Forward-Looking Statements

This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical or current facts, including, without limitation, statements about our business strategy, plans, objectives and future prospects, are forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from these expectations, which could have a material adverse effect on our business, results of operations, cash flow and financial condition. Such risks and uncertainties include, without limitation, the following:

• On November 4, 2009, i2 entered into an Agreement and Plan of Merger (the "Merger Agreement") with JDA Software Group, Inc., a Delaware corporation ("JDA"), and Alpha Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of JDA ("Merger Sub"), under which Merger Sub will be merged with and into i2 (the "Merger"), with i2 continuing after the Merger as the surviving corporation and a wholly-owned subsidiary of JDA. The Merger Agreement has been approved by the Boards of Directors of both JDA and i2. Consummation of the transaction, which is expected to close in first quarter 2010, is subject to several closing conditions, including the approval and adoption of the merger agreement by i2's stockholders, expiration or termination of the applicable Hart-Scott-Rodino waiting periods and regulatory and other customary conditions. In certain circumstances, the approval by JDA stockholders will also be required. On November 5, 2009, we filed a Current Report on Form 8-K with the SEC containing additional information regarding the Merger Agreement and the proposed Merger. There can be no assurance that the parties will be able to close the Merger as contemplated by the Merger Agreement. In the event that the Merger is not completed or is delayed, we may experience, among other things, downward pressure on our stock; lawsuits; uncertainty for our management, sales staff, and other employees; and uncertainty for existing and potential customers regarding our ability to meet our contractual obligations. Such distractions could harm our business, the results of operations, cash flow, and our overall financial condition.

• Beginning in the third quarter of 2008 and continuing through and beyond our third quarter of 2009, we have experienced purchasing delays and a reduction in maintenance services by some customers and prospects attributable to the current economic environment, and continued speculation about our future strategic direction. The current

• We have implemented and continue to evaluate restructuring and reorganization initiatives, including a reduction in our workforce in the first quarter of 2009 and reorganization of our sales force. Failure to achieve the desired results of our restructuring and reorganization initiatives could harm our business, results of operations, cash flow and financial condition.

• Our financial results have varied and may continue to vary significantly from quarter-to-quarter. We may fail to meet analysts and investors' expectations.

• We experienced historical volatility in our quarterly cash flows. A failure to maintain profitability and achieve consistent positive cash flows would have a significant adverse effect on our business, impair our ability to support our operations and adversely affect our liquidity.

• We may require additional private or public debt or equity financing. Such financing may only be available on disadvantageous terms, or may not be available at all. Any new financing could have a substantial dilutive effect on our existing stockholders.

• If we are unable to develop and generate additional demand for our products or develop new products, serious harm could result to our business.

• We may not be competitive, and increased competition could seriously harm our business.

• We face risks related to product quality and performance claims and other litigation that could have a material adverse effect on our relationships with customers and our business, results of operations, cash flow and financial condition. We may face other claims and litigation in the future that could harm our business and impair our liquidity.

• Loss of key personnel or our failure to attract, train, and retain certain additional personnel could negatively affect our operating results and revenues and seriously harm our company.

• We face other risks indicated in Item 1A, "Risk Factors," in the 2008 Annual Report on Form 10-K.

Many of these risks and uncertainties are beyond our control and, in many cases, we cannot accurately predict the risks and uncertainties that could cause our actual results to differ materially from those indicated by the forward-looking statements. When used in this document, the words "believes," "plans," "expects," "anticipates," "intends," "continue," "may," "will," "should" or the negative of such terms and similar expressions as they relate to us, our customers or our management are intended to identify forward-looking statements.

References in this report to the terms "optimal" and "optimization" and words to that effect are not intended to connote the mathematically optimal solution, but may connote near-optimal solutions, which reflect practical considerations such as customer requirements as to response time, precision of the results and other commercial factors.

Overview

Nature of Operations

We operate our business in one segment, supply chain management solutions, that are designed to help enterprises optimize business processes both internally and among trading partners. We are a provider of supply chain management solutions, consisting of various software and service offerings. Our service offerings include business optimization and technical consulting, managed services, training, solution maintenance, software upgrades and software development. Supply chain management is the set of processes, technology and expertise involved in managing supply, demand and fulfillment throughout divisions within a company and with its customers, suppliers and partners. The business goals of our solutions include increasing supply chain efficiency and enhancing customer and supplier relationships by managing variability, reducing complexity, and improving operational visibility. Our offerings are designed to help customers better achieve the following critical business objectives:

Visibility - a clear and unobstructed view up and down the supply chain

Planning - supply chain optimization to match supply and demand while considering system-wide constraints

Collaboration - interoperability with supply chain partners and elimination of functional silos

Control - management of data and business processes across the extended supply chain

Revenue Categories

We recognize revenue for software and our related service offerings in accordance with ASC 605 - Revenue Recognition and ASC 985 - Software.

