##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 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 o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 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 June 30, 2010 and December 31, 2009
    
    
    3Condensed Consolidated Statements of Income for the Three and Six Months Ended
June 30, 2010 and June 30, 2009
    
    
    4Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and
Six Months Ended June 30, 2010 and June 30, 2009
    
    
    5Condensed Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2010 and June 30, 2009
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    30Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    51Item 4. Controls and Procedures
    
    
    52PART II: OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    53Item 1A. Risk Factors
    
    
    54Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    66Item 3. Defaults Upon Senior Securities
    
    
    66Item 4. Reserved
    
    
    66Item 5. Other Information
    
    
    66Item 6. Exhibits
    
    
    66Signature
    
    
    67EX-3.1EX-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)
 June 30,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    146,179
    
    
    $
    75,974Restricted cash
    
    
    11,780
    
    
    
    287,875Accounts receivable, net
    
    
    116,091
    
    
    
    68,883Deferred tax asset
    
    
    57,630
    
    
    
    19,142Prepaid expenses and other current assets
    
    
    33,251
    
    
    
    15,667Total current assets
    
    
    364,931
    
    
    
    467,541Non-Current Assets:Property and equipment, net
    
    
    44,648
    
    
    
    40,842Goodwill
    
    
    197,813
    
    
    
    135,275Other Intangibles, net:Customer-based intangibles
    
    
    156,614
    
    
    
    99,264Technology-based intangibles
    
    
    41,161
    
    
    
    20,240Marketing-based intangibles
    
    
    13,226
    
    
    
    157Deferred tax asset
    
    
    269,421
    
    
    
    44,350Other non-current assets
    
    
    17,381
    
    
    
    13,997Total non-current assets
    
    
    740,264
    
    
    
    354,125Total Assets
    
    $
    1,105,195
    
    
    $
    821,666LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    14,423
    
    
    $
    7,192Accrued expenses and other liabilities
    
    
    68,840
    
    
    
    45,523Income taxes payable
    
    
    3,152
    
    
    
    3,489Deferred revenue
    
    
    121,818
    
    
    
    65,665Total current liabilities
    
    
    208,233
    
    
    
    121,869Commitments and Contingencies (Note 8)Non-Current Liabilities:Long-term debt
    
    
    272,451
    
    
    
    272,250Accrued exit and disposal obligations
    
    
    6,626
    
    
    
    7,341Liability for uncertain tax positions
    
    
    10,306
    
    
    
    8,770Deferred revenue
    
    
    14,601
    
    
    
    Total non-current liabilities
    
    
    303,984
    
    
    
    288,361Total Liabilities
    
    
    512,217
    
    
    
    410,230Stockholders 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
43,628,080 and 36,323,245 shares, respectively
    
    
    436
    
    
    
    363Additional paid-in capital
    
    
    554,579
    
    
    
    361,362Deferred compensation
    
    
    (12,783
    )
    
    
    (5,297
    )Retained earnings
    
    
    77,612
    
    
    
    74,014Accumulated other comprehensive income (loss)
    
    
    (1,014
    )
    
    
    3,267Less treasury stock, at cost, 1,920,105 and 1,785,715 shares, respectively
    
    
    (25,852
    )
    
    
    (22,273
    )Total stockholders equity
    
    
    592,978
    
    
    
    411,436Total liabilities and stockholders equity
    
    $
    1,105,195
    
    
    $
    821,666
  3




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##### Table of Contents



JDA SOFTWARE GROUP, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except earnings per share data, unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009REVENUES:Software licenses
    
    $
    32,152
    
    
    $
    26,589
    
    
    $
    56,589
    
    
    $
    40,946Subscriptions and other recurring revenues
    
    
    5,806
    
    
    
    996
    
    
    
    10,093
    
    
    
    1,964Maintenance services
    
    
    60,594
    
    
    
    44,371
    
    
    
    117,654
    
    
    
    87,368Product revenues
    
    
    98,552
    
    
    
    71,956
    
    
    
    184,336
    
    
    
    130,278Consulting services
    
    
    55,255
    
    
    
    25,079
    
    
    
    98,257
    
    
    
    48,113Reimbursed expenses
    
    
    4,566
    
    
    
    2,450
    
    
    
    7,411
    
    
    
    4,427Service revenues
    
    
    59,821
    
    
    
    27,529
    
    
    
    105,668
    
    
    
    52,540Total revenues
    
    
    158,373
    
    
    
    99,485
    
    
    
    290,004
    
    
    
    182,818COST OF REVENUES:Cost of software licenses
    
    
    909
    
    
    
    1,235
    
    
    
    1,917
    
    
    
    1,837Amortization of acquired software technology
    
    
    1,803
    
    
    
    980
    
    
    
    3,379
    
    
    
    1,988Cost of maintenance services
    
    
    14,227
    
    
    
    10,984
    
    
    
    26,260
    
    
    
    21,533Cost of product revenues
    
    
    16,939
    
    
    
    13,199
    
    
    
    31,556
    
    
    
    25,358Cost of consulting services
    
    
    40,742
    
    
    
    20,131
    
    
    
    76,011
    
    
    
    39,513Reimbursed expenses
    
    
    4,566
    
    
    
    2,450
    
    
    
    7,411
    
    
    
    4,427Cost of service revenues
    
    
    45,308
    
    
    
    22,581
    
    
    
    83,422
    
    
    
    43,940Total cost of revenues
    
    
    62,247
    
    
    
    35,780
    
    
    
    114,978
    
    
    
    69,298GROSS PROFIT
    
    
    96,126
    
    
    
    63,705
    
    
    
    175,026
    
    
    
    113,520OPERATING EXPENSES:Product development
    
    
    19,481
    
    
    
    12,664
    
    
    
    36,758
    
    
    
    25,237Sales and marketing
    
    
    24,460
    
    
    
    16,170
    
    
    
    45,572
    
    
    
    30,422General and administrative
    
    
    19,801
    
    
    
    11,670
    
    
    
    37,498
    
    
    
    22,696Amortization of intangibles
    
    
    9,915
    
    
    
    6,051
    
    
    
    18,481
    
    
    
    12,127Restructuring charges
    
    
    4,548
    
    
    
    2,732
    
    
    
    12,306
    
    
    
    4,162Acquisition-related costs
    
    
    865
    
    
    
    
    
    
    
    7,608
    
    
    
    Total operating expenses
    
    
    79,070
    
    
    
    49,287
    
    
    
    158,223
    
    
    
    94,644OPERATING INCOME
    
    
    17,056
    
    
    
    14,418
    
    
    
    16,803
    
    
    
    18,876Interest expense and amortization of loan fees
    
    
    (6,182
    )
    
    
    (386
    )
    
    
    (12,268
    )
    
    
    (625
    )Interest income and other, net
    
    
    (642
    )
    
    
    123
    
    
    
    481
    
    
    
    (120
    )INCOME BEFORE INCOME TAXES
    
    
    10,232
    
    
    
    14,155
    
    
    
    5,016
    
    
    
    18,131Income tax provision
    
    
    2,366
    
    
    
    5,220
    
    
    
    1,418
    
    
    
    6,552NET INCOME
    
    $
    7,866
    
    
    $
    8,935
    
    
    $
    3,598
    
    
    $
    11,579BASIC EARNINGS PER SHARE
    
    $
    .19
    
    
    $
    .26
    
    
    $
    .09
    
    
    $
    .33DILUTED EARNINGS PER SHARE
    
    $
    .19
    
    
    $
    .25
    
    
    $
    .09
    
    
    $
    .33SHARES USED TO COMPUTE:Basic earnings per share
    
    
    41,672
    
    
    
    35,004
    
    
    
    40,514
    
    
    
    34,983Diluted earnings per share
    
    
    42,265
    
    
    
    35,232
    
    
    
    41,151
    
    
    
    35,154
  4




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JDA SOFTWARE GROUP, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009NET INCOME
    
    $
    7,866
    
    
    $
    8,935
    
    
    $
    3,598
    
    
    $
    11,579OTHER COMPREHENSIVE INCOME (LOSS):Foreign currency
translation
adjustment
    
    
    (3,720
    )
    
    
    4,188
    
    
    
    (4,281
    )
    
    
    3,574Total other
comprehensive income
(loss)
    
    
    (3,720
    )
    
    
    4,188
    
    
    
    (4,281
    )
    
    
    3,574COMPREHENSIVE INCOME
(LOSS)
    
    $
    4,146
    
    
    $
    13,123
    
    
    $
    (683
    )
    
    $
    15,153
  5




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JDA SOFTWARE GROUP, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)
 Six Months EndedJune 30,2010
    
    
    2009OPERATING ACTIVITIES:Net Income
    
    $
    3,598
    
    
    $
    11,579Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    28,010
    
    
    
    18,842Provision for doubtful accounts
    
    
    500
    
    
    
    300Amortization of loan fees
    
    
    922
    
    
    
    Share-based compensation expense
    
    
    6,569
    
    
    
    3,567Net gain on disposal of property and equipment
    
    
    (9
    )
    
    
    (54
    )Deferred income taxes
    
    
    (304
    )
    
    
    5,670Changes in assets and liabilities, net of effects from business acquisitions:Accounts receivable
    
    
    (14,856
    )
    
    
    16,820Income tax receivable
    
    
    2,031
    
    
    
    (1,434
    )Prepaid expenses and other current assets
    
    
    (13,911
    )
    
    
    (6,882
    )Accounts payable
    
    
    3,634
    
    
    
    7,139Accrued expenses and other liabilities
    
    
    (14,075
    )
    
    
    (13,507
    )Income tax payable
    
    
    (3,737
    )
    
    
    365Deferred revenue
    
    
    11,196
    
    
    
