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8-K - FORM 8-K - JDA SOFTWARE GROUP INCp17539e8vk.htm
Exhibit 99.1
     
(JDA SOFTWARE GROUP, INC. LOGO)
  Contact Information
at End of Release
JDA Software Announces Record First Quarter 2010 Results
Integration of i2 Technologies is on Track
Scottsdale, Ariz. — April 27, 2010 — JDA® Software Group, Inc. (NASDAQ: JDAS), The Supply Chain Company®, today announced financial results for the first quarter ended March 31, 2010. JDA reported record total revenues of $131.6 million, a 58 percent increase from $83.3 million of revenue reported in first quarter 2009. Software license and subscription revenues increased 87 percent in the first quarter 2010 to $28.7 million from $15.3 million in first quarter 2009, and adjusted EBITDA increased 88 percent to $31.4 million in first quarter 2010 from $16.7 million in first quarter 2009.
          JDA also reported adjusted non-GAAP earnings for first quarter 2010 of $0.38 per share, an increase of 46 percent from $0.26 per share in first quarter 2009. The GAAP loss applicable to common shareholders for first quarter 2010 was $4.3 million or ($0.11) per share, and includes acquisition-related costs, compared to GAAP net income of $2.6 million or $0.08 per share in first quarter 2009. Results for 2010 include the completion of the acquisition of i2 Technologies, Inc. (“i2”) as of January 28, 2010.
          “I am pleased to report that we delivered solid results in a quarter that featured our largest acquisition to date,” said JDA president and chief executive officer Hamish Brewer. “In the 90 days since completing the i2 acquisition we have fully integrated teams across all regions and functional areas of the company and completed a new JDA product roadmap that demonstrates the breadth, depth and future direction of our powerful suite of planning, optimization and execution solutions.”
First Quarter 2010 Financial Summary
    Adjusted non-GAAP earnings per share for first quarter 2010 were $0.38 using 40.0 million fully diluted shares compared to $0.26 per share in first quarter 2009, using 35.1 million fully diluted shares. Adjusted non-GAAP earnings exclude amortization of acquired software technology and intangibles, restructuring charges, stock-based compensation, and costs related to the acquisition and transition of i2.
    The GAAP net loss applicable to common shareholders for first quarter 2010 was $4.3 million or ($0.11) per share, compared to net income of $2.6 million or $0.08 per share in first quarter 2009.
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    DSO increased to 74 days at the end of first quarter 2010 from 71 days at the end of first quarter 2009, primarily due to the receivables acquired from i2. JDA is applying its focused collection process to the new receivables as a part of the overall company integration process, with the goal of reducing the overall DSO.
    Cash flow from operations was $12.2 million in first quarter 2010, compared to cash flow from operations of $33.1 million in first quarter 2009. The change in operating cash flow in the current period was primarily driven by lower cash provided by working capital as compared to first quarter 2009. This is primarily due to the increase in the receivables from higher revenue in the current year, the payment of approximately $6.7 million of acquisition related costs in first quarter of 2010, as well as the collection of a significant receivable in the first quarter of 2009.
    Cash and cash equivalents, including restricted cash, were $167.5 million at March 31, 2010, compared to $363.8 million at December 31, 2009, which included net proceeds from the issuance of $275.0 million of Senior Notes that were used to complete the acquisition of i2 on January 28, 2010.
First Quarter 2010 Highlights
          “Our strong sales performance this quarter demonstrates a vote of customer confidence in our strategy to build a world-class supply chain company through both organic and acquisition growth,” commented Brewer. “We saw little to no deal erosion as a result of the i2 acquisition, and in fact believe that companies now, more than ever, understand the value of solutions from a company that specializes in supply chain. As a result, JDA continues to be the technology provider of choice for companies around the world.”
          The following presents a high-level summary of JDA’s regional sales performance:
    JDA reported $18.9 million in software license and subscription revenues in its Americas region during first quarter 2010, compared to $19.1 million in fourth quarter 2009 and $11.1 million in first quarter 2009. Customers that signed new software licenses included: Anna’s Linens Company, Cabela’s Incorporated, Compania Embotelladora Del Fuerte, The Forzani Group, Ltd., SABMiller Latin America and OM HealthCare Logistics sm , A Third-Party Logistics Service of Owens & Minor, Inc.
 
