Significant Trends and Developments in Our Business

Outlook and Guidance for First Quarter 2009. The following summarizes our
guidance for first quarter 2009 and includes our estimated ranges for software
revenues and total revenues:


                                     Guidance for First Quarter 2009
                                        Low End             High End

               Software revenues   $    16.0 million     $ 23.0 million
               Total revenues      $    83.5 million     $ 93.0 million

The Company has historically provided annual rather than quarterly guidance for software revenues, total revenues and GAAP earnings per share. The reason for doing this has always been that our business does not typically operate on a 90-day sales cycle, and if the period of time covered by a projection is shortened (i.e., quarterly vs. annual), we believe it increases the risk of error, particularly with respect to the estimated timing of software deals.

However, in light of the highly uncertain economic conditions, we are modifying our approach to providing guidance in 2009. For the foreseeable future, we will provide quarterly guidance for software revenues and total revenues using fairly wide ranges in an attempt to mitigate the risks associated with the shortened forecast window. With the uncertain economic environment as we enter 2009, we believe it is better to give quarterly guidance for each quarter as we see it and to assume the inherent risk of error rather than set potentially unnecessary pessimistic expectations for 2009. We will complement our quarterly guidance with other qualitative information such as a description of our pipeline and other important trends that have or may potentially impact our operating results.

Software sales will continue to be a leading indicator for our business. Software sales in fourth quarter 2008 were positively impacted by normal seasonal fluctuations, including a year-end desire by our customers

to spend money on software using their 2008 budget rather than risk losing the funds in 2009. This year-end "budget-flush" spending has somewhat reduced our sales pipeline as we enter first quarter 2009. This is consistent with our historical patterns, and, as a result, we believe the decrease is temporary in nature rather than a long-term trend, and that our sales pipeline will recover. We also believe we have some large sales opportunities in the first half of 2009. Software sales in fourth quarter 2008 were characterized by a strong performance in large transactions ³$1.0 million ("large transactions"), including an $11.5 million deal with an Americas-based customer, whereas we currently expect software sales in first quarter 2009 to be driven primarily by mid-size software sales opportunities in the $300,000 to $700,000 range, similar to first quarter 2008.

In evaluating our sales pipeline for the first half of 2009, we believe the weak economy may be driving the businesses in our target markets to achieve more process and efficiency improvements in their existing business assets. We believe this scenario favors our solution offerings as they are designed to provide a quick return on investment and are squarely targeted at some of the largest profit drivers in a customer's business. Not only do our solutions enable companies to free up working capital by increasing inventory turns and reducing on-hand inventory balances, but they also increase sales by improving customer service levels, reduce labor costs and enable improved execution of synchronized and optimized business processes, both within the enterprise and between trading partners. While it is true that the economic crisis has been fatal for some of the weaker companies in our target market, we believe a much larger percentage will survive and some will even take advantage of this situation to expand their market share.

We believe our maintenance business will continue to provide highly profitable revenue streams in first quarter 2009. Volatility in the foreign currency exchange rates will continue to be the greatest risk in our efforts to maximize maintenance revenue performance. For example, maintenance services revenues in 2008 include a $2.2 million unfavorable foreign exchange rate variance compared to 2007. In addition, we experienced a $2.1 million unfavorable sequential foreign exchange rate variances in maintenance service revenues in fourth quarter 2008 compared to third quarter 2008. Both of these unfavorable foreign exchange rate variances were due primarily to the strengthening of the US Dollar against European currencies during the last three months of the year. If the currency exchange rates that existed in the fourth quarter continue or if there is additional strengthening of the US Dollar against the European currencies, we will experience another sequential decline in maintenance revenues in first quarter 2009. We significantly expanded our customer support headcount at the CoE during 2008. As our maintenance install-base grows, we believe our efforts to shift resources off-shore will enables us to maintain the same level of customer support service, while lowering our costs and preserving our maintenance services margins in 2009, despite the impact that unfavorable foreign exchange rate variances may have on maintenance revenues. Support renewal trends in our install-base remain steady, and our average annualized retention rates remain strong at 94%.

