Guidance for Second Quarter 2009
                                      Low End             High End
              Software revenues   $17.0 million       $22.0 million
              Total revenues      $85.0 million       $92.0 million

Historically, the Company has 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, due to the continuing uncertainty of economic conditions, we modified our approach to providing guidance in 2009.
In light of the continued uncertain economic conditions, however, we have modified our approach to providing guidance in 2009. Beginning in first quarter 2009 and for the foreseeable future, we will provide quarterly rather than annual guidance for software revenues and total revenues using fairly wide ranges in an attempt to mitigate the risks associated with the shortened forecast window. We believe it is better to give quarterly guidance and to assume the inherent risk of error, rather than speculate about the economy and how it might change over the course of the year. We will continue to 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 are a leading indicator for our business. We saw an increase in the number of deferred software projects in first quarter 2009, particularly in the Americas region. The majority of these deferrals involved customers in the retail industry rather than in the manufacturing and distribution industries. Customers have cited a variety of reasons for the delays. We believe a primary cause for the delays may be that many retailers begin their new financial year during the first calendar quarter, and as budgets were finalized for the upcoming year, a large number of projects were subjected to an additional review process due to the continuing uncertainty of global economic conditions. It appears that some of these projects were subsequently cancelled as a result of the review process while others were simply delayed. We believe there may be opportunities for about half of the delayed projects to ultimately go forward and result in software deals over the next two quarters based on the increased level of activity we have begun to see in our customer base. We also believe it is possible that software deals may never occur on the other half of the delayed projects as long as we remain in the current economic environment. Furthermore, we have seen increased management changes in our target markets. Such changes generally have a disruptive impact on our ability to close business as projects are typically put on hold pending the hiring of new executives and during the period of time they need to assess and approve the underlying business initiatives.
Our record software sales performance in fourth quarter 2008 was positively impacted by normal seasonal fluctuations, including a year-end desire by our customers to spend money on software using their 2008 budgets, rather than risk losing the funds in 2009. This year-end "budget-flush" spending somewhat reduced our sales pipeline for first quarter 2009, particularly opportunities involving transactions ? $1.0 million ("large transactions"). This is consistent with our historical patterns, and, as we expected, the

decline was temporary in nature. We believe our Americas sales pipeline has been successfully rebuilt during first quarter 2009, and that we enter second quarter 2009 with a much stronger list of opportunities that include an increased number of large transactions.
We believe software sales will increase sequentially in second quarter 2009, with the majority of the increase expected to occur in North America. In addition, whereas software sales in first quarter 2009 were primarily driven by mid-size software sales opportunities in the $300,000 to $700,000 range, we believe software sales in second quarter 2009 may be characterized by a strong performance in large transactions.
We believe the weak economy may be driving some businesses in our target markets to achieve more process and efficiency improvements in their operations. 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, they can also increase sales by improving customer service levels. Our solutions also enable cost reductions such reduce labor and transportation costs. While it is true that the economic crisis has stressed the operations and results 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 services revenue stream is a financial strength of the Company that provides a solid foundation for our business in difficult times as long as we are able to maintain our historically high maintenance retention rates. Excluding any further impacts from currency rate fluctuations, we expect maintenance services revenues to be flat sequentially in second quarter 2009 compared to first quarter 2009. Volatility in the foreign currency exchange rates continues to be a significant risk in our efforts to maximize maintenance services revenue performance. For example, unfavorable foreign exchange rate variances reduced first quarter 2009 maintenance services revenues by $3.0 million compared to first quarter 2008 and by $917,000 compared to fourth quarter 2008, due primarily to the strengthening of the US Dollar against European currencies. In addition, we have seen increased pressure from our customer base to renegotiate or drop support in order to reduce their maintenance costs. There has also been an increase in attrition due to bankruptcies and an increase in the number of customers who have opted for reduced levels of support. We believe we have taken steps to limit the impact of these sources of maintenance attrition. Attrition in first quarter 2009 was substantially offset by new maintenance services revenue streams from contracts signed in fourth quarter 2008.
Our consulting services business continues to under-perform against its operating plan, and our service margins continue to decline. The consulting services business has been impacted by product mix, which for several years has favored solutions that require less implementation services, delays in project start dates and both competitive and economic pressures on our realized billing rates. 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 more difficult to predict, which has resulted in increased resource planning and allocation challenges. Although we have recruited and trained a highly qualified team of consulting resources at the CoE, we have not yet fully leveraged this investment, nor have we significantly increased the volume of work and implementation projects cycled through this facility (see "We Will Continue to Focus on Fully Leveraging Our Investment in the Center of Excellence" section below). We believe the primary reason for this lower than expected utilization of the CoE consulting services resources may be due to a slower internal adoption of our planned mix of on-shore/off-shore services. In addition, some of our customers still feel more comfortable having consulting resources on-site at their premises when implementing our solutions.
We continue to address operational and execution issues in our consulting services business. As previously announced, 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 have combined all of our services offerings under a single global organization, JDA Services, and the various service units will share resources, work load, effort, strategy, business development and customer interactions. 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. We believe our Managed Services offering, which is a strategic initiative for 2009 targeted at both the Tier 1 (retailers and manufacturers with revenues of ? $5 billion) and Tier 2 (retailers and manufacturers with revenues of $100 million to $5 billion) markets, 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 anticipate that a significant portion of these services will be performed by resources at the CoE.
We Will Continue to Focus on Fully Leveraging Our Investment in the Center of Excellence. We incurred approximately $5.0 million of incremental costs in 2008 as part of a strategic initiative to expand our operations in India and create a comprehensive