    18,107Net cash provided by operating activities
    
    $
    9,568
    
    
    $
    60,512INVESTING ACTIVITIES:Change in restricted cash
    
    $
    276,095
    
    
    $
    Purchase of i2 Technologies, Inc
    
    
    (213,427
    )
    
    
    Payment of direct costs related to acquisitions
    
    
    (1,639
    )
    
    
    (1,489
    )Purchase of other property and equipment
    
    
    (6,397
    )
    
    
    (1,407
    )Proceeds from disposal of property and equipment
    
    
    349
    
    
    
    54Net cash provided by (used in) investing activities
    
    $
    54,981
    
    
    $
    (2,842
    )FINANCING ACTIVITIES:Issuance of common stock under equity plans
    
    $
    11,610
    
    
    $
    4,642Purchase of treasury stock and other, net
    
    
    (3,758
    )
    
    
    (3,899
    )Net cash provided by financing activities
    
    $
    7,852
    
    
    $
    743EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
    
    
    (2,196
    )
    
    
    1,566Net increase in cash and cash equivalents
    
    
    70,205
    
    
    
    59,979CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    75,974
    
    
    
    32,696CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    146,179
    
    
    $
    92,675
  6




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JDA SOFTWARE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
 Six Months EndedJune 30,2010
    
    
    2009SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for income taxes
    
    $
    6,244
    
    
    $
    2,260Cash paid for interest
    
    $
    12,227
    
    
    $
    98Cash received for income tax refunds
    
    $
    1,458
    
    
    $
    722ACQUISITION OF i2 TECHNOLOGIES, INC.Identifiable assets acquired:Current assets acquired
    
    $
    300,456Property and equipment acquired
    
    
    3,115Customer-based intangibles
    
    
    74,600Technology-based intangibles
    
    
    24,300Marketing-based intangibles
    
    
    14,300Long-term deferred tax assets acquired
    
    
    221,060Other non-current assets acquired
    
    
    3,925Total identifiable assets acquired
    
    
    641,756Goodwill
    
    
    62,538Total assets acquired
    
    
    704,294Liabilities assumed:Deferred revenue assumed
    
    
    (59,095
    )Other current liabilities assumed
    
    
    (44,251
    )Non-current liabilities assumed
    
    
    (1,194
    )Total liabilities assumed
    
    
    (104,540
    )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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Weighted AverageUseful Life
    
    Amortization PeriodCash
    
    $
    218,348Trade accounts receivable acquired
    
    
    33,419Other current assets acquired
    
    
    48,689Property and equipment acquired
    
    
    3,115Customer-based intangibles
    
    
    74,600
    
    
    1 to 7 years
    
    6 yearsTechnology-based intangibles
    
    
    24,300
    
    
    7 years
    
    7 yearsMarketing-based intangibles
    
    
    14,300
    
    
    5 years
    
    5 yearsLong-term deferred tax assets acquired
    
    
    221,060Other non-current assets
    
    
    3,925Total assets acquired
    
    
    641,756Goodwill
    
    
    62,538Total assets acquired
    
    
    704,294Deferred revenue assumed
    
    
    (59,095
    )Other current liabilities assumed
    
    
    (44,251
    )Other non-current liabilities assumed
    
    
    (1,194
    )Total liabilities assumed
    
    
    (104,540
    )Net assets acquired from i2 Technologies, Inc
    
    $
    599,754
   9




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Six Months Ended
    
    
    Six Months EndedJune 30, 2010
    
    
    June 30, 2009Total revenues
    
    $
    305,030
    
    
    $
    296,249Net income (loss)
    
    $
    (10,848
    )
    
    $
    26,980Basic earnings (loss) per share
    
    $
    (0.26
    )
    
    $
    0.58Diluted earnings (loss) per share
    
    $
    (0.26
    )
    
    $
    0.58
  Revenues
    
    
    Earnings (Loss)i2 operating results from January 28, 2010 to June 30, 2010
    
    $
    90,195
    
    
    $
    *i2 operating results from January 1, 2010 to June 30, 2010
    
    $
    105,221
    
    
    $
    *i2 operating results from January 1, 2009 to June 30, 2009
    
    $
    113,431
    
    
    $
    11,663
 
 *
    
    We are unable to provide separate disclosure of the earnings (loss) of i2 from January
28, 2010 (date of acquisition) to
June 30, 2010 and the pro-forma results from January 1, 2010 to June 30, 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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4. Goodwill and Other Intangibles, net
  June 30, 2010
    
    
    December 31, 2009Estimated Useful
    
    
    Gross Carrying
    
    
    Accumulated
    
    
    Gross Carrying
    
    
    AccumulatedLives
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationGoodwill:Gross goodwill
    
    
    
    
    
    $
    207,526
    
    
    $
    
    
    
    $
    144,988
    
    
    $
    Accumulated impairment losses
    
    
    
    
    
    
    (9,713
    )
    
    
    
    
    
    
    (9,713
    )Goodwill, net of impairment losses
    
    
    
    
    
    $
    197,813
    
    
    
    
    
    
    $
    135,275Identifiable intangible assets:Customer-based intangible assets
    
    
    1 to 13 years
    
    
    
    257,983
    
    
    
    (101,369
    )
    
    
    183,383
    
    
    
    (84,119
    )Technology-based intangible assets
    
    
    7 to 15 years
    
    
    
    90,147
    
    
    
    (48,986
    )
    
    
    65,847
    
    
    
    (45,607
    )Marketing-based intangible assets
    
    
    5 years
    
    
    
    19,491
    
    
    
    (6,265
    )
    
    
    5,191
    
    
    
    (5,034
    )367,621
    
    
    
    (156,620
    )
    
    
    254,421
    
    
    
    (134,760
    )$
    565,434
    
    
    $
    (156,620
    )
    
    $
    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
  11




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Year
    
    Amortization2010
    
    $23,8932011
    
    $45,5182012
    
    $44,9312013
    
    $44,2412014
    
    $27,172
 5. Restructuring Reserves
 2010 Restructuring Charges
 CoE
 Impact of Changes
    
    BalanceDescription of charge
    
    Initial Reserve
    
    Cash Payments
    
    in Exchange Rates
    
    June 30, 2010Termination benefits
    
    $
    8,426
    
    
    $
    (6,334
    )
    
    $
    6
    
    
    $
    2,098Office closures
    
    
    3,946
    
    
    
    (748
    )
    
    
    23
    
    
    
    3,221Total
    
    $
    12,372
    
    
    $
    (7,082
    )
    
    $
    29
    
    
    $
    5,319
  2009 Restructuring Charges
 CoE
 12




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6. Manugistics Acquisition Reserves
  Initial
    
    Adjustments
    
    Cash
    
    Impact of Changes
    
    Balance
    
    Adjustments to
    
    Cash
    
    Impact of Changes
    
    BalanceDescription of charge
    
    Reserve
    
    to Reserves
    
    Payments
    
    in Exchange Rates
    
    December 31, 2009
    
    Reserves
    
    Payments
    
    in Exchange Rates
    
    June 30, 2010Restructuring charges:Office closures, lease
terminations and
sublease costs
    
    $
    29,212
    
    
    $
    (949
    )
    
    $
    (16,110
    )
    
    $
    (724
    )
    
    $
    11,429
    
    
    $
    
    
    
    $
    (1,572
    )
    
    $
    (262
    )
    
    $
    9,595Employee severance and
termination benefits
    
    
    3,607
    
    
    
    (767
    )
    
    
    (2,468
    )
    
    
    125
    
    
    
    497
    
    
    
    (73
    )
    
    
    (67
    )
    
    
    (63
    )
    
    
    294IT 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
    
    
    $
    (73
    )
    
    
    (1,639
    )
    
    
    (325
    )
    
    
    9,889Direct costs
    
    
    13,125
    
    
    
    6
    
    
    
    (13,131
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    47,394
    
    
    $
    (1,488
    )
    
    $
    (33,381
    )
    
    $
    (599
    )
    
    $
    11,926
    
    
    $
    (73
    )
    
    $
    (1,639
    )
    
    $
    (325
    )
    
    $
    9,889
  7. Long-term Debt
    13




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##### Table of Contents



8. Legal Proceedings
 Dillards, Inc. vs. i2 Technologies, Inc.
 st
   14




---



##### Table of Contents



i2 Technologies, Inc. vs. Oracle Corporation
  Shareholder Class Action Litigation
   9. Share-Based Compensation
   2010 Performance Program.
 15




---



##### Table of Contents



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 vesting on the
first anniversary of their employment with the remainder vesting ratably over the
subsequent 24-
 16




---



##### Table of Contents



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 $497,000 in the six months ended June 30, 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 $83,000 in the six months ended June 30, 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 June
30, 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
   11. Income Taxes
  17




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12. Earnings per Share
  18




---



##### Table of Contents



Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income
    
    $
    7,866
    
    
    $
    8,935
    
    
    $
    3,598
    
    
    $
    11,579Less dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Undistributed earnings
    
    $
    7,866
    
    
    $
    8,935
    
    
    $
    3,598
    
    
    $
    11,579Allocation of undistributed earnings:Common Stock
    
    $
    7,866
    
    
    $
    8,015
    
    
    $
    3,598
    
    
    $
    10,387Series B Preferred Stock
    
    
    
    
    
    
    920
    
    
    
    
    
    
    
    1,192$
    7,866
    
    
    $
    8,935
    
    
    $
    3,598
    
    
    $
    11,579Weighted average shares:Common Stock
    
    
    41,672
    
    
    
    31,400
    
    
    
    40,514
    
    
    
    31,379Series B Preferred Stock
    
    
    
    
    
    
    3,604
    
    
    
    
    
    
    
