THE DESCARTES SYSTEMS GROUP INC.

On December 21, 2010, we announced that the TSX had approved the purchase by us of up to an aggregate of
4,997,322 common shares of Descartes pursuant to a normal course issuer bid. The purchases can occur from time
to time until December 22, 2011, through the facilities of the TSX and/or the NASDAQ, if and when we consider
advisable. As of March 11, 2011 there were no purchases made pursuant to this normal course issuer bid.
On December 18, 2009, Descartes announced that it was making a normal course issuer bid to purchase up to
5,458,773 common shares of Descartes through the facilities of the TSX and/or NASDAQ (the "2009 Normal
Course Issuer Bid"). Descartes did not purchase any shares under the bid, which commenced on December 23,
2009 and expired on December 22, 2010.
On October 20, 2009, we closed a bought-deal public share offering in Canada which raised gross proceeds of
CAD 40,002,300 (equivalent to approximately $38.4 million at the time of the transaction) from a sale of
6,838,000 common shares at a price of CAD 5.85 per share. The underwriters also exercised an over-allotment
option on October 20, 2009 to purchase an additional 1,025,700 common shares (in aggregate, 15% of the
offering) at CAD 5.85 per share comprised of 332,404 common shares from Descartes and 693,296 common
shares from certain executive officers and directors of Descartes. Gross proceeds to us from the exercise of the
over-allotment option were CAD 1,944,563 (equivalent to approximately $1.9 million at the time of the
transaction). In addition, we received an aggregate of approximately CAD 1,277,648 (equivalent to approximately
$1.2 million at the time of the transaction) in proceeds from certain executive officers and directors of Descartes
from their exercise of employee stock options to satisfy their respective obligations under the over-allotment
option.
On November 30, 2004, we announced that our board of directors had adopted a shareholder rights plan (the
“Rights Plan”) to ensure the fair treatment of shareholders in connection with any take-over offer, and to provide
our board of directors and shareholders with additional time to fully consider any unsolicited take-over bid. We
did not adopt the Rights Plan in response to any specific proposal to acquire control of the company. The Rights
Plan was approved by the TSX and was originally approved by our shareholders on May 18, 2005. The Rights
Plan took effect as of November 29, 2004. On May 29, 2008, our shareholders approved certain amendments to
the Rights Plan and approved the Rights Plan continuing in effect. The Rights Plan will expire at the termination
of our annual shareholders’ meeting in calendar year 2011 unless its continued existence is ratified by the
shareholders before such expiration. We understand that the Rights Plan is similar to plans adopted by other
Canadian companies and approved by their shareholders.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
Our consolidated financial statements included herein and accompanying notes are prepared in accordance with
GAAP. Preparing financial statements requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are affected by
management’s application of accounting policies. Estimates are deemed critical when a different estimate could
have reasonably been used or where changes in the estimates are reasonably likely to occur from period to period
and would materially impact our financial condition or results of operations. Our significant accounting policies
are discussed in Note 2 to the fiscal 2011 consolidated financial statements.
Our management has discussed the development, selection and application of our critical accounting policies with
the audit committee of the board of directors. In addition, the board of directors has reviewed the accounting
policy disclosures in this MD&A.
The following discusses the critical accounting estimates and assumptions that management has made under these
policies and how they affect the amounts reported in the fiscal 2011 consolidated financial statements:
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