Filed By: Frontstep, Inc.
Pursuant to Rule 425 under the
Securities Act of 1933 and deemed
filed pursuant to Rule 14a-12 under
the Securities Exchange Act
Subject Company: Frontstep, Inc.
Commission File No.: 0-19024
On November 25, 2002, Frontstep, Inc. issued letters to its customers
and business partners regarding the proposed merger (the "Merger") of Frontstep,
Inc. with a wholly owned subsidiary of MAPICS, Inc.
A copy of each of these letters are being filed as Appendix A and B to
this filing, and are incorporated herein by reference. A transcript of the
communication referenced in each of these letters is being filed as Appendix C.
***********
Additional Information and Where to Find It
The proposed transaction will be submitted to MAPICS' and Frontstep's
shareholders for their consideration, and MAPICS will file with the SEC a
registration statement containing the joint proxy statement-prospectus to be
used by MAPICS and Frontstep to solicit their respective shareholders' approval
of the proposed transaction, as well as other relevant documents concerning the
proposed transaction. Shareholders of MAPICS and Frontstep are urged to read the
registration statement and the joint proxy statement-prospectus regarding the
proposed transaction when they become available and any other relevant documents
filed with the SEC, as well as any amendments or supplements to those documents,
because they will contain important information. You will be able to obtain a
free copy of the joint proxy statement-prospectus included in the registration
statement, as well as other filings containing information about MAPICS and
Frontstep, at the SEC's Internet site (http://www.sec.gov).
Copies of the joint proxy statement-prospectus and the SEC filings that
will be incorporated by reference in the joint proxy statement-prospectus can
also be obtained, without charge, by directing a request to: Martin D. Avallone,
MAPICS, Inc., 1000 Windward Parkway, Suite 100, Alpharetta, Georgia 30005
(678-319-8000).
Interests of Certain Persons in the Merger
MAPICS and Frontstep and their respective directors and executive officers may
be deemed to be participants in the solicitation of proxies from the
shareholders of MAPICS and Frontstep in connection with the merger. Information
regarding those participants is
included in the proxy statements for MAPICS' and Frontstep's most recent annual
shareholders' meetings, which are available at the SEC's website. Additional
information regarding the interests of those participants may be obtained by
reading the joint proxy statement-prospectus regarding the proposed transaction
when it becomes available.
Forward Looking Statements
Statements in this press release or otherwise attributable to the
Company regarding the Company's business which are not historical facts,
including those regarding benefits associated with the contemplated transaction,
are forward-looking statements made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Words such as "will,"
"committed," "plans," "leverage," "potential," "sustain," "strategy,"
"investing," "expect," "anticipate," "believes" and similar expressions as well
as statements regarding the expected amount of special charges and anticipated
accretion are intended to identify such forward-looking statements. These
forward-looking statements are not guarantees of performance and are inherently
subject to risks and uncertainties, none of which can be predicted or
anticipated. Future events and actual results, financial or otherwise, could
differ materially from those contained herein. Important factors that could
cause the actual results to differ materially from the Company's expectations
include the ability of the parties to consummate the transaction, including
obtaining acceptable financing and other approvals necessary, the ability of the
parties to successfully manage and establish relationships with third parties,
the ability of the parties to successfully and profitably integrate products and
operations, competition in the market for business software in the manufacturing
industry, as well as other factors set forth from time to time in the Company's
reports filed with the Securities and Exchange Commission. The Company
undertakes no obligation to revise or publicly update such forward-looking
statements whether as result of new information or otherwise.
Appendix A
[FRONTSTEP LOGO]
November 25, 2002
MAPICS TO ACQUIRE FRONTSTEP AND
CREATE LARGEST GLOBAL MIDRANGE ERP SOLUTIONS PROVIDER
Dear Valued Customer:
I am pleased to announce that Frontstep and MAPICS have announced a definitive
agreement whereby MAPICS will acquire Frontstep. This announcement is exciting
for the customers, prospects, shareholders, employees and partners of both our
organizations.
