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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2003

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-30389

EXE TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)


Delaware
(State or other jurisdiction of
incorporation or organization)
    
    751719817
(I.R.S. Employer Identification Number)


8787 Stemmons Freeway
Dallas, Texas 75247
(Address including zip code of principal executive offices)

(214) 775-6000
(Registrants telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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 o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
YES o NO x

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of October 31, 2003.

Common stock, $0.01 par value, 6,669,748 shares outstanding.





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|                                              |                                                                                               |                                                        |  |  |  |  |  | 
|--------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------ |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                
|                                              | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                              |                                                                                               | CONSOLIDATED BALANCE SHEETS                           
|                                              |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS                 
|                                              |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS                 
|                                              |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|                                              | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                              | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                                              | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION                   
|                                              | ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                                            
|                                              | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                                   
|INDEX TO EXHIBITS                            
|EX-31.1 Certification of CEO - Section 302   
|EX-31.2 Certification of CFO - Section 302   
|EX-32.1 Certification Pursuant to Section 906



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##### Table of Contents



EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q

PART I. FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Consolidated Balance Sheets
    
    
    3Consolidated Statements of Operations
    
    
    4Consolidated Statements of Cash Flows
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    28PART II. OTHER INFORMATIONItem 2. Changes in Securities and Use of Proceeds
    
    
    29Item 6. Exhibits and Reports on Form 8-K
    
    
    29Signatures
    
    
    30Index to Exhibits
    
    
    31


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PART I. FINANCIAL INFORMATION







ITEM 1. FINANCIAL STATEMENTS







EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

As of
    
    As ofDecember 31,
    
    September 30,2002
    
    2003(unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    20,815,464
    
    
    $
    29,421,248Marketable securities, short-term
    
    
    16,628,465
    
    
    
    Accounts receivable, net of allowance for doubtful accounts and adjustments of
approximately $4,161,000 and $3,454,000 at December 31, 2002 and
September 30, 2003, respectively
    
    
    16,904,889
    
    
    
    14,466,599Other receivables and advances
    
    
    329,568
    
    
    
    576,219Prepaid and other current assets
    
    
    2,747,074
    
    
    
    2,735,930Total current assets
    
    
    57,425,460
    
    
    
    47,199,996Property and equipment, net
    
    
    4,432,882
    
    
    
    3,156,699Goodwill, net
    
    
    5,265,685
    
    
    
    5,265,685Intangible assets, net
    
    
    1,499,891
    
    
    
    999,889Other assets
    
    
    1,745,532
    
    
    
    922,997Total assets
    
    $
    70,369,450
    
    
    $
    57,545,266Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    9,094,823
    
    
    $
    6,670,442Accrued expenses
    
    
    11,326,722
    
    
    
    9,306,151Accrued payroll and benefits
    
    
    1,688,815
    
    
    
    1,827,685Deferred revenue
    
    
    7,885,223
    
    
    
    7,671,155Current portion of long-term debt and capital lease obligations
    
    
    521,458
    
    
    
    499,978Total current liabilities
    
    
    30,517,041
    
    
    
    25,975,411Long-term debt and capital lease obligations, net of current portion
    
    
    416,598
    
    
    
    41,649Long-term accrued expenses, net of current portion
    
    
    8,888,841
    
    
    
    6,344,186Minority interest
    
    
    198,779
    
    
    
    148,564Commitments and contingenciesStockholders equity:Preferred stock, $.01 par value: shares authorized - 20,000,000; none
issued or outstanding
    
    
    
    
    
    
    Common stock, voting, $.01 par value: shares authorized - 150,000,000; shares
issued - 6,807,813 and 6,823,599 at December 31, 2002 and September 30, 2003
    
    
    68,078
    
    
    
    68,236Additional paid-in capital
    
    
    178,871,117
    
    
    
    178,743,706Treasury stock, at cost, 156,418 shares of common stock
at December 31, 2002 and September 30, 2003
    
    
    (3,645,859
    )
    
    
    (3,645,859
    )Accumulated deficit
    
    
    (143,402,453
    )
    
    
    (148,379,076
    )Deferred compensation
    
    
    (809,338
    )
    
    
    (230,397
    )Other comprehensive loss
    
    
    (733,354
    )
    
    
    (1,521,154
    )Total stockholders equity
    
    
    30,348,191
    
    
    
    25,035,456Total liabilities and stockholders equity
    
    $
    70,369,450
    
    
    $
    57,545,266


See accompanying notes.

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EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2002
    
    2003
    
    2002
    
    2003Revenue:Software license
    
    $
    2,694,478
    
    
    $
    2,809,924
    
    
    $
    9,961,142
    
    
    $
    8,950,428Services and maintenance
    
    
    12,283,217
    
    
    
    12,408,929
    
    
    
    36,978,051
    
    
    
    36,072,780Resale of software and equipment
    
    
    1,319,348
    
    
    
    3,485,029
    
    
    
    6,418,717
    
    
    
    8,025,941Reimbursable expenses
    
    
    436,813
    
    
    
    383,952
    
    
    
    1,443,028
    
    
    
    1,274,328Total revenue
    
    
    16,733,856
    
    
    
    19,087,834
    
    
    
    54,800,938
    
    
    
    54,323,477Costs and expenses:Cost of software licenses
    
    
    236,521
    
    
    
    218,100
    
    
    
    435,902
    
    
    
    688,244Cost of services and maintenance
    
    
    7,860,928
    
    
    
    7,509,788
    
    
    
    24,079,137
    
    
    
    22,508,474Cost of resale of software and equipment
    
    
    1,079,373
    
    
    
    2,717,141
    
    
    
    5,307,436
    
    
    
    6,347,717Estimated loss on resale equipment sold to
company in bankruptcy
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    456,866Cost of reimbursable expenses
    
    
    436,813
    
    
    
    383,952
    
    
    
    1,443,028
    
    
    
    1,274,328Sales and marketing
    
    
    4,479,519
    
    
    
    3,430,771
    
    
    
    14,448,762
    
    
    
    11,471,885Research and development
    
    
    2,853,288
    
    
    
    2,262,853
    
    
    
    8,813,889
    
    
    
    7,059,920General and administrative
    
    
    2,810,607
    
    
    
    2,556,288
    
    
    
    9,006,223
    
    
    
    8,289,351Amortization of intangible assets
    
    
    335,848
    
    
    
    166,667
    
    
    
    897,148
    
    
    
    500,002Warrant and stock compensation expense
allocated to:Cost of services and maintenance
    
    
    49,918
    
    
    
    32,382
    
    
    
    225,810
    
    
    
    171,186Sales and marketing
    
    
    38,893
    
    
    
    10,452
    
    
    
    129,785
    
    
    
    55,252Research and development
    
    
    38,893
    
    
    
    15,591
    
    
    
    129,785
    
    
    
    82,423General and administrative
    
    
    83,294
    
    
    
    18,530
    
    
    
    262,988
    
    
    
    134,952Loss on lease abandonment
    
    
    
    
    
    
    
    
    
    
    3,998,862
    
    
    
    Employee severance and other facility
closure costs
    
    
    
    
    
    
    
    
    
    
    2,487,769
    
    
    
    Total costs and expenses
    
    
    20,303,895
    
    
    
    19,322,515
    
    
    
    71,666,524
    
    
    
    59,040,600Operating loss
    
    
    (3,570,039
    )
    
    
    (234,681
    )
    
    
    (16,865,586
    )
    
    
    (4,717,123
    )Other income (expense):Interest income
    
    
    242,123
    
    
    
    67,755
    
    
    
    875,456
    
    
    
    315,334Interest expense
    
    
    (23,662
    )
    
    
    (11,526
    )
    
    
    (74,478
    )
    
    
    (42,318
    )Merger expense
    
    
    
    
    
    
    (796,397
    )
    
    
    
    
    
    
    (796,397
    )Other
    
    
    (25,152
    )
    
    
    403,145
    
    
    
    728,541
    
    
    
    1,013,136Total other income (expense)
    
    
    193,309
    
    
    
    (337,023
    )
    
    
    1,529,519
    
    
    
    489,755Loss before minority interest and taxes
    
    
    (3,376,730
    )
    
    
    (571,704
    )
    
    
    (15,336,067
    )
    
    
    (4,227,368
    )Minority interest in subsidiary (income) loss
    
    
    (5,768
    )
    
    
    14,849
    
    
    
    (14,939
    )
    
    
    50,215Loss before taxes
    
    
    (3,382,498
    )
    
    
    (556,855
    )
    
    
    (15,351,006
    )
    
    
    (4,177,153
    )Income tax provision
    
    
    149,889
    
    
    
    358,248
    
    
    
    328,710
    
    
    
    799,470Net loss
    
    $
    (3,532,387
    )
    
    $
    (915,103
    )
    
    $
    (15,679,716
    )
    
    $
    (4,976,623
    )Net loss per common share  basic and diluted
    
    $
    (0.54
    )
    
    $
    (0.14
    )
    
    $
    (2.39
    )
    
    $
    (0.75
    )Weighted average number of common shares
outstanding  basic and diluted
    
    
    6,579,967
    
    
    
    6,666,216
    
    
    
    6,572,576
    
    
    
    6,663,637


See accompanying notes.

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EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Nine Months EndedSeptember 30,2002
    
    2003Cash Flow from Operating Activities:Net loss
    
    $
    (15,679,716
    )
    
    $
    (4,976,623
    )Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    3,335,348
    
    
    
    1,995,873Write-down of property and equipment
    
    
    1,032,408
    
    
    
    Provision for losses on receivables
    
    
    1,788,521
    
    
    
    558,724Amortization of deferred compensation
    
    
    748,368
    
    
    
    443,813Minority interest
    
    
    14,939
    
    
    
    (50,215
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    8,499,720
    
    
    
    1,879,566Other receivables and advances
    
    
    85,047
    
    
    
    (246,651
    )Prepaids and other current assets
    
    
    (2,873,378
    )
    
    
    11,144Other long-term assets
    
    
    704,915
    
    
    
    822,535Accounts payable
    
    
    (601,360
    )
    
    
    (2,424,381
    )Accrued payroll and benefits
    
    
    (254,477
    )
    
    
    138,870Deferred revenue
    
    
    1,136,670
    
    
    
    (214,068
    )Accrued expenses
    
    
    1,283,592
    
    
    
    (4,565,225
    )Other
    
    
    (442,114
    )
    
    
    (785,851
    )Net cash used in operating activities
    
    
    (1,221,517
    )
    
    
    (7,412,489
    )Cash Flow from Investing Activities:Purchases of property and equipment
    
    
    (605,241
    )
    
    
    (221,638
    )Purchase of developed software technology
    
    
    (1,000,000
    )
    
    
    Purchase of marketable securities
    
    
    (15,710,000
    )
    
    
    Proceeds from sale and maturities of marketable securities
    
    
    17,064,831
    
    
    
    16,628,465Net cash provided by (used in) investing activities
    
    
    (250,410
    )
    
    
    16,406,827Cash Flow from Financing Activities:Issuance of common stock for options and warrants
    
    
    384,394
    
    
    
    7,875Payments on long-term debt and capital lease obligations
    
    
    (355,279
    )
    
    
    (396,429
    )Net cash provided by (used in) financing activities
    
    
    29,115
    
    
    
    (388,554
    )Net increase (decrease) in cash and cash equivalents
    
    
    (1,442,812
    )
    
    
    8,605,784Cash and cash equivalents at beginning of period
    
    
    30,250,156
    
    
    
    20,815,464Cash and cash equivalents at end of period
    
    $
    28,807,344
    
    
    $
    29,421,248


See accompanying notes.

