatively new to our product
development and 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 this area is difficult to predict.

Implementation of Business-to-Business Collaborative Commerce Strategy.

   We intend to continue to devote significant resources to the implementation
of our Business-to-Business Collaborative Commerce strategy. Expanding the
number of business processes that can be executed via intranets, extranets and
the Internet is a key component of the strategy. Because of the special risks
associated with developing and marketing products intended for this market
segment noted in "Our Business is Subject to Rapid Technological Change and New
Products" below, there can be no assurance that we will be successful in the
implementation of our strategy.

Our Success Depends Upon The Continued Expansion of Indirect Channels.

   We are building and hope to maintain strong working relationships with ERP
system vendors and consulting firms that we believe can play important roles in
marketing our products. We are currently investing,

                                       15
<PAGE>

and intend to continue to invest, significant resources to develop these
relationships, which could adversely affect our operating margins. There can be
no assurance that we will be able to attract organizations that will be able to
market our products effectively or that will be qualified to provide timely and
cost-effective customer support and service. In addition, our arrangements with
these organizations are not exclusive and, in many cases, may be terminated by
either party without cause. In addition, many of these organizations have
marketing and other relationships with our competitors. Therefore, there can be
no assurance that any organization that sells or markets our products will
continue its involvement with our products, and the loss of important alliances
could materially adversely affect our results of operations. In addition, if we
are successful in selling products as a result of these relationships, any
material increase in our indirect sales as a percentage of total revenues would
be likely to adversely affect our average selling prices and gross margins
because of the lower unit prices that we receive when selling through indirect
channels.

There is Intense Competition in the 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 Internet
application vendors in the enterprise application software market segment,
vendors in the manufacturing software application market segment, vendors in
the emerging enterprise resource optimization software solutions market segment
and numerous small firms that offer products and services with new or advanced
features. 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 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.

   Some of our competitors may have an advantage over us due to their
significant worldwide presence, longer operating and product development
history, and substantially greater financial, technical and marketing resources
than ours. Furthermore, potential customers may consider outsourcing options,
including data center outsourcing, service bureaus and application service
providers, as viable alternatives to licensing our software products.

Our Business is Subject to Rapid Technological Change and New Products.

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

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

   Despite testing by us and by third parties, 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

                                       16
<PAGE>

released. This may 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 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

  . relational 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.

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

   We license certain 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 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 partnerships 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.

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. 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 characterized by decreased product
    demand, price erosion, technological shifts, work slowdowns and layoffs
    may substantially reduce 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 significantly 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;

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


                                       17
<PAGE>

   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 enterprise 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;

  . 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.

A Significant Portion of Our Revenue in any Quarter May be Derived 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.

   Because of the factors listed above and other specific requirements under
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 prior quarter contracting activity may affect
our consulting, training and maintenance service revenues since these revenues
typically follow license fee revenues. Our ability to maintain or increase
service 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.

Our Future Growth is in Part Dependent on our International Operations.

   We derived approximately 11%, 14%, and 9% of our total revenues from
international sales in the fiscal years ended April 30, 2000, 1999 and 1998,
respectively. We believe that continued growth and profitability will require
increased international sales. We must establish additional foreign operations
and hire additional personnel, as well as expand our indirect sales channels in
markets outside North America. To the extent that we are unable to do so in a
timely and effective manner, our growth, if any, in international sales will be
limited, and our business, operating results and financial condition could be
materially adversely affected. In addition, even if our international
operations are successfully expanded, there can be no assurance that we will be
able to maintain or increase international market demand for our products or
that such operations will be profitable.


                                       18
<PAGE>

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 offer additional discounts to customers, reduce transactions
that involve a perpetual use license to our software products or 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.

   Over the past several years, the American Institute of Certified Public
Accountants issued Statement of Position, or SOP 97-2, "Software Revenue
Recognition," and SOP 98-9, "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 only recently
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. These 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, and again in June 2000.
We are required to adopt the provisions of SAB 101 in our fourth quarter of
fiscal 2001. We are currently reviewing the provisions of SAB 101 and have not
fully assessed the impact of its adoption. While SAB 101 does not supercede the
software industry specific revenue recognition guidance, which we believe we
comply with, the SEC Staff has recently informally indicated its views related
to SAB 101 that may change current interpretations of software revenue
recognition requirements. Such SEC interpretations could result in many
software companies, including us, recording a cumulative effect of a change in
accounting principles.

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

   Logility operated as a division of American Software, Inc. until it went
public in 1997. Today, we are approximately 85% owned by American Software. We
receive a substantial amount of financial, accounting, marketing 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 and marketing 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 to provide 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 the other stockholders of the
Company, the outcome of any corporate action requiring stockholder approval,
including the election of the entire Board of Directors of the Company. In
addition, through its ownership of a majority of our Common Stock and control
of the Board of Directors, American Software will be able to control the
management and affairs of the Company, including all determinations with
respect to acquisitions, dispositions, mergers, and other business
combinations, borrowings, issuances of Common Stock or other equity securities
of the Company, our dividend policy, and any change in control of the Company.


                                       19
<PAGE>

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.
None of our key personnel are bound by long-term employment agreements. The
loss of 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 we have at times 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. 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. Although we invest significant resources in
recruiting and retaining employees, competition for personnel in the software
industry is intense, and, at times, we have had difficulty locating highly
qualified candidates within desired geographic locations, or with certain
expertise. 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. Our failure to attract,
train, retain and effectively manage employees could increase our costs, hurt
our development and sales efforts and cause a degradation of our customer
service.

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

   Because we have historically operated as a division of American Software,
until 1997 we received substantially all of our financial, accounting,
marketing and management services from American Software. The Company and
American Software have entered into an agreement whereby American Software has
agreed to act as a sales and marketing agent for the Company. We expect to
continue to rely on this sales and marketing relationship with American
Software as well as the financial, accounting and management services provided
by American Software. The Company's business, operating results and financial
condition may be adversely affected by a reduction or discontinuation of
services from American Software.

Our Recent and Future Acquisitions May Not Be Successful.

   We have in the recent past and may continue to 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;

                                       20
<PAGE>

  . 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.

   Current accounting principles require us to use the purchase method of
accounting in most 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 goodwill and other intangible assets valued in
the combinations with companies. Such write-offs and ongoing amortization
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.

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. Outstanding applications may not result in issued patents and,
even if issued, the patents may not provide any meaningful competitive
advantage. 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. Therefore, 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 the Licensing of Our Software
and Provision of Services.

   Our agreements 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 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

                                       21
<PAGE>

incur significant expense and pay substantial damages. Even if we prevailed,
the accompanying publicity could adversely impact the demand for our software.

Although We Believe That We Have Successfully Addressed Concerns Surrounding
Year 2000 Compliance, There is Still Uncertainty Regarding the Extent that the
Software Industry May Be Affected by Year 2000 Issues.

   Our management believes that we successfully addressed Y2K readiness in our
proprietary software products and in third-party software, computer and other
equipment used internally. To date, we have not experienced any business
interruptions associated with Y2K compliance issues. However, some uncertainty
still exists in the software industry concerning the potential effects
associated with Y2K readiness.