    Software license and subscription revenues in the Europe, Middle East and Africa (EMEA) region were $5.4 million in first quarter 2010, compared to $6.4 million in

 


 

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      fourth quarter 2009 and $3.2 million in first quarter 2009. New software deals in the EMEA region included: Casio France, Crai Secom SpA, La Gardenia Beauty SpA and SSAB.
 
    JDA’s Asia Pacific region posted software license and subscription revenues of $4.4 million in first quarter 2010, compared to $3.1 in fourth quarter 2009 and $1.1 million in first quarter 2009. Wins in this region included: LG Electronics Inc., Rustan Commercial Corporation and Suning Appliance Co., Ltd.
Conference Call Information
          JDA Software Group, Inc. will host a conference call at 4:45 p.m. Eastern time today to discuss earnings results for its first quarter ended March 31, 2010. To participate in the call, dial 1-877-941-8416 (United States) or 1-480-629-9808 (International) and ask the operator for the “JDA Software Group, Inc. First Quarter 2010 Earnings Conference Call.” A live audio webcast of the conference call can be accessed by logging onto www.jda.com in the Investor Relations section.
          A replay of the conference call will begin on April 27, 2010 at 8:00 p.m. Eastern time and will end on May 27, 2010. To hear a replay of the call over the Internet, access JDA’s web-site at www.jda.com.
About JDA Software Group, Inc.
          JDA® Software Group, Inc. (NASDAQ: JDAS), The Supply Chain Company®, is a leading global provider of innovative supply chain management, merchandising and pricing excellence solutions. JDA empowers more than 6,000 companies of all sizes to make optimal decisions that improve profitability and achieve real results in the discrete and process manufacturing, wholesale distribution, transportation, retail and services industries. With an integrated solutions offering that spans the entire supply chain from materials to the consumer, JDA leverages the powerful heritage and knowledge capital of acquired market leaders including i2 Technologies®, Manugistics®, E3®, Intactix® and Arthur®. JDA’s multiple service options provide customers with flexible configurations, rapid time-to-value, lower total cost of ownership and 24/7 functional and technical support and expertise. To learn more, visit www.jda.com or e-mail info@jda.com.
JDA Investor Relations Contacts:
Pete Hathaway, Executive Vice President/Chief Financial Officer
480-308-3000
Mike Burnett, GVP, Treasury and Investor Relations
mike.burnett@jda.com
480-308-3392
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JDA SOFTWARE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts, unaudited)
                 
    March 31,     December 31,  
    2010     2009  
ASSETS
               
Current Assets:
               
Cash and cash equivalents
  $ 155,817     $ 75,974  
Restricted cash.
    11,698       287,875  
Accounts receivable, net
    107,881       68,883  
Income tax receivable
    1,050        
Deferred tax asset
    57,828       19,142  
Prepaid expenses and other current assets
    29,705       15,667  
 
           
Total current assets
    363,979       467,541  
 
           
 
               
Non-Current Assets:
               
Property and equipment, net
    43,296       40,842  
Goodwill
    201,316       135,275  
Other Intangibles, net:
               
Customer-based intangibles
    167,395       99,264  
Technology-based intangibles
    44,264       20,240  
Marketing-based intangibles
    13,960       157  
Deferred tax asset
    268,821       44,350  
Other non-current assets
    17,154       13,997  
 
           
Total non-current assets
    756,206       354,125  
 
           
 
               
Total Assets
  $ 1,120,185     $ 821,666  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current Liabilities:
               
Accounts payable
  $ 11,063     $ 7,192  
Accrued expenses and other liabilities
    74,068       45,523  
Income taxes payable
          3,489  
Deferred revenue
    127,905       65,665  
 
           
Total current liabilities
    213,036       121,869  
 
           
 