CoE that encompasses additional off-shore product development activities, customer implementation services, customer support services and internal administrative services. The incremental costs were primarily related to the addition of 188 new associates 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). The costs of this investment were more than offset by reductions in our on-shore headcount (66 FTE) that resulted in an overall net cost savings to the Company of approximately $1.3 million in 2008. We added an additional 44 FTE at the CoE in first quarter 2009, primarily in product development (33 FTE) and customer support services (8 FTE) functions.
The CoE has significantly expanded our overall capacity and provides us with the potential to substantially reduce our operating costs without compromising the quality of our services. We have not yet fully utilized certain of the CoE's service capabilities. In particular, we need to increase the involvement of the CoE's customer implementation resources in our consulting service projects and more fully embrace changes in the way we structure projects and deliver our products. 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 believe the primary reason for this lower than expected utilization of the CoE consulting services resources may be due to a slower internal adoption of our planned mix of on-shore/off-shore services.
We believe the CoE provides an improved business model for JDA that enhances growth potential and operating results by:
† Accelerating the development of new solutions and innovations through expanded R&D bandwidth;

† 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;

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

† Accelerating the development of training content;

† Reducing the total cost of ownership of our solutions;

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

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

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

† 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 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, until the availability and terms of credit for acquisitions approach historical norms, we may not be able to successfully pursue and complete significant acquisition opportunities.
Share-Based Compensation Expense. We recorded share-based compensation expense of $1.2 million and $1.2 million related to 2005 Incentive Plan awards in first quarter 2009 and 2008, respectively, and as of March 31, 2009 we have included $6.8 million of deferred compensation in stockholders' equity. In addition, we recorded $169,000 in share-based compensation expense in first quarter 2009 related to purchase of common stock made under our employee stock purchase plan. A summary of total share-based compensation by expense category for first quarter 2009 and 2008 is as follows:

                                                     Three Months
                                                   Ended March 31,
                                                   2009        2008
                Cost of maintenance services     $     94     $    87
                Cost of consulting services           211         151
                Product development                   169         134
                Sales and marketing                   381         315
                General and administrative            555         495

                Total stock-based compensation   $  1,410     $ 1,182

Proposed Amendment to 2005 Performance Incentive Plan. On February 5, 2009, the Board approved an amendment to our 2005 Performance Incentive Plan to increase the number of shares of common stock issuable under the plan from 1,847,000 to 3,847,000 shares of common stock. We are asking for shareholder approval of this amendment and the additional 2,000,000 shares at our 2009 Annual Meeting of Stockholders scheduled to be held on May 11, 2009.
Cash Incentive Bonus Plan. On January 13, 2009, the Board approved a 2009 cash incentive bonus plan ("Incentive Plan") for our executive officers. The Incentive Plan provides for $3.3 million in targeted cash bonuses if we are able to achieve a defined adjusted EBITDA performance threshold goal in 2009. Amounts are payable quarterly under the plan on the basis of the actual EBITDA achieved by the Company for the applicable quarter of 2009. A partial pro-rata cash bonus will be paid if we achieve a minimum adjusted EBITDA performance threshold. There is no cap on the maximum amount the executives can receive if the Company exceeds the defined annualized operational and software performance goals.
Treasury Stock Repurchase Program. On March 5, 2009, the Board adopted a program to repurchase up to $30.0 million of our common stock in the open market or in private transactions at prevailing market prices during the 12-month period ending March 10, 2010. During first quarter 2009, we repurchased 229,912 shares of our common stock under this program for $2.5 million at prices ranging from $10.34 to $11.00 per share.
Resignation of Chief Financial Officer. On April 8, 2009, we announced that Kristen L. Magnuson will resign her position as Executive Vice President and Chief Financial Officer of the Company following a transition period from the date of the announcement until July 5, 2009 (the "Transition Period"). Pursuant to Ms. Magnuson's separation agreement, she will receive a lump sum severance payment of $824,750 and all unvested restricted stock units and performance shares granted to Ms. Magnuson pursuant to the 2005 Performance Incentive Plan became immediately vested on April 14, 2009. We will record an additional share-based compensation charge of $162,000 in second quarter 2009 related to this accelerated vesting. A summary of Ms. Magnuson's unvested restricted stock units and performance awards outstanding at the time of her resignation is as follows:

