##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from                      to
 Commission File Number: 0-27876
 JDA SOFTWARE GROUP, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    86-0787377
(I.R.S. Employer
Identification No.)
 14400 North 87 th Street
Scottsdale, Arizona 85260
(480) 308-3000
(Address and telephone number of principal executive offices)
 þ o
 o o
  Large accelerated filer oAccelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### 



JDA SOFTWARE GROUP, INC.
 FORM 10-Q
 TABLE OF CONTENTS
 Page No.PART I: INTERIM FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (unaudited)Condensed Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009
    
    
    3Condensed Consolidated Statements of Operations for the Three Months Ended
March 31, 2010 and March 31, 2009
    
    
    4Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three
Months Ended March 31, 2010 and March 31, 2009
    
    
    5Condensed Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2010 and March 31, 2009
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    37Item 4.
    
    Controls and Procedures
    
    
    38PART II: OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    39Item 1A.
    
    Risk Factors
    
    
    39Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    50Item 3.
    
    Defaults Upon Senior Securities
    
    
    51Item 4.
    
    Reserved
    
    
    51Item 5.
    
    Other Information
    
    
    51Item 6.
    
    Exhibits
    
    
    51Signature
    
    
    52EX-10.1EX-10.2EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



PART I: FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 JDA SOFTWARE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts, unaudited)
 March 31,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    155,817
    
    
    $
    75,974Restricted cash
    
    
    11,698
    
    
    
    287,875Accounts receivable, net
    
    
    107,881
    
    
    
    68,883Income tax receivable
    
    
    1,050
    
    
    
    Deferred tax asset
    
    
    57,828
    
    
    
    19,142Prepaid expenses and other current assets
    
    
    29,705
    
    
    
    15,667Total current assets
    
    
    363,979
    
    
    
    467,541Non-Current Assets:Property and equipment, net
    
    
    43,296
    
    
    
    40,842Goodwill
    
    
    201,316
    
    
    
    135,275Other Intangibles, net:Customer-based intangibles
    
    
    167,395
    
    
    
    99,264Technology-based intangibles
    
    
    44,264
    
    
    
    20,240Marketing-based intangibles
    
    
    13,960
    
    
    
    157Deferred tax asset
    
    
    268,821
    
    
    
    44,350Other non-current assets
    
    
    17,154
    
    
    
    13,997Total non-current assets
    
    
    756,206
    
    
    
    354,125Total Assets
    
    $
    1,120,185
    
    
    $
    821,666LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    11,063
    
    
    $
    7,192Accrued expenses and other liabilities
    
    
    74,068
    
    
    
    45,523Income taxes payable
    
    
    
    
    
    
    3,489Deferred revenue
    
    
    127,905
    
    
    
    65,665Total current liabilities
    
    
    213,036
    
    
    
    121,869Non-Current Liabilities:Long-term debt
    
    
    272,333
    
    
    
    272,250Accrued exit and disposal obligations
    
    
    6,458
    
    
    
    7,341Liability for uncertain tax positions
    
    
    14,215
    
    
    
    8,770Deferred revenue
    
    
    28,942
    
    
    
    Total non-current liabilities
    
    
    321,948
    
    
    
    288,361Total Liabilities
    
    
    534,984
    
    
    
    410,230Commitments and Contingencies (Note 8)Stockholders Equity:Preferred stock, $.01 par value; authorized 2,000,000 shares; none
issued or outstanding
    
    
    
    
    
    
    Common stock, $.01 par value; authorized 50,000,000 shares; issued
43,528,992 and 36,323,245 shares, respectively
    
    
    435
    
    
    
    363Additional paid-in capital
    
    
    553,705
    
    
    
    361,362Deferred compensation
    
    
    (15,906
    )
    
    
    (5,297
    )Retained earnings
    
    
    69,746
    
    
    
    74,014Accumulated other comprehensive income
    
    
    2,706
    
    
    
    3,267Less treasury stock, at cost, 1,901,490 and 1,785,715 shares, respectively
    
    
    (25,485
    )
    
    
    (22,273
    )Total stockholders equity
    
    
    585,201
    
    
    
    411,436Total liabilities and stockholders equity
    
    $
    1,120,185
    
    
    $
    821,666
  3




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##### Table of Contents



JDA SOFTWARE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except earnings per share data, unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009REVENUES:Software licenses
    
    $
    24,437
    
    
    $
    14,357Subscriptions and other recurring revenues
    
    
    4,287
    
    
    
    968Maintenance services
    
    
    57,060
    
    
    
    42,997Product revenues
    
    
    85,784
    
    
    
    58,322Consulting services
    
    
    43,002
    
    
    
    23,034Reimbursed expenses
    
    
    2,845
    
    
    
    1,977Service revenues
    
    
    45,847
    
    
    
    25,011Total revenues
    
    
    131,631
    
    
    
    83,333COST OF REVENUES:Cost of software licenses
    
    
    1,008
    
    
    
    602Amortization of acquired software technology
    
    
    1,576
    
    
    
    1,008Cost of maintenance services
    
    
    12,033
    
    
    
    10,549Cost of product revenues
    
    
    14,617
    
    
    
    12,159Cost of consulting services
    
    
    35,269
    
    
    
    19,382Reimbursed expenses
    
    
    2,845
    
    
    
    1,977Cost of service revenues
    
    
    38,114
    
    
    
    21,359Total cost of revenues
    
    
    52,731
    
    
    
    33,518GROSS PROFIT
    
    
    78,900
    
    
    
    49,815OPERATING EXPENSES:Product development
    
    
    17,277
    
    
    
    12,573Sales and marketing
    
    
    21,112
    
    
    
    14,252General and administrative
    
    
    17,697
    
    
    
    11,026Amortization of intangibles
    
    
    8,566
    
    
    
    6,076Restructuring charges
    
    
    7,758
    
    
    
    1,430Acquisition-related costs
    
    
    6,743
    
    
    
    Total operating expenses
    
    
    79,153
    
    
    
    45,357OPERATING INCOME (LOSS)
    
    
    (253
    )
    
    
    4,458Interest expense and amortization of loan fees
    
    
    (6,086
    )
    
    
    (239
    )Interest income and other, net
    
    
    1,123
    
    
    
    (243
    )INCOME (LOSS) BEFORE INCOME TAXES
    
    
    (5,216
    )
    
    
    3,976Income tax (provision) benefit
    
    
    948
    
    
    
    (1,332
    )NET INCOME (LOSS)
    
    $
    (4,268
    )
    
    $
    2,644BASIC EARNINGS (LOSS) PER SHARE
    
    $
    (.11
    )
    
    $
    .08DILUTED EARNINGS (LOSS) PER SHARE
    
    $
    (.11
    )
    
    $
    .08SHARES USED TO COMPUTE:Basic earnings (loss) per share
    
    
    39,343
    
    
    
    34,961Diluted earnings (loss) per share
    
    
    39,343
    
    
    
    35,075
  4




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##### Table of Contents



JDA SOFTWARE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009NET INCOME (LOSS)
    
    $
    (4,268
    )
    
    $
    2,644OTHER COMPREHENSIVE LOSS:Foreign currency translation loss
    
    
    (561
    )
    
    
    (614
    )Total other comprehensive loss
    
    
    (561
    )
    
    
    (614
    )COMPREHENSIVE INCOME (LOSS)
    
    $
    (4,829
    )
    
    $
    2,030
  5




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JDA SOFTWARE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
 Three MonthsEnded March 31,2010
    
    
    2009OPERATING ACTIVITIES:Net income (loss)
    
    $
    (4,268
    )
    
    $
    2,644Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization
    
    
    13,148
    
    
    
    9,411Amortization of loan origination fees, debt issuance costs and original issue discount
    
    
    427
    
    
    
    Share-based compensation expense
    
    
    3,277
    
    
    
    1,410Net gain on disposal of property and equipment
    
    
    (5
    )
    
    
    (16
    )Deferred income taxes
    
    
    (2,546
    )
    
    
    1,007Changes in assets and liabilities, net of effects from business acquisition:Accounts receivable
    
    
    (7,211
    )
    
    
    13,594Income tax receivable
    
    
    1,076
    
    
    
    (848
    )Prepaid expenses and other current assets
    
    
    (7,889
    )
    
    
    (2,964
    )Accounts payable
    
    
    550
    
    
    
    4,474Accrued expenses and other liabilities
    
    
    (11,101
    )
    
    
    (15,422
    )Income tax payable
    
    
    (2,127
    )
    
    
    117Deferred revenue
    
    
    28,864
    
    
    
    19,648Net cash provided by operating activities
    
    
    12,195
    
    
    
    33,055INVESTING ACTIVITIES:Change in restricted cash
    
    
    276,177
    
    
    