    3,604Shares  Basic earnings per share
    
    
    41,672
    
    
    
    35,004
    
    
    
    40,514
    
    
    
    34,983Dilutive common stock equivalents
    
    
    593
    
    
    
    228
    
    
    
    637
    
    
    
    171Shares  Diluted earnings per share
    
    
    42,265
    
    
    
    35,232
    
    
    
    41,151
    
    
    
    35,154Basic earnings per share applicable to:Common Stock
    
    $
    .19
    
    
    $
    .26
    
    
    $
    .09
    
    
    $
    .33Series B Preferred Stock
    
    $
    
    
    
    $
    .26
    
    
    $
    
    
    
    $
    .33Diluted earnings per share applicable to common shareholders
    
    $
    .19
    
    
    $
    .25
    
    
    $
    .09
    
    
    $
    .33
 13. Business Segments and Geographic Data
  Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues:Americas
    
    $
    107,304
    
    
    $
    65,803
    
    
    $
    195,004
    
    
    $
    126,381Europe
    
    
    26,874
    
    
    
    20,186
    
    
    
    52,188
    
    
    
    36,839Asia/Pacific
    
    
    24,195
    
    
    
    13,496
    
    
    
    42,812
    
    
    
    19,598Total revenues
    
    $
    158,373
    
    
    $
    99,485
    
    
    $
    290,004
    
    
    $
    182,818
 19




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##### Table of Contents



June 30,
    
    
    December 31,2010
    
    
    2009Identifiable assets:Americas
    
    $
    890,253
    
    
    $
    695,539Europe
    
    
    119,549
    
    
    
    85,817Asia/Pacific
    
    
    95,393
    
    
    
    40,310Total identifiable assets
    
    $
    1,105,195
    
    
    $
    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.
  Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenues:Supply Chain
    
    $
    152,931
    
    
    $
    88,161
    
    
    $
    278,164
    
    
    $
    166,384Services Industries
    
    
    5,442
    
    
    
    11,324
    
    
    
    11,840
    
    
    
    16,434$
    158,373
    
    
    $
    99,485
    
    
    $
    290,004
    
    
    $
    182,818Operating income (loss):Supply Chain
    
    $
    52,638
    
    
    $
    29,127
    
    
    $
    92,542
    
    
    $
    51,238Services Industries
    
    
    (453
    )
    
    
    5,744
    
    
    
    154
    
    
    
    6,623Other (see below)
    
    
    (35,129
    )
    
    
    (20,453
    )
    
    
    (75,893
    )
    
    
    (38,985
    )$
    17,056
    
    
    $
    14,418
    
    
    $
    16,803
    
    
    $
    18,876Depreciation:Supply Chain
    
    $
    2,634
    
    
    $
    1,743
    
    
    $
    5,063
    
    
    $
    3,530Services Industries
    
    
    148
    
    
    
    327
    
    
    
    364
    
    
    
    553$
    2,782
    
    
    $
    2,070
    
    
    $
    5,427
    
    
    $
    4,083Other:General and administrative expenses
    
    $
    19,801
    
    
    $
    11,670
    
    
    $
    37,498
    
    
    $
    22,696Amortization of intangible assets
    
    
    9,915
    
    
    
    6,051
    
    
    
    18,481
    
    
    
    12,127Restructuring charge
    
    
    4,548
    
    
    
    2,732
    
    
    
    12,306
    
    
    
    4,162Acquisition-related costs
    
    
    865
    
    
    
    
    
    
    
    7,608
    
    
    
    $
    35,129
    
    
    $
    20,453
    
    
    $
    75,893
    
    
    $
    38,985
 Supply Chain Services Industry
 20




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14. Condensed Consolidating Financial Information
   21




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##### Table of Contents



Unaudited Condensed Consolidating Balance Sheets
June 30, 2010
(in thousands)
 JDA Software
    
    
    Guarantor
    
    
    Non-GuarantorGroup, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    111,909
    
    
    $
    34,270
    
    
    $
    
    
    
    $
    146,179Restricted cash
    
    
    
    
    
    
    10,971
    
    
    
    809
    
    
    
    
    
    
    
    11,780Accounts receivable
    
    
    
    
    
    
    95,406
    
    
    
    20,685
    
    
    
    
    
    
    
    116,091Income tax receivable
    
    
    4,531
    
    
    
    (3,499
    )
    
    
    (1,032
    )
    
    
    
    
    
    
    Deferred tax asset
    
    
    
    
    
    
    55,682
    
    
    
    1,948
    
    
    
    
    
    
    
    57,630Prepaid expenses and other current assets
    
    
    
    
    
    
    21,424
    
    
    
    11,827
    
    
    
    
    
    
    
    33,251Total current assets
    
    
    4,531
    
    
    
    291,893
    
    
    
    68,507
    
    
    
    
    
    
    
    364,931Non-Current Assets:Property and equipment, net
    
    
    
    
    
    
    38,680
    
    
    
    5,968
    
    
    
    
    
    
    
    44,648Goodwill
    
    
    
    
    
    
    197,813
    
    
    
    
    
    
    
    
    
    
    
    197,813Other intangibles, net:Customer-based intangibles
    
    
    
    
    
    
    156,614
    
    
    
    
    
    
    
    
    
    
    
    156,614Technology-based intangibles
    
    
    
    
    
    
    41,161
    
    
    
    
    
    
    
    
    
    
    
    41,161Marketing-based intangibles
    
    
    
    
    
    
    13,226
    
    
    
    
    
    
    
    
    
    
    
    13,226Deferred tax asset
    
    
    
    
    
    
    257,546
    
    
    
    11,875
    
    
    
    
    
    
    
    269,421Other non-current assets
    
    
    6,266
    
    
    
    108
    
    
    
    11,007
    
    
    
    
    
    
    
    17,381Investment in subsidiaries
    
    
    161,334
    
    
    
    74,331
    
    
    
    
    
    
    
    (235,665
    )
    
    
    Intercompany accounts
    
    
    694,337
    
    
    
    (730,368
    )
    
    
    36,031
    
    
    
    
    
    
    
    Total non-current assets
    
    
    861,937
    
    
    
    49,111
    
    
    
    64,881
    
    
    
    (235,665
    )
    
    
    740,264Total Assets
    
    $
    866,468
    
    
    $
    341,004
    
    
    $
    133,388
    
    
    $
    (235,665
    )
    
    $
    1,105,195LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts Payable
    
    $
    
    
    
    $
    12,688
    
    
    $
    1,735
    
    
    $
    
    
    
    $
    14,423Accrued expenses and other liabilities
    
    
    1,039
    
    
    
    43,150
    
    
    
    24,651
    
    
    
    
    
    
    
    68,840Income taxes payable
    
    
    
    
    
    
    (3,296
    )
    
    
    6,448
    
    
    
    
    
    
    
    3,152Deferred revenue
    
    
    
    
    
    
    89,952
    
    
    
    31,866
    
    
    
    
    
    
    
    121,818Total current liabilities
    
    
    1,039
    
    
    
    142,494
    
    
    
    64,700
    
    
    
    
    
    
    
    208,233Non-Current Liabilities:Long-term debt
    
    
    272,451
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    272,451Accrued exit and disposal obligations
    
    
    
    
    
    
    4,292
    
    
    
    2,334
    
    
    
    
    
    
    
    6,626Liability for uncertain tax positions
    
    
    
    
    
    
    9,052
    
    
    
    1,254
    
    
    
    
    
    
    
    10,306Deferred revenues
    
    
    
    
    
    
    14,429
    
    
    
    172
    
    
    
    
    
    
    
    14,601Total non-current liabilities
    
    
    272,451
    
    
    
    27,773
    
    
    
    3,760
    
    
    
    
    
    
    
    303,984Total Liabilities
    
    
    273,490
    
    
    
    170,267
    
    
    
    68,460
    
    
    
    
    
    
    
    512,217Stockholders Equity
    
    
    592,978
    
    
    
    170,737
    
    
    
    64,928
    
    
    
    (235,665
    )
    
    
    592,978Total Liabilities and Stockholders Equity
    
    $
    866,468
    
    
    $
    341,004
    
    
    $
    133,388
    
    
    $
    (235,665
    )
    
    $
    1,105,195
 22




---



##### Table of Contents



Condensed Consolidating Balance Sheets
December 31, 2009
(in thousands)
 JDA Software
    
    
    Guarantor
    
    
    Non-GuarantorGroup, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    47,170
    
    
    $
    28,804
    
    
    $
    
    
    
    $
    75,974Restricted cash
    
    
    287,875
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    287,875Accounts receivable
    
    
    
    
    
    
    53,535
    
    
    
    15,348
    
    
    
    
    
    
    
    68,883Income tax receivable
    
    
    469
    
    
    
    5,941
    
    
    
    (6,410
    )
    
    
    
    
    
    
    Deferred tax asset
    
    
    
    
    
    
    17,973
    
    
    
    1,169
    
    
    
    
    
    
    
    19,142Prepaid expenses and other current assets
    
    
    
    
    
    
    11,273
    
    
    
    4,394
    
    
    
    
    
    
    
    15,667Total current assets
    
    
    288,344
    
    
    
    135,892
    
    
    
    43,305
    
    
    
    
    
    
    
    467,541Non-Current Assets:Property and equipment, net
    
    
    
    
    
    
    35,343
    
    
    
    5,499
    
    
    
    
    
    
    
    40,842Goodwill
    
    
    
    
    
    
    135,275
    
    
    
    
    
    
    
    
    
    
    
    135,275Other intangibles, net:Customer-based intangibles
    
    
    
    
    
    
    99,264
    
    
    
    
    
    
    
    
    
    
    
    99,264Technology-based intangibles
    
    
    