Our consulting services business continues to under-perform against their operating plan. The consulting services business has been impacted by low rate competition, fixed price engagements and by our product mix, which for several years has favored solutions that require less implementation services. We have also seen an increased interest and lower pricing from off-shore systems integrators and smaller specialist consulting firms on some of our projects, particularly in North America, which has diluted the consulting revenues that we receive from these projects. Furthermore, the average length of time between the execution of a software license and the actual commencement of the related implementation project appears to be increasing. As a result, the timing of consulting services revenues on new projects has become harder to predict, which has resulted in increased resource planning and allocation challenges.

We continue to address operational and execution issues in our consulting services business. We have revamped our market strategy and approach for these services, including the reorganization of our senior practice teams in North America in order to ensure greater continuity and effectiveness in our processes, from services proposal through to final project execution. As part of the organizational changes, we are expanding the overall value proposition and operating effectiveness of our services offerings in 2009 by combining them under a single global organization called JDA Services. The various service units will share resources, work load, effort, strategy, business development and customer interactions. We have promoted Chris Moore to the newly created position of Executive Vice President of Services. Mr. Moore will have combined responsibility for both our consulting services

and customer support groups. Mr. Moore most recently served as our Senior Vice President, Customer Support Solutions. We believe this integration creates new opportunities for efficiencies across the Company, and enables us to establish new service-based programs and further develop our Managed Services offering which expands our existing hosted services. We believe the Managed Services offering will provide customers with effective alternatives, particularly during the current economic environment, to reduce their costs of operation, operate effectively with constrained resources, leverage outside domain expertise to augment their personnel and to improve the value they derive from their JDA products. We have also introduced a new program called Premium Access that is designed to provide a cohesive and supplemental support process encompassing our product development, product management and customer support teams in order to streamline implementations of new products and major product releases that we have identified as riskier and potentially less profitable for our consulting services business.

We believe our investment in and overall shift in service resources to the CoE during the past year will have a positive impact on our consulting services business and service margins in 2009, absent any significant impact from a further decline in overall market conditions. We have recruited and trained a highly qualified team of consulting resources at the CoE that we believe has significantly expanded our overall capacity and will provide us with the potential to substantially reduce our operating costs without compromising the quality of our services (see "We Have Successfully Expanded our Operations in India and Created a Center of Excellence" section below). Our challenge and focus in 2009 is to more fully leverage the service capabilities of the CoE and increase the volume of work and implementation projects cycled through this facility. We expect a significant portion of our Managed Services offering to be performed by the resources at the CoE. We also believe the lower rates we are able to offer on services performed through the CoE will be well accepted in the market right now and enhance our competitive position.

We Have Successfully Expanded our Operations in India and Created a Center of Excellence. We acquired our first off-shore development facility in Hyderabad, India with the Manugistics acquisition in July 2006. At that time, the operation employed approximately 200 associates and was primarily focused on product development. Our major strategic initiative in 2008 was to expand our operations in India and create a comprehensive CoE that encompassed additional off-shore product development activities, customer implementation services, customer support services and internal administrative services. We incurred approximately $5.0 million of incremental costs in 2008 to implement these changes, primarily related to the addition of new associates at the Hyderabad facility. The costs of this investment were more than offset by reductions in our on-shore headcount that resulted in an overall net cost savings to the Company of approximately $1.3 million in 2008. During 2008, we added 188 FTE at the CoE including associates with necessary skill sets in product development (92 FTE), customer implementation services (43 FTE), customer support services (34 FTE) and internal administrative and other (19 FTE) and reduced our on-shore headcount by 66 FTE. Our retention rates for Indian associates have been higher than our original expectations and were approximately 90% in 2008. We believe the CoE has and will continue to fundamentally improve our competitiveness and profitability while improving our service levels, and we expect to be able to take full advantage of this investment in 2009.

