8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 22, 2004

i2 Technologies, Inc.

(Exact name of registrant as specified in its charter)

Delaware	0-28030	75-2294945
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

One i2 Place 11701 Luna Road Dallas, Texas	75234
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (469) 357-1000

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

(c) Exhibits

99.1	Press release
99.2	Earnings script

ITEM 9 AND ITEM 12. REGULATION FD DISCLOSURE AND RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On July 22, 2004, i2 Technologies, Inc. (the “Company”) announced by press release (the “Press Release”) and earnings conference call the Company’s second quarter 2004 financial results. The information contained in the Press Release and the earnings script, which are attached as Exhibit 99.1 and Exhibit 99.2 respectively to this Current Report on Form 8-K, is incorporated by reference herein and is furnished pursuant to Item 9, “Regulation FD Disclosure” and Item 12, “Results of Operations and Financial Condition.”

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.

i2 TECHNOLOGIES, INC.
Dated: July 27, 2004
By:	/s/ Katy Murray
	Katy Murray
	Executive Vice President and Chief Financial Officer

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INDEX TO EXHIBITS

Exhibit Number	Description
99.1	Press release
99.2	Earnings script

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EX-99.1

EXHIBIT 99.1

i2 Reports Second Quarter 2004 Results

DALLAS – July 22, 2004 – i2 Technologies, Inc. (OTC: ITWO), a leading provider of closed-loop supply chain management solutions, today announced results for its second quarter, ended June 30, 2004.

Total revenue for the second quarter was $111 million, as compared to $84 million in the previous quarter and $122 million in the second quarter of 2003.

License revenue in the second quarter was $12 million, consistent with the $12 million of license revenue recognized in the first quarter of 2004. This compares to $17 million of license revenue in the second quarter of 2003.

Development services revenue increased 39 percent sequentially to $9.2 million in the second quarter, up from the $6.6 million in the prior quarter and the $5.6 million in the second quarter of 2003.

Contract revenue recognized in the quarter was $32 million, as compared to $6 million in the prior quarter and $25 million in the second quarter of 2003. Contract revenue reflects amounts deferred as a result of the Company’s July 2003 restatement and is not typically associated with current business and cash collections.

Companies selecting i2 during the second quarter included Bed Bath & Beyond and Procurve Networking by HP in the Americas, Gambro and Severstal in EMEA, and NEC and Petron Corporation in Greater Asia-Pacific.

“I’m very pleased with the progress we’ve made this past quarter,” said Sanjiv Sidhu, i2 CEO. “We’ve closed new business, put the company on a much more solid financial footing, increased customer satisfaction, and are implementing the next generation of supply chain management solutions at leading customers. We are focused on growing our business and bringing value to our customers.”

Total costs and operating expenses for the second quarter of 2004 were $93 million, which includes approximately $4 million of restructuring costs, $2 million of operating expense related to employees no longer with the company, $1 million of legal expenses related to the settlement of the class action and derivative litigation and the SEC investigation and $1.0 million of costs associated with the contract revenue recognized. In addition, cost of license for the second quarter was lower than it would have been by $3 million due to the reversal of some accruals that were taken in earlier periods for potential customer claims that are no longer needed. This compares to $108 million in total costs and operating expenses in the first quarter of 2004, which included approximately $10 million for an accrual the Company had taken in the first quarter for costs associated with the potential resolution of the SEC investigation, and an additional charge of $2.4 million for legal expenses related to the class action and derivative litigation and the SEC investigation. In comparison, total costs and operating expenses in the second quarter of 2003 were $119 million, which included approximately $9 million of audit and legal fees related to the Company’s re-audits and investigations.

Operating income for the second quarter of 2004 totaled $18 million, as compared to an operating loss of $24 million in the prior quarter and operating income of $2.5 million in the second quarter of 2003.

