JDAS Jda Software Grp., Inc. (MM)

 

 

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, 2010

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from            to           

Commission File Number: 0-27876

JDA SOFTWARE GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware		86-0787377
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

14400 North 87 ^th Street
Scottsdale, Arizona 85260
(480) 308-3000
(Address and telephone number of principal executive offices)

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) had been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Acts. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The number of shares outstanding of the Registrant’s Common Stock, $0.01 par value, was 43,764,694 as of November 5, 2010 .

 

 

FORM 10-Q

TABLE OF CONTENTS

		Page No.
PART I: INTERIM FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009			3
Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2010 and September 30, 2009			4
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2010 and September 30, 2009			5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2010 and September 30, 2009			6
Notes to Condensed Consolidated Financial Statements			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			29
Item 3. Quantitative and Qualitative Disclosures About Market Risk			48
Item 4. Controls and Procedures			49
PART II: OTHER INFORMATION
Item 1. Legal Proceedings			49
Item 1A. Risk Factors			50
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			61
Item 3. Defaults Upon Senior Securities			61
Item 4. Reserved			61
Item 5. Other Information			61
Item 6. Exhibits			61
Signature			62
EX-31.1
EX-31.2
EX-32.1

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,
		2010				2009
ASSETS
Current Assets:
Cash and cash equivalents		$	172,370			$	75,974
Restricted cash			10,321				287,875
Accounts receivable, net			98,287				68,883
Deferred tax asset			57,836				19,142
Prepaid expenses and other current assets			32,643				15,667
Total current assets			371,457				467,541
Non-Current Assets:
Property and equipment, net			48,881				40,842
Goodwill			197,031				135,275
Other intangibles, net			199,200				119,661
Deferred tax asset			269,032				44,350
Other non-current assets			17,810				13,997
Total non-current assets			731,954				354,125
Total Assets		$	1,103,411			$	821,666
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	19,017			$	7,192
Accrued expenses and other liabilities			65,316				45,523
Income taxes payable			762				3,489
Deferred revenue			105,053				65,665
Total current liabilities			190,148				121,869
Non-Current Liabilities:
Long-term debt			272,572				272,250
Accrued exit and disposal obligations			5,836				7,341
Liability for uncertain tax positions			10,818				8,770
Deferred revenue			11,469				—
Total non-current liabilities			300,695				288,361
Total Liabilities			490,843				410,230
Stockholders’ Equity :
Common stock			438				363
Additional paid-in capital			545,984				356,065
Retained earnings			85,885				74,014
Accumulated other comprehensive income			7,000				3,267
Treasury stock			(26,739	)			(22,273	)
Total stockholders’ equity			612,568				411,436
Total liabilities and stockholders’ equity		$	1,103,411			$	821,666

See notes to condensed consolidated financial statements.

JDA SOFTWARE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except earnings per share data, unaudited)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
REVENUES:
Software licenses		$	16,276			$	16,354			$	72,865			$	57,300
Subscriptions and other recurring revenues			5,758				896				15,851				2,860
Maintenance services			64,186				45,010				181,840				132,378
Product revenues			86,220				62,260				270,556				192,538
Consulting services			65,947				30,852				164,204				78,965
Reimbursed expenses			6,276				2,747				13,687				7,174
Service revenues			72,223				33,599				177,891				86,139
Total revenues			158,443				95,859				448,447				278,677
COST OF REVENUES:
Cost of software licenses			1,103				580				3,020				2,417
Amortization of acquired software technology			1,833				966				5,212				2,954
Cost of maintenance services			12,932				10,883				39,192				32,416
Cost of product revenues			15,868				12,429				47,424				37,787
Cost of consulting services			48,976				22,219				124,987				61,732
Reimbursed expenses			6,276				2,747				13,687				7,174
Cost of service revenues			55,252				24,966				138,674				68,906
Total cost of revenues			71,120				37,395				186,098				106,693
GROSS PROFIT			87,323				58,464				262,349				171,984
OPERATING EXPENSES:
Product development			17,373				12,495				54,131				37,732
Sales and marketing			20,258				15,888				65,830				46,310
General and administrative			17,546				12,305				55,044				35,001
Amortization of intangibles			9,966				5,753				28,447				17,880
Restructuring charges			4,172				2,543				16,478				6,705
Acquisition-related costs			473				—				8,081				—
Total operating expenses			69,788				48,984				228,011				143,628
OPERATING INCOME			17,535				9,480				34,338				28,356
Interest expense and amortization of loan fees			(6,169	)			(346	)			(18,437	)			(971	)
Interest income and other, net			558				1,006				1,039				886
INCOME BEFORE INCOME TAXES			11,924				10,140				16,940				28,271
Income tax provision			3,651				3,877				5,069				10,429
NET INCOME			8,273				6,263				11,871				17,842
Consideration paid in excess of carrying value on the repurchase of redeemable preferred stock			—				(8,593	)			—				(8,593	)
INCOME APPLICABLE TO COMMON SHAREHOLDERS		$	8,273			$	(2,330	)		$	11,871			$	9,249
EARNINGS PER SHARE APPLICABLE TO COMMON SHAREHOLDERS:
Basic earnings per share		$	.20			$	(.07	)		$	.29			$	.26
Diluted earnings per share		$	.20			$	(.07	)		$	.29			$	.26
SHARES USED TO COMPUTE
Basic earnings per share			41,774				33,505				40,939				35,076
Diluted earnings per share			42,234				33,505				41,517				35,329

See notes to condensed consolidated financial statements.

JDA SOFTWARE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, unaudited)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2010				2009				2010				2009
NET INCOME		$	8,273			$	6,263			$	11,871			$	17,842
OTHER COMPREHENSIVE INCOME:
Foreign currency translation adjustment			8,014				2,032				3,733				5,606
COMPREHENSIVE INCOME		$	16,287			$	8,295			$	15,604			$	23,448

See notes to condensed consolidated financial statements.

JDA SOFTWARE GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)

		Nine Months Ended
		September 30,
		2010				2009
OPERATING ACTIVITIES:
Net Income		$	11,871			$	17,842
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			43,029				28,043
Provision for doubtful accounts			999				900
Amortization of loan fees			1,412				—
Share-based compensation expense			8,834				6,412
Net gain on disposal of property and equipment			(8	)			(55	)
Deferred income taxes			(121	)			8,517
Changes in assets and liabilities, net of effects from business acquisitions:
Accounts receivable			1,281				19,536
Income tax receivable			2,225				(1,838	)
Prepaid expenses and other current assets			(12,948	)			(3,976	)
Accounts payable			8,810				5,685
Accrued expenses and other liabilities			(15,837	)			(11,478	)
Income tax payable			(5,427	)			380
Deferred revenue			(5,127	)			10,560
Net cash provided by operating activities			38,993				80,528
INVESTING ACTIVITIES:
Change in restricted cash			277,554				—
Purchase of i2 Technologies, Inc.			(213,427	)			—
Payment of direct costs related to acquisitions			(2,749	)			(4,431	)
Purchase of property and equipment			(14,785	)			(5,541	)
Proceeds from disposal of property and equipment			631				62
Net cash provided by (used in) investing activities			47,224				(9,910	)
FINANCING ACTIVITIES:
Issuance of common stock under equity plans			13,836				14,524
Purchase of treasury stock and other, net			(4,645	)			(6,266	)
Redemption of redeemable preferred stock			—				(28,068	)
Net cash provided by (used in) financing activities			9,191				(19,810	)
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS			988				1,973
Net increase in cash and cash equivalents			96,396				52,781
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			75,974				32,696
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	172,370			$	85,477

See notes to condensed consolidated financial statements.