    Purchase of i2 Technologies, Inc
    
    
    (213,427
    )
    
    
    Payment of direct costs related to prior acquisitions
    
    
    (850
    )
    
    
    (817
    )Purchase of other property and equipment
    
    
    (533
    )
    
    
    (1,003
    )Proceeds from disposal of property and equipment
    
    
    17
    
    
    
    16Net cash provided by (used in) investing activities
    
    
    61,384
    
    
    
    (1,804
    )FINANCING ACTIVITIES:Issuance of common stock  equity plans
    
    
    10,904
    
    
    
    2,506Purchase of treasury stock and other, net
    
    
    (3,392
    )
    
    
    (3,219
    )Net cash provided by (used in) financing activities
    
    
    7,512
    
    
    
    (713
    )Effect of exchange rates on cash
    
    
    (1,248
    )
    
    
    (219
    )Net increase in cash and cash equivalents
    
    
    79,843
    
    
    
    30,319CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    75,974
    
    
    
    32,696CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    155,817
    
    
    $
    63,015
  6




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JDA SOFTWARE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
 Three MonthsEnded March 31,2010
    
    
    2009SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for income taxes
    
    $
    4,745
    
    
    $
    1,096Cash paid for interest
    
    $
    427
    
    
    $
    43Cash received for income tax refunds
    
    $
    928
    
    
    $
    415Acquisition of i2 Technologies, Inc.Identifiable assets acquired:Current assets acquired
    
    $
    300,097Property and equipment acquired
    
    
    3,116Customer-based intangibles
    
    
    76,200Technology-based intangibles
    
    
    25,600Marketing-based intangibles
    
    
    14,300Long-term deferred tax assets acquired
    
    
    218,322Other non-current assets acquired
    
    
    3,925Total identifiable assets acquired
    
    
    641,560Goodwill
    
    
    66,041Total assets acquired
    
    
    707,601Liabilities assumed:Deferred revenue assumed
    
    
    (62,614
    )Other current liabilities assumed
    
    
    (41,128
    )Non-current liabilities assumed
    
    
    (4,105
    )Total liabilities assumed
    
    
    (107,847
    )Net assets acquired from i2 Technologies, Inc.
    
    $
    599,754Merger consideration to acquire i2 Technologies, Inc.Fair value of JDA common stock issued as merger consideration
    
    $
    167,979Cash merger consideration
    
    
    431,775Total merger consideration to acquire i2 Technologies, Inc.
    
    $
    599,754Cash merger consideration
    
    $
    431,775Less cash acquired from i2 Technologies
    
    
    218,348Cash expended to acquire i2 Technologies, Inc.
    
    $
    213,427
  7




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JDA SOFTWARE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except percentages, shares, per share amounts, or as otherwise stated)
(unaudited)
 1. Basis of Presentation
    2. Acquisition of i2 Technologies, Inc.
    8




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Supply Chain
  Weighted AverageUseful Life
    
    
    Amortization PeriodCash
    
    $
    218,348Trade accounts receivable acquired
    
    
    31,711Other current assets acquired
    
    
    50,038Property and equipment acquired
    
    
    3,116Customer-based intangibles
    
    
    76,200
    
    
    
    1 to 7 years
    
    
    6 yearsTechnology-based intangibles
    
    
    25,600
    
    
    7 years
    
    
    7 yearsMarketing-based intangibles
    
    
    14,300
    
    
    5 years
    
    
    5 yearsLong-term deferred tax assets acquired
    
    
    218,322Other non-current assets
    
    
    3,925Total assets acquired
    
    
    641,560Goodwill
    
    
    66,041Total assets acquired
    
    
    707,601Deferred revenue assumed
    
    
    (62,614
    )Other current liabilities assumed
    
    
    (41,128
    )Other non-current liabilities assumed
    
    
    (4,105
    )Total liabilities assumed
    
    
    (107,847
    )Net assets acquired from i2 Technologies, Inc.
    
    $
    599,754
   9




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##### Table of Contents



Three Months Ended
    
    Three Months EndedMarch 31, 2010
    
    March 31, 2009Total revenues
    
    $
    146,657
    
    
    $
    139,709Net loss
    
    $
    (18,703
    )
    
    $
    (3,527
    )Basic loss per share
    
    $
    (0.45
    )
    
    $
    (0.09
    )Diluted loss per share
    
    $
    (0.45
    )
    
    $
    (0.09
    )
  Revenues
    
    Earnings (Loss)i2operating results from January 28, 2010 to March 31, 2010
    
    $
    37,261
    
    
    $
    *i2 operating results from January 1, 2010 to March 31, 2010
    
    $
    52,287
    
    
    $
    *i2 operating results from January 1, 2009 to March 31, 2009
    
    $
    56,376
    
    
    $
    1,871
 
 *
    
    We are unable to provide separate disclosure of the earnings (loss) of i2 from January
28, 2010 (date of acquisition) to
March 31, 2010 and the pro-forma results from January 1, 2010 to March 31, 2010 as the
operating expenses of the
combined company were co-mingled at the date of acquisition.   3. Derivative Instruments and Hedging Activities
   10




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##### Table of Contents



4. Goodwill and Other Intangibles, net
  March 31, 2010
    
    
    December 31, 2009Estimated Useful
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    AccumulatedLives
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationGoodwill:Gross goodwill
    
    
    
    
    
    $
    211,029
    
    
    $
    
    
    
    $
    144,988
    
    
    $
    Accumulated impairment losses
    
    
    
    
    
    
    (9,713
    )
    
    
    
    
    
    
    (9,713
    )Goodwill, net of impairment losses
    
    
    
    
    
    $
    201,316
    
    
    
    
    
    
    $
    135,275Identifiable intangible assets:Customer-based intangible assets
    
    
    1 to 13 years
    
    
    
    259,583
    
    
    
    (92,188
    )
    
    
    183,383
    
    
    
    (84,119
    )Technology-based intangible assets
    
    
    5 to 15 years
    
    
    
    91,446
    
    
    
    (47,182
    )
    
    
    65,847
    
    
    
    (45,607
    )Marketing-based intangible assets
    
    5 years
    
    
    19,491
    
    
    
    (5,531
    )
    
    
    5,191
    
    
    
    (5,034
    )370,520
    
    
    
    (144,901
    )
    
    
    254,421
    
    
    
    (134,760
    )$
    571,836
    
    
    $
    (144,901
    )
    
    $
    389,696
    
    
    $
    (134,760
    )
 Goodwill. Supply Chain Supply
Chain Services Industries.
 Customer-based Technology-based Marketing-based Customer-based Marketing-based Technology-based customer-based,
technology-based marketing-based
   Year
    
    Amortization2010
    
    $
    35,7812011
    
    $
    46,0182012
    
    $
    45,4312013
    
    $
    44,7422014
    
    $
    27,672
 11




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5. Restructuring Reserves
 2010 Restructuring Charges
 CoE
 Impact of Changes
    
    BalanceDescription of charge
    
    Initial Reserve
    
    Cash Charges
    
    in Exchange Rates
    
    March 31, 2010Termination benefits
    
    $
    5,233
    
    
    $
    (5,089
    )
    
    $
    (1
    )
    
    $
    143Office closures
    
    
    2,512
    
    
    
    (431
    )
    
    
    47
    
    
    
    2,128Total
    
    $
    7,745
    
    
    $
    (5,520
    )
    
    $
    46
    
    
    $
    2,271
  2009 Restructuring Charges
 CoE
 6. Manugistics Acquisition Reserves
  12




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##### Table of Contents



Impact of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Impact ofChanges in
    
    
    Balance
    
    
    
    
    
    
    
    
    
    
    Changes in
    
    
    BalanceInitial
    
    
    Adjustments
    
    
    Cash
    
    
    Exchange
    
    
    December 31,
    
    
    Adjustments
    
    
    Cash
    
    
    Exchange
    
    
    March 31,Description of charge
    
    Reserve
    
    
    to Reserves
    
    
    Charges
    
    
    Rates
    
    
    2009
    
    
    to Reserves
    
    
    Charges
    
    
    Rates
    
    
    2010Restructuring charges:Office closures, lease
terminations and sublease
costs
    
    $
    29,212
    
    
    $
    (949
    )
    
    $
    (16,110
    )
    
    $
    (724
    )
    
    $
    11,429
    
    
    $
    
    
    
    $
    (783
    )
    
    $
    (216
    )
    
    $
    10,430Employee severance and
termination benefits
    
    
    3,607
    
    
    
    (767
    )
    
    
    (2,468
    )
    
    
    125
    
    
    
    497
    
    
    
    
    
    
    
    (67
    )
    
    
    (28
    )
    
