JDA SOFTWARE GROUP INC, 424B4, 1998-05-07

JDA SOFTWARE GROUP INC
424B4, 1998-05-07
COMPUTER PROGRAMMING SERVICES

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<PAGE> 1
Filed under Rule 424(b)(4)
- Registration Statement
No. 333-51043
PROSPECTUS
2,000,000 Shares

[JDA LOGO]
COMMON STOCK
------------------------
OF THE 2,000,000 SHARES OF COMMON STOCK OFFERED HEREBY, 1,520,000 SHARES ARE
BEING OFFERED INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS
AND 480,000 SHARES ARE BEING OFFERED INITIALLY OUTSIDE OF THE UNITED STATES AND
CANADA BY THE INTERNATIONAL UNDERWRITERS. SEE "UNDERWRITERS." ALL OF THE SHARES
OF COMMON STOCK BEING OFFERED HEREBY ARE BEING SOLD BY THE COMPANY. THE
COMPANY'S COMMON STOCK IS LISTED ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL
"JDAS." ON MAY 6, 1998, THE LAST SALE PRICE OF THE COMMON STOCK AS REPORTED ON
THE NASDAQ NATIONAL MARKET WAS $46 1/8 PER SHARE. SEE "PRICE RANGE OF COMMON
STOCK."
------------------------
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
COMMENCING ON PAGE 5 HEREOF.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

------------------------
PRICE $46 A SHARE
------------------------

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
-------- -------------- -----------
<S> <C> <C> <C>
Per Share.............................. $46.00 $2.39 $43.61
Total(3)............................... $92,000,000 $4,780,000 $87,220,000
</TABLE>

- ------------

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriters."

(2) Before deducting expenses payable by the Company estimated at $500,000.

(3) The Company has granted the U.S. Underwriters an option, exercisable
within 30 days of the date hereof, to purchase up to an aggregate of
300,000 additional Shares at the price to public, less underwriting
discounts and commissions for the purpose of covering over-allotments,
if any. If the U.S. Underwriters exercise such option in full, the total
price to public, underwriting discounts and commissions and proceeds to
Company will be $105,800,000, $5,497,000 and $100,303,000, respectively.
See "Underwriters."
------------------------
The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein and subject to approval of certain legal matters
by Brobeck, Phleger & Harrison LLP, counsel for the Underwriters. It is expected
that delivery of the Shares will be made on or about May 12, 1998 at the office
of Morgan Stanley & Co Incorporated, New York, N.Y., against payment therefor in
immediately available funds.
------------------------
MORGAN STANLEY DEAN WITTER
DONALDSON, LUFKIN & JENRETTE
Securities Corporation

HAMBRECHT & QUIST

May 6, 1998
<PAGE> 2

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR
BY ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON
STOCK OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION TO SUCH
PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREBY SHALL
UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED HEREIN IS CORRECT
AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------

TABLE OF CONTENTS

<TABLE>
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PAGE
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Incorporation of Certain Documents by
Reference.................................... 2
Prospectus Summary............................. 3
The Company.................................... 4
Risk Factors................................... 5
Forward Looking Statements..................... 15
Use of Proceeds................................ 15
Dividend Policy................................ 15
Price Range of Common Stock.................... 16
Capitalization................................. 17
Selected Consolidated Financial Data........... 18
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 19
</TABLE>

<TABLE>
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PAGE
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Business....................................... 29
Management..................................... 42
Certain United States Federal Income Tax
Considerations for Non-U.S. Holders of Common
Stock........................................ 44
Underwriters................................... 46
Legal Matters.................................. 49
Experts........................................ 49
Available Information.......................... 49
</TABLE>

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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the Securities and Exchange Commission
(the "Commission") by the Company are incorporated in this Prospectus by
reference: (1) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997; (2) the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998; (3) the Company's Current Report on Form 8-K dated
and filed April 24, 1998; and (4) the description of the Common Stock contained
in the Company's Registration Statement on Form 8-A filed under Section 12(g) of
the Securities Exchange Act of 1934 (the "Exchange Act").

All other documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Common Stock to be made
hereunder shall be deemed to be incorporated herein by reference and made a part
hereof from the date of filing of such documents.

Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
therein or in any other subsequently filed document that also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.

The Company will provide without charge to each person, including any
beneficial owners, to whom a copy of the Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
which are incorporated herein by reference, other than exhibits to such
information (unless such exhibits are specifically incorporated by reference
into such documents). Requests should be submitted to Mr. Lindsay L. Hoopes,
Vice President -- Accounting, 11811 North Tatum Boulevard, Suite 2000, Phoenix,
Arizona 85028.
------------------------

The Company has filed domestic trademark applications for the symbols JDA,
Distributed Store System, DSS, Merchandise Management System, MMS, Open DataBase
Merchandising System, ODBMS, Retail IDEAS and Win/DSS and foreign trademark
applications for the symbol JDA. All other trademarks or trade names referred to
in this Prospectus are the property of their respective owners.
------------------------

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, SHARES OF THE COMMON STOCK IN THE OPEN MARKET.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITERS."
------------------------

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN
ACCORDANCE WITH RULE 103 OF REGULATION M. SEE "UNDERWRITERS."

2
<PAGE> 3

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and notes thereto appearing
elsewhere in this Prospectus or incorporated by reference. Except as otherwise
indicated, all information in this Prospectus assumes that the Underwriters'
over-allotment option is not exercised. See "Underwriters."
THE COMPANY

JDA Software Group, Inc. is a leading international provider of integrated
enterprise-wide software products and services that address mission-critical
management information needs of the retail supply chain. The Company offers a
broad array of software products designed to provide integrated technology
solutions for the collection, organization and analysis of data and the
distribution of information throughout a retail organization. The Company's
products include: merchandising, financial and decision support systems at the
corporate level; point-of-sale, back office and distributed processing
applications at the store level; and warehouse management and logistics systems
at the distribution level. The Company offers products that operate on IBM
AS/400-based and DOS-based platforms, as well as products that operate in the
UNIX and Windows NT open client/server environments. JDA also offers a wide
range of professional services through its consulting and customer support
organizations, including project management, system planning, design and
implementation, custom modifications, training and support services.

The Company's products and services are marketed and sold primarily through
JDA's direct sales force and through cooperative relationships with sales
agents, distributors and other vendors, including IBM and Siemens Nixdorf. The
Company's solutions have been licensed to more than 300 retail enterprises
worldwide and address a wide variety of retail markets, including hard and soft
lines retailers, warehouse operations, department stores and grocery stores. The
Company's customers include many of the world's leading specialty retailers such
as Bed, Bath and Beyond, Inc., CompUSA, Inc., Gucci SpA, LensCrafters, Inc.,
Office Depot International, Oshman's Sporting Goods, Inc., PETCO Animal
Supplies, Inc., Planet Hollywood International, Royal Duty Free Shop, Inc.,
Sears Clothing Ltd., Staples, Inc., Stride Rite Children's Group, Inc., Virgin
Entertainment Group, Inc. and Williams-Sonoma, Inc.

THE OFFERING

<TABLE>
<S> <C>
U.S. Offering.............................................. 1,520,000 Shares
International Offering..................................... 480,000 Shares
Total.............................................. 2,000,000 Shares
Common Stock to be outstanding after the offering.......... 15,318,781 Shares(1)
Use of proceeds............................................ For general corporate purposes, including product
development and working capital and potential acquisitions.
See "Use of Proceeds."
Nasdaq National Market symbol.............................. JDAS
</TABLE>

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
------------------ -----------------------------
1998 1997 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME DATA:
Total revenues............................................ $30,893 $16,844 $91,771 $47,840 $30,084
Gross profit.............................................. 16,544 9,940 52,899 30,986 20,144
Income from operations.................................... 5,246 3,499 19,370 12,277 7,504
Net income(2)............................................. 3,484 2,313 12,466 7,680 4,401
Basic and diluted earnings per share...................... $ .26 $ .18 $ .95 $ .64 $ .42
Shares used to compute basic earnings per share(3)........ 13,236 13,007 13,078 12,010 10,952
Shares used to compute diluted earnings per share(3)...... 13,579 13,168 13,109 12,010 10,952
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1998
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ACTUAL AS ADJUSTED(4)
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<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................. $31,897 $118,617
Working capital........................................... 55,333 142,053
Total assets.............................................. 92,150 178,870
Long-term liabilities..................................... 269 269
Stockholders' equity...................................... 77,564 164,284
</TABLE>

- ------------
(1) Based on the number of shares outstanding as of March 31, 1998. Excludes (i)
1,282,117 shares of Common Stock issuable upon the exercise of stock options
outstanding under the Company's stock option plans as of March 31, 1998, at
a weighted average exercise price of $24.30 per share, the issuance of
99,172 shares of which will not cause further dilution, (ii) 249,005 shares
of Common Stock reserved for option grants under the Company's stock option
plans, (iii) 1,750,000 shares of Common Stock reserved, subject to
stockholder approval, for option grants under the Company's stock option
plans and (iv) 300,000 shares of Common Stock reserved, subject to
stockholder approval, for issuance under the Company's 1998 Employee Stock
Purchase Plan.

(2) Prior to March 30, 1995, certain of JDA's commonly-held predecessor
companies elected S Corporation status. Net income for 1995 includes a pro
forma provision for U.S. federal income taxes at statutory rates. Without
such pro forma provision, net income for 1995 was $5,573.

(3) Includes common and equivalent shares outstanding subsequent to the
Company's reorganization on March 30, 1995.

(4) As adjusted to reflect the sale of 2,000,000 shares of Common Stock offered
by the Company hereby (after deducting underwriting discounts and
commissions and estimated offering expenses payable by the Company) and the
application of the estimated net proceeds therefrom. See "Use of Proceeds"
and "Capitalization."

3
<PAGE> 4

THE COMPANY

JDA Software Group, Inc. ("JDA" or the "Company) is a leading international
provider of integrated enterprise-wide software products and services that
address mission-critical management information needs of the retail supply
chain. The Company offers a broad array of software products designed to provide
integrated technology solutions for the collection, organization and analysis of
data and the distribution of information throughout a retail organization. The
Company's products include: merchandising, financial and decision support
systems at the corporate level; point-of-sale, back office and distributed
processing applications at the store level; and warehouse management and
logistics systems at the distribution level. The Company offers products that
operate on IBM AS/400-based and DOS-based platforms, as well as products that
operate in the UNIX and Windows NT open client/server environments. JDA also
offers a wide range of professional services through its consulting and customer
support organizations, including project management, system planning, design and
implementation, custom modifications, training and support services.

The retailing industry is experiencing rapid change, driven primarily by
changing consumer preferences, intensifying competition and increasing
globalization. To respond to today's competitive challenges, retailers must
accelerate the rate at which they identify and respond to changing business
conditions and consumer requirements. A retail organization's agility and
ultimate success are dependent upon its ability to rapidly and cost-effectively
collect, organize and analyze data, and disseminate information throughout the
enterprise to facilitate effective business decisions. Retailers are recognizing
the strategic imperative of employing technology to cut costs, reduce
inefficiencies and enhance sales in an increasingly competitive environment
dominated by value-conscious consumers. As a result, retailers are demanding
highly functional, easy to use and scaleable software applications that can be
economically and rapidly implemented and adapted for changes in their
mission-critical business functions.

The Company's objective is to strengthen its leadership position by
providing a comprehensive suite of software solutions that address
mission-critical management information needs of the retail supply chain. Key
elements of the Company's strategy include: leveraging the Company's the
in-depth understanding of retailers' requirements accumulated from sales to over
300 customers; expanding product sales to existing customers; continuing to
invest in the Company's high quality professional services organization;
expanding the Company's presence in international markets; further developing
and expanding strategic relationships for development, distribution and
implementation of the Company's products; continuing to develop and offer
products and services that address customers' emerging technological and
financial issues; and acquiring complementary businesses, products and
technologies.

The Company's principal executive offices are located at 11811 North Tatum
Blvd., Suite 2000, Phoenix, AZ 85028, and the telephone number at that address
is (602) 404-5500. Unless the context otherwise requires, the "Company" or "JDA"
refers to JDA Software Group, Inc. and its consolidated subsidiaries.

4
<PAGE> 5

RISK FACTORS

In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered hereby. This Prospectus contains forward-looking
statements that involve risks and uncertainties. Actual results may differ
materially from those indicated in such forward-looking statements. Factors that
may cause such a difference include, but are not limited to, those discussed
below and in the sections entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business." See "Forward
Looking Statements."

Variability in Quarterly Operating Results. The Company's quarterly
operating results have varied and are expected to continue to vary in the
future. These fluctuations may be caused by many factors, including: demand for
the Company's products and services; the size and timing of individual sales;
the lengthening of the Company's sales cycle; competitive pricing pressures;
customer order deferrals in anticipation of new products; changes in the mix of
products and services sold; the timing of introductions and enhancements of
products by the Company or its competitors; market acceptance of new products;
technological changes in platforms supporting the Company's products; changes in
the Company's operating expenses; changes in the mix of domestic and
international revenues; the Company's ability to complete fixed-price consulting
contracts within budget; personnel changes; foreign currency exchange rate
fluctuations; expansion of international operations; changes in the Company's
strategies; and general industry and economic conditions. The Company's business
has experienced, and is expected to continue to experience, some degree of
seasonality due in large part to its retail customers' buying cycles.
Specifically, within each fiscal year software license revenues have been
highest in the fourth quarter. Further, the gross margin on software licenses is
significantly greater than the gross margins on consulting, maintenance and
other services. As a result, the Company's gross margin has fluctuated from
quarter to quarter, and management expects that its gross margin may continue to
fluctuate significantly based on revenue mix and seasonality.

The Company's software products typically ship when contracts are signed.
Consequently, license backlog at the beginning of any quarter has represented
only a small portion of that quarter's expected revenues. As a result, software
license revenues in any quarter are difficult to forecast because such revenues
are substantially dependent on agreements executed and the related shipment of
software in that quarter. Moreover, the Company typically recognizes a
substantial amount of its revenues in the last weeks or days of the quarter. The
Company generally derives a significant portion of its quarterly software
license revenues from a small number of relatively large sales. The timing of
large individual sales is difficult to predict, and in some cases, large
individual sales have occurred in quarters subsequent to those originally
anticipated by the Company. The Company anticipates that the foregoing trends
will continue. Any significant cancellation or deferral of customer orders, or
the Company's inability to conclude license negotiations in the compressed time
frame at the end of a fiscal quarter may have a material adverse effect on its
operating results reported in any particular quarter.

Further, the Company's expense levels are based on its expectations of
future revenues. Since software license sales are typically accompanied by a
significant amount of consulting, implementation and support services, the
Company's consulting and support resources must be managed to meet anticipated
software license revenues. As a result, service personnel are generally hired
and trained in advance of anticipated software license revenues. If such
revenues were to fall short of expectations, or if other factors were to
significantly affect the utilization rates of service personnel, the operating
results reported in any particular quarter are likely to be adversely affected
because a significant portion of the Company's expenses are not variable in the
short-term, and cannot be quickly reduced to respond to any unexpected revenue
shortfall.

Prior to 1998, the Company recognized revenue in accordance with the
provisions of the American Institute of Certified Public Accountants ("AICPA")
Statement of Position No. 91-1, Software Revenue Recognition ("SOP 91-1"). The
AICPA has recently adopted Statement of Position No. 97-2, Software Revenue
Recognition ("SOP 97-2"), that supersedes SOP 91-1. The Company adopted SOP 97-2
effective January 1, 1998. The adoption of SOP 97-2 did not have a significant
impact on the Company's financial statements for the three months ended March
31, 1998. However, there can be no assurance that subsequent interpretations of
this pronouncement by the Company's independent auditors or the Securities and
Exchange Commission will not modify the Company's revenue recognition policies,
or that such modifications will not

5
<PAGE> 6

have a material adverse effect on the operating results reported in any
particular quarter. There can be no assurance that the Company will not be
required to adopt changes in its software licensing or services practices to
conform to SOP 97-2, or that such changes, if adopted, will not result in delays
or cancellations of potential sales of the Company's products.

Based on all of the foregoing, the Company believes that future revenues,
expenses and operating results are likely to vary significantly from quarter to
quarter. As a result, quarter to quarter comparisons of operating results are
not necessarily meaningful or indicative of future performance. Furthermore, the
Company believes it is likely that in some future quarter the Company's
operating results may be below the expectations of public market analysts or
investors. In such event, or in the event that adverse conditions prevail, or
are perceived to prevail, with respect to the Company's business or generally,
the market price of the Common Stock would likely be materially adversely
affected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

Dependence on Retail Industry. The Company has derived substantially all
of its revenues to date from the license of software products and related
services to the retail industry, and its future growth is critically dependent
on increased sales to the retail industry. The success of the Company's
customers is intrinsically linked to economic conditions in the retail industry,
which in turn are subject to intense competitive pressures and are affected by
overall economic conditions. In addition, the Company believes the license of
its software products is relatively discretionary and generally involves a
significant commitment of capital, which is often accompanied by large-scale
hardware purchases or commitments. As a result, although the Company believes
its products can assist retailers in a competitive environment, demand for the
Company's products and services could be adversely affected by instability or
downturns in the retail industry which may cause customers to exit the industry
or delay, cancel or reduce any planned expenditures for information management
systems and software products. The Company also believes that the retail
industry is experiencing a period of increased consolidation, which has in the
past and may in the future affect the demand for the Company's products. There
can be no assurance that the Company will be able to continue its revenue growth
or sustain its profitability on a quarterly or annual basis or that its
operating results will not be adversely affected by future downturns in the
retail industry. Any resulting decline in demand for the Company's products and
services would have a material adverse effect on the Company's business,
operating results and financial condition. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business --
Industry Background" and "-- Company Strategy."

Management of Growth. The Company's business has grown rapidly in recent
years, with revenues increasing from $30.1 million in 1995 to $47.8 million in
1996 to $91.8 million in 1997. The Company's recent expansion has resulted in
substantial growth in the number of its employees, the scope of its operating
systems and the geographic distribution of its operations and customers. This
recent rapid growth has placed, and if continued will continue to place, a
significant strain on the Company's management and operations. The Company's
ability to compete effectively and to manage future growth, if any, will depend
on its ability to continue to implement and improve operational, financial and
management information systems on a timely basis, to expand, train, motivate and
manage its work force, in particular its direct sales force and consulting
services organization, and to deal effectively with third-party systems
integrators and consultants. Several of the Company's executive management
personnel have only recently joined the Company. In addition, Brent W. Lippman
has only recently assumed the role of Chief Executive Officer. The Company's
future growth and success depends in significant part upon the ability of the
Company's executive management team to effectively manage the expansion of the
Company's operations. There can be no assurance that the Company will be able to
manage its recent or any future growth, and any failure to do so would have a
material adverse effect on the Company's business, operating results and
financial condition.

The Company anticipates that continued growth, if any, will require it to
recruit and hire a substantial number of new employees, including consulting and
product development personnel, both domestically and abroad. The Company's
ability to undertake new projects and increase revenues is substantially
dependent on the availability of consulting personnel to assist in the design,
planning and implementation of the Company's solutions. Consequently, the
Company will not be able to continue to increase its business at historical
rates without adding significant numbers of trained consulting personnel.
Moreover, in the event the Company is

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unable to sufficiently increase its consulting capacity, the Company may be
required to forego licensing opportunities or become increasingly dependent on
systems integrators and professional consulting firms to provide implementation
services for its products. Therefore, in anticipation of increasing its business
the Company continues to significantly increase its consulting capacity.
However, to the extent anticipated revenues fail to materialize following the
hiring and training of new personnel, the Company's operating results would be
adversely affected. The addition of significant numbers of new personnel
requires the Company to incur significant start-up expenses, including
procurement of office space and equipment, initial training costs and low
utilization rates of new personnel. Such start-up expenses have in the past
contributed, and may in the future contribute, to significant reductions in
gross margin on consulting, maintenance and other services revenues and on
overall gross margin. There can be no assurance that start-up expenses incurred
in connection with the hiring of additional technical personnel would not result
in a material adverse impact on the Company's future operating results. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Management."

