JDA Software Announces Third Quarter 2009 Results and Reiterates Second Half Guidance

"We guided to a sequentially lower third quarter software sales result, and the actual third quarter results closed in line with our expectations," said JDA CEO Hamish Brewer. "We also guided to a strong software sales result in the fourth quarter, and today we can reiterate our guidance for second half 2009, including projected software sales between $26 million to $30 million for fourth quarter 2009. Supported by the strong performance from consulting services, I am pleased with the overall EBITDA margin of 25% and the $20.0 million of cash flow generated from operations in third quarter 2009."

Third Quarter 2009 Financial Summary

-- Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $24.1 million in the third quarter 2009, compared to $27.0 million in third quarter 2008.

-- Adjusted non-GAAP earnings for third quarter 2009 were $0.40 per share, compared to $0.42 per share in third quarter 2008, and exclude amortization of acquired software technology and intangibles, restructuring charges, stock-based compensation and bank charges on a credit facility commitment for a prior year terminated acquisition. Adjusted non-GAAP earnings for third quarter 2009 also exclude $8.6 million of cash consideration paid in excess of carrying value on the repurchase of redeemable preferred stock.

-- GAAP income applicable to common shareholders for third quarter 2009 was a net loss of $2.3 million or ($0.07) per share, which includes $8.6 million of cash consideration paid in excess of carrying value on the repurchase of redeemable preferred stock, compared to GAAP income applicable to common shareholders of $8.2 million or $0.23 per share in third quarter 2008.

-- Service revenues increased 16% to $33.6 million in third quarter 2009 compared to third quarter 2008, and service margins improved year-over-year from 21% in third quarter 2008 to 26% in third quarter 2009.

-- Cash flow from operations was $20.0 million in third quarter 2009, compared to cash flow of $18.8 million in third quarter 2008.

-- Cash and cash equivalents were $85.5 million at September 30, 2009, compared to $32.7 million at December 31, 2008, and there was no debt at the end of either period. During third quarter 2009, approximately $30.1 million in cash was used to repurchase redeemable preferred stock.

Third Quarter 2009 Highlights

-- Regional Sales Performance: JDA closed a total of 57 new software deals during third quarter 2009, including one contract exceeding $1.0 million. The following presents a high level summary of regional performance: -- JDA closed $12.6 million in software deals in its Americas region during third quarter 2009, compared to $17.5 million in third quarter 2008. Customers that signed licenses included: The Sports Authority, Ripley's Comercial ECCSA S.A. and Grupo Comercial Chedraui, S.A. de C.V.

-- Software sales in JDA's Europe, Middle East and Africa (EMEA) region were $4.1 million in third quarter 2009, compared to $3.5 million in third quarter 2008. New software deals in the EMEA region included: Co-operative Group Limited, Aspiag Service Italia, NorgesGruppen ASA and N.V. Trinfover S.A.

-- JDA's Asia Pacific region posted software sales of $542,000 in third quarter 2009, compared to $2.0 million in third quarter 2008. Wins in this region included: CitiMart Philippines and Shanxi Meetall United Supermarket Co. Ltd.

-- Positioned for Growth and Scale: JDA announced changes to its senior management team during the quarter, including Pete Hathaway who joined JDA as Executive Vice President and Chief Financial Officer, and Jason Zintak who assumed the role of Executive Vice President of Sales and Marketing. Mr. Hathaway and Mr. Zintak are seasoned executives who have the talent, experience and leadership abilities to support JDA's long-term growth plans.

-- China Growth Strategy Underway: Just one quarter after announcing an initiative to drive growth in China through a combination of organic expansion and a wider partner network, JDA has secured its first major win with Shanxi Meetall. This promising start to JDA's program of growth supports the belief that the Chinese market is now ready and willing to buy advanced planning and optimization solutions.

Nine Month 2009 Results

-- Adjusted EBITDA increased to $69.5 million for the nine months ended September 30, 2009, compared to $69.3 million for the nine months ended Septmber 30, 2008.