We believe the CoE provides an improved business model for JDA that enhances growth potential and operating results by:

Ø Accelerating the development of new solutions and innovations through expanded R&D bandwidth;

Ø Increasing the breadth and competitiveness of our consulting services through a blended delivery offering that combines high value on-shore consulting expertise and project management with lower cost off-shore resources;

Ø Enhancing our customer support service through faster resolution of complex customer issues;

Ø Accelerating the development of training content;

Ø Reducing the total cost of ownership of our solutions;

Ø Improving our competitiveness against service providers that already operate low cost off-shore facilities, and against small, low-cost on-shore service providers;

Ø Accelerating the development of common business processes between major departments within JDA;

Ø Increasing our ability to take advantage of technology to optimize our internal operations; and

Ø Lowering our operating costs and improving our operating margins.

The CoE is designed to complement and enhance our existing on-shore business model, not replace it. Our goal is to achieve all of these benefits without sacrificing our capability to work face-to-face with our customers, most of which are in the Americas and Europe.

We Will Continue to Actively Look for Strategic Acquisition Opportunities in 2009. We are disappointed that our proposed acquisition of i2 Technologies was terminated in December 2008. We believe this termination was necessary due to the adverse effect of the continuing credit crisis. The ultimate credit terms available in the underwritten credit facilities would have resulted in unacceptable risks and costs to the combined company. We continue to believe that acquisitions are an integral part of our overall growth plan and that the current environment is likely to create other acquisition opportunities at reasonable prices. As a result, we are actively looking for strategic acquisition opportunities in 2009 that can deliver the kind of results that we achieved in the acquisition of Manugistics Group, Inc., and drive significant accretion for the Company even in these tough economic times. However, without improvement in the availability and terms of credit for acquisitions, we may not be able to successfully pursue and complete significant acquisition opportunities

Summary of 2008 Results. Software license sales in 2008 increased 26% to $92.9 million compared to $73.6 million in 2007. This increase includes a 59% increase in software license sales in the Americas region, offset in part by decreases in software license sales of 15% and 24% in the European and Asia/Pacific regions, respectively. We believe our competitive position remains strong and that we have maintained consistent competitive win rates in our markets. We continue to have significant back-selling opportunities as $68.7 million, or 74% of our software license sales in 2008 came from our install base customers compared to $47.5 million, or 65% in 2007. The increase in software license sales to install base customers in 2008 compared to 2007 was offset in part by a $2.0 million or 8% decrease in sales to new customers. Our average selling prices ("ASP") continue to increase as we believe we have been able to successfully market the high return on investment of our solutions. Our overall ASP increased to $687,000 per deal in 2008 compared to $324,000 in 2007. Furthermore, ASPs have increased across all of our product lines with the exception of our Store Systems solutions and Space & Category Management solutions.

We believe our target market recognizes JDA as a specialized, domain-focused company with the financial strength, breadth and depth of product line, services expertise and ability to invest in new innovation that positions us to be a long-term contender in the supply chain market and to compete successfully against large horizontal enterprise application companies in head-to-head sales opportunities, particularly those involving our supply chain planning, forecasting and optimization solutions. Additionally, our leadership in demand forecasting and replenishment, planning and optimization solutions often creates opportunities for us to enhance existing ERP installations, reducing the effect of direct competition from these large companies. We closed 19 large transactions in 2008, the largest being an $11.5 million deal with an Americas-based customer, compared to 10 large transactions in 2007.

The following tables summarize software license revenue by region for 2008 and 2007:

Software License Revenues


               Region           2008         2007       $Change      % Change

               Americas       $ 67,046     $ 42,269     $ 24,777            59 %
               Europe           18,646       21,910       (3,264 )         (15 )%
               Asia/Pacific      7,206        9,420       (2,214 )         (24 )%

               Total          $ 92,898     $ 73,599     $ 19,299            26 %

Software sales performance in the Americas region in 2008 compared to 2007, and in particular North America, continues to reflect the positive impact of the organizational changes that were made to the regional sales

management team during the past two years. These changes significantly increased our business development efforts and improved the sales force execution and sales performance in the region. We continue to have a solid pipeline of sales opportunities in the Americas that includes both mid-size software deals and large transactions. The Americas is our largest region and, as a result, we believe the software sales performance in the region will continue to be a key driver of our overall success.