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EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Principles of Consolidation and Basis of Presentation

EXE Technologies, Inc. (the Company or EXE) provides software that drives
customers supply chain execution processes, including fulfillment,
warehousing, distribution, and inventory management. The Company operates from
its headquarters in Dallas, Texas, and through its various subsidiary and sales
offices serving North America, Europe, the Middle East, Asia and Australia.
The accompanying unaudited consolidated financial statements include the
accounts of EXE Technologies, Inc. and its majority-owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation.

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for fiscal year end financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring entries) considered necessary
for a fair presentation of the results have been included for the interim
periods presented. Operating results for the three and nine month periods
ended September 30, 2003 are not necessarily indicative of the results that may
be expected for any other interim period or for the year ending December 31,
2003. These statements should be read in conjunction with the Companys
audited financial statements included in the Companys Form 10-K for the year
ended December 31, 2002.

All share and per share amounts in the accompanying financial statements
and footnotes have been adjusted to reflect the Companys one for seven reverse
stock split which was effective January 2, 2003. Certain amounts in prior
years financial statements have been reclassified to conform to the current
year presentation.

2. Pending Merger with a Subsidiary of SSA Global Technologies, Inc.

On August 15, 2003, the Company entered into a definitive agreement with
SSA Global Technologies, Inc. (SSA GT), under which a subsidiary of SSA GT will
merge into the Company and all holders of the Companys outstanding common
stock will receive $7.10 per share in cash. The acquisition is subject to
approval of a majority of the Companys stockholders as well as regulatory and
certain other customary conditions. The Company intends to mail a proxy
statement to our stockholders and hold a stockholders meeting to vote on the
merger during the fourth quarter of 2003. If the stockholders approve the
merger, it is anticipated that the acquisition will be completed shortly
thereafter. Once the acquisition is completed, the Company will be a
wholly-owned subsidiary of SSA GT, and the Companys outstanding common stock
will no longer be publicly traded.

A
company, who owns 30.1% of the Company's shares of common stock, also
owns 25.0% of the capital stock of SSA GT.

Approximately $0.8 million of merger-related costs, including outside
legal costs, investment banker fees, accounting fees, and printing costs were
expensed in the third quarter of 2003. Additional merger-related costs are
expected to be incurred in the fourth quarter of 2003.

3. Net Loss Per Share

The Company computes net income (loss) per share in accordance with the
provisions of Statement of Financial Accounting Standards No. 128, Earnings
per Share(SFAS 128). Basic net income (loss) per common share is computed
using the weighted average number of shares of common stock outstanding during
each period.

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EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

3. Net Loss Per Share (continued)

Diluted net income (loss) per common share is computed using the weighted
average number of shares of common stock outstanding during each period and
common equivalent shares consisting of warrants and stock options (using the
treasury stock method), if dilutive. Diluted loss per common share is the same
as basic loss per common share for all periods presented because all
potentially dilutive securities were anti-dilutive. The following table sets
forth anti-dilutive securities that have been excluded from diluted earnings
per share for the periods presented:

As of September 30,2002
    
    2003Common stock options
    
    
    1,332,566
    
    
    
    1,380,788Warrants
    
    
    145,000
    
    
    
    145,000Total anti-dilutive securities excluded
    
    
    1,477,566
    
    
    
    1,525,788


4. Comprehensive Loss

Comprehensive loss includes foreign currency translation gains (losses)
and unrealized gains (losses) on securities available for sale. The following
table sets forth the calculation of comprehensive loss for the periods
presented:

Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2002
    
    2003
    
    2002
    
    2003Net loss
    
    $
    (3,532,387
    )
    
    $
    (915,103
    )
    
    $
    (15,679,716
    )
    
    $
    (4,976,623
    )Foreign currency translation gains (losses)
    
    
    109,769
    
    
    
    (271,547
    )
    
    
    (374,027
    )
    
    
    (787,800
    )Unrealized gain (loss) on securities available for sale
    
    
    3,323
    
    
    
    
    
    
    
    (125,032
    )
    
    
    Total comprehensive loss
    
    $
    (3,419,295
    )
    
    $
    (1,186,650
    )
    
    $
    (16,178,775
    )
    
    $
    (5,764,423
    )


5. Stock-Based Compensation Plans

The Company accounts for its stock-based compensation plans utilizing the
provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees(APB 25). Under APB 25, if the exercise price of an
employees stock option equals or exceeds the fair market value of the
underlying stock on the date of grant, no compensation expense is recognized.
Any compensation expense associated with employee stock options is recognized
ratably over the vesting period of the underlying option. The Company accounts
for stock-based compensation for non-employees under the fair value method
prescribed by Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation(SFAS 123).

Although SFAS 123 allows the APB 25 guidelines to be applied to accounting
for stock options, SFAS 123 requires the disclosure of pro forma net income
(loss) and earnings (loss) per share information as if the Company had
accounted for its employee stock options under the fair value method. The
following table sets forth the pro forma information as if the provisions of
SFAS 123 had been applied to account for stock-based employee compensation:

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EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

5. Stock-Based Compensation Plans (continued)

Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2002
    
    2003
    
    2002
    
    2003Reported net loss
    
    $
    (3,532,387
    )
    
    $
    (915,103
    )
    
    $
    (15,679,716
    )
    
    $
    (4,976,623
    )Stock compensation expense recorded under
the intrinsic value method prescribed by APB 25
    
    
    210,998
    
    
    
    76,955
    
    
    
    748,368
    
    
    
    443,813Stock-based employee compensation determined
under the fair value method
    
    
    (1,489,677
    )
    
    
    (551,342
    )
    
    
    (4,469,031
    )
    
    
    (2,423,368
    )Pro forma net loss
    
    $
    (4,811,066
    )
    
    $
    (1,389,490
    )
    
    $
    (19,400,379
    )
    
    $
    (6,956,178
    )Reported net loss per common share  basic and diluted
    
    $
    (0.54
    )
    
    $
    (0.14
    )
    
    $
    (2.39
    )
    
    $
    (0.75
    )Pro forma net loss per common share  basic and diluted
    
    $
    (0.73
    )
    
    $
    (0.21
    )
    
    $
    (2.95
    )
    
    $
    (1.04
    )


The fair value for options was estimated at the date of grant using a
Black-Scholes options pricing model and the following weighted-average
assumptions for 2002 and 2003: a risk-free interest rate of 4.47% in
2002 and 2.01% for the nine months ended September 30, 2003; no dividend; an expected life of three to five
years; and a volatility for grants of 0.93 in 2002 and 0.82 for the nine months
ended September 30, 2003. No options were granted during the three months ended September 30, 2003.

6. Segment Information

The Company provides software that drives customers supply chain
execution processes, including fulfillment, warehousing, distribution, and
inventory management. All financial information is reviewed on a consolidated
basis with additional information by geographic region used to make operating
decisions and assess the results of the Company. Total assets are presented
net of intercompany receivables and payables. The Companys geographic
information as of and for the three and nine months ended September 30, 2002
and 2003 is as follows:

Asia PacificNorth
    
    
    
    
    
    and theAmerica
    
    Europe
    
    Middle East
    
    Eliminations
    
    TotalThree months ended September 30, 2002Revenue
    
    $
    7,529,135
    
    
    $
    4,997,838
    
    
    $
    4,206,883
    
    
    $
    
    
    
    $
    16,733,856Amortization of intangible assets
    
    
    335,848
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    335,848Warrant and stock compensation expense
    
    
    17,473
    
    
    
    86,921
    
    
    
    106,604
    
    
    
    
    
    
    
    210,998Operating income (loss)
    
    
    (3,625,919
    )
    
    
    573,063
    
    
    
    (517,183
    )
    
    
    
    
    
    
    (3,570,039
    )


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##### Table of Contents



EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6. Segment Information (continued)

Asia PacificNorth
    
    
    
    
    
    and theAmerica
    
    Europe
    
    Middle East
    
    Eliminations
    
    TotalNine months ended September 30, 2002Revenue
    
    $
    25,804,371
    
    
    $
    15,101,699
    
    
    $
    13,894,868
    
    
    $
    
    
    
    $
    54,800,938Amortization of intangible assets
    
    
    896,434
    
    
    
    714
    
    
    
    
    
    
    
    
    
    
    
    897,148Warrant and stock compensation expense
    
    
    379,891
    
    
    
    161,413
    
    
    
    207,064
    
    
    
    
    
    
    
    748,368Provision for estimated loss on lease abandonment
    
    
    3,900,000
    
    
    
    98,862
    
    
    
    
    
    
    
    
    
    
    
    3,998,862Employee severance and other facility closure costs
    
    
    2,252,745
    
    
    
    133,105
    
    
    
    101,919
    
    
    
    
    
    
    
    2,487,769Operating income (loss)
    
    
    (17,333,634
    )
    
    
    1,332,221
    
    
    
    (864,173
    )
    
    
    
    
    
    
    (16,865,586
    )As of September 30, 2002Property and equipment, net
    
    $
    3,747,104
    
    
    $
    1,052,949
    
    
    $
    699,577
    
    
    $
    
    
    
    $
    5,499,630Total assets
    
    
    62,046,106
    
    
    
    10,668,946
    
    
    
    8,638,879
    
    
    
    (4,108,034
    )
    
