##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2008
 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
    
    86-0787377(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 14400 North 87 th Street
Scottsdale, Arizona 85260
(480) 308-3000
(Address and telephone number of principal executive offices)
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



JDA SOFTWARE GROUP, INC.
 FORM 10-Q
 TABLE OF CONTENTS
 Page No.PART I:
    
    INTERIM FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (unaudited)Condensed Consolidated Balance Sheets as of September 30, 2008 and December 31, 2007
    
    
    3Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2008 and
September 30, 2007
    
    
    4Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2008 and
September 30, 2007
    
    
    5Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2008 and
September 30, 2007
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    18Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    45Item 4.
    
    Controls and Procedures
    
    
    46PART II:
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    48Item 1A.
    
    Risk Factors
    
    
    48Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    56Item 3.
    
    Defaults Upon Senior Securities
    
    
    56Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    56Item 5.
    
    Other Information
    
    
    56Item 6.
    
    Exhibits
    
    
    56Signature
    
    
    57EX-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)
 September 30,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    130,803
    
    
    $
    95,288Accounts receivable, net
    
    
    63,508
    
    
    
    74,659Income tax receivable
    
    
    
    
    
    
    463Deferred tax asset
    
    
    8,089
    
    
    
    8,203Prepaid expenses and other current assets
    
    
    24,985
    
    
    
    15,925Total current assets
    
    
    227,385
    
    
    
    194,538Non-Current Assets:Property and equipment, net
    
    
    44,261
    
    
    
    44,858Goodwill
    
    
    134,561
    
    
    
    134,561Other Intangibles, net:Customer lists
    
    
    127,376
    
    
    
    144,344Acquired software technology
    
    
    25,167
    
    
    
    29,437Trademarks
    
    
    1,754
    
    
    
    3,013Deferred tax asset
    
    
    53,255
    
    
    
    62,029Other non-current assets
    
    
    5,557
    
    
    
    9,445Total non-current assets
    
    
    391,931
    
    
    
    427,687Total Assets
    
    $
    619,316
    
    
    $
    622,225LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    5,362
    
    
    $
    3,559Accrued expenses and other liabilities
    
    
    43,503
    
    
    
    48,559Income tax payable
    
    
    659
    
    
    
    Current portion of long-term debt
    
    
    80,477
    
    
    
    7,027Deferred revenue
    
    
    68,969
    
    
    
    67,530Total current liabilities
    
    
    198,970
    
    
    
    126,675Non-Current Liabilities:Long-term debt
    
    
    
    
    
    
    92,536Accrued exit and disposal obligations
    
    
    9,267
    
    
    
    11,797Liability for uncertain tax positions
    
    
    5,745
    
    
    
    5,421Total non-current liabilities
    
    
    15,012
    
    
    
    109,754Total Liabilities
    
    
    213,982
    
    
    
    236,429Redeemable Preferred Stock
    
    
    50,000
    
    
    
    50,000Stockholders 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
32,247,265 and 31,378,768 shares, respectively
    
    
    322
    
    
    
    314Additional paid-in capital
    
    
    303,406
    
    
    
    295,694Deferred compensation
    
    
    (3,735
    )
    
    
    (3,526
    )Retained earnings
    
    
    69,815
    
    
    
    53,144Accumulated other comprehensive gain
    
    
    1,072
    
    
    
    3,814370,880
    
    
    
    349,440Less treasury stock, at cost, 1,296,741 and 1,189,269 shares, respectively
    
    
    (15,546
    )
    
    
    (13,644
    )Total stockholders equity
    
    
    355,334
    
    
    
    335,796Total liabilities and stockholders equity
    
    $
    619,316
    
    
    $
    622,225
  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
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007REVENUES:Software licenses
    
    $
    23,011
    
    
    $
    15,505
    
    
    $
    58,593
    
    
    $
    51,159Maintenance services
    
    
    46,388
    
    
    
    43,753
    
    
    
    138,843
    
    
    
    131,192Product revenues
    
    
    69,399
    
    
    
    59,258
    
    
    
    197,436
    
    
    
    182,351Consulting services
    
    
    26,437
    
    
    
    31,499
    
    
    
    78,901
    
    
    
    84,706Reimbursed expenses
    
    
    2,610
    
    
    
    2,888
    
    
    
    7,780
    
    
    
    8,055Service revenues
    
    
    29,047
    
    
    
    34,387
    
    
    
    86,681
    
    
    
    92,761Total revenues
    
    
    98,446
    
    
    
    93,645
    
    
    
    284,117
    
    
    
    275,112COST OF REVENUES:Cost of software licenses
    
    
    613
    
    
    
    642
    
    
    
    2,009
    
    
    
    1,831Amortization of acquired software technology
    
    
    1,309
    
    
    
    1,502
    
    
    
    4,270
    
    
    
    4,875Cost of maintenance services
    
    
    11,513
    
    
    
    11,239
    
    
    
    34,145
    
    
    
    33,988Cost of product revenues
    
    
    13,435
    
    
    
    13,383
    
    
    
    40,424
    
    
    
    40,694Cost of consulting services
    
    
    20,315
    
    
    
    21,016
    
    
    
    61,084
    
    
    
    62,616Reimbursed expenses
    
    
    2,610
    
    
    
    2,888
    
    
    
    7,780
    
    
    
    8,055Cost of service revenues
    
    
    22,925
    
    
    
    23,904
    
    
    
    68,864
    
    
    
    70,671Total cost of revenues
    
    
    36,360
    
    
    
    37,287
    
    
    
    109,288
    
    
    
    111,365GROSS PROFIT
    
    
    62,086
    
    
    
    56,358
    
    
    
    174,829
    
    
    
    163,747OPERATING EXPENSES:Product development
    
    
    13,288
    
    
    
    11,934
    
    
    
    40,196
    
    
    
    37,717Sales and marketing
    
    
    15,899
    
    
    
    14,925
    
    
    
    47,738
    
    
    
    44,836General and administrative
    
    
    10,440
    
    
    
    10,365
    
    
    
    32,406
    
    
    
    29,909Provision for doubtful accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,590Amortization of intangibles
    
    
    6,075
    
    
    
    3,963
    
    
    
    18,227
    
    
    
    11,889Restructuring charges and adjustments to acquisition-
related reserves
    
    
    399
    
    
    
    
    
    
    
    3,954
    
    
    
    6,276Gain on sale of office facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,128
    )Total operating expenses
    
    
    46,101
    
    
    
    41,187
    
    
    
    142,521
    
    
    
    128,089OPERATING INCOME
    
    
    15,985
    
    
    
    15,171
    
    
    
    32,308
    
    
    
    35,658Interest expense and amortization of loan fees
    
    
    (2,353
    )
    
    
    (2,757
    )
    
    
    (7,313
    )
    
    
    (9,382
    )Interest income and other, net
    
    
    51
    
    
    
    956
    
    
    
    2,127
    
    
    
    2,420INCOME BEFORE INCOME TAXES
    
    
    13,683
    
    
    
    13,370
    
    
    
    27,122
    
    
    
    28,696Income tax provision
    
    
    5,441
    
    
    
    5,062
    
    
    
    10,451
    
    
    
    10,149NET INCOME
    
    $
    8,242
    
    
    $
    8,308
    
    
    $
    16,671
    
    
    $
    18,547BASIC EARNINGS PER SHARE
    
    $
    .24
    
    
    $
    .25
    
    
    $
    .49
    
    
    $
    .56DILUTED EARNINGS PER SHARE
    
    $
    .23
    
    
    $
    .24
    
    
    $
    .47
    
    
    $
    .55SHARES USED TO COMPUTE:Basic earnings per share
    
    
    34,528
    
    
    
    33,525
    
    
    
    34,223
    
    
    
    33,275Diluted earnings per share
    
    
    35,432
    
    
    
    34,374
    
    
    
    35,261
    
    
    
    33,966
  4




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JDA SOFTWARE GROUP, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 (in thousands, unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007NET INCOME
    
    $
    8,242
    
    
    $
    8,308
    
    
    $
    16,671
    
    
    $
    18,547OTHER COMPREHENSIVE INCOME:Change in fair value of interest rate swap
    
    
    329
    
    
    
    (600
    )
    
    
    159
    
    
    
    (342
    )Foreign currency translation adjustment
    
    
    (3,797
    )
    
    
    1,779
    
    
    
    (2,901
    )
    
    
    3,078Total other comprehensive gain (loss)
    
    
    (3,468
    )
    
    
    1,179
    
    
    
    (2,742
    )
    
    
    2,736COMPREHENSIVE INCOME
    
    $
    4,774
    
    
    $
    9,487
    
    
    $
    13,929
    
    
    $
    21,283
  5




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JDA SOFTWARE GROUP, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands, unaudited)
 Nine MonthsEnded September 30,2008
    
    
    2007OPERATING ACTIVITIES:Net income
    
    $
    16,671
    
    
    $
    18,547Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    29,909
    
    
    
    23,769Provision for doubtful accounts
    
    
    
    
    
    
    1,590Amortization of loan origination fees
    
    
    713
    
    
    
    1,644Excess tax benefits from stock-based compensation
    
    
    1,638
    
    
    
    (863
    )Share-based compensation expense
    
    
    3,135
    
    
    
    4,172Net gain on sale of office facility
    
    
    
    
    
    
    (4,128
    )Net gain on disposal of property and equipment
    
    
    
    
    
    
    (18
    )Deferred income taxes
    
    
    8,888
    
    
    
    309Changes in assets and liabilities:Accounts receivable
    
    
    11,611
    
    
    
    10,613Income tax receivable
    
    
    482
    
    
    
    Prepaid expenses and other assets
    
    
    (424
    )
    