-- Adjusted non-GAAP earnings for the nine months ended September 30, 2009 were $1.24 per share, compared to adjusted non-GAAP earnings per share of $1.04 for the nine months ended September 30, 2008, and exclude amortization of acquired software technology and intangibles, restructuring charges, stock-based compensation and banking charges on a credit facility commitment for a prior year terminated acquisition. Adjusted non-GAAP earnings for the nine months ended September 30, 2009 also exclude $8.6 million of cash consideration paid in excess of carrying value on the repurchase of redeemable preferred stock.

-- GAAP income applicable to common shareholders for the nine months ended September 30, 2009 was $9.2 million or $0.26 per share, which includes $8.6 million of cash consideration paid in excess of carrying value on the repurchase of redeemable preferred stock, compared to GAAP income applicable to common shareholders of $16.7 million or $0.47 per share in the nine months ended September 30, 2008.

-- Cash flow from operations in the first nine months of 2009 was $80.5 million, compared to $70.7 million for the nine months ended September 30, 2008.

Conference Call Information

JDA Software Group, Inc. will host a conference call at 4:45 p.m. (Eastern) today to discuss earnings results for its third quarter ended September 30, 2009. To participate in the call, dial 1-877-941-2068 (United States) or 1-480-629-9712 (International) and ask the operator for the "JDA Software Group, Inc. Third Quarter 2009 Earnings Conference Call." To participate in the webcast, visit the following web page at the time of the conference call: http://viavid.net/dce.aspx?sid=00006AB3.

A replay of the conference call will begin Monday, October 19, 2009 at 7:45 p.m. (Eastern) and will end on Thursday, November 19, 2009 at 11:59 p.m. (Eastern). You can hear the replay by dialing 1-800-406-7325 (United States) or 1-303-590-3030 (International) using access 4164779.

About JDA Software Group, Inc.

JDA(R) Software Group, Inc. (NASDAQ: JDAS | Quote | Chart | News | PowerRating) is the world's leading supply chain solutions provider, helping companies optimize operations and improve profitability. JDA drives business efficiency for its global customer base of more than 5,800 retailers, manufacturers, wholesaler-distributors and services industries companies through deep domain expertise and innovative solutions. JDA's combination of unmatched services, together with its integrated yet modular solutions for merchandising, supply chain planning and execution and revenue management, leverage the strong heritage and knowledge capital of market leaders including Manugistics, E3, Intactix and Arthur. When supply chain results matter, companies turn to JDA. For more information about JDA, visit www.jda.com or contact us at info@jda.com or call +1.800.479.7382 / +1.480.308.3000.

"Safe Harbor" Statement under the U.S. Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally accompanied by words such as "will," and "expect" and other words with forward-looking connotations. In this press release, such forward-looking statements include, without limitation, Mr. Brewer's statement that the Company is reiterating its guidance for second half 2009 including projected software sales between $26 million to $30 million for fourth quarter 2009. The occurrence of future events may involve a number of risks and uncertainties, including, but not limited to: (i) the possibility that the current economic downturn will persist and cause a decline in the demand for our solutions, thereby negatively impacting our financial results; and, (ii) other risks detailed from time to time in the "Risk Factors" section of our filings with the Securities and Exchange Commission. Additional information relating to the uncertainty affecting our business is contained in our filings with the SEC. As a result of these and other risks, actual results may differ materially from those predicted. JDA is not under any obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Information

This press release and the related conference call contain non-GAAP financial measures. In evaluating the Company's performance, management uses certain non-GAAP financial measures to supplement consolidated financial statements prepared under GAAP. Management's presentation of non-GAAP financial measures is intended to be supplemental in nature and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures.

Use and Economic Substance of Non-GAAP Financial Measures Used by JDA

The Company uses non-GAAP measures of performance, including adjusted operating income, EBITDA (earnings before interest, taxes, depreciation and amortization) and earnings per share, in its public statements. Management uses, and chooses to disclose, these non-GAAP financial measures because (i) such measures provide an additional analytical tool to clarify the Company's results from operations and help the Company to identify underlying trends in its results of operations; (ii) the Company uses non-GAAP earnings measures, including EBITDA, as a measure of profitability because such measures help the Company compare its performance on a consistent basis across time periods; and (iii) these non-GAAP measures are employed by the Company's management in its own evaluation of performance and are utilized in financial and operational decision making processes, such as budget planning and forecasting. The Company also internally uses adjusted EBITDA measures for determining (a) compliance with certain financial covenants in its credit agreement and (b) executive and employee compensation. Set forth below are additional reasons why specific items are excluded from the Company's non-GAAP financial measures:

-- Amortization charges for acquired technology are excluded because they result from prior acquisitions, rather than ongoing operations, and absent additional acquisitions, are expected to decline over time.