JDA SOFTWARE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)

		Nine Months Ended
		September 30,
		2010				2009
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes		$	10,403			$	3,262
Cash paid for interest		$	13,681			$	304
Cash received for income tax refunds		$	1,553			$	723
SUPPLEMENTAL DISCLOSURE OF NON-CASH FLOW ACTIVITIES:
Conversion of redeemable preferred common stock		$	—			$	30,525

See notes to condensed consolidated financial statements.

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

          The accompanying unaudited condensed consolidated financial statements of JDA Software Group, Inc. (“we” or the “Company”) have been prepared in accordance with the FASB Standard Accounting Codification (“Codification”), which is the authoritative source of generally accepted accounting principles (“GAAP”) for nongovernmental entities in the United States. The interim financial statements do not include all of the information and notes required for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair and comparable presentation have been included and are of a normal recurring nature. Operating results for the three and nine months ended September 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. These condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

          The preparation of financial statements in conformity with the Codification requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

          Certain reclassifications have been made to the consolidated statements of operations for the three and nine months ended September 30, 2009 to conform to the current presentation. In the consolidated statement of income, we have reported subscription revenues under the caption “Subscriptions and other recurring revenues.” Subscription revenues were previously reported in revenues under the caption “Software licenses” and were not material. In addition we have corrected the presentation of stockholders’ equity accounts, in the consolidated balance sheet as of December 31, 2009, by eliminating the $5.3 million balance of “Deferred compensation” against “Additional paid in capital.”

2. Acquisition of i2 Technologies, Inc.

          On January 28, 2010, we completed the acquisition of i2 Technologies, Inc. (“i2”) for approximately $599.8 million, which included cash consideration of approximately $431.8 million and the issuance of approximately 6.2 million shares of our common stock with an acquisition date fair value of approximately $168.0 million, or $26.88 per share, determined on the basis of the closing market price of our common stock on the date of acquisition (the “Merger”). The combination of JDA and i2 creates a market leader in the supply chain management market. We believe this combination provides JDA with (i) a strong, complementary presence in new markets such as discrete manufacturing; (ii) enhanced scale; (iii) a more diversified, global customer base of over 6,000 customers; (iv) a comprehensive product suite that provides end-to-end supply chain management (“SCM”) solutions; (v) incremental revenue opportunities associated with cross-selling of products and services among our existing customer base; and (vi) an ability to increase profitability through net cost synergies within twelve months after the Merger.

          Under the terms of the Merger Agreement, each issued and outstanding share of i2 common stock was converted into the right to receive $12.70 in cash and 0.2562 of a share of JDA common stock (the “Merger Consideration”). Holders of i2 common stock did not receive any fractional JDA shares in the Merger. Instead, the total number of shares that each holder of i2 common stock received in the Merger was rounded down to the nearest whole number, and JDA paid cash for any resulting fractional share determined by multiplying the fraction by $26.65, which represented the average closing price of JDA common stock on Nasdaq for the five consecutive trading days ending three days prior to the effective date of the Merger.

          Each outstanding option to acquire i2 common stock was canceled and terminated at the effective time of the Merger and converted into the right to receive the Merger Consideration with respect to the number of shares of i2 common stock that would have been issuable upon a net exercise of such option, assuming the market value of the i2 common stock at the time of such exercise was equal to the value of the Merger Consideration as of the close of trading on the day immediately prior to the effective date of the Merger. Any outstanding option with a per share exercise price that was greater than or equal to such amount was cancelled and terminated and no payment was made with respect thereto. In addition, each i2 restricted stock unit award outstanding immediately prior to the effective time of the Merger was fully vested and cancelled, and each holder of such awards became entitled to receive the Merger Consideration for each share of i2 common stock into which the vested portion of the awards would otherwise have been convertible. Each i2 restricted stock award was vested immediately prior to the effective time of the Merger and was entitled to receive the Merger Consideration.

          Each outstanding share of i2’s Series B Preferred Stock was converted into the right to receive $1,100 per share in cash, which was equal to the stated change of control liquidation value of each such share plus all accrued and unpaid dividends thereon through the effective date of the Merger.

          At the effective time of the Merger, each outstanding warrant to purchase shares of i2’s common stock ceased to represent a right to acquire i2’s common stock and was assumed by JDA and converted into a warrant with the right to receive, upon exercise, the Merger Consideration that would have been received as a holder of i2 common stock if such i2 warrant had been exercised prior to the effective time of the Merger. In total, approximately 0.4 million warrants to purchase i2 common stock at an exercise price of $15.4675 were assumed and converted into the right to receive the Merger Consideration upon exercise, including approximately 0.1 million shares of JDA common stock.

          The Merger is being accounted for using the acquisition method of accounting, with JDA identified as the acquirer, and the operating results of i2 have been included in our consolidated financial statements from the date of acquisition. Under the acquisition method of accounting, all assets acquired and liabilities assumed will be recorded at their respective acquisition-date fair values. We initially recorded $66.0 million of goodwill during the three months ended March 31, 2010 and made subsequent adjustments of $3.5 million during the three months ended June 30, 2010 and $0.7 million during the three months ended September 30, 2010 to reduce the goodwill balance to $61.8 million (see Note 4). We have not re-casted the prior quarter financial statements as these adjustment amounts were not material. None of the goodwill recorded in the i2 acquisition is deductible for tax purposes. In addition, through September 30, 2010 we have recorded $113.2 million in other intangible assets, including $74.6 million for customer-based intangibles (maintenance relationships and future technological enhancements, service relationships and a covenant not-to-compete), $24.3 million for technology-based intangibles consisting of developed technology and $14.3 million for marketing-based intangibles consisting of trademark and trade names. The estimated weighted average amortization period for all intangible assets acquired in this transaction that are subject to amortization is approximately six years.

          The purchase price allocation has not been finalized. The preliminary allocation of the purchase price as of September 30, 2010 is based on the best estimates of management and is subject to revision as the final fair values of, and allocated purchase price to, the acquired assets and assumed liabilities in the acquisition of i2 are completed over the remainder of 2010. We currently anticipate that additional adjustments may still be made to the fair value of tax-related accounts and the residual amount allocated to goodwill.

          The following table summarizes our preliminary estimate through September 30, 2010 of the fair values of the assets acquired and liabilities assumed at the date of acquisition.