    
    (1,423
    )Accounts payable
    
    
    1,877
    
    
    
    (1,456
    )Accrued expenses and other liabilities
    
    
    (4,698
    )
    
    
    (2,162
    )Income tax payable
    
    
    (628
    )
    
    
    6,835Deferred revenue
    
    
    1,498
    
    
    
    6,240Net cash provided by operating activities
    
    
    70,672
    
    
    
    63,669INVESTING ACTIVITIES:Payment of direct costs related to acquisitions
    
    
    (5,434
    )
    
    
    (6,333
    )Purchase of other property and equipment
    
    
    (6,065
    )
    
    
    (5,139
    )Proceeds from disposal of property and equipment
    
    
    115
    
    
    
    6,849Net cash used in investing activities
    
    
    (11,384
    )
    
    
    (4,623
    )FINANCING ACTIVITIES:Issuance of common stock  equity plans
    
    
    6,014
    
    
    
    7,282Excess tax benefits from stock-based compensation
    
    
    (1,638
    )
    
    
    863Purchase of treasury stock
    
    
    (1,902
    )
    
    
    (159
    )Principal payments on term loan agreement
    
    
    (19,086
    )
    
    
    (39,563
    )Loan origination fees
    
    
    (3,375
    )
    
    
    Net cash used in financing activities
    
    
    (19,987
    )
    
    
    (31,577
    )Effect of exchange rates on cash
    
    
    (3,786
    )
    
    
    1,543Net increase in cash and cash equivalents
    
    
    35,515
    
    
    
    29,012CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    95,288
    
    
    
    53,559CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    130,803
    
    
    $
    82,571
  6




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##### Table of Contents



JDA SOFTWARE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
 Nine MonthsEnded September 30,2008
    
    
    2007SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for income taxes
    
    $
    3,141
    
    
    $
    4,234Cash paid for interest
    
    $
    6,803
    
    
    $
    7,438Cash received for income tax refunds
    
    $
    502
    
    
    $
    1,297SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:Decrease in retained earnings from an accrual for uncertain tax position
liabilities
    
    $
    
    
    
    $
    1,006SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:Decrease in goodwill recorded in the acquisition of Manugistics Group, Inc.
    
    $
    
    
    
    $
    7,405
  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. Pending Acquisition of i2 Technologies, Inc.
   8




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##### Table of Contents



Retail
  3. New Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Business Combinations Business Combinations
 9




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Disclosures About Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133 Accounting for Derivative Instruments and Hedging Activities Disclosures About Fair Value of Financial Instruments,
 Determination of the Useful Life of
Intangible Assets Goodwill and Other Intangible Assets
 4. Derivative Instruments and Hedging Activities
 Accounting for Derivative Instruments and Hedging Activities,
    10




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5. Goodwill and Other Intangibles, net
  September 30, 2008
    
    December 31, 2007GrossEstimated
    
    Carrying
    
    Accumulated
    
    Gross Carrying
    
    AccumulatedUseful Lives
    
    Amount
    
    Amortization
    
    Amount
    
    AmortizationGoodwill
    
    
    
    
    
    $
    134,561
    
    
    $
    
    
    
    $
    134,561
    
    
    $
    Other intangibles:Amortized intangible assetsCustomer Lists
    
    
    8 to 13 years
    
    
    
    183,383
    
    
    
    (56,007
    )
    
    
    183,383
    
    
    
    (39,039
    )Acquired software technology
    
    
    5 to 15 years
    
    
    
    65,847
    
    
    
    (40,680
    )
    
    
    65,847
    
    
    
    (36,410
    )Trademarks
    
    
    3 to 5 years
    
    
    
    5,191
    
    
    
    (3,437
    )
    
    
    5,191
    
    
    
    (2,178
    )254,421
    
    
    
    (100,124
    )
    
    
    254,421
    
    
    
    (77,627
    )$
    388,982
    
    
    $
    (100,124
    )
    
    $
    388,982
    
    
    $
    (77,627
    )
 Retail, Manufacturing and Distribution, Services Industries.
   Year
    
    Amortization2008
    
    $
    7,0832009
    
    $
    27,5542010
    
    $
    26,2772011
    
    $
    25,9622012
    
    $
    25,500
 6. Acquisition Reserves
  11




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Impact of
    
    
    
    
    
    
    
    
    
    
    
    
    
    Impact ofChanges in
    
    Balance
    
    
    
    
    
    
    
    
    
    Changes in
    
    BalanceInitial
    
    Adjustments
    
    Cash
    
    Exchange
    
    December 31,
    
    Adjustments
    
    Cash
    
    Exchange
    
    Sept 30,Description of charge
    
    Reserve
    
    to Reserves
    
    Charges
    
    Rates
    
    2007
    
    to Reserves
    
    Charges
    
    Rates
    
    2008Restructuring charges under EITF 95-3:Office closures, lease
terminations and sublease
costs
    
    $
    29,212
    
    
    $
    (3,381
    )
    
    $
    (9,246
    )
    
    $
    91
    
    
    $
    16,676
    
    
    $
    
    
    
    $
    (3,028
    )
    
    $
    (443
    )
    
    $
    13,205Employee severance and
termination benefits
    
    
    3,607
    
    
    
    (190
    )
    
    
    (2,297
    )
    
    
    95
    
    
    
    1,215
    
    
    
    (577
    )
    
    
    (168
    )
    
    
    22
    
    
    
    492IT projects, contract
termination penalties, capital
lease buyouts and other costs
to exit activities of
Manugistics
    
    
    1,450
    
    
    
    249
    
    
    
    (1,484
    )
    
    
    
    
    
    
    215
    
    
    
    (27
    )
    
    
    (188
    )
    
    
    
    
    
    
    34,269
    
    
    
    (3,322
    )
    
    
    (13,027
    )
    
    
    186
    
    
    
    18,106
    
    
    
    (604
    )
    
    
    (3,384
    )
    
    
    (421
    )
    
    
    13,697Direct costs under SFAS No. 141:Legal and accounting costs
    
    
    3,367
    
    
    
    52
    
    
    
    (3,368
    )
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    50Investment banker fees
    
    
    4,555
    
    
    
    
    
    
    
    (4,555
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dealer manager, paying agent,
depository and information
agent fees
    
    
    259
    
    
    
    
    
    
    
    (259
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Due diligence fees and
expenses
    
    
    335
    
    
    
    
    
    
    
    (335
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Filing fees, valuation
services and other
    
    
    242
    
    
    
    (46
    )
    
    
    (196
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Change-in-control payments
    
    
    4,367
    
    
    
    
    
    
    
    (4,367
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,125
    
    
    
    6
    
    
    
    (13,080
    )
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    50Total
    
    $
    47,394
    
    
    $
    (3,316
    )
    
    $
    (26,107
    )
    
    $
    186
    
    
    $
    18,157
    
    
    $
    (604
    )
    
    $
    (3,385
    )
    
    $
    (421
    )
    
    $
    13,747
 Recognition of Liabilities in Connection with a
Purchase Business Combination,
  12




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7. Restructuring Charges
 2008 Restructuring Charge
 CoE )
 2007 Restructuring Charges
 JDA Enterprise Architecture
 8. Long-Term Debt
  September 30,
    
    
    December 31,2008
    
    
    2007Term loans, bearing variable interest based on LIBOR + 2.25% per
annum, due in quarterly installments of $437,500 through
July 5,
2013, with the remaining balance due at maturity
    
    $
    80,477
    
    
    $
    99,563Less current portion
    
    
    (80,477
    )
    
    
    (7,027
    )$
    
    
    
    $
    92,536
   9. Sale of Office Facility
  10. Earnings per Share
  13




---



##### Table of Contents



Participating Securities and the Two-Class Method under FASB Statement
No. 128, Earnings per Share
  Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    8,242
    
    
    $
    8,308
    
    
    $
    16,671
    
    
    $
    18,547Less dividends paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Undistributed earnings
    
    $
    8,242
    
    
    $
    8,308
    
    
    $
    16,671
    
    
    $
    18,547Allocation of undistributed earnings:Common Stock
    
    $
    7,382
    
    
    $
    7,415
    
    
    $
    14,918
    
    
    $
    16,541Series B Preferred Stock
    
    
    860
    
    
    
    893
    
    
    
    1,753
    
    
    
    2,006$
    8,242
    
    
    $
    8,308
    
    
    $
    16,671
    
    
    $
    18,547Weighted Average Shares:Common Stock
    
    
    30,924
    
    
    
    29,921
    
    
    
    30,619
    
    
    
    29,671Series B Preferred Stock
    
    
    3,604
    
    
    
    3,604
    
    
    
    3,604
    
    
    
    3,604Shares  Basic earnings per share
    
    
    34,528
    
    
    
    33,525
    
    
    
    34,223
    
    
    
    33,275Dilutive common stock equivalents
    
    
    904
    
    
    
    849
    
    
    
    1,038
    
    
    
    691Shares  Diluted earnings per share
    
    
    35,432
    
    
    
    34,374
    
    
    
    35,261
    
    
    
    33,966Basic earnings per share applicable to:Common Stock
    
    $
    .24
    
    
    $
    .25
    
    
    $
    .49
    
    
    $
    .56Series B Preferred Stock
    
    $
    .24
    
    
    $
    .25
    
    
    $
    .49
    
    
    $
    .56Diluted earnings per share applicable to common shareholders
    
    $
    .23
    
    
    $
    .24
    
    
    $
    .47
    
    
    $
    .55
 11. Stock-Based Compensation
 Performance Share Awards .
  14




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##### Table of Contents



Restricted Stock Units
   Employee Stock Purchase Plan Share
Based Payment,
 12. Income Taxes
 Accounting
for Income Taxes in Interim Periods  in interpretation of APB Opinion No, 28,
 15