-- Amortization charges for other intangibles are excluded because they are non-cash expenses, and while tangible and intangible assets support our business, we do not believe the related amortization costs are directly attributable to the operating performance of our business.

-- Restructuring charges and adjustments to acquisition-related reserves are significant non-routine expenses that cannot be predicted and typically relate to a change in our business model or to a change in our estimate of the costs to complete a plan to exit an activity of an acquired company. The exclusion of these charges promotes period-to-period comparisons and transparency. Such charges are primarily related to severance costs and/or the disposition of excess facilities driven by the changes to our business model.

-- Stock-based compensation is not an expense that typically requires or will require cash settlement by the Company.

Material Limitations (and Compensation thereof) Associated with the Use of Non-GAAP Financial Measures

Non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for the Company's GAAP results. In the future, the Company expects to continue reporting non-GAAP financial measures excluding items described above and the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above. Accordingly, exclusion of these and other similar items in our non-GAAP presentation should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

Some of the limitations in relying on non-GAAP financial measures are:

-- Amortization of acquired technology and intangibles, though not directly affecting our current cash position, represent the loss in value as the technology in our industry evolves, is advanced or is replaced over time. The expense associated with this loss in value is not included in the non-GAAP net income presentation and therefore does not reflect the full economic effect of the ongoing cost of maintaining our current technological position in our competitive industry which is addressed through our research and development program.

-- The Company may engage in acquisition transactions in the future. In addition, we incur other restructuring charges from time to time when necessary to adjust our business model. Restructuring related charges may therefore continue to be incurred and should not be viewed as non-recurring.

-- Stock-based compensation is an important component of our incentive compensation arrangements and will be reflected as expenses in our GAAP results for the foreseeable future.

-- Other companies, including other companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting their usefulness as a comparative measure.

We compensate for these limitations by relying primarily on our GAAP results and using non-GAAP financial measures only supplementally. We also provide reconciliations of each non-GAAP financial measure to our most directly comparable GAAP measure, and we encourage investors to review carefully those reconciliations.

Usefulness of Non-GAAP Financial Measures to Investors

The Company believes that the presentation of these non-GAAP financial measures is warranted for several reasons. First, such non-GAAP financial measures provide investors and management an additional analytical tool for understanding the Company's financial performance by excluding the impact of items which may obscure trends in the core operating performance of the business. Second, since the Company has historically reported non-GAAP results to the investment community, the Company believes the inclusion of non-GAAP numbers provides consistency and enhances investors' ability to compare the Company's performance across financial reporting periods.

JDA SOFTWARE GROUP, INC.
CONDENSED CONSOLIDATED
BALANCE SHEETS
(In thousands, except share amounts,
unaudited)
                                                                    September 30,      December 31,
                                                                    2009               2008
ASSETS
Current Assets:
Cash and cash equivalents                                           $    85,477        $    32,696
Accounts receivable, net                                                 60,236             79,353
Income tax receivable                                                    2,298              316
Deferred tax asset                                                       23,221             22,919
Prepaid expenses and other current assets                                18,292             14,223
Total current assets                                                     189,524            149,507
Non-Current Assets:
Property and equipment, net                                              41,608             43,093
Goodwill                                                                 135,275            135,275
Other Intangibles, net:
Customer lists                                                           104,848            121,719
Acquired software technology                                             21,206             24,160
Trademarks                                                               326                1,335
Deferred tax asset                                                       35,996             44,815
Other non-current assets                                                 7,272              4,872
Total non-current assets                                                 346,531            375,269
Total Assets                                                        $    536,055       $    524,776
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable                                                    $    8,574         $    3,273
Accrued expenses and other liabilities                                   39,381             52,090
Deferred revenue                                                         71,852             62,005
Total current liabilities                                                119,807            117,368
Non-Current Liabilities:
Accrued exit and disposal obligations                                    7,269              8,820
Liability for uncertain tax positions                                    7,447              7,093
Total non-current liabilities                                            14,716             15,913
Total Liabilities                                                        134,523            133,281
Redeemable Preferred Stock                                          -                       50,000
Stockholders' Equity:
Preferred stock, $.01 par value; authorized 2,000,000 shares; none  -                  -
issued or outstanding
Common stock, $.01 par value; authorized, 50,000,000 shares;             363                325
issued 36,269,083 and 32,458,396 shares, respectively
Additional paid-in capital                                               361,740            305,564
Deferred compensation                                                    (7,681  )          (2,915  )
Retained earnings                                                        65,517             56,268
Accumulated other comprehensive income (loss)                            3,589              (2,017  )
Less treasury stock, at cost, 1,774,006 and 1,307,317 shares,            (21,996 )          (15,730 )
respectively
Total stockholders' equity                                               401,532            341,495
Total liabilities and stockholders' equity                          $    536,055       $    524,776