										Weighted Average
						Useful Life				Amortization Period
Cash		$	218,348
Trade accounts receivable acquired			31,621
Other current assets acquired			48,616
Property and equipment acquired			3,115
Customer-based intangibles			74,600				1 to 7 years			6 years
Technology-based intangibles			24,300			7 years				7 years
Marketing-based intangibles			14,300			5 years				5 years
Long-term deferred tax assets acquired			221,060
Other non-current assets			3,925
Total assets acquired			639,885
Goodwill			61,756
Total assets acquired			701,641
Deferred revenue assumed			(56,265	)
Other current liabilities assumed			(44,150	)
Other non-current liabilities assumed			(1,472	)
Total liabilities assumed			(101,887	)
Net assets acquired from i2 Technologies, Inc		$	599,754

          The following table summarizes the merger consideration used to acquire i2:

Fair value of JDA common stock issued as merger consideration		$	167,979
Cash merger consideration			431,775
Total merger consideration to acquire i2 Technologies, Inc.		$	599,754
Cash merger consideration		$	431,775
Less cash acquired from i2 Technologies			218,348
Cash expended to acquire i2 Technologies, Inc.		$	213,427

          As of the date of the acquisition, the gross contractual amount of trade accounts receivable acquired was $34.4 million, of which approximately $2.8 million is expected to be uncollectable.

          Contingent liabilities were recorded in purchase accounting for certain assumed customer and labor disputes in the amounts of $7.7 million and $0.3 million, respectively. The potential undiscounted amount of all future payments that we could be required to make to settle the customer and labor disputes is estimated to range between approximately $5.2 million and $237 million and $0.1 million and $1.2 million, respectively. See Note 8 for a discussion of legal proceedings.

          Through September 30, 2010, we have expensed approximately $12.9 million of costs related to the acquisition of i2, including $0.5 million and $8.1 million in the three and nine months ended September 30, 2010, respectively. These costs, which consist primarily of investment banking fees, commitment fees on unused bank financing, legal and accounting fees, are included in the consolidated statements of income under the caption “Acquisition-related costs.”

          The following unaudited pro-forma consolidated results of operations for the nine months ended September 30, 2010 and 2009 assume the i2 acquisition occurred as of January 1 of each year and include acquisition related costs. The pro-forma results are not necessarily indicative of the actual results that would have occurred had the acquisition been completed as of the beginning of each of the periods presented, nor are they necessarily indicative of future consolidated results.

		Nine Months Ended				Nine Months Ended
		September 30, 2010				September 30, 2009
Total revenues		$	463,473			$	446,744
Net (loss) income		$	(2,601	)		$	31,097
Basic and diluted earnings (loss) per share		$	(0.06	)		$	0.75

          The amounts of i2 revenues and earnings (loss) included in our consolidated statements of operations for the nine months ended September 30, 2010, and the revenues and earnings (loss) of the combined entity had the acquisition date been January 1, 2009 or January 1, 2010 are as follows:

		Revenues				Earnings (Loss)
i2 operating results from January 28, 2010 to September 30, 2010		$	154,117			$	*
i2 operating results from January 1, 2010 to September 30, 2010		$	169,143			$	*
i2 operating results from January 1, 2009 to September 30, 2009		$	168,067			$	21,693

          On December 10, 2009, we issued $275 million of five-year, 8.0% Senior Notes (the “Senior Notes”) at an initial offering price of 98.988% of the principal amount. The net proceeds from the sale of the Senior Notes, which exclude the original issue discount ($2.8 million) and other debt issuance costs ($7.1 million) were placed in escrow and subsequently used, together with cash on hand at JDA and i2, to fund the cash portion of the merger consideration in the acquisition of i2 (see Note 7).

3. Derivative Instruments and Hedging Activities

          We use derivative financial instruments, primarily forward exchange contracts, to manage a majority of the foreign currency exchange exposure associated with net short-term foreign currency denominated assets and liabilities that exist as part of our ongoing business operations that are denominated in a currency other than the functional currency of the subsidiary. The exposures relate primarily to the gain or loss recognized in earnings from the settlement of current foreign currency 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. Forward exchange contracts are marked-to-market at the end of each reporting period, using quoted prices for similar assets or liabilities in active markets, with gains and losses recognized in other income offset by the gains or losses resulting from the settlement of the underlying foreign currency denominated assets and liabilities.

          At September 30, 2010, we had forward exchange contracts with a notional value of $77.3 million and an associated net forward contract receivable of $2.9 million determined on the basis of Level 2 inputs. At December 31, 2009, we had forward exchange contracts with a notional value of $37.9 million and an associated net forward contract liability of $0.4 million determined on the basis of Level 2 inputs. These derivatives are not designated as hedging instruments. The forward contract receivables or liabilities are included in the condensed consolidated balance sheet under the captions, “Prepaid expenses and other current assets” or “Accrued expenses and other liabilities” as appropriate. The notional value represents the amount of foreign currencies to be purchased or sold at maturity and does not represent our exposure on these contracts. We recorded a net foreign currency exchange gain of $0.4 million in the three months ended September 30, 2010 and a net foreign currency exchange gain of $0.8 million in the three months ended September 30, 2009. In the nine months ended September 30, 2010 we recorded a net foreign currency exchange contract gain of $0.4 million compared to a net foreign currency exchange contract gain of $0.6 million in the nine months ended September 30, 2009. Net foreign currency exchange gains (losses) are included in the condensed consolidated statements of operations under the caption “Interest Income and other, net.”

4. Goodwill and Other Intangibles, net

           Goodwill. We initially recorded $66.0 million of goodwill during the three months ended March 31, 2010 in connection with our acquisition of i2 (see Note 2), all of which has been allocated to our Supply Chain reportable business segmenting unit (see Note 13). Subsequent adjustments of $3.5 million were recorded during the three months ended June 30, 2010 and $0.7 million during the three months ended September 30, 2010 to reduce the goodwill balance to $61.8 million. These adjustments were primarily made to (i) increase the fair value of assumed accounts receivable, (ii) reduce the fair value of customer-based and technology-based intangible assets, (iii) decrease the fair value of deferred revenue, (iv) record long-term deferred tax assets and current income tax payable liabilities, and (v) reduce the liability for uncertain tax positions. The purchase price allocation has not been finalized. The preliminary allocation of the purchase price as of September 30, 2010 is based on the best estimates of management and is subject to revision as the final fair values of, and allocated purchase price to, the acquired assets and assumed liabilities in the acquisition of i2 are completed over the remainder of 2010. We currently anticipate that additional adjustments may still be made to the fair value of acquired tax-related accounts and the residual amount allocated to goodwill. We found no indication of impairment of our goodwill balances during the three months ended September 30, 2010 and, absent future indicators of impairment, the next annual impairment test will be performed in fourth quarter 2010. As of September 30, 2010, the goodwill balance has been allocated to our reporting units as follows: $193.3 million to Supply Chain and $3.7 million to Pricing and Revenue Management.