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Income before income tax provision
    
    $
    13,683
    
    
    $
    13,370
    
    
    $
    27,122
    
    
    $
    28,696Effective tax rate
    
    
    38.1
    %
    
    
    36.4
    %
    
    
    37.1
    %
    
    
    34.0
    %Income tax provision at effective tax rate
    
    
    5,209
    
    
    
    4,865
    
    
    
    10,064
    
    
    
    9,767Discrete tax items:Interest and penalties on uncertain tax positions
    
    
    108
    
    
    
    197
    
    
    
    323
    
    
    
    445Changes in estimate and foreign statutory rates
    
    
    124
    
    
    
    
    
    
    
    64
    
    
    
    (63
    )Total discrete tax item benefits
    
    
    232
    
    
    
    197
    
    
    
    387
    
    
    
    382Income tax provision
    
    $
    5,441
    
    
    $
    5,062
    
    
    $
    10,451
    
    
    $
    10,149
     Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109
  16




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13. Business Segments and Geographic Data
  Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:Americas
    
    $
    68,616
    
    
    $
    63,817
    
    
    $
    191,421
    
    
    $
    184,233Europe
    
    
    21,168
    
    
    
    21,250
    
    
    
    66,553
    
    
    
    64,665Asia/Pacific
    
    
    8,662
    
    
    
    8,578
    
    
    
    26,143
    
    
    
    26,214Total revenues
    
    $
    98,446
    
    
    $
    93,645
    
    
    $
    284,117
    
    
    $
    275,112
 September 30,
    
    
    December 31,2008
    
    
    2007Identifiable assets:Americas
    
    $
    482,480
    
    
    $
    470,205Europe
    
    
    93,814
    
    
    
    108,390Asia/Pacific
    
    
    43,022
    
    
    
    43,630Total identifiable assets
    
    $
    619,316
    
    
    $
    622,225
   17




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##### Table of Contents




    
    Retail.This reportable business segment includes all revenues related to applications
sold to retail customers.
 
    
    Manufacturing and Distribution. This reportable business segment includes all revenues
related to applications sold to manufacturing and distribution companies, including consumer
goods manufacturers, life sciences companies, high tech organizations, oil and gas companies,
automotive producers and other discrete manufacturers involved with government, aerospace and
defense contracts.
 
    
    Services Industries.This reportable business segment includes all revenues related to
applications 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
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:Retail
    
    $
    53,378
    
    
    $
    48,845
    
    
    $
    150,398
    
    
    $
    145,094Manufacturing and Distribution
    
    
    39,890
    
    
    
    40,325
    
    
    
    118,324
    
    
    
    118,148Services Industries
    
    
    5,178
    
    
    
    4,475
    
    
    
    15,395
    
    
    
    11,870$
    98,446
    
    
    $
    93,645
    
    
    $
    284,117
    
    
    $
    275,112Operating income (loss):Retail
    
    $
    16,114
    
    
    $
    13,746
    
    
    $
    40,361
    
    
    $
    35,509Manufacturing and Distribution
    
    
    16,317
    
    
    
    15,361
    
    
    
    44,984
    
    
    
    45,796Services Industries
    
    
    468
    
    
    
    392
    
    
    
    1,550
    
    
    
    (111
    )Other (see below)
    
    
    (16,914
    )
    
    
    (14,328
    )
    
    
    (54,587
    )
    
    
    (45,536
    )$
    15,985
    
    
    $
    15,171
    
    
    $
    32,308
    
    
    $
    35,658Depreciation:Retail
    
    $
    1,096
    
    
    $
    1,070
    
    
    $
    3,363
    
    
    $
    3,204Manufacturing and Distribution
    
    
    727
    
    
    
    883
    
    
    
    2,454
    
    
    
    2,608Services Industries
    
    
    196
    
    
    
    98
    
    
    
    536
    
    
    
    262$
    2,019
    
    
    $
    2,051
    
    
    $
    6,353
    
    
    $
    6,074Other:General and administrative expenses
    
    $
    10,440
    
    
    $
    10,365
    
    
    $
    32,406
    
    
    $
    29,909Provision for doubtful accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,590Amortization of intangible assets
    
    
    6,075
    
    
    
    3,963
    
    
    
    18,227
    
    
    
    11,889Restructuring charge
    
    
    399
    
    
    
    
    
    
    
    3,954
    
    
    
    6,276Gain on sale of office facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,128
    )$
    16,914
    
    
    $
    14,328
    
    
    $
    54,587
    
    
    $
    45,536
 Retail Manufacturing and Distribution Services Industry
 
 Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Significant Trends and Developments in Our Business
 Outlook for Fourth Quarter and Year Ending December 31, 2008. 3
 18




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Premium Access CoE CoE The Expansion of our Operations in India and the Creation of a
Center of Excellence is Progressing section below) CoE. CoE, a
  19




---



##### Table of Contents



The Expansion of our Operations in India and the Creation of a Center of Excellence is
Progressing. CoE CoE
 CoE
 Ø
    
    Accelerating the development of new solutions and innovations through expanded
R&D bandwidth;Ø
    
    Increasing the breadth and competitiveness of our consulting services through a
blended delivery offering that combines high value on-shore consulting expertise and
project management with lower cost off-shore resources;Ø
    
    Enhancing our customer support service through faster resolution of complex customer issues;Ø
    
    Accelerating the development of training content;Ø
    
    Reducing the total cost of ownership of our solutions;Ø
    
    Improving our competitiveness against companies that already operate low cost
off-shore facilities, and against small, low-cost on-shore service providers;Ø
    
    Accelerating the development of common business processes between major departments within JDA;Ø
    
    Increasing our ability to take advantage of technology to optimize our internal operations; andØ
    
    Lowering our operating costs and improving our operating margins.
 CoE CoE, CoE CoE. CoE
 Pending Acquisition of i2 Technologies, Inc.
 20




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Retail
  Summary of Nine Month Results.
 21




---



##### Table of Contents



3
  Software License Revenues
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,Region
    
    2008
    
    
    2007
    
    
    $ Change
    
    
    % Change
    
    
    2008
    
    
    2007
    
    
    $ Change
    
    
    % ChangeAmericas
    
    $
    17,503
    
    
    $
    9,785
    
    
    $
    7,718
    
    
    
    79
    %
    
    $
    39,686
    
    
    $
    30,235
    
    
    $
    9,451
    
    
    
    31
    %Europe
    
    
    3,516
    
    
    
    3,976
    
    
    
    (460
    )
    
    
    (12
    %)
    
    
    13,024
    
    
    
    14,432
    
    
    
    (1,408
    )
    
    
    (10
    %)Asia/Pacific
    
    
    1,992
    
    
    
    1,744
    
    
    
    248
    
    
    
    14
    %
    
    
    5,883
    
    
    
    6,492
    
    
    
    (609
    )
    
    
    (9
    %)Total
    
    $
    23,011
    
    
    $
    15,505
    
    
    $
    7,506
    
    
    
    48
    %
    
    $
    58,593
    
    
    $
    51,159
    
    
    $
    7,434
    
    
    
    15
    %
    22




---



##### Table of Contents



CoE
  CoE
 CoE CoE.
  23




---



##### Table of Contents



CoE
   CoE
 Performance Share Awards .
  Restricted Stock Units
 24




---



##### Table of Contents



Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Cost of maintenance services
    
    $
    49
    
    
    $
    161
    
    
    $
    205
    
    
    $
    302Cost of consulting services
    
    
    48
    
    
    
    238
    
    
    
    303
    
    
    
    434Product development
    
    
    115
    
    
    
    194
    
    
    
    354
    
    
    
    364Sales and marketing
    
    
    307
    
    
    
    631
    
    
    
    810
    
    
    
    1,254General and administrative
    
    
    392
    
    
    
    1,070
    
    
    
    1,463
    
    
    
    1,818Total stock-based compensation
    
    $
    911
    
    
    $
    2,294
    
    
    $
    3,135
    
    
    $
    4,172
 Employee Stock Purchase Plan Share
Based Payment,
  Our Financial Position is Solid and We Are Generating Positive Cash Flow from Operations.
 25




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26




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##### Table of Contents



Results of Operations
  Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007REVENUES:Software licenses
    
    
    23
    %
    
    
    16
    %
    
    
    20
    %
    
    
    18
    %Maintenance services
    
    
    47
    %
    
    
    47
    %
    
    
    49
    %
    
    
    48
    %Product revenues
    
    
    70
    %
    
    
    63
    %
    
    
    69
    %
    
    
    66
    %Consulting services
    
    
    27
    %
    
    
    34
    %
    
    
    28
    %
    
    
    31
    %Reimbursed expenses
    
    
    3
    %
    
    
    3
    %
    
    
    3
    %
    
    
    3
    %Service revenues
    
    
    30
    %
    
    
    37
    %
    
    
    31
    %
    
    
    34
    %Total revenues
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %COST OF REVENUES:Cost of software licenses
    
    
    1
    %
    
    
    1
    %
    
    
    1
    %
    
    
    1
    %Amortization of acquired software technology
    
    
    1
    %
    
    
    2
    %
    
    
    1
    %
    
    
    2
    %Cost of maintenance services
    
    
    12
    %
    
    
    12
    %
    
    
    12
    %
    
    
    12
    %Cost of product revenues
    
    
    14
    %
    
    
    15
    %
    
    
    14
    %
    
    
    15
    %Cost of consulting services
    
    
    20
    %
    
    
    22
    %
    
    
    21
    %
    
    
    23
    %Reimbursed expenses
    
    
    3
    %
    
    
    3
    %
    
    
    3
    %
    
    
    3
    %Cost of service revenues
    
    
    23
    %
    
    
    25
    %
    
    
    24
    %
    
    
    26
    %Total cost of revenues
    
    
    37
    %
    
    
    40
    %
    
    
    38
    %
    
    
    41
    %GROSS PROFIT
    
    
    63
    %
    
    
    60
    %
    
    
    62
    %
    
    
    59
    %OPERATING EXPENSES:Product development
    
    
    14
    %
    
    
    13
    %
    
    
    14
    %
    
    
    14
    %Sales and marketing
    
    
    16
    %
    
    
    16
    %
    
    
    17
    %
    
    
    16
    %General and administrative
    
    
    11
    %
    
    
    11
    %
    
    
    12
    %
    
    
    11
    %Provision for doubtful accounts
    
    
    