    
    402IT projects, contract
termination penalties,
capital lease buyouts
and other costs to exit
activities of
Manugistics
    
    
    1,450
    
    
    
    222
    
    
    
    (1,672
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,269
    
    
    
    (1,494
    )
    
    
    (20,250
    )
    
    
    (599
    )
    
    
    11,926
    
    
    $
    
    
    
    
    (850
    )
    
    
    (244
    )
    
    
    10,832Direct costs
    
    
    13,125
    
    
    
    6
    
    
    
    (13,131
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    47,394
    
    
    $
    (1,488
    )
    
    $
    (33,381
    )
    
    $
    (599
    )
    
    $
    11,926
    
    
    $
    
    
    
    $
    (850
    )
    
    $
    (244
    )
    
    $
    10,832
  7. Long-term Debt
      13




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8. Legal Proceedings
   9. Share-Based Compensation
   2010 Performance Program.
 14




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2009 Performance Program
 2008 Performance Program
 2007 Performance Program
  Equity Inducement Awards
 (i)
    
    100,000 shares of restricted stock with a grant date fair value of $1.8 million
were granted to Mr. Hathaway (50,000 shares) and Mr. Zintak (50,000 shares). The
restricted stock awards vest over a three-year period, with one-third
 15




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vesting on the
first anniversary of their employment with the remainder vesting ratably over the
subsequent 24-month period. A deferred compensation charge of $1.8 million has been recorded in the
equity section of our balance sheet for the total grant date fair value of the
restricted stock. Stock-based compensation is being recorded on a graded vesting basis
over requisite service periods that run from their effective dates of employment
through June 2012. We recognized $497,000 in share-based compensation related to
these awards in 2009, plus an additional $248,000 in first quarter 2010 which is
reflected in the consolidated statements of income under the caption General and
administrative.
 (ii)
    
    55,000 contingently issuable performance share awards were granted to Mr.
Hathaway (25,000 shares) and Mr. Zintak (30,000 shares) if the Company was able to
achieve the $91.5 million adjusted EBITDA performance threshold goal defined under the
2009 Performance Program. The Companys actual 2009 adjusted EBITDA performance
qualified Mr. Hathaway and Mr. Zintak to receive 100% of their target awards. A total
of 55,000 performance share awards were issued in January 2010 with a grant date fair
value of $996,000 that is being recognized as share-based compensation over requisite
service periods that run from their effective dates of employment through January 2012.
The performance share awards vested 50% upon the date of issuance with the remaining 50%
vesting ratably over the subsequent 24-month period. A deferred compensation charge of
$996,000 has been recorded in the equity section of our balance sheet, with a related
increase to additional paid-in capital, for the total grant date fair value of the
awards. We recognized $664,000 in share-based compensation related to these awards in
2009, plus an additional $42,000 in first quarter 2010 which is reflected in the
consolidated statements of income under the caption General and administrative.(iii)
    
    100,000 contingently issuable restricted stock units were granted to Mr.
Hathaway (50,000 shares) and Mr. Zintak (50,000 shares) that will vest in defined
tranches if and when we achieve certain pre-defined performance milestones. As of March
31, 2010, none of these awards had been issued, no deferred compensation charge has been
recorded in the equity section of our balance sheet, and no share-based compensation
expense has been recognized related to these grants as management is unable to determine
if it is probable the pre-defined performance milestones will be attained.
 Employee Stock Purchase Plan st st
 10. Treasury Stock Repurchases
    16




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##### Table of Contents



11. Income Taxes
        12. Earnings (Loss) per Share
  17




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##### Table of Contents



Three MonthsEnded March 31,2010
    
    
    2009Net income (loss)
    
    $
    (4,268
    )
    
    $
    2,644Allocation of undistributed earnings:Common Stock
    
    
    (4,268
    )
    
    
    2,371Series B Preferred Stock
    
    
    
    
    
    
    273$
    (4,268
    )
    
    $
    2,644Weighted Average Shares:Common Stock
    
    
    39,343
    
    
    
    31,357Series B Preferred Stock
    
    
    
    
    
    
    3,604Shares  Basic earnings per share
    
    
    39,343
    
    
    
    34,961Dilutive common stock equivalents
    
    
    
    
    
    
    114Shares  Diluted earnings per share
    
    
    39,343
    
    
    
    35,075Basic earnings (loss) per share applicable to common shareholders:Common Stock
    
    $
    (.11
    )
    
    $
    .08Series B Preferred Stock
    
    $
    
    
    
    $
    .08Diluted earnings (loss) per share applicable to common
shareholders
    
    $
    (.11
    )
    
    $
    .08
 18




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##### Table of Contents



13. Business Segments and Geographic Data
  Three MonthsEnded March 31,2010
    
    
    2009Revenues:Americas
    
    $
    87,700
    
    
    $
    60,578Europe
    
    
    25,314
    
    
    
    16,653Asia/Pacific
    
    
    18,617
    
    
    
    6,102Total revenues
    
    $
    131,631
    
    
    $
    83,333
 March 31,
    
    
    December 31,2010
    
    
    2009Identifiable assets:Americas
    
    $
    903,719
    
    
    $
    695,539Europe
    
    
    125,417
    
    
    
    85,817Asia/Pacific
    
    
    91,049
    
    
    
    40,310Total identifiable assets
    
    $
    1,120,185
    
    
    $
    821,666
  Retail Manufacturing and Distribution
 
    
    Supply Chain.This reportable business segment includes all revenues related to
applications and services sold to customers in the supply chain management market. The
majority of our products are specifically designed to provide customers with one synchronized
view of product demand while managing the flow and allocation of materials, information,
finances and other resources across global supply chains, from manufacturers to distribution
centers and transportation networks to the retail store and consumer (collectively, the
Supply Chain). This segment combines all revenues previously reported by the Company under
the Retailand Manufacturing and Distributionreportable business segments and includes all
revenues related to i2 applications and services.
 
    
    Services Industries.This reportable business segment includes all revenues related to
applications and services sold to customers in service industries such as travel,
transportation, hospitality, media and telecommunications. The Services Industriessegment is
centrally managed by a team that has global responsibilities for this market.
  19




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##### Table of Contents



Three MonthsEnded March 31,2010
    
    
    2009Revenues:Supply Chain
    
    $
    125,233
    
    
    $
    78,223Services Industries
    
    
    6,398
    
    
    
    5,110$
    131,631
    
    
    $
    83,333Operating income (loss):Supply Chain
    
    $
    39,904
    
    
    $
    22,111Services Industries
    
    
    607
    
    
    
    879Other (see below)
    
    
    (40,764
    )
    
    
    (18,532
    )$
    (253
    )
    
    $
    4,458Depreciation:Supply Chain
    
    $
    2,429
    
    
    $
    1,787Services Industries
    
    
    216
    
    
    
    226$
    2,645
    
    
    $
    2,013Other:General and administrative expenses
    
    $
    17,697
    
    
    $
    11,026Amortization of intangible assets
    
    
    8,566
    
    
    
    6,076Restructuring charges
    
    
    7,758
    
    
    
    1,430Acquisition-related costs
    
    
    6,743
    
    
    
    $
    40,764
    
    
    $
    18,532
 Supply Chain Services Industry
 
 Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Significant Trends and Developments in Our Business
 Acquisition of i2 Technologies, Inc.
  20




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##### Table of Contents



Revenues:
    
    JDA
    
    
    i2
    
    
    CombinedSoftware licenses and subscriptions
    
    $
    15,878
    
    
    $
    12,846
    
    
    $
    28,724Maintenance services
    
    
    46,491
    
    
    
    10,569
    
    
    
    57,060Product revenues
    
    
    62,369
    
    
    
    23,415
    
    
    
    85,784Service revenues
    
    
    32,001
    
    
    
    13,846
    
    
    
    45,847Total revenues
    
    $
    94,370
    
    
    $
    37,261
    
    
    $
    131,631
 Outlook for 2010.
 Outlook for 2010Low End
    
    High EndSoftware and subscription revenues
    
    $125 million
    
    $135 millionTotal revenues
    
    $590 million
    
    $625 millionAdjusted EBITDA
    
    $160 million
    
    $170 millionAdjusted earnings per share
    
    $
    1.85
    
    
    $
    2.00Cash flow from operations
    
    $100 million
    
    $110 million
    21




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22




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##### Table of Contents



CoE CoE CoE CoE
  We Will Continue to More Fully Leverage Our Centers of Excellence. CoE CoE CoE CoE CoE
 We Expect to Realize Significant Cost Synergies as We Integrate and Combine the Two Companies.
 Share-Based Compensation Expense.
 Three MonthsEnded March 31,2010
    
    
    2009Cost of maintenance services
    
    $
    114
    
    
    $
    94Cost of consulting services
    
    
    448
    
    
    