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,
                                                                  2009          2008           2009           2008
REVENUES:
Software licenses                                                 $  17,250     $  23,011      $  60,160      $  58,593
Maintenance services                                                 45,010        46,388         132,378        138,843
Product revenues                                                     62,260        69,399         192,538        197,436
Consulting services                                                  30,852        26,437         78,965         78,901
Reimbursed expenses                                                  2,747         2,610          7,174          7,780
Service revenues                                                     33,599        29,047         86,139         86,681
Total revenues                                                       95,859        98,446         278,677        284,117
COST OF REVENUES:
Cost of software licenses                                            580           613            2,417          2,009
Amortization of acquired software technology                         966           1,309          2,954          4,270
Cost of maintenance services                                         10,883        11,513         32,416         34,145
Cost of product revenues                                             12,429        13,435         37,787         40,424
Cost of consulting services                                          22,219        20,315         61,732         61,084
Reimbursed expenses                                                  2,747         2,610          7,174          7,780
Cost of service revenues                                             24,966        22,925         68,906         68,864
Total cost of revenues                                               37,395        36,360         106,693        109,288
GROSS PROFIT                                                         58,464        62,086         171,984        174,829
OPERATING EXPENSES:
Product development                                                  12,495        13,288         37,732         40,196
Sales and marketing                                                  15,888        15,899         46,310         47,738
General and administrative                                           12,305        10,440         35,001         32,406
Amortization of intangibles                                          5,753         6,075          17,880         18,227
Restructuring charges and adjustments to acquisition-related         2,543         399            6,705          3,954
reserves
Total operating expenses                                             48,984        46,101         143,628        142,521
OPERATING INCOME                                                     9,480         15,985         28,356         32,308
Interest expense and amortization of loan fees                       (346   )      (2,353 )       (971    )      (7,313  )
Interest income and other, net                                       1,006         51             886            2,127
INCOME BEFORE INCOME TAXES                                           10,140        13,683         28,271         27,122
Income tax provision                                                 3,877         5,441          10,429         10,451
NET INCOME                                                        $  6,263      $  8,242       $  17,842      $  16,671
Consideration paid in excess of carrying value on the repurchase     (8,593 )   -                 (8,593  )   -
of redeemable preferred stock
INCOME APPLICABLE TO COMMON SHAREHOLDERS                          $  (2,330 )   $  8,242       $  9,249       $  16,671
EARNINGS PER SHARE APPLICABLE TO COMMON SHAREHOLDERS:
Basic earnings per share                                          $  (.07   )   $  .24         $  .26         $  .49
Diluted earnings per share                                        $  (.07   )   $  .23         $  .26         $  .47
SHARES USED TO COMPUTE EARNINGS PER SHARE:
Basic earnings per share                                             33,505        34,528         35,076         34,223
Diluted earnings per share                                           33,505        35,432         35,329         35,261