    %
    
    
    
    %
    
    
    
    %
    
    
    
    %Amortization of intangibles
    
    
    6
    %
    
    
    4
    %
    
    
    6
    %
    
    
    4
    %Restructuring charges and adjustments to acquisition-related reserves
    
    
    
    %
    
    
    
    %
    
    
    1
    %
    
    
    2
    %Gain on sale of office facility
    
    
    
    %
    
    
    
    %
    
    
    
    %
    
    
    (1
    %)Total operating expenses
    
    
    47
    %
    
    
    44
    %
    
    
    50
    %
    
    
    46
    %OPERATING INCOME
    
    
    16
    %
    
    
    16
    %
    
    
    12
    %
    
    
    13
    %Interest expense and amortization of loan fees
    
    
    (2
    %)
    
    
    (3
    %)
    
    
    (3
    %)
    
    
    (3
    %)Other income, net
    
    
    
    %
    
    
    1
    %
    
    
    1
    %
    
    
    1
    %INCOME BEFORE INCOME TAX PROVISON
    
    
    14
    %
    
    
    14
    %
    
    
    10
    %
    
    
    11
    %Income tax provision
    
    
    6
    %
    
    
    5
    %
    
    
    4
    %
    
    
    4
    %NET INCOME
    
    
    8
    %
    
    
    9
    %
    
    
    6
    %
    
    
    7
    %Gross margin on software licenses
    
    
    97
    %
    
    
    96
    %
    
    
    97
    %
    
    
    96
    %Gross margin on maintenance services
    
    
    75
    %
    
    
    74
    %
    
    
    75
    %
    
    
    74
    %Gross margin on product revenues
    
    
    81
    %
    
    
    77
    %
    
    
    80
    %
    
    
    78
    %Gross margin on service revenues
    
    
    21
    %
    
    
    30
    %
    
    
    21
    %
    
    
    24
    %
 27




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##### Table of Contents



% Change
    
    
    % ChangeThree Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2008 to 2007
    
    
    2007
    
    
    2008
    
    
    2008 to 2007
    
    
    2007Revenues:Software licenses
    
    $
    23,011
    
    
    
    48
    %
    
    $
    15,505
    
    
    $
    58,593
    
    
    
    15
    %
    
    $
    51,159Maintenance
    
    
    46,388
    
    
    
    6
    %
    
    
    43,753
    
    
    
    138,843
    
    
    
    6
    %
    
    
    131,192Product revenues
    
    
    69,399
    
    
    
    17
    %
    
    
    59,258
    
    
    
    197,436
    
    
    
    8
    %
    
    
    182,351Service revenues
    
    
    29,047
    
    
    
    (16
    %)
    
    
    34,387
    
    
    
    86,681
    
    
    
    (7
    %)
    
    
    92,761Total revenues
    
    
    98,446
    
    
    
    5
    %
    
    
    93,645
    
    
    
    284,117
    
    
    
    3
    %
    
    
    275,112Cost of Revenues:Software licenses
    
    
    613
    
    
    
    (5
    %)
    
    
    642
    
    
    
    2,009
    
    
    
    10
    %
    
    
    1,831Amortization of acquired software technology
    
    
    1,309
    
    
    
    (13
    %)
    
    
    1,502
    
    
    
    4,270
    
    
    
    (12
    %)
    
    
    4,875Maintenance services
    
    
    11,513
    
    
    
    2
    %
    
    
    11,239
    
    
    
    34,145
    
    
    
    
    %
    
    
    33,988Product revenues
    
    
    13,435
    
    
    
    
    %
    
    
    13,383
    
    
    
    40,424
    
    
    
    (1
    %)
    
    
    40,694Service revenues
    
    
    22,925
    
    
    
    (4
    %)
    
    
    23,904
    
    
    
    68,864
    
    
    
    (3
    %)
    
    
    70,671Total cost of revenues
    
    
    36,360
    
    
    
    (2
    %)
    
    
    37,287
    
    
    
    109,288
    
    
    
    (2
    %)
    
    
    111,365Gross Profit
    
    
    62,086
    
    
    
    10
    %
    
    
    56,358
    
    
    
    174,829
    
    
    
    7
    %
    
    
    163,747Operating Expenses:Product development
    
    
    13,288
    
    
    
    11
    %
    
    
    11,934
    
    
    
    40,196
    
    
    
    7
    %
    
    
    37,717Sales and marketing
    
    
    15,899
    
    
    
    7
    %
    
    
    14,925
    
    
    
    47,738
    
    
    
    6
    %
    
    
    44,836General and administrative
    
    
    10,440
    
    
    
    1
    %
    
    
    10,365
    
    
    
    32,406
    
    
    
    8
    %
    
    
    29,90939,627
    
    
    
    6
    %
    
    
    37,224
    
    
    
    120,340
    
    
    
    7
    %
    
    
    112,462Provision for doubtful accounts
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    
    
    
    (100
    %)
    
    
    1,590Amortization of intangibles
    
    
    6,075
    
    
    
    53
    %
    
    
    3,963
    
    
    
    18,227
    
    
    
    53
    %
    
    
    11,889Restructuring charge and adjustments to
acquisition-related reserves
    
    
    399
    
    
    
    100
    %
    
    
    
    
    
    
    3,954
    
    
    
    (37
    %)
    
    
    6,276Gain on sale of office facility
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    
    
    
    (100
    %)
    
    
    (4,128
    )Operating Income
    
    $
    15,985
    
    
    
    5
    %
    
    $
    15,171
    
    
    $
    32,308
    
    
    
    (9
    %)
    
    $
    35,658Cost of Revenues as a % of related revenues:Software licenses
    
    
    3
    %
    
    
    
    
    
    
    4
    %
    
    
    3
    %
    
    
    
    
    
    
    4
    %Maintenance services
    
    
    25
    %
    
    
    
    
    
    
    26
    %
    
    
    25
    %
    
    
    
    
    
    
    26
    %Product revenues
    
    
    19
    %
    
    
    
    
    
    
    23
    %
    
    
    20
    %
    
    
    
    
    
    
    22
    %Service revenues
    
    
    79
    %
    
    
    
    
    
    
    70
    %
    
    
    79
    %
    
    
    
    
    
    
    76
    %Product Development as a % of product revenues
    
    
    19
    %
    
    
    
    
    
    
    20
    %
    
    
    20
    %
    
    
    
    
    
    
    21
    %
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##### Table of Contents



Manufacturing &Retail
    
    
    Distribution
    
    
    Services IndustriesSeptember 30, 2008 vs. 2007
    
    
    September 30, 2008 vs. 2007
    
    
    September 30, 2008 vs. 2007Quarter
    
    
    Nine Months
    
    
    Quarter
    
    
    Nine Months
    
    
    Quarter
    
    
    Nine MonthsSoftware licenses
    
    
    102
    %
    
    
    23
    %
    
    
    1
    %
    
    
    (3
    %)
    
    
    (8
    %)
    
    
    38
    %Maintenance services
    
    
    10
    %
    
    
    11
    %
    
    
    3
    %
    
    
    1
    %
    
    
    9
    %
    
    
    13
    %Product revenues
    
    
    35
    %
    
    
    15
    %
    
    
    2
    %
    
    
    1
    %
    
    
    
    %
    
    
    26
    %Service revenues
    
    
    (22
    %)
    
    
    (13
    %)
    
    
    (11
    %)
    
    
    (1
    %)
    
    
    33
    %
    
    
    34
    %Total revenues
    
    
    9
    %
    
    
    4
    %
    
    
    (1
    %)
    
    
    
    %
    
    
    16
    %
    
    
    30
    %Product development
    
    
    19
    %
    
    
    7
    %
    
    
    (2
    %)
    
    
    (2
    %)
    
    
    38
    %
    
    
    62
    %Sales and marketing
    
    
    30
    %
    
    
    9
    %
    
    
    (22
    %)
    
    
    (2
    %)
    
    
    20
    %
    
    
    38
    %Operating income (loss)
    
    
    17
    %
    
    
    14
    %
    
    
    6
    %
    
    
    (2
    %)
    
    
    19
    %
    
    
    1,496
    %
 Contribution to Total RevenuesRetail
    
    Manufacturing & Distribution
    
    Services IndustriesQuarter
    
    Nine Months
    
    Quarter
    
    Nine Months
    
    Quarter
    
    Nine Months2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    200754%
    
    52%
    
    53%
    
    53%
    
    41%
    
    43%
    
    42%
    
    43%
    
    5%
    
    5%
    
    5%
    
    4%
 The Americas
    
    
    Europe
    
    
    Asia/PacificSeptember 30, 2008 vs. 2007
    
    
    September 30, 2008 vs. 2007
    
    
    September 30, 2008 vs. 2007Quarter
    
    
    Nine Months
    
    
    Quarter
    
    
    Nine Months
    
    
    Quarter
    
    
    Nine MonthsSoftware licenses
    
    
    79
    %
    
    
    31
    %
    
    
    (12
    %)
    
    
    (10
    %)
    
