Acquisition

Acquisition of i2 Technologies, Inc. (2010)

On January 28, 2010, we completed the acquisition of i2 for approximately $600 million, which includes cash consideration of approximately $432 million and the issuance of approximately 6.2 million shares of our common stock with an acquisition date fair value of approximately $168 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 and transportation; (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 in the first six to nine months after the Merger.

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%. The net proceeds from the sale of the Senior Notes, which exclude the original issue discount ($2.8 million) and other debt issuance costs ($7.2 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 10).

For the years ended December 31, 2010 and 2009, we expensed approximately $8.1 million and $4.8 million, respectively, of costs related to the acquisition of i2. 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 table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition.



				Useful Life	Weighted Average Amortization Period
Cash	$	218,348
Trade accounts receivable	31,361
Other current assets	31,336
Property and equipment	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	198,771
Other non-current assets	6,323
Goodwill	97,329
Total assets acquired	699,783

Deferred revenue	(55,436		)
Other current liabilities	(44,593		)
Total liabilities assumed	(100,029		)

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 $34.2 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. See Note 13 for a discussion of legal proceedings.

The following unaudited pro-forma consolidated results of operations for the years ended December 31, 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.



	Years Ended December 31,
	2010			2009
Total revenues	$	609,768		$	613,506
Net (loss) income	$	(12,328	)	$	53,171
Diluted earnings per share	$	(0.29	)	$	1.28

The amounts of i2 revenues and earnings (loss) included in our consolidated statements of operations for the years ended December 31, 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 (unaudited):



	Revenues		Income (Loss)
i2 operating results from January 28, 2010 to December 31, 2010	$	195,863	*
i2 operating results from January 1, 2010 to December 31, 2010	$	210,889	*
i2 operating results from January 1, 2009 to December 31, 2009	$	222,810	$	34,359



*		We are unable to provide separate disclosure of the earnings (loss) of i2 from January 28, 2010 (date of acquisition) to December 31, 2010 and the pro-forma results from January 1, 2010 to December 31, 2010 as the operating expenses of the combined company were co-mingled at the date of acquisition.