Net income applicable to common stockholders for the second quarter totaled $12 million, or $0.02 earnings per diluted share. This compares to a net loss applicable to common stockholders of $30 million, or ($0.07) loss per diluted share, in the first quarter of 2004 and net income applicable to common stockholders of $1.0 million, or $0.00 earnings per diluted share, for the second quarter of 2003.

Cash and investments increased by a net $55 million in the second quarter. The Company finished the quarter with $345 million in total cash and investments. A significant source of cash in the quarter included $120 million from the investments into the Company by an affiliate of Q Investments and i2’s founder and CEO Sanjiv Sidhu. Significant uses of cash included $10 million for the settlement of the SEC enforcement proceedings, $42 million for the settlement of the class action and derivative lawsuits and a $9 million semi-annual interest payment on the convertible debt.

Supply Chain Leaders Program

During the quarter, i2 announced the Supply Chain Leaders Program, an initiative that offers companies the opportunity to craft and efficiently deploy closed-loop supply chain solutions, using i2’s intellectual property over the course of an agreed-upon contract term.

The program enables customers to license and implement any of i2’s software that is currently commercially available, as well as any of its standard software that is released during the term of the contract. These customers have access to implementation services and are supported by dedicated staff from i2’s Competency Center.

Succession Planning

The Company also announced today that it has selected Heidrick & Struggles to begin the process of seeking a successor to its current CEO, Sanjiv Sidhu, who founded the Company in 1988.

“We have taken many steps over the past year to position i2 for success as we move forward,” said Sidhu. “The time is now right for us to attract a world-class CEO for i2. I plan to continue as chairman, and remain as committed to i2 as I’ve ever been.”

Earnings Conference Call Information

The i2 management will host a live conference call and Webcast with investors today, July 22, 2004 at 5:00 p.m. Eastern to discuss the second quarter financial results. Investors and other interested parties may access the call via web cast through the Company’s web site at www.i2.com/investor. A telephone replay of the event will also be available for approximately 24 hours following the call. To access the replay, dial 800-475-6701 and enter pass code 738795.

About i2

A leading provider of closed-loop supply chain management solutions, i2 designs and delivers software that helps customers optimize and synchronize activities involved in successfully managing supply and demand. i2’s global customer base consists of some of the world’s market leaders - including seven of the Fortune global top 10. Founded in 1988 with a commitment to customer success, i2 remains focused on delivering value by implementing solutions designed to provide a rapid return on investment. Learn more at www.i2.com.

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i2 is a registered trademark of i2 Technologies US, Inc. and i2 Technologies, Inc.

i2 Cautionary Language

This press release contains forward-looking statements that involve risks and uncertainties including forward-looking statements regarding the customers’ ability to leverage and implement i2 solutions successfully, receive expected functionality and performance and achieve benefits attributable to i2 solutions; the process of seeking a successor to Sanjiv Sidhu, our current Chairman, President and CEO; and Mr. Sidhu’s retention of the role of Chairman of the Board and continued involvement at the company. These forward-looking statements involve risks and uncertainties that may cause actual results to differ from those projected. For a discussion of factors which could impact i2’s financial results and cause actual results to differ materially from those in forward-looking statements, please refer to i2’s recent filings with the SEC, particularly the Annual Report on Form 10-K/A filed on March 17, 2004 and the Quarterly Report on Form 10-Q filed on May 10, 2004. i2 assumes no obligation to update the forward-looking information contained in this news release.

For More Information Contact:

Melanie Ofenloch

i2 Corporate Communications

469-357-3027

melanie_ofenloch@i2.com

Barry Sievert

Shelton Investor Relations for i2

972-239-5119 ext 134

bsievert@sheltongroup.com

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I2 TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
Revenues:
Software licenses	$	12,027		$	17,271		$	24,415		$	36,419
Development services		9,192			5,571			15,809			14,860
Contract		31,970			24,954			37,940			81,547
Services		27,642			39,605			55,285			78,178
Maintenance		29,798			34,593			60,802			68,938
Total revenues		110,629			121,994			194,251			279,942
Costs and expenses:
Cost of revenues:
Software licenses		196			2,570			3,373			2,853
Development services		4,045			5,709			10,651			11,930
Contract		1,025			(264	)		1,131			6,933
Amortization of acquired technology		134			145			279			290
Services and maintenance		30,269			42,438			62,246			79,212
Sales and marketing		21,591			23,478			41,512			47,127
Research and development		19,115			21,581			38,807			42,358
General and administrative		12,753			23,617			38,214			37,994
Amortization of intangibles		—			39			39			462
Restructuring charges and adjustments		3,670			123			4,245			376
Total costs and expenses		92,798			119,436			200,497			229,535
Operating income (loss)		17,831			2,558			(6,246	)		50,407
Other income (expense), net		(4,378	)		(1,506	)		(9,469	)		(6,525	)
Income (loss) before income taxes		13,453			1,052			(15,715	)		43,882
Income tax expense (benefit)		1,296			38			2,105			1,536
Net income (loss)	$	12,157		$	1,014		$	(17,820	)	$	42,346
Preferred stock dividend and accretion of discount		247			—			247			—
Net income (loss) applicable to common shareholders	$	11,910		$	1,014		$	(18,067	)	$	42,346
Income (loss) per common share:
Basic	$	0.03		$	0.00		$	(0.04	)	$	0.10
Diluted	$	0.02		$	0.00		$	(0.04	)	$	0.09
Weighted-average common shares outstanding:
Basic		444,590			432,878			439,514			432,868
Diluted		482,854			462,315			439,514			468,163

i2 TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)

	June 30, 2004			December 31, 2003
ASSETS
Current assets:
Cash and cash equivalents	$	279,433		$	288,822
Restricted cash		9,343			15,532
Short-term investments, at fair value		29,775			5,000
Accounts receivable, net		32,310			36,746
Deferred contract costs		5,864			6,995
Other current assets		20,375			27,529
Total current assets		377,100			380,624
Long-term investments, at fair value		26,543			—
Premises and equipment, net		22,212			28,483
Intangible assets, net		3,602			4,647
Goodwill		16,620			16,620
Total assets	$	446,077		$	430,374
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	16,366		$	20,853
Accrued liabilities		51,680			109,499
Accrued compensation and related expenses		31,783			27,380
Deferred tax liabilities		9			9
Deferred revenue		187,323			212,753
Total current liabilities		287,161			370,494
Non-current deferred tax liabilities		18			18
Long-term debt		356,800			356,800
Total liabilities		643,979			727,312
Commitments and contingencies
Stockholders' equity deficit:
Preferred Stock, $0.001 par value, 5,000 shares authorized, none issued and outstanding		—			—
Series A junior participating preferred stock, $0.001 par value, 2,000 shares authorized, none issued and outstanding		—			—
Series B 2.5% convertible preferred stock, $1,000 par value, 150,000 shares authorized, 100,000 issued and outstanding		95,364			—
Common stock, $0.00025 par value, 2,000,000 shares authorized, 458,189 and 434,133 shares issued and outstanding		115			109
Additional paid-in capital		10,400,062			10,376,937
Accumulated other comprehensive income (loss)		(1,181	)		217
Accumulated deficit		(10,692,262	)		(10,674,201	)
Net stockholders' deficit		(197,902	)		(296,938	)
Total liabilities and stockholders' deficit	$	446,077		$	430,374

EX-99.2

Exhibit 99.2

i2 TECHNOLOGIES, INC

Conference Call Script

July 22, 2004

4:00 p.m. CDT

Moderator	Ladies and gentlemen, thank you for standing by. Welcome to the Second Quarter 2004 Earnings Release conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Instructions will be given at that time. As a reminder, this conference is being recorded.
	I would now like to turn the conference over to Mr. Barry Sievert. Please go ahead.
B. Sievert	Thank you, John. I’d like to welcome everyone to our conference call this afternoon. We released our second quarter 2004 results today and the release crossed the wire at 3:40 p.m. Central Time. Joining me today are Katy Murray, i2’s Chief Financial Officer; and Sanjiv Sidhu, i2’s Chairman and CEO who will deliver some prepared remarks. Following the prepared commentary, we will open the call up for Q&A. I’d like to remind you that the comments we’ll make today are subject to the SEC’s safe harbor provisions. During our commentary and the question and

answer session, we will make estimates and forward-looking statements that are the current beliefs and opinions of certain members of i2 management.