Software Solutions. Software solutions revenue includes core and recurring license revenue, and revenue to develop the licensed functionality. We recognize these revenues under ASC 605 or ASC 985 based on our evaluation of whether the associated services are essential to the licensed software as described within ASC 985. If the services are considered essential, revenue is generally recognized on a percentage of completion basis under ASC 605. Services are considered essential to the software when they involve significant modifications or additions to the software features and functionality. In addition, we have several subscription and other recurring revenue transactions, which are recognized ratably over the life of each contract.

Services. Services revenue is primarily derived from fees for services that are not essential to the software, including implementation, integration, training, consulting, hosting, and managed services, and is generally recognized when services are performed. In addition, services revenue may include fees received from arrangements to customize or enhance previously purchased licensed software, when such services are not essential to the previously licensed software. Services revenue also includes reimbursable expense revenue, with the related costs of reimbursable expenses included in cost of services.

Maintenance. Maintenance revenue consists of fees generated by providing support services, such as telephone support, and unspecified upgrades/enhancements on a when-and-if available basis. A customer typically prepays maintenance and support fees for an initial period, and the related revenue is deferred and generally recognized over the term of such initial period. Maintenance is renewable by the customer on an annual basis thereafter. Rates for maintenance, including subsequent renewal rates, are typically established based upon a specified percentage of net license fees as set forth in the contract.

Key Performance Indicators and Operating Metrics

The markets in which we operate are highly competitive. Our competitors are diverse and offer a variety of solutions targeting various segments of the extended supply chain as well as the enterprise as a whole. Some competitors offer suites of applications, while most offer solutions designed to target specific processes or industries. We believe our principal competitors continue to strengthen, in part based on consolidation within the industry. In addition, our solutions-oriented products where services are more critical increase our exposure to competition from offshore providers and consulting companies. All of these factors are creating pricing pressure for our software and service offerings. However, we believe our focus on a solutions-oriented approach that leverages our deep supply chain expertise differentiates us from our competitors.

In managing our business and reviewing our results, management focuses most intently on our revenue generation process, including bookings, backlog, revenue, cash flow from operations and liquidity.

Bookings. We define bookings as the total value of non-contingent fees payable to the company pursuant to the terms of duly executed contracts. Bookings are expected to result in revenue as products are delivered or services are performed, and may reflect contracts from which revenue will be recognized over multi-year periods, however there can be no assurance that bookings will result in future revenue. Bookings do not include amounts subject to contingencies, such as optional renewal periods, amounts subject to a customer's internal approvals, amounts subject to customer specific cancellation provisions and amounts that are refundable for reasons outside of our standard warranty provisions. Based on the nature of the transactions, certain of our subscription bookings have termination provisions upon payment of a penalty. Because our revenues are recognized under several different accounting standards and thus are subject to period-to-period variability, we closely monitor our bookings as a leading indicator of future revenues and the overall performance of our business.

In 2009, in connection with a management change and reorganization, we returned to a traditional sales approach focused on selling our licensed software, with add-on services as needed. Under our previous management, we had focused more heavily on selling our services as a means to generate demand for our licensed software. The reorganization was focused on our sales approach and effectiveness, and places a stronger emphasis on software and delivery excellence so that our customers see a strong return on their investment. Our software sales force has been reoriented to be more flexible and focused on the development of new accounts while teaming with our delivery organization to capitalize on opportunities in existing accounts. We expect the restructuring and reorganization will set the stage for our future growth as a software company. This change has caused a shift in the mix of our bookings and revenue in 2009 as compared to our prior period results.

Total bookings for the three months ended September 30, 2009 and September 30, 2008 were $53.8 million and $46.5 million, respectively, an increase of 16% or $7.3 million. Included in total bookings are $7.5 million and $4.2 million of multi-year contracts, respectively. Total bookings for the nine months ended September 30, 2009 and September 30, 2008 were $181.9 million and $177.0 million, respectively, an increase of approximately 3% or $4.9 million. This includes $39.7 million and $12.1 million of multi-year contracts, respectively. The multi-year contracts in the three months ended September 30, 2009 include approximately $5.5 million in maintenance agreements and $2.0 million in software solutions. The average term of these multi-year agreements is approximately 2.5 years.

Backlog. Backlog represents the balance of bookings that has not been recognized as revenue. The amount of backlog for which we have received payment is recorded as deferred revenue on our condensed consolidated balance sheet. We review our backlog to assess future revenue that may be recognized from bookings in previous fiscal periods. This review allows us to determine whether we are recognizing more or less revenue compared to the bookings in that period and whether our backlog is increasing or decreasing.

