Index to Financial Statements

As filed with the Securities and Exchange Commission on November 25, 2009

Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

Under

The Securities Act of 1933

REDPRAIRIE HOLDING, INC.

(Exact name of Registrant as specified in its charter)

Delaware

7372

20-2813175

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

20700 Swenson Drive

Waukesha, WI 53186

(262) 317-2000

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Laura L. Fese, Esq.

Executive Vice President and

Chief Legal Officer

RedPrairie Holding, Inc.

20700 Swenson Drive

Waukesha, WI 53186

(262) 317-2000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Barry M. Abelson, Esq.

John P. Duke, Esq.

Pepper Hamilton LLP

3000 Two Logan Square

18^th and Arch Streets

Philadelphia, PA 19103

(215) 981-4000

Larry W. Sonsini, Esq.

Robert G. Day, Esq.

Wilson Sonsini Goodrich & Rosati

Professional Corporation

650 Page Mill Road

Palo Alto, CA 94304

(650) 493-9300

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act of 1934.


Large Accelerated filer ¨		Accelerated filer ¨
Non-accelerated filer x (do not check if a smaller reporting company)		Smaller reporting company ¨

CALCULATION OF REGISTRATION FEE



Title of Securities to be Registered	Proposed Maximum Aggregate Offering Price (1)(2)	Amount of Registration Fee
Common Stock, $0.001 par value per share	$ 172,500,000	$ 9,625.50

(1)	Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2)	Includes shares of common stock that may be purchased by the underwriters to cover overallotments, if any.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

Index to Financial Statements

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion

Preliminary Prospectus dated November 25, 2009

PROSPECTUS

Shares

LOGO

Common Stock

This is the initial public offering of RedPrairie Holding, Inc. We are selling shares and our stockholders are selling shares.

We expect the public offering price to be between $ and $ per share. Currently, no public market exists for the shares. After pricing of the offering, we expect that the shares will trade on the under the symbol “ .”

Investing in our common stock involves a high degree of risk. See “Risk Factors” on page 9 of this prospectus.


	Per Share	Total
Public offering price	$	$
Underwriting discount	$	$
Proceeds, before expenses, to RedPrairie	$	$
Proceeds, before expenses, to the selling stockholders	$	$

The underwriters may also purchase up to an additional shares from RedPrairie, and up to an additional shares from the selling stockholders, at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover overallotments.

Neither the Securities and Exchange Commission nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The shares will be ready for delivery on or about , 2010.


BofA Merrill Lynch		Credit Suisse

Oppenheimer & Co.

Needham & Company, LLC

The date of this prospectus is , 2010.

Index to Financial Statements

TABLE OF CONTENTS


		Page
Prospectus Summary		1
Risk Factors		9
Special Note Regarding Forward-Looking Statements		29
Use of Proceeds		30
Dividend Policy		30
Capitalization		31
Dilution		32
Selected Consolidated Financial Data		34
Management’s Discussion and Analysis of Financial Condition and Results of Operations		38
Business		75
Management		92
Executive Compensation		99
Certain Relationships and Related Party Transactions		117
Principal and Selling Stockholders		120
Description of Capital Stock		122
Shares Eligible for Future Sale		126
Material United States Tax Considerations for Non-United States Holders of Common Stock		129
Underwriting		133
Legal Matters		139
Experts		139
Where You Can Find Additional Information		139
Index to Consolidated Financial Statements		F-1

You should rely only on the information contained in this prospectus or in any free-writing prospectus we may specifically authorize to be delivered or made available to you. We have not, and the selling stockholders and the underwriters have not, authorized anyone to provide you with additional or different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the selling stockholders and underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

Index to Financial Statements

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. It does not contain all of the information that may be important to you and your investment decision. You should carefully read this entire prospectus, including the matters set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes. In this prospectus, unless the context otherwise requires, references to “RedPrairie,” “we,” “us” and “our” refer to RedPrairie Holding, Inc. and our consolidated subsidiaries.

Our Company

We provide a unique platform of productivity solutions that enable manufacturers, distributors and retailers to synchronize and optimize the management of workforce, inventory and transportation. We deliver these solutions that support business strategies for increasing revenue, reducing costs and creating competitive advantage through a combination of our software and domain expertise. Unlike traditional supply chain management software, which has generally focused on the flow of goods or materials through manufacturing facilities and distribution centers, our platform extends beyond the distribution center to the point of sale or consumption. Furthermore, our platform encompasses solutions to help optimize workforce and inventory management for in-store operations. We refer to this differentiated platform of productivity solutions as E²e™.

We have provided productivity solutions for nearly 35 years. Our customers include eight of the top 15 food and drug retailers, four of the top five food consumer products companies, three of the top four household and personal products companies, four of the top ten general merchandisers and specialty retailers, three of the top five petroleum companies and five of the top ten pharmaceutical companies, based on the 2009 list of Fortune Global 500 companies. Our solutions, which are installed at more than 34,000 customer sites in more than 40 countries, address customer needs for speed, accuracy, visibility and flexibility required to manage increasingly complex, global supply chain networks and in-store operations. Our offerings allow our customers to use forecasted and real-time demand information to more flexibly manage the deployment of people and distribution of products. By implementing our solutions, our customers can realize measurable benefits including better availability of goods at the point of sale and better control over inventory, transportation and personnel costs throughout the supply chain and in retail stores. Our solutions can be deployed in a modular fashion and in the optimal sequence to align with our customers’ evolving strategic objectives.

Our management team has significant experience in developing innovative technologies for evolving supply chain and in-store operations requirements, and in marketing, selling and supporting productivity-focused supply chain and in-store operations solutions. Our total revenue, net income and adjusted EBITDA were $292.9 million, $10.7 million and $60.3 million, respectively, in 2008. For a discussion of adjusted EBITDA see note 4 to “—Summary Consolidated Financial Data.”

Market Opportunity

Currently, our offerings address the needs of the supply chain management, or SCM, and in-store solutions markets, and a portion of the human capital management, or HCM, market. According to a September 2009 report by Gartner, Inc.¹, an independent research firm, the worldwide SCM market is expected to grow to $7.7 billion in 2012 from $6.0 billion in 2007, representing a compound annual growth rate of 5.1%. According to a November 2008 report by Frost & Sullivan, an independent research firm, the worldwide market for in-store solutions is expected to grow to $2.2 billion in 2012 from $1.5 billion in 2007, representing a compound annual

¹	Gartner, Inc., “Forecast: Enterprise Software Markets, Worldwide, 2008-2013, 3Q09 Update,” September 15, 2009, Fabrizio Biscotti, et. al., or the Gartner Report.

Index to Financial Statements

growth rate of 8.0%. In addition, we offer certain solutions that are applicable to some of our customers’ needs for HCM software. According to a December 2008 report by IDC,² an independent research firm, the worldwide HCM applications market is expected to be $6.5 billion in 2010.

Traditional SCM software applications are used to manage the flow of materials through manufacturing facilities and distribution centers. Generally, these facility-focused applications are designed to manage the movement of products from the point of receipt to the point of shipment, but do not provide visibility into the workforce or inventory management processes that impact those products from the point of shipment to the point of sale or consumption. Over time, the complexity of global supply chains has increased, creating a need for more robust capabilities from SCM solutions.

In the retail sector in particular, increased competition is leading industry executives to focus on enhancing efficiency and productivity for in-store operations by automating the management of their in-store inventory, workforce and promotional activities, or tasks. However, existing technology solutions have been limited in their effectiveness by the lack of integration with the rest of the supply chain network.

As a result of a need for greater efficiency and a desire to establish a competitive advantage, we believe that enterprises are increasingly demanding productivity solutions that address a broader range of business processes that extend from the point of manufacturing to the point of sale or consumption and include workforce, inventory and transportation management and in-store operations.

Our Solutions

We provide a comprehensive platform of productivity solutions that synchronizes and optimizes the deployment of people and the distribution of products in retail stores and throughout the supply chain network based on forecasted and real-time consumer demand. We deliver these solutions through a combination of our software and domain expertise that supports business strategies to increase revenue, reduce costs and create competitive advantage. E²e, our extended approach to supply chain management, effectively positions us to provide improved visibility into and control over logistics, inventory and personnel. Our solutions:

•

are built on a flexible service-oriented architecture, or SOA, which enables deployment in a modular fashion and in the optimal sequence to align with our customers’ evolving strategic objectives;

•

address complex, industry-specific supply chain network logistics challenges;

•

coordinate and optimize workforce schedules and employee deployment across supply chain networks and in stores;

•

draw upon our substantial expertise in addressing enterprises’ complex international business and regulatory requirements, and enable regulatory compliance, facilitate management of logistics in densely-populated geographies, and coordinate widely-dispersed, global supply networks; and

•

provide flexible deployment and payment options including on-premise, hosted and on-demand.

For example, in the retail store, E²e provides consumers with access to desired products and ensures that the store is staffed with the right people to help them make their purchases. In the back room of the store, E²e directs the right people to perform stocking tasks at the right time, thereby reducing the amount of inventory and decreasing the frequency of situations when items are out of stock on the shelves while inventory is available in the stockroom. In the distribution network, E²e manages picking products from the warehouse and loading them

²	IDC, “Worldwide HCM Applications 2007 Vendor Shares: Analysis of 25 Vendors in Core HR, eLearning, eRecruiting, Intelligent Compensation, Performance Management, and Workforce Management,” IDC #215584, December 2008.

Index to Financial Statements

onto trucks in the sequence that they will be unloaded at the store, and provides advanced notice of delivery. In the manufacturing environment, E²e optimizes suppliers’ and manufacturers’ resources and synchronizes shipments and production based on demand signals from the point of sale or consumption.

Our Business Strategy and Growth Opportunities

Our objective is to be the leading provider of productivity solutions that enable manufacturers, distributors and retailers to synchronize and optimize the management of workforce, inventory and transportation throughout the supply chain network and in retail stores. To achieve this objective, we intend to:

•

offer expanded, demand-driven capabilities for supply chain networks and in-store operations;

•

expand industry-specific optimization and productivity solutions;

•

focus on high growth market opportunities;

•

expand our presence in international markets;

•

expand our strategic marketing partnerships and indirect sales channels;

•

extend our hosted and on-demand application delivery alternatives; and

•

make targeted, strategic acquisitions.

Risks Associated with our Business

There are a number of risks and uncertainties that may affect our business, financial and operating performance, and our growth prospects. You should carefully consider all of the risks discussed in “Risk Factors,” which begins on page 9, before investing in our common stock. These risks include, among others:

•

volatility in our quarterly operating results;

•

dependence on our large installed customer base for a significant percentage of our revenue;

•

exposure to general economic downturns;

•

long sales cycles, particularly for our larger customers;

•

difficulties associated with implementing or upgrading our complex solutions;

•

a highly competitive marketplace;

•

challenges associated with managing our diverse and complex operations; and

•

difficulties associated with penetrating new markets.

Corporate and Other Information

RedPrairie Holding, Inc. was incorporated as Giants Holding, Inc. in Delaware in April 2005 in connection with the May 2005 acquisition of our company by funds advised by Francisco Partners LLC, which we refer to collectively as Francisco Partners. In May 2005, Giants Holding, Inc. changed its name to RedPrairie Holding, Inc., which currently serves as the holding company for all of the RedPrairie operating entities.

We commenced operation in 1975 under the name of McHugh Freeman & Associates. In 1989, we became an indirect, wholly-owned subsidiary of Pinnacle Automation. In 1998, we were spun off from Pinnacle Automation and became an independent operating company. In 2002, we rebranded as RedPrairie.

Index to Financial Statements

Following completion of this offering, Francisco Partners will own approximately % of our outstanding common stock, or % if the underwriters’ option to purchase additional shares is fully exercised.

Our principal executive office is located at 20700 Swenson Drive, Waukesha, WI 53186 and our telephone number is (262) 317-2000. Our corporate website address is http://www.redprairie.com. The information contained on, or accessible through, our corporate website does not constitute part of this prospectus.

This prospectus includes market and industry data, including estimates of market share and market size, which are based on, in certain cases, public sources, industry and trade publications and reports and analyses prepared and published by third parties. Although we believe that these sources are reliable, we have not independently verified the information, and the publishers and other sources of this data do not guarantee the accuracy or completeness of the information. The Gartner Report referred to in this prospectus represents data, research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc., and are not representations of fact. The Gartner Report speaks as of its original publication date (and not as of the date of this prospectus) and the opinions expressed in the Gartner Report are subject to change without notice.

We own or have rights to trademarks or trade names that we use in conjunction with the operation of our business, including the RedPrairie name. In this prospectus, we also refer to product names, trademarks, trade names and service marks that are the property of other companies. Each of the trademarks, trade names or service marks of other companies appearing in this prospectus belongs to its owners. Our use or display by us of other companies’ product names, trademarks, trade names or service marks is not intended to and does not imply a relationship with, or endorsement or sponsorship by us of, the product, trademark, trade name or service mark owner, unless we otherwise indicate.

Index to Financial Statements

THE OFFERING

Common stock offered:

By us

By the selling stockholders

Common stock outstanding after the offering

Overallotment option

The underwriters have an option to purchase a maximum of additional shares of common stock to cover overallotments. Of the shares subject to the option, shares would be sold by the selling stockholders and shares would be sold by us. The underwriters can exercise this option at any time within 30 days from the date of this prospectus.

Use of proceeds

We estimate that we will receive net proceeds from this offering of approximately $ million, assuming the shares are offered at $ per share (the midpoint of the price range set forth on the cover of this prospectus), after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds of this offering to pay unpaid dividends on shares of our series A preferred stock cumulated through the conversion date of the series A preferred stock and to repay a portion of our term loan indebtedness. The remaining proceeds, if any, will be used for general corporate purposes. We will not receive any proceeds of the sale of the shares of our common stock by the selling stockholders. See “Use of Proceeds.”

Dividend policy

We do not currently intend to pay any cash dividends on our common stock. See “Dividend Policy.”

Risk factors

See “Risk Factors” beginning on page 9 of this prospectus and the other information in this prospectus for a discussion of the risks you should consider before deciding to invest in our common stock.

Symbol

The number of shares of common stock to be outstanding after this offering is based on shares outstanding as of , , and excludes:

•

2,114,707 shares of common stock issuable upon the exercise of options to purchase common stock outstanding as of September 30, 2009, at a weighted average exercise price of $14.63 per share; and

•

shares of common stock reserved for issuance under our 2005 Stock Incentive Plan.

Except as otherwise indicated, all information in this prospectus assumes:

•

the underwriters will not exercise their overallotment option;

•

the conversion of all outstanding shares of our preferred stock into 12,974,833 shares of our common stock in connection with the completion of this offering;

•

the issuance of 253,000 shares of restricted common stock to certain of our directors and executive officers under our 2005 Stock Incentive Plan effective immediately prior to this offering; and

•

the filing and effectiveness of our amended and restated certificate of incorporation in connection with the completion of this offering.

Index to Financial Statements

SUMMARY CONSOLIDATED FINANCIAL DATA

The following table presents our consolidated financial and other data for the periods indicated. The consolidated statements of operations data for each of the three years ended December 31, 2006, 2007 and 2008 are derived from, and qualified by reference to, our audited consolidated financial statements included elsewhere in this prospectus. The interim statements of operations data for the nine months ended September 30, 2008 and 2009 and the consolidated interim balance sheet data as of September 30, 2009 are derived from, and qualified by reference to, our unaudited consolidated interim financial statements included elsewhere in this prospectus. Our unaudited consolidated interim financial statements have been prepared on the same basis as the annual consolidated financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of these statements in all material respects. You should read all of this information in conjunction with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. Our historical results are not necessarily indicative of results for any future period and the results for the interim period are not necessarily indicative of results to be expected for a full year.


	Year Ended December 31,								Nine Months Ended September 30,
	2006			2007			2008		2008		2009
	(in thousands, except share and per share data)
									(unaudited)
Consolidated statements of operations data:
Revenue:
Software license	$	23,367		$	36,900		$	48,441	$	35,274	$	27,291
Post-contract support and hosting		43,479			68,548			78,418		58,408		61,787
Professional services		83,390			116,251			130,030		101,597		85,975
Hardware and other		35,598			31,531			35,971		25,966		18,842

Total revenue		185,834			253,230			292,860		221,245		193,895

Cost of revenue:
Software license		142			578			354		264		307
Amortization of acquired software		6,851			8,381			8,252		6,180		6,034

Total software license		6,993			8,959			8,606		6,444		6,341
Post-contract support and hosting		13,424			27,148			33,940		25,712		25,391
Professional services		49,624			72,022			78,667		60,335		51,203
Hardware and other		28,925			26,606			30,424		22,195		15,820

Total cost of revenue		98,966			134,735			151,637		114,686		98,755


Gross profit		86,868			118,495			141,223		106,559		95,140

Operating expenses:
Research and development		19,176			22,567			27,446		20,277		19,493
Sales and marketing		27,474			40,131			42,144		30,486		25,560
General and administrative		30,351			27,738			26,134		17,661		16,219
Depreciation and amortization		6,022			8,282			7,777		5,905		5,953

Total operating expenses		83,023			98,718			103,501		74,329		67,225

Income from operations		3,845			19,777			37,722		32,230		27,915
Interest expense, net		18,095			23,369			18,365		13,854		10,752
Other income (expense), net		(58	)		507			226		239		166

Income (loss) before income taxes		(14,308	)		(3,085	)		19,583		18,615		17,329
Income tax provision (benefit)		(3,796	)		845			8,843		8,437		4,882

Net income (loss)	$	(10,512	)	$	(3,930	)	$	10,740	$	10,178	$	12,447

Earnings (loss) attributable to common stockholders per common share:
Basic	$	(298.93	)	$	(170.14	)	$	32.59	$	57.06	$	85.41

Diluted	$	(298.93	)	$	(170.14	)	$	0.81	$	0.77	$	0.94

Weighted average common shares outstanding:
Basic		61,557			66,432			66,950		66,950		66,950

Diluted(1)		61,557			66,432			13,225,359		13,227,431		13,225,210


Cash dividend per common share	$	—		$	174.14		$	—	$	—	$	—

Index to Financial Statements


	As of September 30, 2009
	Actual			Pro Forma (2)	Pro Forma as Adjusted (3)
	(in thousands)
Consolidated balance sheet data (unaudited):
Cash and cash equivalents	$	52,626
Total assets		441,489
Total indebtedness		216,416
Series A preferred stock		142,948
Stockholders’ equity (deficit)		(17,216	)


	Year Ended December 31,						Nine Months Ended September 30,
	2006		2007		2008		2008		2009
	(in thousands)
Other financial data (unaudited):
Adjusted EBITDA(4)	$	27,256	$	41,765	$	60,339	$	49,174	$	45,115
Free cash flow(5)		9,282		12,754		36,828		32,606		25,164

(1)	For a description of the calculation of our diluted weighted average common shares outstanding, see note 13 to our audited consolidated financial statements.

(2)	Reflects on a pro forma basis the conversion of all outstanding shares of our series A preferred stock into 12,974,833 shares of common stock.

(3)

Reflects on a pro forma basis the conversion of all outstanding shares of our series A preferred stock into 12,974,833 shares of common stock and, on an as adjusted basis, to reflect the sale of shares of our common stock in this offering at an assumed initial public offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus), and the application of the estimated net proceeds from this offering as described under “Use of Proceeds.”

(4)	Adjusted EBITDA is defined as net income (loss) adjusted for interest (income) expense, net; income tax provision (benefit); depreciation and amortization; stock-based compensation; other (income) expense, net; loss on early extinguishment of debt and restructuring.

Management believes that the use of adjusted EBITDA provides consistency and comparability with our past financial performance, facilitates period to period comparisons of operations, and also facilitates comparisons with our peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. Management believes that it is useful to exclude certain non-cash charges, such as depreciation, amortization and stock-based compensation, and non-core operational charges, such as other (income) expense, net, loss on early extinguishment of debt and restructuring, from adjusted EBITDA because (a) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and (b) such expenses can vary significantly between periods as a result of new acquisitions, full amortization of previously acquired tangible and intangible assets or the timing of new stock-based awards, as the case may be. We use adjusted EBITDA in conjunction with traditional GAAP operating performance measures as part of our overall assessment of our performance, for planning purposes, including the preparation of our annual operating budget, to evaluate the effectiveness of our business strategies, and in communications with our board of directors concerning our financial performance. We do not place undue reliance on adjusted EBITDA as our only measure of operating performance.

Index to Financial Statements

Adjusted EBITDA should not be considered a substitute for other measures of financial performance reported in accordance with GAAP. There are limitations to using non-GAAP financial measures, including that other companies may calculate these measures differently than we do, that they do not reflect our capital expenditures or future requirements for capital expenditures, and that they do not reflect changes in, or cash requirements for, our working capital. Management compensates for the inherent limitations associated with using the adjusted EBITDA measures through disclosure of such limitations, presentation of our financial statements in accordance with GAAP and reconciliation of adjusted EBITDA to the most directly comparable GAAP measure, net income (loss). A reconciliation of net income (loss) to adjusted EBITDA is presented below:


	Year Ended December 31,									Nine Months Ended September 30,
	2006			2007			2008			2008			2009
	(in thousands)
Net income (loss)	$	(10,512	)	$	(3,930	)	$	10,740		$	10,178		$	12,447
Interest expense, net		18,095			23,369			18,365			13,854			10,752
Income tax provision (benefit)		(3,796	)		845			8,843			8,437			4,882
Depreciation and amortization		14,176			18,754			18,364			13,839			13,427
Stock-based compensation		1,775			3,234			4,253			3,105			2,693
Other (income) expense, net		58			(507	)		(226	)		(239	)		(166	)
Loss on early extinguishment of debt		7,460			—			—			—			—
Restructuring		—			—			—			—			1,080

Adjusted EBITDA	$	27,256		$	41,765		$	60,339		$	49,174		$	45,115

(5)	Free cash flow is defined as net cash provided by operating activities less capital expenditures.

Free cash flow is a key measure used in our internal operating reports and allows us to manage the cash available to make principal payments on our debt obligations and fund potential strategic initiatives. Management believes that free cash flow is useful to investors as a supplemental measure to evaluate our liquidity and ability to make principal payments on our debt obligations.

Free cash flow should not be considered a substitute for other measures of financial performance reported in accordance with GAAP. There are limitations to using non-GAAP financial measures, including that other companies may calculate these measures differently than we do. Management compensates for the inherent limitations associated with using the free cash flow measures through disclosure of such limitations, presentation of our financial statements in accordance with GAAP and reconciliation of free cash flow to the most directly comparable GAAP measure, net cash provided by operating activities. A reconciliation of net cash provided by operating activities to free cash flow is presented below:


	Year Ended December 31,									Nine Months Ended September 30,
	2006			2007			2008			2008			2009
	(in thousands)
Net cash provided by operating activities	$	11,276		$	16,007		$	41,319		$	35,822		$	27,289
Capital expenditures		(1,994	)		(3,253	)		(4,491	)		(3,216	)		(2,125	)

Free cash flow	$	9,282		$	12,754		$	36,828		$	32,606		$	25,164

Index to Financial Statements

RISK FACTORS

You should carefully consider the risk factors described below and all other information contained in this prospectus before you decide to invest in our common stock. Our business, financial condition and operating results could be materially adversely affected by any of these risks, as well as other risks and uncertainties not currently known to us or that we currently believe are not material. In that case, the trading price of our common stock could decline, and you may lose part or all of your investment.