    
    14
    %
    
    
    (9
    %)Maintenance services
    
    
    4
    %
    
    
    4
    %
    
    
    4
    %
    
    
    7
    %
    
    
    36
    %
    
    
    22
    %Product revenues
    
    
    23
    %
    
    
    11
    %
    
    
    
    %
    
    
    2
    %
    
    
    28
    %
    
    
    9
    %Service revenues
    
    
    (17
    %)
    
    
    (8
    %)
    
    
    (1
    %)
    
    
    6
    %
    
    
    (29
    %)
    
    
    (14
    %)Total revenues
    
    
    8
    %
    
    
    4
    %
    
    
    
    %
    
    
    3
    %
    
    
    1
    %
    
    
    
    %
 Contribution to Total RevenuesThe Americas
    
    Europe
    
    Asia/PacificQuarter
    
    Nine Months
    
    Quarter
    
    Nine Months
    
    Quarter
    
    Nine Months2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    200770%
    
    68%
    
    67%
    
    67%
    
    21%
    
    23%
    
    24%
    
    23%
    
    9%
    
    9%
    
    9%
    
    10%
 Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2007
 Product Revenues
 Software Licenses.
 Retail. 3
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Manufacturing & Distribution.
 Services Industries.
 Regional Results
   Maintenance Services.
 Service Revenues
  Cost of Product Revenues
 Cost of Software Licenses. rd
 Amortization of Acquired Software Technology
 Cost of Maintenance Services.
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Cost of Service Revenues
 CoE
 Gross Profit
   Operating Expenses
 Product Development. CoE.
 Sales and Marketing.
 General and Administrative.
 Provision of Doubtful Accounts.
 Amortization of Intangibles.
 Restructuring Charges and Adjustments to Acquisition Reserves. CoE
 Operating Income
  31




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Retail
 Manufacturing and Distribution
 Services Industries
  Other Income (Expense)
 Interest Expense and Amortization of Loan Fees.
  Interest Income and Other, Net.
 Income Tax Provision
 Accounting
for Income Taxes in Interim Periods  in interpretation of APB Opinion No, 28,
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##### Table of Contents



Three Months EndedSeptember 30,2008
    
    
    2007Income before income tax provision
    
    $
    13,683
    
    
    $
    13,370Effective tax rate
    
    
    38.1
    %
    
    
    36.4
    %Income tax provision at effective tax rate
    
    
    5,209
    
    
    
    4,865Discrete tax item benefits:Interest and penalties on uncertain tax positions
    
    
    108
    
    
    
    197Changes in estimate and foreign statutory rates
    
    
    124
    
    
    
    Total discrete tax item benefits
    
    
    232
    
    
    
    197Income tax provision
    
    $
    5,441
    
    
    $
    5,062
   Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007
 Product Revenues
 Software Licenses.
 Retail.
 Manufacturing & Distribution.
 Services Industries.
 Regional Results
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##### Table of Contents



Maintenance Services.
 Service Revenues
  Cost of Product Revenues
 Cost of Software Licenses.
 Amortization of Acquired Software Technology
 Cost of Maintenance Services.
 Cost of Service Revenues
  Gross Profit
  34




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##### Table of Contents



Operating Expenses
 Product Development. CoE
 Sales and Marketing.
 General and Administrative.
 Provision of Doubtful Accounts.
 Amortization of Intangibles.
 Restructuring Charges and Adjustments to Acquisition Reserves. CoE
 JDA Enterprise Architecture
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##### Table of Contents



Gain on Sale of Office Facility.
 Operating Income
  Retail
 Manufacturing and Distribution
 Services Industries
  Other Income (Expense)
 Interest Expense and Amortization of Loan Fees.
  Interest Income and Other, Net.
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##### Table of Contents



Income Tax Provision
  Nine Months EndedSeptember 30,2008
    
    
    2007Income before income tax provision
    
    $
    27,122
    
    
    $
    28,696Effective tax rate
    
    
    37.1
    %
    
    
    34.0
    %Income tax provision at effective tax rate
    
    
    10,064
    
    
    
    9,767Discrete tax item benefits:Interest and penalties on uncertain tax positions
    
    
    323
    
    
    
    445Changes in estimate and foreign statutory rates
    
    
    64
    
    
    
    (63
    )Total discrete tax item benefits
    
    
    387
    
    
    
    382Income tax provision
    
    $
    10,451
    
    
    $
    10,149
   Liquidity and Capital Resources
   Operating activities
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##### Table of Contents



Investing activities
 Financing activities
 Changes in the currency exchange rates of our foreign operations Accounting for Derivative Instruments and Hedging
Activities
 Treasury Stock Purchases.
 Contractual Obligations
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##### Table of Contents



Critical Accounting Policies
  
    
    Revenue recognition. Our revenue recognition policy is significant because our revenue
is a key component of our results of operations. In addition, our revenue recognition
determines the timing of certain expenses such as commissions and royalties. We follow
specific and detailed guidelines in measuring revenue; however, certain judgments affect
the application of our revenue policy.We license software primarily under non-cancelable agreements and provide related services,
including consulting, training and customer support. We recognize revenue in accordance with
Statement of Position 97-2 (SOP 97-2), Software Revenue Recognition, as amended and
interpreted by Statement of Position 98-9, Modification of SOP 97-2, Software Revenue
Recognition, with respect to certain transactions, as well as Technical Practice Aids issued
from time to time by the American Institute of Certified Public Accountants, Accounting
Research Bulletin No. 45, Long-Term Construction-Type Contracts (ARB No. 45),Statement of
Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type
Contracts (SOP 81-1)and Staff Accounting Bulletin No. 104, Revenue Recognition,that
provides further interpretive guidance for public companies on the recognition, presentation
and disclosure of revenue in financial statements.Software license revenue is generally recognized using the residual method when:
 Ø
    
    Persuasive evidence of an arrangement exists and a license agreement has been signed;Ø
    
    Delivery, which is typically FOB shipping point, is complete;Ø
    
    Fees are fixed and determinable and there are no uncertainties surrounding product acceptance;Ø
    
    Collection is considered probable; andØ
    
    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
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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 as prescribed in the provisions of
ARB No. 45 and SOP 81-1.Maintenance services are separately priced and stated in our arrangements. Maintenance
services typically include on-line support, access to our Solution Centers via telephone and
web interfaces, comprehensive error diagnosis and correction, and the right to receive
unspecified upgrades and enhancements, when and if we make them generally available.
Maintenance services are generally billed on a monthly basis and recorded as revenue in the
applicable month, or billed on an annual basis with the revenue initially deferred and
recognized ratably over the maintenance period. VSOE for maintenance services is the price
customers will be required to pay when it is sold separately, which is typically the renewal
rate.Consulting and training services are separately priced and stated in our arrangements, are
generally available from a number of suppliers, and are generally not essential to the
functionality of our software products. Consulting services include project 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. We offer hosting services on certain of our software
products under arrangements in which the end users do not take possession of the software.
Revenues from hosting services are included in consulting revenues, billed monthly and
recognized as the services are provided. 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) pursuant to EITF 99-19, Reporting Revenue Gross as a
Principal versus Net as an Agent, 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
retail 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 in accordance with the
requirements of paragraph 8 in Statement of Position 97-2, Software Revenue Recognition, as
amended. For those customers who are not credit worthy, we require prepayment of the
software license fee or a letter of credit before we will ship our software. We have a
history of collecting software payments when they come due without providing refunds or
concessions. Consulting services are generally billed bi-weekly and maintenance services
are billed annually or monthly. For those customers who are significantly delinquent or
whose credit deteriorates, we typically put the account on hold and do not recognize any
further services revenue, and may as appropriate withdraw support and/or our implementation
staff until the situation has been resolved.We do not have significant billing or collection problems. We review each past due account
and provide specific reserves based upon the information we gather from various sources
including our customers, subsequent cash receipts, consulting services project teams, members
of each regions management, and credit rating services such as Dun and Bradstreet. Although
infrequent and unpredictable, from time to time certain of our customers have filed
bankruptcy, and we have been required to refund the pre-petition amounts collected and settle
for less than the face value of their remaining receivable pursuant to a bankruptcy court
order. In these situations, as soon as it becomes probable that the net realizable value of
the receivable is impaired, we provide reserves on the receivable. In addition, we monitor
economic conditions in the various geographic regions in which we operate to determine if
general reserves or adjustments to our credit policy in a region are appropriate for
deteriorating conditions that may impact the net realizable value of our receivables.
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
    
    Goodwill and Intangible Assets. Our business combinations typically result in goodwill
and other intangible assets, which 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 required by Statement
of Financial Accounting Standard No. 142, Goodwill and Other Intangible Assets(SFAS No.
142),requires 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, using a two-step process that
compares 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 goodwill allocated to our reporting units. We found no indication of impairment of our
goodwill balances during the three months ended September 30, 2008 with respect to the
goodwill allocated to our Retail, Manufacturing and Distributionand Services Industries
reportable business segments and, absent future indicators of impairment, the next annual
impairment test will be performed in fourth quarter 2008.Customer lists are amortized on a straight-line basis over estimated useful lives ranging
from 8 years 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 an 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.
In first quarter 2008 we changed the estimated useful life of certain customer lists to
reflect current trends in attrition. With this change, the quarterly amortization expense on
customer lists increased to $4.9 million, or approximately $2.1 million per quarter,
beginning first quarter 2008 and continuing over the remaining useful life of the related
customer lists which extend through June 2014. This change had a $0.04 per share impact
(reduction) on third quarter 2008 basic and diluted earnings per share calculations.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 as a cost of product
revenues in accordance with Financial Accounting Standards No. 86, Accounting for the Costs
of Computer Software to be Sold, Leased, or Otherwise Marketed(SFAS No. 86). 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.Trademarks have been acquired primarily in the acquisitions of Manugistics and E3 Corporation
(E3). The Manugistics and E3 trademarks are being amortized on a straight-line basis over
their estimated remaining useful lives of 3 years.
    