    211Product development
    
    
    333
    
    
    
    169Sales and marketing
    
    
    866
    
    
    
    381General and administrative
    
    
    1,516
    
    
    
    555Total stock-based compensation
    
    $
    3,277
    
    
    $
    1,410
  23




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##### Table of Contents



We Expect to Make Additional Strategic Acquisitions.
 Our Financial Position is Strong and We Expect to Continue Generating Positive Cash Flow from
Operations. Contractual Obligations
  24




---



##### Table of Contents



Results of Operations
 Significant Trends and Developments in Our Business
 Three Months ended
    
    
    2009 to 2010March 31,
    
    
    
    
    
    
    %2010
    
    
    %
    
    
    2009
    
    
    %
    
    
    $ Change
    
    
    ChangeRevenues:Software licenses
    
    $
    24,437
    
    
    
    19
    %
    
    $
    14,357
    
    
    
    17
    %
    
    $
    10,080
    
    
    
    70
    %Subscriptions and other recurring revenue
    
    
    4,287
    
    
    
    3
    
    
    
    968
    
    
    
    1
    
    
    
    3,319
    
    
    
    333
    %Maintenance
    
    
    57,060
    
    
    
    43
    
    
    
    42,997
    
    
    
    52
    
    
    
    14,063
    
    
    
    33
    %Product revenues
    
    
    85,784
    
    
    
    65
    
    
    
    58,322
    
    
    
    70
    
    
    
    27,462
    
    
    
    47
    %Service revenues
    
    
    45,847
    
    
    
    35
    
    
    
    25,011
    
    
    
    30
    
    
    
    20,836
    
    
    
    83
    %Total revenues
    
    
    131,631
    
    
    
    100
    %
    
    
    83,333
    
    
    
    100
    %
    
    
    48,298
    
    
    
    58
    %Cost of Revenues:Software licenses
    
    
    1,008
    
    
    
    1
    %
    
    
    602
    
    
    
    1
    %
    
    
    406
    
    
    
    67
    %Amortization of acquired software technology
    
    
    1,576
    
    
    
    1
    
    
    
    1,008
    
    
    
    1
    
    
    
    568
    
    
    
    56
    %Maintenance services
    
    
    12,033
    
    
    
    9
    
    
    
    10,549
    
    
    
    13
    
    
    
    1,484
    
    
    
    14
    %Product revenues
    
    
    14,617
    
    
    
    11
    
    
    
    12,159
    
    
    
    15
    
    
    
    2,458
    
    
    
    20
    %Service revenues
    
    
    38,114
    
    
    
    29
    
    
    
    21,359
    
    
    
    25
    
    
    
    16,755
    
    
    
    78
    %Total cost of revenues
    
    
    52,731
    
    
    
    40
    
    
    
    33,518
    
    
    
    40
    
    
    
    19,213
    
    
    
    57
    %Gross Profit
    
    
    78,900
    
    
    
    60
    
    
    
    49,815
    
    
    
    60
    
    
    
    29,085
    
    
    
    58
    %Operating Expenses:Product development
    
    
    17,277
    
    
    
    13
    
    
    
    12,573
    
    
    
    15
    
    
    
    4,704
    
    
    
    37
    %Sales and marketing
    
    
    21,112
    
    
    
    16
    
    
    
    14,252
    
    
    
    17
    
    
    
    6,860
    
    
    
    48
    %General and administrative
    
    
    17,697
    
    
    
    13
    
    
    
    11,026
    
    
    
    13
    
    
    
    6,671
    
    
    
    61
    %56,086
    
    
    
    42
    
    
    
    37,851
    
    
    
    45
    
    
    
    18,235
    
    
    
    48
    %Amortization of intangibles
    
    
    8,566
    
    
    
    7
    
    
    
    6,076
    
    
    
    7
    
    
    
    2,490
    
    
    
    41
    %Restructuring charge
    
    
    7,758
    
    
    
    6
    
    
    
    1,430
    
    
    
    2
    
    
    
    6,328
    
    
    
    443
    %Acquisition-related costs
    
    
    6,743
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    6,743
    
    
    
    100
    %Operating income (loss)
    
    $
    (253
    )
    
    
    
    %
    
    $
    4,458
    
    
    
    6
    %
    
    
    (4,711
    )
    
    
    (106
    %)Gross margins:Software licenses and subscription revenues
    
    
    
    
    
    
    96
    %
    
    
    
    
    
    
    96
    %Maintenance
    
    
    
    
    
    
    79
    %
    
    
    
    
    
    
    75
    %Product revenues
    
    
    
    
    
    
    83
    %
    
    
    
    
    
    
    79
    %Services revenues
    
    
    
    
    
    
    17
    %
    
    
    
    
    
    
    15
    %
 25




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##### Table of Contents



Retail Manufacturing
and Distribution
 
    
    Supply Chain.This reportable business segment includes all revenues related to
applications and services sold to customers in the supply chain management market. The
majority of our products are specifically designed to provide customers with one synchronized
view of product demand while managing the flow and allocation of materials, information,
finances and other resources across global supply chains, from manufacturers to distribution
centers and transportation networks to the retail store and consumer (collectively, the
Supply Chain). This segment combines all revenues previously reported by the Company under
the Retailand Manufacturing and Distributionreportable business segments and includes all
revenues related to i2 applications and services.
    
    Services Industries.This reportable business segment includes all revenues related to
applications and services sold to customers in service industries such as travel,
transportation, hospitality, media and telecommunications. The Services Industriessegment is
centrally managed by a team that has global responsibilities for this market.
 Business Segments
 ServicesSupply Chain
    
    Industries2010 vs 2009
    
    2010 vs 2009Software licenses and subscriptions
    
    
    100
    %
    
    
    (15
    )%Maintenance services
    
    
    32
    %
    
    
    49
    %Product revenues
    
    
    49
    %
    
    
    11
    %Service revenues
    
    
    87
    %
    
    
    43
    %Total revenues
    
    
    60
    %
    
    
    25
    %Product development
    
    
    37
    %
    
    
    51
    %Sales and marketing
    
    
    51
    %
    
    
    23
    %Operating income
    
    
    80
    %
    
    
    (31
    %)
 ServicesSupply Chain
    
    Industries2010
    
    2009
    
    2010
    
    2009Contribution to total revenues
    
    
    95
    %
    
    
    94
    %
    
    
    5
    %
    
    
    6
    %
 Geographical Regions
 The Americas
    
    Europe
    
    Asia/Pacific2010 vs 2009
    
    2010 vs 2009
    
    2010 vs 2009Software licenses and subscriptions
    
    
    70
    %
    
    
    70
    %
    
    
    319
    %Maintenance services
    
    
    26
    %
    
    
    33
    %
    
    
    94
    %Product revenues
    
    
    38
    %
    
    
    42
    %
    
    
    150
    %Service revenues
    
    
    58
    %
    
    
    92
    %
    
    
    333
    %Total revenues
    
    
    45
    %
    
    
    52
    %
    
    
    205
    %
 The Americas
    
    Europe
    
    Asia/Pacific2010
    
    2009
    
    2010
    
    2009
    
    2010
    
    2009Contribution to total revenues
    
    
    67
    %
    
    
    73
    %
    
    
    19
    %
    
    
    20
    %
    
    
    14
    %
    
    
    7
    %
 26




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##### Table of Contents



Three Months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009
 Software License and Subscription Results by Region
  Three Months Ended March 31,Region
    
    2010
    
    
    2009
    
    
    $Change
    
    
    % ChangeAmericas
    
    $
    18,916
    
    
    $
    11,105
    
    
    $
    7,811
    
    
    
    70
    %Europe
    
    
    5,403
    
    
    
    3,170
    
    
    
    2,233
    
    
    
    70
    %Asia/Pacific
    
    
    4,405
    
    
    
    1,050
    
    
    
    3,355
    
    
    
    320
    %Total
    
    $
    28,724
    
    
    $
    15,325
    
    
    $
    13,399
    
    
    
    87
    %
   # of Large TransactionsThree Months Ended March 31,2010
    
    2009Region
    
    JDA
    
    i2
    
    TotalAmericas
    
    
    3
    
    
    
    1
    
    
    
    4
    
    
    
    2Europe
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    1Asia/Pacific
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    Total
    
    
    4
    
    
    
    4
    
    
    
    8
    
    
    
    3
  Software License and Subscription Results by Reportable Business Segment.
 Supply Chain.
 Services Industries.
 Maintenance Services
  27




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##### Table of Contents



Service Revenues
   Cost of Product Revenues
 Cost of Software Licenses.
 Amortization of Acquired Software Technology
 Cost of Maintenance Services.
 Cost of Service Revenues
  Operating Expenses
  Product Development.
 Sales and Marketing.
 28