          Identifiable intangibles consist of the following:

						September 30, 2010								December 31, 2009
		Estimated Useful				Gross Carrying				Accumulated				Gross Carrying				Accumulated
		Lives				Amount				Amortization				Amount				Amortization
Goodwill:
Gross goodwill						$	206,744			$	—			$	144,988			$	—
Accumulated impairment losses							(9,713	)							(9,713	)
Goodwill, net of impairment losses						$	197,031							$	135,275
Identifiable intangible assets:
Customer-based intangible assets			1 to 13 years			$	257,983			$	(110,601	)		$	183,383			$	(84,119	)
Technology-based intangible assets			7 to 15 years				90,147				(50,819	)			65,847				(45,607	)
Marketing-based intangible assets		5 years					19,491				(7,001	)			5,191				(5,034	)
						$	367,621			$	(168,421	)		$	254,421			$	(134,760	)

           Customer-based intangible assets include customer lists, maintenance relationships and future technological enhancements, service relationships and covenants not-to-compete; technology-based intangible assets include acquired software technology; and marketing-based intangible assets include trademarks and trade names. Customer-based and marketing-based intangible assets are

being amortized on a straight-line basis. Technology-based intangible assets are being 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. Through September 30, 2010, we have recorded $74.6 million, $24.3 million and $14.3 million of customer-based, technology-based and marketing-based intangible assets, respectively, in connection with our acquisition of i2 (see Note 2).

          Amortization expense for the three and nine months ended September 30, 2010 was $11.8 million and $33.7 million, respectively. Amortization expense for the three and nine months ended September 30, 2009 was $6.7 million and $20.8 million, respectively. The increase in amortization in the 2010 periods compared to the 2009 periods is due to amortization on the identifiable intangible assets recorded in the acquisition of i2.

          Amortization expense is reported in the consolidated statements of operations within cost of revenues under the caption “Amortization of acquired software technology” and in operating expenses under the caption “Amortization of intangibles.” As of September 30, 2010, we expect amortization expense for the remainder of 2010 and thereafter to be as follows:

Year		Amortization
2010		$	11,800
2011			45,507
2012			44,921
2013			44,231
2014			27,370
Thereafter			25,371
Total		$	199,200

5. Restructuring Reserves

2010 Restructuring Charges

          We recorded restructuring charges of $16.5 million in the nine months ended September 30, 2010, including $7.8 million in first quarter 2010, $4.6 million in second quarter 2010 and $4.1 million in third quarter 2010. These charges are primarily for termination benefits, office closures and contract terminations associated with the acquisition of i2 and the continued transition of additional on-shore activities to our Center of Excellence (“CoE”) facilities. The charges include $12.3 million for termination benefits related to a workforce reduction of approximately 185 associates primarily in product development, sales, information technology and other administrative positions primarily in the Americas. In addition, the charges include $4.1 million for estimated costs to close and integrate redundant office facilities and for the integration of information technology and termination of certain i2 contracts that have no future economic benefit to the Company and are incremental to the other costs that will be incurred by the combined Company. As of September 30, 2010, approximately $12.8 million of the costs associated with these restructuring charges have been paid and the remaining balance of $3.8 million includes $3.0 million of current liabilities under the caption “Accrued expenses and other current liabilities” and $0.8 million of non-current liabilities under the caption “Accrued exit and disposal obligations.” A summary of the restructuring charges in the nine months ended September 30, 2010 is as follows:

										Impact of Changes				Balance
Description of charge		Initial Reserve				Cash Payments				in Exchange Rates				September 30, 2010
Termination benefits		$	12,269			$	(11,627	)		$	59			$	701
Office closures and other restructuring			4,169				(1,162	)			59				3,066
Total		$	16,438			$	(12,789	)		$	118			$	3,767

          The balance in the reserve for office closures is primarily related to redundant office facility leases in Dallas, Texas and the United Kingdom and will be reduced as payments are made over the related lease terms that extend through 2014. The balance in the reserve for termination benefits is primarily related to certain foreign employees that we expect to pay in 2010.

2009 Restructuring Charges

          We recorded restructuring charges of $6.5 million in 2009, including $1.5 million in first quarter 2009 and $2.3 million in second quarter 2009 and $2.6 million in third quarter 2009, primarily associated with the transition of additional on-shore activities to the CoE facilities and certain restructuring activities in the EMEA sales organization. The charges include termination benefits related

to a workforce reduction of 86 full-time employees in product development, service, support, sales and marketing, information technology and other administrative positions, primarily in the Americas region. In addition, the restructuring charges include approximately $2.0 million in severance and other termination benefits under separation agreements with our former Executive Vice President and Chief Financial Officer and our former Chief Operating Officer. We recorded an adjustment of $0.1 million during the nine months ended September 30, 2010 to reduce previously established reserves related to the 2009 restructuring charge. As of September 30, 2010, approximately $6.4 million of the costs associated with these restructuring charges have been paid and the remaining balance of $0.1 million is included in the condensed consolidated balance sheet under the caption “Accrued expenses and other current liabilities.” We expect substantially all of the remaining costs will be paid in 2010.

6. Manugistics Acquisition Reserves

          We recorded initial acquisition reserves of $47.4 million for restructuring charges and other direct costs associated with the acquisition of Manugistics in 2006. The restructuring charges were primarily related to facility closures, employee severance and termination benefits and other direct costs associated with the acquisition, including investment banker fees, change-in-control payments, and legal and accounting costs. Subsequent adjustments of $2.9 million were made to reduce the reserves in 2007 and 2008 based on our revised estimates of the restructuring costs to exit certain of the activities of Manugistics. The majority these adjustments were made by September 30, 2007 and included in the final purchase price allocation. All adjustments made subsequent to September 30, 2007, including a $1.4 million increase recorded in 2009, have been included in the consolidated statements of income under the caption “Restructuring charges.” Adjustments made in 2009 resulted primarily from our revised estimate of sublease rentals and market adjustments on an unfavorable office facility lease in the United Kingdom. The unused portion of the acquisition reserves at September 30, 2010 includes $3.9 million of current liabilities under the caption “Accrued expenses and other liabilities” and $5.0 million of non-current liabilities under the caption “Accrued exit and disposal obligations.” A summary of the charges and adjustments recorded against the reserves is as follows:

														Impact of																Impact of
														Changes in				Balance												Changes in				Balance
		Initial				Adjustments				Cash				Exchange				December 31,				Adjustments				Cash				Exchange				September 30,
Description of charge		Reserve				to Reserves				Payments				Rates				2009				to Reserves				Payments				Rates				2010
Restructuring charges:
Office closures, lease terminations and sublease costs		$	29,212			$	(949	)		$	(16,110	)		$	(724	)		$	11,429			$	—			$	(2,374	)		$	(111	)		$	8,944
Employee severance and termination benefits			3,607				(767	)			(2,468	)			125				497				(73	)			(375	)			(49	)			—
IT projects, contract termination penalties, capital lease buyouts and other costs to exit activities of Manugistics			1,450				222				(1,672	)			—				—				—				—				—				—
			34,269				(1,494	)			(20,250	)			(599	)			11,926			$	(73	)			(2,749	)			(160	)			8,944
Direct costs			13,125				6				(13,131	)			—				—				—				—				—				—
Total		$	47,394			$	(1,488	)		$	(33,381	)		$	(599	)		$	11,926			$	(73	)		$	(2,749	)		$	(160	)		$	8,944

          The balance in the reserve for office closures, lease termination and sublease costs is primarily related to office facility leases in Rockville, Maryland and the United Kingdom and will be reduced as payments are made over the related lease terms that extend through 2018.