    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 in accordance with Statement of Financial Accounting Standards No. 86,
Accounting for Costs of Computer Software to be Sold, Leased or Otherwise Marketed. We
consider technological feasibility to have occurred when all planning, designing, coding
and testing have been completed according to design specifications. Once technological
feasibility is established, any additional costs would be capitalized. We believe our
current process for developing software is essentially completed concurrent with the
establishment of technological feasibility, and accordingly, no costs have been
capitalized.
    
    Income Taxes. We account for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes(SFAS No. 109). Under SFAS No.
109, 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
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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.We adopted the provisions of Financial Accounting Standards Board Interpretation No. 48,
Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109
(FIN 48) on January 1, 2007. The amount of unrecognized tax benefits at January 1, 2007 was
$3.5 million, of which $799,000 would impact our effective tax rate if recognized. With the
adoption of FIN 48, we recognized a charge of approximately $1.0 million to beginning
retained earnings for uncertain tax positions. In addition, a FIN 48 adjustment of $2.9
million was made to the purchase price allocation on the Manugistics acquisition to record a
tax liability for uncertain tax positions which increased the goodwill balance. Other than
the settlement of a tax audit in Germany, which could result in a decrease in the FIN 48 tax
liability in fourth quarter 2008 of approximately $800,000 plus interest and penalties, we do
not believe there are any uncertain tax positions for which it is reasonably possible that
the total amounts of unrecognized tax benefits will significantly increase or decrease within
the next 12 months.The FIN 48 adjustments on January 1, 2007 include an accrual of approximately $1.3 million
for interest and penalties. 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. We have accrued
additional interest and penalties related to uncertain tax positions of $323,000 and $445,000
for the nine months ended September 30, 2008 and 2007 respectively which are included as a
component of income tax expense.
    
    Stock-Based Compensation. We adopted Statement of Financial Accounting Standard No.
123(R), Share Based Payment(SFAS No. 123(R)) effective January 1, 2006 using the
modified prospective method. Under the modified prospective method, share-based
compensation expense recognized in our financial statements will now include (i)
compensation expense for all share-based payments granted prior to, but not yet vested as
of January 1, 2006, based on the grant date fair value estimated under the requirements of
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation (SFAS No. 123), and (ii) compensation expense for all share-based payments
granted subsequent to January 1, 2006 under the requirements of SFAS No. 123(R). Results
for prior periods have not been restated. SFAS No. 123(R) also requires the benefits of
tax deductions in excess of recognized compensation cost to be reported as a financing cash
flow rather than as an operating cash flow.We do not expect that outstanding stock options will result in a significant compensation
expense charge as all stock options were fully vested prior to the adoption of SFAS No.
123(R). Stock options are no longer used for share-based compensation. A 2005 Performance
Incentive Plan (2005 Incentive Plan) was approved by our stockholders on May 16, 2005 that
provides for the issuance of up to 1,847,000 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. With the
adoption of the 2005 Incentive Plan, we terminated all prior stock option plans except for
those provisions necessary to administer the outstanding options. The 2005 Incentive Plan
contains certain restrictions that limit the number of shares that may be issued and cash
awarded under each type of award, including a limitation that awards granted in any given
year can be 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 will be in such form as the Compensation Committee shall from time to time
establish and 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 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 awards are amortized over their applicable vesting period using
graded vesting.Performance Share Awards.On February 7, 2008, the Board approved an incentive plan for 2008
similar to the Integration Plan (New Incentive Plan). The New Incentive Plan initially
provides for the issuance of up to 259,516 contingently issuable performance share awards
under the 2005 Incentive Plan to executive officers and certain other members of our
management team if we are able to achieve a defined performance threshold goal in 2008. The
performance threshold goal is defined as $95 million of adjusted EBITDA (earnings before
interest, taxes, depreciation and amortization), which excludes certain non-routine items. A
partial pro-rata issuance of performance share awards will be made if we achieve a minimum
performance threshold. Through September 30, 2008, approximately 200,000 contingently
issuable performance share
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awards, net of forfeitures, have been awarded under the New Incentive Plan. The performance share awards, if any, will be issued after the approval of our 2008 financial results in January 2009 and will vest 50% upon the date of
issuance with the remaining 50% vesting ratably over a 24-month period.The Companys performance against the defined performance threshold goal of the New Incentive
Plan is being evaluated on a quarterly basis throughout 2008 and stock-based compensation is
recognized over the requisite service period that runs from the date of board approval
through January 2011. A deferred compensation charge of approximately $3.5 million 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 issued through September
30, 2008. Although all necessary service and performance conditions have not been met
through September 30, 2008, based on our results for the nine months ended September 30, 2008
and the outlook for the remainder of 2008, we have recorded $1.7 million in stock-based
compensation expense related to these awards on a graded vesting basis in the nine months
ended September 30, 2008, including $583,000 in third quarter 2008. This charge 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.Restricted Stock Units. Our Board of Directors approved a special Manugistics Incentive Plan
(Integration Plan) on August 18, 2006. The Integration Plan provided for the issuance of
contingently issuable restricted stock units under the 2005 Incentive Plan to executive
officers and certain other members of our management team if we were able to successfully
integrate the Manugistics acquisition and achieve a defined performance threshold goal in
2007. The performance threshold goal was defined as $85 million of adjusted EBITDA, which
excludes certain non-routine items. A partial pro-rata issuance of restricted stock units
would be made if we achieved a minimum performance threshold. The Board approved additional
contingently issuable restricted stock units under the Integration Plan for executive
officers and new participants in 2007. The Companys actual EBITDA performance for 2007 was
approved by the Board in January 2008 and qualified participants for a pro-rata issuance
equal to 99.25% of the contingently issuable restricted stock units. In total, 502,935
restricted stock units were issued on January 28, 2008 with a grant date fair value of $8.1
million. The restricted stock units vested 50% upon the date of issuance with the remaining
50% vesting ratably over the subsequent 24-month period. Through September 30, 2008, 19,407
of the restricted stock units have been subsequently forfeited.A deferred compensation charge of $8.1 million was recorded in the equity section of our
balance sheet during 2007, with a related increase to additional paid-in capital, for the
total grant date fair value of the awards. Stock-based compensation is being recognized on a
graded vesting basis over the requisite service periods that run from the date of the various
board approvals through January 2010. We recognized $5.4 million in stock-based compensation
expense related to these restricted stock unit awards in 2007, including $1.8 million in the
nine months ended September 30, 2007, plus an additional $858,000 in the nine months ended
September 30, 2008. These charges are 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.Employee Stock Purchase Plan. An Employee Stock Purchase Plan (2008 Purchase Plan) was
adopted by the Board and approved by stockholders on May 12, 2008. The 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. The
initial six-month offering period began August 1, 2008 with the first scheduled purchase on
February 1, 2009. The plan is considered compensatory under SFAS No. 123 (R) and as a
result, stock-based compensation will be 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. No stock-based compensation expense
was recorded for the 2008 Purchase Plan during the nine months ended September 30, 2008.
    
    Derivative Instruments and Hedging Activities. We account for derivative financial
instruments in accordance with Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities(SFAS No. 133). 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 denominated
assets and liabilities which exist as part of our ongoing business operations. 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 less than 90 days, and are not designated as hedging
instruments under SFAS No. 133. Forward exchange contracts are marked-to-market at the end
of each reporting period, with gains and losses recognized in other income offset by the
gains or losses resulting from the settlement of the underlying foreign denominated assets
and liabilities.
 43




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We were exposed to interest rate risk in connection with our long-term debt which provides
for quarterly interest payments at LIBOR + 2.25%. To manage this risk, we entered into an
interest rate swap agreement on July 28, 2006 to fix LIBOR at 5.365% on $140 million, or 80%
of the aggregate term loans. The interest rate swap was structured with decreasing notional
amounts to match our expected pay down of the debt. The notional value of the interest rate
swap was $53.7 million at September 30, 2008 and represented approximately 67% of the
aggregate term loan balance. The interest rate swap agreement was designated a cash flow
hedge derivative. SFAS No. 133 requires derivatives to be recorded as either an asset or a
liability in the balance sheet at fair value. Changes in the fair value of derivatives that
are designated as highly effective and qualify as a cash flow hedge are deferred and recorded
as a component of Accumulated other comprehensive income (loss) until net income is
affected by the variability of cash flows of the hedged transaction (i.e., that quarterly
payment of interest). When the hedged transaction affects earnings, the resulting gain or
loss is reclassified from Accumulated other comprehensive income (loss) to the consolidated
statement of income on the same line as the underlying transaction (i.e., interest expense).
A change in the fair value of an ineffective portion of a hedging derivative is recognized
immediately in earnings. We evaluate the effectiveness of the cash flow hedge derivative on
a quarterly basis. During third quarter 2008 a net unrealized gain of $329,000 was recorded
in Accumulated other comprehensive income. The interest rate swap had a negative fair value
of $838,000 as of September 30, 2008. This value was determined in accordance with SFAS No.
157 using Level 2 observable inputs and approximates the net loss that would have been
realized if the contract had been settled as of September 30, 2008.We repaid the remaining balance of our long-term debt on October 1, 2008 and terminated the
interest rate swap on October 5, 2008. We made an $899,000 payment on October 5, 2008 in
consideration for early termination of the interest rate swap. This payment will be included
in the consolidated statements of income in fourth quarter 2008 under the caption Interest
expense and amortization of loan fees.
 Other Recent Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities
 Business Combinations Business Combinations
 Disclosures About Derivative Instruments and
Hedging Activities  an
 44