Ability to Attract and Retain Technical Personnel. The Company is heavily
dependent upon its ability to attract, retain and motivate skilled technical and
managerial personnel, especially highly skilled engineers involved in ongoing
product development and consulting personnel who assist in the design, planning
and implementation of the Company's solutions. In particular, the Company's
ability to install, maintain and enhance its products is substantially dependent
upon its ability to locate, hire, train and retain qualified software engineers.
The market for such individuals is intensely competitive, particularly in
international markets. In this regard, as part of its strategy, the Company
plans to significantly increase the number of consulting personnel in connection
with the continuing roll-out of its client/server products and to support
further development and implementation of MMS. Given the critical roles of the
Company's product development and consulting staffs, the inability to recruit
successfully or the loss of a significant part of its product development or
consulting staffs would have a material adverse effect on the Company. The
software industry is characterized by a high level of employee mobility and
aggressive recruiting of skilled personnel. There can be no assurance that the
Company will be able to retain its current personnel, or that it will be able to
attract and retain other highly qualified technical and managerial personnel in
the future. The inability to attract and retain the necessary technical and
managerial personnel could have a material adverse effect upon the Company's
business, operating results and financial condition. See
"Business -- Consulting, Maintenance and Other Services" and "-- Employees" and
"Management."

Limited Deployment of and Uncertain Market for New Software Products. The
Company's newer software products, ODBMS, Win/DSS, Retail IDEAS and WCC, which
are designed for open client/server environments, have all been commercially
released within the last 18 months. To date, only a limited number of customers
have licensed or implemented the Company's client/server products. The market
for these products is new and evolving, and the Company believes that retailers
may generally be more cautious than other businesses in adopting client/server
technologies. Consequently, it is difficult to assess or predict with any
assurance the growth rate, if any, and size of the market for the Company's
client/server products and there can be no assurance that this market will
continue to develop. Potential and existing customers may find it difficult, or
be unable, to successfully implement the Company's client/server products, or
may not purchase such products for a variety of reasons, including: the
customer's inability to obtain hardware, software, networking infrastructure, or
sufficient internal staff required to implement, operate and maintain an open
client/server solution; the generally longer time periods and greater cost
required to implement such products as compared to IBM AS/400-based products;
and limited implementation experience with such products by the Company's
service personnel or third-party implementation providers. Furthermore, the
Company must overcome significant obstacles to successfully market its
client/server solutions, including limited experience of the Company's sales and
consulting personnel in the client/server market and limited existing reference
accounts in this market. If the market for the Company's client/server products
fails to develop, develops more slowly than expected or becomes saturated with
competitors, or if the Company's products do not achieve market acceptance, the
Company's business, operating results and financial condition will be materially
adversely affected. See "Business -- Products."

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<PAGE> 8

Product Concentration. The Company has historically derived the majority
of its revenues from software licenses and consulting, maintenance and other
services related to MMS. MMS revenues are in part dependent on continued
vitality of and support by IBM of its AS/400 platform. Although the Company
expects MMS revenues to continue to represent a significant portion of total
revenues for the foreseeable future, MMS revenues as a percentage of total
revenues may continue to decline as a result of the increased revenues
attributable to the Company's newer software products, particularly ODBMS and
Win/DSS. The life cycle of the MMS product line is difficult to estimate due
largely to the potential effect of new products, applications and product
enhancements, including those introduced by the Company, changes in the retail
industry and future competition. Any decline in MMS revenues, as a result of
competition, technological change, a decline in the market for or support of the
IBM AS/400 platform, or other factors, to the extent not offset by increases in
revenues from other products, would have a material adverse effect on the
Company's business, operating results and financial condition. There can be no
assurance that prospective purchasers of the Company's IBM AS/400-based products
will respond favorably to the Company's future or enhanced software products or
that the Company will continue to be successful in selling its software products
or services in the IBM AS/400 market. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Overview" and
"Business -- Products" and "-- Consulting, Maintenance and Other Services."

International Operations. The Company's international revenues, which
include revenues from international subsidiaries and export sales, represented
48% and 51% of total revenues for the three months ended March 31, 1998 and
1997, respectively, and 55%, 43% and 39% of total revenues in fiscal 1997, 1996
and 1995, respectively. The Company expects that international revenues will
continue to account for a significant percentage of the Company's revenues for
the foreseeable future. The Company anticipates that continued growth of its
international operations will require the Company to recruit and hire a number
of new consulting, sales and marketing and support personnel in the countries in
which the Company has established or will establish offices. In addition, the
Company has only limited experience in developing localized versions of its
products and in marketing and distributing its products internationally.
International introductions of the Company's products often require significant
investment by the Company in advance of anticipated future revenues. The opening
of new offices by the Company typically results in initial recruiting and
training expenses and reduced labor efficiencies associated with the
introduction of products to a new market. There can be no assurance that the
countries in which the Company operates will have a sufficient pool of qualified
personnel from which the Company may hire, or that the Company will be
successful at hiring, training or retaining such personnel. In addition, there
can be no assurance that the Company will be able to successfully localize,
market, sell and deliver its products internationally. The inability of the
Company to successfully expand its international operations in a timely manner
could materially adversely affect the Company's business, operating results and
financial condition.

The Company's international business operations are subject to risks
inherent in international activities, including unexpected changes in regulatory
requirements, tariffs and other trade barriers, costs and risks of localizing
products for foreign countries, longer accounts receivable payment cycles in
certain countries, potentially adverse tax consequences, difficulties in
staffing and managing geographically disparate operations, greater difficulty in
safeguarding intellectual property, licensing and other trade restrictions,
currency fluctuations, repatriation of earnings, the burdens of complying with a
wide variety of foreign laws, and general economic conditions in international
markets. In addition, consulting, maintenance and other services in support of
international software licenses typically have lower gross margins than those
achieved domestically due to generally lower prevailing billing rates and/or
higher costs in certain of the Company's international markets. Accordingly, any
significant growth in the Company's international operations may result in
further declines in gross margins on consulting, maintenance and other services.
To the extent the Company's international operations expand, the Company expects
that an increasing portion of its international software license and consulting,
maintenance and other services revenues will be denominated in foreign
currencies, subjecting the Company to fluctuations in foreign currency exchange
rates. The Company does not currently engage in foreign currency hedging
transactions. However, as the Company continues to expand its international
operations, exposures to gains and losses on foreign currency transactions may
increase. The Company may choose to limit such exposure by entering into forward
foreign exchange contracts or engaging in similar hedging strategies. There can
be no assurance that any currency exchange strategy would be

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<PAGE> 9

successful in avoiding exchange-related losses. In addition, revenues of the
Company earned in various countries where the Company does business may be
subject to taxation by more than one jurisdiction, thereby adversely affecting
the Company's earnings.

The Asia/Pacific region encountered unstable local economies and
significant devaluation in its currencies during the last six months of 1997 and
continuing into 1998. The economic situation in the region has resulted in
slower payments of outstanding receivable balances and various requests for
extended or modified payment terms. To date, this region has not represented a
significant portion of the Company's revenues. However, to the extent the
Asia/Pacific region grows in importance to the Company, or the factors affecting
the region begin to adversely affect retailers in other geographic locations,
the Company's business, operating results and financial condition could be
materially adversely affected. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business -- Company
Strategy" and " -- Sales and Marketing."

Competition. The markets for retail information systems are highly
competitive. The Company believes the principal competitive factors in such
markets are product quality, reliability, performance and price, vendor and
product reputation, retail industry expertise, financial stability, features and
functions, ease of use and quality of support. A number of companies offer
competitive products addressing certain of the Company's target markets. In the
enterprise systems market, the Company competes with internally developed
systems and with third-party developers such as Intrepid Systems ("Intrepid"),
Island Pacific, Radius PLC, Retek (a subsidiary of HNC Software, Inc.), STS
Systems and Richter Management Services. In addition, the Company believes that
new market entrants may attempt to develop fully integrated enterprise level
systems targeting the retail industry. In particular, SAP AG has announced the
availability of an integrated client/server enterprise system competitive with
the Company's products. In addition, Intrepid has announced the formation of a
joint development and marketing relationship with PeopleSoft, Inc., a provider
of enterprise applications software, to develop products that are expected to
compete directly with ODBMS.

In the in-store systems market, which is more fragmented than the
enterprise systems market, the Company competes with major hardware original
equipment manufacturers such as ICL, NCR and IBM, as well as software companies
such as CRS Business Computers, Datavantage, STS Systems, Trimax and GERS Retail
Systems. In the distribution and warehouse management systems market, the
Company's WCC product competes with products from Catalyst International, Inc.,
EXE and McHugh Freeman. The Retail IDEAS product competes with products from
Microstrategy and Intrepid, among other vendors. In the market for consulting
services, the Company is pursuing a strategy of forming informal working
relationships with leading retail systems integrators such as Andersen
Consulting and Ernst & Young LLP. These integrators, as well as independent
consulting firms such as IBM Global Services Division, also represent potential
competition to the Company's consulting services group.

Many of the Company's existing competitors, as well as a number of
potential new competitors, have significantly greater financial, technical,
marketing and other resources than the Company, each of which could provide them
with a significant competitive advantage over the Company. There can be no
assurance that the Company will be able to compete successfully against its
current or future competitors or that competition would not have a material
adverse effect on the Company's business, operating results and financial
condition. See "Business -- Competition."

Risks Associated with Strategic Relationships. The Company has from time
to time established formal and informal relationships with other companies,
including IBM and Silvon, Inc., involving collaboration in areas such as product
development, marketing and distribution. The maintenance of these relationships
and the development of other such relationships is a meaningful part of the
Company's business strategy. Currently, the Company's relationship with IBM is
cooperative in that there is no written agreement defining the parties'
obligations. There can be no assurance that the Company's current informal
relationships will be beneficial to the Company, that such relationships will be
sustained, or that the Company will be able to enter into successful new
strategic relationships in the future. See "Business -- Sales and Marketing."

Lengthy Implementation Process; Fixed-Price Service Contracts. The
Company's software products are complex and perform or directly affect
business-critical functions across many different functional and geographic
areas of the enterprise. Consequently, implementation of the Company's software
is a complex,

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<PAGE> 10

lengthy process that involves a significant commitment of resources by the
Company's customers and that is subject to a number of significant risks over
which the Company has little or no control. The Company believes that the
implementation of the client/server versions of its products is more complex and
requires more time than the implementation of its DOS-based and IBM AS/400-based
products. In addition, the Company's lack of experience in implementing its
client/server-based products may contribute to the length of the implementation
process. Delays in the completion of implementations of any of its software
products, whether by the Company or its business partners, may result in
customer dissatisfaction or damage to the Company's reputation and could have a
material adverse effect on the Company's business, operating results and
financial condition.

The Company offers a combination of software products, implementation and
support services to its customers. Typically, the Company enters into service
agreements with its customers that provide for consulting and implementation
services on a "time and expenses" basis. Certain customers have asked for, and
the Company has from time to time entered into, fixed-price service contracts.
These contracts specify certain milestones to be met by the Company regardless
of actual costs incurred by the Company in fulfilling those obligations. The
Company believes that fixed-price service contracts may increasingly be offered
by its competitors to differentiate their product and service offerings. As
result, the Company may enter into more fixed-price contracts in the future.
There can be no assurance that the Company can successfully complete these
contracts on budget, and the Company's inability to do so could have a material
adverse effect on its business, operating results and financial condition. See
"Business -- Consulting, Maintenance and Other Services."

Technological Change and Market Acceptance of Evolving Standards. The
computer software industry is subject to rapid technological change, changing
customer requirements, frequent new product introductions and evolving industry
standards that may render existing products and services obsolete. As a result,
the Company's position in its existing markets, or other markets that it may
enter, could be eroded rapidly by technological advancements not embraced by the
Company. The life cycles of the Company's products are difficult to estimate.
The products must keep pace with technological developments, conform to evolving
industry standards and address increasingly sophisticated customer needs. In
particular, the Company believes that it must continue to respond quickly to
users' needs for broad functionality and multi-platform support and to advances
in hardware and operating systems. Introduction of new products embodying new
technologies and the emergence of new industry standards could render the
Company's products obsolete and unmarketable. There can be no assurance that the
Company will not experience future difficulties that could delay or prevent the
successful development, introduction and marketing of new products, or that new
products and product enhancements will meet the requirements of the marketplace
and achieve market acceptance. If the Company is unable to develop and introduce
products in a timely manner in response to changing market conditions or
customer requirements, the Company's business, operating results and financial
condition would be materially adversely affected. See "Business -- Product
Development and JDA Technology."

Dependence on Proprietary Technology. The Company's success and ability to
compete is dependent in part upon its proprietary technology, including its
software source code. To protect its proprietary technology, the Company relies
on a combination of trade secret, nondisclosure and copyright law, which may
afford only limited protection. In addition, effective copyright and trade
secret protection may be unavailable or limited in certain foreign countries.
The Company presently has no patents or patent applications pending. The source
code for the Company's proprietary software is protected both as a trade secret
and as a copyrighted work. Although the Company relies on the limited protection
afforded by such intellectual property laws, it also believes that factors such
as the technological and creative skills of its personnel, new product
developments, frequent product enhancements, name recognition and reliable
maintenance are also essential to establishing and maintaining a technology
leadership position. The Company generally enters into confidentiality or
license agreements with its employees, consultants and customers, and generally
controls access to and distribution of its software, documentation and other
proprietary information. The terms of the Company's license agreements with its
customers often require the Company to provide the customer with a listing of
the product source code. Although the license agreements place restrictions on
the use by the customer of the Company's source code and do not permit the
re-sale, sublicense or other transfer of such source code, there can be no
assurance that unauthorized use of the Company's technology will not occur.

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<PAGE> 11

Despite the measures taken by the Company to protect its proprietary
rights, unauthorized parties may attempt to reverse engineer or copy aspects of
the Company's products or to obtain and use information that the Company regards
as proprietary. Policing unauthorized use of the Company's products is
difficult. In addition, litigation may be necessary in the future to enforce the
Company's intellectual property rights, to protect the Company's trade secrets,
to determine the validity and scope of the proprietary rights of others, or to
defend against claims of infringement or invalidity. Such litigation could
result in substantial costs and diversion of resources and could have a material
adverse effect on the Company's business, operating results and financial
condition.

Certain technology used by the Company's products is licensed from third
parties, generally on a non-exclusive basis. These licenses generally require
the Company to pay royalties and fulfill confidentiality obligations. The
Company believes that alternative resources exist for each of the material
components of technology licensed by the Company from third parties. However,
the termination of any such licenses, or the failure of the third-party
licensors to adequately maintain or update their products, could result in
delays in the Company's ability to sell certain of its products while it seeks
to implement technology offered by alternative sources. Any required replacement
licenses could prove costly. Also, any such delay, to the extent it becomes
extended or occurs at or near the end of a fiscal quarter, could result in a
material adverse effect on the Company's operating results. While it may be
necessary or desirable in the future to obtain other licenses relating to one or
more of the Company's products or relating to current or future technologies,
there can be no assurance that the Company will be able to do so on commercially
reasonable terms, if at all.

In the future, the Company may receive notices claiming that it is
infringing the proprietary rights of third parties, and there can be no
assurance that the Company will not become the subject of infringement claims or
legal proceedings by third parties with respect to current or future products.
In addition, the Company may initiate claims or litigation against third parties
for infringement of the Company's proprietary rights or to establish the
validity of the Company's proprietary rights. Any such claim could be time
consuming, result in costly litigation, cause product shipment delays or force
the Company to enter into royalty or license agreements rather than dispute the
merits of such claims. Moreover, an adverse outcome in litigation or similar
adversarial proceedings could subject the Company to significant liabilities to
third parties, require the expenditure of significant resources to develop
non-infringing technology, require disputed rights to be licensed from others or
require the Company to cease the marketing or use of certain products, any of
which could have a material adverse effect on the Company's business, operating
results and financial condition. To the extent the Company desires or is
required to obtain licenses to patents or proprietary rights of others, there
can be no assurance that any such licenses will be made available on terms
acceptable to the Company, if at all. As the number of software products in the
industry increases and the functionality of these products further overlaps, the
Company believes that software developers may become increasingly subject to
infringement claims. Any such claims against the Company, with or without merit,
as well as claims initiated by the Company against third parties, could be time
consuming and expensive to defend, prosecute or resolve. See
"Business -- Proprietary Rights."

Product Defects; Product Liability; Risk of Integration Difficulties. The
Company's software products are highly complex and sophisticated and could, from
time to time, contain design defects or software errors that could be difficult
to detect and correct. In addition, implementation of the Company's products
generally involves a significant amount of customer-specific customization, and
may involve integration with systems developed by third parties. In particular,
it is common for complex software programs, such as the Company's newer,
client/server software products, to contain undetected errors when first
released which are discovered only after the product has been implemented and
used over time with different computer systems and in a variety of applications
and environments. Despite extensive testing, the Company from time to time has
discovered defects or errors in its products or custom modifications only after
its systems have been used by many customers. In addition, the Company or its
customers may from time to time experience difficulties integrating the
Company's products with other hardware or software in the customer's environment
that are unrelated to defects in the Company's products. There can be no
assurance that errors in the Company's software products will not be discovered
or, if discovered, that they will be successfully corrected on a timely basis,
if at all. Further, there can be no assurance that such defects, errors or
difficulties will not cause future delays in product introductions and
shipments, result in increased costs and diversion of development

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<PAGE> 12

resources, require design modifications or impair customer satisfaction with the
Company's products. The Company's future business growth is substantially
dependent on the continued development of market acceptance of its newer,
client/server products. If customers experience significant problems with
implementation of the Company's client/server products or are otherwise
dissatisfied with the functionality or performance of such products, or if such
products fail to achieve market acceptance for any reason, the Company's
business, operating results and financial condition would be materially
adversely affected.

Since the Company's products may be used by its customers to perform
mission-critical functions, design defects, software errors, misuse of the
Company's products, incorrect data from external sources or other potential
problems within or out of the Company's control that may arise from the use of
the Company's products could result in financial or other damages to the
Company's customers. Prior to 1997, the Company did not maintain product
liability insurance. Although the Company's license agreements with its
customers typically contain provisions designed to limit the Company's exposure
to potential claims as well as any liabilities arising from such claims, such
provisions may not effectively protect the Company against such claims and the
liability and costs associated therewith. Accordingly, any such claim could have
a material adverse effect on the Company's business, operating results and
financial condition. See "Business -- Products" and "-- Product Development and
JDA Technology."

Year 2000 Compliance. Many currently installed computer systems are not
capable of distinguishing 21st century dates from 20th century dates. As a
result, in less than two years, computer systems and/or software used by many
companies in a very wide variety of applications will experience operating
difficulties unless they are modified or upgraded to adequately process
information involving, related to or dependent upon the century change.
Significant uncertainty exists in the software and other industries concerning
the scope and magnitude of problems associated with the century change. The
Company recognizes the need to ensure its operations will not be adversely
impacted by Year 2000 software failures and has established a project team to
assess Year 2000 risks. The project team will coordinate the identification and
implementation of changes to computer hardware and software applications that
will ensure availability and integrity of the Company's financial systems and
the reliability of its operational systems. The Company is also assessing the
potential overall impact of the impending century change on the Company's
business, operating results and financial condition.

Based on the Company's assessment to date, the Company believes its current
versions of its software products and services are "Year 2000 compliant," that
is, they are capable of adequately distinguishing 21st century dates from 20th
century dates. However, the Company believes some of the Company's customers are
running earlier versions of the Company's software products that are not Year
2000 compliant, and the Company has been encouraging such customers to migrate
to current product versions. Moreover, the Company's products are generally
integrated into enterprise systems involving complicated software products
developed by other vendors. The Company may in the future be subject to claims
based on Year 2000 problems in others' products, custom modifications made by
third parties to the Company's products, or issues arising from the integration
of multiple products within an overall system. Although the Company has not been
a party to any litigation or arbitration proceeding to date involving its
products or services and related to Year 2000 compliance issues, there can be no
assurance that the Company will not in the future be required to defend its
products or services in such proceedings, or to negotiate resolutions of claims
based on Year 2000 issues. The costs of defending and resolving Year
2000-related disputes, and any liability of the Company for Year 2000-related
damages, including consequential damages, could have a material adverse effect
on the Company's business, operating results and financial condition.