We are not satisfied with the performance of our European region, although we did see some improvement in the region's sales performance in fourth quarter 2008. We have a sizeable sales pipeline in the region; however, we have not been able to fully capitalize on these opportunities. We are currently in the process of transitioning sales management and addressing other fundamental changes to the organizational structure to improve the performance in the European region. In addition, we continue to focus on the region's business development activities in order to expand the quality and number of opportunities in the European sales pipeline. We also reorganized sales management in the Asia/Pacific region during 2008, and have a substantially new sales team in place as we enter 2009. We believe these changes will have a positive effect and will continue to improve our sales execution in the region.

Maintenance services revenues increased 3% to $182.8 million in 2008 compared to 2007 and represented 46% and 48% of total revenues, respectively in these periods. Unfavorable foreign exchange rate variances decreased 2008 maintenance services revenues by $2.0 million compared to 2007 primarily due to the strengthening of the US Dollar against European currencies. Excluding the impact of the favorable foreign exchange rate variance, maintenance services revenues increased 4% in 2008, compared to 2007 as maintenance revenues related to new software sales, rate increases on annual renewals and reinstatements of previously cancelled maintenance agreements exceeded decreases in recurring maintenance revenues due to attrition. Renewal trends in our install-base remain steady and our average annualized retention rates remain strong at 94%. We believe our large annual recurring maintenance revenue base provides significant stability, and enhances our ability to maintain profitable operations.

Maintenance services gross profit dollars increased $4.1 million to $137.1 million in 2008 compared to $133.0 million in 2007, and represented 75% of maintenance services revenues in both periods. The increase in margin dollars in 2008 compared to 2007 is due primarily to the $4.6 million increase in maintenance services revenues and a $1.6 million increase in cost transfers for support personnel used to support consulting-related activities, offset in part by the costs associated with an 8% increase in average headcount in our support functions and a higher bonus payout due to the Company's improved operating performance. During 2008 we reduced our on-shore customer support resources by 3 FTE and added 34 FTE in customer support-related functions at the CoE. We expect maintenance services margins to range between 74% and 76% in 2009. As of December 31, 2008, we had 296 employees in our customer support function compared to 265 at December 31, 2007.

Service revenues, which include consulting services, hosting services and training revenues, net revenues from our hardware reseller business and reimbursed expenses, decreased $7.2 million or 6% to $114.6 million in 2008 compared to $121.8 million in 2007. The decrease in 2008 compared to 2007 reflects a decrease in utilization and billable hours in the Europe and Asia/Pacific regions and lower average billing rates per hour in the Americas and Asia/Pacific regions as well as a $737,000 decrease in hosting services and our hardware reseller business, offset in part by a $518,000 increase in training services. Service revenues in 2007 also included the non-recurring favorable impact from the release of $3.4 million of previously deferred consulting revenue upon completion and final acceptance of a fixed bid project inherited from Manugistics. Our global utilization rate was 53% in 2008 compared to 55% in 2007, and our average blended global billing rates were $195 and $203 per hour, respectively in these periods.

Service gross profit dollars decreased $5.7 million to $22.1 million in 2008 compared to $27.8 million in 2007, and represented 19% and 23% of service revenues in these periods, respectively. The decrease in service margin dollars in 2008 compared to 2007 is due primarily to the $7.2 million decrease in service revenues, a $1.6 million increase in cost transfers from the customer support group for assistance with consulting-related activities, a higher bonus payout due to the Company's improved operating performance and a $521,000 increase in outside contractor costs, offset in part by a decrease in costs resulting from a 5% decrease in average headcount. Service gross profit dollars for 2007 also included the $2.0 million favorable impact from the release of $3.4 million of previously

deferred consulting revenue upon completion and final acceptance of a fixed bid project inherited from Manugistics, net of $1.4 million in related deferred costs that were released. Excluding the impact of the deferred revenues and costs on this project, our service margin was 22% in 2007. During 2008 we reduced our on-shore services organization by 34 FTE and added 43 FTE in service-related functions at the CoE. We currently anticipate that our service margins will remain in the low to mid 20% range in 2009. As of December 31, 2008 we had 438 employees in the services organization compared to 429 at December 31, 2007.