   Although we currently offer software products that are designed and have
been tested for Year 2000 compliance, there can be no assurance that our
software products contain all necessary date code changes. To date, we are not
aware of any Year 2000 compliance failures involving our customers or
suppliers. However, litigation may still arise from business interruptions
associated with Y2K issues. It is uncertain whether, or to what extent, we may
be involved in any such litigation.

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 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

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

Item 3. Legal Proceedings

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

                                       22
<PAGE>

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

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

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

   The Company's Common Shares are listed on the NASDAQ Stock Market--National
Market under the symbol LGTY. As of July 7, 2000, there were 2,072 shareholders
which 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. common stock as reported by NASDAQ, for the Company's last two fiscal
years:

<TABLE>
<CAPTION>
   Fiscal Year
       2000                                                     High    Low
   -----------                                                  ----    ---
   <S>                                                          <C>     <C>
   First Quarter............................................... $ 5 3/4 $3 7/8
   Second Quarter.............................................. $ 4 7/8 $2 3/4
   Third Quarter............................................... $23 5/8 $3
   Fourth Quarter.............................................. $20 5/8 $5 7/8
<CAPTION>
   Fiscal Year
       1999                                                     High    Low
   -----------                                                  ----    ---
   <S>                                                          <C>     <C>
   First Quarter............................................... $12 1/4 $6 3/8
   Second Quarter.............................................. $ 7 1/8 $2 7/16
   Third Quarter............................................... $ 6 1/2 $2 1/2
   Fourth Quarter.............................................. $ 6 1/4 $3 3/8
</TABLE>

Dividends

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

Transfer Agent

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

   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:

Herzog, Heine, Geduld, Inc.
Instinet Corporation
Island System Corporation
Jefferies & Company, Inc.
Knight Securities L.P.
Schwab Capital Markets
Sharpe Capital Inc.
Sherwood Securities Corp.
Spear, Leeds & Kellogg
Wachovia Securities, Inc.

                                       23
<PAGE>

Item 6. Selected Combined Financial Data

   The selected combined financial data presented below for the years ended
April 30, 2000, 1999, 1998, 1997, and 1996 are derived from the audited
combined financial statements of the Company.

<TABLE>
<CAPTION>
                                              Years Ended April 30,
                                     -----------------------------------------
                                      2000    1999     1998    1997     1996
                                     ------- -------  ------- -------  -------
                                                 (in thousands)
<S>                                  <C>     <C>      <C>     <C>      <C>
Combined Statements of Operations
 Data:
Revenues:
  Licenses.........................  $13,501 $11,384  $20,138 $12,359  $10,700
  Maintenance......................    9,418   7,967    7,167   5,051    3,797
  Services.........................    9,370   7,666    7,357   4,414    2,136
                                     ------- -------  ------- -------  -------
    Total revenues.................   32,289  27,017   34,662  21,824   16,633
                                     ------- -------  ------- -------  -------
Cost of Revenues:
  Licenses.........................    3,218   4,433    5,299   3,970    4,016
  Maintenance......................    1,775   2,194    1,582   1,219      876
  Services.........................    5,144   3,468    3,683   1,969    1,131
                                     ------- -------  ------- -------  -------
    Total cost of revenues.........   10,137  10,095   10,564   7,158    6,023
                                     ------- -------  ------- -------  -------
Gross margin.......................   22,152  16,922   24,098  14,666   10,610
Operating expenses:
  Research and development.........    4,949   6,165    5,592   3,484    1,452
  Sales and marketing..............   12,898  14,507   13,676  10,628    9,892
  General and administrative.......    3,054   4,302    3,111   2,508    2,140
  Charge for asset impairment......      --    1,230      --      --       --
                                     ------- -------  ------- -------  -------
    Total operating expenses.......   20,901  26,204   22,379  16,620   13,484
                                     ------- -------  ------- -------  -------
Operating income (loss)............    1,251  (9,282)   1,719  (1,954)  (2,874)
Other income, net..................    1,137   1,274      863     --       --
                                     ------- -------  ------- -------  -------
Income (loss) before income taxes..    2,388  (8,008)   2,582  (1,954)  (2,874)
Income tax expense.................      --      100      --      --       --
                                     ------- -------  ------- -------  -------
Net income (loss)..................  $ 2,388 $(8,108) $ 2,582 $(1,954) $(2,874)
                                     ======= =======  ======= =======  =======
Net income (loss) per common
 share--Basic......................  $  0.18 $ (0.60) $  0.20 $ (0.17) $ (0.25)
                                     ======= =======  ======= =======  =======
    Diluted........................  $  0.17 $ (0.60) $  0.20 $ (0.17) $ (0.25)
                                     ======= =======  ======= =======  =======
Weighted average common shares--
 Basic.............................   13,333  13,486   12,671  11,300   11,300
                                     ======= =======  ======= =======  =======
    Diluted........................   13,698  13,486   12,676  11,300   11,300
                                     ======= =======  ======= =======  =======
<CAPTION>
                                                 As of April 30,
                                     -----------------------------------------
                                      2000    1999     1998    1997     1996
                                     ------- -------  ------- -------  -------
                                                 (in thousands)
<S>                                  <C>     <C>      <C>     <C>      <C>
Combined Balance Sheet Data:
  Cash and cash equivalents........  $ 3,524 $ 9,695  $ 1,006 $   732  $    13
  Investments, short-term..........   14,425  14,024   29,559     --       --
  Working capital..................   17,307  22,814   33,006     557    1,223
  Total assets.....................   44,534  40,678   50,830  16,367   14,170
  Total shareholders' equity.......   31,213  29,468   39,237   6,668    7,224
</TABLE>

                                       24
<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.

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

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

   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.

                                       25
<PAGE>

   The following table sets forth certain revenue and expense items as a
percentage of total revenues for the three years ended April 30, 2000 and the
percentage increases and decreases in those items for the years ended April 30,
2000 and 1999:

<TABLE>
<CAPTION>
                                                                    2000 vs 1999 vs
Percentage of total revenues                     2000  1999   1998   1999    1998
----------------------------                     ----  ----   ----  ------- -------
<S>                                              <C>   <C>    <C>   <C>     <C>
Revenues:
  License fees..................................  42%   42%    58%     19%    (43)%
  Maintenance...................................  29    30     21      18      11
  Services......................................  29    28     21      22       4
                                                 ---   ---    ---     ---     ---
    Total revenues.............................. 100   100    100      20     (22)
                                                 ---   ---    ---     ---     ---
Cost of revenues:
  License fees..................................  10    16     15     (27)    (16)
  Maintenance...................................   5     8      4     (19)     39
  Services......................................  16    13     11      48      (6)
                                                 ---   ---    ---     ---     ---
    Total cost of revenues......................  31    37     30     --       (4)
                                                 ---   ---    ---     ---     ---
Gross margin....................................  69    63     70      31     (30)
Operating expenses
  Research and development, net.................  15    23     16     (20)     10
  Sales and marketing...........................  40    54     40     (11)      6
  General and administrative....................  10    16      9     (29)     38
  Charge for asset impairment................... --      5    --       nm      nm
                                                 ---   ---    ---     ---     ---
    Total operating expenses....................  65    98     65     (20)     17
                                                 ---   ---    ---     ---     ---
Operating income (loss).........................   4   (35)     5      nm      nm
Other income, net...............................   3     5      2     (11)     48
                                                 ---   ---    ---     ---     ---
Income (loss) before income taxes...............   7   (30)     7      nm      nm
Income tax expense.............................. --    --     --       nm      nm
                                                 ---   ---    ---     ---     ---
Net income (loss)...............................   7%  (30)%    7%     nm      nm
                                                 ===   ===    ===     ===     ===
</TABLE>
--------
nm-not meaningful

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 a year ago, to $13.5
million. We believe that we are realizing positive results primarily from the
implementation of our Business-to-Business Collaborative Commerce strategy,
which continues the shift of our applications to Internet-based collaborative
value chain management. 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. 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.