JDA SOFTWARE GROUP, INC.
NON-GAAP MEASURES OF
PERFORMANCE
(in thousands, except share data,
unaudited)
                                                                Three Months Ended           Nine Months Ended
                                                                September 30,                September 30,
                                                                2009          2008           2009          2008
NON-GAAP OPERATING INCOME AND ADJUSTED EBITDA
Operating income (GAAP BASIS)                                   $  9,480      $  15,985      $  28,356     $  32,308
Adjustments for non-GAAP measures of performance:
Add back amortization of acquired software technology              966           1,309          2,954         4,270
Add back amortization of intangibles                               5,753         6,075          17,880        18,227
Add back restructuring charges                                     2,543         399            6,705         3,954
Add back stock-based compensation                                  2,845         911            6,412         3,135
Adjusted non-GAAP operating income                                 21,587        24,679         62,307        61,894
Add back depreciation                                              2,482         2,352          7,209         7,412
Adjusted EBITDA (Earnings before interest, taxes, depreciation  $  24,069     $  27,031      $  69,516     $  69,306
and amortization)
NON-GAAP OPERATING INCOME AND AJDUSTED EBITDA, as a
percentage of revenue
Operating income (GAAP BASIS)                                      10     %      16     %       10     %      12     %
Adjustments for non-GAAP measures of performance:
Amortization of acquired software technology                       1      %      2      %       1      %      2      %
Amortization of intangibles                                        6      %      6      %       6      %      6      %
Restructuring charges                                              3      %   -         %       3      %      1      %
Stock-based compensation                                           3      %      1      %       2      %      1      %
Adjusted non-GAAP operating income                                 23     %      25     %       22     %      22     %
Depreciation                                                       2      %      2      %       3      %      2      %
Adjusted EBITDA (Earnings before interest, taxes, depreciation     25     %      27     %       25     %      24     %
and amortization)
NON-GAAP EARNINGS PER SHARE
Income before income taxes                                      $  10,140     $  13,683      $  28,271     $  27,122
Add back amortization of acquired software technology              966           1,309          2,954         4,270
Add back amortization of intangibles                               5,753         6,075          17,880        18,227
Add back restructuring charges                                     2,543         399            6,705         3,954
Add back stock-based compensation                                  2,845         911            6,412         3,135
Add back bank charges on credit facility commitment                -             637            -             637
Adjusted income before income taxes                                22,247        23,014         62,222        57,345
Adjusted income tax expense                                        8,009         8,285          22,261        20,644
Adjusted net income                                             $  14,238     $  14,729      $  39,961     $  36,701
Adjusted non-GAAP diluted earnings per share                    $  0.40       $  0.42        $  1.24       $  1.04
Shares used to compute non-GAAP diluted earnings per share         35,678        35,432         32,348        35,261

                                                    Three Months Ended            Nine Months Ended
                                                    September 30,                 September 30,
                                                    2009           2008           2009           2008
CASH FLOW INFORMATION
Net cash provided by operating activities           $  20,019      $  18,761      $  80,528      $  70,672
Net cash used in investing activities:
Payment of direct costs related to acquisitions     $  (2,945  )   $  (2,911 )    $  (4,431  )   $  (5,434  )
Purchase of other property and equipment               (4,134  )      (1,568 )       (5,541  )      (6,065  )
Proceeds from disposal of property and equipment       8              46             62             115
                                                    $  (7,071  )   $  (4,433 )    $  (9,910  )   $  (11,384 )
Net cash provided by financing activities:
Issuance of common stock under equity plans         $  9,882       $  307         $  14,524      $  6,014
Redemption of Series B convertible preferred stock     (28,068 )   a"EUR             (28,068 )   a"EUR
Purchase of treasury stock                             (2,367  )      (239   )       (6,266  )      (1,902  )
Principal payments on term-loan agreement           a"EUR             (437   )    a"EUR             (19,086 )
Loan origination fees                               a"EUR             (3,375 )    a"EUR             (3,375  )
Other, net                                          a"EUR          a"EUR          a"EUR             (1,638  )
                                                    $  (20,553 )   $  (3,744 )    $  (19,810 )   $  (19,987 )

SOURCE: JDA Software Group, Inc.

JDA Software Group, Inc., Scottsdale 
Pete Hathaway 
Executive Vice President and Chief Financial Officer 
480-308-3000 
or 
The Berlin Group 
Lawrence Delaney, Jr., 714-734-5000 
larry@berlingroup.com