The Company is currently reviewing its internal management information and
other systems in order to identify and modify those products, services or
systems that are not Year 2000 compliant. The total cost of these Year 2000
compliance activities has not been, and is not anticipated to be, material to
the Company's financial condition or its operating results. These costs and the
timing in which the Company plans to complete its Year 2000 modification and
testing processes are based on management's best estimates. However, there can
be no assurance that the Company will timely identify and remediate all
significant Year 2000 problems, that remedial efforts will not involve
significant time and expense, or that such problems will not have a material
adverse effect on the Company's business, operating results and financial
condition.

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<PAGE> 13

The Company also faces risk to the extent that suppliers of products,
services and systems purchased by the Company and others with whom the Company
transacts business on a worldwide basis do not comply with Year 2000
requirements. In the event any such third parties cannot timely provide the
Company with products, services or systems that meet the Year 2000 requirements
on a timely basis, or in the event Year 2000 issues prevent such third parties
from timely delivery of products or services required by the Company, the
Company's operating results could be materially adversely affected. Also, no
assurance can be given that Year 2000 problems within the Company's prospective
customer base of retail organizations will not result in the deferral or
cancellation of such organizations' decisions to license and implement
information systems such as those offered by the Company. To the extent Year
2000 issues cause significant delays in, or cancellation of, decisions to
purchase the Company's products or services, the Company's business, operating
results and financial condition would be materially adversely affected.

Dependence on Key Personnel. The Company's performance is substantially
dependent on the continued performance of its executive officers and other key
employees, particularly the performance and services of Brent W. Lippman, the
Company's Chief Executive Officer. The Company does not have in place "key
person" life insurance policies on any of its employees. The loss of the
services of Mr. Lippman or other key executive officers or employees could have
a material adverse effect on the business, operating results and financial
condition of the Company. See "Management."

Volatility of Market Price. The market price of the Common Stock has
experienced large fluctuations which may be expected to continue. Future
announcements concerning the Company or its competitors, quarterly variations in
operating results, accounts receivable balances or aging, announcements of
technological innovations, the introduction of new products or changes in
product pricing policies by the Company or its competitors, proprietary rights
or other litigation, changes in earnings estimates by analysts or other factors
could cause the market price of the Common Stock to fluctuate substantially. In
addition, stock prices for many technology companies have fluctuated widely for
reasons which have often been unrelated to the operating results of such
companies. These fluctuations, as well as general economic, market and political
conditions such as recessions or military conflicts, may materially and
adversely affect the market price of the Common Stock. See "Price Range of
Common Stock."

Acquisition Strategy. It is expected that the Company will grow internally
and through strategic acquisitions in order, among other things, to expand the
breadth and depth of its product suite and to build its professional services
organization. The Company continually evaluates potential acquisitions of
complementary businesses, products and technologies, including those which could
be material in size and scope. Acquisition opportunities considered to date
include private companies, public companies and divisions and product lines of
companies with annual revenues that range from several million dollars to
revenues comparable to those of the Company. Although there are no current
commitments or agreements regarding any acquisition, the Company has taken a
number of actions with acquisition candidates in pursuit of various acquisition
opportunities, including: engaged in preliminary discussions; exchanged
nonpublic information; provided verbal and written expressions of interest;
reviewed technological feasability; and made preliminary proposals regarding
potential transaction structures and prices.

Acquisitions involve a number of special risks, including diversion of
management's attention to the assimilation of the operations and personnel of
acquired businesses, and the integration of acquired businesses, products and
technologies into the Company's business and product offerings. Achieving the
anticipated benefits of any acquisition will depend, in part, upon whether the
integration of the acquired business, products or technology is accomplished in
an efficient and effective manner, and there can be no assurance that this will
occur. The difficulties of such integration may be increased by the necessity of
coordinating geographically disparate organizations, the complexity of the
technologies being integrated, and the necessity of integrating personnel with
disparate business backgrounds and combining different corporate cultures. The
inability of management to successfully integrate any acquisition the Company
may pursue, and any related diversion of management's attention, could have a
material adverse effect on the business, operating results and financial
condition of the Company. Moreover, there can be no assurance that any products
acquired will gain acceptance in the Company's markets, or that the Company will
obtain the anticipated or desired benefits of such acquisitions. Any acquisition
pursued or consummated by the Company could result in potentially dilutive
issuances of equity securities, the incurrence by the Company of debt and
contingent liabilities,
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<PAGE> 14

amortization of goodwill and other intangibles, purchased research and
development expense, other acquisition-related expenses and the loss of key
employees, any of which items could have a material adverse effect on the
Company's business, operating results and financial condition.

A relatively large acquisition by the Company could result in the use of a
significant portion of the Company's available cash, including a significant
portion of the net proceeds of this offering. Although the Company is in
negotiation for a credit facility which may include up to $35 million in funds
which may be used for acquisitions by the Company, there can be no assurance
that such financing will be available on acceptable terms, if at all. If the
Company acquires businesses, technologies or products in the near future, it may
use advances under such a credit facility, use proceeds from this offering,
issue equity securities or a combination of the foregoing in order to pay for
any such acquisitions.

Although the Company anticipates that one or more acquisitions, including
material acquisitions, may become available in the near future, the Company is
unable to predict with any reasonable degree of certainty the likelihood of any
such acquisition being completed. Consequently, no assurance can be given that
any acquisition by the Company will occur, or that any completed acquisition
will not materially and adversely affect the Company's business, operating
results or financial condition. See "Business -- Company Strategy."

Potential Effect of Shares Eligible for Future Sale. Sales of a
substantial number of shares of Common Stock in the public market following this
offering could adversely affect the market price of the Common Stock. Upon
completion of this offering, the Company will have outstanding 15,318,781 shares
of Common Stock (15,618,781 shares if the Underwriters' over-allotment option is
exercised in full), assuming no exercise of outstanding options or other
issuances under employee stock plans following March 31, 1998. Each of the
Company and its directors and executive officers, who beneficially owned an
aggregate of 1,889,704 shares of Common Stock as of March 31, 1998, has agreed
that, without the prior written consent of Morgan Stanley & Co. Incorporated on
behalf of the Underwriters, it will not, during the period ending 90 days after
the date of this Prospectus, subject to certain exceptions, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, lend
or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock or (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of ownership
of the Common Stock, whether any such transaction described in (i) or (ii) above
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise. Following the expirations of such lock-up agreements, all of such
shares will be eligible for immediate sale in the public market, subject in some
cases to compliance with the volume and manner of sale requirements of Rule 144
under the Securities Act of 1933 (the "Securities Act").

Anti-Takeover Provisions in Charter Documents and Delaware Law. The
Company is subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law, which prohibit the Company from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an interested
stockholder, unless the business combination is approved in a prescribed manner.
Further, the Company's Board of Directors has the authority to issue up to
2,000,000 shares of the Company's preferred stock and to fix the rights,
preferences, privileges and restrictions of those shares, including voting
rights, without any further vote or action by the stockholders. The rights of
the holders of the Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of the Company's preferred stock that may
be issued in the future. The ability of the Board of Directors to issue shares
of the Company's preferred stock without further stockholder approval, as well
as certain other provisions of the Company's Certificate of Incorporation and
Bylaws and of Delaware law, could have the effect of delaying, deferring or
preventing a change in control of the Company.

Broad Discretion over Use of Proceeds. Because the net proceeds to the
Company of this offering are allocated to general corporate purposes, including
product development, working capital and potential acquisitions, the Company's
management will have broad discretion over the application of these funds. There
can be no assurance that management will make such application effectively or in
a manner that will not result in a material adverse effect on the Company's
business, operating results and financial condition. See "-- Acquisition
Strategy" and "Use of Proceeds."

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FORWARD-LOOKING STATEMENTS

Certain statements contained in this Prospectus that are not historical
facts, including, but not limited to, statements found in "Prospectus Summary,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business," are "forward-looking statements," as that term is
defined in Section 27A of the Securities Act and Section 21E of the Exchange
Act, that involve a number of risks and uncertainties. Such forward looking
statements may concern growth and future operating results, capital
expenditures, potential acquisitions, new products and product enhancements,
research and development activities and expenditures, the hiring of additional
personnel, strategic relationships with third parties, liquidity and the
Company's strategy. Such forward-looking statements are generally accompanied by
words such as "plan," "estimate," "expect," "believe," "should," "would,"
"could," "anticipate" or other words that convey uncertainty of future events or
outcomes. Such forward-looking statements are based upon management's current
plans, expectations, estimates and assumptions and are subject to a number of
risks and uncertainties that could significantly affect current plans,
anticipated actions, the timing of such actions and the Company's business,
operating results and financial condition. As a consequence, actual results may
differ materially from expectations, estimates or assumptions expressed in or
implied by any forward-looking statements made by or on behalf of the Company.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,000,000 shares of
Common Stock offered by the Company hereby are estimated to be approximately
$86.7 million ($99.8 million if the Underwriters' over-allotment option is
exercised in full) after deducting underwriting discounts and commissions and
estimated offering expenses payable by the Company.

The Company intends to use the net proceeds of this offering primarily for
general corporate purposes including product development, working capital and
potential acquisitions. Pending such uses, the proceeds will be invested in
short-term, investment-grade, interest-bearing securities. Although there are no
current commitments or agreements regarding any potential acquisition, the
Company may from time to time acquire businesses, technologies and products that
management believes are complementary to the Company's business, technologies
and products. Consequently, some or all of the net proceeds of this offering may
be used to acquire such businesses, technologies and products. For a summary of
certain risks associated with any such use of proceeds, see "Risk
Factors -- Acquisition Strategy."

DIVIDEND POLICY

The Company anticipates that all earnings subsequent to this offering, if
any, will be retained to finance the growth and development of the business and,
therefore, the Company does not anticipate paying cash dividends on its Common
Stock in the foreseeable future. Future dividends, if any, will be determined by
the Company's Board of Directors. Prior to the Company's reorganization on March
30, 1995, certain of its predecessor companies paid dividends to their S
Corporation stockholders.

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PRICE RANGE OF COMMON STOCK

The Common Stock has been quoted on the Nasdaq National Market under the
symbol "JDAS" since the Company's initial public offering on March 15, 1996. The
following table sets forth, for the periods indicated, the high and low sale
prices per share of the Common Stock as reported on the Nasdaq National Market.

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Calendar 1996
First Quarter (from March 15, 1996)....................... $13 1/4 $11 1/4
Second Quarter............................................ 26 11 7/8
Third Quarter............................................. 29 14 1/4
Fourth Quarter............................................ 39 3/8 26 1/2
Calendar 1997
First Quarter............................................. $30 3/8 $19
Second Quarter............................................ 34 5/8 17 1/4
Third Quarter............................................. 38 3/4 28 3/4
Fourth Quarter............................................ 45 7/8 27 1/2
Calendar 1998
First Quarter............................................. $55 $27 1/4
Second Quarter (through May 6, 1998)...................... 59 1/8 46
</TABLE>

On May 6, 1998, the last reported sale price of the Common Stock on the
Nasdaq National Market was $46 1/8 per share. There were approximately 100
holders of record and approximately 3,300 beneficial holders of the Common Stock
on April 24, 1998.

16
<PAGE> 17

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
March 31, 1998, and as adjusted to give effect to the sale of 2,000,000 shares
of Common Stock offered by the Company hereby (after deducting underwriting
discounts and commissions and estimated offering expenses payable by the
Company) and the application of the net proceeds therefrom. See "Use of
Proceeds." The table should be read in conjunction with the Company's
consolidated financial statements and related notes and the other information
included or incorporated by reference in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1998
----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Stockholders' equity:
Common Stock, $.01 par value per share; 18,000,000 shares
authorized; 13,318,781 outstanding and 15,318,781
shares outstanding, as adjusted(1)..................... $ 133 $ 153
Preferred Stock, $.01 par value per share; 2,000,000
shares authorized;
none issued............................................ -- --
Additional paid-in capital................................ 71,930 158,630
Retained earnings......................................... 5,601 5,601
Accumulated other comprehensive income (loss)............. (100) (100)
------- --------
Total stockholders' equity........................ 77,564 164,284
------- --------
Total capitalization......................... $77,564 $164,284
======= ========
</TABLE>

17
<PAGE> 18

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the Company's consolidated financial statements and
related notes and the other information included or incorporated by reference in
this Prospectus. The "Consolidated Statement of Income Data" and "Consolidated
Balance Sheet Data" as of and for each of the years in the five-year period
ended December 31, 1997 are derived from audited consolidated financial
statements of JDA Software Group, Inc. The "Statement of Income Data" for each
of the three-month periods ended March 31, 1998 and 1997 and the "Balance Sheet
Data" as of March 31, 1998 have been derived from unaudited interim consolidated
financial statements. The unaudited interim consolidated financial statements
reflect all adjustments (consisting only of normal recurring entries) which, in
the opinion of the Company's management, are necessary for a fair presentation
of the results for the interim periods presented.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
----------------- -----------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME DATA:
Revenues:
Software licenses................................ $12,049 $ 7,866 $42,041 $24,296 $15,253 $12,221 $ 9,620
Consulting, maintenance and other services....... 18,844 8,978 49,730 23,544 14,831 11,608 10,701
------- ------- ------- ------- ------- ------- -------
Total revenues............................... 30,893 16,844 91,771 47,840 30,084 23,829 20,321
------- ------- ------- ------- ------- ------- -------
Cost of revenues:
Software licenses................................ 505 200 1,145 438 159 57 305
Consulting, maintenance and other services....... 13,844 6,704 37,727 16,416 9,781 6,870 6,780
------- ------- ------- ------- ------- ------- -------
Total cost of revenues....................... 14,349 6,904 38,872 16,854 9,940 6,927 7,085
------- ------- ------- ------- ------- ------- -------
Gross profit....................................... 16,544 9,940 52,899 30,986 20,144 16,902 13,236
------- ------- ------- ------- ------- ------- -------
Operating expenses:
Product development.............................. 4,279 2,235 11,364 6,478 3,512 1,923 1,345
Sales and marketing.............................. 3,896 2,517 12,633 7,242 5,199 3,228 2,404
General and administrative....................... 3,123 1,689 9,532 4,989 3,929 2,529 2,466
Tax related compensation to S Corporation
Stockholders(1)................................ -- -- -- -- 7,422
------- ------- ------- ------- ------- ------- -------
Total operating expenses..................... 11,298 6,441 33,529 18,709 12,640 7,680 13,637
------- ------- ------- ------- ------- ------- -------
Income (loss) from operations...................... 5,246 3,499 19,370 12,277 7,504 9,222 (401)
Other income (expense) -- net.................... 329 356 1,407 519 (434) (221) (172)
------- ------- ------- ------- ------- ------- -------
Income (loss) before income taxes.................. 5,575 3,855 20,777 12,796 7,070 9,001 (573)
Provision for income taxes(1).................... 2,091 1,542 8,311 5,116 2,669 3,437 (4,886)
------- ------- ------- ------- ------- ------- -------
Net income(1)...................................... $ 3,484 $ 2,313 $12,466 $ 7,680 $ 4,401 $ 5,564 $ 4,313
======= ======= ======= ======= ======= ======= =======
Basic and diluted earnings per share............... $ .26 $ .18 $ .95 $ .64 $ .42 $ .49 $ .38
======= ======= ======= ======= ======= ======= =======
Shares used to compute basic earnings per
share(2)......................................... 13,236 13,007 13,078 12,010 10,952 11,250 11,250
Shares used to compute diluted earnings per
share(2)......................................... 13,579 13,168 13,109 12,010 10,952 11,250 11,250
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, -----------------------------------------------
1998 1997 1996 1995 1994 1993
--------- ------- ------- -------- ------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................. $31,897 $27,304 $30,986 $ 498 $ 2,913 $ 216
Working capital........................................... 55,333 48,384 39,832 607 7,232 2,088
Total Assets.............................................. 92,150 83,202 59,056 27,795 11,557 6,854
Long-term liabilities..................................... 269 267 620 309 2,607 2,513
Redeemable convertible preferred stock.................... -- -- -- 15,000 -- --
Stockholders' equity (deficit)............................ 77,564 67,910 48,661 (12,292) 6,228 864
</TABLE>

- ------------
(1) Prior to March 30, 1995, certain of JDA's commonly-held predecessor
companies elected S Corporation status. The results for 1995, 1994 and 1993
include a pro forma provision for U.S. federal income taxes at statutory
rates and, for 1993, exclude tax-related compensation. Without such pro
forma provision, net income for 1995 was $5,573. In addition, in 1993 these
same companies charged to expense compensation paid to their founding
stockholders in lieu of S Corporation dividends, in order to reduce state
income tax liability.

(2) The results for 1995, 1994 and 1993 include common and equivalent shares
outstanding subsequent to the Company's reorganization on March 30, 1995.

18
<PAGE> 19

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

JDA Software Group, Inc. ("JDA" or the "Company") is a leading
international provider of integrated enterprise-wide software products and
services that address mission-critical management information needs of the
retail supply chain. The Company's products include: merchandising, financial
and decision support systems at the corporate level; point-of-sale, back office
and distributed processing applications at the store level; and warehouse
management and logistics systems at the distribution level. JDA also offers a
wide range of professional services through its consulting and customer support
organizations, including project management, system planning, design and
implementation, custom modifications, training and support services.

In 1986, the Company introduced MMS, its first enterprise retail
information solution, based on the IBM AS/400 platform. The Company's
development efforts through 1993 were focused exclusively on enhancements,
revisions and upgrades to MMS, which is currently in its fourth generation
release. In 1994, the Company acquired DSS, an in-store system, from JDA
Software Services Ltd. ("JDA Canada"), a then unaffiliated Canadian company.
Since 1994, the Company has significantly increased its product development
expenditures to develop products for open platforms. As a result of these
efforts, the Company commercially released ODBMS, an open client/server
enterprise system, in September 1996, and Win/DSS, a Windows-based in-store
system, in January 1997. The Company also released Retail IDEAS, a data
warehouse system, in January 1997 and acquired WCC, a client/server warehouse
automation and management system, in connection with the acquisition of LIOCS
Corporation ("LIOCS") in April 1997.

JDA has historically derived the majority of its revenues from software
licenses and consulting, maintenance and other services relating to MMS. Total
revenues from the MMS product line represented 50% of the Company's total
revenues during the three months ended March 31, 1998 as compared with 56%, 80%
and 91% in fiscal years 1997, 1996 and 1995, respectively. Although the Company
expects MMS revenues to continue to represent a significant portion of total
revenues for the foreseeable future, MMS revenues as a percentage of total
revenues may continue to decline as a result of the increased revenues
attributable to the Company's newer product lines, particularly ODBMS and
Win/DSS.

Software license revenues and consulting, maintenance and other services
revenues represented 39% and 61%, respectively, of JDA's total revenues during
the three months ended March 31, 1998, as compared with 46% and 54%,
respectively in fiscal year 1997, and 51% and 49%, respectively, in fiscal years
1996 and 1995. Consulting, maintenance and other services revenues are derived
from a range of services, including system design and implementation and, to a
lesser extent, software maintenance and support, and training. During the past
two years, the Company has accelerated the growth of its services organization
in anticipation of an increased mix of consulting, maintenance and other
services revenues in both domestic and international markets, and continued
market acceptance of its newer client/server product lines, which require longer
implementation cycles. The Company believes its ability to offer a wide range of
professional services provides it with a competitive advantage as well as
additional revenue streams. Consulting, maintenance and other services revenues
are generally more predictable and generate significantly lower gross margins
than software revenues. In addition, consulting, maintenance and other services
costs tend to be higher during periods of rapid expansion, particularly with the
opening of new international offices where initial recruiting costs, training
and other start-up expenses must be incurred in advance of anticipated revenues,
and as a result of the reduced labor efficiencies associated with the
introduction of products to a new customer base.

The Company has pursued a strategy of addressing international markets by
developing localized versions of its products and establishing international
subsidiaries with direct sales and consulting capabilities. International
revenues, which include revenues from international subsidiaries and export
sales, represented 48% of total revenues for the three months ended March 31,
1998, and 55%, 43% and 39% of total revenues in fiscal years 1997, 1996 and
1995, respectively. Consulting, maintenance and other services in support of
international software licenses typically have lower gross margins than those
achieved domestically due to

19
<PAGE> 20

generally lower prevailing billing rates and/or higher costs in certain of the
Company's international markets. Therefore, significant growth in the Company's
international operations may result in further declines in gross margins on
consulting, maintenance and other services.