                                       26
<PAGE>

   Maintenance. Maintenance revenues increased 18% to $9.4 million from a year
ago, due to an increase in the installed base of customers. Maintenance
revenues are directly related to license fee revenues, since new licenses are
the potential source of new maintenance customers. We expect that maintenance
revenues in dollar amount will continue to increase from the levels achieved in
fiscal 2000.

   Services. Services revenues increased 22% to $9.4 million from a year ago 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. While on an annual basis no
individual customer accounted for more than 10% of total revenues in fiscal
1999 or 1998, 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 $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. 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 2000 was 69% compared to 63% a year ago, due primarily
to increases in gross margins on license fees and maintenance revenues. The
gross margin on license fees increased to 76% from 61% a year ago, due to the
combination of higher license fees and lower amortization of capitalized
software expense. Maintenance gross margin increased to 81% from 72% a year
ago, primarily as a result of increased maintenance revenue. Services gross
margin decreased to 45% from 55% a year ago, 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 30, Percent April 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 prod. dev. costs.............       41%               39%
Product development expenses.......................  $ 4,949    (20%)  $ 6,165
  Percentage of total revenues.....................       15%               23%
</TABLE>

                                       27
<PAGE>

   Gross product development costs decreased 18% in 2000 compared to a year ago
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 a year ago, while the rate of
capitalized development increased slightly to 41% from 39% a year ago. 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.
We expect development expenses to increase 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 declined 11% from a year
ago. 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 a year ago. 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. We expect that
the dollar amount of general and administrative expenses will increase in the
foreseeable future.

 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.

Years Ended April 30, 1999 and 1998:

General Market Conditions:

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

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

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

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

                                       28
<PAGE>

   We believe these factors, as well as possibly others, contributed to our
reduced revenues in fiscal 1999, particularly in the area of software license
fees. We took several steps in the second quarter of fiscal 1999 to reduce our
expense structure in an attempt to return to operating profitability as soon as
possible. These steps included reducing our direct sales force in order to
improve sales effectiveness through the use of our most productive sales
executives. Additionally, we reduced other operating expenses, mainly sales and
marketing expenditures, beginning in the latter portion of the second quarter
of fiscal 1999.

 Revenues:

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

   Licenses. License fee revenues decreased 43% to $11.4 million from fiscal
1998. We believe that in the first half of fiscal 1999, several of our
potential customers continued to delay purchase decisions due to a variety of
factors, including concern over global economic conditions and limited
resources due to the allocation of resources to Year 2000 system projects. The
direct sales channel provided approximately 83% of license fee revenues for
fiscal 1999, compared to 65% for the prior year. This increase was due to
better opportunities available to us to sell through our direct channel. Our
indirect sales channel is principally through American Software.

   Maintenance. Maintenance revenues increased 11% to $8.0 million from fiscal
1998, due to an increase in the installed base of customers. Maintenance
revenues are directly related to license fee revenues, since new licenses are
the potential source of new maintenance customers.

   Services. Services revenues increased 4% to $7.7 million from fiscal 1998 as
a result of the increased utilization of our implementation and training
services, which in turn resulted from the growth in our customer base.

 Gross Margin:

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

 Operating Expenses:

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

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

                                       29
<PAGE>

   Gross product development costs increased 15% in 1999 compared to 1998 as a
result of our continued investment in new product development. Capitalized
development increased as well, growing 25% from 1998, while the rate of
capitalized development increased slightly to 39% from 36% in 1998. Product
development expenses, as a percentage of total revenues, rose to 23%, while net
product development expenses increased 10% as we continued to invest in new
product development in fiscal 1999.

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

   General and Administrative. General and administrative expenses increased
38% to approximately $4.3 million from 1998, mainly as a result of our growth
in the number of employees and the resulting growth in administrative costs.
General and administrative expenses as a percentage of total revenues increased
to 16% from 9% during the same period.

 Other Income:

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

 Income Taxes:

   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. The Company's Tax Sharing Agreement with American
Software does not allow the Company to utilize its net operating loss
carryforwards generated prior to its initial public offering. Income taxes in
fiscal 1999 were related to state income tax obligations.

 Liquidity, Capital Resources and Financial Condition:

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

   Our operating activities provided cash of approximately $5.6 million in the
year ended April 30, 2000, compared to approximately $363,000 in the same
period of the prior year. The cash provided by operations during the year ended
April 30, 2000 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 operations during the prior year was
primarily attributable to non-cash depreciation and amortization expense of
$3.9 million, a decrease in accounts receivable of $3.4 million, the non-cash
portion of the software development cost write-off of $1.2 million, an increase
in deferred revenues of approximately $553,000, and a decrease in prepaid
expenses and other assets of approximately $320,000. This was partially offset
by a decrease in accounts payable and amount due to American Software of $1.1
million.

   Cash (used in) provided by investing activities was approximately ($11.5)
million and $10.0 million for the years ended April 30, 2000 and 1999,
respectively. In fiscal 2000, approximately $7.1 million was used for net
purchases of investments, and $3.4 million was used for computer software
development costs. In the prior year, cash was provided primarily by the
maturities of investments.

                                       30
<PAGE>

   Cash used in financing activities for the year ended April 30, 2000 totaled
$340,000. Approximately $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. For the prior year, cash used in financing
activities was approximately $1.7 million, used primarily for the repurchase of
205,500 shares of our common stock. Days sales outstanding in accounts
receivable were 94 days as of April 30, 2000, compared to 85 days as of April
30, 1999. This increase was primarily due to increased overall revenues for
fiscal 2000.

   Our current ratio on April 30, 2000, was 2.6 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. In November 1998 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
7, 2000, we had purchased a cumulative total of 564,800 shares at a total cost
of $4.3 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 will be 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 there will be 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 are required to adopt the provisions of SAB 101 in our fourth quarter of
fiscal 2001. We are currently reviewing the provisions of SAB 101 and have not
fully assessed the impact of its adoption. While SAB 101 does not supercede the
software industry specific revenue recognition guidance, which we believe we
comply with, the SEC Staff has recently informally indicated its views related
to SAB 101 that may change current interpretations of software revenue
recognition requirements. Such SEC interpretations could result in many
software companies, including us, recording a cumulative effect of a change in
accounting principles.