    
    77,245,897Three months ended September 30, 2003Revenue
    
    $
    9,776,858
    
    
    $
    4,382,673
    
    
    $
    4,928,303
    
    
    $
    
    
    
    $
    19,087,834Amortization of intangible assets
    
    
    166,667
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    166,667Warrant and stock compensation expense
    
    
    23,079
    
    
    
    23,298
    
    
    
    30,578
    
    
    
    
    
    
    
    76,955Operating income (loss)
    
    
    (560,534
    )
    
    
    462,804
    
    
    
    (136,951
    )
    
    
    
    
    
    
    (234,681
    )Nine months ended September 30, 2003Revenue
    
    $
    26,929,014
    
    
    $
    13,536,786
    
    
    $
    13,857,677
    
    
    $
    
    
    
    $
    54,323,477Amortization of intangible assets
    
    
    500,002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500,002Warrant and stock compensation expense
    
    
    172,205
    
    
    
    117,454
    
    
    
    154,154
    
    
    
    
    
    
    
    443,813Operating income (loss)
    
    
    (4,944,268
    )
    
    
    1,014,033
    
    
    
    (786,888
    )
    
    
    
    
    
    
    (4,717,123
    )As of September 30, 2003Property and equipment, net
    
    $
    2,055,163
    
    
    $
    656,574
    
    
    $
    444,962
    
    
    $
    
    
    
    $
    3,156,699Total assets
    
    
    44,609,868
    
    
    
    9,868,829
    
    
    
    7,201,210
    
    
    
    (4,134,641
    )
    
    
    57,545,266


7. Income Taxes

Income tax provisions are primarily due to foreign withholding taxes and
taxes on income earned by foreign subsidiaries. The Company has established a
valuation allowance to reserve its net deferred tax assets due to the
uncertainty of the timing and amount of future taxable income.

8. Commitments and Contingencies

The Company is involved in various legal actions and claims that arise in
the normal course of business. In the opinion of management, the final
disposition of these matters will not have a material adverse effect on the
Companys business, financial condition, cash flows or results of operations.
The Company establishes accruals for losses related to such matters that are
probable and reasonably estimable. However, an unfavorable outcome of some or
all of these matters could have a material effect on the Companys business,
financial condition, cash flows and results of operations.

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EXE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

9. Employee Severance and Lease Abandonment

During the years ended December 31, 2001 and 2002, the Company implemented
various cost reduction actions to lower the Companys cost structure, including
employee severance, the write-off of equipment and the abandonment of certain
leased facilities. As a result, charges totaling approximately $14.3 million
and $9.7 million were charged against operating results during the years ended
December 31, 2001 and 2002, respectively. Of these charges, $6.5 million were
recorded during the nine months ended September 30, 2002, including $1.4
million for severance and other employee related costs for the termination of
approximately 60 services, sales and marketing, development and administrative
employees, $4.0 million for abandoned facility losses, and $1.1 million for
other facility closure costs primarily for the write-down of property and
equipment. Additionally, the 2002 charges included approximately $1.4 million
in severance paid to the Companys former Chief Executive Officer in March
2003, in accordance with his employment agreement.

The Company has made cash payments of approximately $13.3 million, of
which approximately $4.0 million and $4.4 million was paid during the nine months ended
September 30, 2002 and 2003, respectively. Additionally, the Company has written-off approximately
$1.6 million in non-cash charges against the reserves established for these
various cost reduction actions.

Substantially all of the remaining liability of $9.1 million at September
30, 2003 related to the abandoned Dallas facility lease. Approximately $5.6
million of the liability is classified as a long-term liability and is expected
to be paid through 2009. The estimated liability includes estimates pertaining
to sublease rates and vacancy periods. Although the Company does not anticipate
significant changes, the actual costs may differ from these estimates.

At September 30, 2003, the Company occupied less than 50% of the Dallas
facility, most of which has been abandoned. The Company is attempting to
sublease the unoccupied leased space and continues to have discussions with the
lessor regarding a restructuring or a termination of the Dallas lease. If the
Company is able to reach a settlement with the lessor on terms favorable to the
Company, the settlement payment could significantly increase the Companys near
term cash requirements, but could reduce monthly lease payments in the future.
If a satisfactory settlement cannot be reached and the unoccupied space cannot
be subleased, the Company will be required to continue to make significant
scheduled lease payments and pay operating expenses over the remaining lease
term and this could result in additional reserve requirements above those
recorded at September 30, 2003.

10. Related Party Transactions

In October 2002, the Company entered into an agreement with a company in
India to provide development services, with a minimum obligation of $2.1
million over a three-year period. A stockholder of the Company, who owns
approximately 6% of the Company's outstanding shares, has an indirect financial interest
in the India operation. The Company believes that the terms of this agreement
are on an arms length basis. The Company has expensed $1.0 million for these
development services during the nine months ended September 30, 2003.

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|        |  |                                                                                      
|------- |  | -------------------------------------------------------------------------------------
|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Managements discussion and analysis of the financial condition and results of
operations should be read in conjunction with the Certain Factors That May
Affect Future Results included elsewhere in this Form 10-Q and the Companys
Critical Accounting Policies and Estimates included in the Companys Form 10-K
for the year ended December 31, 2002.

Overview

We provide software that drives customers supply chain execution
processes, including fulfillment, warehousing, distribution and inventory
management. Our software solutions deliver the vital, frontline supply chain
intelligence necessary to drive customer execution decisions and processes.
Our products and services help customers worldwide to increase revenue, reduce
distribution costs, manage inventory across the supply chain, and improve
customer loyalty and satisfaction. We provide global service and support for
our software from established facilities in North America, Europe, the Middle
East, Asia, and Australia.

In October 2002, we were notified by the NASDAQ Stock Market, Inc. that
our common stock price had failed to maintain a minimum closing bid price
greater than or equal to $1.00 for 30 consecutive trading days and thereby
subjected our common stock to possible delisting from NASDAQ. In response,
effective January 2, 2003, we completed a one for seven reverse stock split.

We derive our revenue from the sale of software licenses; product related
consulting, training, maintenance and support (collectively, services and
maintenance); and the resale of software and equipment.

Our business has been adversely impacted for the last two years by a
number of factors. A major factor has been the global slowdown in customer
spending for large-scale IT projects. We made significant progress in lowering
our cost structure in the first nine months of 2003. Although total revenues
of $54.3 million for the first nine months of 2003 were substantially the same
level as recorded in the first nine months of 2002, our operating loss of $4.7
million in the 2003 period was significantly improved over the $16.9 million
operating loss (which includes charges of $6.5 million for lease abandonment, employee severance
and other facility closure costs) incurred in the same period of 2002. The
improvement was due primarily to higher service and support margins and
significantly lower operating costs. Services and support margins improved
from 34.9% in the nine months of 2002 to 37.6% for the same period in 2003.
Sales and marketing, research and development and general and administrative
expenses declined approximately $5.4 million, or 16.9%, compared to the first
nine months of 2002. Although our net loss was significantly lower than in the
previous quarters, we continue to have operating losses.

In response to the less than satisfactory operating performance, we took a
number of actions in 2002 to improve operating performance. First, we
substantially reduced our cost structure to more closely align with our current
levels of revenue. These actions included, among other things, a 17% reduction
in global headcount, the closure of our Philadelphia office, the consolidation
of our North American professional services and development operations in
Dallas and expanding our lower-cost offshore development activities. We also
replaced our Chief Executive Officer and Chief Financial Officer, and
eliminated the Chief Operating Officer function.

As a result of these actions in 2002 and other actions taken in 2001, we
made provisions for severance and related employee costs, facility closure
costs and estimated losses on abandoned facilities totaling $9.7 million and
$14.3 million in 2002 and 2001, respectively. Of these charges, $6.5 million
were recorded in the nine months ended September 30, 2002. The remaining
liability at September 30, 2003 is approximately $9.1 million, of which $5.6
million is long-term and expected to be paid through 2009. Should additional
cost reduction actions be required in the future or if managements estimates
of the losses on the current abandoned facility leases are inadequate, future
provisions could be required.

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On
August 15, 2003, we entered into a definitive agreement with SSA Global
Technologies, Inc. (SSA GT), under which a subsidiary of SSA GT will merge into
EXE and all holders of our outstanding common stock will receive $7.10 per
share in cash. The acquisition is subject to approval of a majority of our
stockholders as well as regulatory and certain other customary conditions. We
intend to mail a proxy statement to our stockholders and hold a stockholders
meeting to vote on the merger during the fourth quarter of 2003. If the
stockholders approve the merger, it is anticipated that the acquisition will be
completed shortly thereafter. Once the acquisition is completed, the Company
will be a wholly-owned subsidiary of SSA GT, and the Companys outstanding
common stock will no longer be publicly traded.

A
company, who owns 30.1% of the Company's shares of common stock, also
owns 25.0% of the capital stock of SSA GT.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and the results of
operations are based upon our consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in
the United States. The preparation of these financial statements requires
management to make judgments regarding estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. Management bases its
judgments on historical experience and on various other factors that are
believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities that are not apparent from other sources. Although management
evaluates these judgments on an ongoing basis, there can be no assurance that
actual results will not ultimately differ from those estimates. For a more
detailed explanation of these judgments, including our judgments relating to
revenue recognition, allowance for doubtful accounts and adjustments, goodwill
and intangible impairment, accruals for lease abandonment and employee
termination costs, related party transactions, and contingencies you may refer
to our Annual Report on Form
10-K for the year ended December 31, 2002.

Results of Operations

Three Months Ended September 30, 2003 Compared to the Three Months Ended September 30, 2002

Revenue

Total Revenue.Total revenue increased $2.4 million, or 14.1%, to $19.1
million for the three months ended September 30, 2003, from $16.7 million for
the three months ended September 30, 2002. International revenue accounted for
48.8% and 55.0% of total revenue during the three months ended September 30,
2003 and 2002, respectively. No single customer accounted for more than 10.0%
of total revenue during the three months ended September 30, 2003 or 2002.

Software License.Software license revenue of $2.8 million for the three
months ended September 30, 2003 was $0.1 million, or 4.3%, higher than the $2.7
million recorded during the three months ended September 30, 2002. Software
license revenue as a percentage of total revenue excluding reimbursable
expenses was 15.0% for the three months ended September 30, 2003 versus 16.5%
for the three months ended September 30, 2002.

