Prospectus Summary
This summary does not contain all of the information that you should consider before investing in our common stock. You should read the entire prospectus carefully, especially "Risk Factors" beginning on page 6.
Our Business
We are a leading provider of Internet business collaboration software. Our eMatrix suite of products serves as an Internet platform facilitating collaboration among different departments and geographic locations of global organizations. Our software is also designed to serve as a backbone for an enterprise to collaborate through the Internet with its customers, suppliers and other business partners. Our eMatrix line of products integrates different business processes and facilitates the exchange of information and ideas on activities such as conceptual planning and design of new products, design for manufacturability, plant resource utilization, new product introduction and customer service and support. Additionally, we provide a full line of services, including implementation, training, maintenance and customer support, designed to ensure that our customers successfully utilize our eMatrix products.
The emergence of a global economy over the last several decades and the rapid growth of the Internet are requiring organizations to rapidly respond to a constantly changing business environment. Today, companies understand the need for greater and tighter integration and collaboration among all departments, including engineering, manufacturing, sales and marketing and customer support, to efficiently bring feature-rich products and services to market at competitive prices. Organizations may be hindered in their abilities to interact and exchange information internally and with their customers, suppliers and other business partners due to disparate business processes, differing information technology systems, language barriers, the lack of a reliable and secure environment, network constraints and the prospect of long implementation times for new software solutions. Our eMatrix suite of software products is designed to address these issues.
Our products provide companies with an Internet platform for collaboration within their organizations and with their customers, suppliers and other business partners and allow companies the flexibility and agility to rapidly respond to changing business conditions. Our product features enable our customers to dynamically model, continuously re-evaluate, change and optimize their business processes and content with minimal programming. Customers are also able to define business processes in multiple languages or dialects, thereby facilitating collaboration around the world, while minimizing the problems of misinterpretation or misunderstanding. In addition, we offer our customers off-the-shelf integrations to a wide variety of software products, which allows our customers to leverage their corporate knowledge and existing technology infrastructures and continue to use other best-of-breed applications and point solutions.
Our open-standards Internet architecture that includes extensible markup language technology, or XML, enables our customers to exchange large volumes of different types of data, information, ideas and knowledge regardless of their information technology infrastructures, systems or software. Our eMatrix products provide dynamic access control and high-integrity encryption to protect the confidentiality and integrity of the data, information and ideas being exchanged. Although implementation times for our products vary with the scope of the project, our customers are able to implement specific applications in as little as two weeks, which allows our customers to rapidly realize the benefits of our software.
Our installed customer base represents a wide variety of industries, including aerospace/ defense, automotive, communications, high technology, machinery and medical equipment. Over 300 companies in more than 40 countries worldwide use our eMatrix product suite, including Celestica, Honda, Honeywell, John Deere, Scania, Siemens and 3Com. For the three months ended October 2, 1999, we achieved revenues of $13.9 million and reported an operating loss of $1.2 million and for the year ended July 3, 1999, we had revenues of $41.3 million and an operating loss of $7.2 million.
Our Strategy
We seek to be the world's leading provider of Internet business collaboration software. To accomplish this goal, we intend to:
. extend our technology leadership by accelerating research and development investments;
. expand our business-to-business collaboration capabilities by continuing to enhance the scope of the features and functionality of our eMatrix product line;
. develop business process and industry-focused applications which capture and automate particular business processes;
. broaden our business alliances with systems integrators and distributors and with enterprise, Internet and application software companies;
. leverage our customer base to sell additional products and services, to access our customers' suppliers, customers and other business partners, and to further penetrate our customers' industries; and . expand our global presence to increase our ability to provide our customers with high-quality service in any of their locations.
Our History
We incorporated in Delaware under the name Adra Systems, Inc. in July 1983. We commercially shipped the first version of our business collaboration software in November 1993 and released our first Internet business collaboration software product in March 1997. In October 1997, we changed our name to MatrixOne, Inc., and in May 1998, we sold our legacy design and manufacturing software business, Adra Systems, to focus on our Internet suite of products. We released the current version of our business collaboration suite of products, eMatrix, in June 1999. Our principal executive offices are located at Two Executive Drive, Chelmsford, Massachusetts 01824, and our telephone number is (978) 322-2000. Our Internet address is www.matrixone.com. The information contained on our website is not incorporated by reference in this prospectus.
MatrixOne, eMatrix, eMatrix Advantage, Adaplet, eMatrix Integrations, Matrix Global Advantage, Matrix Systems Administrator, Matrix Business Administrator, MatrixWeb User, Matrix Application Development Kit ADK, CSM and Customer Success Model are trademarks of MatrixOne. All other trademarks or trade names referenced in this prospectus are the property of their respective owners.