Risks Relating to Our Business and Industry

Our operating results may fluctuate, which could cause volatility in our stock price.

Our quarterly revenue and operating results are difficult to predict and may fluctuate significantly from quarter to quarter. If our quarterly revenue or operating results fall below the expectations of investors or securities analysts, the price of our common stock could fall substantially. Our quarterly revenue is difficult to forecast and may vary as a result of many factors, some of which are outside of our control, including:

•

demand for and market acceptance of our products;

•

the varying sales and deployment cycles for our products and services from customer to customer;

•

product and price competition;

•

delays in the implementations of our products by our customers;

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contingencies and other requirements related to the recognition of software license and professional services revenue;

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global and domestic economic conditions;

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timing of hiring new sales and services employees and the rate at which these employees become productive;

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timing of introduction of new products; and

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timing of any acquisitions and incurrence of related costs.

In particular, our revenue from software licenses generally fluctuates, and we expect it to continue to fluctuate on a quarterly basis primarily due to uncertain and inconsistent timing of sales of our software licenses, revenue recognition requirements and seasonality, among other factors. As a result, transactions that were expected to be recognized in one period may be recognized in a subsequent period which may materially affect our financial performance on a quarterly basis.

Because our professional services revenue is primarily influenced by the execution of new software license agreements and upgrades of existing arrangements with customers, a decline in software license revenue also could cause a decline in our services revenue in the same quarter or in subsequent quarters.

Furthermore, a portion of our hardware and other revenue consists of the resale of a variety of third-party hardware products, which we resell in order to meet the needs of our customers seeking a single source supplier for their supply chain management and in-store operations requirements. Hardware sales are difficult to forecast, in part because they do not necessarily correlate with our software sales, as our customers may choose to purchase this hardware directly from manufacturers or distributors of these products. Hardware sales fluctuate from quarter to quarter, leading to unusual comparisons of total revenue and potential fluctuations in profits. Hardware and other revenue also includes reimbursement for billable travel which may also fluctuate from period to period.

As our expenses are based on our expectations of future revenue and are relatively fixed in the short term, an unanticipated shortfall in our revenue in a particular period could have a disproportionately negative effect on our operating results in the same or subsequent periods. As a result of these and other factors, our operating results are difficult to predict.

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Our future revenue is dependent upon our installed customer base continuing to license additional products, renew post-contract support and hosting agreements and purchase additional professional services from us.

We are dependent on our large installed customer base to purchase additional software licenses, post-contract support and hosting and professional services from us. Nevertheless, our post-contract support agreements are generally for a one-year term and our professional services agreements generally only cover a particular engagement. In future periods customers may not license additional products, renew post-contract support and hosting agreements or purchase additional professional services from us. If our customers decide not to license or purchase these products and services from us, or if they reduce the scope of their post-contract support or hosting or professional services agreements, our revenue could decrease and our operating results could be materially adversely affected.

In addition, many of our customers are using older versions of our products for which we are no longer developing any further upgrades or enhancements. While we intend to migrate our customers who are using these versions to newer versions or products, there can be no assurance that these customers will do so. If customers using older versions of our products decide not to license our current software products, or decide to discontinue the use of our products and associated post-contract support services, our revenue could decrease and our operating results could be materially adversely affected.

Downturns in general economic and market conditions and reductions in information technology, or IT, spending may reduce demand for our software and related services which could negatively affect our revenue, results of operations and cash flows.

Our revenue, results of operations and cash flows depend on the overall demand for our software products and related services. Economic downturns in one or more of the countries in which we do business or in particular industries which use supply chain management or in-store operations software have resulted in reductions in IT spending by some of our customers. For example, beginning in the fourth quarter of 2008, we began to experience the impact of the weakening global economy and a decline in purchases of our software solutions and related services by both new and existing customers. We believe that this decline was the result of longer sales cycles, more in depth product trials, smaller initial pilot programs, delays or reductions in customer purchases and pricing pressure from customers and competitors. Our revenue has declined from $221.2 million for the nine months ended September 30, 2008 to $193.9 million for the nine months ended September 30, 2009, which we believe was due in large part to generally weak economic conditions. Further worsening, broadening, or protracted extension of these conditions could have a significant negative impact on our business, financial position, results of operations and cash flows. Prolonged economic slowdowns, such as the one we are currently experiencing, may result in customers requiring us to renegotiate existing contracts on less advantageous terms to us than those currently in place or defaulting on payments due on existing contracts.

Furthermore, during weak economic times, there is an increased risk that one or more of our customers will file for bankruptcy protection, which may adversely affect our revenue, profitability and results of operations. If a customer files for bankruptcy, we may be required to forego collection of pre-petition amounts owed and to repay amounts remitted to us during the 90-day preference period preceding the filing, which may be significant due to extended payment terms for software license fees, and significant billings for professional services on large projects. We also face risk from international customers that file for bankruptcy protection in foreign jurisdictions, in that the outcome of the application of foreign bankruptcy laws may be more difficult to predict. In addition, we may determine that the cost of pursuing any claim may outweigh the recovery potential of such claim.

We encounter long sales cycles, particularly with our larger customers, which could have an adverse effect on the amount, timing and predictability of our revenue.

Our products have lengthy sales cycles, which typically extend from six to 12 months and may take up to several years. Potential and existing customers, particularly larger enterprise customers, often commit

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significant resources to an evaluation of available solutions and services and require us to expend substantial time and resources in connection with our sales efforts. The length of our sales cycles also varies depending on the type of customer to which we are selling, the product being sold and customer requirements. We may incur substantial sales and marketing expenses and expend significant management effort during this time, regardless of whether we make a sale. Many of the key risks relating to sales processes are beyond our control, including:

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our customers’ budgetary and scheduling constraints;

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the timing of our customers’ budget cycles and approval processes;

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our customers’ willingness to replace their currently deployed software solutions; and

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general economic conditions.

As a result of these lengthy and uncertain sales cycles of our products and services, it is difficult for us to predict when customers may purchase products or services from us, thereby affecting when we can recognize the associated revenue, and our operating results may vary significantly and may be adversely affected. The length of our sales cycle makes us susceptible to having pending transactions delayed or terminated by our customers if they decide to delay or withdraw funding for IT projects. Our customers may decide to delay or withdraw funding for IT projects for various reasons, including global economic cycles and capital market fluctuations.

Our solutions are complex and customers may experience difficulty in implementing or upgrading our products successfully or otherwise achieving the benefits attributable to our products.

Due to the scope and complexity of the solutions that we provide, our implementation cycle can be lengthy and unpredictable. Our products may require modification or customization and must integrate with many existing computer systems and software programs of our customers. This can be complex, time-consuming and expensive for our customers and can result in delays in the implementation and deployment of our products. As a result, some customers have had, and may in the future have, difficulty implementing our products successfully or otherwise achieving the expected benefits of our products. Additionally, while a customer may decide to purchase our products and services, the customer may require us to delay the implementation of our products due to their scheduling, resource or budgetary constraints. The implementation and deployment of our products also may be delayed if we fail to attract, train and retain services personnel, or by other factors that are beyond our control.

Delayed or ineffective implementation or upgrades of our software may limit our future sales opportunities, impact revenue, result in customer dissatisfaction and harm to our reputation, or cause non-payment issues by resulting in, among others, any of the following events:

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the withholding of cash payments or cancellation of contracts if we fail to meet our implementation commitments, the customers have financial difficulties or change strategy, or the functionality delivered is not acceptable to the customers. We are particularly susceptible to this with respect to arrangements where payments are scheduled to occur later in the engagement;

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the cancellation or scaling back of one or more of our larger implementation projects which could have a material adverse impact on our reputation and future revenue; or

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an inability to recognize software license or services revenue associated with our solutions and other development projects. Failure to complete implementation phases in accordance with the overall rollout plan can create variability in our expected revenue recognition.

If we are unable to manage our diverse and complex operations, our reputation in the market and our ability to generate revenue from new or existing customers may be adversely affected.

The growth in the size, complexity and diverse nature of our business and the expansion of our product lines and customer base have placed increased demands on our management and operations, and further growth

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(if any) may place additional strains on our resources in the future. Our ability to effectively compete and to manage our planned future growth will depend on, among other things, the following:

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maintaining continuity in our senior management and key personnel;

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attracting, retaining, training and motivating our employees, particularly our technical and management personnel;

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improving our operational, financial and management controls; and

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improving our information reporting systems and procedures.

If we do not manage the size, complexity and diverse nature of our business effectively, we could experience delayed software releases and longer response times for assisting our customers with implementation of our products and services, and could lack adequate resources to support our customers on an ongoing basis, any of which could adversely affect our reputation in the market and our ability to generate revenue from new or existing customers.

If we are unsuccessful in entering new markets or further penetrating our existing markets, our revenue growth could be adversely affected.

We have invested significant resources in developing and marketing our products and services. The demand for, and market acceptance of, our products and services is subject to a high level of uncertainty. We believe that adoption of software solutions, particularly by those enterprises that have historically relied upon traditional means of commerce and communication, requires a broad acceptance of substantially different methods of conducting business and exchanging information. Our products and services are often considered complex and may involve a new approach to the conduct of business by our customers. As a result, intensive marketing and sales efforts may be necessary to educate prospective customers in both new and existing markets regarding the uses and benefits of these products and services in order to generate additional demand. The market for our products and services may weaken, competitors may develop superior products and services or we may fail to develop acceptable solutions to address new market conditions. As a result, we may be unable to enter new markets or penetrate existing markets for our products and services. Any one of these events could have a material adverse effect on our business, results of operations, cash flow and financial condition.

We may be required to defer recognition of revenue on our software products, which may have a material adverse effect on our financial results.

We may be required to defer recognition of revenue for a significant period of time after entering into a license agreement for a variety of factors, including whether:

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the transaction involves both currently deliverable software products and software products that are under development;

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the customer requires significant modifications, customizations or complex interfaces that could delay product delivery or acceptance;

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the transaction involves extended payment terms;

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the transaction involves acceptance criteria or other terms that may delay revenue recognition; and

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the transaction involves performance milestones or payment terms that depend upon contingencies.

Because of these factors and other specific software revenue recognition requirements under generally accepted accounting principles in the United States, or GAAP, we must have very precise terms in our license agreements in order to recognize revenue when we initially deliver software or perform services. Although we strive to enter into agreements that meet the criteria under GAAP for current revenue recognition on delivered

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elements, our agreements are often subject to negotiation and revision based on the demands of our customers. The final terms of our agreements sometimes result in deferred revenue recognition well after the time of delivery, which may have a material adverse effect on our financial position and results of operations. In addition, because of the current economic downturn, more customers may require extended payment terms, shorter term license agreements, or alternative licensing arrangements that could reduce the amount of software revenue we recognize upon shipment of our software and could adversely affect our short-term profitability.

Furthermore, the presentation of our financial results requires us to make estimates and assumptions that may affect revenue recognition. In some instances, we could reasonably use different estimates and assumptions, and changes in estimates are likely to occur from period to period. Accordingly, actual results could differ significantly from our estimates, which, in turn, could adversely affect future presentation of our financial condition or results of operations.

We may face risks associated with our international operations that could impair our ability to grow our revenue.

We generate a significant portion of our revenue outside the United States. For example, for the year ended December 31, 2008 and the nine months ended September 30, 2009, the percentage of revenue generated from customers outside the United States was 32.0% and 29.7%, respectively. We intend to continue selling into our existing international markets and to expand into international markets where we currently do not conduct business, which will require significant management attention and financial resources. If we are unable to continue to sell our products effectively in the existing international markets and expand into additional international markets, our ability to grow our business would be adversely affected. Some of the key factors that may affect our ability to maintain and expand our operations and sales in foreign countries include:

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difficulties in staffing and managing foreign operations, including our ability to provide services to our customers;

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building and maintaining a competitive presence in existing and new markets;

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difficulty enforcing contracts and collecting accounts receivable in some countries, leading to longer collection periods;

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the development and maintenance of successful strategic partner and reseller relationships;

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certification, qualification and compliance requirements and expenses relating to our products and business;

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regulatory requirements, including import and export regulations;

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changes in currency exchange rates;

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reduced protection for intellectual property rights in some countries;

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less stringent adherence to ethical and legal standards by prospective customers in some countries;

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potentially adverse tax treatment;

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the need to localize products for other languages and country-specific business requirements and regulations;

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difficulty competing with local vendors;

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language and cultural barriers; and

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political and economic instability.

Index to Financial Statements

Foreign currency exchange rate risks may adversely affect our results of operations.

Material portions of our revenue and expenses are generated by our operations in foreign countries, and we expect that our foreign operations will account for a material portion of our revenue and expenses in the future. Substantially all of our international expenses and revenue are denominated in foreign currencies, mostly the Euro and British pound. For the year ended December 31, 2008, we generated approximately 29.5% of our total revenue and incurred approximately 24.9% of our total costs in foreign currencies. For the nine months ended September 30, 2009, we generated approximately 26.9% of our total revenue and incurred approximately 24.3% of our total costs in foreign currencies. As a result, our financial results could be affected by factors, such as changes in foreign currency exchange rates or weak economic conditions in European markets and other foreign markets in which we have operations. Fluctuations in the value of those currencies in relation to the U.S. dollar have caused and will continue to cause dollar-translated amounts to vary from one period to another. We also incur currency transaction risk whenever one of our operating subsidiaries enters into either a purchase or a sales transaction using a currency other than the local currency in which it receives revenue and pays expenses. Given the volatility of exchange rates, we may not be able to manage effectively our currency translation or transaction risks, which may adversely affect our financial condition and results of operations.

We may not be able to successfully compete with other vendors of supply chain management and/or in-store operations software.

We compete in markets that are intensely competitive and are expected to become more competitive as current competitors expand their product offerings and new competitors enter the market. These competitors include: specialized SCM and HCM software vendors; large, diversified enterprise application suite providers; smaller niche application software providers whose software typically addresses only certain aspects of the SCM or HCM markets; and information technology, or IT, departments of prospective customers that are capable of developing supply chain applications customized to their businesses. In addition, we anticipate facing increased competition in the future from enterprise resource planning, or ERP, SCM or HCM application vendors and business application software vendors that may broaden their solution offerings by internally developing, or by acquiring or partnering with independent developers of, supply chain planning and execution software. For instance, both Oracle Corporation and SAP AG compete in the SCM market. Furthermore, it is possible that new competitors or alliances may emerge that could cause a rapid and significant market share loss by us, and an increase of competitive pressures on us.

A number of our competitors and potential competitors have greater financial, technical, marketing and other resources, greater name recognition, a broader offering of products and a larger installed base of customers than we do. In order to be successful in the future, we must continue to respond promptly and effectively to technological change and competitors’ innovations. We cannot assure you that our current or potential competitors will not develop products comparable or superior in terms of price and performance features to those developed by us. In addition, we cannot assure you that we will not be required to make substantial additional investments in connection with our research, development, marketing, sales and customer service efforts in order to meet any competitive threat, or that we will be able to compete successfully in the future.

Furthermore, enterprises are requiring their application software vendors to provide faster time to value on their technology investments. We must continue to improve the speed of our implementations and the pace at which our products deliver value or our competitors may gain important strategic advantages over us. If we cannot successfully respond to these market demands, or if our competitors do so more effectively than we do, our business, results of operations, cash flow and financial condition could be materially adversely affected.

If we do not compete successfully in our market, we may lose market share, or be forced to reduce our prices, which could materially and adversely affect our ability to achieve our financial and business goals. For an additional discussion regarding our competitors, see the section of this prospectus captioned “Business—Competition.”

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Mergers or other strategic transactions involving our competitors could weaken our competitive position or reduce our revenue.

We believe that consolidation within our industry is likely, which may result in increased competition. Increased competition may cause pricing pressure and loss of market share, either of which could have a material adverse effect on our business, results of operations and financial condition. Our competitors may establish or strengthen their cooperative relationships with vendors, systems integrators, third-party consulting firms or other parties. Established companies may not only develop their own products but may also acquire or partner with our current competitors. If any of these events occur, our revenue and profitability could significantly decline.

We are dependent on our management team and our technical, sales and services personnel, and the loss of one or more of these key employees could harm our business and prevent us from executing our business strategy in a timely manner.

Our success depends largely upon the continued services of our executive management and key personnel. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives. Such changes in our executive management team may be disruptive to our business. We do not maintain key person life insurance policies on any of our senior executives. The loss of one or more of our key employees could seriously harm our business.

We are also substantially dependent on the continued service of our existing technical, sales and services personnel due to the complexity of our products and services. Experienced management and technical, sales, and services personnel in the technology industry are in high demand and competition for their services is intense. Additionally, the loss of technical personnel such as developers could have a negative impact on our ability to develop, introduce and implement new products in a timely and effective manner and grow our business.

Our future success will depend in large part upon our ability to attract, retain and motivate highly skilled employees. We face significant competition for individuals with the skills required to perform the services we offer, and thus we may encounter increased compensation costs that are not offset by increased revenue. We cannot assure you that we will be able to attract, retain and motivate sufficient numbers of these highly skilled employees. There may also be a significant period of time after new technical, sales and services employees are hired before they become fully productive.

We have substantial debt obligations, which may restrict our ability to fund current and future operations and pursue certain business initiatives.

While we intend to use the proceeds of this offering to repay a portion of our outstanding indebtedness, we will continue to have significant long-term debt obligations. As of September 30, 2009, we had $216.4 million in total long-term debt obligations, including $146.4 million outstanding under our first lien secured credit facility and $70.0 million outstanding under our second lien secured credit facility. Our substantial debt obligations may:

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require us to dedicate a substantial portion of our cash flow to payments on our debt obligations, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other corporate requirements and to pay dividends;

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impede our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions and general corporate purposes;

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subject us to increases in interest rates on our variable rate debt, including the borrowings under our credit agreements;

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make us more vulnerable to a downturn in our business and competitive pressures, and limit our flexibility to plan for, or react to, changes in our business; and

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make it more difficult for us to satisfy our other obligations.

Index to Financial Statements

Our ability to make scheduled payments of principal and interest with respect to our indebtedness will depend on our ability to generate cash flow from our operations. If we fail to make any required payment under our credit agreements or fail to comply with the financial and operating covenants contained in them, we would be in default and our lenders would have the ability to require that we immediately repay our outstanding indebtedness in full. Our credit agreements also include various financial and operating covenants that limit our ability to engage in certain transactions, require us not to allow specific events to occur and require us to apply proceeds from certain transactions to reduce indebtedness.

Our business and profitability may be adversely affected by our acquisitions.

As part of our business strategy, we may from time to time acquire additional companies, technologies and products. We may experience difficulties and incur significant costs as a result of evaluating, completing and integrating acquisitions. Future acquisitions, if any, may expose us to increased risks and costs, including the following:

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we may find that the acquired company, asset or technology does not further our business strategy, that we overpaid for the company, asset or technology, that we may be required to write off acquired assets or investments partially or entirely, that we may be subject to substantial accounting charges for restructuring and other expenses or that economic conditions underlying our acquisition decision have changed;

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we may not realize the expected synergies of the transaction;

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we may have difficulty integrating the operations or personnel of an acquired company or retaining the key personnel of the acquired company;

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if acquired companies, particularly private companies with less sophisticated control systems, have significantly different controls and systems than we do, our ability to meet the Section 404 requirements of the Sarbanes-Oxley Act of 2002 may be adversely affected;

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we may face delays in customer purchases due to difficulty in retaining customers of acquired businesses;

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our ongoing business and management’s time and attention may be disrupted or diverted from existing operations by transition or integration issues;

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we may encounter difficulty with new products or in new geographic markets, and we may face increased competition, including price competition, or intellectual property litigation;

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our relationships with our partner companies or third-party providers of products and services could be negatively affected;

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we may experience significant problems or liabilities associated with product quality, technology and legal contingencies relating to the acquired business or technology, such as intellectual property or employment matters;

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we may be exposed to other unforeseen liabilities and contingencies that were not identified prior to acquiring the company;

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we may not be able to generate sufficient revenue from acquisitions to offset the associated acquisition costs; and

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future acquisitions may result in additional issuances of stock that could be dilutive to our stockholders or in increased leverage if we incur debt to finance an acquisition.

In addition, as a result of our acquisitions, we may acquire diverse software products with different underlying technology and programming which may require significant expense and resources to integrate, improve and support on an ongoing basis. Our future success will depend in part upon our ability to converge our product offerings and migrate the technology and programming underlying our diverse products into unified

Index to Financial Statements

standards, in order to meet our customers’ expectations that our software product offerings will work together to address a variety of their supply chain execution challenges. If we are unable to meet these expectations, our reputation may be adversely affected and customers may be unwilling to purchase new or additional product offerings from us.

We may require significant additional capital to pursue our business strategy, which may or may not be available to us on favorable terms or at all.

We may need to obtain additional financing to pursue our business strategy, to develop new products, to respond to competition and market opportunities, to acquire complementary businesses or technologies and to refinance our indebtedness. We cannot be certain that we will be able to obtain such financing on favorable terms, or at all. In addition, our current credit agreements contain, and agreements we enter into in the future may contain, covenants that limit our ability to obtain financing or enter into certain transactions and may require us to apply the proceeds from certain transactions to reduce our indebtedness. If we need to raise additional capital and cannot do so on acceptable terms, we may not be able to meet our business objectives, our stock price may decline and you may lose some or all of your investment.

We may be subject to additional tax liabilities.

We are subject to income, sales, use and other taxes in the United States and other countries in which we conduct business. Significant judgment is required in determining our worldwide provision for income taxes. This determination is highly complex and requires detailed analysis of the available information and applicable statutes and regulatory materials. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. We are regularly under audit by tax authorities. Although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different from our historical income tax provisions and accruals. If we receive an adverse ruling during an audit, or we unilaterally determine that we have misinterpreted provisions of the myriad tax regulations to which we are subject, there could be a material effect on our income tax provision, net income or cash flows in the period or periods for which that determination is made. In addition, liabilities associated with taxes are often subject to an extended or indefinite statute of limitations period. Therefore, we may be subject to tax liability (including, penalties and interest) for a particular year for extended periods of time.

We incorporate third-party software in our solutions, the failure of which could adversely affect our ability to sell, support and service our products.

We incorporate and include third-party software into and with certain of our products and solutions and expect to continue to do so. The operation of our products could be impaired if errors occur in the third-party software that we use. It may be more difficult for us to correct any defects in third-party software because the development and maintenance of the software is not within our control. Accordingly, our business could be adversely affected in the event of any errors in this software. There can be no assurance that these third parties will continue to make their software available to us on acceptable terms, to not make their products available to our competitors on more favorable terms, to invest the appropriate levels of resources in their products and services to maintain and enhance the capabilities of their software, or to remain in business. Any impairment in our relationship with these third parties could have a material adverse effect on our business, results of operations, cash flow and financial condition.