                                                                Three Months Ended                                                Twelve Months Ended
                                       September 30, 2009            June 30, 2009           March 31, 2009         December 31, 2008             December 31, 2007
Additions to Backlog:
Software Solutions Bookings           $              8,161          $        14,363          $        24,062       $             29,812          $            54,556
Platform Technology/Source Code
Bookings                                                -                        -                        -                          -                           500

Net Additions to Backlog                             8,161                   14,363                   24,062                     29,812                       55,056
Less: Software Solutions
Revenue Recognized                                  15,217                   15,269                   10,203                     46,852                       47,721

Increase/(Decrease) in Backlog        $             (7,056 )        $          (906 )        $        13,859       $            (17,040 )        $             7,335

Revenue. For the three months ended September 30, 2009, total revenue decreased by 16% or $10.1 million compared to the same period in 2008 and decreased by 12% or $24.0 million for the nine months ended September 30, 2009 compared to the same period in 2008. The changes in each category of our revenue are described below.

Software solutions revenue increased 44% or $4.7 million for the three months ended September 30, 2009 compared to the same period in 2008, and increased 17% or $5.9 million for the nine months ended September 30, 2009 compared to the same period in 2008 due to revenue recognized from our transactions where the contract accounting provisions of ASC 605 are applied. The increase primarily resulted from the significant software solutions bookings in the first quarter of 2009.

Services revenue decreased 37% or $12.3 million for the three months ended September 30, 2009 when compared to the same period in 2008 and decreased 23% or $21.3 million for the nine months ended September 30, 2009 when compared to the same period in 2008. The decrease was driven by a decline in demand for our services due to our customers' economic constraints, resulting in a reduction in total billable hours of 26% for the three months ended September 30, 2009 and a 17% reduction for the nine months ended September 30, 2009 with the rate per hour essentially flat. We adjusted our services capacity accordingly through cost reductions including decreasing our average services personnel headcount inclusive of contractors by 20% for the three months ended September 30, 2009 and 15% for the nine months ended September 30, 2009 compared to the same periods in 2008. The remaining decrease in services revenue was due to a reduction in reimbursable travel and entertainment expense.

Maintenance revenue decreased 12% or $2.5 million for the three months ended September 30, 2009 when compared to the same period in 2008 and decreased 13% or $8.6 million for the nine months ended September 30, 2009 when compared to the same period in 2008. This decrease was primarily due to the impact of lower renewal rates as well as cancellations of certain contracts by customers who previously had multiple maintenance agreements. In addition, a significant maintenance-paying customer decided not to renew maintenance in the second quarter of 2009, which resulted in a $1.0 million and $2.0 million, respectively, reduction in maintenance revenue for the three and nine months ended September 30, 2009 when compared to the same periods in 2008. This trend of lower renewal rates and customer losses may continue if our customers reduce their expenditures during the current economic downturn.

Operating Cash Flow and Liquidity. We closely monitor our operating cash flow, working capital and cash levels. In doing so, we attempt to limit our restricted cash and cash balances held by foreign subsidiaries.

Our operating cash flow for the nine months ended September 30, 2009 was $26.9 million compared to operating cash flow of $98.9 million in the nine months ended September 30, 2008. Included in operating cash flow for the nine months ended September 30, 2008, is $83.3 million related to the SAP litigation settlement we received in July 2008.

Our working capital was $145.9 million at September 30, 2009, compared to the $124.9 million balance at June 30, 2009, $106.5 million balance at March 31, 2009 and the $187.4 million at December 31, 2008. In the first quarter of 2009, we used $84.8 million to repurchase debt, see Note 3, Borrowings and Debt Issuance Cost.

The chart below shows the components of our quarterly working capital and the face value of our long-term debt from December 31, 2008 through the third quarter of 2009.

                                                    Working Capital
                                   September 30, 2009       June 30, 2009       March 31, 2009       December 31, 2008
Total cash                        $            192,250     $       181,532     $        166,580     $           243,790
Accounts receivable                             21,127              20,989               22,980                  25,846
Other current assets, net                        8,663               7,203                7,418                   9,477

Total current assets                           222,040             209,724              196,978                 279,113


Current liabilities                             32,354              32,594               31,865                  38,650
Deferred revenue                                43,796              52,202               58,597                  53,028

Total current liabilities                       76,150              84,796               90,462                  91,678


Working capital                   $            145,890     $       124,928     $        106,516     $           187,435


Long-term Debt (Face value)                         -                   -                    -                   86,250

Application of Critical Accounting Policies and Accounting Estimates

There have been no changes during the third quarter of 2009 to the critical accounting policies or the areas that involve the use of significant judgments and estimates we described in our 2008 Annual Report on Form 10-K.

Analysis of Financial Results - Three Months Ended September 30, 2009 Compared to Three Months Ended September 30, 2008.

Summary of Third Quarter 2009 Results

• Total revenue decreased $10.1 million from the same period in 2008

• Total costs and expenses decreased $11.8 million from the same period in 2008.