Services and Maintenance.Services and maintenance revenue increased $0.1
million, or 1.0%, to $12.4 million for the three months ended September 30,
2003 from $12.3 million for the three months ended September 30, 2002.
Services and maintenance revenue as a percentage of total revenue excluding
reimbursable expenses declined to 66.3% for the three months ended September
30, 2003 from 75.4% for the three months ended September 30, 2002. This
decline is largely attributed to a larger volume of resale software and
equipment shipments during the three months ended September 30, 2003.

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Resale Software and Equipment.Resale software and equipment revenue
increased $2.2 million to $3.5 million for the three months ended September 30,
2003, from $1.3 million for the three months ended September 30, 2002. Resale
software and equipment as a percentage of total revenue excluding reimbursable
expenses was 18.6% for the three months ended September 30, 2003 versus 8.1%
for the three months ended September 30, 2002. This increase was due primarily
to a higher volume of shipments of hardware related to voice technology in the
North American region.

Costs and Expenses

Cost of Software Licenses.Cost of software licenses consists primarily
of royalties associated with software used to develop our software products,
the cost of reproduction, and the cost of complementary software applications
that we purchase to sell to our customers. Cost of software licenses
represented 7.8% of software license revenue for the three months ended
September 30, 2003 and 8.8% for the three months ended September 30, 2002.

Cost of Services and Maintenance.Cost of services and maintenance
consists primarily of salaries of professional staff and costs associated with
implementation, consulting and training services, hotline telephone support,
new releases of software and updating user documentation. As a percentage of
services and maintenance revenue, cost of services and maintenance was
approximately 60.5% for the three months ended September 30, 2003 compared to
64.0% for the three months ended September 30, 2002. Cost of services and
maintenance declined 4.5%, or $0.4 million, to $7.5 million for the three
months ended September 30, 2003, from $7.9 million for the three months ended
September 30, 2002. Increased costs during the current quarter associated with
the use of subcontractors to perform a large implementation rollout project for
a customer in Japan were substantially offset by lower internal staff costs and
higher staff utilization in the North American and European regions.

Cost of Resale Software and Equipment.Cost of resale software and
equipment consists primarily of the costs of the database software tools and
hardware we purchase to resell to our customers. Cost of resale software and
equipment increased $1.6 million, or 151.7%, to $2.7 million for the three
months ended September 30, 2003, from $1.1 million for the three months ended
September 30, 2002. This increase was due to increased resale transactions in
our North American region during the current quarter. As a percentage of
resale software and equipment revenue, cost of resale software and equipment
was 78.0% for the three months ended September 30, 2003, and 81.8% for the
three months ended September 30, 2002. This improvement was attributed to
increased sales of higher margin database software during the current quarter.

Sales and Marketing.Sales and marketing expenses consist primarily of
salaries, commissions, bonuses, recruiting costs, travel, marketing materials
and trade shows. Sales and marketing expenses declined $1.1 million, or 23.4%,
to $3.4 million for the three months ended September 30, 2003, from $4.5
million for the three months ended September 30, 2002. The decline was related
primarily to a 30% reduction in the number of sales and marketing employees and
lower marketing expense. As a percentage of total revenue excluding
reimbursable expenses, sales and marketing expenses declined to 18.3% for the
three months ended September 30, 2003, from 27.5% for the three months ended
September 30, 2002.

Research and Development.Research and development expenses consist
primarily of salaries and other personnel-related costs for our product
development activities. Research and development expenses declined $0.6
million, or 20.7%, to $2.3 million for the three months ended September 30,
2003, from $2.9 million for the three months ended September 30, 2002. As a
percentage of total revenue excluding reimbursable expenses, research and
development expenses decreased to 12.1% for the three months ended September
30, 2003, from 17.5% for the three months ended September 30, 2002. As a part
of our cost reduction program, in late 2002 we signed a three-year agreement
with a company to provide offshore development resources in India at a cost
that is lower than our historic development costs. Additionally, we reduced
the number of full time research and development employees in North America.

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General and Administrative.General and administrative expenses consist
primarily of salaries and other personnel-related costs of our finance, human
resources, information systems, administrative, legal and executive
departments, insurance costs and the costs associated with legal, accounting,
and other administrative services. General and administrative costs declined
$0.3 million, or 9.0%, to $2.6 million for the three months ended September 30,
2003, from $2.8 million for the three months ended September 30, 2002. This
decline was due primarily to a reduction in administrative personnel and lower
legal costs. As a percentage of total revenue excluding reimbursable expenses,
general and administrative expenses declined to 13.7% for the three months
ended September 30, 2003, from 17.2% for the three months ended September 30,
2002.

Amortization of Intangible Assets.Amortization of intangible assets
relates primarily to acquired developed software technology and assets acquired
in connection with the 1997 acquisition of Dallas Systems. Amortization of
intangible assets decreased $0.1 million to $0.2 million for the three months
ended September 30, 2003, from $0.3 million for the three months ended
September 30, 2002. The decline from the prior year is attributed to
intangible assets acquired in the 1997 acquisition of Dallas Systems that were
fully amortized in the final quarter of the prior year. In November of 2001 and
July of 2002, we acquired a total of $2.0 million of developed software
technology that has resulted in $0.2 million in amortization during the three
months ended September 30, 2003.

Non-Cash Warrant and Stock Compensation.Non-cash warrant and stock
compensation expense relates to the amortization of deferred compensation
recorded primarily in connection with stock options granted to employees. The
deferred compensation recorded represents the difference between the exercise
price and the deemed fair value of our common stock on the date of grant of
these options. Non-cash warrant and stock compensation expense decreased $0.1
million to $0.1 million for the three months ended September 30, 2003, from
$0.2 million for the three months ended September 30, 2002.

Other Income (Expense).Other income (expense) consists of gains and
losses from currency fluctuations, merger costs, interest expense, and interest
income on investments. We reported net other expense of $0.3 million during the
three months ended September 30, 2003 compared to net other income of $0.2
million during the three months ended September 30, 2002. The third quarter of
2003 net other expense included $0.8 million of merger-related costs, which
were partially reduced by interest income and foreign currency gains. In the
third quarter of 2002, there were no merger-related costs, and interest income
and foreign currency gains were lower than in the third quarter of 2003. The
merger-related costs consist primarily of outside legal costs, investment
banker fees, accounting fees, and printing costs associated with the pending
merger with SSA GT. We expect to incur additional merger-related costs in the
fourth quarter of 2003.

Income Taxes.Income tax provision increased $0.3 million to $0.4 million
during the three months ended September 30, 2003, from $0.1 million during the
three months ended September 30, 2002. The income tax provisions were
primarily due to foreign withholding taxes and taxes on income earned by
foreign subsidiaries.

Nine Months Ended September 30, 2003 Compared to the Nine Months Ended September 30, 2002

Revenue

Total Revenue.Total revenue declined $0.5 million, or 0.9%, to $54.3
million for the nine months ended September 30, 2003, from $54.8 million for
the nine months ended September 30, 2002. International revenue accounted for
50.4% and 52.9% of total revenue during the nine months ended September 30,
2003 and 2002, respectively. No single customer accounted for more than 10.0%
of total revenue during the nine months ended September 30, 2003 or 2002.

Software License.Software license revenue of $9.0 million for the nine
months ended September 30, 2003 was $1.0 million, or 10.1%, lower than the
$10.0 million recorded during the nine months ended September 30, 2002.
Software license revenue as a percentage of total revenue excluding
reimbursable

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expenses was 16.9% for the nine months ended September 30, 2003 versus
18.7% for the nine months ended September 30, 2002. The lower software license
revenue primarily occurred in our North American and Asia Pacific regions.

Services and Maintenance.Services and maintenance revenue declined $0.9
million, or 2.4%, to $36.1 million for the nine months ended September 30, 2003
from $37.0 million for the nine months ended September 30, 2002. The lower
license revenue of the last several quarters has impacted services and
maintenance revenues, since there have been fewer software implementation
projects. As a result, revenue from consulting services has declined. Services
and maintenance revenue as a percentage of total revenue excluding reimbursable
expenses decreased to 68.0% for the nine months ended September 30, 2003 from
69.3% for the nine months ended September 30, 2002.

Resale Software and Equipment.Resale software and equipment revenue
increased $1.6 million, or 25.0%, to $8.0 million for the nine months ended
September 30, 2003, from $6.4 million for the nine months ended September 30,
2002. This increase is primarily attributed to additional sales of voice
products within our North American region despite the exclusion of $0.5 million
of revenue associated with resale equipment sold to a customer during the first
quarter of 2003 that subsequently filed for bankruptcy. We did not recognize
this revenue from the resale equipment sale and provided an estimated loss for
the cost of the equipment. Resale software and equipment as a percentage of
total revenue excluding reimbursable expenses was 15.1% for the nine months
ended September 30, 2003 versus 12.0% for the nine months ended September 30,
2002.

Costs and Expenses

Cost of Software Licenses.Cost of software licenses represented 7.7% of
software license revenue for the nine months ended September 30, 2003 and 4.4%
for the nine months ended September 30, 2002. The increase in cost of software
licenses as a percentage of software license revenue was attributed to an
increase in purchasing of complementary software that was sold during the nine
months ended September 30, 2003.

Cost of Services and Maintenance.Cost of services and maintenance were
lower by 6.5%, or $1.6 million, to $22.5 million for the nine months ended
September 30, 2003, from $24.1 million for the nine months ended September 30,
2002. As a percentage of services and maintenance revenue, cost of services
and maintenance was approximately 62.4% for the nine months ended September 30,
2003 compared to 65.1% for the nine months ended September 30, 2002. Increased
costs during the current year associated with the use of subcontractors to
perform a large implementation rollout project for a customer in Japan were
substantially offset by lower internal staff costs and higher utilization in
the North American and European regions.

Cost of Resale Software and Equipment.Cost of resale software and
equipment increased $1.0 million, or 19.6%, to $6.3 million for the nine months
ended September 30, 2003, from $5.3 million for the nine months ended September
30, 2002. As a percentage of resale software and equipment revenue, cost of
resale software and equipment declined to 79.1% for the nine months ended
September 30, 2003, compared to 82.7% for the nine months ended September 30,
2002, due to sales of higher margin database software during 2003.

Estimated Loss on Resale Equipment Sold to Company in Bankruptcy. We sold
approximately $0.5 million of resale equipment early in the first quarter of
2003 to a customer who subsequently filed bankruptcy in April 2003. As a
result, we did not recognize the revenue from the equipment sale and provided
$0.5 million loss for the cost of the equipment.