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amendment of FASB Statement No. 133 Accounting for Derivative Instruments and Hedging Activities Disclosures About Fair Value of Financial Instruments,
 Determination of the Useful Life of
Intangible Assets Goodwill and Other Intangible Assets
 
 Item 3: Quantitative and Qualitative Disclosures about Market Risk
  Foreign currency exchange rates
    45




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Interest rates
   
 Item 4: Controls and Procedures
 Disclosure Controls and Procedures
 Changes in Internal Control Over Financial Reporting.
 46




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47




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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  Risks Related To Our Business
 We may misjudge when software sales will be realized
  Economic, political and market conditions can adversely affect our revenue results and
profitability
   48




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We may not receive significant revenues from our current research and development efforts
  Our decision to transition our applications to the JDA Enterprise Architecture may present new
risks
 JDA Enterprise Architecture JDA Enterprise Architecture JDA Enterprise
Architecture
 JDA Enterprise Architecture
 
    
    The possibility that it may be more difficult than we currently anticipate to develop
additional, full-featured products for the JDA Enterprise Architectureplatform and
complete the planned transition of our product suite;
    
    The possibility we may not complete the transition to the JDA Enterprise Architecture
platform within a timely manner;
    
    Our ability to transition our customer base onto the JDA Enterprise Architecture
platform as additional products become available;
    
    We may encounter difficulties implementing and supporting new products or versions of
existing products based on the JDA Enterprise Architectureplatform;
    
    We may be required to supplement our consulting and support organizations with JDA
Enterprise Architectureproficient resources from our product development teams to
support early JDA Enterprise Architectureimplementations through our new Premium Access
program which could impact our development schedule for the release of additional JDA
Enterprise Architectureproducts.
 JDA Enterprise Architecture JDA Enterprise Architecture JDA Enterprise Architecture
 We may face liability if our products are defective or if we make errors implementing our products
  49




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We may have difficulty implementing our solutions
 Merchandise Operations Systems,
Demand, Fulfillment Revenue Management
  We may not be able to protect our intellectual property
  Third parties may claim we infringe their intellectual property rights
  
    
    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 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
 Portfolio Merchandise Management
 50




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Performance Analysis by IDEAS, JDA Reporting JDA
Analytics JDA Enterprise Architecture JDA Integrator
 We may face difficulties in our highly competitive markets
   .
 CoE
 51




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CoE
 There are many risks associated with international operations
   
    
    Currency fluctuations, which could significantly increase with our planned expansion
of the CoEin India;
    
    Higher operating costs due to local laws or regulations;
    
    Lower consulting margins;
    
    Competing against low-cost service providers;
    
    Unexpected changes in employment and other regulatory requirements;
    
    Tariffs and other trade barriers;
    
    Costs and risks of localizing products for foreign countries;
    
    Longer accounts receivable payment cycles in certain countries;
    
    Potentially negative tax consequences;
    
    Difficulties in staffing and managing geographically disparate operations;
    
    Greater difficulty in safeguarding intellectual property, licensing and other trade
restrictions;
    
    Ability to negotiate and have enforced favorable contract provisions;
    
    Repatriation of earnings;
    
    The burdens of complying with a wide variety of foreign laws;
    
    Anti-American sentiment due to the war with Iraq, and other American policies that
may be unpopular in certain regions;
    
    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
 We may experience expansion delays or difficulties with our CoE in India
 CoE CoE CoE CoE CoE
 52




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
    
    Unexpected increases in labor costs in India;
    
    Inability to hire or retain sufficient personnel with the necessary skill sets to
meet our needs;
    
    Economic, security and political conditions in India;
    
    Slower than expected acceptance of our services offerings by our customers;
    
    Inadequate facilities or communications infrastructure; and
    
    Local law or regulatory issues.
 We may have difficulty attracting and retaining skilled personnel
  We are dependent on key personnel
  We may have difficulty integrating acquisitions
  
    
    We may have difficulty assimilating the operations and personnel of the acquired
company;
    
    The challenge to integrate new products and technologies into our sales and marketing
process;
    
    We may have difficulty effectively integrating the 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;
    
    The costs and complexity of integrating the internal IT infrastructure may be greater
than expected and require capital investments;
    
    We may not be able to retain key technical and managerial personnel from the acquired
business;
    
    We may be unable to achieve the financial and strategic goals for the acquired and
combined businesses;
    
    We may have difficulty in maintaining controls, procedures and policies during the
transition and integration;
    
    Our relationships with partner companies or third-party providers of technology or
products could be adversely affected;
    
    Our relationships with employees and customers could be impaired;
    
    Our due diligence process may fail to identify significant issues with product
quality, product architecture, legal or tax contingencies, customer obligations and
product development, among other things;
    
    As successor we may be subject to certain liabilities of our acquisition targets; and
    
    We may be required to sustain significant exit or impairment charges if products
acquired in business combinations are unsuccessful.
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
    
    i2 has a history of customer litigation which is more active than ours. We may incur
material losses from lawsuits currently pending against i2. We may also face additional
lawsuits in the future resulting from actions taken by i2 prior to our acquisition;
    
    The i2 acquisition requires a higher degree of product rationalization than previous
acquisitions and this process may take longer and involve greater expense than we have
planned;
    
    i2 has developed a heavily services-based business model during the past several
years. We may face unexpected challenges integrating this go-to-market strategy with our
own, or we may face disruption during the integration phase;
    
    i2 is reliant upon significant revenues from a relatively small group of key large
customers. If we are unable to successfully transition these customers to become loyal
JDA customers then we may face significant revenue erosion from our i2 related business;
    
    i2 may have made customer commitments that have not been fully disclosed and which
could result in the delay of revenue recognition and require increased costs to complete
those commitments;
    
    i2 software sales include a higher proportion of subscription agreements which do not
generate maintenance revenue. The potential consequences of this change in our software
revenue mix could result in increased maintenance attrition;
    
    The i2 sales force may require significant improvement and reorganization. This
process may take longer and cost more than we have planned;
    
    JDA has not historically sold its products into the discrete manufacturing industry,
which is i2s most significant market. In order to be successful in the discrete
manufacturing market, we will need to retain and develop i2s expertise and
relationships in this market; and
    
    It may take longer or be more difficult than anticipated to integrate our JDA
Enterprise Architecturewith the i2 Agile Business Process
platform.
 We may have difficulty completing acquisitions due to adverse conditions in the credit markets
  Government contracts are subject to unique costs, terms, regulations, claims and penalties
  Risks Related To Our Industry
 It may be difficult to identify, adopt and develop product architecture that is compatible with
emerging industry standards
 JDA Enterprise Architecture
 54




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We may be impacted by shifts in the consumer products supply chain
  Risks Related To Our Stock
 Our quarterly operating results may fluctuate significantly, which could adversely affect the price
of our stock
  
    
    The difficulty of predicting demand for our software products and services, including
the size and timing of individual contracts and our ability to recognize revenue with
respect to contracts signed in a given quarter, particularly with respect to our larger
customers;
    
    Changes in the length and complexity of our sales cycle, including changes in the
contract approval process at our customers and potential customers that now require a
formal proposal process, a longer decision making period and additional layers of
customer approval, often including authorization of the transaction by senior
executives, boards of directors and significant equity investors;
    
    Competitive pricing pressures and competitive success or failure on significant
transactions;
    
    Customer order deferrals resulting from the anticipation of new products, economic
uncertainty, disappointing operating results by the customer, management changes,
corporate reorganizations or otherwise;
    
    The timing of new software product and technology introductions and enhancements to
our software products or those of our competitors, and market acceptance of our new
software products and technology;
    
    Lack of desired features and functionality in our individual products or our suite of
products;
    
    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.
  55




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
    
    Loss on impairment of goodwill and/or other intangible assets;
    
    Changes in the useful lives or the amortization of identifiable intangible assets;
    
    Accrual of newly identified pre-merger contingent liabilities, in which case the
related charges could be required to be included in earnings in the period in which the
accrual is determined to the extent it is identified subsequent to the finalization of
the purchase price allocation;
    
    Charges to income to eliminate certain JDA pre-merger activities that duplicate those
of the acquired company or to reduce our cost structure; and
    
    Changes in deferred tax assets and valuation allowances.
  Anti-takeover provisions in our organizational documents and Delaware law could prevent or delay a
change in control
 .
  Our convertible preferred stock may adversely impact JDA and our common stockholders or have a
material adverse affect on our financial condition and results of operations.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 
 Item 3. Defaults Upon Senior Securities
 
 Item 4. Submission of Matters to a Vote of Security Holders
 
 Item 5. Other Information
 
 Item 6. Exhibits
 56




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JDA SOFTWARE GROUP, INC.
 