• Diluted earnings per share were $0.36 for the third quarter of 2009 and $0.05 for the third quarter of 2008

• Cash flow from operations was $4.5 million versus cash flow from operations of $78.5 million in the 2008 period reflecting the receipt of $83.3 million from the SAP litigation settlement.

• Total bookings were $53.8 million versus $46.5 million in the same period in 2008. Total bookings include $7.5 million and $4.2 million of multi-year contracts, respectively.

Revenues

The following table sets forth revenues and the percentages of total revenues of selected items reflected in our condensed consolidated statements of operations and comprehensive income for the three months ended September 30, 2009 and September 30, 2008. The period-to-period comparisons of financial results are not necessarily indicative of future results.

                                   Three Months                          Three Months                               Change 2009 versus 2008
                                       Ended                                 Ended
                                   September 30,      Percent of         September 30,      Percent of          Three months ended September 30
                                       2009            Revenue               2008            Revenue              $ Change                % Change
ASC 985 recognition               $           436              1 %      $           907              1 %      $            (471 )              -52 %
ASC 605 recognition                        10,324             19 %                3,694              6 %                  6,630                179 %
Recurring items                             4,457              8 %                5,961              9 %                 (1,504 )              -25 %

Total Software solutions                   15,217             28 %               10,562             16 %                  4,655                 44 %
Services                                   21,006             38 %               33,316             52 %                (12,310 )              -37 %
Maintenance                                18,413             34 %               20,875             32 %                 (2,462 )              -12 %

Total revenues                    $        54,636            100 %      $        64,753            100 %      $         (10,117 )              -16 %

Software Solutions Revenue. Total software solutions revenue increased 44% or $4.7 million for the three months ended September 30, 2009 compared to the same period in 2008. The components of the changes in software solutions revenue are explained below.

Revenue recognized under the software revenue recognition provisions of ASC 985 for the three months ended September 30, 2009 decreased 52% or $0.5 million compared to the same period in 2008.

Revenue recognized under the contract accounting provisions of ASC 605 increased 179% or $6.6 million for the three months ended September 30, 2009 when compared to the same period in 2008, primarily due to a significant increase in ASC 605 bookings in the first quarter of 2009. During the three months ended September 30, 2009, we recognized revenue related to 17 projects at an average of $0.6 million per project compared to 18 projects at an average of $0.2 million in the same period of 2008. This amount was impacted by the significant software solutions bookings recorded in the first quarter of 2009.

Revenue from recurring items decreased by 25% or $1.5 million for the three months ended September 30, 2009 when compared to the same period in 2008. This decrease resulted primarily from a license arrangement that was required to be recognized ratably over the 12-month term in 2008, which is subject to a maintenance agreement in 2009 as well as a lower amount of recurring revenue from one of our Supply Chain Leader deals that was renewed at a lower rate.

Services Revenue. Services revenue decreased 37% or $12.3 million for the three months ended September 30, 2009 compared to the same period in 2008. The decrease was driven by a decline in demand for our services due to our customers' economic constraints, resulting in a reduction in total billable hours of 26% with the rate per hour essentially flat. We adjusted our services capacity accordingly through cost reductions including decreasing our average services personnel headcount inclusive of contractors by 20%. The remaining decrease in services revenue was due to a reduction in reimbursable travel and entertainment expense.

Services revenue is dependent upon a number of factors, including:

• the number, value and rate per hour of services transactions booked during the current and preceding periods,

• the number and availability of service resources actively engaged on billable services projects,

• the timing of milestone acceptance for engagements contractually requiring customer sign-off, and

• the timing of cash payments when collectability is uncertain

Maintenance Revenue. Maintenance revenue decreased by 12% or $2.5 million for the three months ended September 30, 2009 compared to the same period in 2008. This decrease was primarily due to the impact of lower renewal rates as well as cancellations of certain contracts by customers who previously had multiple maintenance agreements. This trend of lower renewal rates and customer losses may continue if our customers reduce their expenditures during the current economic downturn. In addition, a significant maintenance-paying customer decided not to renew maintenance in the second quarter of 2009, which resulted in a $1.0 million reduction in maintenance revenue for the three months ended September 30, 2009 when compared to the same period in 2008.

Maintenance revenue varies from period-to-period based on several factors, including:

• initial maintenance from new software solutions bookings,

• the timing of negotiating and signing of maintenance renewals,

• completing a renewal several months into the annual maintenance period resulting in a one-time catch up for the period that maintenance services were performed prior to signature of the contract. A similar catch-up of revenue occurs due to the timing of cash receipts for cash basis customers when cash is not received until several months into the maintenance period,

• renewals that occur on less favorable terms than in the prior period, and

• customers that do not renew their maintenance agreements.

. . .