Sales and Marketing.Sales and marketing expenses declined $2.9 million,
or 20.6%, to $11.5 million for the nine months ended September 30, 2003, from
$14.4 million for the nine months ended September 30, 2002. The decline was
related primarily to a 27% reduction in the number of sales and marketing
employees and lower marketing expense. As a percentage of total revenue
excluding reimbursable expenses, sales and marketing expenses declined to 21.6%
for the nine months ended September 30, 2003, from 27.1% for the nine months
ended September 30, 2002.

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Research and Development.Research and development expenses declined $1.7
million, or 19.9%, to $7.1 million for the nine months ended September 30,
2003, from $8.8 million for the nine months ended September 30, 2002. As a
percentage of total revenue excluding reimbursable expenses, research and
development expenses decreased to 13.3% for the nine months ended September 30,
2003, from 16.5% for the nine months ended September 30, 2002. As a part of
our cost reduction program, in late 2002 we signed a three-year agreement with
a company to provide offshore development resources in India at a cost that is
lower than our historic development costs. Additionally, we reduced the number
of full time research and development employees in North America.

General and Administrative.General and administrative costs declined
$0.7 million, or 8.0%, to $8.3 million for the nine months ended September 30,
2003, from $9.0 million for the nine months ended September 30, 2002. The
decline is largely attributed to lower depreciation costs due to asset
disposals and retirements and lower payroll cost due to staff reductions. As a
percentage of total revenue, excluding reimbursable expenses, general and
administrative expenses were 15.6% for the nine months ended September 30, 2003
and 16.9% for the nine months ended September 30, 2002.

Amortization of Intangible Assets.Amortization of intangible assets
relates primarily to acquired developed software technology and assets acquired
in connection with the 1997 acquisition of Dallas Systems. Amortization of
intangible assets decreased $0.4 million to $0.5 million for the nine months
ended September 30, 2003, from $0.9 million for the nine months ended September
30, 2002. The decline from the prior year is attributed to intangible assets
acquired in the 1997 acquisition of Dallas Systems that were fully amortized in
the final quarter of the prior year. In November of 2001 and July of 2002, we
acquired a total of $2.0 million of developed software technology that has
resulted in $0.4 million in amortization during the nine months ended September
30, 2003.

Non-Cash Warrant and Stock Compensation.Non-cash warrant and stock
compensation expense relates to the amortization of deferred compensation
recorded primarily in connection with stock options granted to employees. The
deferred compensation recorded represents the difference between the exercise
price and the deemed fair value of our common stock on the date of grant of
these options. Non-cash warrant and stock compensation expense decreased $0.3
million to $0.4 million for the nine months ended September 30, 2003, from $0.7
million for the nine months ended September 30, 2002.

Estimated Provisions for Lease Abandonment, Employee Severance and Other
Facility Closure Costs.During the years ended December 31, 2001 and 2002,
the Company implemented various cost reduction actions to lower the Companys
cost structure, including employee severance, the write-off of equipment and
the abandonment of certain leased facilities. As a result, charges totaling
approximately $14.3 million and $9.7 million were charged against operating
results in 2001 and 2002, respectively. Of these charges, $6.5 million were
recorded during the nine months ended September 30, 2002.

We have made payments of approximately $13.3 million, of which
approximately $4.4 million were paid during the nine months ended September 30,
2003, and have written off approximately $1.6 million in non-cash charges
against the reserves established for the various cost reduction actions that
occurred during 2002 and 2001. The remaining liability at September 30, 2003
is approximately $9.1 million, of which $5.6 million is long-term and is
expected to be paid through 2009. The reserves include estimates pertaining to
sublease rates, vacancy periods, employee separation costs and settlement of
contractual obligations. Although we do not anticipate significant changes,
the actual costs may differ from these estimates.

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Other Income (Expense).Other income declined $1.0 million to $0.5
million during the nine months ended September 30, 2003 compared to $1.5
million during the nine months ended September 30, 2002. This decline was
primarily attributed to merger costs associated with our pending merger with
SSA GT and lower interest earned on investment securities.

Income Taxes.An income tax provision of $0.8 million and $0.3 million
was recognized during the nine months ended September 30, 2003 and 2002,
respectively. The income tax provisions were primarily due to foreign
withholding taxes and taxes on income earned by foreign subsidiaries.

Liquidity and Capital Resources

We have funded our operations through the issuance of our preferred and
common stock, bank borrowings and cash flow from operations. As of September
30, 2003 we had approximately $29.4 million in cash and marketable securities,
a decline of approximately $8.0 million from the end of 2002.

Net cash used in operating activities was approximately $7.4 million for
the nine months ended September 30, 2003. The $5.0 million net
loss includes approximately $3.0 million of non-cash items (depreciation and amortization, provision for losses on receivables,
amortization of deferred compensation, and minority interest), and operating assets and liabilities consumed approximately $5.4
million of cash. Although we generated approximately $1.9 million of cash by
lowering our receivables, we used approximately $7.3 million of cash primarily
from the reduction of accounts payable and accrued liabilities. Receivable days
declined from 80 days in the fourth quarter of 2002 to 68 days in the third
quarter of 2003. A portion of the accounts payable reduction was due to
payments to resale software and equipment vendors related to resale equipment
deliveries that were made in the fourth quarter of 2002. The reduction of
accrued liabilities was due primarily to payments for employee severance
related to cost reduction actions taken during 2002 and lease payments on our
abandoned Dallas facility. Net cash used in operating activities was
approximately $1.2 million for the comparable nine month period in 2002.

During the nine months ended September 30, 2003, we used approximately
$0.2 million for capital expenditures and approximately $0.4 million for
scheduled debt payments. Capital expenditures in the first nine months of 2002
were approximately $0.6 million. We expect that capital expenditures will not
exceed $1.0 million for the next 12 months.

In October 2002, we entered into a revolving line of credit agreement with
a financial institution under which we can borrow up to $10.0 million over a
two-year period. The agreement contains certain financial covenants, including
a minimum $10.0 million cash and marketable securities balance, restrictions on
dividends and the facility is secured with all of our tangible assets.
Borrowings for half of the revolving credit line will be based on a defined
borrowing base, while the balance does not contain this restriction. Interest
on any borrowings will be at the prime rate, and we will pay a fee on the
unused portion of the line of credit of 0.375% per annum. As of September 30,
2003, we have had no borrowings under this agreement.

At the end of September 30, 2003, we had operating lease obligations of
approximately $41.6 million. Approximately $36.6 million of the total lease
obligations relate to our Dallas facility lease for approximately 195,000
square feet, which expires in 2015. Currently, we occupy less than 50% of the
Dallas facility, and we are attempting to sublease the unoccupied leased space.
A provision has been made for estimated losses on the portion of the Dallas
lease that has been abandoned (see Note 9 of the Notes to the Consolidated
Financial Statements included elsewhere herein), but cash payments will be
required for the remaining term of the existing lease obligation.

We have had discussions with the lessor regarding a restructuring or a
termination of the Dallas lease. To date, we have been unable to reach an
agreement acceptable to us. If we are able to reach a settlement with the
lessor on terms favorable to the Company, the settlement payment could
significantly increase our near term cash requirements, but could reduce
monthly lease payments in the future. If a satisfactory settlement cannot be
reached and the unoccupied space cannot be subleased, we will be required to
continue to make the significant

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scheduled lease payments and pay operating expenses over the remaining
lease term and this could result in additional reserve requirements above those
recorded at September 30, 2003.

We expect to incur and pay significant additional merger-related costs in
the fourth quarter of 2003 and pay for some of the merger-related costs
incurred in the third quarter, whether or not the merger with SSA GT is
consummated.

We believe that our existing working capital and the availability of cash
under the revolving credit line will be sufficient to fund our operations for
at least the next year. However, there can be no assurance that we will not
require additional financing in the future. We cannot be sure that we will be
able to obtain any additional required financing or that, if we can, the terms
will be acceptable to us.

We do not engage in any activities involving special purpose entities or
off-balance sheet financing.

Special Note Regarding Forward-Looking Statements

In addition to historical information, this filing and our Annual Report
on Form 10-K contain forward-looking statements. Any statements contained
herein (including, without limitation, statements to the effect that EXE or its
management believes, expects, anticipates, plans, estimates,
predicts, seeks, intends and similar expressions) that relate to future
events or conditions should be considered forward-looking statements. The
forward-looking statements are made pursuant to safe-harbor provisions of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those reflected in these
forward-looking statements. Factors that might cause such a difference
include, but are not limited to, those discussed in the section entitled
Certain Factors That May Affect Future Results below. Readers are cautioned
not to place undue reliance on these forward-looking statements, which reflect
managements opinions only as of the date hereof. We undertake no obligation
to revise or publicly release the results of any revision to these
forward-looking statements, whether as a result of new information, future
events or otherwise.

Certain Factors That May Affect Future Results

Risks Relating to Our Business

Should the merger with SSA Global Technologies, Inc. not be consummated, our
common stock price could decline significantly and our business could be
negatively impacted.

On
August 15, 2003, we entered into a definitive agreement with SSA GT,
under which a subsidiary of SSA GT will merge into EXE and all holders of our
outstanding common stock will receive $7.10 per share in cash. The acquisition
is subject to approval of a majority of our stockholders as well as regulatory
and certain other customary conditions. We intend to mail a proxy statement to
our stockholders and hold a stockholders meeting to vote on the merger during
the fourth quarter of 2003. If the stockholders approve the merger, it is
anticipated that the acquisition will be completed shortly thereafter. Once
the acquisition is completed, we will be a wholly-owned subsidiary of SSA GT,
and our outstanding common stock will no longer be publicly traded.

Although we expect the merger to be consummated, it is possible that a
majority of our stockholders could vote against the merger or that one of the
customary closing conditions is not met. If so, the merger would not be
consummated and we would remain a publicly traded company. Should the merger
not be completed, our stock price could decline significantly. Prior to the
announcement of the proposed merger, our stock traded in the $6.00 per share
range. Subsequent to the public announcement of the proposed merger, our stock
traded in the $7.00 to $7.05 per share range. Additionally, potential negative
publicity of the merger not being completed could adversely affect our future
operating performance.

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Our customers may continue to delay or cancel spending on software and services
because of the current
economic climate.

Since the beginning of 2001, some companies have experienced financial
difficulties or uncertainty and, as a result, have delayed or canceled spending
on information technology projects such as fulfillment software and services.
If companies continue to delay, or cancel, their information technology
initiatives because of the current economic climate, or for other reasons, our
business, financial condition and results of operations could be materially
adversely affected.