    
    
    
    20,240
    
    
    
    
    
    
    
    
    
    
    
    20,240Marketing-based intangibles
    
    
    
    
    
    
    157
    
    
    
    
    
    
    
    
    
    
    
    157Deferred tax asset
    
    
    
    
    
    
    37,781
    
    
    
    6,569
    
    
    
    
    
    
    
    44,350Other non-current assets
    
    
    6,697
    
    
    
    124
    
    
    
    7,176
    
    
    
    
    
    
    
    13,997Investment in subsidiaries
    
    
    154,166
    
    
    
    27,575
    
    
    
    
    
    
    
    (181,741
    )
    
    
    Intercompany accounts
    
    
    234,479
    
    
    
    (253,131
    )
    
    
    18,652
    
    
    
    
    
    
    
    Total non-current assets
    
    
    395,342
    
    
    
    102,628
    
    
    
    37,896
    
    
    
    (181,741
    )
    
    
    354,125Total Assets
    
    $
    683,686
    
    
    $
    238,520
    
    
    $
    81,201
    
    
    $
    (181,741
    )
    
    $
    821,666LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts Payable
    
    $
    
    
    
    $
    6,140
    
    
    $
    1,052
    
    
    $
    
    
    
    $
    7,192Accrued expenses and other liabilities
    
    
    
    
    
    
    28,809
    
    
    
    16,714
    
    
    
    
    
    
    
    45,523Income taxes payable
    
    
    
    
    
    
    1,255
    
    
    
    2,234
    
    
    
    
    
    
    
    3,489Deferred revenue
    
    
    
    
    
    
    44,145
    
    
    
    21,520
    
    
    
    
    
    
    
    65,665Total current liabilities
    
    
    
    
    
    
    80,349
    
    
    
    41,520
    
    
    
    
    
    
    
    121,869Non-Current Liabilities:Long-term debt
    
    
    272,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    272,250Accrued exit and disposal obligations
    
    
    
    
    
    
    4,723
    
    
    
    2,618
    
    
    
    
    
    
    
    7,341Liability for uncertain tax positions
    
    
    
    
    
    
    8,770
    
    
    
    
    
    
    
    
    
    
    
    8,770Total non-current liabilities
    
    
    272,250
    
    
    
    13,493
    
    
    
    2,618
    
    
    
    
    
    
    
    288,361Total Liabilities
    
    
    272,250
    
    
    
    93,842
    
    
    
    44,138
    
    
    
    
    
    
    
    410,230Stockholders Equity
    
    
    411,436
    
    
    
    144,678
    
    
    
    37,063
    
    
    
    (181,741
    )
    
    
    411,436Total Liabilities and Stockholders Equity
    
    $
    683,686
    
    
    $
    238,520
    
    
    $
    81,201
    
    
    $
    (181,741
    )
    
    $
    821,666
 23




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##### Table of Contents



Unaudited Condensed Consolidating Statements of Income
Three Months Ended June 30, 2010
(in thousands)
 JDA Software
    
    
    Guarantor
    
    
    Non-GuarantorGroup, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Software licenses
    
    $
    
    
    
    $
    32,152
    
    
    $
    
    
    
    $
    
    
    
    $
    32,152Subscriptions and other recurring revenues
    
    
    
    
    
    
    5,806
    
    
    
    
    
    
    
    
    
    
    
    5,806Maintenance services
    
    
    
    
    
    
    42,480
    
    
    
    18,114
    
    
    
    
    
    
    
    60,594Product revenues
    
    
    
    
    
    
    80,438
    
    
    
    18,114
    
    
    
    
    
    
    
    98,552Consulting services
    
    
    
    
    
    
    37,535
    
    
    
    17,720
    
    
    
    
    
    
    
    55,255Reimbursed expenses
    
    
    
    
    
    
    3,048
    
    
    
    1,518
    
    
    
    
    
    
    
    4,566Service revenues
    
    
    
    
    
    
    40,583
    
    
    
    19,238
    
    
    
    
    
    
    
    59,821Total revenues
    
    
    
    
    
    
    121,021
    
    
    
    37,352
    
    
    
    
    
    
    
    158,373Cost of Revenues:Cost of software licenses
    
    
    
    
    
    
    909
    
    
    
    
    
    
    
    
    
    
    
    909Amortization of acquired software technology
    
    
    
    
    
    
    1,803
    
    
    
    
    
    
    
    
    
    
    
    1,803Cost of maintenance services
    
    
    
    
    
    
    9,499
    
    
    
    4,728
    
    
    
    
    
    
    
    14,227Cost of product revenues
    
    
    
    
    
    
    12,211
    
    
    
    4,728
    
    
    
    
    
    
    
    16,939Cost of consulting services
    
    
    
    
    
    
    28,478
    
    
    
    12,264
    
    
    
    
    
    
    
    40,742Reimbursed expenses
    
    
    
    
    
    
    3,044
    
    
    
    1,522
    
    
    
    
    
    
    
    4,566Cost of service revenues
    
    
    
    
    
    
    31,522
    
    
    
    13,786
    
    
    
    
    
    
    
    45,308Total cost of revenues
    
    
    
    
    
    
    43,733
    
    
    
    18,514
    
    
    
    
    
    
    
    62,247Gross Profit
    
    
    
    
    
    
    77,288
    
    
    
    18,838
    
    
    
    
    
    
    
    96,126Operating Expenses:Product development
    
    
    
    
    
    
    12,387
    
    
    
    7,094
    
    
    
    
    
    
    
    19,481Sales and marketing
    
    
    
    
    
    
    14,904
    
    
    
    9,556
    
    
    
    
    
    
    
    24,460General and administrative
    
    
    
    
    
    
    15,824
    
    
    
    3,997
    
    
    
    
    
    
    
    19,801Amortization of intangibles
    
    
    
    
    
    
    9,915
    
    
    
    
    
    
    
    
    
    
    
    9,915Restructuring charges
    
    
    
    
    
    
    3,771
    
    
    
    777
    
    
    
    
    
    
    
    4,548Acquisition-related costs
    
    
    
    
    
    
    865
    
    
    
    
    
    
    
    
    
    
    
    865Total operating expenses
    
    
    
    
    
    
    57,666
    
    
    
    21,404
    
    
    
    
    
    
    
    79,070Operating Income (Loss)
    
    
    
    
    
    
    19,622
    
    
    
    (2,566
    )
    
    
    
    
    
    
    17,056Interest expense and amortization of loan fees
    
    
    (5,995
    )
    
    
    (127
    )
    
    
    (60
    )
    
    
    
    
    
    
    (6,182
    )Interest income and other, net
    
    
    
    
    
    
    (10,683
    )
    
    
    10,041
    
    
    
    
    
    
    
    (642
    )Equity in earnings (loss) of subsidiaries
    
    
    11,583
    
    
    
    5,697
    
    
    
    
    
    
    
    (17,280
    )
    
    
    Income (Loss) Before Income Taxes
    
    
    5,588
    
    
    
    14,509
    
    
    
    7,415
    
    
    
    (17,280
    )
    
    
    10,232Income tax (provision) benefit
    
    
    2,278
    
    
    
    (1,813
    )
    
    
    (2,831
    )
    
    
    
    
    
    
    (2,366
    )Net Income (Loss)
    
    $
    7,866
    
    
    $
    12,696
    
    
    $
    4,584
    
    
    $
    (17,280
    )
    
    $
    7,866
 24




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##### Table of Contents



Unaudited Condensed Consolidating Statements of Income
Three Months Ended June 30, 2009
(in thousands)
 JDA Software
    
    
    Guarantor
    
    
    Non-GuarantorGroup, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Software licenses
    
    $
    
    
    
    $
    26,585
    
    
    $
    
    
    
    $
    
    
    
    $
    26,589Subscriptions and other recurring revenues
    
    
    
    
    
    
    996
    
    
    
    
    
    
    
    
    
    
    
    996Maintenance services
    
    
    
    
    
    
    28,462
    
    
    
    15,909
    
    
    
    
    
    
    
    44,371Product revenues
    
    
    
    
    
    
    56,047
    
    
    
    15,909
    
    
    
    
    
    
    
    71,956Consulting services
    
    
    
    
    
    
    16,377
    
    
    
    8,702
    
    
    
    
    
    
    
    25,079Reimbursed expenses
    
    
    
    
    
    
    1,694
    
    
    
    756
    
    
    
    
    
    
    
    2,450Service revenues
    
    
    
    
    
    
    18,071
    
    
    
    9,458
    
    
    
    
    
    
    
    27,529Total revenues
    
    
    
    
    
    
    74,118
    
    
    
    25,367
    
    
    
    
    
    
    
    99,485Cost of Revenues:Cost of software licenses
    
    
    
    
    
    
    1,235
    
    
    
    
    
    
    
    
    
    
    
    1,235Amortization of acquired software technology
    
    
    
    
    
    
    980
    
    
    
    
    
    
    
    
    
    
    
    980Cost of maintenance services
    
    
    
    
    
    
    8,140
    
    
    
    2,844
    
    
    
    
    
    
    
    10,984Cost of product revenues
    
    
    
    
    
    
    10,355
    
    
    
    2,844
    
    
    
    
    
    
    
    13,199Cost of consulting services
    
    
    
    
    
    
    13,200
    
    
    
    6,931
    
    
    
    
    
    
    
    20,131Reimbursed expenses
    
    
    
    
    
    
    1,694
    
    
    
    756
    
    
    
    
    
    
    
    2,450Cost of service revenues
    
    
    
    
    
    
    14,894
    
    
    
    7,687
    
    
    
    
    
    
    
    22,581Total cost of revenues
    
    
    
    
    
    
    25,249
    
    
    