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##### Table of Contents



General and Administrative.
 Amortization of Intangibles.
 Restructuring Charges. CoE
 CoE
 Acquisition-Related Costs.
 Operating Income
 CoE
  Other Income (Expense)
 29




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##### Table of Contents



Interest Expense and Amortization of Loan Fees.
 Interest Income and Other, Net.
 Income Tax Provision
   Liquidity and Capital Resources
 Contractual Obligations
  Operating activities
 Investing activities
 30




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##### Table of Contents



Financing activities
 Changes in the currency exchange rates of our foreign operations
 Treasury Stock Repurchases.
  Contractual Obligations CoE
    31




---



##### Table of Contents



Critical Accounting Policies
  
    
    Revenue recognition. Our revenue recognition policy is significant because our revenue
is a key component of our results of operations. In addition, our revenue recognition
determines the timing of certain expenses such as commissions and royalties. We follow
specific and detailed guidelines in measuring revenue; however, certain judgments affect
the application of our revenue policy.We license software primarily under non-cancelable agreements and provide related services,
including consulting, training and customer support. Software license revenue is generally
recognized using the residual method when:
 
    
    Persuasive evidence of an arrangement exists and a license agreement has been signed;
    
    Delivery, which is typically FOB shipping point, is complete;
    
    Fees are fixed and determinable and there are no uncertainties surrounding product acceptance;
    
    Collection is considered probable; and
    
    Vendor-specific evidence of fair value (VSOE) exists for all undelivered elements.
 Our customer arrangements typically contain multiple elements that include software, options
for future purchases of software products not previously licensed to the customer,
maintenance, consulting and training services. The fees from these arrangements are
allocated to the various elements based on VSOE. Under the residual method, if an arrangement
contains an undelivered element, the VSOE of the undelivered element is deferred and the
revenue recognized once the element is delivered. If we are unable to determine VSOE for any
undelivered element included in an arrangement, we will defer revenue recognition until all
elements have been delivered. In addition, if a software license contains milestones,
customer acceptance criteria or a cancellation right, the software revenue is recognized upon
the achievement of the milestone or upon the earlier of customer acceptance or the expiration
of the acceptance period or cancellation right. For arrangements that provide for significant
services or custom development that are essential to the softwares functionality, the
software license revenue and contracted services are recognized under the percentage of
completion method. We measure progress-to-completion on arrangements involving significant
services or custom development that are essential to the softwares functionality using input
measures, primarily labor hours, which relate hours incurred to date to total estimated hours
at completion. We continually update and revise our estimates of input measures. If our
estimates indicate that a loss will be incurred, the entire loss is recognized in that
period.Subscription and other recurring revenues include fees for access rights to software
solutions that are offered under a subscription-based delivery model where the users do not
take possession of the software. Under this model, the software applications are hosted by
the Company or by a third party and the customer accesses and uses the software on an
as-needed basis over the internet or via a dedicated line. The underlying arrangements
typically include (i) a single fee for the service that is billed monthly, quarterly or
annually, (ii) cover a period from 36 to 60 months and (iii) do not provide the customer with
an option to take delivery of the software at any time during or after the subscription term.
Subscription revenues are recognized ratably over the subscription term beginning on the
commencement dates of each contract.Maintenance services are separately priced and stated in our arrangements. Maintenance
services typically include on-line support, access to our Solution Centers via telephone and
web interfaces, comprehensive error diagnosis and correction, and
the right to receive unspecified upgrades and enhancements, when and if we make them
generally available. Maintenance services are generally billed on a monthly basis and
recorded as revenue in the applicable month, or billed on an annual basis with the revenue
initially deferred and recognized ratably over the maintenance period. VSOE for maintenance
services is the price customers will be required to pay when it is sold separately, which is
typically the renewal rate.Consulting and training services are separately priced and stated in our arrangements, are
generally available from a number of suppliers, and are generally not essential to the
functionality of our software products. Consulting services include project
 32




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management,
system planning, design and implementation, customer configurations, and training. These
services are generally billed bi-weekly on an hourly basis or pursuant to the terms of a
fixed price contract. Consulting services revenue billed on an hourly basis is recognized as
the work is performed. Under fixed price service contracts and milestone-based arrangements
that include services that are not essential to the functionality of our software products,
consulting services revenue is recognized using the proportional performance method. We
measure progress-to-completion under the proportional performance method by using input
measures, primarily labor hours, which relate hours incurred to date to total estimated hours
at completion. We continually update and revise our estimates of input measures. If our
estimates indicate that a loss will be incurred, the entire loss is recognized in that
period. Training revenues are included in consulting revenues in the Companys consolidated
statements of income and are recognized once the training services are provided. VSOE for
consulting and training services is based upon the hourly or per class rates charged when
those services are sold separately.Consulting and training services, when sold with subscription offerings, are accounted for
separately if they have standalone value to the customer and there is objective and reliable
evidence of fair value for the undelivered elements. In these situations, the consulting and
training revenues are recognized as the services are rendered for time and material contracts
or when milestones are achieved and accepted by the customer under fixed price service
contracts. If the consulting and training services sold with the subscription offerings do
not quality for separate accounting, all fees from the arrangement are treated as a single
unit of accounting and recognized ratably over the subscription term.Managed service offerings are separately price and stated in our arrangements with the
related revenues included in consulting revenues. Managed services typically include
implementation lab services, advance customer support and software and hardware
administration services, and are billed monthly, quarterly or annually with the revenue
recognized ratably over the term of the contract. Revenues from our hardware reseller
business are also included in consulting revenues, reported net (i.e., the amount billed to a
customer less the amount paid to the supplier) and recognized upon shipment of the hardware.Customers are reviewed for creditworthiness before we enter into a new arrangement that
provides for software and/or a service element. We do not sell or ship our software, nor
recognize any license revenue, unless we believe that collection is probable. Payments for
our software licenses are typically due within twelve months from the date of delivery.
Although infrequent, where software license agreements call for payment terms of twelve
months or more from the date of delivery, revenue is recognized as payments become due and
all other conditions for revenue recognition have been satisfied.
    
    Accounts Receivable.Consistent with industry practice and to be competitive in the
software marketplace, we typically provide payment terms on most software license sales.
Software licenses are generally due within twelve months from the date of delivery.
Customers are reviewed for creditworthiness before we enter into a new arrangement that
provides for software and/or a service element. We do not sell or ship our software, nor
recognize any revenue unless we believe that collection is probable. For those customers
who are not credit worthy, we require prepayment of the software license fee or a letter of
credit before we will ship our software. We have a history of collecting software payments
when they come due without providing refunds or concessions. Consulting services are
generally billed bi-weekly and maintenance services are billed annually or monthly. For
those customers who are significantly delinquent or whose credit deteriorates, we typically
put the account on hold and do not recognize any further services revenue, and may as
appropriate withdraw support and/or our implementation staff until the situation has been
resolved.We do not have significant billing or collection problems. We review each past due account
and provide specific reserves based upon the information we gather from various sources
including our customers, subsequent cash receipts, consulting services project teams, members
of each regions management, and credit rating services such as Dun and Bradstreet. Although
infrequent and unpredictable, from time to time certain of our customers have filed
bankruptcy, and we have been required to refund the pre-petition amounts collected and settle
for less than the face value of their remaining receivable pursuant to a bankruptcy court
order. In these situations, as soon as it becomes probable that the net realizable value of
the
receivable is impaired, we provide reserves on the receivable. In addition, we monitor
economic conditions in the various geographic regions in which we operate to determine if
general reserves or adjustments to our credit policy in a region are appropriate for
deteriorating conditions that may impact the net realizable value of our receivables.
    
    Business Combinations. The acquisition of i2 on January 28, 2010 is being accounted for
at fair value under the acquisition method of accounting. However, the purchase price
allocation has not been finalized. We are still in the process of obtaining all information
necessary to determine the fair values of the acquired assets and we have retained an
independent third party appraiser for the intangible assets to assist management in its
valuation. This could result in adjustments to the carrying value of the assets and
liabilities acquired, the useful lives of intangible assets and the residual amount
allocated to goodwill.
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The preliminary allocation of the purchase price is based on the
best estimates of management and is subject to revision based on the final valuations and
estimates of useful lives. Under the acquisition method of accounting, (i)
acquisition-related costs, except for those costs incurred to issue debt or equity
securities, are expensed in the period incurred; (ii) non-controlling interests are valued
at fair value at the acquisition date; (iii) in-process research and development is
recorded at fair value as an indefinite-lived intangible asset at the acquisition date;
(iv) restructuring costs associated with a business combination are expensed subsequent to
the acquisition date; and (v) changes in deferred tax asset valuation allowances and
income tax uncertainties after the acquisition date are recognized through income tax
expense.
    