We can give you no assurance that we will be able to maintain or grow our level
of revenue or achieve profitability in the future.

Our future operating results may be affected by any of the following
factors:



| |  | a continued decline in general economic conditions;
|- |  | ---------------------------------------------------



| |  | the level of market acceptance of, and demand for, our software;
|- |  | ----------------------------------------------------------------



| |  | the overall growth rate of the markets in which we compete;
|- |  | -----------------------------------------------------------



| |  | our competitors products and prices;
|- |  | -------------------------------------



| |  | our ability to establish strategic marketing relationships;
|- |  | -----------------------------------------------------------



| |  | our ability to develop and market new and enhanced products;
|- |  | ------------------------------------------------------------



| |  | our ability to successfully train alliance companies and consulting organizations;
|- |  | ----------------------------------------------------------------------------------



| |  | our ability to control costs;
|- |  | -----------------------------



| |  | changes in our products and services mix; and
|- |  | ---------------------------------------------



| |  | our ability to train and expand our direct sales force and indirect distribution channels worldwide.
|- |  | ----------------------------------------------------------------------------------------------------

We may not be profitable in the future.

With the exception of the third and fourth quarters of the year ended
December 31, 2000, we have experienced quarterly and annual losses since the
formation of EXE in September 1997. We experienced net losses of $63.9 million
in 2001, $23.8 million in 2002 and $5.0 million for the nine months ended
September 30, 2003. We may continue to incur losses on both a quarterly and an
annual basis. Moreover, we expect to continue to incur significant sales and
marketing, research and development and general and administrative expenses
and, as a result, we will need to generate significant revenue to report net
income in future periods. We may not achieve our planned growth or generate
sufficient revenue to report net income in future periods.

Our non-cancelable, long-term lease of office space in Dallas, Texas is
substantially in excess of our expected facility requirements resulting in
significant future cash obligations for unused office space, which could
negatively impact our financial condition in the future.

We lease approximately 195,000 square feet of office space in Dallas,
Texas under a lease that extends to 2015. Amounts due the landlord over the
remaining term of the lease are in excess of $36.6 million. Currently, we
occupy less than 50% of the Dallas facility and we are attempting to sublease
the unoccupied leased space. A provision has been made for estimated losses on
the portion of the Dallas lease that has been abandoned (see Note 9 of the
Notes to the Consolidated Financial Statements included elsewhere herein), but
cash payments will be required for the remaining term of the existing lease
obligation.

We have had discussions with the lessor regarding a restructuring or a
termination of the Dallas lease. To date, we have been unable to reach an
agreement acceptable to us. If we are able to reach a settlement with the
lessor on terms favorable to the Company, the settlement payment could
significantly increase our near term cash requirements, but could reduce monthly
lease payments in the future. If a satisfactory settlement cannot be reached
and the unoccupied space cannot be subleased, we will be required to continue
to make the significant scheduled lease payments and pay operating expenses
over the remaining lease term and this could result in additional reserve
requirements above those recorded at September 30, 2003.

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Our revenue could decline if our customers do not continue to accept our
existing products, including fulfillment and collaboration products.

We expect to derive a majority of our product license revenue in the
future from our fulfillment and collaboration products and their components.
Our business depends on continued customer acceptance of these products and the
release, introduction and customer acceptance of new products. We expect that
we will continue to depend on revenue from new and enhanced versions of our
fulfillment and collaboration products, and our revenue could decline if our
target customers do not continue to adopt and expand their use of these
products and their components.

Our quarterly operating results depend heavily on software license revenue,
which is difficult to forecast and may fluctuate.

Our quarterly software license revenue is difficult to forecast because
our sales cycles, from initial evaluation to delivery of software, vary
substantially from customer to customer. Revenue in any quarter is dependent
on orders received, contracts signed and products shipped in that quarter. We
typically recognize the majority of our revenue in the last month of the
quarter, frequently in the last week or even days of the quarter. In addition,
the timing of large individual license sales is difficult for us to predict,
and, in some cases, transactions are concluded later than anticipated. Since
our operating expenses are based on anticipated revenue levels and most of our
operating expenses, particularly personnel and facilities costs, are relatively
fixed in advance of any particular quarter, any revenue shortfall may cause
fluctuations in operating results in any particular quarter. We can give you
no assurance that revenue will grow in future periods, that revenue will grow
at historical rates, or that we will achieve and maintain positive operating
margins in future quarters. If revenue falls below our expectations in a
particular quarter, our operating results could be harmed.

Because our sales cycles are lengthy and subject to uncertainties, it is
difficult to forecast our sales, and the delay or failure of a significant
software license transaction or our inability to anticipate a delay could harm
our operating results.

Our software is used for mission critical division- or enterprise-wide
purposes and involves a significant commitment of resources by customers. A
customers decision to license our software usually involves the evaluation of
the available alternatives by a number of personnel in multiple functional and
geographic areas, each often having specific and conflicting requirements.
Accordingly, we typically must expend substantial resources educating
prospective customers about the value of our solutions. For these and other
reasons, the length of time between the date of initial contact with the
potential customer and the execution of a software license agreement typically
ranges from three to nine months, and is subject to delays over which we may
have little or no control. As a result of the length and variability of the
sales cycle for our software products, our ability to forecast the timing and
amount of specific sales is limited, and the delay or failure to complete one
or more anticipated large license transactions could harm our operating
results.

We depend on the services of a number of key personnel. A loss of any of these
personnel could disrupt our operations and result in reduced revenue.

Our success depends on the continued services and performance of our
senior management staff. The loss of the services of any of our senior
management staff or key employees could seriously impair our ability to operate
and achieve our objectives, which could reduce our revenue. We have employment
agreements with all of our executive officers. However, these employment
agreements do not prevent key employees from voluntarily terminating their
employment with us.

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Failure to expand our alliance relationships with consulting firms and
complementary software vendors and to establish new strategic alliances may
slow acceptance of our software and delay the growth of our revenue.

To supplement our direct sales force and our implementation capabilities,
we have established strategic marketing alliances with consulting firms and
complementary software vendors, and we rely on them to recommend our software
to their customers and to periodically install and support our software. To
increase our sales and implementation capabilities, one of our key strategies
is to expand our existing relationships and establish new strategic alliances
with consulting firms and complementary software vendors. The loss of, or
failure to expand, existing relationships or our failure to establish new
strategic alliances could limit the number of transactions we may complete, may
result in our inability to recognize revenue and may harm our operating
results.

If our new or enhanced products do not gain market acceptance, our business and
results of operations would be harmed.

The growth of our business will depend on the successful development,
introduction and acceptance of new and enhanced versions of our products. The
introduction of new or enhanced products requires that we manage the transition
from existing products to these new or enhanced products. We have recently
introduced our EXceed AIM and EXceed SNx software solutions to work in
conjunction with our existing fulfillment software suite in order to extend our
product reach into complementary markets. We expect to derive a portion of our
revenues in the future from new and enhanced products currently being
developed, including Exceed AIM and Exceed SNx. If EXceed AIM and EXceed SNx
and our other new and enhanced products do not gain market acceptance, our
revenues may decline. Factors that may affect the market acceptance of EXceed
AIM and EXceed SNx and our other new and enhanced products, some of which are
beyond our control, may include:



| |  | the changing requirements of our industry;
|- |  | ------------------------------------------



| |  | the performance, quality and price of our new and enhanced products; and
|- |  | ------------------------------------------------------------------------



| |  | the availability, performance, quality and price of competing products and technologies.
|- |  | ----------------------------------------------------------------------------------------

We may experience delays in the scheduled introduction of new or upgraded
software, and our software may contain undetected errors or bugs, resulting
in loss of revenue and harm to our reputation.

Historically, we have issued significant new software products or new
releases of our software periodically, with interim releases issued more
frequently. Our software is particularly complex, because it must perform in
environments operating multiple computer systems and respond to customer demand
for high performance fulfillment, warehousing and distribution applications and
major new product enhancements. Our software requires long development and
testing periods before it is commercially released. For example, the
development cycle for the introduction of our EXceed Crossdock component took
approximately nine months. If we experience delays in the scheduled
introduction of new software or software upgrades, our customers may become
dissatisfied and our reputation and operating results could be harmed.

Also, despite testing by us, our software may contain undetected errors or
bugs. In the past, we have discovered software bugs in new versions of our
software after its release. We may experience software bugs in the future.
These bugs could result in a delay or loss of revenue, diversion of development
resources, damage to our reputation, increased service and warranty costs, or
impaired market acceptance and sales of this software, any of which could harm
our operating results.

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If we are unable to timely collect our accounts receivable, our cash flow will
be harmed.

Although we have recently improved on the time required to collect
accounts receivable from our customers, there is no assurance that this trend
will continue. Historically, we have experienced longer receivable collection
periods that have largely been attributed to the deterioration of certain of
our customers financial condition due to the negative economic climate in the
United States and the international markets we serve. The failure of any
significant customer to pay for our products on a timely basis could adversely
affect our results of operations and our operating cash flow.

If we do not expand our customer base, our business may not grow.

Our growth is dependent in part on our ability to attract new customers
for our products. We derive a substantial portion of our revenue from the sale
of additional products and services to our existing customers. If we are
unable to expand our customer base by attracting new customers for our
products, our business will suffer. In addition, a material reduction in the
demand for our products and services from our existing customers would have a
material adverse effect on our business, financial condition and results of
operations.

Our international operations are subject to heightened risks. If any of these
risks actually occur, our earnings could decline.

International revenue accounted for approximately 50.4% of our total
revenue during the nine months ended September 30, 2003, 52.2% of our total
revenue during the year ended December 31, 2002, and 46.6% of our total revenue
during the year ended December 31, 2001.

Our international operations are subject to risks inherent in
international business activities, including:



| |  | difficulty in staffing and managing geographically diverse operations;
|- |  | ----------------------------------------------------------------------



| |  | longer accounts receivable payment cycles in certain countries;
|- |  | ---------------------------------------------------------------



| |  | compliance with a variety of foreign laws and regulations;
|- |  | ----------------------------------------------------------



| |  | unexpected changes in regulatory requirements and overlap of different tax structures;
|- |  | --------------------------------------------------------------------------------------



| |  | greater difficulty in safeguarding intellectual property;
|- |  | ---------------------------------------------------------



| |  | trade restrictions;
|- |  | -------------------



| |  | changes in tariff rates and import and export licensing requirements; and
|- |  | -------------------------------------------------------------------------



| |  | general economic conditions in international markets.
|- |  | -----------------------------------------------------

In addition, we have expanded our offshore research and development
activities. In the instance of a political upheaval in certain regions, our
development process could be severely disrupted. Our operating results could
be negatively impacted if these or other factors affect international
operations.