The Asia/Pacific region encountered unstable local economies and
significant devaluation in its currencies during the last six months of 1997 and
continuing into 1998. The economic situation in the region has resulted in
slower payment of outstanding receivable balances and various requests for
extended or modified payment terms. This region represented 4% of the Company's
revenues for the three months ended March 31, 1998 and less than 10% of the
Company's revenues and less than 2% of income from operations in fiscal year
1997. Asia/Pacific receivables, net of reserves, were approximately 9% of the
Company's total net receivables as of March 31, 1998. To the extent the
Asia/Pacific region grows in importance to the Company, or that the factors
affecting the region begin to adversely affect retailers in other geographic
locations, the Company's business, operating results and financial condition
could be adversely affected.

To the extent the Company's international operations expand, the Company
expects that an increasing portion of its international software license and
consulting, maintenance and other services revenues will be denominated in
foreign currencies, subjecting the Company to fluctuations in foreign currency
exchange rates. Historically, the Company's operations have not been materially
adversely affected by fluctuations in foreign currency exchange rates, and the
Company has not engaged in foreign currency hedging transactions. However, as
the Company continues to expand its international operations, exposures to gains
and losses on foreign currency transactions may increase. The Company may choose
to limit such exposure by entering into forward foreign exchange contracts or
engaging in similar hedging strategies. There can be no assurance that any
currency exchange strategy would be successful in avoiding exchange-related
losses. In addition, revenues of the Company earned in various countries where
the Company does business may be subject to taxation by more than one
jurisdiction, thereby adversely affecting the Company's earnings.

Prior to 1998, the Company recognized revenue in accordance with the
provisions of the American Institute of Certified Public Accountants ("AICPA")
Statement of Position No. 91-1, Software Revenue Recognition ("SOP 91-1"). Under
SOP 91-1, software license revenue is recognized upon the shipment of the
product if collection is probable and the Company's remaining obligations under
the license agreement are insignificant. Consulting services are generally
billed on an hourly basis and revenues are recognized as the work is performed.
Maintenance revenues from ongoing customer support are billed on a monthly basis
and recorded as revenue in the applicable month. The AICPA has recently adopted
Statement of Position No. 97-2, Software Revenue Recognition ("SOP 97-2"), that
supersedes SOP 91-1. The Company adopted SOP 97-2 effective January 1, 1998. The
adoption of SOP 97-2 did not have a significant impact on the Company's
financial statements for the three months ended March 31, 1998. However, there
can be no assurance that subsequent interpretations of this pronouncement by the
Company's independent auditors or the Securities and Exchange Commission will
not modify the Company's revenue recognition policies, or that such
modifications will not have a material adverse effect on the operating results
reported in any particular quarter. There can be no assurance that the Company
will not be required to adopt changes in its software licensing or services
practices to conform to SOP 97-2, or that such changes will not result in delays
or cancellations of potential sales of the Company's products.

20
<PAGE> 21

RESULTS OF OPERATIONS

The following table sets forth certain selected financial information
expressed as a percentage of total revenues for the periods indicated and
certain gross margin data expressed as a percentage of software license or
consulting, maintenance and other services revenues, as appropriate:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
------------ --------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues:
Software licenses............................... 39% 47% 46% 51% 51%
Consulting, maintenance and other services...... 61 53 54 49 49
--- --- --- --- ---
Total revenues.......................... 100 100 100 100 100
--- --- --- --- ---
Cost of revenues:
Software licenses............................... 1 1 1 1 1
Consulting, maintenance and other services...... 45 40 41 34 32
--- --- --- --- ---
Total cost of revenues.................. 46 41 42 35 33
--- --- --- --- ---
Gross profit...................................... 54 59 58 65 67
--- --- --- --- ---
Operating expenses:
Product development............................. 14 13 12 14 12
Sales and marketing............................. 13 15 14 15 17
General and administrative...................... 10 10 11 10 13
--- --- --- --- ---
Total operating expenses................ 37 38 37 39 42
--- --- --- --- ---
Income from operations............................ 17 21 21 26 25
Other income (expense) -- net................... 1 2 2 1 (1)
--- --- --- --- ---
Income before income taxes........................ 18 23 23 27 24
Provision for income taxes(1)................... 7 9 9 11 9
--- --- --- --- ---
Net income(1)..................................... 11% 14% 14% 16% 15%
=== === === === ===
Gross margin on software licenses................. 96% 97% 97% 98% 99%
Gross margin on consulting, maintenance and other
services........................................ 27% 25% 24% 30% 34%
</TABLE>

- ---------------

(1) The results for 1995 include a pro forma provision for U.S. federal income
taxes at statutory rates.

THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997

REVENUES

Total revenues for the three months ended March 31, 1998 were $30.9
million, an increase of 83% over the $16.8 million reported in the comparable
prior year period. Revenues consist of software licenses and consulting,
maintenance and other services, which represented 39% and 61%, respectively, of
total revenues during the three months ended March 31, 1998, and 47% and 53%,
respectively in the comparable prior year period.

Software Licenses. Software license revenues for the three months ended
March 31, 1998 were $12.0 million, an increase of 53% over the $7.9 million
reported in the comparable prior year period. Domestic and international
software license revenues increased 106% and 12%, respectively, between the
comparable periods. These increases resulted primarily from the Company's
worldwide expansion of its sales and marketing staff, an increase in domestic
sales of the MMS product line between such periods, and incremental sales of
ODBMS and Retail IDEAS over the comparable prior year period.

Consulting, Maintenance and Other Services. Consulting, maintenance and
other services revenues for the three months ended March 31, 1998 were $18.8
million, an increase of 110% over the $9.0 million reported in the comparable
prior year period. This increase resulted from increased software license sales
and the introduction of client/server products that require longer
implementation cycles. Although domestic

21
<PAGE> 22

consulting, maintenance and other services revenues increased 88% between the
comparable periods, nearly 60% of total revenue growth occurred in the Company's
international markets where the comparative increase was 135%.

COST OF REVENUES

Cost of software licenses was $505,000 for the three months ended March 31,
1998 and $200,000 in the comparable prior year period. Cost of software licenses
represented 4% and 3% of software license revenues in the respective periods.
The increase between such periods reflects the higher costs associated with
ODBMS and Retail IDEAS that incorporate software technology licensed from third
party suppliers. Consulting, maintenance and other services costs for the three
months ended March 31, 1998 were $13.8 million, an increase of 107% over the
$6.7 million reported in the comparable prior year period. The Company has
expanded its consulting and customer support organizations as a result of, and
in anticipation of continued, increased sales of new software licenses and
increased demand from the existing client base for additional support and
professional services. The Company increased the number of personnel in its
consulting, maintenance and other services organization by 90% between the
comparable periods, and as of March 31, 1998 the Company had approximately 500
employees involved in these functions. The Company anticipates that the dollar
amount of consulting, maintenance and other services will continue to increase
as the Company expands its operations.

GROSS PROFIT

Gross profit for the three months ended March 31, 1998 was $16.5 million,
an increase of 66% over the $9.9 million reported in the comparable prior year
period. Gross profit as a percentage of total revenues decreased from 59% in the
three months ended March 31, 1997 to 54% in the comparable current year period.
This decrease was primarily attributable to an increase in consulting,
maintenance and other services revenues as a percentage of total revenues from
53% to 61% between the comparable periods. The Company did, however, increase
gross margin on consulting, maintenance and other services revenues between the
comparable periods from 25% in 1997 to 27% in 1998. The increase results from
improved utilization rates and economies of scale between periods. There can be
no assurance that the Company will successfully maintain or improve consulting,
maintenance and other services margins, and such margins could be materially,
adversely affected if revenues were to fall short of expectation, or if other
factors were to significantly affect the utilization rates of the service
personnel. Other factors include the continued rapid expansion of the Company's
consulting infrastructure and the resulting high front-end recruiting, training
and downtime costs, and the higher costs associated with the continued or
increased use of outside contractors in international markets such as the United
Kingdom to service the increased demand for installation work. The Company
currently anticipates that quarterly consulting, maintenance and other services
revenues as a percentage of total revenues will increase in 1998 compared to
1997, and accordingly, that overall gross profit as a percentage of total
revenues will be reduced as a result of the significantly lower gross margins
associated with consulting, maintenance and other services as compared to
software licenses.

OPERATING EXPENSES

Product Development. Product development expenses for the three months
ended March 31, 1998 were $4.3 million, an increase of 91% over the $2.2 million
reported in the comparable prior year period. Product development expenses as a
percentage of total revenues increased between the comparable periods from 13%
in 1997 to 14% in 1998. The Company increased its product development staff by
36% between the comparable periods to continue development efforts on ODBMS,
Win/DSS, Retail IDEAS and WCC, and to make further enhancements to the MMS
product line. In addition, certain product development activities were conducted
by the Company's services organization and by outside contractors during the
three months ended March 31, 1998. Such activities were conducted primarily by
the Company's internal product development staff in the comparable prior year
period. The Company believes that a strong commitment to product development
will be required in order to remain competitive. JDA has identified certain
functions and design features in connection with early installations of ODBMS
that it plans to add to the base code in order

22
<PAGE> 23

to shorten the deployment cycle and increase customer satisfaction. The Company
currently expects product development expenses in 1998 to be between $18 million
and $19 million as it incorporates these features into the ODBMS product and
adds similar improvements to Win/DSS and other product lines. The Company
believes its current process for developing software is essentially completed
concurrent with the establishment of technological feasibility, and accordingly,
no costs have been capitalized.

Sales and Marketing. Sales and marketing expenses for the three months
ended March 31, 1998 were $3.9 million, an increase of 55% over the $2.5 million
reported in the comparable prior year period. Sales and marketing expenses as a
percentage of total revenues decreased between the comparable periods from 15%
in 1997 to 13% in 1998 due to the significant increase in total revenues. The
increase in absolute dollars resulted from the Company's increased sales and
marketing presence in both domestic and international markets. The Company
increased its sales and marketing staff from 52 at March 31, 1997 to 76 at March
31, 1998. The Company anticipates that sales and marketing expenses may continue
to increase in absolute dollars as the Company expands its operations.

General and Administrative. General and administrative expenses for the
three months ended March 31, 1998 were $3.1 million, an increase of 85% over the
$1.7 million reported in the comparable prior year period. General and
administrative expenses as a percentage of total revenues were 10% in each of
the comparable periods. The increase in absolute dollars results from the
addition of administrative personnel to support the Company's domestic and
international growth. The Company anticipates that general and administrative
expenses may continue to increase in absolute dollars as the Company expands its
operations.

PROVISION FOR INCOME TAXES

The Company's effective income tax rate was 38% for the three months ended
March 31, 1998 compared with a rate of 40% in the comparable prior year period.
This rate reflects statutory federal, state and foreign tax rates, partially
offset by a reduction for research and development expense tax credits.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

REVENUES

Total revenues for 1997 were $91.8 million, an increase of 92% over the
$47.8 million reported in 1996. Revenues consist of software licenses and
consulting, maintenance and other services, which represented 46% and 54%,
respectively, of total revenues during 1997, and 51% and 49%, respectively in
1996.

Software Licenses. Software license revenues for 1997 were $42.0 million,
an increase of 73% over the $24.3 million reported in 1996. Domestic and
international software license revenues for 1997 increased 44% and 101%,
respectively, over 1996. These increases resulted primarily from the Company's
expanded sales and marketing efforts worldwide, the incremental sales of the
Company's newer product lines such as ODBMS, Win/DSS and Retail IDEAS over the
prior year, and an increase in average transaction size.

Consulting, Maintenance and Other Services. Consulting, maintenance and
other services revenues for 1997 were $49.7 million, an increase of 111% over
the $23.5 million reported in 1996. This increase resulted from increased
software license sales and the introduction of client/server products that
require longer installation cycles. Although domestic consulting, maintenance
and other services revenues increased 62% between the comparable years, nearly
two-thirds of this revenue growth occurred in the Company's international
markets where the comparative increase was 197%.

COST OF REVENUES

Cost of software licenses was $1.1 million and $438,000 in 1997 and 1996,
respectively, representing 3% and 2% of software license revenues in the
respective periods. Consulting, maintenance and other services costs for 1997
were $37.7 million, an increase of 130% over the $16.4 million reported in 1996.
The Company has expanded its consulting and customer support organizations as a
result, and in anticipation of, increased sales of new software licenses and
increased demand from the existing client base for additional support and
professional services. The Company increased the number of personnel in its
consulting, maintenance and other services organization by 98% during 1997, and
as of December 31, 1997, the Company had 430 employees involved in these
functions.

23
<PAGE> 24

GROSS PROFIT

Gross Profit for 1997 was $52.9 million, an increase of 71% over the $31.0
million reported in 1996. Gross profit as a percentage of total revenue
decreased from 65% in 1996 to 58% in 1997. This decrease was primarily
attributable to an increase in consulting, maintenance and other services
revenues as a percentage of total revenues in 1997. In addition, the Company's
gross margins on consulting, maintenance and other services revenues decreased
from 30% in 1996 to 24% in 1997 as a result of the rapid expansion of the
consulting infrastructure, including high front-end recruiting, training and
downtime costs associated with the hiring of 213 consultants during 1997.
Consulting, maintenance and other services margins were also reduced by the
higher costs associated with the Company's use of up to 65 outside contractors
in the United Kingdom during the second half of 1997 to service the increased
demand for installation work in that market. The Company's objective is to
improve its consulting, maintenance and other services margins during 1998 by
gradually replacing these contractors with full-time staff and improving
utilization rates and economies of scale, particularly with respect to the
installation of the ODBMS client/server product.

OPERATING EXPENSES

Product Development. Product development expenses for 1997 were $11.4
million, an increase of 75% over the $6.5 million reported in 1996. Product
development expenses as a percentage of total revenues decreased from 14% in
1996 to 12% in 1997. The increase in absolute dollars resulted from increases in
the Company's product development staff to continue development efforts on
ODBMS, Win/DSS, Retail IDEAS, and WCC, and to make further enhancements to the
MMS product line.

Sales and Marketing. Sales and marketing expenses for 1997 were $12.6
million, an increase of 74% over the $7.2 million reported in 1996. Sales and
marketing expenses as a percentage of total revenues decreased from 15% in 1996
to 14% in 1997. The increase in absolute dollars results from the Company's
increased sales and marketing presence in both domestic and international
markets. The Company increased its sales and marketing staff from 49 as of
December 31, 1996 to 73 as of December 31, 1997.

General and Administrative. General and administrative expenses for 1997
were $9.5 million, an increase of 91% over the $5.0 million reported in 1996.
General and administrative expenses as a percentage of total revenues were 11%
and 10% in 1997 and 1996, respectively. The increase in absolute dollars results
from the addition of administrative personnel to support the Company's domestic
and international growth and from a $2.0 million increase in the allowance for
doubtful accounts during 1997, including $1.0 million in specific reserves for
receivables originating in the Asia/Pacific region.

PROVISION FOR INCOME TAXES

The Company's effective income tax rate was 40% for both 1997 and 1996.
This rate reflects statutory federal, state and foreign tax rates, partially
offset by a reduction for research and development expense tax credits.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

REVENUES

Total revenues for 1996 were $47.8 million, an increase of 59% over the
$30.1 million in 1995. The increase in total revenues was primarily due to
increases in software licenses resulting from expanded sales and marketing
efforts both domestically and internationally, combined with increases in
consulting, maintenance and other services from associated implementations. To a
lesser extent, the increase in total revenues in 1996 was also the result of the
software license revenues generated by the Company's commercial release of its
ODBMS software in September 1996 and revenues generated by JDA Canada which was
acquired by the Company in August 1996.

International revenues comprised 43% and 39% of total revenues in 1996 and
1995, respectively. This increase in international revenues as a percentage of
total revenues was primarily attributable to increased revenues in Latin
America, the Pacific Rim and Europe resulting from the Company's expanded sales
and marketing efforts in those markets, including efforts in new geographic
locations within those markets. The

24
<PAGE> 25

increase in international revenues in 1996 was also the result of the
acquisition of JDA Canada in August 1996 and the related increase in revenues in
Canada.

Software Licenses. Software license revenues increased 59% to $24.3
million in 1996 from $15.3 million in 1995. The increase was primarily
attributable to the expansion of the Company's sales and marketing efforts in
all markets and, to a lesser extent, to the commercial release of ODBMS in
September 1996 and the acquisition of JDA Canada in August 1996.

Consulting Maintenance and Other Services. Consulting, maintenance and
other services revenues increased 59% to $23.5 million in 1996 from $14.8
million in 1995. The increase was primarily attributable to increased software
license revenues and associated implementations both domestically and
internationally.

COST OF REVENUES

Cost of software licenses was $438,000 and $159,000 in 1996 and 1995,
respectively, representing 2% and 1% of software license revenues in the
respective periods. Cost of consulting, maintenance and other services was $16.4
million and $9.8 million, representing 70% and 66% of consulting, maintenance
and other services revenues, in 1996 and 1995, respectively. The increase in
these costs as a percentage of consulting, maintenance and other services
revenues was primarily due to the increased percentage of consulting,
maintenance and other service revenues attributable to international
installations, which typically generate lower gross margins than those achieved
domestically due to generally lower prevailing billing rates in certain of the
Company's international markets.

GROSS PROFIT

Gross profit for 1996 was $31.0 million, an increase of 54% over the $20.1
million reported in 1995. Gross profit as a percentage of total revenues
decreased from 67% in 1995 to 65% in 1996. This decrease resulted primarily from
the higher mix of international consulting, maintenance and other services
revenues, which typically have lower gross margins than those achieved
domestically.

OPERATING EXPENSES

Product Development. Product development expenses increased by 84% from
$3.5 million in 1995 to $6.5 million in 1996, representing 12% and 14%,
respectively, of total revenues in those periods. Increased product development
expenses were primarily a result of an increase in the number of product
development personnel from 48 as of December 31, 1995 to 90 as of December 31,
1996. Significant product development efforts in 1995 included the continued
development and initial beta release of ODBMS, continued enhancements to MMS and
initial development of Win/DSS. Significant product development efforts in 1996
included the continued development of ODBMS and Win/DSS and continued
enhancements to MMS.

Sales and Marketing. Sales and marketing expenses increased 39% to $7.2
million in 1996 from $5.2 million in 1995, representing 15% and 17% of total
revenues in those respective periods. Sales and marketing expenses increased in
absolute dollars in 1996 due to continued additions to sales and marketing
personnel and related expenses, but decreased as a percentage of total revenues
due to the significant increase in total revenues.

General and Administrative. General and administrative expenses increased
by 27% to $5.0 million in 1996 from $3.9 million in 1995, representing 10% and
13% of total revenues in those periods, respectively. The increase in absolute
dollars of general and administrative expenses in 1996 was primarily due to the
continued addition of personnel and increased legal and accounting expenses.

PROVISION FOR INCOME TAXES

The Company's effective income tax rate was 40% in 1996. The effective rate
reflects statutory federal, state and foreign tax rates, partially offset by a
reduction for research and development expense tax credits. Prior to March 30,
1995, certain of JDA's predecessor companies elected S Corporation status. As a
result, the Company's statement of income for the first quarter of 1995 does not
contain a provision for federal income taxes. The 1995 Consolidated Statement of
Income reflects a pro forma adjustment for federal income taxes and an effective
rate of 38%.