 Forward-looking Statements:

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

                                       31
<PAGE>

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

   Foreign Currency. For the year ended April 30, 2000, the Company generated
11% of its revenues outside of the United States. International sales usually
are made by the Company's foreign subsidiaries and are denominated typically in
U.S. Dollars or British Pounds Sterling. However, the expenses incurred by
foreign subsidiaries are denominated in the local currencies. There was no
material impact on the Company's revenues or expenses from foreign currency
fluctuations in fiscal 2000.

   Interest rates. The Company manages its interest rate risk by maintaining an
investment portfolio of held-to-maturity instruments with high credit quality
and relatively short average maturities. These instruments include, but are not
limited to, money-market instruments, bank time deposits, and taxable and tax-
advantaged variable rate and fixed rate obligations of corporations,
municipalities, and national, state, and local government agencies, in
accordance with an investment policy approved by the Company's Senior
Management. These instruments are denominated in U.S. dollars. The fair value
of securities held at April 30, 2000 was approximately $21.2 million.

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

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

Item 8. Financial Statements and Supplementary Data

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

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

   None.

                                       32
<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of Registrant

   The information relating to the members of the Board of Directors of the
Company is set forth in the Caption "Election of Directors and Information
Regarding Directors" in the Company's 2000 Proxy Statement (the "Proxy
Statement"), which information is incorporated herein by reference.

   The executive officers of the Company are as follows:

<TABLE>
<CAPTION>
      Name                  Age                    Position
      ----                  ---                    --------
<S>                         <C> <C>
J. Michael Edenfield.......  42 Chief Executive Officer, President and Director
Vincent C. Klinges.........  37 Chief Financial Officer
Larry R. Olin..............  48 Vice President--Sales, The Americas
Donald L. Thomas...........  53 Vice President--Customer Service
Andrew G. White............  35 Vice President--Product Strategy
</TABLE>

   J. Michael Edenfield has served as a Director and as President and Chief
Executive Officer of the Company since January 1997. He also serves as a
Director of INSIGHT, Inc., as well as ShipSolutions, Inc., in which the Company
owns minority interests. 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 the Company.

   Vincent C. Klinges joined the Company 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.

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

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

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

                                       33
<PAGE>

 Section 16(a) Beneficial Ownership Reporting Compliance

   Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and directors, and persons who own
more than 10% of a registered class of the Company's 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 the Common Stock of the Company are required under regulations promulgated
by the Commission to furnish the Company with copies of all Section 16(a) forms
they file.

   Based upon a review by the Company of filings made under Section 16(a) of
the Exchange Act, not all of the reports required to be filed during fiscal
2000 were filed on a timely basis. The Company is aware of the following
reports that were filed by officers, directors and 10% stockholders of the
Company after their respective due dates: Frederick E. Cooper (Initial
Statement of Beneficial Ownership) and Donald L. Thomas (Statement of Changes
in Beneficial Ownership). To the Company's knowledge, James M. Modak, an
officer of the Company who resigned during fiscal 2000, has not made the
required Section 16(a) filings with respect to stock options exercised at the
time of his departure and with respect to the resale of such shares. Based upon
its review of copies of filings received by it, the Company believes that since
May 1, 1999, all other Section 16(a) filing requirements applicable to its
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 Beneficial Owners and Management

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

Item 13. Certain Relationships and Related Transactions

Relationship with American Software, Inc.

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

Services Agreement

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

                                       34
<PAGE>

compensation, general and administration services, and risk management and tax
services. In addition to these services, American Software has agreed to allow
eligible employees of the Company to participate in certain of American
Software's employee benefit plans.

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

   The Services Agreement has an initial term of three years and is renewed
automatically thereafter for successive one-year terms unless either the
Company or American Software elects not to renew its term by giving proper
notice. The Company will indemnify American Software against any damages that
American Software may incur in connection with its performance of services
under the Services Agreement (other than those arising from American Software's
gross negligence or willful misconduct), and American Software will indemnify
the Company against any damages arising out of American Software's gross
negligence or willful misconduct in connection with its rendering of services
under the Services Agreement. For the fiscal years ended 2000 and 1999 the
services related to this agreement have been $1.0 and $1.5 million,
respectively.

Facilities Agreement

   American Software and the Company have entered into a Facilities Agreement
(the "Facilities Agreement"), which provides that the Company may occupy space
located in certain facilities owned or leased by American Software (or
subsidiaries of American Software). The Facilities Agreement has an initial
term of two years and is renewed automatically thereafter for successive one-
year terms unless either American Software or the Company elects not to renew
its term. The Facilities Agreement may be terminated by the Company for any
reason with respect to any particular facility upon thirty days' written
notice. The Company's lease of space at any facility under the Facilities
Agreement is limited by the term of the underlying lease between American
Software and a landlord with respect to any facility leased by American
Software and by the disposition by American Software of any facility owned by
American Software. For the fiscal years ended 2000 and 1999 the services
related to this agreement have been $418,000 and $342,000, respectively.

Tax Sharing Agreement

   The Company is included in American Software's federal consolidated income
tax group, and the Company's federal income tax liability will be included in
the consolidated federal income tax liability of American Software and its
subsidiaries. The Company and American Software have entered into a Tax Sharing
Agreement (the "Tax Sharing Agreement") pursuant to which American Software,
Inc. and the Company will make payments between them such that the amount of
taxes to be paid by the Company, subject to certain adjustments, will be
determined as though the Company were to file separate federal, state, and
local income tax returns, rather than as a consolidated subsidiary of American
Software. Pursuant to the Tax Sharing Agreement, under certain circumstances,
the Company will be reimbursed for tax attributes that it generates from the
consolidated tax group of American Software Inc., such as net operating losses
and loss carryforwards. Such reimbursement, if any, will be made for
utilization of the Company's losses only after such losses are utilized by
American Software. For that purpose, all losses of American Software and its
consolidated income tax group will be deemed utilized in the order in which
they are recognized. The Company will pay American Software a fee intended to
reimburse American Software for all direct and indirect costs and expenses
incurred with respect to American Software's share of the overall costs and
expense incurred by American Software with respect to tax related services.

                                       35
<PAGE>

Technology License Agreement

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

Marketing License Agreement

   American Software USA, Inc. ("USA"), a wholly-owned subsidiary of American
Software, and the Company have entered into a Marketing License Agreement (the
"Marketing License Agreement") pursuant to which USA has agreed to act as a
non-exclusive marketing representative of the Company for the solicitation of
license agreements relating to the Logility 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 the Company 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 the Company by USA and accepted by the Company. The Marketing
License Agreement has a five-year term, although the Company may terminate the
Marketing License Agreement for cause, and either party may terminate the
Marketing License Agreement at any time upon twelve months' prior written
notice to the other party. For the fiscal years ended 2000 and 1999 the
services related to this agreement have been $731,000 and $308,000,
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.