As you know, the business environment has been very difficult for the past
couple of years, and the marketplace in which we operate continues to change.
The consolidation of the maturing software industry creates a situation in
which, increasingly, larger companies with greater resources will dominate. This
compels us to consider how best to protect your investments in our SyteLine
suite of products.
This combination of two very seasoned and successful companies creates a
financially stable business that has the strength and resources to continue to
support our customer base while investing in product advancements.
Frontstep and MAPICS share a common vision, common values, and a strong
commitment to helping our customers succeed. Current and future customers will
benefit from the proven solutions, manufacturing expertise and employee talent
of the combined company. Our unwavering dedication to teamwork and quality will
help ensure a seamless transition for all customers.
We would have preferred making this announcement while we were with so many of
you at Frontstep Forum, but since that was not possible, I encourage each of you
to read the enclosed news release and to view the video message from MAPICS
President and CEO Dick Cook and me at www.frontstep.com/mapics .
This transaction will create the largest provider of extended ERP, CRM and
supply chain management solutions that is committed exclusively to solving the
unique challenges of manufacturers. I am truly excited about the opportunities
that lie ahead, and appreciate your continued support.
Sincerely,
/s/ Stephen A. Sasser
Stephen A. Sasser President
and CEO Frontstep, Inc.
Appendix B
Frontstep and MAPICS have signed a definitive agreement whereby MAPICS will
acquire Frontstep. The actual closing of this transaction is expected to occur
in about 90 days and is subject to normal conditions, including regulatory
clearance and approval by MAPICS and Frontstep shareholders. We fully expect to
receive approval.
Frontstep has been investigating and pursuing various strategic opportunities
for the company for some time. We have evaluated numerous options, and have
determined this is the best path to take.
We have been operating in a very difficult business environment and the markets
in which we operate continue to change. One of the most definitive market forces
is the consolidation of a maturing software industry. As this consolidation
continues, it is clear that companies with a greater depth of resources at their
disposal will dominate.
Today's announcement takes Frontstep down a prudent path that creates a
financially stable business with the strength and resources to continue to
support our existing customers, leverage the investments made in Syteline 7 and
our extended suite, and provide better career opportunities for many of our
employees.
Additionally, a balanced sales channel strategy is a key synergy for the
companies. Moving forward, the combined company will benefit from the experience
and focus of both direct and indirect channels around the world. Further, you
should be encouraged by the fact that MAPICS is very skilled in supporting an
indirect partner network.
Through this decision, we have made our destiny a matter of choice, not chance.
By combining with MAPICS now, we choose to become a major force in the
manufacturing software industry. I'm excited about the future prospects for the
combined companies.
Until the transaction is finalized, the Frontstep team will remain focused on
our individual goals and objectives. An important element of this is our
continued support of you - our Business Partners. Each of us must do our part to
maintain business as usual through this interim period until the closing. The
successful completion of this opportunity does depend on our continued
dedication and professionalism. Today's announcement naturally raises some
uncertainties and questions; but it also alleviates others. We respect your
concerns, and going forward we will do everything we can to keep you informed.
This morning, we sent correspondence regarding this announcement to our
customers. Copies of this communication are attached to this email and can be
found at https://secured.frontstep.com/intranet.
Also, Dick Cook (MAPICS president & CEO) and I have collaborated on a customer
video that is available at http://www.frontstep.com/mapics. Please refer to
these communications, the attached press release and the Business Partner FAQ to
learn more.
I urge you to focus on the positive aspects of this announcement and bring a
sense of enthusiasm to the opportunities it will create.
Thank you,
Steve Sasser
Appendix C
Transcript of Communications to Customers and Business Partners
Hello, I am Steve Sasser, President and CEO of Frontstep.
Frontstep and MAPICS have announced a definitive agreement whereby MAPICS will
acquire Frontstep. This announcement is exciting for the customers, prospects,
shareholders, employees and partners of both our organizations.