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<PAGE> 26

QUARTERLY RESULTS OF OPERATIONS

The following table sets forth certain unaudited consolidated statement of
income data, both in absolute dollars and as a percentage of total revenues
(except for gross margin data), for each of the Company's last five quarters.
This data has been derived from unaudited consolidated financial statements that
have been prepared on the same basis as the annual consolidated financial
statements and, in the opinion of the Company, include all adjustments
(consisting only of normal adjustments) necessary for a fair presentation of
such information. These unaudited quarterly results should be read in
conjunction with the Company's consolidated financial statements and related
notes and the other information included or incorporated by reference in this
Prospectus. The consolidated results of operations for any quarter are not
necessarily indicative of the results for any future period.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------
MAR. 31, DEC. 31, SEPT. 30, JUNE 30, MAR. 31,
1998 1997 1997 1997 1997
-------- -------- --------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenues:
Software licenses......................................... $12,049 $14,552 $10,066 $ 9,557 $ 7,866
Consulting, maintenance and other services................ 18,844 15,603 13,609 11,540 8,978
------- ------- ------- ------- -------
Total revenues...................................... 30,893 30,155 23,675 21,097 16,844
Cost of Revenues:
Software licenses......................................... 505 454 258 233 200
Consulting, maintenance and other services................ 13,844 11,723 10,207 9,093 6,704
------- ------- ------- ------- -------
Total cost of revenues.............................. 14,349 12,177 10,465 9,326 6,904
------- ------- ------- ------- -------
Gross profit................................................ 16,544 17,978 13,210 11,771 9,940
------- ------- ------- ------- -------
Operating expenses:
Product development....................................... 4,279 4,031 2,747 2,351 2,235
Sales and marketing....................................... 3,896 3,822 3,235 3,059 2,517
General and administrative................................ 3,123 3,317 2,119 2,407 1,689
------- ------- ------- ------- -------
Total operating expenses............................ 11,298 11,170 8,101 7,817 6,441
------- ------- ------- ------- -------
Income from operations...................................... 5,246 6,808 5,109 3,954 3,499
Other income.............................................. 329 366 321 364 356
------- ------- ------- ------- -------
Income before income taxes.................................. 5,575 7,174 5,430 4,318 3,855
Provision for income taxes................................ 2,091 2,870 2,171 1,728 1,542
------- ------- ------- ------- -------
Net income.................................................. $ 3,484 $ 4,304 $ 3,259 $ 2,590 $ 2,313
======= ======= ======= ======= =======
Basic and diluted earnings per share........................ $ .26 $ .33 $ .25 $ .20 $ .18
======= ======= ======= ======= =======
Shares used to compute:
Basic earnings per share.................................. 13,236 13,151 13,112 13,040 13,007
Diluted earnings per share................................ 13,579 13,208 13,219 13,197 13,168
AS A PERCENTAGE OF TOTAL REVENUES:
Revenues:
Software licenses......................................... 39% 48% 43% 45% 47%
------- ------- ------- ------- -------
Consulting, maintenance and other services................ 61 52 57 55 53
------- ------- ------- ------- -------
Total revenues...................................... 100 100 100 100 100
Cost of revenues:
Software licenses......................................... 1 1 1 1 1
Consulting, maintenance and other services................ 45 39 43 43 40
------- ------- ------- ------- -------
Total cost of revenues.............................. 46 40 44 44 41
------- ------- ------- ------- -------
Gross profit................................................ 54 60 56 56 59
------- ------- ------- ------- -------
Operating expenses:
Product development....................................... 14 13 11 11 13
Sales and marketing....................................... 13 13 14 15 15
General and administrative................................ 10 11 9 11 10
------- ------- ------- ------- -------
Total operating expenses............................ 37 37 34 37 38
------- ------- ------- ------- -------
Income from operations...................................... 17 23 22 19 21
Other income.............................................. 1 1 1 1 2
------- ------- ------- ------- -------
Income before income taxes.................................. 18 24 23 20 23
Provision for income taxes................................ 7 10 9 8 9
------- ------- ------- ------- -------
Net income.................................................. 11% 14% 14% 12% 14%
======= ======= ======= ======= =======
Gross margin on software licenses........................... 96% 97% 97% 98% 97%
Gross margin on consulting, maintenance and other
services.................................................. 27% 25% 25% 21% 25%
</TABLE>

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<PAGE> 27

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company has financed its operations primarily
through cash generated from operations and public sales of equity securities
and, to a lesser extent, borrowings under its bank line of credit. The Company
had working capital of $55.3 million at March 31, 1998 compared with $48.4
million at December 31, 1997. Cash and cash equivalents at March 31, 1998 were
$31.9 million, an increase of $4.6 million from the $27.3 million reported at
December 31, 1997.

Operating activities provided cash of $2.3 million during the three months
ended March 31, 1998 and $2.1 million, $6.1 million, and $5.5 million in the
years ended December 31, 1997, 1996 and 1995, respectively. The Company had net
accounts receivable of $33.7 million and $32.4 million at March 31, 1998 and
December 31, 1997, respectively, which represented 98 and 99 days of sales
outstanding ("DSOs"). DSOs have historically been higher in the second and third
quarters of each fiscal year as a result, the Company believes, of the seasonal
cash flow requirements of its retail customers. DSOs may fluctuate significantly
on a quarterly basis due to a number of factors including seasonality, shifts in
customer buying patterns, the underlying mix of products and services, and the
geographic concentration of revenues.

Investing activities utilized cash of $3.9 million during the three months
ended March 31, 1998, utilized cash of $12.4 million in fiscal year 1997,
provided cash of $8.6 million in fiscal year 1996, and utilized cash of $16.1
million in fiscal year 1995. The activity in the three-month period represents
capital expenditures to support the Company's growth. The fiscal year 1997
activity includes $10.8 million in capital expenditures to support the Company's
growth and an initial payment of $1.6 million for the purchase of LIOCS and the
fiscal year 1996 activity includes the redemption of $14.6 million in restricted
short-term investments acquired during fiscal year 1995 and capital expenditures
of $6.2 million.

Financing activities provided cash of $6.0 million during the three months
ended March 31, 1998 and $7.4 million, $15.4 million and $8.2 million during the
years ended December 31, 1997, 1996 and 1995, respectively. The activity in the
three-month period consists primarily of proceeds from the issuance of stock and
related tax benefits. The fiscal year 1997 activity includes $8.0 million in
proceeds from the issuance of stock and related tax benefits. The fiscal year
1996 activity includes the issuance of 2,182,866 shares of Common Stock for
$25.3 million in an initial public offering on March 20, 1996, the net proceeds
of which were offset by the repayment of stockholder notes and the redemption of
preferred stock, and the issuance of 600,000 shares of Common Stock by the
Company for $15.5 million in a secondary offering on November 26, 1996.

Changes in the currency exchange rates of the Company's foreign operations
had the effect of increasing cash by $205,000 during the three months ended
March 31, 1998, and reducing cash by $743,000 in fiscal year 1997. The Company
did not enter into any foreign exchange contracts or engage in similar hedging
strategies during any of these periods.

The Company may in the future pursue additional acquisitions of businesses,
products and technologies, or enter into joint venture arrangements, that could
complement or expand the Company's business. Any material acquisition or joint
venture could result in a decrease to the Company's working capital depending on
the amount, timing and nature of the consideration to be paid. In addition, any
material acquisitions of complementary businesses, products or technologies
could require the Company to obtain additional equity or debt financing.
Although the Company is in negotiation for a credit facility which may include
up to $35 million in funds which may be used for acquisitions by the Company,
there can be no assurance that such financing will be available on acceptable
terms, if at all.

The Company maintains a $5.0 million line of credit with a commercial bank.
The line of credit is collateralized by property and equipment, receivables and
intangibles; accrues interest at the bank's reference rate, which approximates
prime; and requires the Company to maintain certain current ratios and tangible
net worth. The line of credit matures on July 1, 1998, and the Company intends
to seek renewal at that time. There were no amounts outstanding on the line of
credit as of March 31, 1998. The Company believes that its cash and cash
equivalents, available borrowings under the bank line of credit and funds
generated from operations will provide adequate liquidity to meet the Company's
normal operating requirements for at least the next twelve months.

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<PAGE> 28

YEAR 2000 COMPLIANCE

Many currently installed computer systems are not capable of distinguishing
21st century dates from 20th century dates. As a result, in less than two years,
computer systems and/or software used by many companies in a very wide variety
of applications will experience operating difficulties unless they are modified
or upgraded to adequately process information involving, related to or dependent
upon the century change. Significant uncertainty exists in the software and
other industries concerning the scope and magnitude of problems associated with
the century change. The Company recognizes the need to ensure its operations
will not be adversely impacted by Year 2000 software failures and has
established a project team to assess Year 2000 risks. The project team will
coordinate the identification and implementation of changes to computer hardware
and software applications that will ensure availability and integrity of the
Company's financial systems and the reliability of its operational systems. The
Company is also assessing the potential overall impact of the impending century
change on the Company's business, operating results and financial condition.

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<PAGE> 29

BUSINESS

JDA Software Group, Inc. ("JDA" or the "Company") is a leading
international provider of integrated enterprise-wide software products and
services that address mission-critical management information needs of the
retail supply chain. The Company offers a broad array of software products
designed to provide integrated technology solutions for the collection,
organization and analysis of data and the distribution of information throughout
a retail organization. The Company's products include: merchandising, financial
and decision support systems at the corporate level; point-of-sale, back office
and distributed processing applications at the store level; and warehouse
management and logistics systems at the distribution level. The Company offers
products that operate on IBM AS/400-based and DOS-based platforms, as well as
products that operate in the UNIX and Windows NT open client/server
environments. JDA also offers a wide range of professional services through its
consulting and customer support organizations including: project management,
system planning, design and implementation, custom modifications, training and
support services.

INDUSTRY BACKGROUND

The retailing industry is experiencing rapid change, driven primarily by
changing consumer preferences, intensifying competition and increasing
globalization. Consumers' purchase patterns have shifted, with today's consumer
choosing value, in the form of lower prices and improved convenience and
personal service, over brand and retailer loyalty. The result for many retailers
has been increased pressure on operating profits as they try to lower prices and
increase marketing and promotions to increase traffic in stores in order to
increase sales. In addition, new retail formats, such as the "category killer"
format employed by retailers such as Staples and PETCO, have enjoyed broad
market acceptance and are setting the standards for lower prices and improved
customer service. To exploit international growth opportunities a number of
retailers are seeking to apply their concepts outside their domestic markets.
Despite the significant challenges in the retail industry, many retailers have
successfully achieved efficiencies and reduced operating costs by improving
inventory management, decentralizing the decision making process while
centralizing purchasing and other administrative functions, deploying state of
the art information technology and pursuing aggressive roll-out strategies to
achieve economies of scale.

To respond to today's competitive challenges, retailers must accelerate the
rate at which they identify and respond to changing business conditions and
consumer requirements. A retail organization's agility and ultimate success are
dependent upon its ability to rapidly and cost-effectively collect, organize and
analyze data, and disseminate information throughout the enterprise to
facilitate effective business decisions. Such information provides a basis for
critical product, marketing, inventory, pricing and human resource decisions. In
addition, inventory management has become more complicated as retailers seek to
reduce costs and improve margins while replenishing inventory on a just-in-time
basis. Accordingly, retailers are demanding more sophisticated purchasing,
inventory management and merchandising tools that enable them to distribute and
manage goods efficiently. Retailers are also increasingly restructuring existing
operations so that consumers interact effectively with the entire enterprise
from a single store location. This requires store level personnel and decision
makers throughout an enterprise to have a common base of readily available sales
and inventory information and that in-store personnel have the ability to more
rapidly respond to consumers' needs. To meet their increasing requirements for
information, retailers seek information systems that are adept at handling large
volumes of transactions, possess a high degree of reliability, accommodate peak
load and seasonal requirements and rapidly capture and analyze data and
distribute information throughout the

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<PAGE> 30

geographically dispersed parts of the enterprise. Moreover, global retailers
require applications that support the specialized requirements of international
business, including local language support, multiple currencies, import/export
costing and foreign tax and regulatory requirements. Retailers are also seeking
solutions that address emerging technical and business issues, such as Year 2000
compliance and the increased prevalence of electronic commerce.

Historically, information technology in the retail supply chain has
consisted largely of separate legacy applications at the corporate, store and
distribution levels. These legacy applications have primarily been host-centric
systems that operate on mainframe or mid-range computers. These systems,
developed and modified internally over many years or licensed from third
parties, represent considerable investments by retailers and have provided
benefits within their distinct roles. However, they generally do not have the
flexibility to support diverse and changing operations within a customer's
business or to respond effectively to changing technologies. Additionally, these
solutions have only targeted distinct levels of the retail supply chain such as
the corporate or in-store levels, and have not generally provided the full
benefits of integration, which allows information to be distributed effectively
throughout the retail enterprise. Despite these limitations, many host-centric
systems are still being widely deployed for retail applications because of their
strengths in particular segments, as well as to preserve significant hardware
and software investments. Furthermore, retailers have historically been cautious
in adopting new technologies due to the real-time, transaction-intensive nature
of retailing and the economic consequences of disruptions to their operations.

Despite their reservations, retailers are recognizing the strategic
imperative of employing technology to cut costs, reduce inefficiencies and
enhance sales in an increasingly competitive environment dominated by
value-conscious consumers. The development of distributed client/server
computing has created a technological framework for software applications that
are adaptable, integrated and tailored for the retail supply chain.
Additionally, improved hardware price/performance and database capabilities on
platforms such as the IBM AS/400 have improved the capabilities of the
information systems that can leverage retailers' existing hardware investments.
As a result, retailers are demanding highly functional, easy to use and
scaleable software applications that can be economically and rapidly implemented
and adapted for changes in their mission-critical business functions. The
Company believes that the adoption of new information technologies by retailers
will accelerate as competitive pressures increasingly necessitate the ability to
change business practices quickly and to empower employees with the information
and tools to respond to consumer requirements.

JDA SOLUTION

JDA is a leading international provider of integrated enterprise-wide
software products and related services that address mission-critical management
information needs throughout the retail supply chain. The Company's product
suite is designed to provide integrated technology solutions for the collection,
organization, distribution and analysis of data throughout a retail
organization. At the corporate level, the Company offers two merchandise
management systems, Merchandise Management System ("MMS") for the IBM AS/400
platform, and Open Database Merchandising System ("ODBMS") for open
client/server environments, that distribute data throughout the retail
enterprise and enable management to make more informed and timely decisions,
respond more rapidly to changes in the competitive environment, monitor
store-level activity and achieve greater operating efficiencies. The Company's
in-store systems, DOS-based Distributed Store System ("DSS") and Windows-based
Win/DSS, register transactions at the point-of-sale, capture individual consumer
profiles and demographic information, and leverage enterprise-wide information
such as stock availability, pricing and inventory replenishment by bringing it
to the store level. The Company also offers Warehouse Control Center ("WCC") for
management of the storage and flow of inventory within the warehouse or
distribution center. The Company also offers Retail IDEAS, a multi-platform
client/server data warehouse system that provides retailers with powerful
application tools for analyzing their business, monitoring strategic plans and
supporting tactical actions. Finally, the Company provides a wide range of
professional services designed to enable customers to rapidly achieve the
benefits of the Company's software products. These services, known as Optimum
Pathways, include project management, system planning, design and
implementation, custom modifications, training and support services.

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<PAGE> 31

The Company's solutions are designed to provide the following benefits to
retailers:

Enhanced Decision Making Capabilities. The Company's products are designed
to identify and highlight the most relevant information from large volumes of
transaction and work-flow data. By collecting and distributing valuable
enterprise-wide information, the Company's solutions enable retailers to make
more informed and timely decisions, to quickly adapt their products and
operations to changes in competition and consumer preferences, and to maximize
operational efficiencies.

Fully Integrated Adaptable Solutions. The Company offers an integrated
suite of software products that enables retailers to respond to consumer demand
at the point-of-sale and distribute that information throughout the enterprise.
These products link point-of-sale level information with the centralized
merchandising and financial functions that ultimately affect decisions with
suppliers and vendors. The Company's integrated corporate, in-store and
distribution products operate a range of applications and function seamlessly
with each other's databases, enabling greater speed, data integrity and ease of
modification. The Company's newer products, ODBMS and Win/DSS, are designed to
be adaptable and easily configured by customers to meet their specialized and
evolving needs.

Improved Inventory Planning and Distribution Logistics. The Company's
enterprise-wide solutions are designed to help retailers achieve operating
efficiencies by automating the collection and analysis of data from key
functions, such as the management of inventory, distribution and merchandising,
and providing decision makers with access to critical supply chain information.
JDA provides retailers with tools for vendor analysis, stock status monitoring,
sales capture and analysis, merchandise allocation and replenishment, purchase
order management, distribution center management and other important activities
that enable retailers to improve gross margins and return on inventory
investment through increased inventory turnover, reduced inventory investment,
reduced clearance mark-downs and more efficient management of ordering and
distribution.

Increased Responsiveness to Consumer Needs. The Company's solutions help
retailers better understand and fulfill consumer needs. With the Company's
enterprise systems, retailers can explore "what if" merchandising plans, track
and analyze performance, and adjust quickly to market changes and consumer
purchase patterns, all to help ensure that the appropriate pricing and
merchandise mix is available to the consumer at the point-of-sale. The Company's
in-store software products provide enterprise information at the point-of-sale
enabling store level personnel to track the preferences of individual consumers
and provide a higher level of personalized service.

Ease of Implementation. The Company's products are specifically designed
to meet the needs of the retail industry, and the Company's consulting,
maintenance and other services organization is primarily comprised of
individuals who are trained for and experienced with system implementations in
the retail environment. The Company's newer products, ODBMS and Win/DSS, are
designed to be easily configured by customers to meet their specialized and
evolving needs. As a result, the Company believes it offers rapid, low cost
implementations, which are generally accomplished within three to twelve months.

COMPANY STRATEGY

JDA's objective is to strengthen its position by providing a comprehensive
suite of software solutions that address the mission-critical management
information needs of the retail supply chain. Key elements of the Company's
strategy to achieve this objective are as follows:

Leverage Retail Application Knowledge Base. The Company intends to
continue to leverage its retail industry knowledge base to provide comprehensive
integrated solutions to retailers. The Company believes its in-depth
understanding of retailers' requirements accumulated from its twelve-year
history and over 300 retail customers differentiates it from competitors and
provides a significant advantage in securing new customers. The Company further
augments its knowledge through ongoing customer consulting engagements and
interaction with its user group.

Expand Product Sales to Existing Customers. The Company's products are
designed to meet the enterprise-wide needs of the retail supply chain. Although
most organizations initially deploy one or more of the Company's products in an
organization, the Company believes that initial customer success can lead to

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<PAGE> 32

opportunities for additional sales of products to other parts of the
organization. The Company has a significant installed base of customers from its
twelve-year history to which it intends to market and sell additional products
and services. In addition, the Company believes that references from its
installed base will also provide assistance in making additional sales to new
customers.

Provide High Quality Professional Services. The Company believes that its
high-quality consulting, implementation, support and training services enable
the Company to achieve a high level of customer satisfaction, strong customer
references and long-term relationships as well as facilitate software
improvements based on customer feedback. With the release of its new
client/server products, the Company intends to continue to invest in its
professional services organization to provide better service to its customers.
The Company also plans to continue to provide innovative offerings such as
Direct Path, a streamlined approach for implementing MMS within three months in
order to help respond to customers' Year 2000 requirements well into 1999. In
addition, the Company plans to leverage its cooperative relationships with IBM's
Global Services Division and Siemens Nixdorf to compliment its internal
professional services organization in international markets.

Expand Presence in International Markets. The Company intends to expand
its international presence by continuing to develop localized versions of its
products and investing directly in strategic markets by establishing additional
international operations with local direct sales and consulting personnel, and
through cooperative relationships with companies with established international
presence, such as IBM and Siemens Nixdorf. To date, the Company has established
international offices in Australia, Canada, Chile, France, Germany, Mexico,
Singapore, South Africa and the United Kingdom, and plans to continue to expand
its worldwide infrastructure in order to provide additional localized products
and implementation services.

Enhance Solutions for Evolving Customer Needs. The Company will continue
to develop and offer products and services that address emerging technological
and financial issues confronting retailers such as Year 2000 compliance,
adoption of a common Eurocurrency, and the growth of electronic commerce. JDA's
Direct Path implementation methodology for MMS is designed to quickly address
the requirements of retailers whose systems are not yet Year 2000 compliant.
Eurocurrency functionality has been incorporated into the Company's open
client/server products and the Company currently plans to add Eurocurrency
functionality to its IBM AS/400 products. JDA is implementing a development
strategy to Web-enable ODBMS, MMS and Retail IDEAS. The Company continues to
work on adding additional features and functionality to its product suite.

Further Develop and Leverage Strategic Relationships. The Company intends
to continue to establish strategic business relationships for the development of
products that complement the Company's current software solutions or enhance the
delivery of professional services. The Company has a number of cooperative
relationships with system integrators, other software vendors and retail systems
consulting groups, including, among others, IBM, Siemens Nixdorf, Lawson
Software ("Lawson"), Ernst & Young and Andersen Consulting. The Company believes
these relationships can provide the Company with greater access to international
markets, greater market presence and a greater opportunity to increase its
customer base and sales.