                                       36
<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, 2000 and 1999....................   40
Combined Statements of Operations for the Years ended April 30, 2000,
 1999, and 1998..........................................................   41
Combined Statements of Shareholders' Equity for the Years ended April 30,
 2000, 1999, and 1998....................................................   42
Combined Statements of Cash Flows for the Years ended April 30, 2000,
 1999, and 1998..........................................................   43
Notes to the Combined Financial Statements...............................   44
Independent Auditors' Report.............................................   56

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

<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
Schedule II--Valuation and Qualifying Accounts--for the three years ended
 April 30, 2000..........................................................   57
Independent Auditors' Report.............................................   58
</TABLE>

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

3. Exhibits

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

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

                                       37
<PAGE>

<TABLE>
     <C>   <S>
     10.8  Technology License Agreement between the Company and American
           Software, as amended, included as Exhibit 10.9 to the S-1
           Registration Statement, and incorporated herein by this reference.
     10.9  Marketing License Agreement between the Company and American
           Software, as amended, included as Exhibit 10.10 to the S-1
           Registration Statement, and incorporated herein by this reference.
     10.10 Employee Stock Purchase Plan dated September 30, 1998, included as
           Exhibit 4.1 to the Company's Form S-8 Registration Statement No.
           333-66773 and incorporated herein by this reference.
     23.1  Independent Auditors' Consent.
     27.1  Financial Data Schedule
</TABLE>
   (b) Reports on Form 8-K

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


                                       38
<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/ Vincent C. Klinges
                                            ___________________________________
                                                     Vincent C. Klinges
                                                  Chief Financial Officer

Date: July 26, 2000

   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 26, 2000
____________________________________  Officer
        J. Michael Edenfield

       /s/ James C. Edenfield        Chairman of the Board of           July 26, 2000
____________________________________  Directors
         James C. Edenfield

      /s/ Frederick E. Cooper        Director                           July 26, 2000
____________________________________
        Frederick E. Cooper

        /s/ Parker H. Petit          Director                           July 26, 2000
____________________________________
          Parker H. Petit

       /s/ Dr. John A. White         Director                           July 26, 2000
____________________________________
         Dr. John A. White

       /s/ Vincent C. Klinges        Chief Financial Officer            July 26, 2000
____________________________________
         Vincent C. Klinges

      /s/ Deirdre J. Lavender        Controller and Principal           July 26, 2000
____________________________________  Accounting Officer
        Deirdre J. Lavender
</TABLE>

                                       39
<PAGE>

                                 LOGILITY, INC.

                            COMBINED BALANCE SHEETS

                       (In thousands, except share data)
                            April 30, 2000 and 1999

<TABLE>
<CAPTION>
                                                               2000     1999
                                                             --------  -------
<S>                                                          <C>       <C>
                           Assets
                           ------
Current assets:
  Cash and cash equivalents................................. $  3,524    9,695
  Investments--current......................................   14,425   14,024
  Trade accounts receivable, less allowance for doubtful
   accounts of $684 and $447 at April 30, 2000 and 1999,
   respectively:
    Billed..................................................    4,599    5,471
    Unbilled................................................    2,558    1,931
  Due from American Software, Inc...........................    2,204      --
  Prepaid expenses and other current assets.................      556      444
                                                             --------  -------
      Total current assets..................................   27,866   31,565
Investments--noncurrent.....................................    6,738      --
Furniture and equipment, less accumulated depreciation......    1,870    1,889
Intangible assets, less accumulated amortization............    6,748    6,202
Other assets, net...........................................    1,312    1,022
                                                             --------  -------
                                                             $ 44,534   40,678
                                                             ========  =======

            Liabilities and Shareholders' Equity
            ------------------------------------
Current liabilities:
  Accounts payable.......................................... $  1,225      990
  Accrued compensation and related costs....................    1,879    1,827
  Other current liabilities.................................    1,750    1,224
  Deferred revenues.........................................    5,705    4,710
                                                             --------  -------
      Total current liabilities.............................   10,559    8,751
  Deferred income taxes.....................................    2,762    2,459
                                                             --------  -------
      Total liabilities.....................................   13,321   11,210
                                                             --------  -------
Shareholders' equity:
  Preferred stock; 2,000,000 shares authorized; no shares
   issued...................................................      --       --
  Common stock, no par value; 20,000,000 shares authorized;
   13,873,454 and 13,830,000 shares issued as of April 30,
   2000 and 1999, respectively..............................      --       --
  Additional paid-in capital................................   43,312   43,187
  Accumulated deficit.......................................   (7,788) (10,176)
  Treasury stock, at cost: 564,811 and 410,800 shares as of
   April 30, 2000 and 1999, respectively....................   (4,311)  (3,543)
                                                             --------  -------
      Total shareholders' equity............................   31,213   29,468
Commitments and contingencies (note 9)
                                                             --------  -------
                                                             $ 44,534   40,678
                                                             ========  =======
</TABLE>

            See accompanying notes to combined financial statements.

                                       40
<PAGE>

                                 LOGILITY, INC.

                       COMBINED STATEMENTS OF OPERATIONS
                     (In thousands, except per share data)
                   Years ended April 30, 2000, 1999, and 1998

<TABLE>
<CAPTION>
                                                         2000    1999    1998
                                                        ------- ------  ------
<S>                                                     <C>     <C>     <C>
Revenues:
  License.............................................. $13,501 11,384  20,138
  Maintenance..........................................   9,418  7,967   7,167
  Services.............................................   9,370  7,666   7,357
                                                        ------- ------  ------
    Total revenues.....................................  32,289 27,017  34,662
                                                        ------- ------  ------
Cost of revenues:
  License..............................................   3,218  4,433   5,299
  Maintenance..........................................   1,775  2,194   1,582
  Services.............................................   5,144  3,468   3,683
                                                        ------- ------  ------
    Total cost of revenues.............................  10,137 10,095  10,564
                                                        ------- ------  ------
    Gross margin.......................................  22,152 16,922  24,098
Operating expenses:
  Research and development.............................   4,949  6,165   5,592
  Sales and marketing..................................  12,898 14,507  13,676
  General and administrative...........................   3,054  4,302   3,111
  Charge for asset impairment..........................     --   1,230     --
                                                        ------- ------  ------
    Total operating expenses...........................  20,901 26,204  22,379
                                                        ------- ------  ------
    Operating income (loss)............................   1,251 (9,282)  1,719
Other income, net......................................   1,137  1,274     863
                                                        ------- ------  ------
    Income (loss) before income taxes..................   2,388 (8,008)  2,582
Income tax expense.....................................     --     100     --
                                                        ------- ------  ------
    Net income (loss).................................. $ 2,388 (8,108)  2,582
                                                        ======= ======  ======
Earnings (loss) per common share:
  Basic................................................ $  0.18  (0.60)   0.20
                                                        ======= ======  ======
  Diluted.............................................. $  0.17  (0.60)   0.20
                                                        ======= ======  ======
Shares used in the calculation of net earnings (loss)
 per common share:
  Basic................................................  13,333 13,486  12,671
                                                        ======= ======  ======
  Diluted..............................................  13,698 13,486  12,676
                                                        ======= ======  ======
</TABLE>

            See accompanying notes to combined financial statements.

