JDA Software Reports Record EBITDA and Third Quarter Software Revenue

Business Wire, Oct 20, 2008

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.

* The "ticking fee" is a significant non-routine expense to hold the commitment on the new credit facility from August 10, 2008 (the date of our acceptance of the commitment) through the closing date of our pending acquisition of i2 Technologies, Inc. Exclusion of this charge promotes period-to-period comparisons and transparency as we do not believe this cost is directly attributable to the operating performance of our business.

* 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