Acquire Complementary Businesses, Products and Technologies. The Company
intends to pursue acquisition opportunities for complementary businesses,
products and technologies in order to add to its current product offerings and
increase its market share. The Company believes that such acquisitions will also
assist its efforts to leverage its installed base.

PRODUCTS

The Company offers a suite of software products which collects, organizes
and analyzes data and distributes information throughout a retail organization.
The Company's products are designed to provide an end-to-end supply chain
solution for the mission-critical components of retailing operations -- from the
planning and purchasing functions through the distribution and final sale of
goods. The Company offers merchandising, financial and decision support systems
at the corporate level, point-of-sale, back office and distributed processing
applications at the store level, and warehouse management and logistics systems
at the

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<PAGE> 33

distribution level. The Company also offers a data warehouse system for the
analysis of information throughout the retail supply chain.

The following chart summarizes certain key functions of the retail
enterprise addressed by the Company's products:

[CHART DEPICTING CERTAIN FEATURES AND FUNCTIONALITY OF JDA PRODUCTS]
Merchandise Management Systems

The Company's merchandise management systems process high volumes of
information to provide decision support for inventory control, cost and price
management, purchase order management, automated replenishment, merchandise
planning, transfer management and allocation. Merchandise management systems
distribute data throughout the retail enterprise and enable management to make
more informed and timely decisions, respond more rapidly to changes in the
competitive environment, monitor store-level activity and achieve greater
operating efficiencies. The Company's merchandise management systems can be
integrated with in-store, warehouse and logistics products designed by the
Company or by third parties. The Company offers two merchandise management
systems: MMS for the IBM AS/400 platform and ODBMS for open client/server
environments. Both systems are comprised of functional modules that are selected
by the customer and can be configured to fit the customer's unique requirements.

MMS was first introduced in 1986 and was specifically designed to take
advantage of the IBM AS/400 database and operating environment. MMS can be
configured by the retailer to adapt to changing strategies and prevailing
competitive conditions by performing product price analyses based upon key data
such as gross margin, sales velocity and competitive prices. The product can
then recommend and automate price changes based on the retailer's specifically
defined pricing strategies. To date, the Company has performed over 250 MMS
implementations worldwide. The Company has continued to invest in the
development and enhancement of MMS to address the requirements of a broad
spectrum of retailing formats and processes.

ODBMS, which was commercially released in September 1996, offers the same
core functionality of MMS, excluding the general ledger, accounts payable and
accounts receivable modules of MMS's retail sales accounting system, and also
offers, through its open client/server architecture, enhanced adaptability and

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<PAGE> 34

scaleability. ODBMS is capable of operating with Oracle and Informix relational
database management systems running on Windows NT and the most popular UNIX
platforms. ODBMS is designed to support the information requirements of
international, multi-format retail organizations and features support for
multiple concurrent languages and currencies, user-specific nomenclature and
user-defined data structures and hierarchies. Thus, an international retailer
can centrally establish a product margins objective and apply it to local market
rules, including currency conversions, applicable taxation and rounding
algorithms, to determine final pricing at each location. The Company is party to
a co-marketing agreement with Lawson to develop interfaces between ODBMS and
Lawson's client/server business applications, which provide financial, human
resource, procurement and supply-chain management for the retail industry, and
which are Web-deployable.

License fees for the Company's merchandise management systems vary
depending upon a number of factors, including the size and complexity of the
retail operation and the modules chosen. License fees have generally ranged from
$250,000 to $750,000 for MMS, and from $500,000 to in excess of $1.0 million for
ODBMS.

In-Store Systems

The Company offers two in-store systems: DSS for DOS-based platforms and
Win/DSS for the Windows environment. The Company's in-store systems are designed
to enable a retailer to capture and analyze in-store operations information and
transmit such information to corporate-level systems for sales and other
analysis. These systems also allow store-level personnel to access valuable
enterprise-wide information to better serve the consumer at the point-of-sale.
DSS and Win/DSS are comprised of functional modules that are selected by the
customer and can be configured to fit the customer's unique requirements.

DSS can be licensed independently and utilized with a customer's existing
merchandise management system, or it can work in concert with the Company's MMS
merchandise management system, to provide the retailer the ability to manage
information through a wide range of retail operations. A typical installation of
DSS enables the retailer to perform a number of individual store-level functions
and support back office, store inventory and point-of-sale operations. For
example, store managers can use DSS to measure the results of a store
promotional event. In addition, DSS enables retailers to track the preferences
of individual consumers and provide a higher level of personalized service.

Win/DSS incorporates the core functionality of DSS with the enhanced
capabilities of the Windows platforms. Win/DSS incorporates an object-oriented
software design that is capable of arranging retail business processes to adapt
to a retailer's specialized and evolving requirements. For example, a retailer
can utilize the Win/DSS multi-tasking capabilities by configuring its
point-of-sale systems to simultaneously run credit authorizations, process
transactions and update store inventory records. In addition, to reflect a more
service-oriented workflow, the customer service desk in the same store can be
configured to provide ready access to personal information and purchase
histories of individual consumers. Business information process flows can be
adapted to reflect changing store strategies during special promotions or
periods of peak consumer traffic.

License fees for the Company's in-store systems vary depending upon a
variety of factors, including the size and complexity of the retail operation
and the modules chosen, and generally have ranged from $50,000 to in excess of
$600,000.

Warehouse and Logistics Systems

The Company offers warehouse and logistics systems for client/server and
IBM AS/400 environments. WCC is a client/server system that combines the latest
automation tools, bar coding and radio frequency technologies with the benefits
of a client/server architecture. The product was acquired from LIOCS Corporation
in April 1997 and became commercially available in December 1997. WCC is a
stand-alone system that can be integrated with ODBMS or software supplied by
third-party vendors. WCC provides a variety of functions including receipt
scheduling, license plate labeling, system-directed putaway, and lot and serial
number tracking. For the IBM AS/400 platform, the Company offers warehouse
management,

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<PAGE> 35

merchandise receiving and wholesale order entry modules as part of its MMS
merchandise product. License fees for these modules have generally ranged from
$50,000 to $230,000.

Data Warehouse System

Retail IDEAS is a data warehouse system developed jointly with Silvon
Software, Inc. ("Silvon") that provides a comprehensive set of tools for
analyzing business results, monitoring strategic plans and enabling tactical
decisions. Retail IDEAS is currently available on the IBM AS/400 and Windows NT
platforms, and is under development for UNIX platforms. Retail IDEAS is designed
as a packaged offering that enables retailers to monitor vendor performance,
promotional effectiveness and distribution center productivity, and to analyze
financial measurements related to sales and inventory, margins and
profitability, merchandise categories and items, open and suggested orders, and
promotional and pricing events. The product integrates with the Company's MMS
product and may also be used with non-JDA transactional systems. Integration
with ODBMS is under development.

CONSULTING, MAINTENANCE AND OTHER SERVICES

The Company provides a wide range of professional services designed to
enable customers to rapidly achieve the benefits of the Company's software
products. These services, known as Optimum Pathways, include project management,
system planning, design and implementation, custom modifications, training and
support services. The Company believes that its Optimum Pathways consulting
services facilitate a customer's early success with its products, strengthen its
relationship with the customer, and add to the Company's industry-specific
knowledge base for use in future implementation and product development efforts.
Although the Company's service offerings are optional, the Company has found
that substantially all of its customers utilize some or all of its services to
some degree in connection with the implementation and ongoing support of the
Company's software products. The Company believes its ability to provide these
services provides a competitive advantage, which is expected to be enhanced by a
developing cooperative relationship with IBM Global Services Division to jointly
support, distribute and implement ODBMS. As of March 31, 1998, the Company had
approximately 500 employees in its consulting, maintenance and other services
organization. The Company is pursuing a strategy to increasingly utilize
third-party consultants, such as those from major systems integrators, to assist
in certain large-scale implementations and for extensive business process re-
engineering projects.

Consulting Services

The Company's consulting services group consists of business consultants,
systems analysts and technical personnel with extensive retail industry
experience that are devoted to assisting retailers in all phases of systems
development, including systems planning and design, customer-specific
configuration of application modules, and on-site implementation or conversion
from existing systems. Consulting services are generally billed on a time and
expenses basis. The Company's consulting engagements have typically taken
between six months and one year for merchandise management systems, between
three and six months for in-store systems, between three and six months for
warehouse and logistic systems, and between two and three months for data
warehouse systems. Given the complexity of platforms on which the Company's
ODBMS and Win/DSS systems operate and the increased ability of the customer to
configure these new products to its work flows and processes, the implementation
of such systems generally requires increased levels of consulting services, as
well as longer periods of time. In order to satisfy the demands of both existing
and future customers, the Company plans to substantially increase its consulting
services personnel to support anticipated growth in product implementations. To
the extent anticipated revenues fail to materialize following the hiring and
training of such personnel, the Company's operating results would be adversely
affected.

Education and Training

The Company offers comprehensive education and training programs to its
customers, associates and business partners. The Company initiated JDA
University in 1997 as a formal education program that combines lectures,
demonstrations and hands-on exercise sessions for each of JDA's software
solutions. JDA

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<PAGE> 36

University features a curriculum for each JDA system, and a full-time
administration consisting of professional instructors and course developers. The
JDA University curriculum ranges from introductory to advanced levels and
includes application training on JDA systems, technical courses on design and
data models for such systems, and developer courses for programmers and
designers. Classes are offered at in-house facilities as well as at customer
locations. Approximately 2,700 individuals attended JDA University during 1997.

Customer Support Services

The Company believes that providing business solutions along with a high
level of on-going support to its customers is a critical element in establishing
long-term relationships and maintaining a high level of customer satisfaction.
The Company offers a comprehensive support program that includes maintenance,
on-line support and help desk services. The standard maintenance support program
includes new releases and unspecified upgrades of products. Standard support
programs have historically been purchased by the majority of the Company's
customers and are generally annual contracts that are paid on a monthly basis.
For clients who have licensed DSS or Win/DSS, the Company offers a program,
known as Optimum Store Support, that features help desk services, 24 hours a
day, 7 days per week, and field upgrade support.

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<PAGE> 37

CUSTOMERS

The Company has licensed its software products to more than 300 retail
customers worldwide in a wide variety of retail markets, including hard and soft
lines retailers, warehouse operations, department stores and grocery stores. The
Company generally targets customers having from 50 to over 500 store locations,
with annual sales in excess of $100 million.

The following is a partial list of the Company's customers that have
purchased at least $500,000 of the Company's products or services through March
31, 1998:

APPAREL
Bally Management Ltd.
(Switzerland)
Big M, Inc.
CHANEL, Inc.
Columbia Sportswear
Company
Filenes Basement Corp.
Footstar, Inc.
Foschini Group (Pty) Ltd.
(South Africa)
Gucci SpA (Italy)
Guess?, Inc.
InWear Group A/S
(Denmark)
Johnson's S.A. (Chile)
Moregro Retail Group, Ltd.
(South Africa)
Mothercare, U.K., Ltd. (UK)
Sainsbury's Savacentro,
Ltd. (UK)
Sears Clothing Ltd. (UK)
Stride Rite Children's
Group, Inc.
Today's Man
Wilsons The Leather Experts

AUTOMOTIVE
Chief Auto Parts, Inc.
CSK Auto, Inc.
The Retail Operations Division
of Bridgestone/ Firestone, Inc.
Western Auto Supply
Company

CONVENIENCE STORES
Fina Plc. (UK)
Petro-Canada (Canada)

CRAFTS & TOYS
Frank's Nursery & Crafts, Inc.
Lewiscraft (Canada)

DEPARTMENT STORES
Almacenes Paris Commercial
S.A. (Chile)
Beijing Wang Fu Jing Retail
Management Co. Ltd.
(China)
Cativen (Venezuela)
Royal Duty Free Shop, Inc.
(Philippines)
Specialty Department
Stores, Inc.

DRUG & COSMETICS
A.S. Watson & Co. Limited
(Hong Kong)
Bath & Body Works
Beauty Brands, Inc.
Farmatodo, C.A. (Venezuela)
MedMax, Inc.

FOOD
Calgary Co-operative Assoc.
Ltd. (Canada)
Chedraui (Mexico)
Laura Secord, Inc. (Canada)
Provigo, Inc. (Canada)
Santa Isabel (Chile)
Starbucks Corporation
Whole Foods Market, Inc.

FURNITURE, APPLIANCES &
ELECTRONICS
ABC Carpet & Home, Inc.
British Gas Energy
Centres, Ltd. (UK)
CompUSA, Inc.
Grupo Elektra (Mexico)
Heilig-Meyers Company
Onking Chain-Store Co. Ltd.
(Taiwan)
Sun Television &
Appliances, Inc.
Tandy Corporation

GENERAL MERCHANDISE
PETCO Animal Supplies, Inc.
Sky Connection Limited
(Hong Kong)
Kingfisher Group (UK)

HOME IMPROVEMENT
Eagle Hardware &
Garden, Inc.
Great Mills (Retail)
Ltd. (UK)
Intergamma BV (Netherlands)
Sodimac Chile (Chile)
Westlake ACE Hardware, Inc.
Wolohan Lumber, Inc.

HOUSEWARES
Bed, Bath & Beyond, Inc.
Lechters, Inc.
Robert Dyas Ltd. (UK)
Williams-Sonoma, Inc.

JEWELRY & CATALOG SHOWROOMS
Asprey Plc. (UK)
Carlyle & Co. Jewelers
Helzberg Diamonds, Inc.

LUGGAGE, CARDS & GIFTS
Birthdays Ltd. (UK)
Carlton Retail, Inc.
Factory Card Outlet Corp.
Party City Corporation

MUSIC, BOOKS, VIDEOS &
SOFTWARE
Books-A-Million, Inc.
Guitar Center, Inc.
HMV Group (UK)
Rogers Video
Virgin Entertainment
Group, Inc.

OFFICE PRODUCTS
Maxi-Papier-Market GMBH
(Staples-Germany)
Office Depot International
Staples, Inc. (UK and US)

OPTICAL & CAMERA
Black Photo Corporation
(Canada)
LensCrafters, Inc.
Sunglass Hut
International, Inc.
Vantios Group (UK)
Wolf Camera & Video

SPORTING GOODS
Gart Sports
JumboSports, Inc.
Mountain Equipment Co-op
(Canada)
Oshman's Sporting Goods, Inc.
West Marine, Inc.

THEME RETAIL
MCA/Universal Studios
MGM Grand, Inc.
Planet Hollywood International

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<PAGE> 38

SALES AND MARKETING

The Company's worldwide sales effort is conducted primarily through a
direct sales force located in Phoenix, Arizona and through international
operations in Australia, Brazil, Canada, Chile, France, Germany, Mexico,
Singapore and the United Kingdom. Internationally, in addition to its direct
sales force, the Company leverages its cooperative relationships with sales
agents, distributors, and other vendors, including IBM in China, Columbia,
India, the Middle East and Scandinavia. Additional relationships with system
integrators, other major hardware vendors and the retail systems consulting
groups of major accounting firms are also components of the Company's sales and
marketing strategy. The Company believes these relationships provide important
product endorsements and valuable feedback as well as sales referrals.

While the sales cycle varies substantially from customer to customer, it
typically requires six to nine months from generation of the sales lead to
execution of a license agreement. Because of the complexity and technical nature
of the Company's systems, consulting and product development employees often
participate directly in the sales cycle and educate prospective customers on the
advantages of using the Company's solutions.

The Company's marketing activities are directed at increasing market
awareness of the Company's products and services and identifying prospective
customers. The execution of major agreements with customers, when agreed to by
the customer, are accompanied by press announcements and public relations
activities. The Company combines attendance at key trade shows with a limited
amount of focused advertising and direct mail campaigns to generate prospects.
In addition to these activities, the Company's marketing personnel provide
extensive support to the sales organization, including responding to requests
for proposals, conducting product demonstrations and determining hardware
specifications. The marketing organization is also responsible for corporate
communications and development of sales tools and marketing materials. As of
March 31, 1998, the Company's sales and marketing organization consisted of 37
sales and marketing personnel in the United States and 39 sales and marketing
personnel in the rest of the world.

PRODUCT DEVELOPMENT AND JDA TECHNOLOGY

The Company has invested and expects to continue to invest substantial
resources in research and development. The Company believes that its future
performance will depend in large part on its ability to maintain and enhance its
current products, develop new products that achieve market acceptance, maintain
technological competitiveness and meet an expanding range of customer
requirements. The Company intends to continue development efforts towards new
products, such as its recently released ODBMS product, and enhancements that
address emerging requirements for highly adaptable applications utilizing the
advantages of client/server technologies across multiple platforms. In addition,
the Company continues to devote significant resources to modify its MMS product
line to take advantage of recent client/server enhancements to the IBM AS/400
platform.

The Company's software design philosophy is to develop products with broad,
enterprise-wide retailing functionality that is applicable to the majority of
retailers' needs. At the same time, the Company's objective is to design
products that are easily tailored to the specific work flows and business
processes of the individual retailer and are readily adapted to changing
conditions, reducing the amount of software modification required.

The Company has established a design framework, known as the Advanced
Retail Architecture ("ARA"), based on the principles of open systems and
object-oriented technologies, for developing new products and modules. This
architecture is designed to protect the Company's investment in product
development, as well as its customers' software investment, from changes in
underlying technology and front-end interfaces. The Company believes products
designed to ARA specifications can support multiple platforms and accommodate
platform changes or new platforms generally without significant modification to
the JDA application. The Company's products designed within the ARA framework
are ODBMS, Win/DSS and WCC. The Company intends to apply ARA to the development
of new products and the enhancement of existing products to the extent feasible.
However, the Company's ability to take advantage of the full scope of ARA design
objectives is limited by the proprietary nature of the IBM AS/400-based and
DOS-based platforms upon which MMS and DSS operate.

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<PAGE> 39

As of March 31, 1998, there were 140 employees on the Company's product
development staff. The Company's product development expenditures in 1997, 1996
and 1995 were $11.4 million, $6.5 million and $3.5 million, and represented 12%,
14% and 12% of total revenues, respectively. The Company's product development
expenditures were $4.3 million or 14% of total revenues for the three months
ended March 31, 1998, and the Company currently expects total product
development expenses in 1998 to be between $18 million and $19 million. The
Company's ongoing product development efforts include projects related to
shortening the implementation cycle and facilitating the integration of its
products.

The Company's newer software products, ODBMS, Win/DSS, Retail IDEAS and
WCC, which are designed for open client/server environments, have all been
commercially released within the last 18 months. To date, only a limited number
of customers have licensed or implemented the Company's client/server products.
The market for these products is new and evolving, and the Company believes that
retailers may generally be more cautious than other businesses in adopting
client/server technologies. Consequently, it is difficult to assess or predict
with any assurance the growth rate, if any, and size of the market for the
Company's client/server products, and there can be no assurance that this market
will continue to develop. Potential and existing customers may find it
difficult, or be unable, to successfully implement the Company's client/server
products, or may not purchase such products for a variety of reasons, including:
the customer's inability to obtain hardware, software, networking
infrastructure, or sufficient internal staff required to implement, operate and
maintain an open client/server solution; the generally longer time periods and
greater cost required to implement such products as compared to IBM AS/400-based
products; and limited implementation experience with such products by the
Company's service personnel or third-party implementation providers.
Furthermore, the Company must overcome significant obstacles to successfully
market its client/server solutions, including limited experience of the
Company's sales and consulting personnel in the client/server market and limited
existing reference accounts in this market. If the market for the Company's
client/server products fails to develop, develops more slowly than expected or
becomes saturated with competitors, or if the Company's products do not achieve
market acceptance, the Company's business, operating results and financial
condition will be materially adversely affected.

The computer software industry is subject to rapid technological change,
changing customer requirements, frequent new product introductions and evolving
industry standards that may render existing products and services obsolete. As a
result, the Company's position in its existing markets or other markets that it
may enter could be eroded rapidly by technological advancements not embraced by
the Company. The life cycles of the Company's products are difficult to
estimate. The products must keep pace with technological developments, conform
to evolving industry standards and address increasingly sophisticated customer
needs. In particular, the Company believes that it must continue to respond
quickly to users' needs for broad functionality and multi-platform support and
to advances in hardware and operating systems. Introduction of new products
embodying new technologies and the emergence of new industry standards could
render the Company's products obsolete and unmarketable. There can be no
assurance that the Company will not experience future difficulties that could
delay or prevent the successful development, introduction and marketing of new
products, or that new products and product enhancements will meet the
requirements of the marketplace and achieve market acceptance. If the Company is
unable to develop and introduce products in a timely manner in response to
changing market conditions or customer requirements, the Company's business,
operating results and financial condition would be materially adversely
affected.