These statements are indicated by such terms as plan to, preliminary, goal, will, belief, targeting, expect, anticipate, enhance, and likely. They may include statements regarding future revenues and expenses, earnings and operations, as well as statements regarding demand for the company’s solutions and the company’s ability to achieve its targets, goals and initiatives. We can give no assurance regarding the achievement of these forward-looking statements as they are only estimates and the actual outcomes may be significantly different.

Additionally, we expect that these forward-looking statements will change in the normal course of our business and management specifically disclaims any obligation to update forward-looking statements that we may make on today’s call. Please refer to the sections in i2’s filings with the SEC captioned “forward-looking statements” and “factors that may affect future results” in the MD&A section of our most recent 10-K and 10-Q filings with the SEC which are available on our web site.

With that, I’d now like to turn the call over to i2’s CFO, Katy Murray.

K. Murray	Thank you, Barry. Good afternoon and thank you for joining us today for the release of i2’s second quarter 2004 results. The second quarter was significant for many reasons. Bookings for core license and development services were up significantly as compared to the last four quarters. Operating cash flow performance improved significantly and deferred revenue, excluding the effect of contract revenue, was up for the second quarter in a row by $6 million.
	Also, during the quarter, the company was able to make progress in several non-operating areas. We announced the settlement of the SEC enforcement proceedings against the company, a definitive agreement to settle the consolidated shareholder class action and derivative lawsuits, and a $100 million equity investment by an affiliate of Q Investments.
	Before I begin the financial review, I would like to update everyone on i2’s current listing status. We were now taking steps to start the process for re-applying for listing on the NASDAQ. As part of that process, it is our expectation that we will be seeking shareholder approval for a reverse split since the initial listing criteria for the NASDAQ requires a $5 minimum share price. We are currently expecting to hold our annual shareholder meeting in the fourth quarter. However, at this time, a specific date has

not yet been set. Given we are in a very early stages of starting this process, we are not able to predict with certainty the timing or the outcome of the re-listing process.

As we continue to put these non-operational issues behind the company, we are once again able to focus our attention on the execution of our business plan. The second quarter’s operational results demonstrate progress in that effort and I will now highlight this quarter’s financial results.

Total revenues for the second quarter, which include contract revenues, were $111 million, up from $84 million in the prior quarter. Excluding contract revenue, operating revenues were $79 million, slightly better than the operating revenues of $78 million in the previous quarter. Our revenues were spread globally, with 70% of total revenue recognized originating in the Americas, 17% from EMEA, and 13% from the Greater Asia region which includes Japan.

For the second quarter, total license revenues recognized were $12.0 million, down slightly from the $12.4 million recognized in the previous quarter. License revenues in the quarter include $9.2 million of revenue that is recurring in nature, mainly from our content business and $2.8

million of core license revenue. We recognized 15 core license transactions with an ASP of $189,000. For core license transactions over $100,000, the ASP was $479,000. This compares to 21 core license transactions with an ASP of $167,000 and an ASP of $308,000 for core license transactions over $100,000 in the prior quarter.

Development services revenue recognized was $9.2 million in the second quarter, an increase of 39% from the prior quarter. We recognized revenue from 47 development service projects having an ASP of $196,000 in the second quarter and we exited the quarter with 72 active projects. This compares to the first quarter where we recognized revenue from 45 projects with an ASP of $153,000 and we exited the quarter with 68 active projects. These projects, which include both license and services, are recognized, on average, over a three to four quarter period. Since there is a license portion to this revenue line, we feel that it is important to begin providing some visibility to the breakout between license and services.

