EX-99.1 2 p75986exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
 
    JDA Investor Relations Contacts:
    Kristen L. Magnuson, Executive Vice President & Chief
    Financial Officer, JDA Software Group, Inc.
    Tel: 480-308-3000
     
JDA Software Group, Inc.   Lawrence Delaney, Jr., The Berlin Group
NEWS RELEASE   Tel: 714-734-5000; larry@berlingroup.com
JDA Reports Financial Results for Second Quarter 2008
JDA Achieves Year-Over-Year Increase in Total Revenues
Scottsdale, Ariz. – July 28, 2008 – JDA® Software Group, Inc. (NASDAQ: JDAS) today announced financial results for the second quarter ended June 30, 2008. JDA reported total revenues of $91.8 million and product revenues of $62.2 million for second quarter 2008, compared to total revenues of $90.8 million and product revenues of $61.6 million for second quarter 2007. For the six months ended June 30, 2008, JDA reported total revenues of $185.7 million and product revenues of $128 million, compared to total revenues of $181.5 million and product revenues of $123.1 million for the six months ended June 30, 2007.
Second Quarter 2008 Financial Summary
    Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) was $20.4 million for the second quarter of 2008 compared to $20.9 million in the second quarter 2007.
 
    Adjusted non-GAAP earnings for second quarter 2008 was $0.29 per share as compared to $0.31 in the second quarter 2007 and exclude amortization of acquired software technology and intangibles, restructuring charges and stock-based compensation.
 
    GAAP net income for second quarter 2008 was at $3.1 million or $0.09 per share, compared to GAAP net income of $4.8 million or $0.14 per share in second quarter 2007.
 
    Software license revenues were $15.5 million in second quarter 2008, compared to $18.6 million in second quarter 2007.
 
    DSOs were 68 days at the end of second quarter 2008, compared to 79 days at the end of first quarter 2008 and 76 days at the end of second quarter 2007.
 
    Cash flow from operations was $28.8 million in second quarter 2008, compared to $23.1 million in first quarter 2008 and $24.9 million in second quarter 2007.
 
    Cash and cash equivalents were $124.5 million at the end of second quarter 2008 after paying off an additional $13 million of debt, leaving a debt balance of $80.9 million. This compares to $95.3 million in cash and cash equivalents and $99.6 million in debt at December 31, 2007.
          “Although we experienced a slow down in license fees this quarter, our profitability and overall product revenues remained very strong,” commented JDA CEO Hamish Brewer. “Our new business win rates remain high and our pipeline of new opportunities remains strong.”
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JDA Software Reports Second Quarter 2008 Earnings
Second Quarter 2008 Highlights
    Significant Software Deals for the Quarter: JDA signed 57 new software deals in second quarter 2008, which included three contracts that exceeded $1.0 million and six deals that included multiple products.
 
 
    Regional Sales Activity:
  Ø   JDA’s Americas region software sales closed at $8.9 million in software license deals in the second quarter 2008, compared to $10.8 million in second quarter 2007. Software transactions with Americas customers include the following: Cabela’s Inc.; FAO Schwarz, Inc.; Hibbett Sports, Inc.; Liz Claiborne, Inc.; Supervalu, Inc.; The Fred W. Albrecht Grocery Company and Tiendas Peruanas.
 
  Ø   JDA’s Europe, Middle East and Africa (EMEA) region software sales were $4.8 million in second quarter 2008, compared to $5.0 million in second quarter 2007. EMEA customers that signed license agreements in second quarter 2008 include: Ackermans, a division of Pepkor Retail; Coop Italia Societa Cooperative; Lombardini Holding SpA; Mosaic Fashions Ltd. and Thales Information Systems Limited.
 
  Ø   JDA’s Asia Pacific region software sales closed at $1.8 million in second quarter 2008, compared to $2.8 million in second quarter 2007. Foster’s Group was a significant win in this region.
    JDA’s Annual Global Conference Sets New Record: JDA’s annual global user conference, FOCUS 2008, had record attendance with nearly 1,700 retailers, manufacturers, wholesaler-distributors and services industries customers and partners at the four-day event in Las Vegas in May. Of the more than 200 sessions held, over 100 were customer-led. Eleven companies were recognized with a Real Results Award for their measurable results in achieving exceptional increases in sales and profits, reductions in inventory, improved operational efficiencies and decreases in resources and costs.
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JDA Software Reports Second Quarter 2008 Earnings
Six Month Results
    Adjusted EBITDA increased to $42.3 million for the six months ended June 30, 2008, compared to $40.5 million for the six months ended June 30, 2007.
 