    10,531
    
    
    
    
    
    
    
    35,780Gross Profit
    
    
    
    
    
    
    48,869
    
    
    
    14,836
    
    
    
    
    
    
    
    63,705Operating Expenses:Product development
    
    
    
    
    
    
    10,107
    
    
    
    2,557
    
    
    
    
    
    
    
    12,664Sales and marketing
    
    
    
    
    
    
    9,677
    
    
    
    6,493
    
    
    
    
    
    
    
    16,170General and administrative
    
    
    
    
    
    
    9,232
    
    
    
    2,438
    
    
    
    
    
    
    
    11,670Amortization of intangibles
    
    
    
    
    
    
    6,051
    
    
    
    
    
    
    
    
    
    
    
    6,051Restructuring charges
    
    
    
    
    
    
    1,678
    
    
    
    1,054
    
    
    
    
    
    
    
    2,732Total operating expenses
    
    
    
    
    
    
    36,745
    
    
    
    12,542
    
    
    
    
    
    
    
    49,287Operating Income
    
    
    
    
    
    
    12,124
    
    
    
    2,294
    
    
    
    
    
    
    
    14,418Interest expense and amortization of loan fees
    
    
    (275
    )
    
    
    (74
    )
    
    
    (37
    )
    
    
    
    
    
    
    (386
    )Interest income and other, net
    
    
    
    
    
    
    3,454
    
    
    
    (3,331
    )
    
    
    
    
    
    
    123Equity in earnings (loss) of subsidiaries
    
    
    9,105
    
    
    
    (2,131
    )
    
    
    
    
    
    
    (6,974
    )
    
    
    Income (Loss) Before Income Taxes
    
    
    8,830
    
    
    
    13,373
    
    
    
    (1,074
    )
    
    
    (6,974
    )
    
    
    14,155Income tax (provision) benefit
    
    
    105
    
    
    
    (6,012
    )
    
    
    687
    
    
    
    
    
    
    
    (5,220
    )Net Income (Loss)
    
    $
    8,935
    
    
    $
    7,361
    
    
    $
    (387
    )
    
    $
    (6,974
    )
    
    $
    8,935
 25




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##### Table of Contents



Unaudited Condensed Consolidating Statements of Income
Six Months Ended June 30, 2010
(in thousands)
 JDA Software
    
    
    Guarantor
    
    
    Non-GuarantorGroup, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Software licenses
    
    $
    
    
    
    $
    56,589
    
    
    $
    
    
    
    $
    
    
    
    $
    56,589Subscriptions and other recurring revenues
    
    
    
    
    
    
    10,093
    
    
    
    
    
    
    
    
    
    
    
    10,093Maintenance services
    
    
    
    
    
    
    80,768
    
    
    
    36,886
    
    
    
    
    
    
    
    117,654Product revenues
    
    
    
    
    
    
    147,450
    
    
    
    36,886
    
    
    
    
    
    
    
    184,336Consulting services
    
    
    
    
    
    
    68,219
    
    
    
    30,038
    
    
    
    
    
    
    
    98,257Reimbursed expenses
    
    
    
    
    
    
    5,184
    
    
    
    2,227
    
    
    
    
    
    
    
    7,411Service revenues
    
    
    
    
    
    
    73,403
    
    
    
    32,265
    
    
    
    
    
    
    
    105,668Total revenues
    
    
    
    
    
    
    220,853
    
    
    
    69,151
    
    
    
    
    
    
    
    290,004Cost of Revenues:Cost of software licenses
    
    
    
    
    
    
    1,917
    
    
    
    
    
    
    
    
    
    
    
    1,917Amortization of acquired software technology
    
    
    
    
    
    
    3,379
    
    
    
    
    
    
    
    
    
    
    
    3,379Cost of maintenance services
    
    
    
    
    
    
    17,848
    
    
    
    8,412
    
    
    
    
    
    
    
    26,260Cost of product revenues
    
    
    
    
    
    
    23,144
    
    
    
    8,412
    
    
    
    
    
    
    
    31,556Cost of consulting services
    
    
    
    
    
    
    53,574
    
    
    
    22,437
    
    
    
    
    
    
    
    76,011Reimbursed expenses
    
    
    
    
    
    
    5,180
    
    
    
    2,231
    
    
    
    
    
    
    
    7,411Cost of service revenues
    
    
    
    
    
    
    58,754
    
    
    
    24,668
    
    
    
    
    
    
    
    83,422Total cost of revenues
    
    
    
    
    
    
    81,898
    
    
    
    33,080
    
    
    
    
    
    
    
    114,978Gross Profit
    
    
    
    
    
    
    138,955
    
    
    
    36,071
    
    
    
    
    
    
    
    175,026Operating Expenses:Product development
    
    
    
    
    
    
    24,359
    
    
    
    12,399
    
    
    
    
    
    
    
    36,758Sales and marketing
    
    
    
    
    
    
    28,361
    
    
    
    17,211
    
    
    
    
    
    
    
    45,572General and administrative
    
    
    
    
    
    
    30,406
    
    
    
    7,092
    
    
    
    
    
    
    
    37,498Amortization of intangibles
    
    
    
    
    
    
    18,481
    
    
    
    
    
    
    
    
    
    
    
    18,481Restructuring charges
    
    
    
    
    
    
    8,914
    
    
    
    3,392
    
    
    
    
    
    
    
    12,306Acquisition-related costs
    
    
    
    
    
    
    7,608
    
    
    
    
    
    
    
    
    
    
    
    7,608Total operating expenses
    
    
    
    
    
    
    118,129
    
    
    
    40,094
    
    
    
    
    
    
    
    158,223Operating Income (Loss)
    
    
    
    
    
    
    20,826
    
    
    
    (4,023
    )
    
    
    
    
    
    
    16,803Interest expense and amortization of loan fees
    
    
    (11,923
    )
    
    
    (246
    )
    
    
    (99
    )
    
    
    
    
    
    
    (12,268
    )Interest income and other, net
    
    
    
    
    
    
    (14,274
    )
    
    
    14,755
    
    
    
    
    
    
    
    481Equity in earnings (loss) of subsidiaries
    
    
    10,990
    
    
    
    6,841
    
    
    
    
    
    
    
    (17,831
    )
    
    
    Income (Loss) Before Income Taxes
    
    
    (933
    )
    
    
    13,147
    
    
    
    10,633
    
    
    
    (17,831
    )
    
    
    5,016Income tax (provision) benefit
    
    
    4,531
    
    
    
    (2,289
    )
    
    
    (3,660
    )
    
    
    
    
    
    
    (1,418
    )Net Income (Loss)
    
    $
    3,598
    
    
    $
    10,858
    
    
    $
    6,973
    
    
    $
    (17,831
    )
    
    $
    3,598
 26




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##### Table of Contents



Unaudited Condensed Consolidating Statements of Income
Six Months Ended June 30, 2009
(in thousands)
 JDA Software
    
    
    Guarantor
    
    
    Non-GuarantorGroup, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Software licenses
    
    $
    
    
    
    $
    40,946
    
    
    $
    
    
    
    $
    
    
    
    $
    40,946Subscriptions and other recurring revenues
    
    
    
    
    
    
    1,964
    
    
    
    
    
    
    
    
    
    
    
    1,964Maintenance services
    
    
    
    
    
    
    56,395
    
    
    
    30,973
    
    
    
    
    
    
    
    87,368Product revenues
    
    
    
    
    
    
    99,305
    
    
    
    30,973
    
    
    
    
    
    
    
    130,278Consulting services
    
    
    
    
    
    
    31,689
    
    
    
    16,424
    
    
    
    
    
    
    
    48,113Reimbursed expenses
    
    
    
    
    
    
    3,030
    
    
    
    1,397
    
    
    
    
    
    
    
    4,427Service revenues
    
    
    
    
    
    
    34,719
    
    
    
    17,821
    
    
    
    
    
    
    
    52,540Total revenues
    
    
    
    
    
    
    134,024
    
    
    
    48,794
    
    
    
    
    
    
    
    182,818Cost of Revenues:Cost of software licenses
    
    
    
    
    
    
    1,837
    
    
    
    
    
    
    
    
    
    
    
    1,837Amortization of acquired software technology
    
    
    
    
    
    
    1,988
    
    
    
    
    
    
    
    
    
    
    
    1,988Cost of maintenance services
    
    
    
    
    
    
    16,074
    
    
    
    5,459
    
    
    
    
    
    
    
    21,533Cost of product revenues
    
    
    
    
    
    
    19,899
    
    
    
    5,459
    
    
    
    
    
    
    
    25,358Cost of consulting services
    
    
    
    
    
    
    25,597
    
    
    
    13,916
    
    
    
    
    
    
    
    39,513Reimbursed expenses
    
    
    
    
    
    
    3,030
    
    
    
    1,397
    
    
    
    
    
    
    
    4,427Cost of service revenues
    
    
    
    
    
    
    28,627
    
    
    
    15,313
    
    
    
    
    
    
    
    43,940Total cost of revenues
    
    
    
    
    
    
    48,526
    
    
    
    20,772
    
    
    
    
    
    
    
    69,298Gross Profit
    
    
    
    
    
    
    85,498
    
    
    
    28,022
    
    
    
    
    
    
    
    113,520Operating Expenses:Product development
    
    
    
    
    
    
    20,494
    
    
    
    4,743
    
    
    
    
    
    
    
    25,237Sales and marketing
    
    
    
    
    
    
    19,205
    
    
    
    11,217
    
    
    
    
    
    
    
    30,422General and administrative
    
    
    
    
    
    
    18,452
    
    
    
    4,244
    
    
    
    
    
    
    
    22,696Amortization of intangibles
    
    
    