For more than 20 years, Frontstep has focused on three fundamentals: A
dedication to the manufacturing market; a foundation based on ERP; and a
commitment to help our customers improve their business.
These fundamentals were recently reinforced at Frontstep Forum. More than one
thousand manufacturing customers from around the world came together to work
with Frontstep, extend their ERP solutions, and learn more about SyteLine 7.
Like Frontstep, MAPICS has been focused on these same fundamentals for nearly 25
years.
As you know, the business environment has been very difficult, and the
marketplace in which we operate continues to change. The consolidation of the
maturing software industry creates a situation in which, increasingly, larger
companies with greater resources will dominate. When brought together, MAPICS
and Frontstep will be stronger than either company alone. By virtue of sheer
size and dedicated focus on this market, we will create a better opportunity for
our manufacturing customers.
Both companies bring value. MAPICS provides financial strength and stability, as
well as a long history of creating solutions on the IBM platform. Frontstep
brings a strong product vision and strategy, along with a comprehensive
enterprise solution based on the Microsoft .NET platform. Comments received from
existing customers, prospective customers, and industry observers validate that
we are on the right track with this product strategy. In fact, at Frontstep
Forum, more than a hundred of our current customers told us they're ready to
take the next step and move forward with SyteLine 7.
Together, Frontstep and MAPICS will be better positioned to provide our combined
customer base of more than 10,000 manufacturing sites with the service and
support they need. Together, the companies will have greater knowledge and
expertise to help manufacturers create real business value. And together, the
companies will have the financial strength to continue investing in and
delivering extended enterprise solutions for manufacturers.
Now, to share with you some background about MAPICS and his excitement about the
opportunity, here is Dick Cook, President and CEO of MAPICS.
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Thank you, Steve. And let me be the first within MAPICS to say "Wow!" What an
opportunity this is. Like Steve, I am very excited about bringing Frontstep and
MAPICS together as the leading solution provider focused exclusively on solving
problems for manufacturers around the world. Many of you may already know
something about MAPICS. But I'd like to share with you a few of our most recent
news items.
First, we are extremely well-positioned financially. Despite the difficult
economic times we've all faced, we've generated six consecutive quarters of
operating profit. MAPICS generated $31M in cash from operations last year. We
were also able to pay down nearly $20M of our debt and ended the year debt-free,
with almost $24M in cash.
We have entered into strong partnership arrangements with IBM and with Microsoft
to make sure we have access to the latest technology for our customers. We
launched a number of new or upgraded solutions across our entire suite of
offerings during the last year - all designed to solve business problems for
manufacturers. And we refocused our organization around delivery of solutions to
help customers become world-class manufacturers, those who achieve best-in-class
performance even in tough economic times.
We view the SyteLine suite as a powerful addition to the MAPICS solution
line-up. We intend to aggressively pursue the continued advancement of SyteLine
solutions within the new MAPICS. Let me say that again: we intend to
aggressively develop SyteLine solutions going forward.
Most importantly, MAPICS has an unshakable commitment to providing world-class
customer support. It's evident in the programs we've created, the attitude and
actions of our employees and in the reputation we've earned throughout the
industry. Analysts have ranked us best in the industry for it. And I'm
personally committed to maintaining that level of support. The resources of the
combined organization will provide the market strength to ensure that support
continues on behalf of ALL MAPICS and Frontstep customers.
The acquisition is not complete, but it does have the full support of both
companies and their boards. We expect to have shareholder and regulatory
approvals within the next 90 days.
We have much to do during that time as we begin the integration planning
process. We may not have all the answers today as to what the new MAPICS will
look like. But I can tell you this: it will be a strong organization, managed by
a team built from the best resources of the MAPICS and Frontstep organizations,
and focused exclusively on providing world-class solutions to manufacturers.
So, in closing, we're excited about having you as a customer, and look forward
to helping you with your success.
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