                                       41
<PAGE>

                                 LOGILITY, INC.

                  COMBINED STATEMENTS OF SHAREHOLDERS' EQUITY
                       (in thousands, except share data)
                     Years ended April 30, 2000, 1999, 1998

<TABLE>
<CAPTION>
                            Common stock    Additional                        Treasury stock       Total
                          -----------------  paid-in   Divisional Accumulated ---------------  shareholders'
                            Shares   Amount  capital     equity     deficit   Shares  Amount      equity
                          ---------- ------ ---------- ---------- ----------- ------- -------  -------------
<S>                       <C>        <C>    <C>        <C>        <C>         <C>     <C>      <C>
Balance at April 30,
 1997...................  11,300,000  $--      7,919      1,871      (3,122)      --  $   --       6,668
Contribution from
 (dividend to) American
 Software, Inc..........         --    --        115       (346)        --        --      --        (231)
Proceeds from initial
 public offering........   2,530,000   --     33,152        --          --        --      --      33,152
Divisional equity
 contribution...........         --    --      2,001     (2,001)        --        --      --         --
Repurchase of 205,300
 common shares..........         --    --        --         --          --    205,300  (1,882)    (1,882)
Distribution to American
 Software, Inc. under
 Tax Sharing Agreement..         --    --        --         --       (1,052)      --      --      (1,052)
Net income..............         --    --        --         476       2,106       --      --       2,582
                          ----------  ----    ------     ------     -------   ------- -------     ------
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
                          ==========  ====    ======     ======     =======   ======= =======     ======
</TABLE>


            See accompanying notes to combined financial statements.

                                       42
<PAGE>

                                 LOGILITY, INC.

                       COMBINED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                   Years ended April 30, 2000, 1999, and 1998

<TABLE>
<CAPTION>
                                                      2000     1999     1998
                                                    --------  -------  -------
<S>                                                 <C>       <C>      <C>
Cash flows from operating activities:
 Net income (loss)................................. $  2,388   (8,108)   2,582
 Adjustments to reconcile net income (loss) to net
  cash provided by operating activities:
  Depreciation and amortization....................    3,485    3,862    4,737
  Charge for asset impairment......................      --     1,230      --
  (Increase) decrease in assets:
   Accounts receivable.............................      245    3,392   (4,214)
   Due from American Software, Inc.................   (2,204)     --       --
   Prepaid expenses and other assets...............     (102)     320     (613)
  Increase (decrease) in liabilities:
   Accounts payable................................      235     (154)    (122)
   Accrued compensation and other liabilities......      578      229    1,072
   Deferred revenues...............................      995      553      271
   Due to American Software, Inc...................      --      (961)     (91)
                                                    --------  -------  -------
    Net cash provided by operating activities......    5,620      363    3,622
                                                    --------  -------  -------
Cash flows from investing activities:
 Additions to capitalized computer software
  development costs................................   (3,373)  (3,952)  (3,169)
 Additions to purchased computer software costs....     (100)     (28)    (235)
 Purchases of furniture and equipment..............     (539)    (755)  (1,136)
 Purchase of minority investment in business.......     (300)    (763)     --
 Proceeds from maturities of investments...........   53,791   97,718      --
 Purchases of investments..........................  (60,930) (82,183) (29,559)
                                                    --------  -------  -------
    Net cash (used in) provided by investing
     activities....................................  (11,451)  10,037  (34,099)
                                                    --------  -------  -------
Cash flows from financing activities:
 Deferred income taxes resulting from Tax Sharing
  Agreement........................................      303      (50)    (288)
 Contributions from (dividends to) American
  Software, Inc....................................      --       --      (231)
 Proceeds from exercise of stock options...........      125      --       --
 Proceeds from initial public offering.............      --       --    33,152
 Repurchases of common stock.......................     (768)  (1,661)  (1,882)
                                                    --------  -------  -------
    Net cash (used in) provided by financing
     activities....................................     (340)  (1,711)  30,751
                                                    --------  -------  -------
    Net change in cash and cash equivalents........   (6,171)   8,689      274
Cash and cash equivalents at beginning of year.....    9,695    1,006      732
                                                    --------  -------  -------
Cash and cash equivalents at end of year........... $  3,524    9,695    1,006
                                                    ========  =======  =======
Supplemental disclosure:
 Cash paid for income taxes........................ $     84      102      --
                                                    ========  =======  =======
</TABLE>

            See accompanying notes to combined financial statements.

                                       43
<PAGE>

                             LOGILITY INCORPORATED

                     NOTES TO COMBINED FINANCIAL STATEMENTS

(1) 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 optimize the internal and external operating
efficiencies of participants along the entire value chain of an enterprise,
from raw materials, manufacturing, and warehousing to final consumption. The
Company's products and services are used by customers within the United States
and certain international markets.

   The Company is headquartered in Atlanta, Georgia, and is 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.

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

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

   The accompanying combined financial statements include the results of
operations of the Company's constituent businesses as reflected in ASI's
consolidated financial statements. The Supply Chain Planning and WarehousePRO
divisions required certain estimates and allocations which ASI believes
approximates costs that relate to the Company's operations. Since Distribution
Sciences, Inc. was a separate business, no allocations were necessary, other
than income taxes.

 (b) Revenue Recognition

   The Company recognizes revenue in accordance with Statement of Position
("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.

                                       44
<PAGE>

                             LOGILITY INCORPORATED

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

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

 (c) Cost of Revenues

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

 (d) Cash and Cash Equivalents

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

 (e) Investments

   Investments at April 30, 2000 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 an estimated
useful life of 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.

                                       45
<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,
                                                           -------------------
                                                            2000   1999  1998
                                                           ------ ------ -----
                                                             (in thousands)
<S>                                                        <C>    <C>    <C>
Total capitalized computer software development costs..... $3,373  3,952 3,169
Total research and development expense....................  4,949  6,165 5,592
                                                           ------ ------ -----
Total research and development expense and capitalized
 computer software development costs...................... $8,322 10,117 8,761
                                                           ====== ====== =====
Total amortization of capitalized computer software
 development costs........................................ $2,761  3,169 4,057
                                                           ====== ====== =====
Total amortization of purchased computer software costs... $  106    244   251
                                                           ====== ====== =====
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 generally accepted accounting principles. 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

                                       46
<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 granted exceeds the
exercise price. The Company has elected to apply the provisions of APB Opinion
No. 25 and provide the pro forma disclosures under the provisions of
SFAS No. 123.