Because many of our customers pay us in foreign currencies, we may be exposed
to exchange rate risks and our profitability may suffer due to currency
fluctuations.

A majority of the revenue and expenses incurred by our international
operations are denominated in currencies other than the United States dollar.
In particular, our revenue and costs of operations in Japan and Singapore are
denominated in Japanese Yen and Singapore Dollars, and in Europe some of our
contracts are denominated in the Euro. Exchange rate fluctuations have caused
and will continue to cause currency transaction gains and losses. We
experienced currency transaction gains (losses) of $1.0 million for the nine
months ended September 30, 2003, $1.2 million for the year ended December 31,
2002, and $(0.5) million for the year ended December 31, 2001. We can give you
no assurance that currency transaction losses will not adversely affect our
results in future periods.

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Our success depends on our ability to attract and retain key personnel, in
particular knowledgeable and experienced sales and marketing personnel and
professional services personnel. If we are unable to attract these personnel
and use them efficiently, our ability to sell and implement our software could
be harmed.

We believe our success will depend significantly on our ability to
attract, motivate and retain highly skilled technical, managerial, consulting,
sales and marketing personnel and professional services personnel. We compete
intensely for these personnel, and we may be unable to achieve our personnel
goals. Our failure to attract, motivate and retain such highly skilled
personnel could seriously limit our ability to expand our business.

Our operating performance, personnel reductions and lower stock price over
the last two years has made it difficult to retain key personnel. There is no
assurance we will be able to retain our key personnel in the future.

Also, we believe our success will depend on our ability to productively manage
our personnel. Any significant growth in software license revenue will likely
generate the need for more professional services personnel to deploy and
implement software and to train customers. A shortage in the number of trained
personnel, either within our Company or available from outside consulting
firms, could limit our ability to implement our software on a timely and
cost-effective basis. Our operating performance will suffer if we generate
insufficient revenue to cover growth-related expenses, significantly strain
management resources with additional responsibilities, fail to successfully
expand our relationships and develop additional relationships with third-party
implementers and complementary software vendors or fail to have sufficiently
trained sales and marketing personnel and professional services personnel.

The length and complexity of our implementation cycle may result in
implementation delays, which may cause customer dissatisfaction.

The introduction of new products and the size and complexity of some of
our software implementations can result in lengthy implementation cycles and
may result in delays. These delays could result in customer dissatisfaction,
which could adversely affect our reputation. Additional delays could result if
we fail to attract, train and retain services personnel, or if our alliance
companies fail to commit sufficient resources towards implementing our
software. These delays and resulting customer dissatisfaction could harm our
reputation and cause our revenue to decline.

The use of fixed-price service contracts subjects us to the risk that we may
not successfully complete these contracts on budget.

We offer software implementation and related consulting services to our
customers. Although we typically provide services on a time and material
basis, we have from time to time entered into fixed-price service contracts,
and we expect that some customers will demand these contracts in the future.
These contracts specify certain milestones to be met by us regardless of actual
costs incurred in meeting those obligations. If we are unable to successfully
complete these contracts on budget, our earnings could suffer.

We rely on software licenses that may be terminated or unavailable to us on
commercially reasonable terms.

We market and resell, under license, third-party software, including:



| |  | software embedded in our products;
|- |  | ----------------------------------



| |  | software that enables our software to interact with other software systems or databases; and
|- |  | --------------------------------------------------------------------------------------------



| |  | software in conjunction with which our software operates.
|- |  | ---------------------------------------------------------

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We also license software tools used to develop our software and software
for internal systems. We cannot assure you that the third-party software or
software tools will continue to be available to us on commercially reasonable
terms. The loss or inability to maintain any of these software licenses could
result in delays or reductions in product shipments until equivalent software
could be identified and licensed or compiled, which could harm our business.

We could be subject to legal actions by former personnel, which could be
costly, divert management time and attention and harm our operating results.

During 2001 and 2002, we terminated approximately 343 of our services,
sales, development and administrative personnel. It is possible that some of
these employees could bring legal actions against us under applicable federal,
state or local laws. Any such claims, whether with or without merit, could
subject us to costly litigation and the diversion of management time and
attention, and successful claims could result in awards of damages to or
reinstatement of former employees, any of which could harm our operating
results.

Product liability and other claims related to our customers business
operations could result in substantial costs.

Many of our installations involve projects that are critical to the
operations of our clients businesses and provide benefits that may be
difficult to quantify. Any failure in a clients system or any intellectual
property infringement claims by third parties could result in a claim for
substantial damages against us, regardless of our responsibility for the
failure or for the alleged intellectual property infringement. We cannot
assure you that our customer contracts will protect us in the event of any such
claim. In addition, although we maintain general liability insurance coverage,
including coverage for errors or omissions, we cannot assure you that this
coverage will continue to be available on reasonable terms or will be available
in sufficient amounts to cover one or more large claims, or that the insurer
will not disclaim coverage.

The successful assertion of one or more large claims against us that
exceeds available insurance coverage or changes in our insurance policies,
including premium increases or the imposition of large deductible or
co-insurance requirements, could result in substantial costs.

Should our stock price fall below $1 per share for a period of time our common
stock could be de-listed from the NASDAQ National market.

During the last half of 2002 our common stock price was subject to
de-listing on the NASDAQ National Market due to our stock price being below $1
per share for a specified period of time. Our stockholders approved a one for
seven reverse stock split which was effective in January 2003. As a result of
the reverse stock split, our stock price increased substantially above $1 per
share. Should our stock price fall below $1 per share again, we could be
subject to de-listing again.

If our common stock is de-listed by NASDAQ and our securities begin to
trade on the OTC Bulletin Board maintained by NASDAQ, another over-the-counter
quotation system, or on the pink sheets, investors may find it more difficult
to dispose of or obtain accurate quotations as to the market value of the
securities. In addition, we would be subject to a rule promulgated by the
Securities and Exchange Commission that, if we fail to meet criteria set forth
in such rule, imposes various practice requirements on broker-dealers who sell
securities governed by the rule to persons other than established customers and
accredited investors. For these types of transactions, the broker-dealer must
make a special suitability determination for the purchaser and have received
the purchasers written consent to the transactions prior to sale.
Consequently, the rule may deter broker-dealers from recommending or selling
our common stock, which may further affect the liquidity of our common stock.
De-listing from NASDAQ will make trading our shares more difficult for
investors, potentially leading to further declines in our share price. It
would also make it more difficult for us to raise additional capital. Further,
if we are de-listed we could also incur additional costs under state blue-sky
laws in connection with any sales of our securities.

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Additionally, because brokers commissions on low-priced stocks generally
represent a higher percentage of the stock price than commissions on higher
priced stocks, the low share price of the common stock can result in an
individual stockholder paying transaction costs that represent a higher
percentage of total share value than would be the case if the share price were
higher. This factor may also limit the willingness of institutions to purchase
our common stock.

We expect our results of operations to fluctuate, and the price of our common
stock could fall if quarterly results differ from the expectations of
securities analysts.

Our operating results historically have fluctuated on a quarterly basis
and may continue to do so in the future. If our quarterly results differ from
the expectations of securities analysts, the price of our common stock could
fall. Some of the factors that could cause our operating results to fluctuate
include:



| |  | general economic conditions;
|- |  | ----------------------------



| |  | demand for our products and services;
|- |  | -------------------------------------



| |  | our competitors products and prices;
|- |  | -------------------------------------



| |  | the timing and market acceptance of new product introductions and upgrades by us or our competitors;
|- |  | ----------------------------------------------------------------------------------------------------



| |  | our success in expanding our services, customer support and marketing and sales organizations, and the timing of these
activities;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  | the mix of products and services sold;
|- |  | --------------------------------------



| |  | delays in, or cancellations of, customer implementations;
|- |  | ---------------------------------------------------------



| |  | customers budget constraints;
|- |  | ------------------------------



| |  | the level of research and development expenditures;
|- |  | ---------------------------------------------------



| |  | the size of recurring compensation charges;
|- |  | -------------------------------------------



| |  | changes in foreign currency exchange rates;
|- |  | -------------------------------------------



| |  | our ability to control costs; and
|- |  | ---------------------------------



| |  | the timing of acquisitions and of the amortization or impairment of intangible assets.
|- |  | --------------------------------------------------------------------------------------

A large portion of our expenses, including expenses for facilities,
equipment and personnel, is relatively fixed. Accordingly, if our revenue
declines or does not grow as anticipated, we may not be able to correspondingly
reduce our operating expenses in a timely manner. Failure to achieve
anticipated levels of revenue could therefore significantly harm our operating
results for a particular fiscal period.

Our stock price could be extremely volatile and may result in litigation
against us.

The stock market has experienced significant price and volume
fluctuations, and the market price for our common stock has been in the past
and could continue to be volatile. In the past, following periods of
volatility in the market price of a companys securities, securities class
action litigation has often been instituted. Litigation could result in
substantial costs and a diversion of managements attention and resources.

The concentration of ownership of our common stock may have the effect of
delaying or preventing a change of control of us.

Our directors, executive officers and their affiliated companies
beneficially own more than 40% of our outstanding common stock. As a result,
if these stockholders vote as a group, they will have the ability to
significantly influence the election of our directors and the outcome of
corporate actions requiring stockholder approval. This concentration of
ownership may have the effect of delaying or preventing a change of control of
us.

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We have implemented anti-takeover provisions that may discourage a change of
control.

Our certificate of incorporation authorizes the issuance of 20,000,000
shares of preferred stock. Our board of directors has the power to determine
the price and terms of any preferred stock. The ability of our board of
directors to issue one or more series of preferred stock without stockholder
approval could deter or delay unsolicited changes of control by discouraging
open market purchases of our common stock or a non-
negotiated tender or exchange offer for our common stock. Discouraging open
market purchases may be disadvantageous to our stockholders who may otherwise
desire to participate in a transaction in which they would receive a premium
for their shares.