In addition, the Company strives to achieve compatibility between those
products and retailing systems platforms which management believes are, or will
become, popular and widely adopted. The Company invests substantial resources in
development efforts aimed at achieving such compatibility. Any failure by the
Company to anticipate or respond adequately to technology or market developments
could result in a loss of competitiveness or revenue.

COMPETITION

The markets for retail information systems are highly competitive. The
Company believes the principal competitive factors in such markets are product
quality, reliability, performance and price, vendor and product reputation,
retail industry expertise, financial stability, features and functions, ease of
use and quality of

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<PAGE> 40

support. A number of companies offer competitive products addressing certain of
the Company's target markets. In the enterprise systems market, the Company
competes with in-house systems developed by the Company's targeted customers and
with third-party developers such as Intrepid Systems ("Intrepid"), Island
Pacific, Radius PLC, Retek (a subsidiary of HNC Software, Inc.), STS Systems and
Richter Management Services. In addition, the Company believes that new market
entrants may attempt to develop fully integrated enterprise level systems
targeting the retail industry. In particular, SAP AG has announced the
availability of an integrated client/server enterprise system competitive with
the Company's products, and Intrepid has announced the formation of a joint
development and marketing relationship with PeopleSoft, Inc., a provider of
enterprise applications software, to develop products that are expected to
compete directly with ODBMS.

In the in-store systems market, which is more fragmented than the
enterprise market, the Company competes with major hardware original equipment
manufacturers such as ICL, NCR and IBM, as well as software companies such as
CRS Business Computers, Datavantage, STS Systems, Trimax and GERS Retail
Systems. In the distribution and warehouse management systems market, the
Company's WCC product competes with products from Catalyst International, Inc.,
EXE and McHugh Freeman. The Retail IDEAS product competes with products from
Microstrategy and Intrepid, among other vendors. In the market for consulting
services, the Company is pursuing a strategy of forming informal working
relationships with leading retail systems integrators such as Andersen
Consulting and Ernst & Young LLP, and other similar major systems integrators.
These integrators, as well as independent consulting firms such as IBM Global
Services Division, also represent potential competition to the Company's
consulting services group.

PROPRIETARY RIGHTS

The Company's success and ability to compete is dependent in part upon its
proprietary technology, including its software source code. To protect its
proprietary technology, the Company relies on a combination of trade secret,
nondisclosure and copyright law, which may afford only limited protection. In
addition, effective copyright and trade secret protection may be unavailable or
limited in certain foreign countries. The Company presently has no patents or
patent applications pending. The source code for the Company's proprietary
software is protected both as a trade secret and as a copyrighted work. Although
the Company relies on the limited protection afforded by such intellectual
property laws, it also believes that factors such as the technological and
creative skills of its personnel, new product developments, frequent product
enhancements, name recognition and reliable maintenance are also essential to
establishing and maintaining a technology leadership position. The Company
generally enters into confidentiality or license agreements with its employees,
consultants and customers, and generally controls access to and distribution of
its software, documentation and other proprietary information. The terms of the
Company's license agreements with its customers often require the Company to
provide the customer with a listing of the product source code. Although the
license agreements place restrictions on the use by the customer of the
Company's source code and do not permit the re-sale, sublicense or other
transfer of such source code, there can be no assurance that unauthorized use of
the Company's technology will not occur.

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<PAGE> 41

Certain technology used by the Company's products is licensed from third
parties, generally on a non-exclusive basis. These licenses generally require
the Company to pay royalties and fulfill confidentiality obligations. The
Company believes that alternative resources exist for each of the material
components of technology licensed by the Company from third parties. However,
the termination of any such licenses, or the failure of the third-party
licensors to adequately maintain or update their products, could result in
delays in the Company's ability to ship certain of its products while it seeks
to implement technology offered by alternative sources. Any required replacement
licenses could prove costly. Also, any such delay, to the extent it becomes
extended or occurs at or near the end of a fiscal quarter, could result in a
material adverse effect on the Company's operating results. While it may be
necessary or desirable in the future to obtain other licenses relating to one or
more of the Company's products or relating to current or future technologies,
there can be no assurance that the Company will be able to do so on commercially
reasonable terms, if at all.

In the future, the Company may receive notices claiming that it is
infringing the proprietary rights of third parties, and there can be no
assurance that the Company will not become the subject of infringement claims or
legal proceedings by third parties with respect to current or future products.
In addition, the Company may initiate claims or litigation against third parties
for infringement of the Company's proprietary rights or to establish the
validity of the Company's proprietary rights. Any such claim could be time
consuming, result in costly litigation, cause product shipment delays or force
the Company to enter into royalty or license agreements rather than dispute the
merits of such claims. Moreover, an adverse outcome in litigation or similar
adversarial proceedings could subject the Company to significant liabilities to
third parties, require the expenditure of significant resources to develop
non-infringing technology, require disputed rights to be licensed from others,
or require the Company to cease the marketing or use of certain products, any of
which could have a material adverse effect on the Company's business, operating
results and financial condition. To the extent the Company desires or is
required to obtain licenses to patents or proprietary rights of others, there
can be no assurance that any such licenses will be made available on terms
acceptable to the Company, if at all. As the number of software products in the
industry increases and the functionality of these products further overlaps, the
Company believes the software developers may become increasingly subject to
infringement claims. Any such claims against the Company, with or without merit,
as well as claims initiated by the Company against third parties, could be time
consuming and expensive to defend, prosecute or resolve.

EMPLOYEES

As of March 31, 1998, the Company had approximately 780 employees, of which
approximately 450 were located in the United States. The Company has never had a
work stoppage and none of its employees are represented by a collective
bargaining agreement. The Company believes its relations with its employees are
good.

The Company's future operating results depend in significant part upon the
continued service of its key technical and senior management personnel. The
Company's future success also depends on its continuing ability to attract and
retain highly qualified technical and managerial personnel. Competition for such
personnel is intense, and there can be no assurance that the Company will retain
its key managerial or technical personnel or that it can attract, assimilate and
retain such personnel in the future. The Company has at times experienced, and
continues to experience, difficulty recruiting qualified personnel and there can
be no assurance that the Company will not experience such difficulties in the
future. The Company actively recruits qualified product development, consulting
and sales and marketing personnel. If the Company is unable to hire and retain
qualified personnel in the future, such inability could have a material adverse
effect on the Company's business, operating results and financial condition.

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<PAGE> 42

MANAGEMENT

The directors and executive officers of the Company, and their ages as of
March 31, 1998, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- -----------
<S> <C> <C>
Brent W. Lippman.......................... 41 Chief Executive Officer and Director
Kristen L. Magnuson....................... 41 Senior Vice President and Chief Financial Officer
Kenneth J. Desmarchais.................... 39 Senior Vice President of Research and Development
J. Timothy Davis.......................... 47 Senior Vice President of Worldwide Consulting
Services
Hamish Brewer............................. 36 Senior Vice President of International
James D. Armstrong........................ 47 Co-Chairman of the Board
Frederick M. Pakis........................ 44 Co-Chairman of the Board
Kurt R. Jaggers(1)........................ 39 Director
William C. Keiper(1)...................... 47 Director
</TABLE>

- ------------
(1) Member of Audit and Compensation Committees.

BRENT W. LIPPMAN serves on the Company's Board of Directors and was
promoted to Chief Executive Officer in October 1997. Mr. Lippman previously
served as the Company's Chief Operating Officer during 1997, as Senior Vice
President of Sales and Marketing during 1996, as Vice President of Marketing
from 1991 to 1995, and as Director of Marketing upon joining the Company in
1990. Prior to joining the Company, Mr. Lippman served as a Sales Manager with
Sterling Software, Inc., a publicly-held software company, from 1984 to 1990,
and as a Senior Systems Consultant for Wang Laboratories from 1983 to 1984. Mr.
Lippman received a Bachelor of Science Degree in Operations Research and a
Masters of Business Administration Degree from Case Western Reserve University.

KRISTEN L. MAGNUSON has served as the Company's Senior Vice President and
Chief Financial Officer since joining the Company in September 1997. Prior to
joining the Company, Ms. Magnuson served as Vice President of Finance and
Planning for Michaels Stores, Inc., a $1.4 billion publicly-held arts and craft
retailer from 1990 to 1997, as Senior Vice President and Controller of MeraBank
FSB, an $8 billion financial institution, from 1987 to 1990, and various
positions in the audit department of Ernst & Young from 1978 to 1987. Ms.
Magnuson is a Certified Public Accountant and received a Bachelor of Business
Administration Degree in Accounting from the University of Washington.

KENNETH J. DESMARCHAIS has served as the Company's Senior Vice President of
Research and Development since June 1997. Mr. Desmarchais previously served as
the Company's Vice President of Technology from 1995 to 1997, as Director of
Technology from 1992 to 1995, as Manager of New Product Development from 1990 to
1992 and as a Project Manager from 1988 to 1990. Prior to joining the Company,
Mr. Desmarchais served as a Project Manager with JDA Canada from 1986 to 1987,
and as an Advisory Systems Engineer with IBM Canada from 1980 to 1985. Mr.
Desmarchais received a Bachelor of Science Degree in Computer Science from
Ryerson Polytechnic Institute in Toronto, Ontario.

J. TIMOTHY DAVIS has served as the Company's Senior Vice President of
Worldwide Consulting Services since October 1997. Mr. Davis previously served as
the Company's Vice President of North American Consulting Services from 1996 to
1997. Prior to joining the Company, Mr. Davis served as Vice President and
Senior Manager with Price Waterhouse's Management Horizons Division from 1991 to
1995, as a Managing Associate with Coopers & Lybrand from 1983 and 1990, and as
Director of Financial Systems Planning and Analysis for Zale Corporation, a
publicly-held retail jewelry corporation, from 1980 to 1982. Mr. Davis received
a Bachelor of Science Degree in Business and Public Administration from the
University of Texas.

HAMISH BREWER was promoted to Senior Vice President of International in
January 1998. Mr. Brewer previously served as Vice President of the Company's
European, Middle East and African operations from 1996 to 1997, as Sales
Director of the Company's European, Middle East and African operations from 1995
to 1996, and as a Marketing Representative from 1994 to 1995. Prior to joining
the Company, Mr. Brewer served as a Retail Marketing Specialist with IBM from
1986 to 1994, and in various operational positions with a

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privately-held retail sales organization located in England. Mr. Brewer received
a Bachelor of Science and a Bachelor of Commerce Degree from the University of
Birmingham in England.

JAMES D. ARMSTRONG has been a director of the Company since 1985 and
currently serves as Co-Chairman of the Board with Mr. Pakis. Mr. Armstrong
co-founded the Company in 1985 and served as its Chief Executive Officer until
October 1997. Mr. Armstrong founded JDA Software Services, Ltd., a Canadian
software development company, in 1978 and served as its President until 1987.
Mr. Armstrong also served as a director of Mark's Work Wearhouse, a
publicly-held Canadian specialty retailing company from 1985 to 1987. Mr.
Armstrong attended Ryerson Polytechnic Institute in Toronto, Ontario.

FREDERICK M. PAKIS has been a director of the Company since 1985 and
currently serves as Co-Chairman of the Board with Mr. Armstrong. Mr. Pakis
co-founded the Company in 1985 and served as its President until October 1997.
Mr. Pakis served as a Retail Consulting Manager with Touche Ross & Co. from 1981
to 1985, and as Director of Corporate Planning for the Sherwin Williams Company,
a home improvement specialty store company from 1976 to 1981. Mr. Pakis has
served on the Board of Directors of Advanced Food Systems, Inc., a
privately-held food manufacturing and distribution company since October 1997.
Mr. Pakis attended the United States Military Academy at West Point, received a
Bachelor of Science Degree in Operations Research from Case Western Reserve
University and a Master of Business Administration Degree from the London School
of Business, where he studied as a Sloan Fellow.

KURT R. JAGGERS has served as a director of the Company since March 1995.
Mr. Jaggers has served as a Managing Director of TA Associates, an equity
investment firm since 1997. He has also served as a Principal for TA Associates
from 1993 to 1997, and in various advisory capacities with that firm from 1990
to 1993. Mr. Jaggers currently serves on the Board of Directors of Invitrogen
and International Microcircuits, two privately-held technology companies. Mr.
Jaggers attended Stanford University, receiving a Bachelor of Science and a
Master of Science Degree in electrical engineering, and a Master of Business
Administration Degree.

WILLIAM C. KEIPER joined the Company as a director on April 22, 1998. Mr.
Keiper has served as a Managing Director of Software Equity Group, L.L.C., a
software industry mergers, acquisitions and strategic consulting firm based in
Phoenix, Arizona, since January 1998. From January 1993 until October 1997, Mr.
Keiper served in various positions with Artisoft, Inc., a publicly-held software
company that provides local area network, PC communications and computer
telephony solutions. Mr. Keiper served as the President and Chief Operating
Officer of Artisoft, Inc. from January 1993 until June 1993, Chief Executive
Officer from June 1993 until October 1997, and Chairman of the Board from
October 1995 until October 1997. From 1986 through January 1993, Mr. Keiper held
various positions at MicroAge, Inc., a publicly-held distributor of personal
computer hardware and software, including serving as President and Chief
Operating Officer.

Crawford L. Cole resigned from the Company's Board of Directors effective
April 22, 1998.

43
<PAGE> 44

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK

The following discussion concerns the material United States federal income
tax consequences of the ownership and disposition of shares of Common Stock
applicable to Non-U.S. Holders of shares of Common Stock. In general, a
"Non-U.S. Holder" is any holder other than (i) a citizen or an individual
considered under the U.S. tax laws to be a resident of the U.S., (ii) a
corporation or partnership created or organized in the U.S. or under the laws of
the U.S. or any State, (iii) an estate whose income is includible in gross
income for U.S. federal income tax purposes regardless of its source or (iv) a
trust for which a court within the U.S. is able to exercise primary supervision
over the administration of the trust, and for which one or more U.S. fiduciaries
has the authority to control all substantial decisions of the trust. The
discussion is based on current law, which is subject to change retroactively or
prospectively, and is for general information only. The discussion does not
address all aspects of federal income taxation and does not address any aspects
of federal estate taxation or of state, local or foreign tax laws. The
discussion does not consider any specific facts or circumstances that may apply
to a particular Non-U.S. Holder (including the fact that in the case of a
Non-U.S. Holder that is a partnership, the U.S. tax consequences of holding and
disposing of shares of Common Stock may be affected by certain determinations
made at the partner level). Accordingly, prospective investors are urged to
consult their tax advisors regarding the U.S. federal, state, local and non-U.S.
income, estate and other tax consequences of holding and disposing of shares of
Common Stock.

Dividends. Dividends, if any (see "Dividend Policy"), paid to a Non-U.S.
Holder generally will be subject to United States withholding tax at a 30% rate
(or a lower rate as may be prescribed by an applicable tax treaty) unless the
dividends are effectively connected with a trade or business of the Non-U.S.
Holder within the U.S. Dividends effectively connected with a trade or business
will generally not be subject to withholding (if the Non-U.S. Holder complies
with applicable U.S. Internal Revenue Service ("IRS") reporting requirements)
and generally will be subject to U.S. federal income tax on a net income basis
at regular graduated rates. In the case of a Non-U.S. Holder which is a
corporation, such effectively connected income also may be subject to the branch
profits tax (which is generally imposed on a foreign corporation on the deemed
repatriation from the U.S. of effectively connected earnings and profits) at a
30% rate or, if available, a lower treaty rate. Under currently effective U.S.
Treasury regulations, dividends paid to an address outside the U.S. are presumed
to be paid to a resident of such country for purposes of the withholding tax.
Under interpretations of currently effective U.S. Treasury regulations, the same
presumption applies to determine the applicability of a reduced rate of
withholding under a tax treaty. Thus, non-U.S. holders receiving dividends at
addresses outside the U.S. are not currently required to file tax forms to
obtain the benefit of an applicable treaty rate. Recently finalized U.S.
Treasury Regulations applicable to dividends paid after December 31, 1999 (the
"Final Regulations") generally provide that the status of a payee as a Non-U.S.
Holder would be made based upon a withholding certificate. In addition, the
Final Regulations establish certain presumptions upon which the Company may
generally rely to determine whether, in the absence of a certification, a holder
should be treated as a Non-U.S. Holder for purposes of the 30% withholding tax
described above. The presumptions would not apply for purposes of granting a
reduced rate of withholding under a treaty. Under the Final Regulations, to
obtain a reduced rate of withholding under a treaty, a Non-U.S. Holder will
generally be required either (i) to provide an IRS Form W-8 certifying such
Non-U.S. Holder's entitlement to benefits under a treaty together with, in
certain circumstances, additional information or (ii) satisfy certain other
applicable certification requirements. The Final Regulations also provide
special rules to determine whether, for purposes of determining the
applicability of a tax treaty and for purposes of the 30% withholding tax
described above, dividends paid to a Non-U.S. Holder that is an entity should be
treated as paid to the entity or those holding an interest in that entity.

Dispositions of Common Stock. Generally, a Non-U.S. Holder will not be
subject to United States federal income tax on any gain realized upon the
disposition of such holder's shares of Common Stock unless (i) the gain is
effectively connected with a trade or business carried on by the Non-U.S. Holder
with the U.S. (in which case the branch profits tax may also apply); (ii) the
Non-U.S. Holder is an individual who holds the shares of Common Stock as a
capital asset and is present in the U.S. for 183 days or more in the taxable
year of the disposition and to whom such gain is U.S. source; (iii) the Non-U.S.
Holder is subject to tax pursuant

44
<PAGE> 45

to the provisions of U.S. tax law applicable to certain former U.S. citizens or
residents; or (iv) the Company is or has been a "U.S. real property holding
corporation" for federal income tax purposes (which the Company does not believe
that it is or is likely to become) at any time during the five-year period
ending on the date of disposition (or such shorter period that such shares were
held).

BACKUP WITHHOLDING AND INFORMATION REPORTING

Dividends. The Company must report annually to the IRS and to each
Non-U.S. Holder the amount of dividends paid to and the tax withheld, if any,
with respect to such holder. These information reporting requirements apply
regardless of whether withholding was reduced by an applicable tax treaty.
Copies of these information returns may also be available under the provisions
of a specific treaty or agreement with the tax authorities in the country in
which the Non-U.S. Holder resides. Dividends that are subject to U.S.
withholding tax at the 30% statutory rate or at a reduced tax treaty rate and
dividends that are effectively connected with the conduct of a trade or business
in the U.S. (if certain certification and disclosure requirements are met) are
exempt from backup withholding of U.S. federal income tax. In general, backup
withholding at a rate of 31% and information reporting will apply to other
dividends paid on shares of Common Stock to holders that are not "exempt
recipients" and fail to provide in the manner required certain identifying
information (such as the holder's name, address and taxpayer identification
number). Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. For dividends paid
after December 31, 1999, the Final Regulations provide certain presumptions and
other rules under which Non-U.S. Holders may be subject to backup withholding
and related information reporting in the absence of required certifications.

Dispositions of Common Stock. The payment of the proceeds from the
disposition of shares of Common Stock through the U.S. office of a broker will
be subject to information reporting and backup withholding unless the holder,
under penalties of perjury, certifies, among other things, its status as a
Non-U.S. Holder, or otherwise establishes an exemption. Generally, the payment
of the proceeds from the disposition of shares of Common Stock to or through a
non-U.S. office of a broker will not be subject to backup withholding and will
not be subject to information reporting. In the case of the payment of proceeds
from the disposition of shares of Common Stock through a non-U.S. office of a
broker that is a U.S. person or a "U.S.-related person," existing regulations
require information reporting (but not backup withholding) on the payment unless
the broker receives a statement from the owner, signed under penalties of
perjury, certifying, among other things, its status as a Non-U.S. Holder, or the
broker has documentary evidence in its files that the owner is a Non-U.S.
Holder, the broker has no actual knowledge to the contrary and ceratin other
requirements are satisfied. For tax purposes, a "U.S.-related person" is (i) a
"controlled foreign corporation" for U.S. federal income tax purposes, (ii) a
foreign person 50% or more of whose gross income from all sources for the three-
year period ending with the close of its taxable year preceding the payment (or
for such part of the period that the broker has been in existence) is derived
from activities that are effectively connected with the conduct of a U.S. trade
or business or (iii) effective after December 31, 1999, certain brokers that are
foreign partnerships with U.S. partners or that are engaged in a U.S. trade or
business.