7. Long-term Debt

          On December 10, 2009, we issued $275 million of 8.0% Senior Notes at an initial offering price of 98.988% of the principal amount. The net proceeds from the sale of the Senior Notes, which exclude the original issue discount ($2.8 million) and other debt issuance costs ($7.1 million) were placed in escrow and subsequently used, together with cash on hand at JDA and i2, to fund the cash portion of the Merger Consideration in the acquisition of i2 (see Note 2).

          The Senior Notes have a five-year term and mature on December 15, 2014. Interest is computed on the basis of a 360-day year composed of twelve 30-day months, and is payable semi-annually on September 15 and December 15 of each year, beginning on September 15, 2010. The obligations under the Senior Notes are fully and unconditionally guaranteed on a senior basis by substantially all of our existing and future domestic subsidiaries (including, following the Merger, i2 and its domestic subsidiaries).

          At any time prior to December 15, 2012, we may redeem up to 35% of the aggregate principal amount of the Senior Notes at a redemption price equal to 108% of the principal amount, plus accrued and unpaid interest, with the cash proceeds of an equity offering of our common stock. At any time prior to December 15, 2012, we may also redeem all or a part of the Senior Notes at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest and a ‘make whole” premium calculated as the greater of (i) 1% of the principal amount of the Senior Notes redeemed or (ii) the excess of the present value of the redemption price of the Senior Notes redeemed at December 15, 2012 over the principal amount the Senior Notes redeemed. In addition, we may redeem the Senior Notes on or after December 15, 2012 at a redemption price of 104% of the principal amount, and on or after December 15, 2013 at a redemption price of 100% of the principal amount, plus accrued and unpaid interest. The Senior Notes rank equally in right of payment with all existing and future senior debt and are senior in right of payment to all subordinated debt.

          The Senior Notes contain certain restrictive covenants including (i) a requirement to repurchase the Senior Notes at price equal to 101% of the principal amount, plus accrued and unpaid interest, in the event of a change in control and (ii) restrictions that limit our ability to pay dividends, make investments, incur additional indebtedness, create liens, issue preferred stock or consolidate, merge, sell or otherwise dispose of all or substantially all of our or their assets. The Senior Notes also provide for customary events of default and in the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding Senior Notes will become due and payable immediately without further action or notice. If any other event of default occurs or is continuing, the trustee or holders of at least 25% in aggregate principal amount of the then outstanding Senior Notes may declare all the Senior Notes to be due and payable immediately.

          The Senior Notes and the related guarantees have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States without registration or an applicable exemption from registration requirements. In connection with the issuance of the Senior Notes, we entered into an exchange and registration rights agreement. Under the terms of the exchange and registration rights agreement, we were required to file, and did initially file on June 9, 2010, an exchange offer registration statement, as amended (the “Exchange Offer Registration Statement”), enabling holders to exchange the Senior Notes for registered notes with terms substantially identical to the terms of the Senior Notes. We were also required to use commercially reasonable efforts to have the Exchange Offer Registration Statement declared effective by the Securities and Exchange Commission (the “SEC”) on or prior to 270 days after the closing of the note offering, or September 8, 2010, (the “Registration Deadline”) and, unless the exchange offer would not be permitted by applicable law or SEC policy, to complete the exchange offer within 30 business days after the Registration Deadline. On November 5, 2010, the Exchange Offer Registration Statement was declared effective by the SEC. Under the terms of the exchange and registration rights agreement, we will incur special interest on the Senior Notes at a per annum rate of 0.25% of the principal amount of the Senior Notes from the Registration Deadline through the completion of the exchange offer. We expect to complete the exchange offer in December 2010.

          The fair value and carrying amount of the Senior Notes were $291.5 million and $272.5 million, respectively at September 30, 2010 and $269.4 million and $272.3 million, respectively at December 31, 2009.

          The $2.8 million original issue discount on the Senior Notes and other debt issuance costs of approximately $7.1 million are being amortized using the effective interest and straight-line methods, respectively over the five-year term and are reflected in the consolidated statements of income under the caption, “Interest expense and amortization of loan fees.” We accrued $16.5 million of interest on the Senior Notes in the nine months ended September 30, 2010 and have amortized approximately $1.4 million of the original issue discount and related loan origination fees.

8. Legal Proceedings

      Dillard’s, Inc. vs. i2 Technologies, Inc.

          In September 2007, Dillard’s, Inc. filed a lawsuit against i2 in the 191 ^st Judicial District Court of Dallas County, Texas, (the “trial court”) Cause No. 07-10924-J, which alleges that i2 committed fraud and failed to meet certain obligations to Dillard’s regarding the purchase of two i2 products in the year 2000 under a software license agreement and related services agreement. Dillard’s paid i2 approximately $8.1 million under these two agreements.

          As previously reported, on June 15, 2010, a jury in the District Court of the State of Texas, County of Dallas, returned an adverse verdict in the litigation between Dillard’s, Inc. and i2. On September 30, 2010, the trial court signed a judgment awarding Dillard’s $237 million, plus post-judgment interest of 5% per annum. i2 intends to file additional motions with the trial court seeking a new trial and a reduction of the amount of the judgment. i2 also intends to appeal the judgment. On October 4, 2010, i2 posted a $25 million supersedeas bond. By posting the bond, under Texas law, the execution of the judgment is suspended, which means the judgment will not have to be paid during the appeals process. The appeals process is not expected to be resolved prior to the end of

2011 and the ultimate resolution of the matter could take several years to complete. There can be no assurance that it will be successful or that the litigation will be settled on terms acceptable to JDA.

          The Company will accrue an estimated loss from this matter if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In evaluating the probability of an unfavorable outcome in this litigation we have considered (a) the nature of the litigation and claim, (b) the progress in the case, (c) the opinions of legal counsel and other advisors, (d) the experience of the Company and others in similar cases, and (e) how management intends to respond in the event an unfavorable final judgment is returned by the trial court. We currently estimate the potential loss for this matter to range between zero and $237 million (representing a maximum award for lost profits, punitive damages and pre-judgment interest), plus post-judgment interest. The final trial court judgment or any revised result that may be achieved through an appeals process (which could take several years to complete) could result in multiple potential outcomes within this range. Management has determined that the best estimate of the potential outcome of this matter is $5 million which was recorded on the opening balance sheet of i2 following JDA’s acquisition of i2 in January 2010. We have not accrued any additional estimated contingent losses in this lawsuit as a result of the jury verdict and trial court judgment. Management’s best estimate is based on our evaluation of the case, which included input from i2’s in-house counsel and trial lawyers, and other outside litigation experts who assisted in our due diligence process. This amount was also supported by subsequent analyses and focus group assessments prepared by outside trial consultants prior to the actual trial.

