8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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): May 4, 2006

i2 Technologies, Inc.

(Exact name of Registrant as specified in its charter)

Delaware	000-28030	75-2294945
(State of Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS 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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 and Item 7.01. Results of Operations and Financial Condition, and Regulation FD Disclosure.

On May 4, 2006, i2 Technologies, Inc. (the “Company”) announced by press release (the “Press Release”) the Company’s first quarter 2006 financial results. The information contained in the Press Release, which is attached to this Current Report on Form 8-K as Exhibit 99.1, is incorporated by reference herein and is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition” and Item 7.01, “Regulation FD Disclosure.”

The Company will conduct its earnings conference call on May 4, 2006, at 10:00 a.m. EDT. A webcast of the conference call will be open to the public and can be accessed via the company’s Web site at http://www.i2.com/investor.

The information in this Current Report and the accompanying exhibit shall not be incorporated by reference into any filing by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.

Included in the Press Release is the disclosure of non-GAAP diluted earnings per share and pro forma operating income. Management believes that the presentation of non-GAAP diluted earnings per share, pro forma operating income and their related reconciliation to GAAP diluted earnings per share and GAAP operating income, respectively, is useful to investors as it reflects financial measures that management utilizes for budgeting purposes, as well as analyzing the underlying performance of the Company. Management believes that these non-GAAP measures provide investors additional important information to enable them to assess, in the way that management assesses, the operations of the Company. This non-GAAP financial information should not be considered as a substitute for, or superior to, and should only be read in conjunction with, measures of financial performance prepared in accordance with generally accepted accounting principles.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits.

99.1 Press Release dated May 4, 2006.

SIGNATURE

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: May 4, 2006	By:	/s/ Michael J. Berry
		Michael J. Berry
		Executive Vice President and Chief Financial Officer

Index to Exhibits

Exhibit No.	Description
99.1	Press Release dated May 4, 2006

EX-99.1

Exhibit 99.1

i2 Reports First Quarter 2006 Results

Company Achieves Fourth Straight Quarter of Profitability

DALLAS – May 4, 2006 – i2 Technologies, Inc. (NASDAQ: ITWO) today announced results for the first quarter 2006.

A summary of first quarter results:

• Total revenue was $64.0 million

• Total costs and expenses were $59.8 million

• Net income applicable to common shareholders was $1.8 million

• Diluted earnings per share (GAAP) were $0.07

• Non-GAAP diluted earnings per share were $0.21 (excluding stock option expense and contract revenue and contract expense)

• Total bookings were $61.6 million, including $9.4 million of software solutions bookings

“In the first quarter, we recorded our fourth consecutive quarter of profitability while at the same time implementing strategies to drive future growth,” stated i2 Chief Executive Officer Michael McGrath. “Equally important, we have made excellent progress with our new next-generation solutions, which I believe will reshape the supply chain management market. We will be describing our progress on these next-generation solutions in detail next week at i2 Planet.”

First Quarter Results

Revenue Detail

Total revenue for the first quarter was $64.0 million, as compared to $81.9 million in the first quarter of 2005. Total revenue in the first quarter of 2005 included a one-time customer settlement of $8.5 million as well as contract revenue of $3.1 million.

i2 had total first quarter software solutions revenue, which includes core license revenue, recurring license revenue as well as fees received to develop the licensed functionality, of $16.9 million. This compares to $25.4 million of software solutions revenue in the first quarter of 2005. Excluding the $8.5 million customer settlement recorded in first quarter 2005, software solutions revenue was flat year-over-year.

Services revenue in the first quarter was $23.9 million, which compares to first quarter 2005 services revenue of $27.6 million. Services revenue includes fees received from arrangements to customize or enhance previously purchased licensed software. Services revenue also includes reimbursable expenses.

First quarter maintenance revenue was $23.2 million, compared to $25.8 million in the first quarter of 2005.