In Q2, the license component of the $9.2 million of development services revenue was approximately $2.8 million. This compares to $2.2 million in the prior quarter. In the second quarter, new customers accounted for 32% of core license and development services revenue recognized, which is a significant improvement over the prior quarter’s 8%. In addition, we recognized two deals over $1 million this quarter compared to zero in Q1.

On a vertical basis, the high-tech industry accounted for 44% of core license and development services revenue recognized, the CPG and retail industry contributed 24%, metals customers accounted for 16%, automotive and industrial sectors accounted for 12%, and various other industries contributed 4%.

I would now like to talk in a bit more detail about bookings for the quarter. Bookings are the measure we use internally to measure the business and represent the contracted value of licensed IT and/or development services. Bookings convert to revenue as contractual obligations are met. Bookings for the combination of core license and development services revenue were $24 million in the second quarter, up sequentially from the first quarter bookings and significantly more than the $12 million of core license and development service revenue recognized in the quarter. We do expect to see variability in bookings from quarter-to-quarter.

Another area I would like to spend a few minutes on is some of the financial details relating to the three supply chain leader deals that were announced this quarter. The total contracted value for the three deals is in

excess of $50 million, which represents fees for license, services, and maintenance. Two of these transactions have contractual terms of three years with the third transaction having a longer contractual term. It is important to note that each deal represents, in part, incremental revenue to be recognized over that contractual term. The license and maintenance fees recognized from these deals will be accounted for as subscription revenue, which we report in our income statement as recurring license revenue. Therefore, you will see a decrease in reported maintenance revenue in future quarters relating to these three customers. Services revenue will be recognized as services are provided.

In regards to other revenue line, we recognized $28 million in services revenue in the quarter, which is consistent with the prior quarter. Service revenue in the second quarter included approximately $3.1 million of related T&E expense as compared to $2.7 million in the first quarter of 2004. For maintenance, we’ve recognized $30 million of revenue this quarter as compared to $31 million recognized in the prior quarter.

In this quarter, we also recognized $32 million of contract revenue, which represents amounts carried on our balance sheet as deferred revenue as a result of our restatement. This was significantly more than the $6 million recognized in the first quarter.

I would like to reiterate again that the timing of the recognition of this deferred contract revenue is difficult to predict and is not typically associated with current business or current cash collections. Therefore, I encourage investors and analysts to consider this when evaluating the company’s current performance and financial results and also when building financial models.

On the expense side, we are reporting total GAAP costs and operating expenses of $93 million for the quarter. Of this amount, I want to highlight some notable expense items. There was approximately $4 million for restructuring expenses that were incurred in the second quarter, $2 million of operating expense related to employees no longer with the company, $1 million of legal expenses associated with the SEC and class action litigation, and $1 million of cost related to the contract revenue recognized in this quarter. In addition, cost of license for the second quarter was lower than it would have been by $3 million due to the reversal of some accruals that had been taken in earlier periods for potential customer claims that were no longer needed.

We are exiting the second quarter with an operating expense run rate of approximately $85 million, which does not include potential expense items like the ones discussed above.

We are reporting GAAP operating income of $18 million for the quarter as compared to a $24 million GAAP operating loss in the prior quarter. Other income was negative this quarter by $4 million primarily as a result of the continued disparity between our interest expense and the returns we were able to achieve on our cash balances.

GAAP net income for the second quarter totaled $12 million, or $0.02 per fully diluted share.

I feel like it is important again to note that this quarter we recognized approximately $32 million of contract revenue, which represents those amounts carried on our balance sheet as deferred revenue as the result of our recent restatement.

In the prior quarter, we reported a net loss of $30 million, or a loss of $0.07 per share. The first quarter’s operating and net results included the $6 million in contract revenue recognized and $10 million for the accrual for the potential settlement with the SEC.