      i2 Technologies, Inc. vs. Oracle Corporation

          On April 29, 2009, i2 filed a lawsuit for patent infringement against Oracle Corporation (NASDAQ: ORCL). The lawsuit, filed in the United States District Court for the Eastern District of Texas, Tyler Division (No. 6:09-cv-194-LED) alleges infringement of 11 patents related to supply chain management, available to promise software and other enterprise software applications. As a result of our acquisition of i2 on January 28, 2010, i2 is now a wholly-owned subsidiary of the Company. On April 22, 2010, Oracle filed counterclaims against i2 and JDA Software Group, Inc. (of which i2 is now a wholly-owned subsidiary) alleging the infringement by i2 of four Oracle patents. In response to i2’s motion to sever the Oracle counterclaim, on June 11, 2010, the trial court split the initial case into two cases, staying the second case (No. 6:10-cv-00284-LED) pending the outcome of the first case. The trial court instructed i2 to select five patents for the first case and Oracle to select one patent for the first case.

      Shareholder Class Action Litigation

          In December, 2009, the Company was sued in a putative shareholder class action against i2 and its board of directors, in the County Court of Law No. 2 of Dallas County (No. CC-09-08476-B). The plaintiffs allege in this lawsuit that the directors of i2 breached their fiduciary duties to shareholders of i2 by selling i2 to the Company via an allegedly unfair process and at an unfair price, and that the Company aided and abetted this alleged breach. On January 26, 2010, the Court denied the plaintiffs’ request for a preliminary injunction that sought to enjoin the merger between JDA and i2. The plaintiffs subsequently filed an amended complaint, alleging unspecified monetary damages in addition to declaratory and injunctive relief and attorneys’ fees. The Company, i2 and i2’s directors have denied all allegations and discovery is ongoing. A settlement agreement in principle has been reached among the parties, which is subject to formal documentation and court approval. The agreement, if it is finalized and then approved by the court, will provide that (i) the pendency and prosecution of the lawsuit and the efforts of plaintiffs’ counsel were a reason and cause for the decision by i2’s then board of directors to provide additional disclosures in the Registration Statement on Form S-4, filed with the Securities and Exchange Commission on or about November 19, 2009, in connection with the Company’s acquisition of i2 and (ii) plaintiffs’ counsel may apply to the court for an award of attorneys’ fees and costs of $450,000 to be paid by i2, which will be funded by its directors and officers’ liability insurer.

          We are involved in other legal proceedings and claims arising in the ordinary course of business. Although there can be no assurance, management does not currently believe the disposition of these matters will have a material adverse effect on our business, financial position, results of operations or cash flows.

9. Share-Based Compensation

          The Company has a stock-based compensation program that provides the Board of Directors broad discretion in creating equity incentives for employees, officers, directors and consultants. This program includes stock purchase rights, stock bonuses, restricted stock, restricted stock units, performance awards, performance units and deferred compensation awards.

          Annual stock-based incentive programs (“Performance Programs”) have been approved for executive officers and certain other members of our management team for years 2007 through 2010 that provide for contingently issuable performance share awards or restricted stock units upon achievement of defined performance threshold goals.

          In February 2010, the Board approved a stock-based incentive program for 2010 (“2010 Performance Program”). The 2010 Performance Program provides for the issuance of 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 adjusted EBITDA performance threshold goal in 2010. A partial pro-rata issuance of performance share awards will be made if we achieve a minimum adjusted EBITDA performance threshold. The 2010 Performance Program initially provides for the issuance of up to approximately 555,000 of targeted contingently issuable performance share awards. The performance share awards, if any, will be issued after the approval of our 2010 financial results in January 2011 and will vest 50% upon the date of issuance with the remaining 50% vesting ratably over a 24-month period. Our performance against the defined performance threshold goal will be evaluated on a quarterly basis throughout 2010 and share-based compensation will be recognized over the requisite service period that runs from February 3, 2010 (the date of board approval) through January 2013. Although all necessary service and performance conditions have not been met through September 30, 2010, based on the nine months ended September 30, 2010 results and the outlook for the remainder of 2010, management has determined that it is probable the Company will achieve its minimum adjusted EBITDA performance threshold. We have recorded $6.0 million in stock-based compensation expense related to these awards in the nine months ended September 30, 2010, including $1.4 million in third quarter 2010.

          The Company has recognized stock-based compensation as follows (in thousands):

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2010				2009				2010				2009
Cost of maintenance services		$	126			$	206			$	403			$	474
Cost of consulting services			401				411				1,179				882
Product development			204				234				710				594
Sales and marketing			542				667				2,292				1,736
General and administrative			992				1,327				4,250				2,726
Total stock-based compensation		$	2,265			$	2,845			$	8,834			$	6,412

10. Treasury Stock Repurchases

          On March 5, 2009, the Board adopted a program to repurchase up to $30 million of our common stock in the open market or in private transactions at prevailing market prices during the 12-month period ended March 10, 2010. During 2009, we repurchased approximately 0.3 million shares of our common stock under this program for $2.9 million at prices ranging from $10.34 to $11.00 per share. There have been no shares of common stock repurchased under this program in 2010.

          During the nine months ended September 30, 2010 and 2009, we repurchased 0.2 million and 0.1 million shares, respectively, tendered by employees for the payment of applicable statutory withholding taxes on the issuance of restricted shares under the 2005 Performance Incentive Plan. These shares were repurchased for $4.5 million at prices ranging from $22.47 to $30.06 in the nine months ended September 30, 2010 and for $1.4 million at prices ranging from $9.75 to $22.37 in the nine months ended September 30, 2009.

11. Income Taxes

          For the nine months ended September 30, 2010, income taxes were calculated using the liability method. The provision for income taxes reflects the Company’s estimate of the effective rate expected to be applicable for the full fiscal year, adjusted by any discrete events, which are reported in the period in which they occur. This estimate is re-evaluated each quarter based on our estimated tax expense for the year. Prior to January 1, 2010, the Company’s tax provisions were calculated using the discrete method which calculates the year-to-date effective tax rate and records discrete tax adjustments in the reporting period in which they occur. The discrete method was used by the Company due to its inability to forecast net income by the numerous jurisdictions from which it derives income and was therefore unable to reliably estimate an overall annual effective tax rate. The change in the method in 2010 is due to the Company’s ability to forecast income by jurisdiction and reliably estimate an overall annual effective tax rate.

          We recorded income tax provisions of approximately $3.7 million and $3.9 million for the three months ended September 30, 2010 and 2009, respectively, representing effective income tax rates of 31% and 38%, for the corresponding periods. We recorded income tax provisions of approximately $5.1 million and $10.4 million for the nine months ended September 30, 2010 and 2009, respectively, representing effective income tax rates of 30% and 37%, for the corresponding periods. Various factors affect our effective income tax rate including, among others, changes in our FIN 48 liability, state income taxes (net of federal benefit), the effect of foreign operations and permanent items, including those related to certain costs the Company incurred in connection with the acquisition of i2 Technologies, Inc. during the first quarter of 2010. Our effective income tax rate during the three and nine months ended September 30, 2010 differ from the same periods in 2009 primarily due to the mix of revenue by jurisdiction, the 2010 benefit from the Domestic Production Activities Deduction for US manufacturers and expense related to our FIN 48 liability.