 (l) Impairment of Long-Lived Assets

   The Company accounts for long-lived assets in accordance with 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

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

 (n) Net Earnings (Loss) Per Common Share

   On January 31, 1998, the Company adopted SFAS No. 128, Earnings Per Share,
which prescribes the calculation methodology and financial reporting
requirements for basic and diluted earnings per share. Basic earnings (loss)
per common share available to common 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,
                                                       --------------------
                                                        2000   1999   1998
                                                       ------ ------ ------
                                                          (in thousands)
                                                       --------------------
      <S>                                              <C>    <C>    <C>
      Weighted average common shares outstanding used
       for basic                                       13,333 13,486 12,671
      Dilutive effect of outstanding stock options        365    --       5
                                                       ------ ------ ------
      Total used for diluted                           13,698 13,486 12,676
                                                       ====== ====== ======
</TABLE>

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

                                       47
<PAGE>

                             LOGILITY INCORPORATED

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

 (o) Industry Segment

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

(2) Investments

   Investments, which are classified as held-to-maturity, consist of the
following at April 30, 2000 and 1999 (in thousands):

<TABLE>
<CAPTION>
                                      2000                       1999
                           -------------------------- --------------------------
                                           Unrealized
                           Carrying  Fair     gain    Carrying  Fair  Unrealized
                            value   value    (loss)    value   value     gain
                           -------- ------ ---------- -------- ------ ----------
<S>                        <C>      <C>    <C>        <C>      <C>    <C>
  Commercial paper........ $ 7,958   7,988     30       5,229   5,236      7
  Corporate bonds.........  10,725  10,702    (23)      8,795   8,780    (15)
  Government securities...   2,480   2,473     (7)        --      --     --
                           -------  ------    ---      ------  ------    ---
                           $21,163  21,163    --       14,024  14,016     (8)
                           =======  ======    ===      ======  ======    ===
</TABLE>

   The maturity of investments as of April 30, 2000 is $14,425,000 in 2001 and
$6,738,000 in 2002.

(3) Furniture and Equipment

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

<TABLE>
<CAPTION>
                                                                   2000    1999
                                                                  ------- ------
   <S>                                                            <C>     <C>
   Computer and communications equipment......................... $ 3,310  2,780
   Furniture and fixtures........................................     413    404
                                                                  ------- ------
                                                                    3,723  3,184
   Less accumulated depreciation.................................   1,853  1,295
                                                                  ------- ------
                                                                  $ 1,870  1,889
                                                                  ======= ======

(4) Intangible Assets

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

<CAPTION>
                                                                   2000    1999
                                                                  ------- ------
   <S>                                                            <C>     <C>
   Capitalized computer software development costs............... $18,005 14,632
   Purchased computer software costs.............................   1,258  1,158
                                                                  ------- ------
                                                                   19,263 15,790
   Less accumulated amortization.................................  12,515  9,588
                                                                  ------- ------
                                                                  $ 6,748  6,202
                                                                  ======= ======
</TABLE>

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

                                       48
<PAGE>

                             LOGILITY INCORPORATED

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

(5) Purchase of Minority Investment in Business

   During the year ended April 30, 2000, the Company acquired 30% of the
outstanding common stock of ShipSolutions, Inc. ("SSI") for $300,000. SSI
provides an easy, secure and quality tracking service to match buyers and
sellers of shipping activities through an internet-based shipping portal.

   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 investments in INSIGHT, INC. and SSI are accounted for on the cost basis
of accounting due to immateriality and are 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,
                                                         ---------------------
                                                         2000    1999    1998
                                                         -----  ------  ------
                                                           (in thousands)
   <S>                                                   <C>    <C>     <C>
   Computed "expected" income tax expense (benefit)....  $ 812  (2,723)    878
   Increase (decrease) in income taxes resulting from:
     State income taxes, net of Federal income tax
      effect...........................................    120      66     102
     Change in the valuation allowance for deferred tax
      assets...........................................   (827)  2,872  (1,045)
     Other, net........................................   (105)   (115)     65
                                                         -----  ------  ------
                                                         $ --      100     --
                                                         =====  ======  ======
</TABLE>

   The significant components of deferred income tax expense (benefit)
attributable to earnings (loss) before income taxes for the years ended April
30, 2000, 1999, 1998, are as follows:

<TABLE>
<CAPTION>
                                                            Years ended
                                                             April 30,
                                                        ---------------------
                                                        2000    1999    1998
                                                        -----  ------  ------
                                                          (in thousands)
   <S>                                                  <C>    <C>     <C>
   Deferred income tax expense (benefit)............... $ 827  (2,872)  1,045
   Increase (decrease) in the valuation allowance for
    deferred tax assets................................  (827)  2,872  (1,045)
                                                        -----  ------  ------
                                                        $ --      --      --
                                                        =====  ======  ======
</TABLE>

                                       49
<PAGE>

                             LOGILITY INCORPORATED

              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, 2000 and 1999 are presented as
follows:

<TABLE>
<CAPTION>
                                                                 Years ended
                                                                  April 30,
                                                               ---------------
                                                                2000    1999
                                                               ------- -------
                                                               (in thousands)
   <S>                                                         <C>     <C>
   Deferred income tax assets:
     Compensated absences and other expenses, due to accrual
      for financial reporting purposes........................ $   280     249
     Deferred revenue.........................................     421     --
     Accounts receivable, due to allowance for doubtful
      accounts................................................     260     170
     Prepaid maintenance......................................     453     --
     Net operating loss carryforwards.........................   5,319   6,838
                                                               ------- -------
       Total gross deferred income tax assets.................   6,733   7,257
     Less valuation allowance.................................   3,971   4,798
                                                               ------- -------
       Net deferred income tax assets.........................   2,762   2,459
                                                               ------- -------
   Deferred income tax liabilities:
     Capitalized computer software development costs..........   2,524   2,292
     Property and equipment, primarily due to differences in
      depreciation............................................     236     167
     Other....................................................       2     --
                                                               ------- -------
       Total gross deferred income tax liabilities............   2,762   2,459
                                                               ------- -------
       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 (of $5,768,000, which include net
operating loss and tax credit carryforwards) that arose prior to the initial
public offering were allocated to ASI. Accordingly, the Company will not
receive any benefit from the $5,768,000 of 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 $2,762,000 at April 30, 2000 and
$2,459,000 at April 30, 1999, 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 the reduction in
income taxes payable with respect to the current tax period. The Company had
net stand-alone taxable income for 1998, therefore, the corresponding
calculated income taxes due are recorded as a distribution to ASI in the
combined statement of shareholders' equity. At April 30, 2000, ASI had net
operating loss carryforwards of approximately $27,000,000 which must be
utilized by ASI before the Company would receive payment for any currently
generated tax benefits. Such net operating losses expire in varying amounts
through 2020.

(7) Stockholders' Equity

 (a) Completion of Initial Public Offering

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

                                       50
<PAGE>

                             LOGILITY INCORPORATED

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
million less issuance costs of $3.1 million. On November 6, 1997, the Company
sold 330,000 shares of common stock as part of the underwriters' overallotment
from the initial public offering for $4.8 million less issuance costs of
approximately $400,000.