    
    
    
    12,127
    
    
    
    
    
    
    
    
    
    
    
    12,127Restructuring charges
    
    
    
    
    
    
    2,885
    
    
    
    1,277
    
    
    
    
    
    
    
    4,162Total operating expenses
    
    
    
    
    
    
    73,163
    
    
    
    21,481
    
    
    
    
    
    
    
    94,644Operating Income
    
    
    
    
    
    
    12,335
    
    
    
    6,541
    
    
    
    
    
    
    
    18,876Interest expense and amortization of loan fees
    
    
    (409
    
    
    
    (138
    )
    
    
    (78
    )
    
    
    
    
    
    
    (625
    )Interest income and other, net
    
    
    
    
    
    
    6,331
    
    
    
    (6,451
    )
    
    
    
    
    
    
    (120
    )Equity in earnings (loss) of subsidiaries
    
    
    11,833
    
    
    
    (2,053
    )
    
    
    
    
    
    
    (9,780
    )
    
    
    Income (Loss) Before Income Taxes
    
    
    11,424
    
    
    
    16,475
    
    
    
    12
    
    
    
    (9,780
    )
    
    
    18,131Income tax (provision) benefit
    
    
    155
    
    
    
    (7,008
    )
    
    
    301
    
    
    
    
    
    
    
    (6,552
    )Net Income (Loss)
    
    $
    11,579
    
    
    $
    9,467
    
    
    $
    313
    
    
    $
    (9,780
    )
    
    $
    11,579
 27




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##### Table of Contents



Unaudited Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 2010
(in thousands)
 JDA Software
    
    
    Guarantor
    
    
    Non-GuarantorGroup, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet Cash Provided by (Used in) Operating
Activities
    
    $
    147,828
    
    
    $
    (147,903
    )
    
    $
    9,643
    
    
    $
    
    
    
    $
    9,568Investing Activities:Change in restricted cash
    
    
    276,095
    
    
    
    (10,971
    )
    
    
    10,971
    
    
    
    
    
    
    
    276,095Purchase of
i2 Technologies, Inc.
    
    
    (431,775
    )
    
    
    218,348
    
    
    
    
    
    
    
    
    
    
    
    (213,427
    )Payment of direct costs related to prior
acquisitions
    
    
    
    
    
    
    (1,639
    )
    
    
    
    
    
    
    
    
    
    
    (1,639
    )Purchase of property and equipment
    
    
    
    
    
    
    (4,531
    )
    
    
    (1,866
    )
    
    
    
    
    
    
    (6,397
    )Proceeds from disposal of property and
equipment
    
    
    
    
    
    
    336
    
    
    
    13
    
    
    
    
    
    
    
    349Net cash provided by (used in)
investing activities
    
    
    (155,680
    )
    
    
    201,543
    
    
    
    9,118
    
    
    
    
    
    
    
    54,981Financing Activities:Issuance of common stock  equity plans
    
    
    11,610
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,610Purchase of treasury stock and other ,
net
    
    
    (3,758
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,758
    )Change in intercompany receivable/payable
    
    
    
    
    
    
    18,727
    
    
    
    (18,727
    )
    
    
    
    
    
    
    Net cash provided by (used in)
financing activities
    
    
    7,852
    
    
    
    18,727
    
    
    
    (18,727
    )
    
    
    
    
    
    
    7,852Effect of Exchange Rates on Cash and Cash
Equivalents
    
    
    
    
    
    
    (7,628
    )
    
    
    5,432
    
    
    
    
    
    
    
    (2,196
    )Net increase in cash and
equivalents
    
    
    
    
    
    
    64,739
    
    
    
    5,466
    
    
    
    
    
    
    
    70,205Cash and Cash Equivalents, Beginning of
Period
    
    
    
    
    
    
    47,170
    
    
    
    28,804
    
    
    
    
    
    
    
    75,974Cash and Cash Equivalents, End of Period
    
    $
    
    
    
    $
    111,909
    
    
    $
    34,270
    
    
    $
    
    
    
    $
    146,179
 28




---



##### Table of Contents



Unaudited Condensed Consolidating Statements of Cash Flows
Six Months Ended June 30, 2009
(in thousands)
 JDA Software
    
    
    Guarantor
    
    
    Non-GuarantorGroup, Inc.
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedNet Cash Provided by (Used in) Operating Activities
    
    $
    (743
    )
    
    $
    59,432
    
    
    $
    1,823
    
    
    $
    
    
    
    $
    60,512Investing Activities:Payment of direct costs related to prior
acquisitions
    
    
    
    
    
    
    (1,489
    )
    
    
    
    
    
    
    
    
    
    
    (1,489
    )Purchase of property and equipment
    
    
    
    
    
    
    (139
    )
    
    
    (1,268
    )
    
    
    
    
    
    
    (1,407
    )Proceeds from disposal of property and
equipment
    
    
    
    
    
    
    4
    
    
    
    50
    
    
    
    
    
    
    
    54Net cash used in investing
activities
    
    
    
    
    
    
    (1,624
    )
    
    
    (1,218
    )
    
    
    
    
    
    
    (2,842
    )Financing Activities:Issuance of common stock  equity plans
    
    
    4,642
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,642Purchase of treasury stock and other, net
    
    
    (3,899
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,899
    )Change in intercompany receivable/payable
    
    
    
    
    
    
    1,495
    
    
    
    (1,495
    )
    
    
    
    
    
    
    Net cash provided by (used in) financing
activities
    
    
    743
    
    
    
    1,495
    
    
    
    (1,495
    )
    
    
    
    
    
    
    743Effect of Exchange Rates on Cash and Cash Equivalents
    
    
    
    
    
    
    (2,526
    )
    
    
    4,092
    
    
    
    
    
    
    
    1,566Net increase in cash and equivalents
    
    
    
    
    
    
    56,777
    
    
    
    3,202
    
    
    
    
    
    
    
    59,979Cash and Cash Equivalents, Beginning of Period
    
    
    
    
    
    
    10,841
    
    
    
    21,855
    
    
    
    
    
    
    
    32,696Cash and Cash Equivalents, End of Period
    
    $
    
    
    
    $
    67,618
    
    
    $
    25,057
    
    
    $
    
    
    
    $
    92,675
 29




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##### Table of Contents



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.
     30




---



##### Table of Contents



Second Quarter 2010
 Revenues:
    
    JDA
    
    
    
    
    
    
    i2
    
    
    
    
    
    
    CombinedSoftware licenses and subscriptions
    
    $
    21,728
    
    
    
    57
    %
    
    $
    16,230
    
    
    
    43
    %
    
    $
    37,958Maintenance services
    
    
    45,417
    
    
    
    75
    %
    
    
    15,177
    
    
    
    25
    %
    
    
    60,594Product revenues
    
    
    67,145
    
    
    
    68
    %
    
    
    31,407
    
    
    
    32
    %
    
    
    98,552Service revenues
    
    
    38,294
    
    
    
    64
    %
    
    
    21,527
    
    
    
    36
    %
    
    
    59,821Total revenues
    
    $
    105,439
    
    
    
    67
    %
    
    $
    52,934
    
    
    
    33
    %
    
    $
    158,373
 First Half 2010
 Revenues:
    
    JDA
    
    
    
    
    
    
    i2
    
    
    
    
    
    
    CombinedSoftware licenses and subscriptions
    
    $
    37,606
    
    
    
    56
    %
    
    $
    29,076
    
    
    
    44
    %
    
    $
    66,682Maintenance services
    
    
    91,908
    
    
    
    78
    %
    
    
    25,746
    
    
    
    22
    %
    
    
    117,654Product revenues
    
    
    129,514
    
    
    
    70
    %
    
    
    54,822
    
    
    
    30
    %
    
    
    184,336Service revenues
    
    
    70,295
    
    
    
    67
    %
    
    
    35,373
    
    
    
    33
    %
    
    
    105,668Total revenues
    
    $
    199,809
    
    
    
    69
    %
    
    $
    90,195
    
    
    
    31
    %
    
    $
    290,004
 Outlook for 2010. Liquidity and Capital Resources .
 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 (Revised)
    
    $80 million
    
    $90 million
    31




---



##### Table of Contents




    
    Quarter-to-quarter software sales will fluctuate due to the timing of
transactions in our sales pipeline.
    
    Second half 2010 software license revenues could be softer in the third quarter followed by a
strengthening of software sales in the fourth quarter.
    