          We exercise significant judgment in determining our income tax provision due to transactions, credits and calculations where the ultimate tax determination is uncertain. Uncertainties arise as a consequence of the actual source of taxable income between domestic and foreign locations, the outcome of tax audits and the ultimate utilization of tax credits. Although we believe our estimates are reasonable, the final tax determination could differ from our recorded income tax provision and accruals. In such case, we would adjust the income tax provision in the period in which the facts that give rise to the revision become known. These adjustments could have a material impact on our income tax provision and our net income for that period.

          As of September 30, 2010 approximately $11.9 million of unrecognized tax benefits would impact our effective tax rate if recognized, some of which relate to uncertain tax positions associated with the acquisition of Manugistics and i2. Future recognition of uncertain tax positions resulting from the acquisition of Manugistics will be treated as a component of income tax expense rather than as a reduction of goodwill. It is reasonably possible that approximately $5.6 million of unrecognized tax benefits will be recognized within the next twelve months. We have placed a valuation allowance against the Arizona research and development credit as we do not expect to be able to utilize it prior to its expiration.

          We treat interest and penalties related to uncertain tax positions as a component of income tax expense. We have accrued interest and penalties related to uncertain tax positions of $0.2 million and $0.4 million in the nine months ended September 30, 2010 and 2009, respectively. As of September 30, 2010 and December 31, 2009 there are approximately $3.2 million and $2.3 million, respectively of interest and penalty accruals related to uncertain tax positions which are reflected in the consolidated balance sheet under the caption “Liability for uncertain tax positions.” To the extent interest and penalties are not assessed with respect to the uncertain tax positions, the accrued amounts for interest and penalties will be reduced and reflected as a reduction of the overall tax provision.

          We conduct business globally and, as a result, JDA Software Group, Inc. or one or more of our subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business we are subjected to examination by taxing authorities throughout the world, including the United States, the United Kingdom, and India. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations for years before 2004 due to the expiration of the statute of limitations. We are currently under audit by the Internal Revenue Service for the 2009 tax year and various other years in India. The examination phase of these audits has not yet been completed; however, we do not anticipate any material adjustments.

          We currently have on-going tax examinations in India and the U.S. We do not believe there will be any material adjustments from these audits.

          We have participated in the Internal Revenue Service’s Compliance Assurance Program (“CAP”) since 2007. The CAP program was developed by the Internal Revenue Service to allow for transparency and to remove uncertainties in tax compliance. The CAP program is offered by invitation only to those companies with both a history of immaterial audit adjustments and a high level of tax complexity and will involve a review of each quarterly tax provision. The Internal Revenue Service has completed their review of our tax returns prior to 2009 and no material adjustments have been made as a result of these examinations.

12. Earnings per Share

          From July 2006 through September 2009, the Company had two classes of outstanding capital stock, common stock and Series B preferred stock. The Series B preferred stock, which was issued in connection with the acquisition of Manugistics, was a participating security such that in the event a dividend was declared or paid on the common stock, the Company would be required to simultaneously declare and pay a dividend on the Series B preferred stock as if the Series B preferred stock had been converted into common stock. Companies that have participating securities are required to apply the two-class method to compute basic earnings per share. Under the two-class computation method, basic earnings per share is calculated for each class of stock and participating security considering both dividends declared and participation rights in undistributed earnings as if all such earnings had been distributed during the period.

          During third quarter 2009, all shares of the Series B preferred stock were either converted into shares of common stock or repurchased for cash. The calculation of diluted earnings per share applicable to common shareholders for the three and nine months ended September 30, 2009 includes the assumed conversion of the Series B preferred stock into common stock as of the beginning of the period.

          The dilutive effect of outstanding stock options is included in the diluted earnings per share calculations for 2010 and 2009 using the treasury stock method. Diluted earnings per share for the three months ended September 30, 2010 and 2009 exclude less

than 0.1 million and approximately 0.5 million, respectively of vested options for the purchase of common stock that have grant prices in excess of the average market price, or which are otherwise anti-dilutive. Diluted earnings per share for the nine months ended September 30, 2010 and 2009 exclude less than 0.1 million and approximately 1.1 million, respectively of vested options for the purchase of common stock that have grant prices in excess of the average market price, or which are otherwise anti-dilutive. In addition, diluted earnings per share also exclude approximately 0.6 million and 0.8 million of contingently issuable performance share awards, respectively for which all necessary conditions had not been met (see Note 8).

          Earnings per share for three and nine months ended September 30, 2010 and 2009 are calculated as follows:

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2010				2009				2010				2009
Net income		$	8,273			$	6,263			$	11,871			$	17,842
Less dividends paid			—				(8,593	)			—				(8,593	)
Undistributed earnings		$	8,273			$	(2,330	)		$	11,871			$	9,249
Allocation of undistributed earnings:
Common Stock		$	8,273			$	(2,330	)		$	11,871			$	8,463
Series B Preferred Stock			—				—				—				786
		$	8,273			$	(2,330	)		$	11,871			$	9,249
Weighted average shares:
Common Stock			41,774				33,505				40,939				32,095
Series B Preferred Stock			—				—				—				2,981
Shares — Basic earnings per share			41,774				33,505				40,939				35,076
Dilutive common stock equivalents			460				—				578				253
Shares — Diluted earnings per share			42,234				33,505				41,517				35,329
Basic earnings per share applicable to:
Common Stock		$	.20			$	(.07	)		$	.29			$	.26
Series B Preferred Stock		$	—			$	—			$	—			$	.26
Diluted earnings per share applicable to common shareholders		$	.20			$	(.07	)		$	.29			$	.26

13. Business Segments and Geographic Data

          We are a leading global provider of sophisticated enterprise software solutions designed specifically to address the supply chain, merchandising and pricing requirements of manufacturers, wholesale/distributors and retailers, as well as government and aerospace defense contractors and travel, transportation, hospitality and media organizations. We have licensed our software to more than 6,000 customers worldwide. We generate sales in three geographic regions that have separate management teams and reporting structures: the Americas (United States, Canada, and Latin America), Europe (Europe, Middle East and Africa), and Asia/Pacific. Similar products and services are offered in each geographic region. Identifiable assets are also attributed to a geographical region. The geographic distribution of our revenues and identifiable assets is as follows:

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2010				2009				2010				2009
Revenues:
Americas		$	98,698			$	67,059			$	293,702			$	193,440
Europe			27,503				20,601				79,691				57,440
Asia/Pacific			32,242				8,199				75,054				27,797
Total revenues		$	158,443			$	95,859			$	448,447			$	278,677

		September 30,				December 31,
		2010				2009
Identifiable assets:
Americas		$	882,558			$	695,539
Europe			121,105				85,817
Asia/Pacific			99,748				40,310
Total identifiable assets		$	1,103,411			$	821,666

          Revenues in the Americas for three months ended September 30, 2010 and 2009 include $84.6 million and $58.2 million from the United States, respectively and $252.8 million and $169.0 million from the United States in the nine months ended September 30, 2010 and 2009, respectively. Identifiable assets for the Americas include $845.8 million and $666.0 million in the United States as of September 30, 2010 and December 31, 2009, respectively. The increase in identifiable assets at September 30, 2010 compared to December 31, 2009 resulted primarily from net assets recorded in the acquisition of i2 (see Note 2).