In addition, some provisions of our certificate of incorporation and
by-laws may also discourage a change of control by means of a tender offer,
open market purchase, proxy contest or otherwise. These provisions include:



| |  | a board that is divided into three classes, each of which is elected to serve staggered three year terms;
|- |  | ---------------------------------------------------------------------------------------------------------



| |  | provisions under which only the board of directors or our chief executive officer or secretary may call a special meeting
of the stockholders;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  | provisions which permit the board of directors to increase the number of directors and to fill these positions without a
vote of the stockholders;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  | provisions under which no director may be removed at any time except for cause and by a majority vote of the outstanding
shares of voting stock; and
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  | provisions under which stockholder action may be taken only at a stockholders meeting and not by written consent of the
stockholders.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------

These provisions may have the effect of discouraging takeovers and
encouraging persons seeking to acquire control to negotiate with us.

Risks Relating to Our Industry

We face intense competition from numerous competitors, some of whom have a
significant competitive advantage over us. If we lose our competitive position,
our revenue could decline.

The market for fulfillment, collaboration and inventory management
solutions is intensely competitive, fragmented and subject to rapid
technological change. The principal competitive factors in our market include:



| |  | adherence to emerging Internet-based technology standards;
|- |  | ----------------------------------------------------------



| |  | comprehensiveness of applications;
|- |  | ----------------------------------



| |  | adaptability and flexibility;
|- |  | -----------------------------



| |  | immediate, interactive capability with customer and partner systems;
|- |  | --------------------------------------------------------------------



| |  | financial viability;
|- |  | --------------------



| |  | global capability;
|- |  | ------------------



| |  | references from existing customers;
|- |  | -----------------------------------



| |  | industry domain experience and expertise;
|- |  | -----------------------------------------



| |  | ability to support specific industry requirements;
|- |  | --------------------------------------------------



| |  | ease of application use and deployment;
|- |  | ---------------------------------------



| |  | speed of implementation;
|- |  | ------------------------



| |  | customer service and support; and
|- |  | ---------------------------------



| |  | initial price and total cost of ownership.
|- |  | ------------------------------------------

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Because we offer fulfillment, traditional supply chain, collaboration,
inventory management and supply network execution software, we consider a
number of companies in different market categories to be our competitors. Our
competitors include companies and groups that:



| |  | focus on providing fulfillment applications;
|- |  | --------------------------------------------



| |  | offer enterprise platforms for order management, fulfillment and inventory management; and
|- |  | ------------------------------------------------------------------------------------------



| |  | service internal customers, such as internal information technology groups.
|- |  | ---------------------------------------------------------------------------

We believe that the market for integrated fulfillment, collaboration,
inventory management and supply network execution solutions is still in its
formative stage, and that no currently identified competitor represents a
dominant presence in this market.

We expect competition to increase as a result of software industry
consolidation. New competitors could emerge and rapidly capture market share.
We can give you no assurance that we can maintain our competitive position
against current and potential competitors, especially those with greater name
recognition, comparable or superior products, significant installed customer
bases, long-standing customer relationships or the ability to price products as
incremental add-ons to existing systems. If we lose our competitive position,
our revenue could decline.

The market for our software is characterized by rapid technological change. If
we fail to respond promptly and effectively to technological change and
competitors innovations, our growth and operating results could be harmed.

The market for fulfillment, warehousing, distribution, inventory
management and supply network execution systems experiences rapid technological
change, changing customer needs, frequent new product introductions and
evolving industry standards that may render existing products and services
obsolete. Our growth and future operating results will depend in part on our
ability to enhance existing applications and develop and introduce new
applications or components. These new applications must:



| |  | meet or exceed technological advances in the marketplace;
|- |  | ---------------------------------------------------------



| |  | meet changing customer requirements;
|- |  | ------------------------------------



| |  | respond to competitive products; and
|- |  | ------------------------------------



| |  | achieve market acceptance.
|- |  | --------------------------

Our product development and testing efforts have required, and are
expected to continue to require, substantial investments. Also, we may be
unable to successfully identify new software opportunities and develop and
bring new software to market quickly and efficiently. Our software may not
achieve market acceptance and current or future products may not conform to
industry standards in the markets served. If we are unable to develop and
introduce new and enhanced software in a timely manner, our growth and
operating results could be harmed.

We depend on intellectual property laws, which may not fully protect us from
unauthorized use or misappropriation of our proprietary technologies.

We rely on intellectual property laws, confidentiality procedures and
contractual provisions to protect our proprietary rights in our products and
technology. These measures afford only limited protection to us, particularly
on an international basis. We may be unable to avoid infringement or
misappropriation claims regarding current or future technology, or unable to
adequately deter misappropriation or independent third-party development of our
technology. In addition, policing unauthorized use of our products is
difficult.

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We are unable to determine the extent to which piracy of our software
products exists and software piracy could become a problem. Litigation to
defend and enforce our intellectual property rights could result in substantial
costs and diversion of resources, regardless of the final outcome of such
litigation.









|        |  |                                                           
|------- |  | ----------------------------------------------------------
|ITEM 3. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We market and sell our products in North America, South America, Europe,
the Middle East, Asia and Australia. Revenues outside the United States were
46.6%, 52.2% and 50.4% of our total revenues for the years ended December 31,
2001 and 2002, and for the nine months ended September 30, 2003, respectively.
Most of our foreign subsidiaries sales and expenses are made in local
currencies. International sales denominated in currencies other than the U.S.
dollar are primarily in the Japanese Yen, Singapore dollar and the Euro.
Accordingly, we are exposed to fluctuations in currency exchange rates.
Foreign currency transaction gains (losses) were approximately $(0.5) million,
$1.2 million and $1.0 million for the years ended December 31, 2001 and 2002,
and for the nine months ended September 30, 2003, respectively. Because most
of our sales are currently made in U.S. dollars, a strengthening of the dollar
could make our products less competitive in foreign markets.

Our net assets denominated in currencies other than U.S. dollars as of
September 30, 2003 were approximately $8.5 million. A potential loss in the
value of these net assets resulting from a hypothetical 10% adverse change in
foreign exchange rates would be approximately $0.9 million.

In January 2001, we began a foreign currency-hedging program to hedge
certain nonfunctional currency exposure. Forward currency exchange contracts
are utilized by us to reduce foreign currency exchange risks with the goal of
offsetting foreign currency transaction gains and losses recorded for
accounting purposes with gains and losses realized on the forward contracts.
We do not hold derivative financial instruments for trading or speculative
purposes. At September 30, 2003, we do not have any outstanding foreign
currency exchange contracts.

We used a portion of the proceeds obtained from our August 2000 initial
public offering to repay all outstanding amounts under our revolving credit
facility and term loan, which we subsequently terminated. To the extent that
we enter into a new credit facility in the future, future interest expense
could be subject to fluctuations based on the general level of U.S. interest
rates.









|        |  |                        
|------- |  | -----------------------
|ITEM 4. |  | CONTROLS AND PROCEDURES

Based on their evaluation as of the end of the period covered by this
Quarterly Report on Form 10-Q, the Companys Chief Executive Officer and Chief
Financial Officer have concluded that the Companys disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (the Exchange Act)), are effective to ensure that
information required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange
Commissions rules and forms.

During our fiscal quarter ended September 30, 2003, no change occurred in
our internal control over financial reporting that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.

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PART II. OTHER INFORMATION









|        |  |                                          
|------- |  | -----------------------------------------
|ITEM 2. |  | CHANGES IN SECURITIES AND USE OF PROCEEDS

The Company completed its initial public offering of 1,142,857 million
shares of its common stock pursuant to a Registration Statement on Form S-1
(Registration No. 333-35106, effective August 3, 2000) on August 9, 2000.
Total proceeds from the offering, including the exercise of the over-allotment
option, were approximately $63.9 million net of underwriting discounts and
commissions of approximately $5.0 million and other fees and expenses of
approximately $1.8 million.

From the date of receipt through September 30, 2003, we have used the
proceeds as follows:

Repayment of indebtedness
    $
    16.6 millionAcquisition of businesses
    
    4.4 millionWorking capital
    
    24.2 millionTotal
    $
    45.2 million


The remainder of the proceeds has been invested in investment grade
corporate and government securities and money market funds. We intend to use
the remaining proceeds for research and development activities; expenditures on
sales and marketing, consulting services, and general and administrative
personnel; systems costs; and working capital and general corporate purposes,
including possible acquisitions of, or investments in, businesses and
technologies that are complementary to our business. None of the net proceeds
of the offering were paid by us, directly or indirectly, to any director,
officer or general partner of ours or any of their associates, or to any
persons owning ten percent or more of any class of our equity securities, or
any affiliates of ours.









|        |  |                                 
|------- |  | --------------------------------
|ITEM 6. |  | EXHIBITS AND REPORTS ON FORM 8-K

(a)
    
    Exhibits10.1
    
    Agreement and Plan of Merger between EXE Technologies, Inc.,
SSA Global Technologies, Inc. and Rush Merger Subsidiary, Inc. dated
August 15, 2003 (incorporated herein by reference to Appendix A to
the Companys Preliminary Proxy Statement on Schedule 14a, filed with
the Commission on October 23, 2003).31.1
    
    Certification of the Chief Executive Officer required by Rule
13a-14(a) or Rule 15d-14(a) of the Exchange Act pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer required by Rule
13a-14(a) or Rule 15d-14(a) of the Exchange Act pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(b)
    
    Reports on Form 8-K


On October 24, 2003, the Company filed a current report on Form 8-K under
Item 9. Regulation FD Disclosure (pursuant to Item 12. Results of Operations
and Financial Condition) announcing that on October 24, 2003, the Company
issued a press release with its fiscal 2003 third quarter results.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

EXE TECHNOLOGIES, INCDate: November 14, 2003
    
    By:
    
    /s/  Joseph L. CowanJoseph L. CowanPresident and Chief Executive OfficerDate: November 14, 2003
    
    By:
    
    /s/  Kenneth R. VinesKenneth R. VinesSenior Vice President, Chief Financial
Officer, Secretary and Treasurer


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##### Table of Contents









INDEX TO EXHIBITS

10.1
    
    Agreement and Plan of Merger between EXE Technologies, Inc., SSA Global
Technologies, Inc. and Rush Merger Subsidiary, Inc. dated August 15, 2003
(incorporated herein by reference to Appendix A to the Companys
Preliminary Proxy Statement on Schedule 14a, filed with the Commission on
October 23, 2003).31.1
    
    Certification of the Chief Executive Officer required by Rule 13a-14(a)
or Rule 15d-14(a) of the Exchange Act pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer required by Rule 13a-14(a)
or Rule 15d-14(a) of the Exchange Act pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.


31