               
Non-Current Liabilities:
               
Long-term debt
    272,333       272,250  
Accrued exit and disposal obligations
    6,458       7,341  
Liability for uncertain tax positions
    14,215       8,770  
Deferred revenue
    28,942        
 
           
Total non-current liabilities
    321,948       288,361  
 
           
 
               
Total Liabilities
    534,984       410,230  
 
           
 
               
Stockholders’ Equity:
               
Preferred stock, $.01 par value; authorized 2,000,000 shares; none issued or outstanding
           
Common stock, $.01 par value; authorized, 50,000,000 shares; issued 43,528,992 and 36,323,245 shares, respectively
    435       363  
Additional paid-in capital
    553,705       361,362  
Deferred compensation
    (15,906 )     (5,297 )
Retained earnings
    69,746       74,014  
Accumulated other comprehensive income
    2,706       3,267  
Less treasury stock, at cost, 1,901,490 and 1,785,715 shares, respectively
    (25,485 )     (22,273 )
 
           
Total stockholders’ equity
    585,201       411,436  
 
           
Total liabilities and stockholders’ equity
  $ 1,120,185     $ 821,666  
 
           
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JDA SOFTWARE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except earnings per share data, unaudited)
                 
    Three Months Ended  
    March 31,  
    2010     2009  
REVENUES:
               
Software licenses
  $ 24,437     $ 14,357  
Subscriptions and other recurring revenues
    4,287       968  
Maintenance services
    57,060       42,997  
 
           
Product revenues
    85,784       58,322  
 
           
 
               
Consulting services
    43,002       23,034  
Reimbursed expenses
    2,845       1,977  
 
           
Service revenues
    45,847       25,011  
 
           
Total revenues
    131,631       83,333  
 
           
 
               
COST OF REVENUES:
               
Cost of software licenses
    1,008       602  
Amortization of acquired software technology
    1,576       1,008  
Cost of maintenance services
    12,033       10,549  
 
           
Cost of product revenues
    14,617       12,159  
 
           
 
               
Cost of consulting services
    35,269       19,382  
Reimbursed expenses
    2,845       1,977  
 
           
Cost of service revenues
    38,114       21,359  
 
           
Total cost of revenues
    52,731       33,518  
 
           
 
               
GROSS PROFIT
    78,900       49,815  
 
               
OPERATING EXPENSES:
               
Product development
    17,277       12,573  
Sales and marketing
    21,112       14,252  
General and administrative
    17,697       11,026  
Amortization of intangibles
    8,566       6,076  
Restructuring charges
    7,758       1,430  
Acquisition-related costs
    6,743        
 
           
Total operating expenses
    79,153       45,357  
 
           
 
               
OPERATING INCOME (LOSS)
    (253 )     4,458  
 
               
Interest expense and amortization of loan fees
    (6,086 )     (239 )
Interest income and other, net
    1,123       (243 )
 
           
 
               
INCOME (LOSS) BEFORE INCOME TAXES
    (5,216 )     3,976  
Income tax (provision) benefit
    948       1,332  
 
           
 
               
NET INCOME (LOSS)
  $ (4,268 )   $ 2,644  
 
           
 
               
BASIC EARNINGS (LOSS) PER SHARE
  $ (.11 )   $ .08  
 
           
DILUTED EARNINGS (LOSS) PER SHARE
  $ (.11 )   $ .08  
 
           
 
               
SHARES USED TO COMPUTE:
               
Basic earnings (loss) per share
    39,343       34,961  
 
           
Diluted earnings (loss) per share
    39,343       35,075  
 
           
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JDA SOFTWARE GROUP, INC.
NON-GAAP MEASURES OF PERFORMANCE
(in thousands, except share data, unaudited)
                 
    Three Months Ended  
    March 31,  
    2010     2009  
Reconciliation of GAAP Net Income (Loss) to EBITDA and Adjusted EBITDA
               
 
               