Product development expense increased $2.7 million or 5% to $53.9 million in 2008 compared to $51.2 million in 2007. The increase in product development expense in 2008 compared to 2007 is due primarily to a $2.5 million reduction in deferred costs resulting from the completion of certain on-going customer funded product development efforts in 2008 and a higher bonus payout due to the Company's improved operating performance, offset in part by an $884,000 decrease in outside contractor costs. Additionally, although the average product development headcount increased 15% in 2008 compared to 2007, salaries and related benefits only increased 1% as new and replacement positions were filled with lower cost resources, including those added at the CoE. During 2008 we reduced our on-shore product development headcount by 23 FTE and added 92 FTE in product development-related functions at the CoE. As we continue with our plan to balance our on-shore and off-shore product development resources in 2009, we expect to be able to provide significant product development efforts at a lower cost. As of December 31, 2008 we had 531 people in product development compared to 462 at December 31, 2007.

Sales and marketing expense increased $3.3 million or 5% to $66.5 million in 2008 compared to $63.2 million in 2007. The increase in sales and marketing expense in 2008 compared to 2007 is due primarily to a $3.4 million increase in commissions due to the 26% increase in software sales and an $851,000 increase in marketing-related costs, offset in part by a $790,000 decrease in share-based compensation. As of December 31, 2008 we had 215 people in sales and marketing compared to 212 at December 31, 2007, including quota carrying sales associates of 66 and 68, respectively. Sales and marketing expense will continue to fluctuate quarterly with software license performance and the related impact on commission expense.

General and administrative expense increased $2.7 million or 6% to $44.2 million in 2008 compared to $41.5 million in 2007. The increase in general and administrative expense in 2008 compared to 2007 is due primarily to a 14% increase in average headcount that was substantially offset by a $482,000 decrease in outside contractor costs for assistance with internal system initiatives, a higher bonus payout due to the Company's improved operating performance and a $267,000 increase in legal and accounting fees, offset in part by a $647,000 decrease in share-based compensation. During 2008 we added 22 FTE in administrative positions at the CoE, primarily in information technology functions. As of December 31, 2008 we had 238 people in general and administrative functions compared to 218 at December 31, 2007.

We recorded a provision for doubtful accounts of $750,000 in 2008 due to the increased number of bankruptcies in the retail sector and a provision for doubtful accounts of $2.9 million in 2007 primarily related to certain foreign receivables for which collection was doubtful.

Amortization of intangibles increased $8.5 million to $24.3 million in 2008 compared to $15.9 million in 2007 due primarily to a change in the estimated useful life of certain customer lists to reflect current trends in attrition. With this change, the quarterly amortization expense on customer lists increased approximately $2.1 million per quarter, beginning first quarter 2008 and continuing over the remaining useful life of the related customer lists which extend through June 2014. This change had a $0.16 per share impact (reduction) on basic and diluted earnings per share calculations for 2008.

We recorded restructuring charges of $8.0 million in 2008 primarily associated with our transition of certain on-shore activities to the CoE. The 2008 restructuring charges include $7.9 million for termination benefits, primarily related to a workforce reduction of 100 full-time employees ("FTE") in product development, consulting and sales-related positions across all of our geographic regions and $119,000 for office closure and integration costs of redundant office facilities. In addition, we recorded $426,000 in net adjustments during 2008 to increase the acquisition reserves recorded in the acquisition of Manugistics. These adjustments were based on our revised estimates of the restructuring costs to exit certain activities of Manugistics and relate primarily to facility closures and employee severance and termination benefits.

Costs of Terminated Acquisition of i2 Technologies. We expensed $30.4 million in costs associated with the terminated acquisition of i2 Technologies in fourth quarter 2008, including a $20 million non-refundable reverse termination fee, $5.1 million of legal, accounting and other acquisition-related fees that are included in operating expenses under the caption "Costs of terminated acquisition of i2 Technologies" and $5.3 million in finance costs related to loan origination and "ticking" fees on the debt financing commitments from Credit Suisse, Credit Suisse Securities (USA) LLC, Wachovia Bank, National Association and Wachovia Capital Markets, LLC that are included in other income (expense) under the caption "Finance costs on terminated acquisition of i2 Technologies." As of December 31, 2008, $3.6 million of these costs, . . .