          In connection with the acquisition of i2, management approved a realignment of our reportable business segments to better reflect the core business in which we operate, the supply chain management market, and how our chief operating decision maker views, evaluates and makes decisions about resource allocations within our business. As a result of this realignment, we eliminated Retail and Manufacturing and Distribution as reportable business segments and beginning with first quarter 2010 have reported our operations within the following segments:

•		Supply Chain. This reportable business segment includes all revenues related to applications and services sold to customers in the supply chain management market. The majority of our products are specifically designed to provide customers with one synchronized view of product demand while managing the flow and allocation of materials, information, finances and other resources across global supply chains, from manufacturers to distribution centers and transportation networks to the retail store and consumer (collectively, the “ Supply Chain”) . This segment combines all revenues previously reported by the Company under the Retail and Manufacturing and Distribution reportable business segments and includes all revenues related to i2 applications and services.
•		Pricing and Revenue Management (previously known as Services Industries) . This reportable business segment includes all revenues related to applications and services sold to customers in service industries such as travel, transportation, hospitality, media and telecommunications. The Pricing and Revenue Management segment is centrally managed by a team that has global responsibilities for this market.

          A summary of the revenues, operating income and depreciation attributable to each of these reportable business segments for the three and nine months ended September 30, 2010 and 2009 is as follows:

		Three Months								Nine Months
		Ended September 30,								Ended September 30,
		2010				2009				2010				2009
Revenues:
Supply Chain		$	153,706			$	88,608			$	431,870			$	254,992
Pricing and Revenue Management			4,737				7,251				16,577				23,685
		$	158,443			$	95,859			$	448,447			$	278,677
Operating income (loss):
Supply Chain		$	50,435			$	29,054			$	142,977			$	80,292
Pricing and Revenue Management			(743	)			1,027				(589	)			7,650
Other (see below)			(32,157	)			(20,601	)			(108,050	)			(59,586	)
		$	17,535			$	9,480			$	34,338			$	28,356
Depreciation:
Supply Chain		$	2,708			$	1,898			$	7,769			$	5,428
Pricing and Revenue Management			145				256				512				809
		$	2,853			$	2,154			$	8,281			$	6,237
Other:
General and administrative expenses		$	17,546			$	12,305			$	55,044			$	35,001
Amortization of intangible assets			9,966				5,753				28,447				17,880
Restructuring charge			4,172				2,543				16,478				6,705
Acquisition-related costs			473				—				8,081				—
		$	32,157			$	20,601			$	108,050			$	59,586

          Operating income in the Supply Chain and Pricing and Revenue Management reportable business segments includes direct expenses for software licenses, maintenance services, service revenues, and product development expenses, as well as allocations for sales and marketing expenses, occupancy costs, depreciation expense and amortization of acquired software technology. The “Other” caption includes general and administrative expenses and other charges that are not directly identified with a particular reportable business segment and which management does not consider in evaluating the operating income (loss) of the reportable business segment.

14. Condensed Consolidating Financial Information

          Pursuant to the indenture governing the Senior Notes (see Note 7) our obligations under the Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior basis by substantially all of our existing and future domestic subsidiaries (including, following the Merger, i2 and its domestic subsidiaries). Pursuant to Regulation S-X, Section 210.3-10(f), we are required to present condensed consolidating financial information for subsidiaries that have guaranteed the debt of a registrant issued in a public offering, where the guarantee is full and unconditional, joint and several, and where the voting interest of the subsidiary is 100% owned by the registrant.

          The following tables present condensed consolidating balance sheets as of September 30, 2010 and December 31, 2009, and condensed consolidating statements of income for the three and nine months ended September 30, 2010 and 2009, and condensed consolidating statements of cash flow for the nine months ended September 30 2010 and 2009 for (i) JDA Software Group, Inc. — the parent company and issuer of the Senior Notes, (ii) the guarantor subsidiaries on a combined basis, (iii) the non-guarantor subsidiaries on a combined basis, (iv) elimination adjustments, and (v) total consolidating amounts. The condensed consolidating financial information should be read in conjunction with the consolidated financial statements herein.

Unaudited Condensed Consolidating Balance Sheets
September 30, 2010
(in thousands)

		JDA Software				Guarantor				Non-Guarantor
		Group, Inc.				Subsidiaries				Subsidiaries				Eliminations				Consolidated
ASSETS
Current Assets:
Cash and cash equivalents		$	—			$	136,430			$	35,940			$	—			$	172,370
Restricted cash			—				9,462				859				—				10,321
Accounts receivable			—				73,954				24,333				—				98,287
Income tax receivable			6,801				(8,806	)			2,005				—				—
Deferred tax asset			—				55,682				2,154				—				57,836
Prepaid expenses and other current assets			—				12,339				20,304				—				32,643
Total current assets			6,801				279,061				85,595				—				371,457
Non-Current Assets:
Property and equipment, net			—				41,249				7,632				—				48,881
Goodwill			—				197,031				—				—				197,031
Other intangibles, net			—				199,200				—				—				199,200
Deferred tax asset			—				256,257				12,775				—				269,032
Other non-current assets			5,994				5,059				6,757				—				17,810
Investment in subsidiaries			170,770				74,268				(24,235	)			(220,803	)			—
Intercompany accounts			708,099				(743,470	)			35,371				—				—
Total non-current assets			884,863				29,594				38,300				(220,803	)			731,954
Total Assets		$	891,664			$	308,655			$	123,895			$	(220,803	)		$	1,103,411
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable		$	—			$	16,133			$	2,884			$	—			$	19,017
Accrued expenses and other liabilities			6,524				33,257				25,535				—				65,316
Income taxes payable			—				(10,495	)			11,257				—				762
Deferred revenue			—				81,545				23,508				—				105,053
Total current liabilities			6,524				120,440				63,184				—				190,148
Non-Current Liabilities:
Long-term debt			272,572				—				—				—				272,572
Accrued exit and disposal obligations			—				3,429				2,407				—				5,836
Liability for uncertain tax positions			—				9,489				1,329				—				10,818
Deferred revenues			—				6,647				4,822				—				11,469
Total non-current liabilities			272,572				19,565				8,558				—				300,695
Total Liabilities			279,096				140,005				71,742				—				490,843
Stockholders’ Equity			612,568				168,650				52,153				(220,803	)			612,568
Total Liabilities and Stockholders’ Equity		$	891,664			$	308,655			$	123,895			$	(220,803	)		$	1,103,411