We rely on third-party vendors to provide technology and services necessary for the operation of our business; the failure of our vendors to provide such technology and services on acceptable terms or the failure of such technology or services to perform as expected could have a material adverse effect on our business.

We rely on third-party vendors to provide technology and services necessary for the operation of our business that we cannot or do not create or provide ourselves. We depend on these vendors to ensure that our infrastructure will consistently meet our business requirements. The ability of these third-party vendors to

Index to Financial Statements

successfully provide reliable and high quality services is subject to technical and operational uncertainties that are beyond our control. While we may be entitled to damages if our vendors fail to perform under their agreements with us, our agreements with these vendors limit the amount of damages we may receive. In addition, we do not know whether we will be able to collect on any award of damages or that these damages would be sufficient to cover the actual costs we would incur as a result of any vendor’s failure to perform under its agreement with us. Any failure of our infrastructure could have a material adverse effect on our business, financial condition and results of operations. Upon expiration or termination of any of our agreements with third-party vendors, we may not be able to replace the services provided to us in a timely manner or on terms and conditions, including service levels and cost, that are favorable to us, and a transition from one vendor to another vendor could subject us to operational delays and inefficiencies until the transition is complete.

The use of open source software in our products may expose us to additional risks and harm our intellectual property.

Some of our products use or incorporate software that is subject to one or more open source licenses. Open source software is typically freely accessible, usable and modifiable. Certain open source software licenses require a user who intends to distribute the open source software as a component of the user’s software to disclose publicly part or all of the source code to the user’s software. In addition, certain open source software licenses require the user of such software to make any derivative works of the open source code available to others on unfavorable terms or at no cost. This can subject previously proprietary software to open source license terms.

While we monitor the use of all open source software in our products, processes and technology and try to ensure that no open source software is used in such a way as to require us to disclose the source code to the related product or solution when we do not wish to do so, such use could inadvertently occur. Additionally, if a third-party software provider has incorporated certain types of open source software into software we license from such third party for our products and solutions, we could, under certain circumstances, be required to disclose the source code to our products and solutions. This could harm our intellectual property position and have a material adverse effect on our business, results of operations and financial condition.

Our ability to license our software is highly dependent on the quality of our services offerings, and our failure to offer high quality services could adversely affect our software licensing revenue and results of operations.

Once our software has been installed and deployed, our customers may depend on us to provide them with ongoing support and resolution of issues relating to our software. Therefore, a high level of service is critical for the continued marketing and sale of our solutions. If we or our partners do not efficiently and effectively install and deploy our software products, or succeed in helping our customers quickly resolve post-deployment issues, our ability to sell software products to these customers would be adversely affected and our reputation in the marketplace and with potential customers could suffer.

Errors or defects in our software products could harm our reputation and expose us to liability, which could result in customer loss, decreased revenue, unexpected expenses and loss of market share.

Because our software products are complex, they may contain defects, errors or vulnerabilities that are not detected until after commercial release and installation by our customers. We may not be able to correct any errors or defects or address vulnerabilities promptly, or at all. Any defects, errors or vulnerabilities in our products could result in:

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expenditure of significant resources in efforts to analyze, correct, eliminate or work around errors or defects, or to address and eliminate vulnerabilities;

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delayed introduction of new products;

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loss of existing or potential customers;

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•

delayed or lost revenue;

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delay or failure to attain market acceptance;

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increased costs of service, warranty, product replacement, litigation and insurance; and

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negative publicity causing harm to our reputation.

In particular, because our software is used to manage functions that are often critical to our customers, the licensing and support of our software involves the risk of product liability claims. We also may face liability for breaches of our product warranties, product failures or damages caused by faulty installation of our products. Provisions in our contracts relating to warranty disclaimers and liability limitations may be unenforceable or otherwise ineffective. Defending a lawsuit, regardless of its merit, could be costly and divert management’s time and attention. Our business liability insurance coverage may be inadequate or be subject to significant deductibles and future coverage may be unavailable on acceptable terms, or at all. The successful assertion of one or more large claims against us could have a material adverse effect on our financial condition, and costs or payments made in connection with warranty and product liability claims could materially affect our financial condition and results of operations.

Restructuring and reorganization initiatives pose significant risks to our business.

We have implemented restructuring initiatives involving a reduction of our workforce and we continue to manage our business in an effort to achieve our profitability objectives. In the first quarter of 2009, we reduced our workforce by 70 employees. These activities pose significant risks to our business, including: a decline in employee morale; employees whom we desire to retain may resign because they disagree with our initiatives; and terminated employees may disparage us, file legal claims against us related to their termination of employment, become employed by our competitors, share our intellectual property or other sensitive information with others or use our intellectual property or other sensitive information without authorization. The failure to retain and effectively manage our remaining employees or achieve our targeted efficiencies through the reorganization could increase our costs, adversely affect our development efforts and adversely affect the quality of our products and customer service. If customers become dissatisfied with our products or service, our renewal rate of post-contract support agreements may decrease, our customers may take legal action against us and our sales to existing customers could decline, leading to reduced revenue. Our restructuring and reorganization initiatives may not achieve targeted efficiencies, which could adversely affect our business, results of operations, cash flow and financial condition.

Releases of new products and enhancements to existing products may cause purchasing delays, which would harm our revenue.

Our practice and the practice in the industry in which we compete is to regularly develop and release new products and enhancements to existing products. As a result, our future success could be hindered by delays in our introduction of new products and/or enhancements of existing products, delays in market acceptance of new products and/or enhancements of existing products, and our, or our competitors’, announcement of new products and/or product enhancements or technologies that could replace or shorten the life cycle of our existing products. In addition, customers may delay their purchasing decisions in anticipation of our new or enhanced products or new or enhanced products of our competitors. Delays in customer purchasing decisions could seriously harm our business and operating results. Moreover, significant delays in the general availability of new releases or customer dissatisfaction with new releases could have a material adverse effect on our business, results of operations, cash flow and financial condition.

Index to Financial Statements

Our professional services revenue produces lower gross margins than our software license revenue, and an increase in professional services revenue relative to software license revenue could harm our overall gross margins.

Our professional services revenue was 44.4% and 44.3% of total revenue for the year ended December 31, 2008 and the nine months ended September 30, 2009, respectively. Our professional services revenue produces lower gross margins than our software license revenue. The gross margin of our professional services revenue was 39.5% and 40.4% for the year ended December 31, 2008 and the nine months ended September 30, 2009, while the gross margin for total software license revenue was 82.2% and 76.8% for the respective periods. An increase in the percentage of total revenue represented by professional services revenue could adversely affect our overall gross margins.

The volume and profitability of our professional services offerings depend in large part upon:

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competitive pricing pressure on the rates that we can charge for our professional services;

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the utilization rate of our professional services personnel;

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the complexity of our customers’ business processes and information technology environments;

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the resources directed by our customers to their implementation projects;

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the extent to which we are required to use third-party resources;

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our ability to hire, train and retain qualified professional services personnel;

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the extent to which outside consulting organizations provide professional services directly to customers; and

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the mix of revenue between our geographic segments as the margins in professional services revenue in the Americas are generally higher than EMEA/APAC.

Any erosion in our professional services margins or any significant increase in professional services revenue as a percentage of total revenue would adversely affect our operating results.

Our growth is dependent upon the continued development of our direct sales force and the development and maintenance of our indirect sales channels.

We believe that our future growth will depend on the continued development of our direct sales force and their ability to obtain new customers, particularly large enterprise customers, and to manage our existing customer base. Our ability to achieve significant growth in revenue in the future will depend, in large part, on our success in recruiting, training and retaining a sufficient number of direct sales personnel. New hires require significant training and may, in some cases, take more than a year before becoming productive, if at all. If we are unable to hire and develop sufficient numbers of productive direct sales personnel, sales of our software and services will suffer and our growth will be impeded.

In addition, we believe our future growth also will depend on the development and maintenance of successful strategic reseller, consulting and marketing relationships. Our growth in revenue in international markets will depend, in part, on the development and maintenance of these indirect sales channels. However, because lower unit prices are often charged on sales made through indirect channels, increased indirect sales could reduce our average selling prices and result in lower gross margins. In addition, sales of our products through indirect channels may reduce our professional services revenue, as our partners may provide these services themselves. As indirect sales increase, our direct contact with our customer base will decrease, and we may have more difficulty accurately forecasting sales, evaluating customer satisfaction, managing customer relations and recognizing emerging customer requirements. In addition, our resellers and consulting partners may develop, acquire or market products that are competitive with our products. Our strategy of marketing our

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products directly to customers and indirectly through resellers and consulting partners also may result in distribution channel conflicts. Our direct sales efforts may compete with those of our indirect channels and, to the extent different resellers and consulting partners target the same customers, resellers and consulting partners also may come into conflict with each other. Any channel conflicts that develop may have a material adverse effect on our relationships with resellers and consulting partners or may harm our ability to attract new resellers and consulting partners.

Any impairment in the value of our goodwill will result in an accounting charge against our earnings, which could negatively impact our stock price.

As of December 31, 2008, we had $204.0 million of goodwill, representing approximately 45.3% of our total assets as of such date. In accordance with GAAP, we conduct an impairment analysis of our goodwill annually and at such other times when an event or change in circumstances occurs which would indicate potential impairment. If we determine significant impairment of our goodwill as a result of any of those tests, we would be required to record a corresponding non-cash impairment charge against our earnings that could negatively affect our stock price.

We may face intellectual property infringement claims that could be time consuming, costly to defend and result in our loss of significant rights.

The technology industry generally and the market for software products in particular are characterized by a relatively high level of litigation based on allegations of infringement of intellectual property rights. We have in the past received and may in the future receive inquiries from other intellectual property holders and may become subject to claims that we infringe their intellectual property rights. We cannot assure you that we are not infringing or violating any third-party intellectual property rights. Any parties claiming that our products infringe upon their intellectual property rights, or that we have misappropriated their trade secrets, regardless of the merits, could force us to acquire intellectual property rights and licenses, which may involve substantial royalty payments and other expenditures or to defend ourselves and possibly our customers in litigation. We also may be required to indemnify our customers for damages they suffer as a result of such infringement. These claims and any resulting licensing arrangement or lawsuit, if successful or if settled, could subject us to significant royalty payments or liability for damages and invalidation of our proprietary rights. Any potential intellectual property litigation also could force us to stop making, having made, developing, selling, incorporating, distributing, or using our products that use the challenged intellectual property, to obtain from the owner of the infringed intellectual property right a license to sell or use the relevant technology, which license may not be available on reasonable terms or at all, or to redesign those products that use any allegedly infringing intellectual property. Any of these events could seriously harm our business, operating results and financial condition. In addition, any lawsuits regarding intellectual property rights, regardless of their success, would be expensive to resolve and would divert our management’s time and attention.

If we are unable to protect our intellectual property, our ability to compete and our business could be harmed.

We depend on our ability to protect our proprietary technology and intellectual property. We protect our proprietary technology through a combination of trade secrets, third-party confidentiality and non-disclosure agreements and additional contractual restrictions on disclosure and use, and patent, copyright and trademark laws. However, these legal means do not afford complete protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage. We cannot guarantee that:

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any of our present or future intellectual property rights will not lapse or be invalidated, circumvented, challenged or abandoned; our intellectual property rights will provide competitive advantages to us;

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our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will be limited by our agreements with third parties;

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any of our pending or future patent applications will be issued or have the coverage originally sought;

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our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak; or

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we will not lose the ability to assert our intellectual property rights against or to license our technology to others and collect royalties or other payments.

Although we have taken steps to protect our intellectual property and proprietary technology, there is no assurance that third parties will not be able to invalidate or design around our intellectual property. Furthermore, although we have entered into confidentiality agreements and intellectual property assignment agreements with our employees, consultants, business partners and advisors, such agreements may not be enforceable or may not provide meaningful protection for our trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy, reverse engineer, or otherwise obtain and use our products or technology. Monitoring unauthorized use of our products and solutions is difficult, and we cannot be certain that the steps we have taken to do so will prevent unauthorized use of our technology or infringement or misappropriation of our intellectual property, particularly in foreign countries where the laws may not protect our proprietary rights as comprehensively as in the United States, if at all. Litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others, which could result in substantial costs and diversion of our resources. If competitors are able to use our technology or develop proprietary technology similar to ours or competing technologies, our ability to compete effectively could be harmed.

Interruptions or delays in service from our third-party data center could impair the delivery of our service and harm our business.

We deliver applications to some of our customers from third-party data center facilities located in Atlanta, Georgia, London, United Kingdom, and Sterling, Virginia. We do not control the operation of these facilities, and they are vulnerable to damage or interruption from earthquakes, floods, fires and other natural disasters, power loss, telecommunications failures and similar events. They also are subject to break-ins, sabotage, intentional acts of vandalism, the failure of physical, administrative, and technical security measures, terrorist acts, human error, the financial insolvency of the provider and other unanticipated problems or events. The occurrence of any of these events could result in interruptions in our service and unauthorized access to, or alteration of, the applications and other data that these third-party vendors store and deliver on our behalf.

In addition, our software license agreements may require us to pay penalties and issue credits to our customers and may allow or cause our customers to terminate their agreements with us if there is a disruption in our services. The payment of such penalties or the termination of agreements by our customers may have an adverse affect on our operating results and our relationship with our customers.

Our systems and facilities, and those of our third-party service providers, could suffer data security incidents.

Our information technology infrastructure, and that of our third-party service providers, is vulnerable to security breaches, computer viruses, and similar disruptive problems. Our servers provide access to and distribution of many of our enterprise software solutions, products and services to our customers. Providing unimpeded access to our servers is critical to servicing customers of our hosted services and providing superior customer service to them. These systems are also subject to telecommunications failures, power loss, hacking incidents, other system failure, and data security incidents in which information is accessed or modified without authorization. Any of these occurrences, whether intentional or accidental, could lead to interruptions, delays or cessation of operation of our servers and our third-party service providers’ servers. Our inability to provide continuous access to our hosted services, and to secure our hosted services and associated customer information from unauthorized use, access, or disclosure, could cause some of our customers to discontinue subscribing to our hosted services, could harm our business reputation, and could cause us to incur significant liability.

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Serious harm to our business could result if our encryption technology fails to ensure the security of our customers’ on-line transactions.

The secure exchange of confidential information over public networks is a significant concern of consumers engaging in on-line transactions and interaction. Some of our software applications use encryption technology to provide the security necessary to effect the secure exchange of valuable and confidential information. Advances in computer capabilities, new discoveries in the field of cryptography or other events or developments could result in a compromise or breach of the algorithms that these applications use to protect customer data. If any compromise or breach were to occur, our reputation could be damaged, our business may suffer and we could incur significant liability.

If we are unable to develop software applications that interoperate with computing platforms developed by others, our business and results of operations may be adversely affected.

We develop software applications that interoperate with operating systems, database platforms and hardware devices developed by others, which we refer to collectively as computing platforms. If the developers of these computing platforms do not cooperate with us or we are unable to devote the necessary resources so that our applications interoperate with those computing platforms, our software development efforts may be delayed and our business and results of operations may be adversely affected. When new or updated versions of these computing platforms are introduced, it is often necessary for us to develop updated versions of our software applications so that they interoperate properly with these computing platforms. We may not accomplish these development efforts quickly or cost-effectively, and it is difficult to predict what the relative growth rates of adoption of these computing platforms will be. These development efforts require substantial investment, the devotion of substantial employee resources and the cooperation of the developers of the computing platforms. For some computing platforms, we must obtain some proprietary application program interfaces from the owner in order to develop software applications that interoperate with the computing platforms. Computing platform providers have no obligation to assist in these development efforts. If they do not provide us with assistance or the necessary proprietary application program interfaces on a timely basis, we may experience delays or be unable to expand our software applications into other areas.

The computing platforms we use may not continue to be available to us on commercially reasonable terms. Any loss of the right to use any of these systems could result in delays in the provision of our products and services and our results of operations may be adversely affected. Defects in computing platforms could result in errors or a failure of our products which could harm our business.

We may not receive significant revenue as a result of our current research and development efforts.

Developing and localizing software is expensive and the investment in product development often involves a long payback cycle. We have made and expect to continue to make significant investments in software research and development and related product opportunities. Accelerated product introductions and short product life cycles require high levels of expenditures for research and development that could adversely affect our operating results if not offset by corresponding revenue increases. We believe that we must continue to dedicate a significant amount of resources to our research and development efforts to maintain our competitive position. However, it is difficult to estimate when, if ever, we will receive significant revenue as a result of these investments.

We may not be able to fully realize the benefits of our deferred tax assets which could harm our financial position and results of operations.

Our ability to use our net operating loss carryforwards and other tax attributes in various jurisdictions during their remaining life is dependent upon our ability to generate sufficient taxable income in these jurisdictions during the carryforward periods. As of December 31, 2008, we had approximately $14.8 million of

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U.S. net operating losses and approximately $33.0 million of non-U.S. net operating losses. If we do not generate sufficient taxable income, the remaining deferred tax assets related to these items may expire without being fully used. We have recorded a valuation reserve against our non-U.S. deferred tax assets to reflect this risk.

A defined benefit plan benefiting certain employees of one of our subsidiaries is underfunded and we may be required to pay into the plan.

We contribute to a defined benefit pension plan of one of our subsidiaries. Approximately 4.0% of our current employees are participants in the plan, which is closed to new members. For the year ended December 31, 2008, our total contributions to this plan, which include payments for voluntary withdrawals, were approximately $1.3 million. Our plan was underfunded by approximately $3.8 million as of December 31, 2008, the last time an actuarial valuation of the plan was performed. In addition, we may be required to make additional unexpected contributions the plan based on future actuarial studies.

We will be subject to additional regulatory compliance matters, including Section 404 of the Sarbanes-Oxley Act of 2002, as a result of becoming a public company and our management has limited experience managing a public company. Failure to comply with these regulatory matters could harm our business.

We have never operated as a public company and will incur significant legal, accounting and other expenses that we did not incur as a private company. Our management team and other personnel will need to devote a substantial amount of time to new compliance initiatives and to meeting the obligations that are associated with being a public company, and we may not successfully or efficiently manage our transition into a public company. We expect rules and regulations such as the Sarbanes-Oxley Act of 2002 to increase our legal and finance compliance costs and to make some activities more time-consuming. For example, we intend to engage outside consultants and expect to hire additional employees to assist us with Sarbanes-Oxley compliance. Furthermore, Section 404 of the Sarbanes-Oxley Act of 2002 requires that our management report on, and our independent auditors attest to, the effectiveness of our internal control structure and procedures for financial reporting in our annual report on Form 10-K for the year ending December 31, 2011. Section 404 compliance may divert internal resources and will take a significant amount of time and effort to complete. We may not be able to successfully complete the procedures and certification and attestation requirements of Section 404 by the time we will be required to do so. If we fail to do so, or if in the future our chief executive officer, chief financial officer or independent registered public accounting firm determines that our internal controls over financial reporting are not effective as defined under Section 404, we could be subject to sanctions or investigations by the exchange on which we will list our shares, the Securities and Exchange Commission, or SEC, or other regulatory authorities. Furthermore, investor perceptions of our company may suffer, and this could cause a decline in the market price of our stock. Irrespective of compliance with Section 404, any failure of our internal controls could have a material adverse effect on our stated results of operations and harm our reputation. If we are unable to implement these changes effectively or efficiently, it could harm our operations, financial reporting or financial results and could result in an adverse opinion on internal controls from our independent auditors. If we are unable to retain enough independent directors to our board to meet the listing standards of the exchange on which we will list our shares by the deadlines set by such exchange, it could affect our continued listing on the exchange.

New accounting standards or interpretations of existing accounting standards could adversely affect our operating results.

GAAP is subject to interpretation by the Financial Accounting Standards Board, or FASB, the American Institute of Certified Public Accountants, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations, including the recently proposed implementation of International Financial Reporting Standards, could change our application of GAAP and affect the reporting of transactions completed before the announcement of a change, resulting in a significant effect on our reported financial results.

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For example, we recognize software license revenue in accordance with the FASB’s guidance on software revenue recognition and accounting for performance of construction-type and certain production-type contracts. Accounting standards bodies may continue to discuss certain provisions of relevant accounting literature with the objective of providing additional guidance on potential interpretations related to software revenue recognition and “multiple element arrangements” in which a single contract includes a software license, a maintenance services agreement and/or other “elements” that are bundled together in a total offering to the customer. These discussions and the issuance of interpretations, once finalized, could lead to unanticipated changes in our current revenue accounting practices, which could change the timing of revenue recognition.

Risks Relating to Our Relationship with Our Majority Stockholder

Following this offering, Francisco Partners will continue to own a significant percentage of our common stock and, therefore, our other stockholders will be unable to affect the outcome of stockholder voting.

Following this offering, Francisco Partners will own approximately % of our outstanding common stock, or % of our outstanding common stock if the underwriters exercise their overallotment option in full. As a result of this ownership position, Francisco Partners will have the ability to delay or prevent a change of control of us that may be favored by other stockholders and will otherwise exercise significant influence over all corporate actions requiring stockholder approval, irrespective of how our other stockholders may vote. In addition, Francisco Partners is not prohibited from selling a controlling interest in us to a third party or a participant in our industry. Additional information regarding our relationship with Francisco Partners can be found in the section of this prospectus captioned “Certain Relationships and Related Party Transactions.”

Francisco Partners and its designees on our board of directors may have interests that conflict with our interests and the interests of our other stockholders.

Francisco Partners and its designees on our board of directors may have interests that conflict with, or are different from, our own and those of our other stockholders. They have invested in or acquired other businesses that are involved in the software industry and may invest in or acquire others in the future. If an actual or potential conflict of interest develops involving one of our directors, our corporate governance guidelines provide that the director must report the matter immediately to our board of directors and audit committee for evaluation and appropriate resolution. Furthermore, such director must recuse himself or herself from participation in the related discussion and abstain from voting on the matter. Nonetheless, conflicts of interest may not be resolved in a manner favorable to us or our other stockholders. In addition, Francisco Partners’ significant concentration of share ownership may adversely affect the trading price of our common stock because investors may perceive disadvantages in owning stock in companies with controlling stockholders.

By exercising its registration rights and selling a large number of shares, Francisco Partners could cause the price of our common stock to decline and impede our ability to raise capital through the issuance of equity securities in the future.

Francisco Partners is entitled to certain registration rights which allow it to require us to register the offer and sale of its shares of our common stock for sale under the Securities Act. Pursuant to these “demand” registration rights, Francisco Partners may require us to register the offer and sale of some or all of its shares from time to time following completion of this offering, subject to Francisco Partners’ agreement with the underwriters in this offering not to demand any registrations or sell any shares of our stock that it holds for the 180-day period following the completion of this offering, with certain exceptions. In addition to these demand registration rights, if we propose to register any shares of our common stock for public sale under the Securities Act, either for our own account or the account of any other person, Francisco Partners may require that we include some or all of its shares in that registration. Sales of substantial amounts of our common stock by Francisco Partners, or the perception that these sales may occur, through a registered offering or otherwise, may adversely affect the price of our common stock and impede our ability to raise capital through the issuance of equity securities in the future.