                                                         Unvested Shares to
           Type of Award        Original Grant Date    Vest on April 14, 2009
       Restricted Stock Units     March 13, 2007                      6,805
       Restricted Stock Units      May 14, 2007                         903
       Performance Shares        February 7, 2008                     9,600

During the Transition Period, David Alberty will assume the role of principal financial executive, to serve until a permanent Chief Financial Officer is named. Mr. Alberty, 50, has served as our Group Vice President of Accounting, Finance and Treasury since May 2008. From September 2007 to May 2008, Mr. Alberty served as the Company's Group Vice President and Worldwide Controller. From January 2006 to September 2007, Mr. Alberty served as the Company's Vice President of International Accounting and Tax. From December 1999 to January 2006, Mr. Alberty served as the Company's Director of Tax.

Results of Operations
     The following table sets forth certain selected financial information
expressed as a percentage of total revenues for first quarter 2009 and 2008 and
certain gross margin data expressed as a percentage of software license revenue,
maintenance services revenue, product revenues or services revenues, as
appropriate:

                                                                         Three months
                                                                       Ended March 31,
                                                                     2009            2008
REVENUES:

Software licenses                                                       18 %           21 %
Maintenance services                                                    52             49

Product revenues                                                        70             70

Consulting services                                                     28             28
Reimbursed expenses                                                      2              2

Service revenues                                                        30             30

Total revenues                                                         100            100

COST OF REVENUES:

Cost of software licenses                                                1              1
Amortization of acquired software technology                             1              2
Cost of maintenance services                                            13             12

Cost of product revenues                                                15             15

Cost of consulting services                                             23             21
Reimbursed expenses                                                      2              2

Cost of service revenues                                                25             23

Total cost of revenues                                                  40             38


GROSS PROFIT                                                            60             62

OPERATING EXPENSES:

Product development                                                     15             15
Sales and marketing                                                     17             17
General and administrative                                              13             12
Amortization of intangibles                                              7              6
Restructuring charges and adjustments to acquisition-related
reserves                                                                 2              1

Total operating expenses                                                54             51


OPERATING INCOME                                                         6             11

Interest expense and amortization of loan fees                           -             (3 )
Other income and other, net                                              -              1


INCOME BEFORE INCOME TAX PROVISON                                        5              9

Income tax provision                                                     2              3


NET INCOME                                                               3 %            6 %


Gross margin on software licenses                                       96 %           95 %
Gross margin on maintenance services                                    75 %           76 %
Gross margin on product revenues                                        79 %           79 %
Gross margin on service revenues                                        15 %           21 %

The following table sets forth a comparison of selected financial information, expressed as a percentage change between periods for first quarter 2009 and 2008. In addition, the table sets forth cost of revenues and product development expenses expressed as a percentage of the related revenues:

                                                                           % Change
                                                                 Three Months ended March 31,
                                                          2009           2008 to 2009            2008
Revenues:

Software licenses                                       $  15,325                  (24 )%      $ 20,036
Maintenance                                                42,997                   (6 )%        45,812

Product revenues                                           58,322                  (11 )%        65,848
Service revenues                                           25,011                  (11 )%        28,027

Total revenues                                             83,333                  (11 )%        93,875


Cost of Revenues:

Software licenses                                             602                  (43 )%         1,053
Amortization of acquired software technology                1,008                  (33 )%         1,501
Maintenance services                                       10,549                   (6 )%        11,196

Product revenues                                           12,159                  (12 )%        13,750
Service revenues                                           21,359                   (3 )%        22,063

Total cost of revenues                                     33,518                   (6 )%        35,813


Gross Profit                                               49,815                  (14 )%        58,062

Operating Expenses:

Product development                                        12,573                   (8 )%        13,676
Sales and marketing                                        14,252                  (12 )%        16,109
General and administrative                                 11,026                   (5 )%        11,588

                                                           37,851                   (9 )%        41,373

Amortization of intangibles                                 6,076                    - %          6,076
Restructuring charge                                        1,430                   89 %            756

Operating income                                        $   4,458                  (55 %)      $  9,857

Cost of Revenues as a % of related revenues:
Software licenses                                               4 %                                   5 %
Maintenance services                                           25 %                                  24 %
Product revenues                                               21 %                                  21 %
Service revenues                                               85 %                                  79 %

Product development as a % of product revenues                 22 %                                  21 %

The following tables set forth selected comparative financial information on revenues in our business segments and geographical regions, expressed as a percentage change between first quarter 2009 and 2008. In addition, the tables set forth the contribution of each business segment and geographical region to . . .