    Goodwill and Other Identifiable Intangible Assets. Our business combinations have
typically resulted in goodwill and other identifiable intangible assets. These intangible
assets affect the amount of future period amortization expense and potential impairment
charges we may incur. The determination of the value of such intangible assets and the
annual impairment tests that we perform require management to make estimates of future
revenues, customer retention rates and other assumptions that affect our consolidated
financial statements.Goodwill is tested annually for impairment, or more frequently if events or changes in
business circumstances indicate the asset might be impaired, by comparing a weighted average
of the fair value of future cash flows under the Discounted Cash Flow Method of the Income
Approach and the Guideline Company Method to the carrying value of the goodwill allocated
to our reporting units. We found no indication of impairment of our goodwill balances during
first quarter 2010 with respect to the goodwill allocated to our Supply Chainand Services
Industriesreportable business segments. Absent future indications of impairment, the next
annual impairment test will be performed in fourth quarter 2010.Customer-basedintangible assets include customer lists, maintenance relationships and future
technological enhancements, service relationships and covenants not-to-compete.
Customer-basedintangible assets are amortized on a straight-line basis over estimated useful
lives ranging from one to 13 years. The values allocated to customer list intangibles are
based on the projected economic life of each acquired customer base, using historical
turnover rates and discussions with the management of the acquired companies. We estimate
the economic lives of these assets using the historical life experiences of the acquired
companies as well as our historical experience with similar customer accounts for products
that we have developed internally. We review customer attrition rates for each significant
acquired customer group on annual basis, or more frequently if events or circumstances
change, to ensure the rate of attrition is not increasing and if revisions to the estimated
economic lives are required. We have initially recorded $76.2 million of customer-based
intangible assets in connection with the acquisition of i2.Technology-basedintangible assets include acquired software technology. Acquired software
technology is capitalized if the related software product under development has reached
technological feasibility or if there are alternative future uses for the purchased software.
Amortization of software technology is reported in the consolidated statements of operations
in cost of revenues under the caption Amortization of acquired software technology.
Software technology is amortized on a product-by-product basis with the amortization recorded
for each product being the greater of the amount computed using (a) the ratio that current
gross revenues for a product bear to the total of current and anticipated future revenue for
that product, or (b) the straight-line method over the remaining estimated economic life of
the product including the period being reported on. The estimated economic lives of our
acquired software technology range from 5 years to 15 years. We have initially recorded
$25.6 million of Technology-basedintangible assets in connection with the acquisition of i2.Marketing-basedintangible assets include trademarks and trade names. Trademarks are being
amortized on a straight-line basis over estimated useful lives of five years. We have
initially recorded $14.3 million of Marketing-basedintangible assets in connection with the
acquisition of i2.
    
    Product Development.The costs to develop new software products and enhancements to
existing software products are expensed as incurred until technological feasibility has
been established. We consider technological feasibility to have occurred when all planning,
designing, coding and testing have been completed according to design specifications. Once
technological feasibility is established, any additional costs would be capitalized. We
believe our current process for developing software is essentially completed concurrent
with the establishment of technological feasibility, and accordingly, no costs have been
capitalized.
    
    Income Taxes. Deferred tax assets and liabilities are recorded for the estimated future
tax effects of temporary differences between the tax basis of assets and liabilities and
amounts reported in the consolidated balance sheets, as well as operating loss and tax
credit carry-forwards. We follow specific and detailed guidelines regarding the
recoverability of any tax assets recorded on the balance sheet and provide valuation
allowances when recovery of deferred tax assets is not considered likely.
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We exercise significant judgment in determining our income tax provision due to transactions,
credits and calculations where the ultimate tax determination is uncertain. Uncertainties
arise as a consequence of the actual source of taxable income between domestic and foreign
locations, the outcome of tax audits and the ultimate utilization of tax credits. Although
we believe our estimates are reasonable, the final tax determination could differ from our
recorded income tax provision and accruals. In such case, we would adjust the income tax
provision in the period in which the facts that give rise to the revision become known.
These adjustments could have a material impact on our income tax provision and our net income
for that period.As of March 31, 2010 we have approximately $14.7 million of unrecognized tax benefits that
would impact our effective tax rate if recognized, some of which relate to uncertain tax
positions associated with the acquisition of Manugistics and i2. Future recognition of
uncertain tax positions resulting from the acquisition of Manugistics will be treated as a
component of income tax expense rather than as a reduction of goodwill. During first quarter
2010, there were no significant changes in the unrecognized tax benefits recorded, other than
the recording of i2s unrecognized tax benefits. It is reasonably possible that approximately
$8.5 million of unrecognized tax benefits will be recognized within the next twelve months.
We have placed a valuation allowance against the Arizona research and development credit as
we do not expect to be able to utilize it prior to its expiration.We treat interest and penalties related to uncertain tax positions as a component of income
tax expense including accruals of $429,000 in first quarter 2010 and $118,000 in first
quarter 2009. As of March 31, 2010 and December 31, 2009 there are approximately $5.0
million and $2.3 million, respectively of interest and penalty accruals related to uncertain
tax positions which are reflected in the consolidated balance sheet under the caption
Liability for uncertain tax positions. To the extent interest and penalties are not
assessed with respect to the uncertain tax positions, the accrued amounts for interest and
penalties will be reduced and reflected as a reduction to tax expense.
    
    Share-Based Compensation. Our 2005 Performance Incentive Plan, as amended (2005
Incentive Plan) provides for the issuance of up to 3,847,000 shares of common stock to
employees, consultants and directors under stock purchase rights, stock bonuses, restricted
stock, restricted stock units, performance awards, performance units and deferred
compensation awards. The 2005 Incentive Plan contains certain restrictions that limit the
number of shares that may be issued and the amount of cash awarded under each type of
award, including a limitation that awards granted in any given year can represent no more
than two percent (2%) of the total number of shares of common stock outstanding as of the
last day of the preceding fiscal year. Awards granted under the 2005 Incentive Plan are in
such form as the Compensation Committee shall from time to time establish and the awards
may or may not be subject to vesting conditions based on the satisfaction of service
requirements or other conditions, restrictions or performance criteria including the
Companys achievement of annual operating goals. Restricted stock and restricted stock
units may also be granted under the 2005 Incentive Plan as a component of an incentive
package offered to new employees or to existing employees based on performance or in
connection with a promotion, and will generally vest over a three-year period, commencing
at the date of grant. We measure the fair value of awards under the 2005 Incentive Plan
based on the market price of the underlying common stock as of the date of grant. The fair
value of each award is amortized over the applicable vesting period of the awards using
graded vesting and reflected in the consolidated statements of operations under the
captions Cost of maintenance services, Cost of consulting services, Product
development, Sales and marketing, and General and administrative.Annual stock-based incentive programs have been approved for executive officers and certain
other members of our management team for years 2007 through 2010 that provide for
contingently issuable performance share awards or restricted stock units upon achievement of
defined performance threshold goals. The defined performance threshold goal for each year
has been an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization)
targets, which excludes certain non-routine items. The awards vest 50% upon the date the
Board approves the achievement of the annual performance threshold goal with the remaining
50% vesting ratably over the subsequent 24-month period.Equity Inducement Awards. During third quarter 2009, we announced the appointment of Peter S.
Hathaway to the position of Executive Vice President and Chief Financial Officer and Jason
Zintak to the newly-created position of Executive Vice President, Sales and Marketing. In
order to induce Mr. Hathaway and Mr. Zintak to accept employment, the Compensation Committee
granted certain equity awards outside of the terms of the 2005 Incentive Plan and pursuant to
NASDAQ Marketplace Rule 5635(c)(4).Stock Option Plans. We maintained various stock option plans through May 2005 (Prior
Plans). The Prior Plans provided for the issuance of shares of common stock to employees,
consultants and directors under incentive and non-statutory stock
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option grants. Stock
option grants under the Prior Plans were made at a price not less than the fair market value
of the common stock at the date of grant, generally vested over a three to four-year period
commencing at the date of grant and expire in ten years. Stock options are no longer used
for share-based compensation and no grants have been made under the Prior Plans since 2004.
With the adoption of the 2005 Incentive Plan, we terminated all Prior Plans except for those
provisions necessary to administer the outstanding options, all of which are fully vested. As
of March 31, 2010, we had approximately 719,000 vested stock options outstanding with
exercise prices ranging from $10.33 to $27.50 per share.Employee Stock Purchase Plan. Our employee stock purchase plan (2008 Purchase Plan) has an
initial reserve of 1,500,000 shares and provides eligible employees with the ability to defer
up to 10% of their earnings for the purchase of our common stock on a semi-annual basis at
85% of the fair market value on the last day of each six-month offering period that begin on
February 1st and August 1st of each year. The 2008 Purchase Plan is
considered compensatory and, as a result, stock-based compensation is recognized on the last
day of each six-month offering period in an amount equal to the difference between the fair
value of the stock on the date of purchase and the discounted purchase price. A total of
44,393 shares of common stock were purchased on January 31, 2010 at a price of $22.28 and we
recorded $175,000 of related share-based compensation expense. A total of 100,290 shares of
common stock were purchased on February 1, 2009 at a price of $9.52 and we recognized
$169,000 in share-based compensation expense in connection with such purchases. The
share-based compensation expense in connection with these purchases, which is reflected in
the consolidated statements of income under the captions Cost of maintenance services,
Cost of consulting services, Product development, Sales and marketing, and General and
administrative.
    