    We did not expect to realize any significant software revenue synergies from i2
in 2010 based on our past experience with other acquisitions.
   CoE CoE CoE
  We Have Incurred Significant Unplanned Legal Expenses
 32




---



##### Table of Contents



We Have Realized Cost Synergies as We Integrate and Combine i2 and JDA.
 Share-Based Compensation Expense.
 Three Months
    
    
    Six MonthsEnded June 30,
    
    
    Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Cost of maintenance services
    
    $
    163
    
    
    $
    174
    
    
    $
    277
    
    
    $
    286Cost of consulting services
    
    
    330
    
    
    
    260
    
    
    
    778
    
    
    
    471Product development
    
    
    173
    
    
    
    191
    
    
    
    506
    
    
    
    360Sales and marketing
    
    
    884
    
    
    
    688
    
    
    
    1,750
    
    
    
    1,069General and administrative
    
    
    1,742
    
    
    
    844
    
    
    
    3,258
    
    
    
    1,399Total stock-based compensation
    
    $
    3,292
    
    
    $
    2,157
    
    
    $
    6,569
    
    
    $
    3,567
   We May Make Additional Strategic Acquisitions.
 33




---



##### Table of Contents



Financial and Cash Flow From Operations. Contractual Obligations
   Future Tax Benefits From the i2 Acquisition
  34




---



##### Table of Contents



Results of Operations
 Significant
Trends and Developments in Our Business
 Three Months endedJune 30,
    
    
    
    
    
    
    2009 to 20102010
    
    
    %
    
    
    2009
    
    
    %
    
    
    $ Change
    
    
    % ChangeRevenues:Software licenses
    
    $
    32,152
    
    
    
    20
    %
    
    $
    26,589
    
    
    
    27
    %
    
    $
    5,563
    
    
    
    21
    %Subscriptions and other recurring revenue
    
    
    5,806
    
    
    
    4
    
    
    
    996
    
    
    
    1
    
    
    
    4,810
    
    
    
    483
    %Maintenance
    
    
    60,594
    
    
    
    38
    
    
    
    44,371
    
    
    
    44
    
    
    
    16,223
    
    
    
    37
    %Product revenues
    
    
    98,552
    
    
    
    62
    
    
    
    71,956
    
    
    
    72
    
    
    
    26,596
    
    
    
    37
    %Service revenues
    
    
    59,821
    
    
    
    38
    
    
    
    27,529
    
    
    
    28
    
    
    
    32,292
    
    
    
    117
    %Total revenues
    
    
    158,373
    
    
    
    100
    %
    
    
    99,485
    
    
    
    100
    %
    
    
    58,888
    
    
    
    59
    %Cost of Revenues:Software licenses
    
    
    909
    
    
    
    1
    %
    
    
    1,235
    
    
    
    1
    %
    
    
    (326
    )
    
    
    (26
    %)Amortization of acquired software technology
    
    
    1,803
    
    
    
    1
    
    
    
    980
    
    
    
    1
    
    
    
    823
    
    
    
    84
    %Maintenance services
    
    
    14,227
    
    
    
    9
    
    
    
    10,984
    
    
    
    11
    
    
    
    3,243
    
    
    
    30
    %Product revenues
    
    
    16,939
    
    
    
    11
    
    
    
    13,199
    
    
    
    13
    
    
    
    3,740
    
    
    
    28
    %Service revenues
    
    
    45,308
    
    
    
    28
    
    
    
    22,581
    
    
    
    23
    
    
    
    22,727
    
    
    
    101
    %Total cost of revenues
    
    
    62,247
    
    
    
    39
    
    
    
    35,780
    
    
    
    36
    
    
    
    26,467
    
    
    
    74
    %Gross Profit
    
    
    96,126
    
    
    
    61
    
    
    
    63,705
    
    
    
    64
    
    
    
    32,421
    
    
    
    51
    %Operating Expenses:Product development
    
    
    19,481
    
    
    
    12
    
    
    
    12,664
    
    
    
    13
    
    
    
    6,817
    
    
    
    54
    %Sales and marketing
    
    
    24,460
    
    
    
    15
    
    
    
    16,170
    
    
    
    16
    
    
    
    8,290
    
    
    
    51
    %General and administrative
    
    
    19,801
    
    
    
    13
    
    
    
    11,670
    
    
    
    12
    
    
    
    8,131
    
    
    
    70
    %63,742
    
    
    
    40
    
    
    
    40,504
    
    
    
    41
    
    
    
    23,238
    
    
    
    57
    %Amortization of intangibles
    
    
    9,915
    
    
    
    6
    
    
    
    6,051
    
    
    
    6
    
    
    
    3,864
    
    
    
    64
    %Restructuring charge
    
    
    4,548
    
    
    
    3
    
    
    
    2,732
    
    
    
    3
    
    
    
    1,816
    
    
    
    66
    %Acquisition-related costs
    
    
    865
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    865
    
    
    
    100
    %Operating income
    
    $
    17,056
    
    
    
    11
    %
    
    $
    14,418
    
    
    
    14
    %
    
    
    2,638
    
    
    
    18
    %Gross margins:Software licenses and subscription revenues
    
    
    
    
    
    
    98
    %
    
    
    
    
    
    
    96
    %Maintenance
    
    
    
    
    
    
    77
    %
    
    
    
    
    
    
    75
    %Product revenues
    
    
    
    
    
    
    83
    %
    
    
    
    
    
    
    82
    %Services revenues
    
    
    
    
    
    
    24
    %
    
    
    
    
    
    
    18
    %
 35




---



##### Table of Contents



Six Months endedJune 30,
    
    
    
    
    
    
    
    
    2009 to 20102010
    
    
    %
    
    
    2009
    
    
    %
    
    
    $ Change
    
    
    % ChangeRevenues:Software licenses
    
    $
    56,589
    
    
    
    20
    %
    
    $
    40,946
    
    
    
    22
    %
    
    $
    15,643
    
    
    
    38
    %Subscriptions and other recurring revenue
    
    
    10,093
    
    
    
    3
    
    
    
    1,964
    
    
    
    1
    
    
    
    8,129
    
    
    
    414
    %Maintenance
    
    
    117,654
    
    
    
    41
    
    
    
    87,368
    
    
    
    48
    
    
    
    30,286
    
    
    
    35
    %Product revenues
    
    
    184,336
    
    
    
    64
    
    
    
    130,278
    
    
    
    71
    
    
    
    54,058
    
    
    
    41
    %Service revenues
    
    
    105,668
    
    
    
    36
    
    
    
    52,540
    
    
    
    29
    
    
    
    53,128
    
    
    
    101
    %Total revenues
    
    
    290,004
    
    
    
    100
    %
    
    
    182,818
    
    
    
    100
    %
    
    
    107,186
    
    
    
    59
    %Cost of Revenues:Software licenses
    
    
    1,917
    
    
    
    1
    %
    
    
    1,837
    
    
    
    1
    %
    
    
    80
    
    
    
    4
    %Amortization of acquired software technology
    
    
    3,379
    
    
    
    1
    
    
    
    1,988
    
    
    
    1
    
    
    
    1,391
    
    
    
    70
    %Maintenance services
    
    
    26,260
    
    
    
    9
    
    
    
    21,533
    
    
    
    12
    
    
    
    4,727
    
    
    
    22
    %Product revenues
    
    
    31,556
    
    
    
    11
    
    
    
    25,358
    
    
    
    14
    
    
    
    6,198
    
    
    
    24
    %Service revenues
    
    
    83,422
    
    
    
    29
    
    
    
    43,940
    
    
    
    24
    
    
    
    39,482
    
    
    
    90
    %Total cost of revenues
    
    
    114,978
    
    
    
    40
    
    
    
    69,298
    
    
    
    38
    
    
    
    45,680
    
    
    
    66
    %Gross Profit
    
    
    175,026
    
    
    
    60
    
    
    
    113,520
    
    
    
    62
    
    
    
    61,506
    
    
    
    54
    %Operating Expenses:Product development
    
    
    36,758
    
    
    
    12
    
    
    
    25,237
    
    
    
    14
    
    
    
    11,521
    
    
    
    46
    %Sales and marketing
    
    
    45,572
    
    
    
    16
    
    
    
    30,422
    
    
    
    17
    
    
    
    15,150
    
    
    
    50
    %General and administrative
    
    
    37,498
    
    
    
    13
    
    
    
    22,696
    
    
    
    12
    
    
    
    14,802
    
    
    
    65
    %119,828
    
    
    
    41
    
    
    
    78,355
    
    
    
    43
    
    
    
    41,473
    
    
    
    53
    %Amortization of intangibles
    
    
    18,481
    
    
    
    6
    
    
    
    12,127
    
    
    
    7
    
    
    
    6,354
    
    
    
    52
    %Restructuring charge
    
    
    12,306
    
    
    
    4
    
    
    
    4,162
    
    
    
    2
    
    
    
    8,144
    
    
    
    196
    %Acquisition-related costs
    
    
    7,608
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    7,608
    
    
    
    100
    %Operating income
    
    $
    16,803
    
    
    
    6
    %
    
    $
    18,876
    
    
    
    10
    %
    
    
    (2,073
    )
    
    
    (11
    %)Gross margins:Software licenses and subscription revenues
    
    
    
    
    
    
    97
    %
    
    
    
    
    
    
    96
    %Maintenance
    
    
    
    
    
    
    78
    %
    
    
    
    
    
    
    75
    %Product revenues
    
    
    
    
    
    
    83
    %
    
    
    
    
    
    
    81
    %Services revenues
    
    
    
    
    
    
    21
    %
    
    
    
    
    
    
    16
    %
 36




---



##### 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
 Supply Chain
    
    
    Services IndustriesJune 30, 2010 vs. 2009
    
    
    June 30, 2010 vs. 2009Quarter
    
    
    Six Months
    
    
    Quarter
    
    
    Six MonthsSoftware licenses and subscriptions
    
    
    90
    %
    
    
    94
    %
    
    
    (96
    %)
    
    
    (82
    %)Maintenance services
    
    
    37
    %
    
    
    35
    %
    
    
    22
    %
    
    
    36
    %Product revenues
    
    
    54
    %
    
    
    51
    %
    
    
    (81
    %)
    
    
    (58
    %)Service revenues
    
    
    123
    %
    
    
    106
    %
    
    
    58
    %
    
    
    51
    %Total revenues
    
    
    73
    %
    
    
    67
    %
    
    
    (52
    %)
    
    
    (28
    %)Product development
    
    
    56
    %
    
    
    46
    %
    
    
    24
    %
    
    
    38
    %Sales and marketing
    
    
    56
    %
    
    
    53
    %
    
    
    14
    %
    
    
    18
    %Operating income
    
    
    81
    %
    
    
    81
    %
    
    
    (108
    %)
    