    Adjusted non-GAAP earnings for the six months ended June 30, 2008 was $0.62 per share, which excludes amortization of acquired software technology and intangibles, restructuring charges and stock-based compensation, as compared to adjusted non-GAAP earnings per share of $0.59 for the six months ended June 30, 2007, which excluded amortization of acquired software technology and intangibles, restructuring charges, stock-based compensation and a gain on the sale of an office facility.
 
    GAAP net income for the six months ended June 30, 2008 was $8.4 million or $0.24 per share, as compared to GAAP net income of $10.2 million or $0.30 per share in the six months ended June 30, 2007.
 
    Software license revenues were $35.6 million in the six months ended June 30, 2008, compared to $35.7 million in the six months ended June 30, 2007.
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 second quarter ended June 30, 2008. To participate in the call, dial 1-800-762-8779 (United States) or 1-480-629-9041 (International) and ask the operator for the “JDA Software Group, Inc. Second Quarter 2008 Earnings Conference Call.” A replay of the conference call will begin Monday, July 28, 2008 at 7:45 p.m. (Eastern) and will end on Thursday, August 28, 2008 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 3893162.
To participate in the webcast of the call, visit the following web page at the time of the conference
call: http://viavid.net/dce.aspx?sid=00005297. A replay of the webcast will be available approximately five minutes after the conclusion of the event.
About JDA Software Group, Inc.
          JDA® Software Group, Inc. (NASDAQ: JDAS) is focused on helping companies realize real supply chain and revenue management results – fast. JDA Software delivers integrated merchandising as well as supply chain and revenue management planning, execution and optimization solutions for the consumer-driven supply chain and services industries. Through its industry leading solutions, leading manufacturers, distributors, retailers and services companies around the world are growing their businesses with greater
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JDA Software Reports Second Quarter 2008 Earnings
predictability and more profitably. For more information on JDA Software, visit www.jda.com or contact us at info@jda.com or
call +1.800.479.7382. 
          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 “our new business win rates remain high and our pipeline of new opportunities remains strong.” The occurrence of future events may involve a number of risks and uncertainties, including, but not limited to: (a) the risk that our win rates will decline in our highly competitive and ever changing market; (b) the possibility that we may not be able to close deals in our pipeline to the extent and within the timeframe of our forecasts, particularly given the current economic downturn; and (c) 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.
           We exclude amortization of intangibles 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 exist 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.
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JDA Software Reports Second Quarter 2008 Earnings
           Sales of office facilities are non-routine transactions, not directly related to our core business of selling software and related services and hardware.
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 under SFAS 123R.
           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.
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JDA Software Reports Second Quarter 2008 Earnings
JDA SOFTWARE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts, unaudited)
                 
    June 30,     December 31,  
    2008     2007  
ASSETS
               
Current Assets:
               
Cash and cash equivalents
  $ 124,539     $ 95,288  
Accounts receivable, net
    69,696       74,659  
Income tax receivable
          463  
Deferred tax asset
    8,311       8,203  
Prepaid expenses and other current assets
    15,768       15,925  
 
           
Total current assets
    218,314       194,538  
 
               
Non-Current Assets:
               
Property and equipment, net
    44,924       44,858  
Goodwill
    134,561       134,561  
Other Intangibles, net:
               
Customer lists
    133,031       144,344  
Acquired software technology
    26,476       29,437  
Trademarks
    2,174       3,013  
Deferred tax asset
    59,321       62,029  
Other non-current assets
    9,166       9,445  
 
           
Total non-current assets
    409,653       427,687  
 
           
 
               
Total Assets
  $ 627,967     $ 622,225  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current Liabilities:
               
Accounts payable
  $ 3,210     $ 3,559  
Accrued expenses and other liabilities
    44,230       48,559  
Income tax payable
    2,082        
Current portion of long-term debt
    1,750       7,027  
Deferred revenue
    82,003       67,530  
 