Net Income (Loss) (GAAP BASIS)
  $ (4,268 )   $ 2,644  
Income tax provision (benefit)
    (948 )     1,332  
Interest expense and amortization of loan fees
    6,086       239  
Amortization of acquired software technology
    1,576       1,008  
Amortization of intangibles
    8,566       6,076  
Depreciation
    3,006       2,327  
 
           
EBITDA (earnings before interest, tax, depreciation and amortization)
    14,018       13,626  
Restructuring charges
    7,758       1,430  
Stock-based compensation
    3,277       1,410  
Acquisition-related costs
    6,743        
Non-recurring transition costs to integrate acquisition
    717        
Interest income and other non-operating (income) expense, net
    (1,123 )     243  
 
           
Adjusted EBITDA
  $ 31,390     $ 16,709  
 
           
 
               
EBITDA, as a percentage of revenue
    11 %     16 %
 
           
 
               
Adjusted EBITDA, as a percentage of revenue
    24 %     20 %
 
           
 
               
NON-GAAP EARNINGS PER SHARE
               
 
               
Income (loss) before income taxes (GAAP BASIS)
  $ (5,216 )   $ 3,976  
 
               
Amortization of acquired software technology
    1,576       1,008  
Amortization of intangibles
    8,566       6,076  
Restructuring charges
    7,758       1,430  
Stock-based compensation
    3,277       1,410  
Acquisition-related costs
    6,743        
Non-recurring transition costs to integrate acquisition
    717        
 
           
Adjusted income before income taxes
    23,421       13,900  
Adjusted income tax expense
    8,197       4,865  
 
           
Adjusted net income
  $ 15,224     $ 9,035  
 
           
Adjusted non-GAAP diluted earnings per share
  $ 0.38     $ 0.26  
 
           
Shares used to compute non-GAAP diluted earnings per share
    40,025       35,075  
 
           
 
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    Three Months Ended  
    March 31,  
    2010     2009  
CASH FLOW INFORMATION
               
 
               
Net cash provided by (used in) operating activities
  $ 12,195     $ 33,055  
 
               
Net cash provided by (used in) investing activities:
               
Change in restricted cash
  $ 276,177     $  
Purchase of i2 Technologies, Inc.
    (213,427 )      
Payment of direct costs related to acquisitions
    (850 )     (817 )
Purchase of other property and equipment
    (533 )     (1,003 )
Proceeds from disposal of property and equipment
    17       16  
 
           
 
  $ 61,384     $ (1,804 )
 
           
 
               
Net cash provided by (used in) financing activities:
               
Issuance of common stock under equity plans
  $ 10,904     $ 2,506  
Purchase of treasury stock and other, net
    (3,392 )     ( 3,219 )
 
           
 
  $ 7,512     $ (713 )
 
           
 
               
Acquisition of i2 Technologies, Inc. — Preliminary Allocation
               
 
               
Identifiable assets acquired:
               
Fair value of current assets acquired
  $ 300,097          
Fair value of fixed assets acquired
    3,116          
Customer-based intangibles
    76,200          
Technology-based intangibles
    25,600          
Marketing-based intangibles
    14,300          
Long-term deferred tax assets acquired
    218,322          
Fair value of other non-current assets acquired
    3,925          
 
             
Total identifiable assets acquired
    641,560          
Goodwill
    66,041          
 
             
Total assets acquired
    707,601          
 
             
 
               
Liabilities assumed:
               
Fair value of deferred revenue assumed
    (62,614 )        
Fair value of other current liabilities assumed
    (41,128 )        
Fair value of non-current liabilities assumed
    (4,105 )        
 
             
Total liabilities assumed
    (107,847 )        
 
             
 
               
Net assets acquired from i2 Technologies, Inc.
  $ 599,754          
 
             
 
               
Total consideration transferred to acquire i2 Technologies, Inc.:
               
 
               
Fair value of JDA common stock issued as merger consideration
    167,979          
Cash acquired
    218,348          
Cash expended to acquire i2 Technologies, Inc.
    213,427          
 
             
Total consideration transferred to acquire i2 Technologies, Inc.
  $ 599,754          
 
             
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JDA Software Group, Inc.
Supplemental Data