Our June 30^th cash and investments balance was $345 million, which represents a net increase of $55 million in the quarter. Significant cash inflows this quarter included $120 million in proceeds from the sale of preferred stock to an affiliate of Q Investments, and common stock to CEO Sanjiv Sidhu.

Significant uses of the cash included $53 million towards the settlement of the SEC enforcement proceedings, class action and derivative lawsuits, and legal expenses associated with those activities; $6 million were paid for restructuring-related activities, and we made our semi-annual interest payment of approximately $9 million this quarter. Other items to note are that depreciation and amortization expense was $3 million for the quarter, and we spent less than $500,000 on capital expenditures.

DSOs for the quarter were 27 days, which included the beneficial effects of the restated deferred contract revenue recognized in the quarter, and 35 days without. We ended the quarter with $187 million of deferred revenues, of which $86 million is the net restated deferred contract revenue. Excluding the net deferred contract revenue balance, deferred revenues increased $6 million on a net basis quarter-over-quarter. Again, this is an increase in two quarters in a row.

Another area to highlight on our balance sheet is that total accrued liabilities decreased on a net basis by $58 million. Significant payments

this quarter include a $10 million payment to the SEC related to the enforcement proceedings, $42 million for the class action and derivative lawsuits, and the $9 million semi-annual interest payment made this quarter.

Total headcount at the end of the quarter was 2,199, down 198 from the reported 2,397 at March 31^st. We finished the quarter with 100 quota-carrying reps within our sales organization. While we’re down a net three quota-carrying sales reps from the prior quarter, we are currently hiring sales reps, and have over ten open, active positions where we are currently interviewing candidates.

We believe we are taking the right steps to bring i2 back to profitability by focusing on increasing bookings and revenues and decreasing our operating costs. In addition, we will continue to evaluate opportunities to deleverage our balance sheet. While we had some significant cash payments this quarter, we are continuing to focus on improving our cash flow from operation, and with $345 million in cash and investments, we feel that our liquidity remains strong and we can focus on executing to our business plans.

With that, I will turn the call over to Sanjiv.

Sanjiv Sidhu	Thank you, Katy. I know that all i2ers share my satisfaction in seeing the progress we’re making. The quarter shows many improvements. We’ve met and even exceeded many of the objectives we set out for ourselves this quarter. So let me review some of these accomplishments. As you remember, I last spoke to you from Planet, i2’s conference in San Diego in April. So this is the fitting place for me to begin my comments on our performance for the last three months.
	We were privileged to host almost 1,400 participants at i2 Planet from around the world. We left the conference buoyed by the support of our customers, buoyed by the three big supply chain leader deals that we signed, and the enthusiastic response to our closed-looped supply chain management solutions. As industry analyst firm, ARC Advisory Group noted, “There were case stories of far reaching supply chain transformation from users that one does not hear about at other supplier’s shows.” i2 continues to stand for the best in supply chain management. Then, Bruce Richardson from AMR summed it up when he wrote, “I left Planet believing I had witnessed the first real bounce back for i2.”
	So let me now tell you about how we are bouncing back. Katy did cover the details of our financial performance improvements. What I’d like to do

is highlight four of the key financial achievements: first, we achieved $24 million of license and development services bookings, much better than any of the last four quarters; second, we improved cash flow performance very significantly; third, we increased deferred revenue by over $6 million, excluding the effect of contract revenue; and fourth, we reduced operating costs significantly. While we’re excited by this improvement, we still have work to do to get us to sustainable profitability, but this quarter proves that we are well within sight of that goal.

So next, let me discuss sales execution. We implemented new programs to strengthen sales execution. These programs are showing results. We also added new talent in all three regions with Steve Minisini now leading Americas, Hiten Varia leading Greater Asia-Pacific, and Ken Coulter joining the EMEA team under Jim Contardi. We also added several professional sales leaders to strengthen coverage in the Americas, and we’re adding a new strategic account sales team in the U.S. and plan to add key talent to that team over the coming weeks.