Any amounts withheld from a payment to a Non-U.S. Holder under the backup
withholding rules will be allowed as a credit against such holder's U.S. federal
income tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the IRS. Non-U.S. Holders should consult
their tax advisors regarding the application of these rules to their particular
situations, the availability of an exemption therefrom and the procedures for
obtaining such an exemption, if available.

45
<PAGE> 46

UNDERWRITERS

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof (the "Underwriting Agreement"), the U.S.
Underwriters named below for whom Morgan Stanley & Co. Incorporated, Donaldson,
Lufkin & Jenrette Securities Corporation and Hambrecht & Quist LLC are acting as
U.S. Representatives, and the International Underwriters named below for whom
Morgan Stanley & Co. International Limited, Donaldson, Lufkin & Jenrette
International and Hambrecht & Quist LLC are acting as International
Representatives, have severally agreed to purchase, and the Company has agreed
to sell to them, severally, the respective number of shares of Common Stock set
forth opposite the names of such Underwriters below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- ---------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated......................... 480,000
Donaldson, Lufkin & Jenrette Securities Corporation....... 240,000
Hambrecht & Quist LLC..................................... 240,000
Adams, Harkness & Hill, Inc. ............................. 40,000
A.G. Edwards & Sons, Inc. ................................ 80,000
Jefferies & Company, Inc. ................................ 40,000
Edward D. Jones & Co., L.P. .............................. 80,000
Lazard Freres & Co. LLC................................... 80,000
Pacific Growth Equities, Inc. ............................ 40,000
Piper Jaffray Inc. ....................................... 80,000
Prudential Securities Incorporated........................ 80,000
Wheat, First Securities, Inc. ............................ 40,000
---------
Subtotal............................................... 1,520,000
---------
International Underwriters:
Morgan Stanley & Co. International Limited................ 240,000
Donaldson, Lufkin & Jenrette International................ 120,000
Hambrecht & Quist LLC..................................... 120,000
---------
Subtotal............................................... 480,000
---------
Total............................................. 2,000,000
=========
</TABLE>

The U.S. Underwriters and the International Underwriters, and the U.S.
Representatives and the International Representatives, are collectively referred
to as the "Underwriters" and the "Representatives," respectively. The
Underwriting Agreement provides that the obligations of the several Underwriters
to pay for and accept delivery of the shares of Common Stock offered hereby are
subject to the approval of certain legal matters by their counsel and to certain
other conditions. The Underwriters are obligated to take and pay for all of the
shares of Common Stock offered hereby (other than those covered by the U.S.
Underwriters' over-allotment option described below) if any such shares are
taken.

Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that, with certain exceptions: (i)
it is not purchasing any Shares (as defined herein) for the account of anyone
other than a United States or Canadian Person (as defined herein) and (ii) it
has not offered or sold, and will not offer or sell, directly or indirectly, any
Shares or distribute any prospectus relating to the Shares outside the United
States or Canada or to anyone other than a United States or Canadian Person.
Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has represented and agreed that, with certain
exceptions: (i) it is not purchasing any Shares for the account of any United
States or Canadian Person and (ii) it has not offered or sold, and will not
offer or sell, directly or indirectly, any Shares or distribute any prospectus
relating to the Shares in the United States or Canada or to any United States or
Canadian Person. With respect to any Underwriter that is

46
<PAGE> 47

a U.S. Underwriter and an International Underwriter, the foregoing
representations and agreements (i) made by it in its capacity as a U.S.
Underwriter apply only to it in its capacity as a U.S. Underwriter and (ii) made
by it in its capacity as an International Underwriter apply only to it in its
capacity as an International Underwriter. The foregoing limitations do not apply
to stabilization transactions or to certain other transactions specified in the
Agreement between U.S. and International Underwriters. As used herein, "United
States or Canadian Person" means any national or resident of the United States
or Canada, or any corporation, pension, profit-sharing or other trust or other
entity organized under the laws of the United States or Canada or of any
political subdivision thereof (other than a branch located outside the United
States and Canada of any United States or Canadian Person), and includes any
United States or Canadian branch of a person who is otherwise not a United
States or Canadian Person. All shares of Common Stock to be purchased by the
Underwriters under the Underwriting Agreement are referred to herein as the
"Shares."

Pursuant to the Agreement between U.S. and International Underwriters,
sales may be made between the U.S. Underwriters and International Underwriters
of any number of Shares as may be mutually agreed. The per share price of any
Shares so sold shall be the public offering price set forth on the cover page
hereof, in United States dollars, less an amount not greater than the per share
amount of the concession to dealers set forth below.

Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented that it has not offered or sold, and has agreed
not to offer or sell, any Shares, directly or indirectly, in any province or
territory of Canada or to, or for the benefit of, any resident of any province
or territory of Canada in contravention of the securities laws thereof and has
represented that any offer or sale of Shares in Canada will be made only
pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer or sale is made. Each U.S.
Underwriter has further agreed to send to any dealer who purchases from it any
of the Shares a notice stating in substance that, by purchasing such Shares,
such dealer represents and agrees that it has not offered or sold, and will not
offer or sell, directly or indirectly, any of such Shares in any province or
territory of Canada or to, or for the benefit of, any resident of any province
or territory of Canada in contravention of the securities laws thereof and that
any offer or sale of Shares in Canada will be made only pursuant to an exemption
from the requirement to file a prospectus in the province or territory of Canada
in which such offer or sale is made, and that such dealer will deliver to any
other dealer to whom it sells any of such Shares a notice containing
substantially the same statement as is contained in this sentence.

Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has represented and agreed that (i) it has not offered
or sold and, prior to the date six months after the closing date for the sale of
the Shares to the International Underwriters, will not offer or sell, any Shares
to persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Shares in, from or otherwise involving
the United Kingdom; and (iii) it has only issued or passed on and will only
issue or pass on in the United Kingdom any document received by it in connection
with the offering of the Shares to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on.

Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has further represented that it has not offered or
sold, and has agreed not to offer or sell, directly or indirectly, in Japan or
to or for the account of any resident thereof, any of the Shares acquired in
connection with the distribution contemplated hereby, except for offers or sales
to Japanese International Underwriters or dealers and except pursuant to any
exemption from the registration requirements of the Securities and Exchange Law
and otherwise in compliance with applicable provisions of Japanese law. Each
International Underwriter has further agreed to send to any dealer who purchases
from it any of the Shares a notice stating in substance that, by purchasing such
Shares, such dealer represents and agrees that it has not offered or sold, and
will not offer or sell, any of such Shares, directly or indirectly, in Japan or
to or for the account of any resident thereof except for
47
<PAGE> 48

offers or sales to Japanese International Underwriters or dealers and except
pursuant to any exemption from the registration requirements of the Securities
and Exchange Law and otherwise in compliance with applicable provisions of
Japanese law, and that such dealer will send to any other dealer to whom it
sells any of such Shares a notice containing substantially the same statement as
is contained in this sentence.

The Underwriters initially propose to offer part of the shares of Common
Stock directly to the public at the public offering price set forth on the cover
page hereof and part to certain dealers at a price that represents a concession
not in excess of $1.42 a share under the public offering price. Any Underwriter
may allow, and such dealers may reallow, a concession not in excess of $.10 a
share to other Underwriters or to certain dealers. After the initial offering of
the shares of Common Stock, the offering price and other selling terms may from
time to time be varied by the Representatives.

The Company has granted to the U.S. Underwriters an option, exercisable for
30 days from the date of this Prospectus, to purchase up to an aggregate of
300,000 additional shares of Common Stock at the public offering price set forth
on the cover page hereof, less underwriting discounts and commissions. The U.S.
Underwriters may exercise such option solely for the purpose of covering
over-allotments, if any, made in connection with the offering of the shares of
Common Stock offered hereby. To the extent such option is exercised, each U.S.
Underwriter will become obligated, subject to certain conditions, to purchase
approximately the same percentage of such additional shares of Common Stock as
the number set forth next to such U.S. Underwriter's name in the preceding table
bears to the total number of shares of Common Stock set forth next to the names
of all U.S. Underwriters in the preceding table.

Each of the Company and the directors and executive officers of the Company
has agreed that, without the prior written consent of Morgan Stanley & Co.
Incorporated on behalf of the Underwriters, it will not, during the period
ending 90 days after the date of this Prospectus, subject to certain exceptions,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise.

In order to facilitate the offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Stock. Specifically, the Underwriters may over-allot in
connection with the offering, creating a short position in the Common Stock for
their own account. In addition, to cover over-allotments or to stabilize the
price of the Common Stock, the Underwriters may bid for, and purchase, shares of
Common Stock in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an Underwriter or a dealer for distributing the
Common Stock in the offering, if the syndicate repurchases previously
distributed Common Stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Common Stock above independent market
levels. The Underwriters are not required to engage in these activities, and may
end any of these activities at any time.

The Underwriters and dealers may engage in passive market making
transactions in the Common Stock in accordance with Rule 103 of Regulation M
promulgated by the Securities and Exchange Commission. In general, a passive
market maker may not bid for, or purchase, the Common Stock at a price that
exceeds the highest independent bid. In addition, the net daily purchases made
by any passive market maker generally may not exceed 30% of its average daily
trading volume in the Common Stock during a specified two month prior period, or
200 shares, whichever is greater. A passive market maker must identify passive
market making bids as such on the Nasdaq electronic inter-dealer reporting
system. Passive market making may stabilize or maintain the market price of the
Common Stock above independent market levels. Underwriters and dealers are not
required to engage in passive market making and may end passive market making
activities at any time.

The Company and the Underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act of
1933.

48
<PAGE> 49

LEGAL MATTERS

The validity of the securities offered hereby has been and general
corporate legal matters will be passed upon for the Company by Gray Cary Ware &
Freidenrich LLP, Austin, Texas. Certain legal matters in connection with the
Offering will be passed upon for the Underwriters by Brobeck, Phleger & Harrison
LLP, Austin, Texas.

EXPERTS

The consolidated financial statements incorporated in this prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated by reference and has
been so incorporated in reliance upon such firm given upon their authority as
experts in accounting and auditing.

AVAILABLE INFORMATION

The Company is subject to the information requirements of the Securities
Exchange Act of 1934 and, in connection therewith, files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, or at the Commission's Regional Offices located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and at 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of
these materials can also be obtained at prescribed rates from the Public
Reference Section of the Commission at the principal offices of the Commission,
450 Fifth Street, NW, Washington, D.C. 20549. In addition, copies of such
materials filed electronically by the Company with the Commission may be
obtained from the web site that the Commission maintains at http://www.sec.gov.

The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933. This Prospectus does
not contain all the information set forth in the Registration Statement and the
exhibits and schedules thereto, certain portions of which are omitted in
accordance with the rules and regulations of the Commission. Statements made in
the Prospectus concerning the contents of any documents referred to herein are
not necessarily complete. With respect to each such document filed with the
Commission as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description, and each such statement shall be deemed
qualified in its entirety by such reference.

49
<PAGE> 50

[JDA LOGO]
<PAGE> 51
Filed under Rule 424(b)(4)
- Registration Statement
No. 333-51043

PROSPECTUS

2,000,000 Shares

[JDA LOGO]
COMMON STOCK
------------------------
OF THE 2,000,000 SHARES OF COMMON STOCK BEING OFFERED HEREBY, 480,000 SHARES ARE
BEING OFFERED INITIALLY OUTSIDE OF THE UNITED STATES AND CANADA BY THE
INTERNATIONAL UNDERWRITERS AND 1,520,000 SHARES ARE BEING OFFERED INITIALLY IN
THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS. SEE "UNDERWRITERS." ALL
OF THE SHARES OF COMMON STOCK BEING OFFERED HEREBY ARE BEING SOLD BY THE
COMPANY. THE COMPANY'S COMMON STOCK IS LISTED ON THE NASDAQ NATIONAL MARKET
UNDER THE SYMBOL "JDAS." ON MAY 6, 1998, THE LAST SALE PRICE OF THE COMMON STOCK
AS REPORTED ON THE NASDAQ NATIONAL MARKET WAS $46 1/8 PER SHARE. SEE "PRICE
RANGE OF COMMON STOCK."
------------------------
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
COMMENCING ON PAGE 5 HEREOF.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

------------------------
PRICE $46 A SHARE
------------------------

- ------------

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriters."

(2) Before deducting expenses payable by the Company estimated at $500,000.

(3) The Company has granted the U.S. Underwriters an option, exercisable
within 30 days of the date hereof, to purchase up to an aggregate of
300,000 additional Shares at the price to public, less the underwriting
discounts and commissions, solely to cover over-allotments, if any. If
the U.S. Underwriters exercise such option in full, the total price to
public, underwriting discounts and commissions and proceeds to Company
will be $105,800,000, $5,497,000 and $100,303,000, respectively. See
"Underwriters."
------------------------
The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein and subject to approval of certain legal matters
by Brobeck, Phleger & Harrison LLP, counsel for the Underwriters. It is expected
that delivery of the Shares will be made on or about May 12, 1998 at the office
of Morgan Stanley & Co Incorporated, New York, N.Y., against payment therefor in
immediately available funds.
------------------------
MORGAN STANLEY DEAN WITTER
DONALDSON, LUFKIN & JENRETTE
International

HAMBRECHT & QUIST

May 6, 1998
<PAGE> 52

TABLE OF CONTENTS

------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

2
<PAGE> 53

PROSPECTUS SUMMARY

THE OFFERING

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

(3) Includes common and equivalent shares outstanding subsequent to the
Company's reorganization on March 30, 1995.

3
<PAGE> 54

THE COMPANY

4
<PAGE> 55

RISK FACTORS

Prior to 1998, the Company recognized revenue in accordance with the
provisions of the American Institute of Certified Public Accountants ("AICPA")
Statement of Position No. 91-1, Software Revenue Recognition ("SOP 91-1"). The
AICPA has recently adopted Statement of Position No. 97-2, Software Revenue
Recognition ("SOP 97-2"), that supersedes SOP 91-1. The Company adopted SOP 97-2
effective January 1, 1998. The adoption of SOP 97-2 did not have a significant
impact on the Company's financial statements for the three months ended March
31, 1998. However, there can be no assurance that subsequent interpretations of
this pronouncement by the Company's independent auditors or the Securities and
Exchange Commission will not modify the Company's revenue recognition policies,
or that such modifications will not

5
<PAGE> 56

6
<PAGE> 57

7
<PAGE> 58

8
<PAGE> 59

9
<PAGE> 60

10
<PAGE> 61

11
<PAGE> 62

12
<PAGE> 63

14
<PAGE> 65

FORWARD-LOOKING STATEMENTS

USE OF PROCEEDS

DIVIDEND POLICY

15
<PAGE> 66

PRICE RANGE OF COMMON STOCK

16
<PAGE> 67

CAPITALIZATION

17
<PAGE> 68

SELECTED CONSOLIDATED FINANCIAL DATA

(2) The results for 1995, 1994 and 1993 include common and equivalent shares
outstanding subsequent to the Company's reorganization on March 30, 1995.

18
<PAGE> 69

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

JDA Software Group, Inc. ("JDA" or the "Company") is a leading
international provider of integrated enterprise-wide software products and
services that address mission-critical management information needs of the
retail supply chain. The Company's products include: merchandising, financial
and decision support systems at the corporate level; point-of-sale, back office
and distributed processing applications at the store level; and warehouse
management and logistics systems at the distribution level. JDA also offers a
wide range of professional services through its consulting and customer support
organizations, including project management, system planning, design and
implementation, custom modifications, training and support services.

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The Asia/Pacific region encountered unstable local economies and
significant devaluation in its currencies during the last six months of 1997 and
continuing into 1998. The economic situation in the region has resulted in
slower payment of outstanding receivable balances and various requests for
extended or modified payment terms. This region represented 4% of the Company's
revenues for the three months ended March 31, 1998 and less than 10% of the
Company's revenues and less than 2% of income from operations in fiscal year
1997. Asia/Pacific receivables, net of reserves, were approximately 9% of the
Company's total net receivables as of March 31, 1998. To the extent the
Asia/Pacific region grows in importance to the Company, or that the factors
affecting the region begin to adversely affect retailers in other geographic
locations, the Company's business, operating results and financial condition
could be adversely affected.

Prior to 1998, the Company recognized revenue in accordance with the
provisions of the American Institute of Certified Public Accountants ("AICPA")
Statement of Position No. 91-1, Software Revenue Recognition ("SOP 91-1"). Under
SOP 91-1, software license revenue is recognized upon the shipment of the
product if collection is probable and the Company's remaining obligations under
the license agreement are insignificant. Consulting services are generally
billed on an hourly basis and revenues are recognized as the work is performed.
Maintenance revenues from ongoing customer support are billed on a monthly basis
and recorded as revenue in the applicable month. The AICPA has recently adopted
Statement of Position No. 97-2, Software Revenue Recognition ("SOP 97-2"), that
supersedes SOP 91-1. The Company adopted SOP 97-2 effective January 1, 1998. The
adoption of SOP 97-2 did not have a significant impact on the Company's
financial statements for the three months ended March 31, 1998. However, there
can be no assurance that subsequent interpretations of this pronouncement by the
Company's independent auditors or the Securities and Exchange Commission will
not modify the Company's revenue recognition policies, or that such
modifications will not have a material adverse effect on the operating results
reported in any particular quarter. There can be no assurance that the Company
will not be required to adopt changes in its software licensing or services
practices to conform to SOP 97-2, or that such changes will not result in delays
or cancellations of potential sales of the Company's products.

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RESULTS OF OPERATIONS

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(1) The results for 1995 include a pro forma provision for U.S. federal income
taxes at statutory rates.

THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997

REVENUES

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COST OF REVENUES

GROSS PROFIT

OPERATING EXPENSES

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PROVISION FOR INCOME TAXES

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

REVENUES

COST OF REVENUES

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GROSS PROFIT

OPERATING EXPENSES

PROVISION FOR INCOME TAXES

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

REVENUES

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increase in international revenues in 1996 was also the result of the
acquisition of JDA Canada in August 1996 and the related increase in revenues in
Canada.

COST OF REVENUES

GROSS PROFIT

OPERATING EXPENSES

PROVISION FOR INCOME TAXES

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QUARTERLY RESULTS OF OPERATIONS

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LIQUIDITY AND CAPITAL RESOURCES

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YEAR 2000 COMPLIANCE

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BUSINESS

JDA Software Group, Inc. ("JDA" or the "Company") is a leading
international provider of integrated enterprise-wide software products and
services that address mission-critical management information needs of the
retail supply chain. The Company offers a broad array of software products
designed to provide integrated technology solutions for the collection,
organization and analysis of data and the distribution of information throughout
a retail organization. The Company's products include: merchandising, financial
and decision support systems at the corporate level; point-of-sale, back office
and distributed processing applications at the store level; and warehouse
management and logistics systems at the distribution level. The Company offers
products that operate on IBM AS/400-based and DOS-based platforms, as well as
products that operate in the UNIX and Windows NT open client/server
environments. JDA also offers a wide range of professional services through its
consulting and customer support organizations including: project management,
system planning, design and implementation, custom modifications, training and
support services.

INDUSTRY BACKGROUND

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JDA SOLUTION

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The Company's solutions are designed to provide the following benefits to
retailers:

COMPANY STRATEGY

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PRODUCTS

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distribution level. The Company also offers a data warehouse system for the
analysis of information throughout the retail supply chain.

The following chart summarizes certain key functions of the retail
enterprise addressed by the Company's products:

[CHART DEPICTING CERTAIN FEATURES AND FUNCTIONALITY OF JDA PRODUCTS]
Merchandise Management Systems

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In-Store Systems

Warehouse and Logistics Systems

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merchandise receiving and wholesale order entry modules as part of its MMS
merchandise product. License fees for these modules have generally ranged from
$50,000 to $230,000.

Data Warehouse System

CONSULTING, MAINTENANCE AND OTHER SERVICES

Consulting Services

Education and Training

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Customer Support Services

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