The Offering
Shares offered by MatrixOne.................. shares Shares to be outstanding after the offering.. shares Proposed Nasdaq National Market symbol....... MONE Use of proceeds.............................. For general corporate purposes, including working capital and possible acquisitions.
The shares of common stock to be outstanding after the offering exclude:
. 4,261,179 shares issuable upon the exercise of outstanding stock options as of October 2, 1999 at a weighted average exercise price of $1.69; and . 56,250 shares issuable upon the exercise of an outstanding warrant as of October 2, 1999 at an exercise price of $1.33 per share.
Unless otherwise specifically stated, information throughout this prospectus assumes:
. no exercise of the underwriters' over-allotment option;
. the conversion of all outstanding shares of our convertible preferred stock into an aggregate of 8,920,927 shares of common stock immediately prior to the closing of the offering;
. the effectiveness of a -for- stock split of the common stock immediately prior to the date of this prospectus; and . the effectiveness of our Second Amended and Restated Certificate of Incorporation to increase our authorized common stock to 100,000,000 shares and to authorize 5,000,000 shares of undesignated preferred stock and the adoption of our Amended and Restated By-laws as of the closing of the offering.
Summary Consolidated Financial Data The following table summarizes our consolidated statements of operations data. In May 1998, we sold our legacy design and manufacturing software business, Adra Systems, to focus on our Internet-enabled suite of software products. The financial results of this divested business are reflected in our consolidated financial statements as discontinued operations.
Shares used in computing pro forma basic and diluted net income (loss) per share give effect to the conversion of all outstanding shares of our convertible preferred stock into shares of common stock, as if the conversion had occurred on the original date of issuance.
Year Ended Three Months Ended
July 1, June 29, June 28, June 27, July 3, October 3, October 2,
1995 1996 1997 1998 1999 1998 1999
(in thousands, except per share data)
Consolidated Statements of Operations Data: Total revenues.......... $ 1,885 $ 6,130 $12,275 $ 21,179 $41,346 $ 8,200 $13,881 Gross profit............ 521 3,608 8,469 13,351 23,556 4,760 7,849 Total operating expenses............... 4,692 10,243 12,873 26,203 31,035 6,812 9,142 Net loss from continuing operations............. (4,171) (6,635) (3,669) (10,876) (7,235) (1,947) (1,195) Net income (loss) from discontinued operations............. 3,816 (319) 1,777 8,684 -- -- -- Net loss................ $ (355) $(6,954) $(1,892) $ (2,192) $(7,235) $(1,947) $(1,195) Basic and diluted net income (loss) per share: Continuing operations... $ (3.56) $ (5.52) $ (2.95) $ (8.64) $ (4.90) $ (1.53) $ (0.69) Discontinued operations............. 3.26 (0.27) 1.43 6.90 -- -- -- Net loss................ $ (0.30) $ (5.79) $ (1.52) $ (1.74) $ (4.90) $ (1.53) $ (0.69) Shares used in computation............ 1,172 1,202 1,243 1,259 1,476 1,276 1,734 Pro forma basic and diluted net income (loss) per share: Continuing operations... $ (0.67) $ (1.05) $ (0.58) $ (1.30) $ (0.78) $ (0.21) $ (0.11) Discontinued operations............. 0.61 (0.05) 0.28 1.04 -- -- -- Net loss................ $ (0.06) $ (1.10) $ (0.30) $ (0.26) $ (0.78) $ (0.21) $ (0.11) Shares used in computation............ 6,262 6,291 6,333 8,350 9,323 9,072 10,655 The following table presents a summary of our balance sheet as of October 2, 1999:
. on an actual basis;
. on a pro forma basis after giving effect to the conversion of our outstanding convertible preferred stock into 8,920,927 shares of common stock immediately prior to the closing of the offering and the filing of our Second Amended and Restated Certificate of Incorporation as of the closing of the offering authorizing 100,000,000 shares of common stock and 5,000,000 shares of undesignated preferred stock; and . on a pro forma as adjusted basis to reflect the sale of shares of common stock at an assumed initial public offering price of $ per share, after deducting the estimated underwriters' discounts and commissions and estimated offering expenses.
As of October 2, 1999 Pro Forma Actual Pro Forma As Adjusted (in thousands)
Consolidated Balance Sheet Data: Cash and equivalents............................. $ 7,594 $ 7,594 $ Working capital.................................. 7,047 7,047 Total assets of continuing operations............ 27,140 27,140 Redeemable convertible preferred stock........... 17,015 -- Total stockholders' equity (deficit)............. (6,710) 10,305