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Risks Relating to this Offering and Ownership of Our Common Stock

We are a “controlled company” within the meaning of the rules of the exchange on which we list our shares and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements.

Francisco Partners will beneficially own approximately % of our outstanding common stock, or % of our common stock if the underwriters exercise their overallotment option in full, following completion of this offering. As a result, we will qualify for, and intend to rely on, certain exemptions from corporate governance standards available to “controlled companies.” Under the rules of the exchange on which we will list our shares, a company of which more than 50% of the voting power is held by a single person or a group of people is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

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the requirement that a majority of the board of directors consist of independent directors;

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the requirement that the compensation of officers be determined, or recommended to the board of directors for determination, by a majority of the independent directors or a compensation committee comprised solely of independent directors; and

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the requirement that director nominees be selected, or recommended for the board of directors’ selection, by a majority of the independent directors or a nominating committee comprised solely of independent directors with a written charter or board resolution addressing the nomination process.

Unless we no longer rely on these exemptions, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements.

Our stock price may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price.

Prior to the offering there has been no public market for our common stock, and an active public market for our common stock may not develop or be sustained after this offering. The initial public offering price for our common stock will be determined through negotiations between the underwriters, the selling stockholders and us. This initial public offering price will not necessarily reflect the price at which investors in the market will be willing to buy and sell our shares following this offering. If you purchase shares of our common stock, you may not be able to resell those shares at or above the initial public offering price. We cannot predict the extent to which investor interest in us will lead to the development of a trading market in our common stock or how liquid that market might become. If an active public market does not develop or is not sustained, it may be difficult for you to sell your shares of common stock at a price that is attractive to you, or at all. The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

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the timing of customer orders that may cause quarterly or other periodic fluctuations in our results that may, in turn, affect the market price of our common stock;

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the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

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changes in financial estimates by any securities analysts who follow us, our failure to meet these estimates or failure of those analysts to maintain coverage of our stock;

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ratings downgrades by any securities analysts who follow us;

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the public’s response to our press releases or other public announcements, including our filings with the SEC;

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market conditions or trends in our industry or the economy as a whole;

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price and volume fluctuations in the overall stock market;

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changes in operating performance and stock market valuations of other technology companies generally, or those that sell supply chain software in particular;

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the development and sustainability of an active trading market for our common stock;

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future sales of our common stock by our officers, directors and significant stockholders; and

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other events or factors, including those resulting from war, incidents of terrorism or responses to these events.

In addition, the stock market in general, and the market for technology companies in particular, has experienced significant price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may seriously affect the market price of our common stock, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our stock during the period immediately following this offering. In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources from our business.

If there are substantial sales of our common stock or issuances of our common stock by us, our stock price could decline.

The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market after this offering or the perception that these sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Upon completion of this offering, shares of our common stock will be outstanding, based on our shares outstanding as of , 2010. All of the shares of common stock expected to be sold in this offering will be freely tradable without restriction or further registration under the Securities Act unless held by our “affiliates,” as that term is defined in Rule 144 under the Securities Act. The resale of the remaining shares, or % of our outstanding shares after this offering, are currently prohibited or otherwise restricted as a result of securities law provisions, market standoff agreements entered into by our stockholders with us or lock-up agreements entered into by our stockholders with the underwriters; however, subject to applicable securities law restrictions and certain extensions, these shares will be able to be sold in the public market beginning 180 days after the date of this prospectus. In addition, the shares subject to outstanding options, of which are exercisable as of , 2010, and the shares reserved for future issuance under our stock option and equity incentive plans will become available for sale immediately upon the exercise of such options and the expiration of any applicable market stand-off or lock-up agreements. For more information see the section of this prospectus captioned “Shares Eligible for Future Sale.”

Holders of approximately shares, or %, of our common stock will have rights, subject to some conditions, to require us to file registration statements covering the sale of their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. We also intend to register the offer and sale of all shares of common stock that we may issue under our equity compensation plans. Once we register the offer and sale of shares for the holders of registration rights and option holders, they can be freely sold in the public market upon issuance, subject to the lock-up agreements described in the section of this prospectus captioned “Underwriting.”

In addition, in the future, we may issue additional shares of common stock or other equity or debt securities convertible into common stock in connection with a financing, acquisition, employee arrangement or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and could cause the value of our common stock to decline.

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Provisions of our charter documents and Delaware corporate law might deter acquisition bids for us that you might consider favorable.

Certain provisions of our certificate of incorporation and bylaws that will be in effect upon completion of this offering may make it more difficult for a third party to acquire control of us or effect a change in our board of directors and management. These provisions include:

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classification of our board of directors into three classes, with one class elected each year;

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lack of cumulative voting in the election of directors;

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the ability of our board of directors to authorize the issuance of undesignated preferred stock, the terms and rights of which may be established and shares of which may be issued without stockholder approval, including rights superior to the rights of the holders of common stock;

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elimination of stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders;

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provision that our certificate of incorporation may be amended only by a vote of two-thirds of the outstanding shares of our common stock rather than by a majority of the outstanding shares; and

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the establishment of advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings.

These provisions could discourage, delay or prevent a transaction involving a change of control, even if doing so would benefit our stockholders. These provisions also could discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing or cause us to take other corporate actions you desire.

In addition, we are subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with a stockholder owning 15% or more of our outstanding voting stock for a period of three years following the date on which the stockholder became an “interested” stockholder. In order for us to consummate a business combination with an “interested” stockholder, either (1) the business combination or the transaction that resulted in the stockholder becoming “interested” must be approved by our board of directors prior to the date the stockholder became “interested,” or (2) the business combination must be approved by our board of directors and authorized by at least two-thirds of our stockholders (excluding the “interested” stockholder). This provision could have the effect of delaying or preventing a change of control, whether or not it is desired by or beneficial to our stockholders.

If securities or industry analysts do not publish research or reports about our business, or if they publish unfavorable research about our business or our stock, our stock price and trading volume could decline.

The trading market for our common stock will be influenced in part by the research and reports that securities or industry analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities analysts. If no securities or industry analysts commence coverage of us, the trading price for our stock may be negatively affected. If securities or industry analysts do begin coverage of us, and if one or more of the analysts who covers us downgrades our stock or publishes unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in the financial markets, which could cause our stock price and trading volume to decline.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained in this prospectus constitute forward-looking statements, including in the sections captioned “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business.” Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the development and introduction of new products, and the implementation of our marketing and branding strategies. In many cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or the negative of these terms or other comparable terminology.

The forward-looking statements contained in this prospectus reflect our views as of the date of this prospectus about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including, but not limited to, those factors described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These factors include:

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volatility in our quarterly operating results;

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dependence on our large installed customer base for a significant percentage of our revenue;

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exposure to general economic downturns;

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long sales cycles, particularly for our larger customers;

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difficulties associated with implementing or upgrading our complex solutions;

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challenges associated with managing our diverse and complex operations;

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difficulties associated with penetrating new markets;

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risks associated with our international operations;

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foreign currency exchange rate risk;

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a highly competitive marketplace;

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the loss of one or more members of our executive management team or other key employees on whom we depend;

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our substantial debt obligations;

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risks associated with integrating acquisitions;

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potential failure of third-party software incorporated into our solutions;

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potential additional tax liabilities;

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the failure of our third-party vendors to provide technology and services as expected;

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unavailability of capital on favorable terms, or at all, necessary to pursue our business strategies;

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our inability to protect our intellectual property; and

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our inability to develop software applications that interoperate with third-party computing platforms.

All of the forward-looking statements we have included in this prospectus are based on information available to us on the date of this prospectus. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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USE OF PROCEEDS

We estimate that we will receive net proceeds from the sale of our common stock in this offering of approximately $ million, or approximately $ million if the underwriters exercise their over-allotment option in full, based upon an assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover of this prospectus) and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. A $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease the net proceeds to us from this offering by approximately $ million, assuming the number of shares offered by us, as indicated on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

In connection with this offering, all of the outstanding shares of our series A preferred stock will convert into shares of common stock immediately prior to the closing of this offering. We intend to use the net proceeds of this offering to pay unpaid dividends on shares of our series A preferred stock cumulated through the conversion date of the series A preferred stock and to repay a portion of our term loan indebtedness. Our first lien term borrowings bear interest at our option at a rate of ABR plus 200 basis points or LIBOR plus 300 basis points. Our second lien term borrowings bear interest at our option at a rate of ABR plus 550 basis points or LIBOR plus 650 basis points. Our first and second lien term facilities mature on July 20, 2012 and January 20, 2013, respectively. For more information regarding our outstanding indebtedness, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” The remaining proceeds, if any, will be used for general corporate purposes.

While we have no present understandings, commitments or agreements to enter into any potential acquisitions, we also may use a portion of the net proceeds for the acquisition of, or investment in, businesses, technologies or products that complement our existing business. The timing and amounts actually spent for each and any of these purposes may vary significantly and will depend on a number of factors, including our revenue and operating costs, working capital and capital expenditures and other factors described under “Risk Factors.” Accordingly, management will retain broad discretion as to the allocation of the net proceeds of this offering.

We will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholders.

DIVIDEND POLICY

On January 31, 2007, our board of directors declared a cash dividend in an aggregate amount of approximately $24.4 million. Of that amount, an aggregate of approximately $13.0 million was paid to holders of our series A preferred stock and an aggregate of approximately $11.4 million was paid to holders of our common stock as a special cash dividend. Except for this dividend, which was paid in February 2007, we have never paid a dividend on our common stock.

We currently intend to retain future earnings, if any, to finance the expansion of our business and, except for the dividend we expect to pay in connection with the conversion of our series A preferred stock, do not expect to pay any cash dividends in the foreseeable future. In addition, restrictions contained in our credit agreement materially limit our ability to pay dividends on our common stock. Payment of future cash dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs and plans for expansion, the requirements of our current or then-existing credit arrangements and other factors our board of directors deems relevant.

Index to Financial Statements

CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2009:

•

on an actual basis;

•

on a pro forma basis reflecting the conversion of all outstanding shares of our series A preferred stock into 12,974,833 shares of common stock; and

•

on a pro forma as adjusted basis to further reflect:

•

the sale of shares of our common stock in this offering at an assumed initial public offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus), and

•

the application of the estimated net proceeds from this offering as described under “Use of Proceeds.”

You should read this table together with the sections entitled “Use of Proceeds,” “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.


	As of September 30, 2009
	Actual			Pro Forma	Pro Forma As Adjusted (1)
	(in thousands, except share and per share data)
	(unaudited)
Cash and cash equivalents	$	52,626		$	$

Debt:
Current portion of long term debt	$	7,773		$	$
Long-term debt, less current portion		208,643

Total debt		216,416
Series A preferred stock, $0.001 par value; 1,320,000 shares authorized, 1,297,483 shares issued and outstanding (aggregate liquidation preference of $152,409); none authorized, issued or outstanding, pro forma and pro forma as adjusted		142,948
Stockholders’ equity (deficit):
Common stock, $0.001 par value; 15,500,000 authorized, 66,950 issued and outstanding actual; shares authorized, issued and outstanding pro forma; shares authorized, issued and outstanding pro forma as adjusted(2)		—
Additional paid-in capital		(13,577	)
Accumulated earnings		4,706
Accumulated other comprehensive income (loss)		(8,345	)

Total stockholder’s equity (deficit)		(17,216	)

Total capitalization	$	342,148		$	$

(1)

Assuming the number of shares sold by us in this offering remains the same as set forth on the cover page, a $1.00 increase or decrease in the assumed initial public offering price would increase or decrease, as applicable, our cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization by approximately $ million.

(2)

Outstanding common stock does not include (a) 2,114,707 shares of our common stock issuable upon the exercise of stock options outstanding as of September 30, 2009 with a weighted average exercise price of $14.63 per share; or (b) shares of our common stock reserved for future issuance under our 2005 Stock Incentive Plan.

Index to Financial Statements

DILUTION

If you invest in our common stock in this offering, you will experience immediate and substantial dilution in the pro forma net tangible book value of your shares of our common stock. The pro forma net tangible book value of our common stock as of was $ million, or approximately $ per share. Pro forma net tangible book value per share represents the amount of our total tangible assets less our total liabilities divided by the pro forma number of shares of common stock outstanding on September 30, 2009 after giving effect to the conversion of all outstanding shares of our series A preferred stock into a total of 12,974,833 shares of our common stock.

Dilution in pro forma net tangible book value per share represents the difference between the amount per share paid by purchasers of shares of common stock in this offering and the pro forma net tangible book value per share of our common stock immediately after the completion of this offering. After giving effect to the sale of shares of our common stock in this offering at an assumed public offering price of $ (the midpoint of the estimated price range shown on the cover page of this prospectus) and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us and after giving effect to the conversion of all outstanding shares of our series A preferred stock into a total of 12,974,833 shares of our common stock, our pro forma net tangible book value as of September 30, 2009 would have been approximately $ million, or approximately $ per share. This represents an immediate increase in pro forma net tangible book value of $ per share to existing stockholders and an immediate dilution of $ per share to new investors purchasing shares of our common stock in this offering at the assumed initial public offering price. The following table illustrates this per share dilution:


Assumed initial public offering price per share		$

Pro forma net tangible book value as of September 30, 2009	$
Increase per share attributable to new investors in this offering

Pro forma as adjusted net tangible book value per share after this offering

Dilution per share to new investors		$

If the underwriters exercise their overallotment in full, pro forma net tangible book value per share after the offering will be $ , and dilution in pro forma net tangible book value per share to new stockholders will be $ . A $1.00 increase (decrease) in the assumed initial public offering price of $ per share would increase (decrease) our pro forma net tangible book value by $ million, the pro forma net tangible book value per share after this offering by $ per share and the dilution in pro forma net tangible book value to new investors in this offering by $ per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

The following table presents, on a pro forma basis, as of September 30, 2009, the differences between the number of shares of common stock purchased from us, the total consideration paid or exchanged and the average price per share paid by existing stockholders and by new investors purchasing shares of our common stock in this offering before deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. The table assumes an initial public offering price of $ per share, as specified above.


	Shares Purchased			Total Consideration			Average Price Per Share
	Number	Percent		Amount	Percent		Average Price Per Share
	(in thousands, except share and per share data)
Existing stockholders			%	$		%	$
New investors

Total		100.0	%	$	100.0	%

Index to Financial Statements

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share would increase (decrease) total consideration paid by new stockholders by $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

The number of shares outstanding in the table above is based on the number of shares outstanding as of September 30, 2009 after giving effect to the conversion of all outstanding shares of our preferred stock into a total of 12,974,833 shares of common stock. The discussion and tables above do not include the following shares:

•

shares of common stock that may be issued by us pursuant to the underwriters overallotment option;

•

2,114,707 shares of our common stock issuable upon the exercise of stock options outstanding as of September 30, 2009 with a weighted average exercise price of $14.63 per share; and

•

shares of our common stock reserved for future issuance under our 2005 Stock Incentive Plan.

To the extent any such shares of common stock are issued, new investors may experience further dilution. If the underwriters exercise their overallotment option in full, the following will occur: (1) the number of ordinary shares held by existing stockholders will represent approximately % of the total number of ordinary shares outstanding after this offering; and (2) the number of ordinary shares held by new investors will be increased to , or approximately % of the total number of shares of common stock outstanding after this offering.

Index to Financial Statements

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated statements of operations data for each of the years ended December 31, 2006, 2007 and 2008 and the consolidated balance sheet data as of December 31, 2007 and 2008 are derived from, and qualified by reference to, our audited consolidated financial statements and related notes appearing elsewhere in this prospectus. The selected consolidated statements of operations data for the year ended December 31, 2004 and for the periods from January 1, 2005 through May 22, 2005 and from May 23, 2005 through December 31, 2005 and the consolidated balance sheet data as of December 31, 2004, 2005 and 2006 are derived from our audited financial statements not appearing in this prospectus. The interim statements of operations data for the nine months ended September 30, 2008 and 2009 and consolidated interim balance sheet data as of September 30, 2009 are derived from, and qualified by reference to, our unaudited consolidated interim financial statements included elsewhere in this prospectus. Our unaudited selected consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary for the fair presentation of these statements in all material respects. You should read all of this information in conjunction with our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. Our historical results are not necessarily indicative of results for any future period and the results for any interim period are not necessarily indicative of the results to be expected for a full year.

We were acquired on May 23, 2005 by Francisco Partners in a business combination accounted for under the purchase method of accounting. Accordingly, the financial data set forth below includes a predecessor basis and a successor basis. As a result of the transaction, our assets and liabilities were adjusted to their estimated fair values. In addition, our consolidated statements of operations data for the successor basis include interest expense resulting from indebtedness incurred to finance the transaction and amortization of intangible assets related to the transaction. Therefore, our successor basis financial data generally is not comparable to our predecessor basis financial data.

Index to Financial Statements


	Predecessor					Successor
	Year Ended December 31, 2004		Period From January 1, 2005 Through May 22, 2005			Period From May 23, 2005 Through December 31, 2005			Years Ended December 31,								Nine Months Ended September 30,
	Year Ended December 31, 2004		Period From January 1, 2005 Through May 22, 2005			Period From May 23, 2005 Through December 31, 2005			2006			2007			2008		2008		2009
						(in thousands, except share and per share data)
																	(unaudited)
Consolidated statements of operations data:
Revenue:
Software license	$	23,130	$	4,159		$	11,304		$	23,367		$	36,900		$	48,441	$	35,274	$	27,291
Post-contract support and hosting		23,972		11,391			18,617			43,479			68,548			78,418		58,408		61,787
Professional services		51,941		22,927			30,524			83,390			116,251			130,030		101,597		85,975
Hardware and other		23,292		10,366			16,220			35,598			31,531			35,971		25,966		18,842

Total revenue		122,335		48,843			76,665			185,834			253,230			292,860		221,245		193,895
Cost of revenue		60,539		25,499			41,738			98,966			134,735			151,637		114,686		98,755

Gross profit		61,796		23,344			34,927			86,868			118,495			141,223		106,559		95,140
Operating expenses:
Research and development		12,451		5,213			6,821			19,176			22,567			27,446		20,277		19,493
Sales and marketing		20,502		9,071			13,111			27,474			40,131			42,144		30,486		25,560
General and administrative		10,469		2,882			6,062			30,351			27,738			26,134		17,661		16,219
Merger-related		—		24,163			—			—			—			—		—		—
Depreciation and amortization		2,535		1,034			2,129			6,022			8,282			7,777		5,905		5,953

Total operating expenses		45,957		42,363			28,123			83,023			98,718			103,501		74,329		67,225

Income from operations		15,839		(19,019	)		6,804			3,845			19,777			37,722		32,230		27,915
Interest expense, net		1,375		669			8,674			18,095			23,369			18,365		13,854		10,752
Other income (expense), net		14		(31	)		(49	)		(58	)		507			226		239		166

Income (loss) before income taxes		14,478		(19,719	)		(1,919	)		(14,308	)		(3,085	)		19,583		18,615		17,329
Income tax provision (benefit)		5,660		(6,415	)		(844	)		(3,796	)		845			8,843		8,437		4,882

Net income (loss)	$	8,818	$	(13,304	)	$	(1,075	)	$	(10,512	)	$	(3,930	)	$	10,740	$	10,178	$	12,447

Earnings (loss) attributable to common stockholders per common share (1):
Basic									$	(298.93	)	$	(170.14	)	$	32.59	$	57.06	$	85.41

Diluted									$	(298.93	)	$	(170.14	)	$	0.81	$	0.77	$	0.94

Weighted average common shares outstanding (1):
Basic										61,557			66,432			66,950		66,950		66,950

Diluted										61,557			66,432			13,225,359		13,227,431		13,225,210

Cash dividend per common share										—		$	174.14			—		—		—



	As of December 31,													As of September 30,
	2004		2005		2006			2007			2008			2008			2009
		(in thousands)
Consolidated balance sheet data:														(unaudited)
Cash and cash equivalents	$	5,416	$	9,144	$	12,667		$	13,326		$	46,589		$	44,035		$	52,626
Total assets		120,038		311,469		423,088			442,891			450,562			461,361			441,489
Total indebtedness		23,000		121,567		197,250			237,550			235,850			236,275			216,416
Total long-term liabilities		29,590		157,528		229,049			279,374			265,250			265,919			251,941
Series A preferred stock		—		116,415		143,943			142,948			142,948			142,948			142,948
Stockholders’ equity (deficit)		38,237		792		(9,642	)		(37,234	)		(37,265	)		(18,610	)		(17,216	)

Index to Financial Statements


	Year Ended December 31,						Nine Months Ended September 30,
	2006		2007		2008		2008		2009
	(in thousands)
Other financial data (unaudited):
Adjusted EBITDA (2)	$	27,256	$	41,765	$	60,339	$	49,174	$	45,115
Free cash flow (3)		9,282		12,754		36,828		32,606		25,164

(1)

In connection with Francisco Partners’ May 2005 acquisition of us, we were recapitalized. As a result, the capital structure of our predecessor is not comparable to that of the successor. Accordingly, net loss per common share is not comparable or meaningful for periods prior to 2006 and has not been presented.

(2)	Adjusted EBITDA is defined as net income (loss) adjusted for interest (income) expense, net; income tax provision (benefit); depreciation and amortization; stock-based compensation; other (income) expense, net; loss on early extinguishment of debt and restructuring.


	Year Ended December 31,									Nine Months Ended September 30,
	2006			2007			2008			2008			2009
	(in thousands)
Net income (loss)	$	(10,512	)	$	(3,930	)	$	10,740		$	10,178		$	12,447
Interest expense, net		18,095			23,369			18,365			13,854			10,752
Income tax provision (benefit)		(3,796	)		845			8,843			8,437			4,882
Depreciation and amortization		14,176			18,754			18,364			13,839			13,427
Stock-based compensation		1,775			3,234			4,253			3,105			2,693
Other (income) expense, net		58			(507	)		(226	)		(239	)		(166	)
Loss on early extinguishment of debt		7,460			—			—			—			—
Restructuring		—			—			—			—			1,080

Adjusted EBITDA	$	27,256		$	41,765		$	60,339		$	49,174		$	45,115

Index to Financial Statements

(3)	Free cash flow is defined as net cash provided by operating activities less capital expenditures.


	Year Ended December 31,									Nine Months Ended September 30,
	2006			2007			2008			2008			2009
	(in thousands)
Net cash provided by operating activities	$	11,276		$	16,007		$	41,319		$	35,822		$	27,289
Capital expenditures		(1,994	)		(3,253	)		(4,491	)		(3,216	)		(2,125	)

Free cash flow	$	9,282		$	12,754		$	36,828		$	32,606		$	25,164

Index to Financial Statements

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our audited consolidated financial statements and related notes included elsewhere in this prospectus. Our audited consolidated financial statements have been prepared in accordance with GAAP. Statements in this prospectus which are not historical facts are forward-looking statements within the meaning of the federal securities laws. These statements may contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” or other wording indicating future results or expectations. Forward-looking statements are subject to significant risks and uncertainties. Our actual results may differ materially from the results discussed in these forward-looking statements. Factors that could cause our actual results to differ materially include, but are not limited to, those discussed under “Risk Factors” and “Special Note Regarding Forward-Looking Statements” and elsewhere in this prospectus. Our business, financial condition or results of operations could be materially adversely affected by any of these factors.