(dollars in thousands)
                                         
    Software & Subscription Revenues by Geographic Region  
    Three Months Ended  
    3/31/2010     12/31/2009     9/30/2009     6/30/2009     3/31/2009  
Americas
  $ 18,917     $ 19,084     $ 12,624     $ 14,356     $ 11,105  
EMEA
    5,403       6,417       4,084       5,012       3,170  
Asia/Pacific
    4,404       3,125       542       8,216       1,050  
 
                             
Total
  $ 28,724     $ 28,626     $ 17,250     $ 27,584     $ 15,325  
 
                             
                                         
    Business Segment Data  
    Three Months Ended  
    3/31/2010     12/31/2009     9/30/2009     6/30/2009     3/31/2009  
Supply Chain
                                       
Total Revenues
  $ 125,233     $ 99,410     $ 88,608     $ 88,161     $ 78,223  
Operating Income
    39,904       33,882       29,054       29,127       22,111  
Operating Income Margin
    32 %     34 %     33 %     33 %     28 %
Services Industry
                                       
Total Revenues
  $ 6,398     $ 7,713     $ 7,251     $ 11,324     $ 5,110  
Operating Income
    607       986       1027       5744       879  
Operating Income Margin
    9 %     13 %     14 %     51 %     17 %
                                                                                 
    New vs Install-Base Sales
    Three Months Ended
    3/31/2010             12/31/2009             9/30/2009             6/30/2009             3/31/2009          
New Sales
  $ 8,415       29 %   $ 4,515       16 %   $ 3,317       19 %   $ 10,066       36 %   $ 5,768     38 %
Install-Base Sales
    20,309       71 %     24,111       84 %     13,933       81 %     17,518       64 %     9,557     62 %
 
                                                                     
Total
  $ 28,724             $ 28,626             $ 17,250             $ 27,584             $ 15,325          
 
                                                                     
                                         
    ASP, Multi-Product Deals & Large Deal Counts  
    Last Twelve Months Ended  
    3/31/2010     12/31/2009     9/30/2009     6/30/2009     3/31/2009  
Average Sales Price (ASP)
  $ 618     $ 630     $ 733     $ 819     $ 697  
Multiple-Product Deals
    24       23       19       18       19  
Large Deal Count (>= $1 million )
    24       19       16       19       17  
Quota Carrying Sales Representatives
    96       75       75       72       68  
                                         
    Summary of Revenue Contribution in First Quarter 2010  
    JDA             i2             Combined  
Software and Subscription Revenues
  $ 15,878       55 %   $ 12,846       45 %   $ 28,724  
Maintenance Revenues
    46,491       81 %     10,569       19 %     57,060  
 
                                 
Product Revenues
    62,369       73 %     23,415       27 %     85,784  
Service Revenues
    32,001       70 %     13,846       30 %     45,847  
 
                                 
Total Revenues
  $ 94,370       72 %   $ 37,261       28 %   $ 131,631  
 
                                 

 


 

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“Safe Harbor” Statement under the U.S. Private Securities Litigation Reform Act of 1995
          We do not believe this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Nevertheless, if remarks in this press release are considered to be ``forward-looking’’ or to have forward-looking implications, such as Mr. Brewer’s comments regarding our accomplishments to date in integrating i2 and that JDA continues to be the technology provider of choice for companies around the world, we would remind our investors and prospective investors that future events may involve risks and uncertainties. Risks and uncertainties that may affect our business are detailed from time to time in the ``Risk Factors’’ section and other sections of our filings with the Securities and Exchange Commission. As a result of these and other risks, actual results may differ materially from those predicted. We undertake no obligation to update information in this release, except as required by law.
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 net 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 software 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 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.
 
    Acquisition-related costs associated with the acquisition of i2 and the non-recurring transition costs to integrate the acquisition are significant non-routine expenses. Exclusion of these costs promotes period-to-period comparisons and transparency as we do not believe these costs are directly attributable to the operating performance of our business.
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

 


 

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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.