With that, let me move on and discuss accomplishments in the key area of customer satisfaction. This past quarter, we asked a third party firm to take the pulse of our customer satisfaction; as you know, we do this twice a year. Now, I’m proud to announce that we’ve seen significant

improvements again. Most of our key survey metrics, including customers’ likelihood to renew maintenance and to recommend i2 solutions to others, are at an all-time high. Customers are telling us that they are increasingly satisfied with our solutions, increasingly satisfied with our consulting teams, and our customer support services. I really want to thank customers and all i2ers for these phenomenal results.

Next, is growth in new business. While our current customers are critical to us, so is growing new business. As Katy mentioned, revenue from new customers was almost a third of our license and development services revenue recognized this quarter, up from 8% last quarter. In the retail sector, we had a very gratifying win with Bed, Bath & Beyond. We are very committed to the retail sector. We see this as a key growth area for the company. We have a differentiated solution for retailers; a solution enables them to proactively manage their business - managing inventories, promotions, replenishments, transportation and new product introductions. We also won a new contract with HP for their ProCurve Networking division.

In the metals industry, we added Severstal in Russia as a new customer. Severstal will be using i2’s master planning and profit optimization solutions. Currently they have more demand than capacity, so Severstal’s goal is to decide which orders to take to maximize profit and customer requests.

We also added several new customers in the Greater Asia-Pacific region. In the Philippines, for example, we added Petron. Petron is a major oil company that will be using i2’s downstream oil solution. We won this deal in a highly competitive sales cycle that was ultimately won by the demonstration of our solution in their environment. No one else could match i2’s capabilities.

As further evidence of our growing new customer momentum, I’m also pleased to tell you that Kia just joined our roster of top tier automotive companies that have selected i2 as their technology partner. Just last week, Kia and i2 made a commitment to install i2 service parts management to enhance Kia’s customer service and to reduce their dealer inventory costs.

With that, let me now discuss progress with our new products. The success that you’re seeing in the license booking growth is being driven in part by demand for a newer solutions for closed-loop supply chain management. With these advanced solutions, we’re helping customers implement what has become known as composite applications, applications that tie multiple disparate processes and systems together to perform a closed-loop workflow.

The three major deals that we closed this quarter in our supply chain leaders program are examples of this next generation in supply chain management. Our newer solutions help customers to implement a proven operational improvement paradigm called Plan-Do-Check-Act. This is extremely similar to the popular SixSigma approach that you hear of so often. So our closed-loop solution supports visibility, supports event management, supports collaborative planning and execution and master data management across disparate systems in a broad value chain.

Our master data management solution, for example, is now being deployed in a number of customer sites ranging from Woolworth’s in Australia, Infineon in Germany, NEC in Japan, and others, as they use the technology and data service to synchronize supply chain across disparate systems. As you noticed, I had to say Infineon in Germany. NEC in Japan, for example, is committed to a worldwide project to expand the use of MDM in a global roll out that will enable them to introduce new products much more quickly across the multiple systems that they have across the multiple business units that they have.

Composite applications, once again, are applications that enable companies to create true closed-loop management. These represent the future of supply chain management, and clearly, i2 is leading that future.

As you can sense from my enthusiasm, I’m pleased with the progress we’ve made to set i2 on a rebound course. I believe that now is the time to attract a world class CEO for i2. We’ve just hired Heidrick & Struggles to conduct the search. I plan to continue as CEO until we find the next CEO, at which point, I plan to continue as Chairman of the Board. This will give me an opportunity to spend more time with customers, to help understand emerging customer needs, such that these needs can be converted into differentiated technology solutions for i2 and our customers. I do remain very committed to i2, as committed as I’ve ever been.

In conclusion, we’ve made tremendous progress. I’d like to thank all i2ers and thank all supporters for their efforts to bring us to this point. I believe that the achievements of this quarter will energize i2ers, further improving the value that we can add to customers. We still have work ahead of us to return i2 to a healthy profitable company, but as a re-energized team, we’re really ready for this challenge.

With that, we’d like to take questions.