Overview

Our Business

We provide a unique platform of productivity solutions that enable manufacturers, distributors and retailers to synchronize and optimize the management of workforce, inventory and transportation. We deliver these solutions that support business strategies for increasing revenue, reducing costs and creating competitive advantage through a combination of our software and related services. Our customers include eight of the top 15 food and drug retailers, four of the top five food consumer products companies, three of the top four household and personal products companies, four of the top ten general merchandisers and specialty retailers, three of the top five petroleum companies and five of the top ten pharmaceutical companies, based on the 2009 list of Fortune Global 500 companies.

We commenced operations in 1975 under the name of McHugh Freeman & Associates as a provider of supply chain management software and general consulting services. In 1989, we became an indirect, wholly-owned subsidiary of Pinnacle Automation, a provider of warehouse management and material handling solutions. During the 1990s, through several acquisitions, we expanded our product line to include transportation management, multi-platform warehouse management, and labor management. In 1998, we were spun off from Pinnacle Automation and became an independent operating company. As part of the spin off, we received a $50.0 million equity investment from two institutional investors.

In 2002, we rebranded as RedPrairie and embarked on a strategy to expand our product and geographic reach. In 2004, we acquired Logistics Technology Group Limited, a provider of supply chain execution and warehouse management solutions in the United Kingdom and Europe, which became the foundation for our EMEA/APAC operations. In May 2005, we were acquired by Francisco Partners in a $236.2 million merger transaction, which was financed by a $120.0 million senior secured credit facility and the issuance of series A preferred stock and common stock. Subsequent to this transaction, we acquired several smaller companies, including RangeGate Mobile Solutions Limited, Alta A/S and MARC Global Holdings, Inc., and in July 2006, we acquired BlueCube Software, Inc., which became the foundation for our in-store operations offering and supported our vision of an extended productivity platform. The BlueCube Software, Inc. acquisition was financed by a new senior secured credit facility which resulted in the incurrence of an additional $69.4 million of debt and the issuance of series A preferred stock and common stock. In early 2007, we further enhanced our product offerings with the acquisitions of StorePerform Technologies, Inc., a provider of store execution management software, and GEOCOMtms Inc., a provider of fleet management software.

Geographic Segments

We manage our business in two geographic segments: Americas, which includes the United States, Canada and Latin America, and EMEA/APAC, which includes Europe, the Middle East, Africa, Asia and

Index to Financial Statements

Australia. Segment revenue is based on the location of the end-user customer or reseller partner. During the years ended December 31, 2006, 2007 and 2008, and for the nine months ended September 30, 2008 and 2009, we derived 25.0%, 28.1%, 29.8%, 29.5% and 27.3% of our revenue, respectively, from sales to customers within our EMEA/APAC segment. The following table summarizes our revenue, gross profit and income from operations by segment:


	Year Ended December 31,						Nine Months Ended September 30,
	2006		2007		2008		2008		2009
	(in thousands)
							(unaudited)
Americas:
Revenue	$	139,382	$	181,992	$	205,693	$	156,075	$	140,956
Gross profit (1)		61,201		76,388		93,436		71,110		74,014
Income from operations (1)		39,780		46,286		62,785		49,357		56,405

EMEA/APAC:
Revenue	$	46,452	$	71,238	$	87,167	$	65,170	$	52,939
Gross profit (1)		25,667		42,107		47,787		35,449		21,126
Income from operations (1)		12,338		23,424		25,460		18,345		5,599

Corporate unallocated costs (1)	$	48,273	$	49,933	$	50,523	$	35,472	$	34,089

Total:
Revenue	$	185,834	$	253,230	$	292,860	$	221,245	$	193,895
Gross profit		86,868		118,495		141,223		106,559		95,140
Income from operations		3,845		19,777		37,722		32,230		27,915

(1)

Segment costs consist of certain direct costs to support our business, but do not include certain unallocated costs including research and development and certain marketing and general and administrative costs. For more information, see note 14 of our audited consolidated financial statements included elsewhere in this prospectus.

Significant Trends and Developments in our Business

Challenging Macroeconomic Environment

Our results of operations depend on the demand for our software products and related services which can be affected by general economic conditions. Beginning in the fourth quarter of 2008, we began to experience the impact of the weakening global economy and a decline in purchases of our software solutions and related services by both new and existing customers. We believe that this decline was the result of reductions in IT spending by enterprises, longer sales cycles, more in-depth product trials, smaller initial pilot programs, delays or reductions in customer purchases and pricing pressure from customers and competitors. Although our revenue declined for the nine months ended September 30, 2009 compared to the prior year period, our adjusted EBITDA declined to a lesser extent on a percentage basis due to our focus on managing costs and maintaining profitability in light of the challenging economic environment. To this end, we implemented a reduction in our workforce and other cost containment measures during the first quarter of 2009.

Increased Proportion of License Sales to Existing Customers

We have generated a higher percentage of new license sales from existing customers in the nine months ended September 30, 2009 compared to the prior year period. We believe that this trend has been primarily the result of recent economic conditions that have caused some prospective customers to delay their purchases of our software solutions. We have been able to sell additional licenses to products previously licensed by the customer, as well as new licenses to other products within our product portfolio. The nature of our business, particularly recurring purchases of additional software, professional services and post-contract support and hosting services by existing customers helped to mitigate the decline in sales of our products and services to new customers.

Index to Financial Statements

While sales of additional solutions to existing customers tend to be smaller on average than sales to new customers, the sales cycle is typically shorter and the selling costs are typically lower than for sales to new customers.

Impact of Foreign Exchange Fluctuations

Material portions of our revenue and expenses are generated by our operations in foreign countries, and we expect that our foreign operations will account for a material portion of our revenue and expenses in the future. For the year ended December 31, 2008, we generated approximately 29.5% of our total revenue and incurred approximately 24.9% of our total costs in foreign currencies. For the nine months ended September 30, 2009, we generated approximately 26.9% of our total revenue and incurred approximately 24.3% of our total costs in foreign currencies. We are unable to predict the extent to which revenue in future periods will be impacted by changes in foreign exchange rates. If EMEA/APAC revenue increases as a percentage of our total revenue in the future, changes in foreign currency rates may have a greater impact on our revenue and operating results. For the year ended December 31, 2008 and the nine months ended September 30, 2009, the Euro and British pound were the two predominant non-U.S. currencies that affected our financial results. As the U.S. dollar strengthens against foreign currencies, our revenue and operating income may be negatively impacted. As the U.S. dollar weakens against foreign currencies, our revenue and operating income may be positively impacted. During the nine months ended September 30, 2009, on an average exchange basis, the U.S. dollar strengthened against the Euro and British pound compared to the nine months ended September 30, 2008. Overall, the U.S. dollar strengthening against the Euro had the most significant impact to our financial statements and has negatively affected the revenue in certain foreign countries when converted to U.S. dollars in our statements of income for the nine months ended September 30, 2009 as compared to the prior year period.

Key Operating and Financial Performance Measures

We monitor the key financial metrics set forth below as well as cash, cash equivalents and short-term investments, which are discussed in “—Liquidity and Capital Resources,” to help us evaluate growth trends, establish budgets, measure the effectiveness of our sales and marketing efforts and assess operational efficiencies.


	Year Ended December 31,									Nine Months Ended September 30,
	2006			2007			2008			2008			2009
	(in thousands)
										(unaudited)
Total revenue	$	185,834		$	253,230		$	292,860		$	221,245		$	193,895
Gross margin		46.7	%		46.8	%		48.2	%		48.2	%		49.1	%
Adjusted EBITDA (1)	$	27,256		$	41,765		$	60,339		$	49,174		$	45,115
Free cash flow (2)	$	9,282		$	12,754		$	36,828		$	32,606		$	25,164

(1)	For a further discussion of adjusted EBITDA (unaudited) see note 4 in the “Prospectus Summary—Summary Consolidated Financial Data” elsewhere in this prospectus.

(2)	For a further discussion of free cash flow (unaudited) see note 5 in the “Prospectus Summary—Summary Consolidated Financial Data” elsewhere in this prospectus.

Gross Margin

Gross margin, or gross profit as a percentage of revenue, has been and will continue to be affected by a variety of factors, including the average sales price of our products, the mix of products sold and the mix of revenue between software license, post-contract support and hosting, professional services, and hardware and other. We believe our overall gross margin for the near term will remain near the levels we have seen during the year ended December 31, 2008 and nine months ended September 30, 2009. While an increase in software license revenue would positively affect our margins, given the current global economic environment, we do not

Index to Financial Statements

anticipate in the near term any significant increase in our software license revenue as a percentage of total revenue.

In addition, each of professional services revenue and hardware and other revenue have a negative impact on our gross margin and a dilutive effect to our overall margins, due to relatively lower margins on these sources of revenue.

Adjusted EBITDA

Adjusted EBITDA is defined as net income (loss) adjusted for interest (income) expense, net, income tax provision (benefit), depreciation and amortization, stock-based compensation, other (income) expense, net, loss on early extinguishment of debt and restructuring. Management believes that the use of adjusted EBITDA provides consistency and comparability with our past financial performance, facilitates period to period comparisons of operations, and also facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. Management believes that it is useful to exclude certain non-cash charges, such as depreciation, amortization and stock-based compensation, and non-core operational charges, such as other (income) expense, net, loss on early extinguishment of debt and restructuring, from adjusted EBITDA because (1) the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and (2) such expenses can vary significantly between periods as a result of new acquisitions, full amortization of previously acquired tangible and intangible assets or the timing of new stock-based awards, as the case may be. Prior to 2009, our adjusted EBITDA grew from approximately $27.3 million in 2006 to approximately $60.3 million in 2008, as a result of the combination of organic growth and growth from acquisitions. Adjusted EBITDA declined by approximately $4.1 million for the nine months ended September 30, 3009 relative to the prior year period which we believe was due to reduced demand for our products and services as a result of the weakness in the overall global economic environment.

Free Cash Flow

Free cash flow is defined as net cash provided by operating activities less capital expenditures. Free cash flow is a key measure used in our internal operating reports and allows us to manage the cash available to fund our debt obligations and potential strategic initiatives. Management believes that free cash flow is useful to investors as a supplemental measure to evaluate our liquidity and ability to meet debt obligations. From 2006 through 2008 we generated significant free cash flow with free cash flow increasing from approximately $9.3 million in 2006 to approximately $36.8 million in 2008, as a result of the combination of organic growth and growth from acquisitions. Free cash flow declined by approximately $7.4 million for the nine months ended September 30, 2009 relative to the prior year period which we also believe was due to reduced demand for our products and services as a result of the weakness in the overall global economic environment. We manage our free cash flow through our focus on profitability and working capital.

Key Components of our Results of Operations

Revenue

We derive revenue primarily from sales of (1) software licenses, (2) post-contract support and hosting, (3) professional services and (4) hardware and other.

Software Licenses

We generate software license revenue from sales of perpetual software licenses and term licenses. Our revenue from software licenses generally fluctuates, and we expect it to continue to fluctuate on a quarterly basis primarily due to uncertain and inconsistent timing of sales of our software licenses, revenue recognition requirements and seasonality, among other factors. As a result, transactions that were expected to be recognized

Index to Financial Statements

in one period may be recognized in a subsequent period which may materially affect our financial performance on a quarterly basis. Furthermore, as our operating expenses are budgeted based on our expectations of future revenue and are relatively fixed in the short term, an unanticipated shortfall in our software license revenue in a particular period could have a disproportionately negative effect on our operating results in the same or subsequent periods. Software license revenue may also be influenced by an increase in the number of customers through acquisitions.

We allow customers the rights to use and pay for the software over a specified term, which is generally three to five years. Under these arrangements, the software license revenue is recognized ratably over the term of the arrangement, generally commencing when the product has been installed. We intend to continue to leverage our expertise in delivering our applications as an on-demand service and our established application-hosting infrastructure to extend our hosted and on-demand software offerings to more of the products we offer.

Post-Contract Support and Hosting

We derive post-contract support revenue from customer fees for technical support services and unspecified software upgrades, updates and enhancements, when and if available. Typically, customers contract for post-contract support services at the time of entering into a software license agreement. Post-contract support services typically have an initial one-year term, billed annually in advance, with renewal for additional periods thereafter. Over the last three years our annual worldwide post-contract support renewal rate has been over 90% as measured by revenue.

We offer hosting solutions for our applications, whereby we can service customers who seek the benefits of our applications without the need to manage and support the software and associated hardware themselves. To this end, we house the hardware and software in third-party facilities and in our own designated facilities, and provide access to the application and to data security and storage, backup and recovery services over the Internet. As a result of the associated third-party costs and additional hardware costs, hosting solutions generally have lower gross margins than post-contract support; however, we believe that providing hosting services is a valuable service to our customers, allowing them to focus on their core competencies and not on managing their technology solutions.

Post-contract support and hosting revenue is influenced by (1) execution of new software license agreements, (2) annual renewal of post-contract support agreements and related price increases, (3) annual renewal of hosting agreements and related price increases and (4) an increase in the number of customers through acquisitions.

Professional Services

Professional services revenue is primarily derived from fees for services including implementation, consulting, customization of our applications and training, and is generally recognized when services are performed. Although our professional services are optional, the majority of our customers use at least some portion of these services in conjunction with the purchase of software licenses, the implementation of generally released upgrades offered as part of post-contract support, or on a stand-alone basis. Our professional services revenue is primarily influenced by the execution of new software license agreements, upgrades of existing arrangements with customers, and may also be influenced by an increase in the number of customers through acquisitions.

Hardware and Other

Hardware and other revenue consists of revenue derived from (1) the sale of hardware such as computers, radio frequency terminal networks, radio frequency identification, or RFID, chip readers, bar code printers and scanners, other peripherals, and related third-party maintenance agreements, (2) the sale of third-party software that is

Index to Financial Statements

not integrated with our software and related maintenance agreements, and (3) reimbursements for billable travel associated with the provision of professional services. We resell hardware and related third-party maintenance services to customers who license our software products. We purchase hardware pursuant to contractual orders from our customers and typically do not maintain hardware inventory for resale. Although we do not view hardware sales as a key component of our business, we resell this hardware in order to meet the needs of our customers seeking a single source supplier for their supply chain management and in-store operations requirements.

Cost of Revenue

Cost of Total Software License Revenue

Cost of total software license revenue consists primarily of amortization of acquired software, as well as royalties on third-party software that is integrated with our software.

Cost of Post-Contract Support and Hosting Revenue

Cost of post-contract support and hosting revenue consists primarily of personnel expenses related to the support and maintenance of our software products, as well as costs associated with depreciation of property and equipment, including hosting equipment, and rent expense for third-party data centers. Personnel expenses include salaries, benefits, bonuses and non-cash stock-based compensation.

Cost of Professional Services Revenue

Cost of professional services revenue consists primarily of personnel expenses related to the provision of professional services, as well as depreciation of property and equipment. We may from time to time redeploy research and development personnel to customer-specific billable projects in response to customer requirements.

Cost of Hardware and Other Revenue

Cost of hardware and other revenue consists primarily of direct hardware, software and maintenance costs from third-party hardware and software providers whose products we resell to our customers, costs associated with internal technology services personnel and out-of-pocket expenses billed to our customers on a gross basis.

Operating Expenses

Our operating expenses consist of research and development, sales and marketing, general and administrative, and depreciation and amortization expenses. We expect personnel expenses, which are the most significant component of operating expenses, to continue to increase in absolute dollars in future periods as we hire new employees; however, the non-cash stock-based compensation component of personnel expenses may fluctuate based on the timing and magnitude of new equity awards.

Research and Development

Research and development expense includes personnel expenses, third-party contractor expenses, software development tools, an allocation of facilities expenses and other expenses related to development of new products and upgrading and enhancing existing products. Expenses incurred in developing new products and upgrading and enhancing existing products at the request of a customer are included in cost of revenue and are not included in research and development. We expect to continue to invest in research and development and we expect research and development expense to increase in absolute dollars in future periods.

Index to Financial Statements

Sales and Marketing

Sales and marketing expense includes personnel expenses, including sales commissions, of our sales and marketing organizations, travel and entertainment expenses, advertising and marketing materials, trade shows and other marketing events, net changes in the allowance for doubtful accounts and an allocation of facilities expenses. We expect sales and marketing expenses to increase in absolute dollars in future periods.

General and Administrative

General and administrative expense includes personnel expenses for general and administrative functions, including finance, accounting, legal, human resources, facilities, information technology and corporate development; third-party professional fees; insurance; allocation of facilities expenses; and other administrative expenses. We expect that the costs of being a public company, including the costs of compliance with the Sarbanes-Oxley Act of 2002 and other regulations governing public companies, increased directors and officers insurance, and professional and other services, will significantly increase our general and administrative expenses in absolute dollars in future periods. This increase will be partially offset by a decrease in third-party professional fees due to a termination of our advisory agreement with Francisco Partners.

Depreciation and Amortization

Depreciation and amortization expenses are primarily attributable to the depreciation of property and equipment and amortization of intangible assets, including customer lists and trademarks obtained in connection with acquisitions.

Other Expenses

Interest Expense, Net

Interest expense, net consists primarily of interest expense on our credit facilities and amortization of deferred financing fees associated with the credit facilities, partially offset by interest income earned on cash balances. For more information about our credit facilities, see “—Liquidity and Capital Resources—Our Indebtedness.”

Other Income (Expense), Net

Other income (expense), net consists primarily of foreign exchange currency transaction gains and losses.

Income Tax Provision (Benefit)

We are subject to tax in the United States as well as other tax jurisdictions or countries in which we conduct business. Earnings from our non-U.S. activities are subject to local country income tax and may be subject to current U.S. income tax.

Our effective tax rates differ from the statutory rate primarily due to valuation allowances on our deferred taxes, state taxes, foreign taxes, research and development tax credits and tax contingencies.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. Generally, we base our estimates on historical

Index to Financial Statements

experience and on various other assumptions in accordance with GAAP that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under other assumptions or conditions.

Critical accounting policies and estimates are those that we consider the most important to the portrayal of our financial condition and results of operations because they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our critical accounting policies and estimates include those related to:

•

revenue recognition;

•

allowance for doubtful accounts;

•

valuation of long-lived assets, including goodwill;

•

income taxes;

•

stock-based compensation;

•

business combinations;

•

reserves for contingencies; and

•

pension plans.

Revenue Recognition

We follow specific and detailed guidelines in measuring revenue; however certain judgments affect the application of our revenue policy. Our revenue is derived from software license, post-contract support and hosting, professional services and hardware and other revenue. We generally contract under multiple element arrangements, which typically include software license fees and post-contract support, but may also include professional services or hardware. The accounting related to license revenue recognition in the software industry is complex and affected by interpretations of the rules which are subject to change. We evaluate revenue recognition on a contract-by-contract basis as the terms of each arrangement vary. The evaluation of our contractual arrangements often requires judgments and estimates that affect the timing of revenue recognized in our statements of operations. Specifically, we may be required to make judgments about:

•

whether the fees associated with our products and services are fixed or determinable;

•

whether collection of our fees is reasonably assured;

•

whether professional services are essential to the functionality of the related software product;

•

whether we have the ability to make reasonably dependable estimates in the application of the percentage-of-completion method; and

•

whether we have verifiable objective evidence of fair value for our products and services.

Our judgment is required in assessing the probability of collection, which is generally based on evaluation of customer-specific information, historical collection experience and economic market conditions. If market conditions decline, or if the financial condition of our customers deteriorates, we may be unable to determine that collectibility is probable, and we could be required to defer the recognition of revenue until we receive customer payments.

For software that does not require modification or customization that is essential to the functionality of the delivered software, we recognize software license revenue when (1) persuasive evidence of an arrangement exists and a license agreement has been signed; (2) delivery is complete and there are no uncertainties surrounding product acceptance; (3) the amount of fees to be paid by the customer are fixed or determinable; (4) collection of fees from the customer is probable; and (5) vendor specific objective evidence, or VSOE, of fair

Index to Financial Statements

value exists for all undelivered elements. We generally do not sell software or software licenses to our customers on a stand-alone basis; therefore, allocation of fees to the software component of multiple element arrangements is determined using the residual method. If we are unable to determine VSOE for any undelivered element included in the arrangement, we will defer revenue recognition until all elements for which we cannot determine VSOE have been delivered.

If software requires modification or customization that is essential to the functionality of the delivered software, we recognize software license and professional services revenue using the percentage-of-completion method over the period the services are provided. Under the percentage-of-completion method, revenue is recognized throughout the period of service with progress to completion measured primarily on the number of hours expended on such services as a percentage of total hours to be expended to complete such services. Changes in estimates of total labor hours and the related effect on the timing of revenue and profits are recognized in the period in which they are determinable. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.

For a small number of arrangements, we allow customers the rights to use and pay for the software over a specified term, which is generally three to five years. Under these arrangements, the software license revenue is recognized ratably over the term of the arrangement, generally commencing when the product has been installed. Straight-line attribution is used because there is no discernible pattern of use that suggests revenue is earned or obligations are fulfilled in a different pattern.

Our post-contract support and hosting revenue consists of fees generated from technical support services, general releases of unspecified software upgrades, updates and enhancement as well as fees related to the hosting of our software products. Post-contract support services and hosting services are primarily billed in advance and recognized as revenue ratably over the term of the agreement, typically 12 months.

Our professional services revenue consists of fees generated from services, including implementation, consulting, customization of our applications, and training. Fees from professional services performed by us are generally billed on an hourly basis, and revenue is recognized as the services are performed. Professional services are sometimes rendered under agreements in which billings are based upon a fixed-fee for portions of or all of the engagement. Revenue related to fixed-fee based contracts is recognized on a proportional performance basis based on the hours incurred on discrete projects within an overall services arrangement. Project losses are provided for in their entirety in the period in which they become known.

Hardware and other revenue consists of revenue derived from (1) the sale of hardware such as computers, radio frequency terminal networks RFID chip readers, bar code printers and scanners, other peripherals, and related third-party maintenance agreements, (2) the sale of third-party software that is not integrated with our software and related maintenance agreements, and (3) reimbursements for billable travel associated with the provision of professional services. Hardware revenue is recognized upon delivery to the customer when title passes. We generally purchase hardware from our vendors only after receiving an order from a customer. As a result, we do not typically maintain hardware inventory for resale. Additionally, we recognize amounts associated with reimbursements from customers for out-of-pocket expenses as revenue as incurred.

Allowance for Doubtful Accounts

We monitor collections and payments from our customers and maintain an allowance for estimated write-offs based upon historical experience and any specific customer collection issues that have been identified. The establishment of reserves requires the use of judgment and assumptions regarding the potential for losses on receivable balances. While such losses have historically been within our expectations and the provisions established, we cannot guarantee that we will continue to experience the same loss rates that we have in the past.