 SIGNATURE
  JDA SOFTWARE GROUP, INC.Dated: November 10, 2008
    By:
    /s/ Kristen L. MagnusonKristen L. MagnusonExecutive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) 57




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EXHIBIT INDEX
 Exhibit #
    
    Description of Document2.1555
    
    
    
    Agreement and Plan of Merger by and between JDA Software Group, Inc., Stanley
Acquisition Corp. and Manugistics Group, Inc. dated April 24, 2006.2.2555
    
    
    
    Voting Agreement by and among JDA Software Group, Inc., Manugistics Group, Inc. and
other parties signatory thereto dated as of April 24, 2006.2.3 ̈ ̈ ̈ ̈
    
    
    
    Agreement and Plan of Merger by and between JDA Software Group, Inc., Iceberg
Acquisition Corp and i2 Technologies, Inc. dated August 10, 2008.3.1****
    
    
    
    Third Restated Certificate of Incorporation of the Company together with
Certificate of Amendment dated July 23, 2002.3.2**
    
    
    
    First Amended and Restated Bylaws of JDA Software Group, Inc.3.35555
    
    
    
    Certificate of Designation of rights, preferences, privileges and restrictions of Series B
Convertible Preferred Stock of JDA Software Group, Inc filed with the Secretary of State of
the State of Delaware on July 5, 2006.3.4
    
    
    
    Certificate of Correction filed to correct a certain error in the Certificate of
Designation of rights, preferences, privileges and restrictions of Series B Convertible Preferred Stock of
JDA Software Group, Inc. filed with the Secretary of State of the State of Delaware on July
5, 2006.4.1*
    
    
    
    Specimen Common Stock Certificate of JDA Software Group, Inc.10.1*(1)
    
    
    
    Form of Indemnification Agreement.10.2 ̈ ̈ (1)
    
    
    
    1996 Stock Option Plan, as amended on March 28, 2003.10.3*(1)
    
    
    
    1996 Outside Directors Stock Option Plan and forms of agreement thereunder.10.4 ̈ ̈ (1)
    
    
    
    Executive Employment Agreement between James D. Armstrong and JDA Software Group,
Inc. dated July 23, 2002, together with Amendment No. 1 effective August 1, 2003.10.5 ̈ ̈ (1)
    
    
    
    Executive Employment Agreement between Hamish N. Brewer and JDA Software Group,
Inc. dated January 22, 2003, together with Amendment No. 1 effective August 1, 2003.10.6 ****(1)
    
    
    
    Executive Employment Agreement between Kristen L. Magnuson and JDA Software
Group, Inc. dated July 23, 2002.10.7 ̈ ̈ (1)
    
    
    
    1998 Nonstatutory Stock Option Plan, as amended on March 28, 2003.10.8#
    
    
    
    2008 Employee Stock Purchase Plan.10.95555
    
    
    
    Credit Agreement dated as of July 5, 2006, among JDA Software Group, Inc., Manugistics
Group, Inc., Citicorp North America, Inc., Citibank, N.A., Citigroup Global Markets Inc.,
UBS Securities LLC and Wells Fargo Foothill, LLC and the Lenders named therein.10.9.1***
    
    
    
    Amendment No. 1 to Credit Agreement dated July 26, 2007, among JDA Software Group,
Inc., Manugistics Group, Inc., Citicorp North America, Inc., Citibank, N.A., Citigroup
Global Markets Inc., UBS Securities LLC and Wells Fargo Foothill, LLC and the Lenders
named therein.10.10 ̈ ̈ (2)
    
    
    
    Value-Added Reseller License Agreement for Uniface Software between Compuware
Corporation and JDA Software Group, Inc. dated April 1, 2000, together with Product
Schedule No. One dated June 23, 2000, Product Schedule No. Two dated September 28,
2001, and Amendment to Product Schedule No. Two dated December 23, 2003.10.11 ̈ ̈ (1)
    
    
    
    JDA Software, Inc. 401(k) Profit Sharing Plan, adopted as amended effective
January 1, 2004.10.12**(1)
    
    
    
    Form of Amendment of Stock Option Agreement between JDA Software Group, Inc
and Kristen L. Magnuson, amending certain stock options granted to Ms. Magnuson
pursuant to the JDA Software Group, Inc. 1996 Stock Option Plan on September 11, 1997
and January 27, 1998.
 58




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Exhibit #
    
    Description of Document10.13(1)
    
    
    
    Form of Rights Agreement between the Company and ChaseMellon Shareholder
Services, as Rights Agent (including as Exhibit A the Form of Certificate of
Designation, Preferences and Rights of the Terms of the Series A Preferred
Stock, as Exhibit B the Form of Right Certificate, and as Exhibit C the Summary
of Terms and Rights Agreement).10.14(1)
    
    
    
    Form of Incentive Stock Option Agreement between JDA Software Group, Inc. and
Kristen L. Magnuson to be used in connection with stock option grants to Ms.
Magnuson pursuant to the JDA Software Group, Inc. 1996 Stock Option Plan.10.15 ̈(1)(3)
    
    
    
    Form of Incentive Stock Option Agreement between JDA Software Group, Inc. and
certain Senior Executive Officers to be used in connection with stock options granted
pursuant to the JDA Software Group, Inc. 1996 Stock Option Plan.10.16 ̈ (1)(3)
    
    
    
    Form of Nonstatutory Stock Option Agreement between JDA Software Group, Inc. and
certain Senior Executive Officers to be used in connection with stock options granted
pursuant to the JDA Software Group, Inc. 1996 Stock Option Plan.10.17 ̈ (1)(4)
    
    
    
    Form of Amendment of Stock Option Agreement between JDA Software Group, Inc
and certain Senior Executive Officers, amending certain stock options granted
pursuant to the JDA Software Group, Inc. 1996 Stock Option Plan.10.18 ̈ (1)(5)
    
    
    
    Form of Incentive Stock Option Agreement between JDA Software Group, Inc. and
certain Senior Executive Officers to be used in connection with stock options granted
pursuant to the JDA Software Group, Inc. 1996 Stock Option Plan.10.19 (1)
    
    
    
    Executive Employment Agreement between Christopher Koziol and JDA Software Group,
Inc. dated June 13, 2005.10.205 (1)
    
    
    
    Restricted Stock Units Agreement between Christopher Koziol and JDA Software Group,
Inc. dated November 3, 2005.10.215 (1)
    
    
    
    Form of Restricted Stock Unit Agreement to be used in connection with restricted stock
units granted pursuant to the JDA Software Group, Inc. 2005 Performance Incentive Plan.10.2255 (1)
    
    
    
    Standard Form of Restricted Stock Agreement to be used in connection with restricted
stock granted pursuant to the JDA Software Group, Inc. 2005 Performance Incentive Plan.10.2355 (1)
    
    
    
    Form of Restricted Stock Agreement to be used in connection with restricted stock
granted to Hamish N. Brewer pursuant to the JDA Software Group, Inc. 2005 Performance
Incentive Plan.10.2455 (1)
    
    
    
    Form of Restricted Stock Agreement to be used in connection with restricted stock
granted to Kristen L. Magnuson pursuant to the JDA Software Group, Inc. 2005
Performance Incentive Plan.10.2555 (1)
    
    
    
    Form of Restricted Stock Agreement to be used in connection with restricted stock
granted to Christopher J. Koziol pursuant to the JDA Software Group, Inc. 2005
Performance Incentive Plan.10.26555
    
    
    
    Preferred Stock Purchase Agreement by and among JDA Software Group, Inc. and Funds
Affiliated with Thoma Cressey Equity Partners Inc. dated as of April 23, 2006.10.27555
    
    
    
    Registration Rights Agreement Between JDA Software Group, Inc. and Funds Affiliated
With Thoma Cressey Equity Partners Inc. dated as of April 23, 2006.10.28#
    
    
    
    Commitment Letter by and among JDA Software Group, Inc., Credit Suisse, Credit Suisse
Securities (USA) LLC, Wachovia Bank, National Association and Wachovia Capital
Markets, LLC dated August 10, 2008.10.29##
    
    
    
    Amendment to Commitment Letter by and among JDA Software Group, Inc., Credit Suisse,
Credit Suisse Securities (USA) LLC, Wachovia Bank, National Association and Wachovia
Capital Markets, LLC dated September 29, 2008.14.1 ̈ ̈
    
    
    
    Code of Business Conduct and Ethics.21.1 ̈ ̈ ̈
    
    
    
    Subsidiaries of Registrant.31.1
    
    
    
    Rule 13a-14(a) Certification of Chief Executive Officer.31.2
    
    
    
    Rule 13a-14(a) Certification of Chief Financial Officer.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.
 59




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*
    
    Incorporated by reference to the Companys Registration Statement on Form S-1 (File No.
333-748), declared effective on March 14, 1996.**
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1998, as filed on August 14, 1998.***
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 2007, as filed on August 9, 2007.****
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2002, as filed on November 12, 2002.
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated October 2, 1998,
as filed on October 28, 1998.
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1998, as filed on November 13, 1998.
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated May 16, 2005, as
filed on June 20, 2005.
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2006, as filed on November 9, 2006. ̈
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the
year ended December 31, 1999, as filed on March 16, 2000. ̈ ̈
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for
the year ended December 31, 2003, as filed on March 12, 2004. ̈ ̈ ̈
    
    Incorporated by reference to the Companys Annual Report on Form 10-K
for the year ended December 31, 2007, as filed on March 14, 2008. ̈ ̈ ̈ ̈
    
    Incorporated by reference to the Companys Current Report on Form
8-K dated August 10, 2008, as filed on August 11, 2008.5
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated
October 28, 2005, as filed on November 3, 2005.55
    
    Incorporated by reference to the Companys Annual Report on Form 10-K for the year
ended December 31, 2005, as filed on March 16, 2006.555
    
    Incorporated by reference to the Companys Current Report on Form 8-K/A (Amendment No. 1)
dated April 24, 2006, as filed on April 27, 2006.5555
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated July 5, 2006, as
filed on July 7, 2006.#
    
    Incorporated by reference to the Companys Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 2008, as filed on August 11, 2008.##
    
    Incorporated by reference to the Companys Current Report on Form 8-K dated
September 29, 2008, as filed on September 30, 2008. (1)
    
    Management contracts or compensatory plans or arrangements covering executive officers or
directors of the Company.(2)
    
    Confidential treatment has been granted as to part of this exhibit.(3)
    
    Applies to James D. Armstrong.(4)
    
    Applies to Hamish N. Brewer.(5)
    
    Applies to Senior Executive Officers with the exception of James D. Armstrong and Kristen
L. Magnuson. 60