 (b) 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 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, 2000, this limitation resulted in a maximum
aggregate number of option shares that had been exercised, were outstanding or
were available for grant of 817,878 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, 2000,
1999, and 1998, and changes during the years then ended is presented below:

<TABLE>
<CAPTION>
                                                                       Weighted-
                                                                        average
                                                              Shares     price
                                                             --------  ---------
<S>                                                          <C>       <C>
Outstanding at April 30, 1997...............................      --    $  --
Granted.....................................................  267,890    12.97
Forfeited/canceled..........................................   (5,820)   13.67
                                                             --------
Outstanding at April 30, 1998...............................  262,070    12.96
Granted.....................................................  600,130     2.93
Forfeited/canceled.......................................... (306,754)    8.78
                                                             --------
Outstanding at April 30, 1999...............................  555,446     4.22
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
                                                             ========   ======
Options exercisable at April 30, 2000.......................  126,438   $ 6.17
                                                             ========   ======
Weighted-average fair value of options granted during:
    2000....................................................            $ 2.63
                                                                        ======
    1999....................................................            $ 1.71
                                                                        ======
    1998....................................................            $10.74
                                                                        ======
</TABLE>

                                       51
<PAGE>

                             LOGILITY INCORPORATED

              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, 2000      life       price    30, 2000     price
     --------    ----------- ----------- --------- ----------- ---------
   <S>           <C>         <C>         <C>       <C>         <C>
   $2.75-- 5.00    625,054       8.8      $ 3.33      87,955    $ 3.01
    5.01--10.00     83,000       9.5        8.85       5,000      7.50
   10.01--15.00     49,035       7.6       14.07      26,483     13.92
   15.01--16.25      7,000       8.5       15.61       7,000     15.61
                   -------                           -------
                   764,089       8.8      $ 4.73     126,438    $ 6.17
                   =======                           =======
</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,
                                                            --------------------
                                                             2000   1999   1998
                                                            ------ ------  -----
                                                              (in thousands,
                                                             except per share
                                                                   data)
   <S>                                                      <C>    <C>     <C>
   Net income (loss):
     As reported........................................... $2,388 (8,108) 2,582
     Pro forma.............................................  1,063 (9,254) 1,176
   Diluted net income (loss) per common share:
     As reported........................................... $  .17   (.60)   .20
     Pro forma.............................................    .08   (.69)   .09
</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>
                                                       2000     1999     1998
                                                      -------  -------  -------
   <S>                                                <C>      <C>      <C>
   Dividend yield....................................       0%       0%       0%
   Expected volatility...............................   150.9%   131.4%    62.1%
   Risk-free interest rate...........................     5.6%     5.6%     5.6%
   Expected life..................................... 8 years  8 years  8 years
</TABLE>

 (c) 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

                                       52
<PAGE>

                             LOGILITY INCORPORATED

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
common stock may be purchased under the Purchase Plan. During the years ended
April 30, 2000 and 1999, 23,361 and 12,874 shares, respectively, were purchased
on the open market, at a cost to the Company of $147,782 and $12,615,
respectively, representing the funded discount from market price.

(8) International Revenues and Significant Customer

   International revenues were $3,658,000 or 11%, $3,893,000 or 14%, and
$3,197,000 or 9% of combined revenues for the years ended April 30, 2000, 1999,
1998, 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 years ended April 30, 1999 or 1998.

(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 2000, 1999, or 1998.

   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 $153,000 and $49,000 for 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 $418,000, $342,000, and $342,000 for the years
ended April 30, 2000, 1999, 1998, respectively. In addition, the Company has
various other operating leases. Rent expense under these facility leases was
$433,000, $529,000, and $401,000 for the years ended April 30, 2000, 1999,
1998, 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>
   2001.................................................................... $394
   2002....................................................................  245
   2003....................................................................  130
   2004....................................................................  129
   2005....................................................................   54
                                                                            ----
                                                                            $952
                                                                            ====
</TABLE>

                                       53
<PAGE>

                             LOGILITY INCORPORATED

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

 (c) Contingencies

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

(10) Agreements with ASI

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

   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 from
                                    Expense for the Expense for the August 1, 1997
                                      year ended      year ended          to
   Service       Cost methodology   April 30, 2000  April 30, 1999  April 30, 1998
   -------      ------------------- --------------- --------------- --------------
<S>             <C>                 <C>             <C>             <C>
 . General       Apportioned based
  corporate     on apportionment
  services      formula to all ASI
                subsidiaries.......    $622,000        1,167,000       530,000

 . Professional  Cost plus billing
  services to   with the percentage
  customers on  of costs and
  behalf of     expenses to be          345,000          219,000       472,000
  the Company   negotiated.........
  (services
  are
  available
  unless ASI
  determines
  it is not
  economic or
  otherwise
  feasible)

 . Employee      Apportioned based
  benefits      on apportionment
  services      formula to all ASI
                subsidiaries.......      40,000           95,000        65,000
</TABLE>

                                       54
<PAGE>

                             LOGILITY INCORPORATED

              NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)

<TABLE>
<CAPTION>
                                                                  Expense from
                                    Expense for    Expense for   August 1, 1997
                                   the year ended the year ended  to April 30,
                                   April 30, 2000 April 30, 1999      1998
                                   -------------- -------------- --------------
<S>                                <C>            <C>            <C>
Facilities Agreement--The Company
 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 2000, ASI allocated
 utility expenses based on the
 Company's percentage of
 occupancy.......................        $418,000        342,000        330,000

Stock Option Agreement--The
 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...  Not applicable Not applicable Not applicable

Technology License Agreement--The
 Company granted ASI a
 nonexclusive, nontransferable,
 worldwide perpetual right and
 license to use, execute,
 reproduce, display, etc. its
 Value Chain Planning and
 Execution Solutions (which ASI
 had transferred to the Company)
 so that ASI may maintain and
 support end-users of the
 software products. The license
 is fully paid and royalty-
 free............................  Not applicable Not applicable Not applicable

Marketing License Agreement--The
 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..........................         731,000        308,000      1,108,000
</TABLE>


                                       55
<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, 2000 and 1999, 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, 2000. 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, 2000 and 1999, and the results of its operations and its cash
flows for each of the years in the three-year period ended April 30, 2000, in
conformity with accounting principles generally accepted in the United States
of America.

                                          /s/ KPMG LLP

Atlanta, Georgia
June 16, 2000

                                       56
<PAGE>

                                                                     Schedule II

                                 LOGILITY, INC.

                       VALUATION AND QUALIFYING ACCOUNTS
                   Years ended April 30, 1998, 1999, and 2000
                                 (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,
 1998...................    $421       --           --            --           421
Year ended April 30,
 1999...................     421       907          --            881          447
Year ended April 30,
 2000...................     447       120          232           115          684
</TABLE>
--------
(1) Recovery of previously written-off amounts.
(2) Write-off of uncollectible accounts.

                                       57
<PAGE>

                          Independent Auditors' Report

The Board of Directors and Shareholders
Logility, Inc.:

   Under date of June 16, 2000, we reported on the combined balance sheets of
Logility, Inc. as of April 30, 2000 and 1999, 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, 2000, which are included in the
April 30, 2000, 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 16, 2000

                                       58