Index to Financial Statements

Valuation of Long-Lived Assets, Including Goodwill

Business combinations typically result in goodwill and other intangible assets, such as acquired technology, customer lists and trademarks, which affect the amount of future period amortization expense and potential impairment charges we may incur. The determination of the value of such intangible assets and the annual impairment tests require management to make estimates of future revenue, customer retention rates and other assumptions that affect the consolidated financial statements.

Goodwill is tested annually as of December 31st for impairment, or more frequently if events or changes in business circumstances indicate the asset might be impaired. The impairment test for goodwill is a two-step process. The first step is to compare the carrying amount of the respective reporting unit’s net assets to the fair value of the reporting units. Fair value is estimated by utilizing a discounted cash flow analysis based on key assumptions and estimates. If the fair value exceeds the carrying value, no further evaluation is required and no impairment loss is recognized. If the carrying value of the reporting unit exceeds fair value, then the second step must be completed, which involves allocating the fair value of the reporting unit to each asset and liability, with the excess being implied goodwill. An impairment loss occurs if the amount of the recorded value exceeds the implied goodwill. There were no impairments recorded in 2006, 2007, 2008 or the nine months ended September 30, 2009.

Customer lists are amortized on a straight-line basis over estimated useful lives ranging from five years to 25 years. The values allocated to customer list intangibles are based on the projected economic life of each acquired customer base, using historical turnover rates and discussions with the management of the acquired companies. We estimate the economic lives of these assets using the historical life experiences of the acquired companies as well as our historical experience with similar customer accounts for products that we have developed internally. We review customer attrition rates for each significant acquired customer group on annual basis, or more frequently if events or circumstances change, to ensure the rate of attrition is not increasing and if revisions to the estimated economic lives are required.

Acquired technology is amortized on a product-by-product basis with the amortization recorded for each product being the greater of the amount computed using (1) the ratio that current gross revenue for a product bears to the total of current and anticipated future revenue for that product, or (2) the straight-line method over the remaining estimated economic life of the product including the period being reported on. The estimated economic lives of our acquired software technology range from five years to 10 years. Amortization of acquired technology is reported as a cost of total software license revenue.

Trademarks were acquired primarily in the acquisition of our company by Francisco Partners. These trademarks have been assigned a useful life of 25 years. Trademarks are tested for impairment at least annually or more frequently if impairment indicators arise.

Income Taxes

The current provision for income taxes represents actual or estimated amounts payable or refundable on tax returns filed each year. Deferred tax assets and liabilities are recognized for the estimated future tax effects attributable to the temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as operating loss and tax credit carryforwards. Uncertainties arise as a consequence of the actual source of taxable income between domestic and foreign locations, the outcome of tax audits and the ultimate utilization of tax credits. Although we believe our estimates are reasonable, the final tax determination could differ from our recorded income tax provision and accruals. In such case, we would adjust the income tax provision in the period in which the facts that give rise to the revision become known. These adjustments could have a material impact on our income tax provision and our net income for that period.

As of September 30, 2009, there are no income tax positions for which the unrecognized tax benefits will significantly increase or decrease during the next twelve months. Tax years still open for examination by federal and major state agencies as of December 31, 2008 are 2005 through 2008. Federal and state agencies may disallow research tax carryforwards, net operating loss carryforwards and other carryforwards previously claimed.

Index to Financial Statements

As of December 31, 2008, we had federal operating loss carryforwards of approximately $14.8 million which are set to expire beginning in 2021. In addition, certain of our foreign subsidiaries have net operating loss carryforwards in U.S. dollars totalling approximately $33.0 million as of December 31, 2008 and which are set to expire beginning in 2010. Under Section 382 of the Internal Revenue Code of 1986, or the Code, in general, an aggregate increase of more than 50% in the percentage ownership in value of our stock by 5% or greater stockholders (including public groups) over a running three year period constitutes an “ownership change” for federal income tax purposes. Such an ownership change may limit our ability to use, for both regular and alternative minimum tax purposes, any net operating loss carryforwards attributable to the periods prior to the ownership change. We believe that such ownership changes have occurred and may occur in the future to further limit the use of our net operating loss carryforwards. We also believe that any future ownership changes should not have a material adverse effect on the use of our existing net operating loss carryforwards.

Stock-Based Compensation

Effective January 1, 2006, based on updated guidance issued by the FASB, our stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period. We applied this guidance under the prospective transition method and therefore apply the valuation provisions to all awards granted, modified, repurchased or cancelled after the adoption date. We account for stock issued to non-employees on a fair value basis.

The fair value of share-based awards is calculated through the use of option-pricing models, even though such models were developed to estimate the fair value of options to purchase freely-tradable, fully-transferable equity securities without vesting restrictions, which differ significantly from our option grants. These models also require subjective assumptions regarding future share price volatility and expected lives of each option grant.

The fair value of employee stock options granted since January 1, 2007 was estimated at the grant date using the Black-Scholes option pricing model by applying the following weighted average assumptions:


Risk-free interest rates	2-4	%
Expected option life (in years)	5
Dividend yield	0	%
Expected volatility	45-65	%

At each stock option grant date, we utilized peer group data to calculate our expected volatility. Expected volatility was based on comparable companies’ four-year history. Expected term and forfeiture rates were based on existing employee exercise patterns and our historical pre-vested forfeiture experience. The risk-free rate was based on the treasury yield rate with a maturity corresponding to the expected option life assumed at the grant date.

Changes to the underlying assumptions, including increased forfeiture rates, may have a significant impact on the underlying value of the stock options, which could have a material impact on our consolidated financial statements. We did not grant any options during 2008 or during the nine months ended September 30, 2009. As of September 30, 2009, there was a total of $4.9 million of unrecognized stock-based compensation which will be recognized over a weighted average period of approximately two years.

We have granted stock options at exercise prices believed to be equivalent to the fair value of our common stock, as of the grant date. Given the absence of any active market for our common stock, the fair value of the common stock underlying stock options granted was determined by our board of directors, with input from our management, and based in part on third party valuations. Members of our board of directors and management team have extensive business, finance and private equity experience.

Index to Financial Statements

Background. We considered numerous objective and subjective factors in valuing our common stock at each valuation date in accordance with the guidance in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. These objective and subjective factors included, but were not limited to:

•

our financial position and historical operating and financial performance as well as progress to date against planned budgets;

•

our financial projections and future prospects;

•

the fact that option grants involved illiquid securities of a private company;

•

the likelihood of achieving a liquidity event for the shares of common stock underlying the options, such as an initial public offering or sale of our company, given prevailing market conditions and our relative financial condition at the time of grant;

•

the stock price performance of selected publicly held companies identified as being comparable to us;

•

the consideration received in connection with the issuance of shares to outside investors in arm’s-length transactions;

•

the related rights and preferences associated with our common and preferred stock; and

•

valuations performed contemporaneous with the stock option grant date, in each case within 90 days of the grant.

Our board of directors and management believe the valuation methodology employed for each date of determination provided a reasonable basis for estimating the fair value of our common stock.

The following table sets forth all stock option grants since January 1, 2007 through the date of this prospectus:


Grant Period	Number of Options Granted	Exercise Price			Common Stock Fair Value Per Share		Valuation Report Date
4/26/2007	377,118	$	21.63	(1)	$	21.63	2/28/2007
5/21/2007	53,975		21.63	(1)		21.63	2/28/2007
5/29/2007	15,000		21.63	(1)		21.63	2/28/2007
12/19/2007	721,179		17.05			17.05	10/31/2007
10/14/2009	348,000		16.64			16.64	9/24/2009

(1)

The options granted on April 26, 2007, May 21, 2007 and May 29, 2007 were repriced from an exercise price of $21.63 to $17.05 on December 19, 2007 contemporaneously with grants of additional options on such date to better reflect our board of directors’ determination for the fair value of our common stock.

In order to determine the fair value of our common stock associated each grant we utilized the most recent valuation performed contemporaneously with the grant date. We determined the fair value of our common stock by using a combination of three different approaches to value our company and applied a weighting to each approach. The approaches utilized in our valuations of our common stock include the income approach and the market multiple approach, as well as the Monte Carlo simulation approach utilized only in the October 31, 2007 valuation.

Under the income, or discounted cash flow, approach, our estimated annual revenue and cash flow projections based on our internal financial forecasts were discounted to their present values to estimate the value of our company. Our financial forecasts include a growth rate and an exit multiple based upon our internal projections. We used a discount rate of approximately 15%, 16% and 16% in our valuations as of February 28, 2007, October 31, 2007 and September 24, 2009, respectively, which corresponds to our estimated weighted average cost of capital. Our weighted average cost of capital was computed by selecting market rates on the

Index to Financial Statements

valuation date for debt and equity that were reflective of the risks associated with an investment in our industry as estimated by using the companies in our peer group.

Under the market multiple approach, we compared ourselves to the companies in our peer group. The market multiples of those companies were calculated as of the applicable valuation date and were then applied to our historical and forecasted financial results at the applicable valuation date to estimate the value of our company. Since our common stock has not been publicly traded, we established a peer group of comparable publicly-traded companies and utilized their reported EBITDA and revenue multiples as of the valuation date.

Under the Monte Carlo simulation approach used in the October 31, 2007 valuation, we simulated the outcome for each class of our stock based on our future enterprise value, a volatility factor and a range of future possible outcomes. This model allowed for the specification of inputs to the model as ranges or random variables within defined distributions as opposed to as a single, static number.

After estimating our average value based on the approaches described above, we also utilized a probability weighted expected return method. Under the probability-weighted expected return method, the value of the common stock was estimated based upon the analysis of values for us assuming various outcomes, through an initial public offering, sale of our company or remaining private, and the estimated probability of each outcome assuming that all preferred stock is converted into common stock and any applicable dividends were paid.

Business Combinations

In accordance with business combination accounting, we allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.

Management makes estimates of fair value based upon assumptions believed to be reasonable. These estimates are based on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Critical estimates in valuing certain of the intangible assets include but are not limited to future expected cash flows from customer contracts and acquired technologies; the acquired company’s trademarks, as well as assumptions about the period of time the acquired trademarks will continue to be used in the company’s product portfolio; and discount rates. Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results.

In connection with purchase price allocations, we estimate the fair value of the post-contract support obligations assumed in connection with acquisitions. The estimated fair value of the post-contract support obligations is determined utilizing a cost build-up approach. The cost build-up approach determines fair value by estimating the costs related to fulfilling the obligations plus a normal profit margin. The estimated costs to fulfill the support obligations are based on the historical direct costs related to providing the support services and to correct any errors in the software products acquired.

Reserves for Contingencies

We regularly assess the estimated impact and probability of various uncertain events, or contingencies. Contingent losses must be accrued if available information indicates it is probable that the loss has been or will be incurred given the likelihood of the uncertain event, and the amount of the loss can be reasonably estimated. Management judgment is required in deciding the amount and timing of accrual of a contingency. For example, legal proceedings are inherently uncertain, and in order to determine the amount of any reserves required, we assess the likelihood of any adverse judgments or outcomes in pending and threatened litigation, as well as potential ranges of probable losses. A determination of the amount of loss accrual required for these contingencies is made after analysis of each individual matter. The amount of any such accrual may change in

Index to Financial Statements

the future due to changes in approach or new developments in each case. As of September 30, 2009, December 31, 2008 and 2007, we had no accruals recorded for legal fees and contingencies.

Pension Plans

We account for our defined benefit pension plan using actuarial valuations that are based on assumptions, including discount rates, long-term rates of return on plan assets, and rates of change in participant compensation levels. To determine the discount rate, we apply the expected cash flows from our pension plan to specific yield curves at the plan’s measurement date to match our expected plan obligations and related expected cash flow. A lower discount rate increases the present value of benefit obligations and increases pension expense. We believe the assumptions utilized in recording our pension plans are reasonable, and represent our best estimates, based on information as to historical experience and performance as well as other factors that might cause future expectations to differ from past trends. These assumptions are evaluated periodically and are updated to reflect our experience. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors. In such cases, the differences between actual results and actuarial assumptions are amortized over future periods. We also evaluate the funded status of our defined benefit pension plan using these assumptions, consider applicable regulatory requirements, tax deductibility, reporting considerations and other relevant factors, and thereby determine the appropriate funding level for each period.

Results of Operations

The following tables summarize key components of our results of operations for the periods indicated, both in dollars and as a percentage of revenue:


	Year Ended December 31,								Nine Months Ended September 30,
	2006			2007			2008		2008		2009
	(in thousands)
									(unaudited)
Consolidated statements of operations data:
Revenue:
Software license	$	23,367		$	36,900		$	48,441	$	35,274	$	27,291
Post-contract support and hosting		43,479			68,548			78,418		58,408		61,787
Professional services		83,390			116,251			130,030		101,597		85,975
Hardware and other		35,598			31,531			35,971		25,966		18,842

Total revenue		185,834			253,230			292,860		221,245		193,895

Cost of revenue:
Software license		142			578			354		264		307
Amortization of acquired technology		6,851			8,381			8,252		6,180		6,034

Total software license		6,993			8,959			8,606		6,444		6,341
Post-contract support and hosting		13,424			27,148			33,940		25,712		25,391
Professional services		49,624			72,022			78,667		60,335		51,203
Hardware and other		28,925			26,606			30,424		22,195		15,820

Total cost of revenue		98,966			134,735			151,637		114,686		98,755

Gross profit		86,868			118,495			141,223		106,559		95,140

Operating expenses:
Research and development		19,176			22,567			27,446		20,277		19,493
Sales and marketing		27,474			40,131			42,144		30,486		25,560
General and administrative		30,351			27,738			26,134		17,661		16,219
Depreciation and amortization		6,022			8,282			7,777		5,905		5,953

Total operating expenses		83,023			98,718			103,501		74,329		67,225


Income from operations		3,845			19,777			37,722		32,230		27,915
Interest expense, net		18,095			23,369			18,365		13,854		10,752
Other income (expense), net		(58	)		507			226		239		166

Income (loss) before taxes		(14,308	)		(3,085	)		19,583		18,615		17,329
Income tax provision (benefit)		(3,796	)		845			8,843		8,437		4,882

Net income (loss)	$	(10,512	)	$	(3,930	)	$	10,740	$	10,178	$	12,447

Index to Financial Statements


	Year Ended December 31,						Nine Months Ended September 30,
	2006		2007		2008		2008		2009
	(% of revenue)
Consolidated statements of operations data:
Revenue:
Software license	12.6	%	14.6	%	16.5	%	15.9	%	14.1	%
Post-contract support and hosting	23.4		27.1		26.8		26.4		31.9
Professional services	44.9		45.9		44.4		45.9		44.3
Hardware and other	19.1		12.4		12.3		11.8		9.7

Total revenue	100.0		100.0		100.0		100.0		100.0

Total cost of revenue	53.3		53.2		51.8		51.8		50.9


Gross profit	46.7		46.8		48.2		48.2		49.1

Operating expenses:
Research and development	10.3		8.9		9.4		9.2		10.1
Sales and marketing	14.8		15.8		14.4		13.8		13.2
General and administrative	16.3		11.0		8.9		8.0		8.4
Depreciation and amortization	3.2		3.3		2.6		2.6		3.0

Total operating expenses	44.6		39.0		35.3		33.6		34.7


Income from operations	2.1		7.8		12.9		14.6		14.4

Interest expense, net	9.7		9.2		6.3		6.3		5.5
Other income (expense), net	—		0.2		0.1		0.1		0.1

Income (loss) before taxes	(7.6	)	(1.2	)	6.7		8.4		9.0
Income tax provision (benefit)	(2.0	)	0.3		3.0		3.8		2.5


Net income (loss)	(5.6	)%	(1.5	)%	3.7	%	4.6	%	6.5	%

Nine Months Ended September 30, 2009 Compared to the Nine Months Ended September 30, 2008

Revenue

The following table sets forth for the periods indicated a period over period comparison of the components of our revenue:


	Nine Months Ended September 30,
	2008		2009		$ Change			% Change
	(dollars in thousands)
	(unaudited)
Software license	$	35,274	$	27,291	$	(7,983	)	(22.6	)%
Post-contract support and hosting		58,408		61,787		3,379		5.8
Professional services		101,597		85,975		(15,622	)	(15.4	)
Hardware and other revenue		25,966		18,842		(7,124	)	(27.4	)

Total revenue	$	221,245	$	193,895	$	(27,350	)	(12.4	)

Total revenue decreased by $27.4 million, or 12.4%, to $193.9 million for the nine months ended September 30, 2009, compared to the nine months ended September 30, 2008. Of this decrease, approximately $17.4 million was the result of decreased sales of software licenses, professional services and hardware and other to both new and existing customers, partially offset by an increase in revenue from post-contract support and hosting. We attribute the decrease in total revenue primarily to the weakening global economic environment beginning in the fourth quarter of 2008. Approximately $10.0 million of the decrease was the result of the strengthening of the U.S. dollar compared to foreign currencies.

Index to Financial Statements

Software License Revenue. Software license revenue represented 14.1% and 15.9% of total revenue for the nine months ended September 30, 2009, and 2008, respectively. Software license revenue decreased by $8.0 million to $27.3 million primarily due to lower average transaction sizes and delays in customer purchasing decisions, attributable to the prevailing macroeconomic environment and strengthening of the U.S. dollar.

Software license revenue for Americas and EMEA/APAC decreased by approximately $2.4 million and $5.6 million, respectively, for the nine months ended September 30, 2009 compared to the same period in the prior year. Of the decrease in EMEA/APAC, approximately $1.1 million was the result of the strengthening of the U.S. dollar compared to foreign currencies.

Post-Contract Support and Hosting Revenue. Post-contract support and hosting revenue represented 31.9% and 26.4% of total revenue for the nine months ended September 30, 2009, and 2008, respectively. Of the $3.4 million increase in post-contract support, approximately $2.7 million was attributable to post-contract support and approximately $0.7 million was attributable to hosting. Post-contract support and hosting revenue increased primarily as a result of our software license sales in the prior year.

Post-contract support and hosting revenue for Americas and EMEA/APAC increased by approximately $4.2 million and decreased by approximately $0.8 million, respectively, for the nine months ended September 30, 2009, compared to the prior year period. The increase in EMEA/APAC was offset in part by approximately $3.0 million as a result of the strengthening of the U.S. dollar compared to foreign currencies.

Professional Services Revenue. Professional services revenue represented 44.3% and 45.9% of total revenue for the nine months ended September 30, 2009, and 2008, respectively. Professional services revenue decreased by $15.6 million to $86.0 million primarily due to a decrease in sales of professional services to existing customers and a decrease in sales of software licenses to new and existing customers in 2009.

Professional services revenue for Americas and EMEA/APAC decreased by approximately $12.4 million and by approximately $3.2 million, respectively, for the nine months ended September 30, 2009, compared to the prior year period. Of the decrease in EMEA/APAC, approximately $5.5 million was the result of the strengthening of the U.S. dollar compared to foreign currencies.

Hardware and Other Revenue. Hardware and other revenue represented 9.7% and 11.8% of total revenue for the nine months ended September 30, 2009, and 2008, respectively. Hardware and other revenue decreased by $7.1 million to $18.8 million primarily due to a decrease of reimbursements of billable travel of approximately $3.1 million, which was consistent with the reduction in professional services revenue, and a decrease of approximately $4.0 million in hardware bought and resold from third-party vendors, which was consistent with the decrease in sales of software licenses to new and existing customers.

Hardware and other revenue for Americas and EMEA/APAC decreased by approximately $4.5 million and $2.6 million, respectively, compared to the prior year period. Of the decrease in EMEA/APAC, approximately $0.4 million was the result of the strengthening of the U.S. dollar compared to foreign currencies.

Index to Financial Statements

Cost of Revenue

The following table sets forth for the periods indicated a period over period comparison of the components of our cost of revenue and also sets forth these costs as a percentage of corresponding revenue:


	Nine Months Ended September 30,
	2008			2009			$ Change			% Change
	(dollars in thousands)
	(unaudited)
Cost of revenue:
Software license	$	264		$	307		$	43		16.3	%
Amortization of acquired software		6,180			6,034			(146	)	(2.4	)

Total software license		6,444			6,341			(103	)	(1.6	)
Post-contract support and hosting		25,712			25,391			(321	)	(1.2	)
Professional services		60,335			51,203			(9,132	)	(15.1	)
Hardware and other		22,195			15,820			(6,375	)	(28.7	)

Total cost of revenue	$	114,686		$	98,755		$	(15,931	)	(13.9	)

Percent of corresponding revenue:
Total software license		18.3	%		23.2	%
Post-contract support and hosting		44.0			41.1
Professional services		59.4			59.6
Hardware and other		85.5			84.0
Total cost of revenue		51.8			50.9

Cost of Total Software License. The $0.1 million decrease in cost of total software license revenue for the nine months ended September 30, 2009 compared to the prior year period was due primarily to the impact of foreign exchange rates on amortization of acquired software.

Cost of Post-Contract Support and Hosting. The $0.3 million decrease in cost of post-contract support and hosting revenue for the nine months ended September 30, 2009 compared to the prior year period was due primarily to a decrease of approximately $2.1 million related to personnel expenses, a decrease of approximately $0.7 million in rent, depreciation and other expenses and a decrease of approximately $0.1 million in hosting rent and power costs consistent with our consolidation of third-party data centers which occurred during 2008. This decrease was offset by an increase of approximately $2.6 million in costs associated with a redeployment of research and development personnel to post-contract support projects. Of the decrease, approximately $1.2 million was the result of the strengthening of the U.S. dollar compared to foreign currencies.

Cost of Professional Services. The $9.1 million decrease in cost of professional services revenue for the nine months ended September 30, 2009 compared to the prior year period was due primarily to the reduction in professional services revenue which resulted in a decrease of approximately $4.4 million in personnel costs, a decrease of approximately $2.7 million in third-party contractor expense and a decrease of approximately $2.3 million in costs associated with research and development personnel that had been redeployed to customer-specific billable projects compared to the prior year period, offset by an increase of approximately $0.3 million in other expenses. Of the decrease, approximately $3.6 million was the result of the strengthening of the U.S. dollar compared to foreign currencies.

Cost of Hardware and Other. The $6.4 million decrease in cost of hardware and other revenue for the nine months ended September 30, 2009 compared to the prior year period was due primarily to a decrease of approximately $3.2 million in costs related to hardware purchases for resale and a decrease of approximately $3.2 million in the amount of billable travel to customers as a result of the reduction in professional services revenue. Of the decrease, approximately $0.4 million was the result of the strengthening of the U.S. dollar compared to foreign currencies.

Index to Financial Statements

Operating Expenses

The following table sets forth for the periods indicated a period over period comparison of the components of our operating expenses:


	Nine Months Ended September 30,
	2008		2009		$ Change			% Change
	(dollars in thousands)
	(unaudited)
Research and development	$	20,277	$	19,493	$	(784	)	(3.9	)%
Sales and marketing		30,486		25,560		(4,926	)	(16.2	)
General and administrative		17,661		16,219		(1,442	)	(8.2	)
Amortization and depreciation		5,905		5,953		48		0.8

Total operating expenses	$	74,329	$	67,225	$	(7,104	)	(9.6	)

Research and Development. The $0.8 million decrease in research and development expense for the nine months ended September 30, 2009 compared to the prior year period was due to the redeployment of research and development personnel to customer-specific billable projects which resulted in approximately $1.4 million of costs associated with research and development being included in cost of professional services revenue or cost of post-contract support and hosting revenue and approximately $0.4 million of travel and other expenses, offset by an increase of approximately $1.0 million in personnel expenses. Of the total decrease, approximately $0.4 million was the result of the strengthening of the U.S. dollar compared to foreign currencies.