    Derivative Instruments and Hedging Activities. We use derivative financial
instruments, primarily forward exchange contracts, to manage a majority of the foreign
currency exchange exposure associated with net short-term foreign currency denominated
assets and liabilities that exist as part of our ongoing business operations that are
denominated in a currency other than the functional currency of the subsidiary. The
exposures relate primarily to the gain or loss recognized in earnings from the settlement
of current foreign denominated assets and liabilities. We do not enter into derivative
financial instruments for trading or speculative purposes. The forward exchange contracts
generally have maturities of 90 days or less and are not designated as hedging instruments.
Forward exchange contracts are marked-to-market at the end of each reporting period, using
quoted prices for similar assets or liabilities in active markets, with gains and losses
recognized in other income offset by the gains or losses resulting from the settlement of
the underlying foreign currency denominated assets and liabilities.At March 31, 2010, we had forward exchange contracts with a notional value of $83.3 million
and an associated net forward contract receivable of $337,000 determined on the basis of
Level 2 inputs. At December 31, 2009, we had forward exchange contracts with a notional
value of $37.9 million and an associated net forward contract liability of $354,000
determined on the basis of Level 2 inputs. These derivatives are not designated as hedging
instruments. The forward contract receivables or liabilities are included in the condensed
consolidated balance sheet under the captions, Prepaid expenses and other current assets or
Accrued expenses and other liabilities as appropriate. The notional value represents the
amount of foreign currencies to be purchased or sold at maturity and does not represent our
exposure on these contracts. We recorded net foreign currency exchange contract gain of
$961,000 in first quarter 2010 and a net foreign currency exchange contract loss of $318,000
in first quarter 2009, which are included in the condensed consolidated statements of income
under the caption Interest Income and other, net.
 Other Recent Accounting Pronouncements
 Revenue Recognition
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Item 3: Quantitative and Qualitative Disclosures about Market Risk
  Foreign currency exchange rates
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Interest rates
  
 Item 4: Controls and Procedures
 Disclosure Controls and Procedures
 Changes in Internal Control Over Financial Reporting.
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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
   
 Item 1A. Risk Factors
  Risks Related To Our Business
 We may not be able to sustain profitability in the future.
  
    
    attract and retain an adequate client base;
    
    manage effectively a larger and more global business;
    
    react to changes, including technological changes, in the markets we target or operate
in;
    
    deploy our services in additional markets or industry segments;
    
    respond to competitive developments and challenges;
    
    attract and retain experienced and talented personnel; and
    
    establish strategic business relationships.
  We have a substantial amount of debt, which could impact our ability to obtain future financing or
pursue our growth strategy.
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
    
    we must use a substantial portion of our cash flow from operations to pay interest on our
indebtedness, which will reduce the funds available to us for operations and other purposes;
    
    our ability to obtain additional financing for working capital, capital expenditures,
acquisitions or general corporate purposes may be impaired;
    
    our high level of indebtedness could place us at a competitive disadvantage compared to
our competitors that may have proportionately less debt;
    
    our flexibility in planning for, or reacting to, changes in our business and the industry
in which we operate may be limited;
    
    our high level of indebtedness may make us more vulnerable to economic downturns and
adverse developments in our business; and
    
    our ability to fund a change of control offer may be limited.
  Payments on our indebtedness will require a significant amount of cash.
  We may incur substantial additional indebtedness that could further xacerbate the risks associated
with our indebtedness.
  We may not receive significant revenues from our current research and development efforts, which
may limit our business from developing in ways that we currently anticipate.
  We may misjudge when software sales will be realized, which may materially reduce our revenue and
cash flow and adversely affect our business.
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We may face liability if our products are defective or if we make errors implementing our products.
   We may have difficulty implementing our software products, which would harm our business and
relations with customers.
  
    
    involve more significant integration efforts in order to complete implementation;
    
    require the execution of implementation procedures in multiple layers of software;
    
    offer a customer more deployment options and other configuration choices;
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
    
    require more training; and
    
    may involve third party integrators to change business processes concurrent with the
implementation of the software.
  Our operating results may be adversely affected as a result of our failure to meet contractual
obligations under fixed-price contracts within our estimated cost structure.
  We may have difficulty developing our new managed services offering, which could reduce future
revenue growth opportunities.
  The enforcement and protection of our intellectual property rights may be expensive and could
divert our valuable resources.
   Third parties may claim we infringe their intellectual property rights, which would result in an
increase in litigation and other related costs.
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
    
    be time-consuming, costly and/or result in litigation;
    
    divert managements time and attention from developing our business;
    
    require us to pay monetary damages or involve settlement payments, either of which could
be significant;
    
    require us to enter into royalty and licensing agreements that we would not normally find
acceptable;
    
    require us to stop selling or to redesign certain of our products; or
    
    require us to satisfy indemnification obligations to our customers.
  If we lose access to critical third-party software or technology, our costs could increase and the
introduction of new products and product enhancements could be delayed, potentially hurting our
competitive position.
  We may face difficulties in our highly competitive markets, which may make it difficult to
attract and retain clients and grow revenues.
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CoE CoE
 CoE CoE
 There are many risks associated with international operations, which may negatively impact our
overall business and profitability.
   
    
    currency fluctuations, the impact of which could significantly increase as a result of:
 
    
    our continuing expansion of the CoE in India; and
    
    the acquisition of i2, as the majority of i2s international expenses, including
the compensation expense of over 65% of its employees, is denominated in currencies
other than the U.S. Dollar;
 
    
    higher operating costs due to the need to comply with local laws or regulations;
    
    lower margins on consulting services;
    
    competing against low-cost service providers;
    
    unexpected changes in employment and other regulatory requirements;
    
    tariffs and other trade barriers;
    
    costs and risks of adapting our products for use in foreign countries;
    
    longer payment cycles in certain countries;
    
    potentially negative tax consequences;
    
    difficulties in staffing and managing geographically disparate operations;
    
    greater difficulty in safeguarding intellectual property, licensing and other trade
restrictions;
    
    ability to negotiate and have enforced favorable contract provisions;
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
    
    repatriation of earnings;
    
    the challenges of finding qualified management for our international operations;
    
    general economic conditions in international markets; and
    
    developing and deploying the skills required to service our broad set of product
offerings across the markets we serve.
 CoE
 If we experience expansion delays or difficulties with our Center of Excellence in India, our costs
may increase and our margins may decrease.
 CoE CoE CoE CoE CoE CoE CoE CoE CoE, CoE
 
    
    the slower-than-expected rate of internal adoption of our planned mix of
on-shore/off-shore services;
    
    significant expected increases in labor costs in India;
    
    increased risk of associate attrition due to the improvement of the Indian economy and
job market;
    
    terrorist activities in the region;
    
    inability to hire or retain sufficient personnel with the necessary skill sets to meet
our needs;
    
    economic, security and political conditions in India;
    
    inadequate facilities or communications infrastructure; and
    
    local law or regulatory issues.
  Economic, political and market conditions can adversely affect our revenue and profitability.
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We may be unable to retain key personnel, which could materially impact our ability to further
develop our business.
   We may have difficulty integrating future acquisitions, which would reduce the anticipated benefits
of those transactions.
  