           
Total current liabilities
    133,275       126,675  
 
           
 
               
Non-Current Liabilities:
               
Long-term debt
    79,164       92,536  
Accrued exit and disposal obligations
    10,311       11,797  
Liability for uncertain tax positions
    5,636       5,421  
 
           
Total non-current liabilities
    95,111       109,754  
 
           
 
               
Total Liabilities
    228,386       236,429  
 
           
 
               
Redeemable Preferred Stock
    50,000       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; issued 32,188,825 and 31,378,768 shares, respectively
    322       314  
Additional paid-in capital
    303,211       295,694  
Deferred compensation
    (4,758 )     (3,526 )
Retained earnings
    61,573       53,144  
Accumulated other comprehensive gain
    4,540       3,814  
 
           
 
    364,888       349,440  
Less treasury stock, at cost, 1,283,164 and 1,189,269 shares, respectively
    (15,307 )     (13,644 )
 
           
Total stockholders’ equity
    349,581       335,796  
 
           
Total liabilities and stockholders’ equity
  $ 627,967     $ 622,225  
 
           
See notes to condensed consolidated financial statements.
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JDA Software Reports Second Quarter 2008 Earnings
JDA SOFTWARE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except earnings per share data, unaudited)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2008     2007     2008     2007  
REVENUES:
                               
Software licenses
  $ 15,546     $ 18,626     $ 35,582     $ 35,654  
Maintenance services
    46,643       42,961       92,455       87,439  
 
                       
Product revenues
    62,189       61,587       128,037       123,093  
 
                               
Consulting services
    26,640       26,458       52,464       53,207  
Reimbursed expenses
    2,967       2,705       5,170       5,167  
 
                       
Service revenues
    29,607       29,163       57,634       58,374  
 
                               
Total revenues
    91,796       90,750       185,671       181,467  
 
                       
 
                               
COST OF REVENUES:
                               
Cost of software licenses
    343       724       1,396       1,189  
Amortization of acquired software technology
    1,460       1,502       2,961       3,373  
Cost of maintenance services
    11,436       11,696       22,632       22,749  
 
                       
Cost of product revenues
    13,239       13,922       26,989       27,311  
 
Cost of consulting services
    20,909       20,326       40,769       41,600  
Reimbursed expenses
    2,967       2,705       5,170       5,167  
 
                       
Cost of service revenues
    23,876       23,031       45,939       46,767  
 
Total cost of revenues
    37,115       36,953       72,928       74,078  
 
                       
 
                               
GROSS PROFIT
    54,681       53,797       112,743       107,389  
 
                               
OPERATING EXPENSES:
                               
Product development
    13,232       11,996       26,908       25,783  
Sales and marketing
    15,730       15,103       31,839       29,911  
General and administrative
    10,378       9,256       21,978       19,544  
Provision for doubtful accounts
          1,302             1,590  
Amortization of intangibles
    6,076       3,963       12,152       7,926  
Restructuring charges and adjustments to acquisition- related reserves
    2,799       2,232       3,555       6,276  
Gain on sale of office facility
                      (4,128 )
 
                       
Total operating expenses
    48,215       43,852       96,432       86,902  
 
                       
 
                               
OPERATING INCOME
    6,466       9,945       16,311       20,487  
 
                               
Interest expense and amortization of loan fees
    (2,466 )     (3,175 )     (4,948 )     (6,625 )
Interest income and other, net
    779       795       2,076       1,464  
 
                       
 
                               
INCOME BEFORE INCOME TAXES
    4,779       7,565       13,439       15,326  
 
                               
Income tax provision
    1,706       2,742       5,010       5,087  
 
                       
 
                               
NET INCOME
  $ 3,073     $ 4,823     $ 8,429     $ 10,239  
 
                       
 
                               
BASIC EARNINGS PER SHARE
  $ .09     $ .15     $ .25     $ .31  
 
                       
DILUTED EARNINGS PER SHARE
  $ .09     $ .14     $ .24     $ .30  
 
                       
 
                               
SHARES USED TO COMPUTE:
                               
Basic earnings per share
    34,214       33,225       34,069       33,148  
 
                       
Diluted earnings per share
    35,263       33,955       35,174       33,760  
 
                       
See notes to consolidated financial statements.
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JDA Software Reports Second Quarter 2008 Earnings
JDA SOFTWARE GROUP, INC.
NON-GAAP MEASURES OF PERFORMANCE
(in thousands, except share data, unaudited)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2008     2007     2008     2007  
     