Sales and Marketing. The $4.9 million decrease in sales and marketing expense for the nine months ended September 30, 2009 compared to the prior year period was due primarily to the decrease in software license revenue which resulted in a decrease of approximately $3.8 million in sales commission expense, a decrease of approximately $0.9 million in personnel expenses, a decrease of approximately $0.8 million in travel and a decrease of approximately $0.4 million in marketing programs, offset by an increase of approximately $1.0 million in our allowance for doubtful accounts. Of the total decrease, approximately $1.5 million was the result of the strengthening of the U.S. dollar compared to foreign currencies.

General and Administrative. The $1.4 million decrease in general and administrative expense for the nine months ended September 30, 2009 compared to the prior year period was due primarily to a decrease of approximately $1.0 million in personnel expenses and a decrease of approximately $0.8 million in professional fees, including accounting and legal, offset by an increase of approximately $0.4 million in franchise tax payments. Of the total decrease, approximately $2.4 million was the result of the strengthening of the U.S. dollar compared to foreign currencies.

Depreciation and Amortization. The increase in depreciation and amortization expense for the nine months ended September 30, 2009 compared to the prior year period was primarily due to timing of capital expenditures in 2009 relative to 2008. Of the total decrease, approximately $0.1 million was the result of the strengthening of the U.S. dollar compared to foreign currencies.

Other

The following table sets forth for the periods indicated, a period over period comparison of the components of our interest expense, net, other income, net and income tax provision:


	Nine Months Ended September 30,
	2008		2009		$ Change			% Change
	(dollars in thousands)
	(unaudited)
Interest expense, net	$	13,854	$	10,752	$	(3,102	)	(22.4	)%
Other income, net		239		166		(73	)	(30.5	)
Income tax provision (benefit)		8,437		4,882		(3,555	)	(42.1	)

Index to Financial Statements

Interest Expense, Net. The $3.1 million decrease in interest expense, net, for the nine months ended September 30, 2009 compared to the prior year period was due to lower principal balances and lower interest rates on our outstanding variable interest debt. Average debt outstanding under our credit facilities decreased to $226.1 million for the nine months ended September 30, 2009, compared to $236.9 million for the prior year period, as a result of principal debt payments made on our first lien term loan borrowings, including a payment derived from excess cash flow in second quarter of 2009.

Other Income (Expense), Net. The $0.1 million decrease in other income (expense), net, for the nine month period ended September 30, 2009 compared to the prior year period was primarily due to the strengthening of the U.S. dollar compared to foreign currencies.

Income Tax Provision (Benefit). Our interim tax provision is determined by applying the estimated annual effective tax rate to year to date income and adding the tax effect of discrete items. The change in the effective income tax rate from 45.3% for the nine months ended September 30, 2008 to 28.2% for the nine months ended September 30, 2009 was primarily attributable to the recognition of tax benefits related to the release of valuation allowances and changes in estimates of tax attributes.

Year Ended December 31, 2008 Compared to the Year Ended December 31, 2007

Revenue

The following table sets forth for the periods indicated a year over year comparison of the components of our revenue:


	Year Ended December 31,
	2007		2008		$ Change		% Change
	(dollars in thousands)
Software license	$	36,900	$	48,441	$	11,541	31.3	%
Post-contract support and hosting		68,548		78,418		9,870	14.4
Professional services		116,251		130,030		13,779	11.9
Hardware and other		31,531		35,971		4,440	14.1

Total revenue	$	253,230	$	292,860	$	39,630	15.6

Total revenue increased by $39.6 million to $292.9 million for the year ended December 31, 2008, compared to the year ended December 31, 2007. Of this increase, approximately $35.5 million was the result of an increase in sales to new and existing customers and approximately $4.1 million was the result of a weakening of the U.S. dollar compared to foreign currencies.

Software License. Software license revenue represented 16.5% and 14.6% of total revenue for the years ended December 31, 2008, and 2007, respectively. Software license revenue increased by $11.5 million to $48.4 million primarily due to increased software license revenue across substantially all industries we target. While the number of software license sales was relatively consistent year over year, the mix of new customers led to a higher average sale price for the year ended December 31, 2008 compared to the year ended December 31, 2007.

Software license revenue for Americas and EMEA/APAC increased $5.5 million and $6.0 million for the year ended December 31, 2008, respectively, compared to the prior year. Of the increase in EMEA/APAC, approximately $0.4 million was the result of the weakening of the U.S. dollar compared to foreign currencies.

Post-Contract Support and Hosting Revenue. Post-contract support and hosting revenue represented 26.8% and 27.1% of total revenue for the years ended December 31, 2008, and 2007, respectively. Post-contract support and hosting revenue decreased as a percentage of total revenue for the year ended December 31, 2008, as compared to the year ended December 31, 2007, primarily due to the significant increase in software license revenue and its share of total revenue during 2008. Of the $9.9 million increase, approximately $7.7 million was

Index to Financial Statements

attributable to post-contract support and approximately $2.2 million was attributable to hosting. The increase in post-contract support revenue was the result of strong license sales to new and existing customers during 2007 and early 2008, while the increase in hosting was primarily related to the increased adoption of our hosted offerings.

Post-contract support and hosting revenue for Americas and EMEA/APAC increased by approximately $6.9 million and $3.0 million, respectively, compared to the prior year. Of the increase in EMEA/APAC, approximately $0.8 million was the result of the weakening of the U.S. dollar compared to foreign currencies.

Professional Services Revenue. Professional services revenue represented 44.4% and 45.9% of total revenue for the years ended December 31, 2008, and 2007, respectively. Professional services revenue increased by $13.8 million to $130.0 million primarily due to the significant increase in software license revenue during 2008.

Professional services revenue for Americas and EMEA/APAC increased by $8.4 million and $5.4 million for the year ended December 31, 2008, respectively, compared to the prior year period. Of the increase in EMEA/APAC, approximately $2.8 million was the result of the weakening of the U.S. dollar compared to foreign currencies.

Hardware and Other Revenue. Hardware and other revenue represented 12.3% and 12.4% of total revenue for the years ended December 30, 2008, and 2007, respectively. Hardware and other revenue increased by $4.4 million to $36.0 million primarily due to the significant increase in software license revenue during 2008. Hardware and other revenue increased due to an increase of approximately $2.1 million in reimbursements of billable travel consistent with the increase in professional services revenue, and an increase of approximately $2.3 million in hardware bought and resold from third-party vendors.

Hardware and other revenue for Americas and EMEA/APAC increased by approximately $2.9 million and $1.5 million, respectively, compared to the prior year period. Of the increase in EMEA/APAC, approximately $0.1 million was the result of the weakening of the U.S. dollar compared to foreign currencies.

Cost of Revenue

The following table sets forth for the periods indicated a year over year comparison of the components of our cost of revenue and also sets forth these costs as a percentage of corresponding revenue:


	Year Ended December 31,
	2007			2008			$ Change			% Change
	(dollars in thousands)
Cost of revenue:
Software license	$	578		$	354		$	(224	)	(38.8	)%
Amortization of acquired software		8,381			8,252			(129	)	(1.5	)

Total software license		8,959			8,606			(353	)	(3.9	)
Post-contract support and hosting		27,148			33,940			6,792		25.0
Professional services		72,022			78,667			6,645		9.2
Hardware and other		26,606			30,424			3,818		14.4

Total cost of revenue	$	134,735		$	151,637		$	16,902		12.5

Percent of corresponding revenue:
Total software license		24.3	%		17.8	%
Post-contract support and hosting		39.6			43.3
Professional services		62.0			60.5
Hardware and other		84.4			84.6
Total cost of revenue		53.2			51.8

Index to Financial Statements

Cost of Total Software License. The $0.4 million decrease in cost of total software license revenue was due primarily to a decrease in the royalty paid for third-party products used in, or sold with, our software.

Cost of Post-Contract Support and Hosting. The $6.8 million increase in cost of post-contract support and hosting revenue was due primarily to increases of approximately $3.0 million in personnel costs due to increased staffing levels to support the increased post-contract support and hosting revenue, approximately $1.7 million in costs related to hosting, approximately $1.6 million in costs associated with a redeployment of research and development personnel to post-contract support projects, and $0.5 million in professional fees and other expenses. Of the increase, approximately $0.5 million was the result of the weakening of the U.S. dollar compared to foreign currencies.

Cost of Professional Services. The $6.6 million increase in cost of professional services revenue was due primarily to an increase of approximately $7.1 million in personnel expenses and allocations related to increased staffing levels to support the increased professional services revenue, offset by a decrease of approximately $0.5 million in costs related to the redeployment of personnel to customer-specific billable projects and other costs. Of the increase, approximately $2.3 million was the result of the weakening of the U.S. dollar compared to foreign currencies.

Cost of Hardware and Other. The $3.8 million increase in cost of hardware and other revenue was due primarily to increases of approximately $2.3 million in reimbursements for billable travel to customers and approximately $1.5 million in costs related to hardware purchases for resale. Of the increase, approximately $0.1 million was the result of the weakening of the U.S. dollar compared to foreign currencies.

Operating Expenses

The following table sets forth for the periods indicated a period over period comparison of the components of our operating expenses:


	Year Ended December 31,
	2007		2008		$ Change			% Change
	(dollars in thousands)
Research and development	$	22,567	$	27,446	$	4,879		21.6	%
Sales and marketing		40,131		42,144		2,013		5.0
General and administrative		27,738		26,134		(1,604	)	(5.8	)
Depreciation and amortization		8,282		7,777		(505	)	(6.1	)

Total operating expenses	$	98,718	$	103,501	$	4,783		4.8

Research and Development. The $4.9 million increase in research and development expense was due primarily to increases of approximately $4.0 million in personnel expenses and approximately $1.2 million in third-party contractor expense, offset by a decrease of approximately $0.3 million related to the redeployment of research and development personnel to customer specific billable projects.

Sales and Marketing. The $2.0 million increase in sales and marketing expense was due primarily to the increase in software license revenue and bookings which resulted in increases of approximately $1.4 million in employee salary and benefits, approximately $1.1 million in sales commission expense and approximately $0.9 million in allowance for doubtful accounts, offset by decreases of approximately $1.1 million in marketing programs and approximately $0.3 million in professional fees.

General and Administrative. The $1.6 million decrease in general and administrative expense was due primarily to a decrease of approximately $2.1 million in severance cost, including costs associated with the separation from employment of our former chief executive officer and other employees in 2007, a decrease of

Index to Financial Statements

approximately $1.0 million in professional fees, including accounting and legal, and a decrease of approximately $0.4 million in travel expenses, offset by approximately $1.9 million increase in incentive compensation bonuses in 2008.

Depreciation and Amortization. The $0.5 million decrease in depreciation and amortization expense was due in part to an increase in our allocation of depreciation expense from operating expenses to cost of revenue as a result of headcount fluctuations, our primary allocation method.

Other

The following table sets forth for the periods indicated a year over year comparison of the components of our interest expense, net, other income, net and income tax provision:


	Year Ended December 31,
	2007		2008		$ Change			% Change
	(dollars in thousands)
Interest expense, net	$	23,369	$	18,365	$	(5,004	)	(21.4	)%
Other income, net		507		226		(281	)	(55.4	)
Income tax provision (benefit)		845		8,843		7,998		946.5

Interest Expense, Net. The $5.0 million decrease in interest expense, net, was due to lower interest rates on our outstanding debt. Average debt outstanding increased to $236.7 million for the year ended December 31, 2008, compared to $217.4 million for the prior year, as a result of additional borrowings under our credit facilities.

Other Income (Expense), Net. The $0.3 million decrease in other income (expense), net, for the twelve months ended December 31, 2008 compared to the prior year period was due primarily to the strengthening of the U.S. dollar compared to foreign currencies.

Income Tax Provision (Benefit). The change in the effective income tax rate from (27.4%) in 2007 to 45.2% in 2008 was primarily attributable to the fact that the magnitude of the 2007 permanent differences and discrete items, including uncertain tax positions, were proportionately significant to the marginal level of book loss. The greater amount of book income in 2008 allowed the effective rate to normalize. The 2008 tax provision was also impacted by an increase in the federal statutory rate applied to our deferred tax assets and liabilities.

Year Ended December 31, 2007 Compared to the Year Ended December 31, 2006

Revenue

The following table sets forth for the periods indicated a year over year comparison of the components of our revenue:


	Year Ended December 31,
	2006		2007		$ Change			% Change
	(dollars in thousands)
Software license	$	23,367	$	36,900	$	13,533		57.9	%
Post-contract support and hosting		43,479		68,548		25,069		57.7
Professional services		83,390		116,251		32,861		39.4
Hardware and other		35,598		31,531		(4,067	)	(11.4	)

Total revenue	$	185,834	$	253,230	$	67,396		36.3

Index to Financial Statements

Total revenue increased by $67.4 million to $253.2 million for the year ended December 31, 2007, compared to the year ended December 31, 2006 primarily as a result of our acquisition of BlueCube Software, Inc. in 2006 and to a lesser extent our acquisitions of MARC Global Holdings, Inc. in 2006 and StorePerform Technologies, Inc. and GEOCOMtms Inc. in 2007.

Software License Revenue. Software license revenue represented 14.6% and 12.6% of total revenue for the years ended December 31, 2007, and 2006, respectively. Software license revenue increased by $13.5 million to $36.9 million primarily due to increases of approximately $7.6 million related to the 2006 acquisition of BlueCube Software, Inc., approximately $1.5 million related to the 2007 acquisition of StorePerform Technologies, Inc., and approximately $4.4 million in sales to new and existing customers.

Software license revenue for Americas and EMEA/APAC increased approximately $10.3 million and $3.2 million, respectively, compared to the prior year.

Post-Contract Support and Hosting Revenue. Post contact support and hosting revenue represented 27.1% and 23.4% of total revenue for the years ended December 31, 2007, and 2006, respectively. Post-contract support and hosting revenue increased by $25.1 million to $68.5 million primarily due to increases of approximately $12.1 million and $1.3 million related to the acquisitions of BlueCube Software, Inc. and MARC Global Holdings, Inc., respectively, during the year ended December 31, 2006 and approximately $2.5 million related to the 2007 acquisition of StorePerform Technologies, Inc. Additionally, approximately $9.2 million of the increase was due to increased sales to new and existing customers.

Post-contract support and hosting revenue for Americas and EMEA/APAC increased by approximately $14.8 million and $10.3 million, respectively, compared to the prior year.

Professional Services Revenue. Professional services revenue represented 45.9% and 44.9% of total revenue for the years ended December 31, 2007, and 2006, respectively. Professional services revenue increased by $32.9 million to $116.3 million primarily due to increases of approximately $18.9 million related to our increase in software license revenue and related professional services revenue, approximately $10.9 million and $1.8 million related to the 2006 acquisitions of BlueCube Software, Inc. and MARC Global Holdings, Inc., respectively, and approximately $1.3 million related to the 2007 acquisition of StorePerform Technologies, Inc.

Professional services revenue for Americas and EMEA/APAC increased by approximately $20.0 million and $12.9 million, respectively, compared to the prior year.

Hardware and Other Revenue. Hardware and other revenue represented 12.4% and 19.1% of total revenue for the years ended December 31, 2007, and 2006, respectively. Hardware and other revenue decreased by approximately $4.1 million to $31.5 million primarily due to a shift in customer buying patterns for hardware to third-party providers.

Hardware and other revenue for Americas and EMEA/APAC decreased by approximately $2.5 million and $1.6 million, respectively, compared to the prior year.

Index to Financial Statements

Cost of Revenue

The following table sets forth for the periods indicated a year over year comparison of the components of our cost of revenue and also sets forth these costs as a percentage of corresponding revenue:


	Year Ended December 31,
	2006			2007			$ Change			% Change
	(dollars in thousands)
Cost of revenue:
Software license	$	142		$	578		$	436		307.0	%
Amortization of acquired software		6,851			8,381			1,530		22.3

Total software license		6,993			8,959			1,966		28.1
Post-contract support and hosting		13,424			27,148			13,724		102.2
Professional services		49,624			72,022			22,398		45.1
Hardware and other		28,925			26,606			(2,319	)	(8.0	)

Total cost of revenue	$	98,966		$	134,735		$	35,769		36.1

Percent of corresponding revenue:
Total software license		29.9	%		24.3	%
Post-contract support and hosting		30.9			39.6
Professional services		59.5			62.0
Hardware and other		81.3			84.4
Total cost of revenue		53.3			53.2

Cost of Total Software License. The $2.0 million increase in cost of total software license revenue for the year ended December 31, 2007 as compared to the prior year was primarily related to an increase in amortization of acquired software relating to our acquisitions during 2006 and 2007.

Cost of Post-Contract Support and Hosting. The $13.7 million increase in cost of post-contract support and hosting revenue for the year ended December 31, 2007 as compared to the prior year period was due primarily to increases of approximately $6.8 million and $0.4 million related to the 2006 acquisitions of BlueCube Software, Inc. and MARC Global Holdings, Inc., respectively, and an increase of approximately $1.3 million related to the 2007 acquisition of StorePerform Technologies, Inc. Additionally, approximately $5.2 million of the increase was due to increased sales to new and existing customers and an increase in redeployment of research and development personnel to post-contract support projects. As a percentage of post-contract support and hosting revenue, cost of post-contract support and hosting revenue increased to 39.6% for the year ended December 31, 2007 from 30.9% over the prior year period due to an increase in our investment in post-contract support and hosting infrastructure.

Cost of Professional Services. The $22.4 million increase in cost of professional services revenue for the year ended December 31, 2007 as compared to the prior year period was due primarily to increases of approximately $10.5 million, $1.8 million and $1.3 million related to the acquisitions of BlueCube Software, Inc., StorePerform Technologies, Inc. and MARC Global Holdings, Inc., respectively. Additionally, approximately $8.8 million of the increase was due to the increase in professional services revenue for the year ended December 31, 2007 compared to the prior year.

Cost of Hardware and Other. The $2.3 million decrease in cost of hardware and other revenue for the year ended December 31, 2007 as compared to the prior year was primarily due to an overall decrease in hardware and other revenue.

Index to Financial Statements

Operating Expenses

The following table sets forth for the periods indicated a period over period comparison of the components of our operating expenses:


	Year Ended December 31,
	2006		2007		$ Change			% Change
	(dollars in thousands)
Research and development	$	19,176	$	22,567	$	3,391		17.7	%
Sales and marketing		27,474		40,131		12,657		46.1
General and administrative		30,351		27,738		(2,613	)	(8.6	)
Depreciation and amortization		6,022		8,282		2,260		37.5

Total operating expenses	$	83,023	$	98,718	$	15,695		18.9

Research and Development. The $3.4 million increase in research and development expense was due primarily to increases of approximately $3.0 million related to the 2006 acquisition of BlueCube Software, Inc. and approximately $1.4 million related to the 2007 acquisition of StorePerform Technologies, Inc., offset by a decrease of approximately $0.6 million related to the reduction in employee headcount of MARC Global Holdings, Inc. following its acquisition in 2006, and a decrease of approximately $0.4 million related to a reduction in severance and other costs.

Sales and Marketing. The $12.7 million increase in sales and marketing expense as compared to the prior year was due primarily to an increase of approximately $4.5 million related to the 2006 acquisition of BlueCube Software, Inc. and $0.9 million related to the 2007 acquisition of StorePerform Technologies, Inc., offset by a decrease of approximately $0.5 million related to the reduction in employee headcount of MARC Global Holdings, Inc., following its acquisition in 2006. Additionally, approximately $7.8 million of the increase

was attributable to an increase in software license sales to new and existing customers for the year ended December 31, 2007 compared to the prior year.

General and Administrative. The $2.6 million decrease in general and administrative expense was due primarily to the incurrence of debt extinguishment fees of $2.6 million and a write-off of prior deferred financing costs of approximately $4.8 million, both for the year ended December 31, 2006, and a decrease of approximately $0.7 million related to a reduction in costs as we integrated the acquisition of MARC Global Holdings, Inc. The decreases were offset by an increase in personnel costs including approximately $1.0 million in severance related to the termination of our former chief executive officer and other employees during 2007, the 2006 acquisition of BlueCube Software, Inc. which contributed an increase of approximately $0.9 million in general and administrative expenses, and the 2007 acquisition of StorePerform Technologies, Inc. which contributed an increase of approximately $1.6 million in general and administrative expenses.

Depreciation and Amortization. The $2.3 million increase in depreciation and amortization expenses was due primarily to the full year effect of the acquisitions of BlueCube Software, Inc. and MARC Global Holdings, Inc.

Index to Financial Statements

Other

The following table sets forth for the periods indicated a period over period comparison of the components of our interest expense, net, other income (expense), net and income tax provision (benefit):


	Year Ended December 31,
	2006			2007		$ Change		% Change
				(dollars in thousands)
Interest expense, net	$	18,095		$	23,369	$	5,274	29.1	%
Other income (expense), net		(58	)		507		565	NM	*
Income tax provision (benefit)		(3,796	)		845		4,641	NM	*

*NM – not meaningful.

Interest Expense, Net. The $5.3 million increase in interest expense, net, was due primarily to higher outstanding debt balances under our credit facilities. Average debt outstanding under our credit facilities increased to $217.4 million for 2007 compared to $159.4 million for the prior year, as a result of additional borrowings related to the acquisitions of MARC Global Holdings, Inc. and BlueCube Software, Inc.

Other Income (Expense), Net. The $0.6 million increase in other income (expense), net, was due primarily to a weakening of the U.S. dollar compared to foreign currencies.

Income Tax Provision (Benefit). The change in the effective income tax rate from 26.5% in 2006 to (27.4%) in 2007 was primarily attributable to the recognition of liabilities for uncertain tax positions under the FASB’s authoritative guidance, adopted by us on January 1, 2007.

Index to Financial Statements

Unaudited Quarterly Statements of Operations Data

The following tables present our unaudited consolidated quarterly results of operations data in dollars and as a percentage of revenue for each of the seven most recent quarters in the period ended September 30, 2009. We have prepared this information on a basis consistent with our audited consolidated financial statements and have included all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary to fairly present our operating results for the quarters presented. You should read the following tables in conjunction with our audited and unaudited consolidated financial statements and related notes appearing elsewhere in this prospectus. Our quarterly results of operations have varied in the past and are likely to do so again in the future. As such, we believe that comparisons of our quarterly results of operations should not be relied upon as an indication of our future performance. The items discussed below highlight unusual events and circumstances that make comparability between quarters difficult.