    
    if we incur significant debt to finance a future acquisition and our combined business
does not perform as expected, we may have difficulty complying with debt covenants;
    
    if we use our stock to make a future acquisition, it will dilute existing shareholders;
    
    we may have difficulty assimilating the operations and personnel of any acquired company;
    
    the challenge and additional investment involved to integrate new products and
technologies into our sales and marketing process;
    
    we may have difficulty effectively integrating any acquired technologies or products with
our current products and technologies, particularly where such products reside on different
technology platforms, or overlap with our products;
    
    our ongoing business may be disrupted by transition and integration issues;
    
    customer purchases and projects may become delayed until we publish a combined product
roadmap, and once we do publish the roadmap it may disrupt additional purchases and
projects;
    
    the costs and complexity of integrating the internal information technology
infrastructure of each acquired business with ours may be greater than expected and require
capital investments;
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
    
    we may not be able to retain key technical and managerial personnel from an acquired
business;
    
    we may be unable to achieve the financial and strategic goals for any acquired and
combined businesses;
    
    we may have difficulty in maintaining controls, procedures and policies during the
transition and integration period following a future acquisition;
    
    our relationships with partner companies or third-party providers of technology or
products could be adversely affected;
    
    our relationships with employees and customers could be impaired;
    
    our due diligence process may fail to identify significant issues with product quality,
product architecture, legal or tax contingencies, customer obligations and product
development, among other things;
    
    as successor we may be subject to certain liabilities of our acquisition targets; and
    
    we may be required to sustain significant exit or impairment charges if products acquired
in business combinations are unsuccessful.
  Government contracts are subject to unique costs, terms, regulations, claims and penalties that
could reduce their profitability to us.
  
    
    early termination of contracts by the government;
    
    costly and complex competitive bidding process;
    
    required extensive use of subcontractors, whose work may be deficient or not performed in
a timely manner;
    
    significant penalties associated with employee misconduct in the highly regulated
government marketplace;
    
    changes or delays in government funding that could negatively impact contracts; and
    
    onerous contractual provisions unique to the government such as most favored customer
provisions.
  If we do not identify, adopt and develop product architecture that is compatible with merging
industry standards, our products will be less attractive to customers.
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We may be impacted by shifts in consumer preferences affecting the supply chain that could reduce
our revenues.
  Risks Related to the Acquisition of i2
 We may not realize the anticipated benefits of our acquisition of i2, including potential synergies, due to challenges associated with integrating the companies or other factors.
   
    
    integrating the two companies operations, processes, people, technologies, products and
services;
    
    coordinating and integrating sales and marketing and research and development functions;
    
    demonstrating to our clients that the acquisition will not result in adverse changes in
business focus, products and service deliverables (including customer satisfaction);
    
    assimilating and retaining the personnel of both companies and integrating the business
cultures, operations, systems and clients of both companies; and
    
    consolidating corporate and administrative infrastructures and eliminating duplicative
operations and administrative functions.
  If we are unable to successfully execute on any of our identified business opportunities or other
business opportunities that we determines to pursue, we may not achieve the benefits of the
acquisition and our business may be harmed.
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
    
    the ability of our technology and hardware, suppliers and service providers to perform as
we expect;
    
    our ability to execute our strategy and continue to operate a larger, more diverse
business efficiently on a global basis;
    
    our ability to effectively manage our third party relationships;
    
    our ability to attract and retain qualified personnel;
    
    our ability to effectively manage our employee costs and other expenses;
    
    our ability to retain and grow revenues and profits from our clients and the current
portfolio of business with each client;
    
    technology and application failures and outages, security breaches or interruption of
service, which could adversely affect our reputation and our relations with our clients;
    
    our ability to accurately predict and respond to the rapid technological changes in our
industry and the evolving service and pricing demands of the markets we serve; and
    
    our ability to raise additional capital to fund our long-term growth plans.
  i2 has been, and we may be, subject to product quality and performance claims, which could
seriously harm our business.
  Risks Related To Our Stock
 Our quarterly operating results may fluctuate significantly, which could adversely affect the price
of our stock.
  
    
    The difficulty of predicting demand for our software products and services, including the size and timing of
individual contracts and our ability to recognize revenue with respect to contracts signed in a given quarter,
particularly with respect to our larger customers;
    
    Changes in the length and complexity of our sales cycle, including changes in the contract approval process at our
customers and potential customers that now require a formal proposal process, a longer decision making period and
additional layers of customer approval, often including authorization of the transaction by senior executives,
boards of directors and significant equity investors;
    
    Competitive pricing pressures and competitive success or failure on significant transactions;
    
    Customer order deferrals resulting from the anticipation of new products, economic uncertainty, disappointing
operating results by the customer, management changes, corporate reorganizations or otherwise;
    
    The timing of new software product and technology introductions and enhancements to our software products or those
of our competitors, and market acceptance of our new software products and technology;
    
    Lack of desired features and functionality in our individual products or our suite of products;
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
    
    Changes in the number, size or timing of new and renewal maintenance contracts or cancellations;
    
    Unplanned changes in our operating expenses;
    
    Changes in the mix of domestic and international revenues, or expansion or contraction of international operations;
    
    Our ability to complete fixed price consulting contracts within budget;
    
    Foreign currency exchange rate fluctuations;
    
    Lower-than-anticipated utilization in our consulting services group as a result of increased competition, reduced
levels of software sales, reduced implementation times for our products, changes in the mix of demand for our
software products, mergers and consolidations within our customer base, or other reasons; and
    
    Our limited ability to reduce costs in the short term to compensate for any unanticipated shortfall in product or
services revenue.
  
    
    Loss on impairment of goodwill and/or other intangible assets due to economic
conditions or an extended decline in the market price of our stock below book
value;
    
    Changes in the useful lives or the amortization of identifiable intangible assets;
    
    Accrual of newly identified pre-merger contingent liabilities, in which case the
related charges could be required to be included in earnings in the period in
which the accrual is determined to the extent it is identified subsequent to the
finalization of the purchase price allocation;
    
    Charges to income to eliminate certain JDA pre-merger activities that duplicate
those of the acquired company or to reduce our cost structure; and
    
    Changes in deferred tax assets and valuation allowances.
  Anti-takeover provisions in our organizational documents and Delaware law could prevent or delay a
change in control.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 
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Item 3. Defaults Upon Senior Securities
 
 Item 4.
 
 Item 5. Other Information
 
 Item 6. Exhibits
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JDA SOFTWARE GROUP, INC.
 
 SIGNATURE
  JDA SOFTWARE GROUP, INC.Dated: May 10, 2010
    By:
    /s/ Hamish N. BrewerHamish N. BrewerPresident and Chief Executive Officer
(Principal Executive Officer)By:
    /s/ Peter S. HathawayPeter S. HathawayExecutive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) 52




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EXHIBIT INDEX
 Exhibit #
    
    Description of Document3.1
    
    Third Restated Certificate of Incorporation of the Company together with
Certificate of Amendment dated July 23, 2002. (Incorporated by reference to Exhibit 3.1 to
the Companys Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2002, as filed on November 12, 2002).3.2
    
    Amended and Restated Bylaws of JDA Software Group, Inc. (as amended through April 22,
2010) (Incorporated by reference to Exhibit 3.1 to the Companys Current Report on Form
8-K dated April 22, 2010, as filed on April 28, 2010).3.3
    
    Certificate of Designation of rights, preferences, privileges and restrictions of Series B
Convertible Preferred Stock of JDA Software Group, Inc filed with the Secretary of State of
the State of Delaware on July 5, 2006. (Incorporated by reference to Exhibit 3.1 to the
Companys Current Report on Form 8-K dated July 5, 2006, as filed on July 6, 2006).3.4
    
    Certificate of Correction filed to correct a certain error in the Certificate of
Designation of
rights, preferences, privileges and restrictions of Series B Convertible Preferred Stock of
JDA Software Group, Inc. filed with the Secretary of State of the State of Delaware on July
5, 2006. (Incorporated by reference to Exhibit 3.4 to the Companys Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2006, as filed on November 9,
2006).4.1
    
    Specimen Common Stock Certificate of JDA Software Group, Inc. (Incorporated by
reference the Companys Registration Statement on Form S-1 (File No. 333-748), declared
effective on March 14, 1996).4.2
    
    Indenture, dated as of December 10, 2009, by and among JDA Software Group, Inc., the
Guarantors named therein, and U.S. Bank National Association, as Trustee governing the
8% Senior Notes due 2014. (Incorporated by reference to Exhibit 4.1 to the Companys
Current Report on Form 8-K dated December 10, 2009, as filed on December 11, 2009).10.1(1)(2)
    
    Executive Employment Agreement between Pete Hathaway and JDA Software Group, Inc. dated
July 20, 2009. (Filed herewith).10.2(1)
    
    Executive Employment Agreement between Jason B. Zintak and JDA Software Group, Inc. dated
August 18, 2009. (Filed herewith).31.1
    
    Rule 13a-14(a) Certification of Chief Executive Officer. (Filed herewith).31.2
    
    Rule 13a-14(a) Certification of Chief Financial Officer. (Filed herewith).32.1
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(Filed herewith).
 
 (1)
    
    Management contracts or compensatory plans or arrangements covering executive
officers or directors of the Company.(2)
    
    An extension of confidential treatment has been requested with respect to certain
portions of this exhibit. 53