NON-GAAP OPERATING INCOME AND ADJUSTED EBITDA
                               
 
                               
Operating income (GAAP BASIS)
  $ 6,466     $ 9,945     $ 16,311     $ 20,487  
 
                               
Adjustments for non-GAAP measures of performance:
                               
 
                               
Add back amortization of acquired software technology
    1,460       1,502       2,961       3,373  
Add back amortization of intangibles
    6,076       3,963       12,152       7,926  
Add back restructuring charges
    2,799       2,232       3,555       6,276  
Add back stock-based compensation
    1,042       991       2,224       1,879  
Less gain on sale of office facility
                      (4,128 )
 
                       
 
                               
Adjusted non-GAAP operating income
    17,843       18,633       37,203       35,813  
 
                               
Add back depreciation
    2,582       2,241       5,060       4,640  
 
                       
 
                               
Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization)
  $ 20,425     $ 20,874     $ 42,263     $ 40,453  
 
                       
 
                               
NON-GAAP OPERATING INCOME AND ADJUSTED EBITDA, as a percentage of revenue
                               
 
                               
Operating income (GAAP BASIS)
    7 %     11 %     9 %     11 %
 
                               
Adjustments for non-GAAP measures of performance:
                               
 
                               
Amortization of acquired software technology
    1 %     2 %     1 %     2 %
Amortization of intangibles
    7 %     4 %     7 %     4 %
Restructuring charges
    3 %     3 %     2 %     3 %
Stock-based compensation
    1 %     1 %     1 %     1 %
Gain on sale of office facility
    %     %     %     (2 %)
 
                               
Adjusted non-GAAP operating income
    19 %     21 %     20 %     19 %
 
                               
Depreciation
    3 %     2 %     3 %     3 %
 
                               
Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization)
    22 %     23 %     23 %     22 %
 
                               
NON-GAAP EARNINGS PER SHARE
                               
 
                               
Income before income tax provision
  $ 4,779     $ 7,565     $ 13,439     $ 15,326  
 
                               
Amortization of acquired software technology
    1,460       1,502       2,961       3,373  
Amortization of intangibles
    6,076       3,963       12,152       7,926  
Restructuring charges
    2,799       2,232       3,555       6,276  
Stock-based compensation
    1,042       991       2,224       1,879  
Gain on sale of office facility
                      (4,128 )
 
                       
Adjusted income before income taxes
    16,156       16,253       34,331       30,652  
 
                               
Adjusted income tax expense
    5,816       5,689       12,359       10,728  
 
                       
Adjusted net income
  $ 10,340     $ 10,564     $ 21,972     $ 19,924  
 
                       
Adjusted non-GAAP diluted earnings per share
  $ 0.29     $ 0.31     $ 0.62     $ 0.59  
 
                       
Shares used to compute non-GAAP diluted earnings per share
    35,263       33,955       35,174       33,760  
 
                       
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JDA Software Reports Second Quarter 2008 Earnings
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2008     2007     2008     2007  
CASH FLOW INFORMATION
                               
 
                               
Net cash provided by operating activities
  $ 28,812     $ 24,889     $ 51,911     $ 43,307  
 
                               
Net cash used in investing activities:
                               
Payment of direct costs related to acquisitions
  $ (1,155 )   $ (2,109 )   $ (2,523 )   $ (4,414 )
Purchase of other property and equipment
    (2,328 )     (1,447 )     (4,497 )     (3,983 )
Proceeds from disposal of property and equipment
          20       69       6,821  
 
                       
 
  $ (3,483 )   $ (3,536 )   $ (6,951 )   $ (1,576 )
 
                       
 
                               
Net cash provided by financing activities:
                               
Issuance of common stock under equity plans
  $ 5,664     $ 2,511     $ 5,707     $ 4,054  
Principal payments on term-loan agreement
    (13,000 )     (20,000 )     (18,649 )     (35,000 )
Other, net
    (1,863 )     239       (3,301 )     303  
 
                       
 
  $ (9,199 )   $ (17,250 )   $ (16,243 )   $ (30,643 )