MANUGISTICS ANNOUNCES SECOND QUARTER FISCAL 2005 RESULTS

Manugistics Group, Inc. (NASDAQ:MANU), a leading global provider of demand and supply chain management solutions, today reported results for its fiscal 2005 second quarter ended August 31, 2004.

For the second quarter, total revenue was $51.3 million, down 14 percent from $59.7 million in the prior year quarter. Software revenue was $11.1 million, down 38 percent from $17.8 million in the prior year quarter. Support revenue was $21.3 million compared to $21.1 million in the prior year quarter. Product revenue, which is composed of software and support revenue, was 63 percent of total revenue, compared to 65 percent of total revenue in the prior year quarter. Services revenue was $16.4 million, down 11 percent from $18.4 million in the prior year quarter.

For the second quarter, the Company reported a GAAP net loss of $17.1 million, or $.21 per basic and diluted share, compared to a GAAP net loss of $8.0 million, or $.11 per basic and diluted share, in the prior year quarter. The Company reported a GAAP operating loss of $15.0 million compared to a GAAP operating loss of $4.2 million in the prior year quarter. The GAAP net loss and the GAAP operating loss for the quarter ended August 31, 2004 include a restructuring charge of $6.2 million incurred by the Company for restructuring plans approved by August 19, 2004. This charge consists primarily of $2.0 million, to be paid over multiple quarters, for severance and other benefits related to headcount reductions and $4.2 million for lease abandonment and other charges associated with the restructuring plans, including cash expenditures of $3.5 million to be paid through 2007.

For the second quarter, the Company reported adjusted operating loss of $3.5 million, compared to adjusted operating income of $1.2 million in the prior year quarter. The Company reported adjusted net loss of $5.6 million, or $.07 per basic and diluted share, for the second quarter, compared to adjusted net loss of $2.6 million, or $.04 per basic and diluted share, in the prior year quarter.

Adjusted operating income or loss, adjusted net loss and adjusted net loss per basic and diluted share referred to in this press release are non-GAAP measures and exclude the following items: amortization of intangibles and acquired technology, restructuring and lease abandonment benefits and charges and non-cash stock option compensation charges. A reconciliation of GAAP results to adjusted results has been provided in the financial statement tables following the text of this press release. For further information, please refer to the section of the press release titled, "Reasons for Presentation of Non-GAAP Financial Measures."

"Since I arrived, I`ve worked with our senior management team to assess Manugistics` products, markets and clients and have concluded that Manugistics has a strong foundation on which to grow," said Joe Cowan, the new chief executive officer. "I have added two experienced executives to my existing senior management team and am confident that together we can solidify Manugistics` leadership position. We have developed a more focused product strategy and are strategically restructuring the organization to align our operating expense levels at a baseline revenue run rate that will allow us to be profitable. We are taking these steps in response to decreased spending and prolonged sales cycles for application software. We intend to return to profitability as quickly as possible and to seek opportunities to make investments in focused areas for future growth."

As a result of the above restructuring plans, the Company expects to incur additional charges of approximately $8.0 million to $10.0 million in the second half of fiscal 2005, that will result in future cash expenditures consisting primarily of $6.0 million to $7.5 million for lease abandonment charges and $2.0 million to $2.5 million in severance and other benefits associated with further reductions in headcount. Employee headcount was 815 as of August 31, 2004, down from 865 as of May 31, 2004. The Company expects headcount to be approximately 725 at the end of its fourth quarter fiscal 2005. The Company anticipates quarterly cost savings of approximately $4.0 million to $5.0 million by its fourth quarter fiscal 2005, as a result of the second quarter restructuring plans.

Business Metrics - Quarter Ended August 31, 2004

-- The Company closed 18 significant software license transactions - software license transactions of $100,000 or greater.

-- The Company closed 3 software license transaction of $1 million or greater.

-- The average selling price for significant software transactions was approximately $533,000.

-- 26 percent of software revenue came from new clients.

-- 43 percent of software revenue came from international sales.

-- Cash flows from operations were a negative $6.8 million.

-- Cash, marketable securities and investments were approximately $137.9 million as of August 31, 2004, down from $148.7 million as of May 31, 2004.

-- Days Sales Outstanding (DSO) for receivables were 75 days compared to 81 days in the first quarter.

Going forward, Manugistics will not provide guidance on software revenue, total revenue, operating performance or net performance nor does the company intend to provide performance updates.

Other Highlights and Developments:
Second Quarter Global Client Wins: The Company signed significant software license transactions across key industries in the Americas, Europe and Asia, with second quarter global wins including, among others: Cingular Wireless, BAE SYSTEMS, Electrocomponents plc, The General Services Administration - Federal Supply Service, JCPenney, Marriott International, Inc., Princess Cruise Lines and Vodafone UK.

New Leadership: In July, Manugistics named Joe Cowan as CEO, and in August, he was appointed by the Board of Directors to serve as a Class III Director with a term expiring in 2007. Cowan recently announced his executive management team.
-- Jeffrey L. Holmes, Executive Vice President & President of Worldwide Sales Operations, will lead all worldwide sales, pre-sales and sales operations.

-- Raghavan Rajaji continues as Executive Vice President & Chief Financial Officer.