	2008												2009
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			First Quarter			Second Quarter			Third Quarter
	(in thousands, except per share data)
Consolidated statements of operations data (unaudited):
Revenue:
Software licenses	$	9,218		$	13,640		$	12,416		$	13,167		$	10,285		$	9,733		$	7,273
Post-contract support and hosting		18,810			19,620			19,978			20,010			20,005			20,466			21,316
Professional services		33,884			33,781			33,932			28,433			28,327			30,918			26,730
Hardware and other revenue		8,342			9,345			8,279			10,005			5,760			6,165			6,917

Total revenue		70,254			76,386			74,605			71,615			64,377			67,282			62,236
Cost of revenue:
Software license		110			70			84			90			169			77			61
Amortization of acquired technology		2,004			2,104			2,072			2,072			1,987			2,014			2,033

Total software license		2,114			2,174			2,156			2,162			2,156			2,091			2,094
Post-contract support and hosting		8,368			8,903			8,441			8,228			8,303			8,360			8,728
Professional services		21,224			19,892			19,219			18,332			17,796			17,142			16,265
Hardware and other		7,079			8,111			7,005			8,229			5,067			5,017			5,736

Total cost of revenue		38,785			39,080			36,821			36,951			33,322			32,610			32,823


Gross profit		31,469			37,306			37,784			34,664			31,055			34,672			29,413

Operating expenses:
Research and development		6,776			6,940			6,561			7,169			7,043			6,670			5,780
Sales and marketing		9,774			10,259			10,453			11,658			9,281			9,176			7,103
General and administrative		5,412			6,590			5,659			8,473			5,621			5,291			5,307
Depreciation and amortization		2,030			1,940			1,935			1,872			1,953			1,994			2,006

Total operating expenses		23,992			25,729			24,608			29,172			23,898			23,131			20,196

Income from operations		7,477			11,577			13,176			5,492			7,157			11,541			9,217
Interest expense, net		5,168			4,395			4,291			4,511			3,917			3,485			3,350
Other income (expense), net		336			114			(211	)		(13	)		315			(761	)		612

Income before income taxes		2,645			7,296			8,674			968			3,555			7,295			6,479
Income tax provision		1,199			3,307			3,931			406			1,575			3,123			184

Net income	$	1,446		$	3,989		$	4,743		$	562		$	1,980		$	4,172		$	6,295

Dividends on convertible redeemable preferred stock		(2,080	)		(2,111	)		(2,167	)		(2,200	)		(2,185	)		(2,242	)		(2,302	)

Net income (loss) attributable to common stockholders	$	(634	)	$	1,878		$	2,576		$	(1,638	)	$	(205	)	$	1,930		$	3,993

Earnings (loss) attributable to common stockholders per common share:
Basic	$	(9.47	)	$	28.05		$	38.48		$	(24.47	)	$	(3.06	)	$	28.83		$	59.64

Diluted	$	(9.47	)	$	0.30		$	0.36		$	(24.47	)	$	(3.06	)	$	0.32		$	0.48

Index to Financial Statements


	2008								2009
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		First Quarter		Second Quarter		Third Quarter
	(% of revenue)
Consolidated statements of operations data (unaudited):
Revenue:
Software licenses	13.1	%	17.9	%	16.6	%	18.4	%	16.0	%	14.5	%	11.7	%
Post-contract support and hosting	26.8		25.7		26.8		27.9		31.1		30.4		34.3
Professional services	48.2		44.2		45.5		39.7		44.0		46.0		42.9
Hardware and other revenue	11.9		12.2		11.1		14.0		8.9		9.1		11.1

Total revenue	100.0		100.0		100.0		100.0		100.0		100.0		100.0

Total cost of revenue	55.2		51.2		49.4		51.6		51.8		48.5		52.7


Gross profit	44.8		48.8		50.6		48.4		48.2		51.5		47.3

Operating expenses:
Research and development	9.6		9.1		8.8		10.0		10.9		9.9		9.3
Sales and marketing	13.9		13.4		14.0		16.3		14.4		13.6		11.4
General and administrative	7.7		8.6		7.6		11.8		8.7		7.9		8.5
Depreciation and amortization	3.0		2.5		2.6		2.6		3.1		3.0		3.3

Total operating expenses	34.2		33.6		33.0		40.7		37.1		34.4		32.5


Income from operations	10.6		15.2		17.6		7.7		11.1		17.1		14.8

Interest expense, net	7.4		5.8		5.7		6.3		6.1		5.2		5.4
Other income (expense), net	0.5		0.1		(0.3	)	—		0.5		(1.1	)	1.0

Income before income taxes	3.7		9.5		11.6		1.4		5.5		10.8		10.4
Income tax provision	1.7		4.3		5.3		0.6		2.4		4.6		0.3

Net income	2.0	%	5.2	%	6.3	%	0.8	%	3.1	%	6.2	%	10.1	%

Total Revenue

For each of the quarters in the nine months ended September 30, 2009, our total revenue decreased as compared to the corresponding prior year period. We began to experience in the fourth quarter of 2008 the impact of the weakening global economy and a decline in purchases of our software solutions and related services by both new and existing customers. We believe that this decline was the result of reductions in information technology spending by enterprises, longer sales cycles, more in-depth product trials, smaller initial pilot programs, delays or reductions in customer purchases and pricing pressure from customers and competitors. Our revenue was also negatively affected by the strengthening of the U.S. dollar compared to foreign currencies.

Software License Revenue

Our software license revenue generally fluctuates, and we expect it to continue to fluctuate on a quarterly basis, primarily due to uncertain and inconsistent timing of sales of our software licenses, revenue recognition requirements and seasonality. For example, in the second quarter of 2009 our software license revenue as a percentage of total revenue was 14.5% as compared to the third quarter of 2009 when our software license revenue as a percentage of total revenue was 11.7%. Additionally, transactions that are expected to be recognized in one period may be recognized in a subsequent period and materially affect our financial performance on a quarterly basis. Although not evidenced by our results of operations set forth above, historically we have experienced lower software license sales during the first quarter and have usually generated the majority of our software license revenue in the final month of each quarter and a significant amount in the last two weeks of a quarter. We believe that this trend is due to customer buying patterns typical in this industry.

Index to Financial Statements

Post-Contract Support and Hosting Revenue

Post-contract support and hosting has generally increased sequentially in the quarters presented in the table above, as new post-contract support and hosting agreements have been entered into as a result of new software license sales and existing customers have renewed their contracts. We believe that based on historical renewal rates and our expectations regarding future license sales, our post-contract support and hosting revenue will continue to grow in absolute dollars in 2010.

Professional Services Revenue

While in general our professional services revenue has fluctuated much less than our software license revenue over the past seven quarters, we have experienced more quarterly volatility in 2009 than in prior periods. We believe that this volatility was primarily due to a reduction in professional services projects directly attributed to a decline in our software license revenue during 2009 from both new and existing customers. Additionally, we have experienced declines in our professional services revenue relating to existing customers postponing periodic upgrades of their software solutions as well as other delays.

Hardware and Other Revenue

Similarly and somewhat correlated to our professional services, our hardware and other revenue has fluctuated more during the nine months ended September 30, 2009 than we have historically experienced. We believe that this volatility was due to a decrease in reimbursements for billable travel associated with professional services and related projects and declines in our hardware revenue due to lower customer spending on these items. We have historically experienced higher hardware sales in the fourth quarter as our customers look to finalize their capital spending for the year.

Gross Margin

Over the past seven quarters, our gross margin has ranged from 44.8% to 51.5%. While generally increasing over this time period, we have experienced some sequential volatility. We believe that this volatility was largely the result of our revenue mix in a particular period. The amount of software license revenue in a period is a significant driver of our overall gross margin because of the high margins our software generally produces. Our margins in professional services are important because it is generally the single largest revenue source in any period. Margins in professional services may be affected by the mix in geographic segments as our margins in the Americas are generally higher than EMEA/APAC. Furthermore, as our professional services expenses are based on our expectations of future revenue and are relatively fixed in the short term, an unanticipated shortfall in our professional services revenue in a particular period could have a disproportionately negative effect on our operating results in the same or subsequent periods. Finally, hardware and other revenue generally has relatively low margins, primarily due to the effect of reimbursable billable travel and its overall dilutive effect to our gross margin, and an increase in hardware and other revenue could negatively impact our gross margin.

Operating Expenses

Fluctuations in operating expenses as a percentage of total revenue are driven largely by (1) the mix and amount of total revenue in a particular period, (2) the effect of variable expenses such as bonuses and sales commissions during a particular period, and (3) periodic allocation of research and development expenses to both costs of post-contract support and hosting and professional services. Furthermore, as our operating expenses are based on our expectations of future revenue and are relatively fixed in the short term, an unanticipated shortfall in our revenue in a particular period could have a disproportionately negative effect on our operating results in the same or subsequent periods. During the first quarter of 2009, we have reduced our operating expenses as a percentage of total revenue due to a reduction in our workforce and other cost containment measures.

Index to Financial Statements

Liquidity and Capital Resources

At September 30, 2009, cash and cash equivalents were $52.6 million, compared to $46.6 million at December 31, 2008. Our principal sources of liquidity are cash flow from operations, borrowings under our credit agreements and equity financings. Our principal uses of cash are debt service payments as described below, capital expenditures, and working capital requirements.

Sources of Funds

We anticipate that operating cash flow, together with available borrowings under our revolving credit facility, will be sufficient to meet our working capital requirements, fund our research and development and capital expenditures and service our debt obligations for at least the next 12 months. However, our ability to make scheduled payments of principal of, to pay interest on, or to refinance, our indebtedness and to satisfy our other debt obligations will depend upon our future operating performance, which will be affected by continued market acceptance of our products and services, renewals of post-contract support and hosting agreements by our customers and general economic, financial, competitive, business and other factors beyond our control.

From time to time, we may explore additional financing sources and means to lower our cost of capital, which could include equity, equity-linked and debt financing, and the application of the proceeds therefrom to the repayment of bank debt or other indebtedness. In addition, in connection with any future acquisitions, we may require additional funding which may be provided in the form of additional debt, equity or equity-linked financing or a combination thereof. There can be no assurance that any additional financing will be available to us on acceptable terms.

Our Indebtedness

We have entered into (1) a first lien credit agreement, which provides for a revolving credit facility, a letter of credit facility, and term loan borrowings, and (2) a second lien credit agreement which provides for additional term loan borrowings, which we refer to collectively as our credit agreements. The obligations under our credit agreements are guaranteed by us and certain of our wholly-owned subsidiaries, which we refer to as the guarantors, including RedPrairie Corporation, our principal operating subsidiary, and are secured by a pledge of substantially all of the guarantors’ assets. As of September 30, 2009, we had (1) no borrowings under our revolving credit facility, with $20.0 million of borrowing capacity available under our revolving credit facility, (2) no letters of credit outstanding under our letter of credit facility, and (3) total term loan indebtedness of $146.4 million and $70.0 million under our first and second lien credit agreements, respectively. As of September 30, 2009, our effective interest rate after taking into account our interest rate swaps described below was 5.5%. As of September 30, 2009, giving effect to completion of this offering and the application of the net proceeds, we would have had outstanding $ million and $ million aggregate principal amount of term loan borrowings under our first lien credit agreement and second lien credit agreement, respectively. Any inability to meet our significant debt service obligations could have material consequences to our security holders.

Revolving Credit Facility

Borrowings under the revolving credit facility are limited to $20.0 million and bear interest at our option if (1) our leverage ratio is greater than or equal to 3.00 to 1.00, at an alternative base rate, or ABR, plus 200 basis points or LIBOR plus 300 basis points and (2) if our leverage ratio is less than 3.00 to 1.00, at ABR plus 175 basis points, or LIBOR plus 275 basis points. Interest on ABR loans are payable quarterly in arrears on each March 30, June 30, September 30 and December 31 and interest on LIBOR loans are payable on the 30^th, 60^th, 90^th or 180^th day after the borrowing in incurred, depending on the LIBOR term we elect. As part of our acquisition of StorePerform Technologies, Inc. in January 2007, we borrowed approximately $15.6 million under our revolving credit facility, which, together with an additional $3.0 million in revolver borrowings incurred in December 2006 in connection with the payment of interest for the fourth quarter of 2006, were repaid in

Index to Financial Statements

February 2007 with term loan borrowing under our first lien credit agreement. Unless terminated earlier as a result of an event of default or mandatory reduction of commitments, the revolving credit facility will terminate on July 20, 2011.

Letter of Credit Facility

Letters of credit are limited to $10.0 million, bear fees at a rate equal to the margin over LIBOR applicable to the revolving credit facility and reduce availability under our revolving credit facility. No letters of credit were outstanding as of September 30, 2009 or December 31, 2008. As of December 31, 2007, there was one standby letter of credit outstanding in the amount of approximately $1.2 million.

First Lien Term Loan Facility

The initial aggregate amount of term loan borrowings under the first lien credit facility was $150.0 million. In February 2007, we amended the first lien term loan facility and incurred an additional $20.0 million in borrowings. Prior to the amendment of our first lien agreement, we were required to make quarterly principal repayments of $375,000 on September 30, 2006 and on December 31, 2006. Following the amendment to our first lien term loan facility in February 2007, we were required to make quarterly principal repayments of $425,000 from March 31, 2007 to June 30, 2009 and are required to make quarterly principal repayments of $4,250,000 from September 30, 2009 to March 31, 2012 subject to reduction to reflect any prepayments of the first lien term borrowings. In addition, if as of December 31 of each year, our leverage ratio is greater than or equal to 2.50 to 1.00, we are required to use 50% of excess cash flow, as defined in the first lien credit agreement, for such year to repay first lien term loan borrowings (or if no such borrowings are then outstanding, second lien term loan borrowings). We repaid $18.6 million in April 2009 pursuant to the mandatory excess cash flow repayment provision of the first lien credit agreement. Mandatory repayments from excess cash flow are considered as prepayments of our obligations to make quarterly amortization repayments. This repayment satisfied our quarterly amortization obligations through March 2010 and reduced all subsequent quarterly payments. In addition, we may repay all or a portion of our borrowings under the first lien term facility at any time without penalty. Unless earlier accelerated in connection with an event of default or prepayment, the remaining outstanding principal amount of borrowings under the first lien term loan facility is required to be repaid on July 20, 2012. Our first lien term borrowings bear interest at our option at a rate of ABR plus 200 basis points or LIBOR plus 300 basis points for the ended December 31, 2008 and the nine months ended September 30, 2009.

The first lien credit agreement contains customary events of default, conditions to borrowings and restrictive covenants, including restrictions on our ability to incur debt, incur liens, make investments, dispose of assets, enter into sale and leaseback or certain swap transactions, make certain types of restricted payments, such as dividends on, or repurchases of, our capital stock, enter into certain types of related party transactions, or enter into agreements that would restrict the ability of our subsidiaries to make dividends or other distributions to us. The first lien credit agreement also includes financial covenants including covenants to maintain a specified interest coverage ratio, leverage ratio and first lien leverage ratio and a covenant which restricts our ability to make capital expenditures. We were in compliance with all such covenants as of December 31, 2007 and 2008 and as of September 30, 2009.

Second Lien Term Loan Facility

The initial aggregate amount of term loan borrowings under the second lien term loan facility was $45.0 million. In February 2007, we amended the second lien term loan facility and incurred an additional $25.0 million in borrowings. Our second lien term loan borrowings bear interest at our option at a rate of ABR plus 550 basis points, or LIBOR plus 650 basis points. The interest period with respect to our second lien term loan borrowings is determined in the same manner, as borrowings under the revolving credit facility. To the extent that there are no borrowings under our first lien credit agreement, we may prepay all or a portion of our borrowings under the second lien term facility at any time without penalty. Unless earlier accelerated in connection with an event of default or prepayment, the remaining outstanding principal amount of borrowings under the second lien term loan facility is required to be repaid on January 20, 2013.

Index to Financial Statements

The second lien term loan agreement contains events of default, conditions to borrowings and restrictive covenants substantially similar to those under the first lien credit agreement. The second lien credit agreement also includes financial covenants to maintain a specified leverage ratio, which is slightly more permissive than that under the first lien credit agreement. We were in compliance with all such covenants as of December 31, 2007 and 2008, and as of September 30, 2009.

Interest Rate Swaps. We use interest rate swaps to manage the risks associated with variable rate instruments. As of September 30, 2009, we had four interest rate swaps outstanding with an aggregate notional amount of $135.0 million, which represented approximately 62% of our term loan borrowings as of such date, including:

•

An interest rate swap with a total notional amount of $35.0 million effectively fixes the interest rate for a corresponding amount of term loan borrowings under the second lien term facility at 9.088%. Such interest rate swap expired on November 6, 2009.

•

An interest rate swap with a total notional amount of $50.0 million effectively fixes the interest rate for a corresponding amount of term loan borrowings under the first lien term facility at 5.081%. Such interest rate swap expired on November 24, 2009.

•

An interest rate swap with a total notional amount of $35.0 million effectively fixes the interest rate for a corresponding amount of term loan borrowings under the first lien term facility at 7.711%. Such interest rate swap expires on August 6, 2010.

•

An interest rate swap with a total notional amount of $15.0 million effectively fixes the interest rate for a corresponding amount of term loan borrowings under the first lien term facility at 4.239%. Such interest rate swap expires on August 24, 2010.

The interest rate swaps were structured with decreasing notional amounts to match our expected interest payment date. The interest rate swap agreements are designated as cash flow hedge derivatives. To the extent we use a portion of the net proceeds to repay outstanding indebtedness, we may incur fees associated with the settlement of the swap agreements.

Uses of Funds

Dividend Payments

Outstanding shares of our series A preferred stock are entitled to receive dividends in an amount equal to 6.0% per annum, compounded quarterly. On January 31, 2007, our board of directors declared a cash dividend on both our series A preferred stock and common stock in an aggregate amount of $24.4 million, which was paid in February 2007. Of that amount, an aggregate of approximately $13.0 million was paid to holders of our series A preferred stock and an aggregate of approximately $11.4 million was paid to holders of our common stock as a special cash dividend. The dividend was funded by an amendment to our credit agreement that increased borrowings under our second lien credit facility. Except for this dividend, we have never paid a dividend on our capital stock. As of September 30, 2009, the aggregate cumulated unpaid dividends on the shares of series A preferred stock was approximately $22.7 million. Each share of series A preferred stock is convertible at the option of the holder into ten shares of our common stock, and is automatically converted into ten shares of our common stock upon the approval of a majority of the then outstanding holders of series A preferred stock. The conversion ratio of ten shares of our common stock per share of series A preferred stock is derived by dividing the per share face value of the series A preferred stock, or $100, by the conversion price then in effect, or $10. In connection with this offering, all of the outstanding shares of our series A preferred stock will convert into shares of common stock immediately prior to the closing of this offering. We intend to use a portion of the net proceeds of this offering to pay unpaid dividends on shares of our series A preferred stock cumulated through the conversion date of the series A preferred stock.

Index to Financial Statements

Capital Expenditures

Consistent with previous periods, future capital expenditures will focus on acquiring additional hosting and general corporate infrastructure. Our first lien credit agreement contains restrictions on our ability to make capital expenditures in excess of $4.5 million per year. Based on current estimates, we believe that the amount of capital expenditures permitted to be made under the first lien credit agreement will be adequate to implement our current plans.

Historical Trends

The following table summarizes our cash flow data for the years ended December 31, 2006, 2007 and 2008, and for the nine months ended September 30, 2008 and 2009.


	Year Ended December 31,									Nine Months Ended September 30,
	2006			2007			2008			2008			2009
	(in thousands)
										(unaudited)
Net cash provided by operating activities	$	11,276		$	16,007		$	41,319		$	35,822		$	27,289
Net cash used in investing activities		(73,999	)		(27,500	)		(4,491	)		(3,216	)		(2,335	)
Net cash provided by (used in) financing activities		66,102			11,566			(1,830	)		(1,388	)		(19,443	)

Operating Cash Flow

Net cash provided by operating activities of $27.3 million for the nine months ended September 30, 2009, decreased by $8.5 million compared to the prior year period. We benefited from an increase of approximately $3.2 million in deferred revenue and a decrease of $6.2 million in amounts receivable from customers and unbilled accounts receivable. This was partially offset by a decrease of $6.5 million in accounts payable and accrued expenses and other liabilities.

Net cash provided by operating activities increased $25.3 million during the year ended December 31, 2008, as compared to the prior year. We benefited from an increase of $6.9 million in deferred revenue and an increase of $5.2 million in accounts payable and accrued expenses and other liabilities. This was offset by a $4.5 million increase in accounts receivable and a $1.3 million increase in unbilled accounts receivable.

Net cash provided by operating activities increased $4.7 million during the year ended December 31, 2007, compared to the prior year. Contributing to this increase was $1.1 million from an increase in deferred revenue. These were partially offset by decreases in accounts receivable from customers and in accounts payable and accrued liabilities.

Investing Cash Flow

Net cash used in investing activities for the nine months ended September 30, 2009 and the year ended December 31, 2008 was $2.3 million and $4.5 million, respectively. In each case the amount principally represents the purchase of property and equipment.

Net cash used in investing activities for the year ended December 31, 2007 was $27.5 million. This included $3.3 million for the purchase of property and equipment and $24.2 million paid in connection with the acquisitions of GEOCOMtms Inc., StorePerform Technologies, Inc. and BlueCube Software, Inc.

Net cash used in investing activities for the year ended December 31, 2006, was $74.0 million. This included $2.0 million for the purchase of property and equipment and $72.1 million paid in connection with the acquisitions of Alta A/S, MARC Global Holdings, Inc., and BlueCube Software, Inc.

Index to Financial Statements

Financing Cash Flow

Net cash used in financing activities for the nine months ended September 30, 2009 was $19.4 million. During the second quarter of 2009, we made a mandatory principal payment of approximately $18.6 million on our borrowings under our first lien term loan facility as disclosed above, as well as scheduled principal payments of $0.4 million in both March 2009 and June 2009.

Net cash used in financing activities for the year ended December 31, 2008, was $1.8 million. We made payments of $1.7 million on our first lien term loan borrowings and $0.1 million on capital leases.

Net cash provided by financing activities for the year ended December 31, 2007, was $11.6 million. We made payments of $1.7 million on our term loan and $18.6 million on our revolving credit facility. We declared and paid a dividend of $24.4 million and repurchased $2.5 million of series A preferred and common stock. Additionally, we borrowed $15.6 million under our revolving credit facility and amended our first and second lien credit agreements providing for additional term loan borrowings of $43.2 million, net of fees.

Net cash provided by financing activities for the year ended December 31, 2006, was $66.1 million, which consisted of $136.8 million of principal payments made on our prior credit agreement and payment of an $8.0 million related party note payable. In addition, we borrowed $210.9 million in connection with the refinancing of our prior credit agreement.

Contractual Obligations

The following table summarizes, as of December 31, 2008, our minimum payments for long-term debt and other obligations for the next five years and thereafter:


	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in thousands)
Long-term debt, including capital leases	$	235,850	$	19,009	$	28,693	$	188,148	$	—
Operating leases		26,400		8,500		13,700		4,200		—
Pension liability		3,308		205		430		465		2,208

Total contractual obligations(1)(2)	$	265,558	$	27,714	$	42,823	$	192,813	$	2,208

(1)	Excludes cumulated and unpaid dividends on outstanding shares of our series A preferred stock. All such shares will convert into shares of our common stock in connection with this offering.

RedPrairie Holding, Inc. S-1