    
    (98
    %)
 Contribution to Total RevenuesJune 30, 2010 vs. 2009Quarter
    
    
    Six Months2010
    
    
    2009
    
    
    2010
    
    
    2009Supply Chain
    
    
    97
    %
    
    
    89
    %
    
    
    96
    %
    
    
    91
    %Services Industries
    
    
    3
    %
    
    
    11
    %
    
    
    4
    %
    
    
    9
    %100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 37




---



##### Table of Contents



Geographical Regions
 The Americas
    
    
    Europe
    
    
    Asia/PacificJune 30, 2010 vs. 2009
    
    
    June 30, 2010 vs. 2009
    
    
    June 30, 2010 vs. 2009Quarter
    
    
    Six Months
    
    
    Quarter
    
    
    Six Months
    
    
    Quarter
    
    
    Six MonthsSoftware licenses and subscriptions
    
    
    89
    %
    
    
    81
    %
    
    
    (5
    )%
    
    
    24
    %
    
    
    (26
    )%
    
    
    13
    %Maintenance services
    
    
    32
    %
    
    
    29
    %
    
    
    29
    %
    
    
    31
    %
    
    
    98
    %
    
    
    96
    %Product revenues
    
    
    50
    %
    
    
    45
    %
    
    
    18
    %
    
    
    29
    %
    
    
    10
    %
    
    
    48
    %Service revenues
    
    
    90
    %
    
    
    75
    %
    
    
    86
    %
    
    
    89
    %
    
    
    499
    %
    
    
    418
    %Total revenues
    
    
    63
    %
    
    
    54
    %
    
    
    33
    %
    
    
    42
    %
    
    
    79
    %
    
    
    118
    %
 Contribution to Total RevenuesJune 30, 2010 vs. 2009Quarter
    
    
    Six Months2010
    
    
    2009
    
    
    2010
    
    
    2009The Americas
    
    
    68
    %
    
    
    66
    %
    
    
    67
    %
    
    
    69
    %Europe
    
    
    17
    %
    
    
    20
    %
    
    
    18
    %
    
    
    20
    %Asia/Pacific
    
    
    15
    %
    
    
    14
    %
    
    
    15
    %
    
    
    11
    %100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Three Months Ended June 30, 2010 Compared to Three Months Ended June 30, 2009
 Software License and Subscription Results by Region
  Three Months Ended June 30,Region
    
    2010
    
    
    2009
    
    
    $Change
    
    
    % ChangeAmericas
    
    $
    27,080
    
    
    $
    14,357
    
    
    $
    12,723
    
    
    
    89
    %Europe
    
    
    4,773
    
    
    
    5,012
    
    
    
    (239
    )
    
    
    (5
    %)Asia/Pacific
    
    
    6,105
    
    
    
    8,216
    
    
    
    (2,111
    )
    
    
    (26
    %)Total
    
    $
    37,958
    
    
    $
    27,585
    
    
    $
    10,373
    
    
    
    38
    %
  38




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# of Large TransactionsThree Months Ended June 30,2010
    
    
    2009Region
    
    JDA
    
    
    i2
    
    
    TotalAmericas
    
    
    4
    
    
    
    
    
    
    
    4
    
    
    
    3Europe
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Asia/Pacific
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    1Total
    
    
    4
    
    
    
    2
    
    
    
    6
    
    
    
    5
  Software License and Subscription Results by Reportable Business Segment.
 Supply Chain.
 Services Industries.
 Maintenance Services
  Service Revenues
  Cost of Product Revenues
 Cost of Software Licenses.
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Amortization of Acquired Software Technology
 Cost of Maintenance Services.
 Cost of Service Revenues
  Operating Expenses
  Product Development.
 Sales and Marketing.
 General and Administrative.
 Amortization of Intangibles.
 Restructuring Charges. CoE
 CoE
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Acquisition-Related Costs.
 Other Income (Expense)
 Interest Expense and Amortization of Loan Fees.
 Interest Income and Other, Net.
 Income Tax Provision
   Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009
 Software License and Subscription Results by Region
  Six Months Ended June 30,Region
    
    2010
    
    
    2009
    
    
    $Change
    
    
    % ChangeAmericas
    
    $
    45,997
    
    
    $
    25,462
    
    
    $
    20,535
    
    
    
    81
    %Europe
    
    
    10,176
    
    
    
    8,182
    
    
    
    1,994
    
    
    
    24
    %Asia/Pacific
    
    
    10,509
    
    
    
    9,266
    
    
    
    1,243
    
    
    
    13
    %Total
    
    $
    66,682
    
    
    $
    42,910
    
    
    $
    23,772
    
    
    
    55
    %
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# of Large TransactionsSix Months Ended June 30,2010
    
    
    2009Region
    
    JDA
    
    
    i2
    
    
    TotalAmericas
    
    
    7
    
    
    
    1
    
    
    
    8
    
    
    
    5Europe
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    2Asia/Pacific
    
    
    1
    
    
    
    3
    
    
    
    4
    
    
    
    1Total
    
    
    8
    
    
    
    6
    
    
    
    14
    
    
    
    8
 Software License and Subscription Results by Reportable Business Segment.
 Supply Chain.
 Services Industries.
 Maintenance Services
  Service Revenues
  Cost of Product Revenues
 Cost of Software Licenses.
 Amortization of Acquired Software Technology
 Cost of Maintenance Services.
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Cost of Service Revenues
  Operating Expenses
  Product Development.
 Sales and Marketing.
 General and Administrative.
 Amortization of Intangibles.
 Restructuring Charges. CoE
 CoE
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Acquisition-Related Costs.
 Other Income (Expense)
 Interest Expense and Amortization of Loan Fees.
 Interest Income and Other, Net.
 Income Tax Provision
   Liquidity and Capital Resources
 Contractual Obligations
  Operating activities
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Investing activities
 Financing activities
 Changes in the currency exchange rates of our foreign operations
 Treasury Stock Repurchases.
  Contractual Obligations CoE
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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
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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 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
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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. The purchase price allocation has
not been finalized. The preliminary allocation of the purchase price as of June 30, 2010 is
based on the best estimates of management and is subject to revision as the final fair
values of, and allocated purchase price to, the acquired assets and assumed liabilities in
the acquisition of i2 are completed over the remainder of 2010. We currently anticipate
that additional adjustments may still be made to the fair value of acquired deferred
revenue balances, tax-related accounts, amortization of intangible assets and the residual
amount allocated to goodwill. 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
second 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 $74.6 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
$24.3 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
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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.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 June 30, 2010 we have approximately $12.6 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 second
quarter 2010, the liability for uncertain tax positions decreased by approximately $2.1
million. The decrease was primarily related to the Company receiving communication that the
Indian and U.S. authorities reached a settlement related to i2s 2002-2006 tax years. It is
reasonably possible that approximately $6.3 million of all items included in our 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 a $194,000 benefit in the six months ended June 30, 2010 and an accrual
of $383,000 for the six months ended June 30, 2009. As of June 30, 2010 and December 31,
2009 there are approximately $2.8 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 of
the overall tax provision.
 
    
    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
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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 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 June 30, 2010, we had approximately 670,000 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
recognized $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 June 30, 2010, we had forward exchange contracts with a notional value of $72.3 million
and an associated net forward contract receivable of $545,000 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 a net foreign currency exchange loss of $958,000 in
the three months ended June 30, 2010 and a net foreign currency exchange gain of $102,000 in
the three months ended June 30, 2009. In the six months ended June 30, 2010 we recorded a net
foreign currency exchange contract gain of $3,000 compared to a net foreign currency exchange
contract loss of $216,000 in the six months ended June 30, 2009. Net foreign currency
exchange gains (losses) are included in the condensed consolidated statements of operations
under the caption Interest Income and other, net.
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Other Recent Accounting Pronouncements
 Revenue Recognition
   
 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
 Dillards, Inc. vs. i2 Technologies, Inc.
 st
   i2 Technologies, Inc. vs. Oracle Corporation
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Shareholder Class Action Litigation
   
 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 with larger, complex tier one
projects;
    
    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.
  Litigation Could Harm Our Business.
  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.
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Third parties may claim we infringe their intellectual property rights, which would result in
an increase in litigation and other related costs.
  
    
    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;
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
    
    ability to negotiate and have enforced favorable contract provisions;
 
    
    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.
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Economic, political and market conditions can adversely affect our revenue and profitability.
  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;
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
    
    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;
 
    
    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;
 
    
    we may be required to sustain significant exit or impairment charges if products
acquired in business combinations are unsuccessful; and
 
    
    adverse outcomes in legal proceedings.
  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.
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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.
  
    
    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;
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
    
    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;
    
    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.
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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 Not applicable
 
 Item 3.
    
    Defaults Upon Senior Securities Not applicable
 
 Item 4.
    
    Reserved
 
 Item 5.
    
    Other Information Not applicable
 
 Item 6.
    
    Exhibits See Exhibits Index
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JDA SOFTWARE GROUP, INC.
 
 SIGNATURE
  JDA SOFTWARE GROUP, INC.Dated: August 9, 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) 67




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EXHIBIT INDEX
 Exhibit #
    
    
    
    Description of Document3.1
    
    
    
    Third Restated Certificate of Incorporation of the Company as amended through July 14,
2010 (Filed herewith).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).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
    
    
    
    8% Senior Notes due 2014 Indenture dated as of December 10, 2009 among JDA Software
Group, Inc., the Guarantors, and U.S. Bank National Association, as trustee
((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).4.3
    
    
    
    Supplemental Indenture dated as of January 28, 2010 among JDA Software Group, Inc., i2
Technologies, Inc., i2 Technologies US, Inc., the Guarantors and U.S. Bank National
Association, as trustee (Incorporation by reference to Exhibit 4.3 to the Companys
Registration Statement on Form S-4 (File No. 333-167429), as filed on June 9, 2010).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).
 68