Costs and Expenses

Total costs and expenses for the first quarter of 2006 were $59.8 million, including $3.7 million in stock option expense. This compares to $101.3 million in the first quarter of 2005. Costs and expenses in the year-ago quarter included $23.6 million of restructuring and non-operating legal expenses. The year-over-year reductions in operating expenses were across virtually all areas of the cost structure and are a realization of the restructuring efforts implemented in 2005.

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i2 Reports First Quarter 2006 Results

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Net Income

The company reported first quarter 2006 net income applicable to common shareholders of $1.8 million or $0.07 per fully diluted share.

Non-GAAP Earnings Per Share

The company provides non-GAAP financial measures to assist shareholders with the analysis of financial and business trends related to the company’s operations. These calculations are not in accordance with, or an alternative for, generally accepted accounting principles (GAAP) and may be different from non-GAAP measures presented by other companies, but are used as a tool by management to measure the effectiveness of i2’s business.

Non-GAAP diluted earnings per share in the first quarter 2006 were $0.21, compared to a loss of ($1.52) per diluted share in the comparable period last year on a non-GAAP basis. Non-GAAP diluted earnings per share exclude stock option expense and the net effect of contract revenue and contract expense.

Contract revenue is the result of the recognition of certain revenue carried on i2’s balance sheet as a portion of deferred revenue and is a result of the company’s 2003 financial restatement. The timing of the recognition of deferred contract revenue is difficult to predict and is not typically associated with current business or cash collections. The company did not recognize a material amount of contract revenue or expense during the first quarter of 2006.

	Quarter Ended 03-31-06		Quarter Ended 03-31-05
GAAP Diluted EPS	$	0.07	($	1.36	)
Add: Stock option expense	$	0.14	$	0.00
Less: Effect of contract revenue and expense	$	0.00	($	0.16	)
Non-GAAP Diluted EPS, excluding stock option and contract revenue and expense	$	0.21	($	1.52	)

Please see the attached schedule for a reconciliation of GAAP to non-GAAP financial measures.

Balance Sheet Items

On March 31, 2006, i2’s total cash (including restricted cash) totaled $115.1 million.

Total debt at the end of the first quarter was $107.2 million, which included $83.3 million of long-term debt and $23.9 million of short-term debt. The increase in total debt from the December 31, 2005 amount of $100.7 million was primarily due to the exercise of the remaining overallotment

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i2 Reports First Quarter 2006 Results

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option granted to the holders of the company’s 5 percent senior convertible notes due 2015. This increase was partially offset by the open-market repurchase of $1.1 million of our 5.25 percent convertible subordinated notes due December 15, 2006.

The company experienced negative cash flow from operations of $8.0 million in first quarter 2006. Included in the first quarter operating cash outflows were the cash payment of employee profit-sharing and bonuses earned in 2005, non-operating legal fees, the 2006 director and officer insurance premium as well as other pre-paid expenses.

Full Year 2006 Outlook

Effective January 1, 2006, the company adopted Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment,” using the modified prospective method of transition, which does not require restatement of prior periods. During the first quarter, the company recorded $3.7 million of non-cash stock option expense. The company estimates that full year 2006 stock option expense will be approximately $16 million, or approximately $0.62 per fully diluted share.

The company is revising its full year 2006 operating revenue (operating revenue is total revenue less contract revenue) outlook. Previous expectations were for 2006 operating revenue to be equal to or slightly above the comparable amount from 2005, but the company now expects operating revenue in 2006 to be below the 2005 amount. Software solutions revenue is expected to be lower than previous expectations due to lower than planned bookings and a shift in the mix of anticipated bookings to more of the company’s next-generation solutions, which generally have a longer revenue recognition period than its traditional solutions. In addition, services revenue has not increased as quickly as anticipated, largely due to lower than planned headcount.

Although operating revenue is expected to be lower than its previous outlook, because of lower operating costs the company is not currently changing its previously announced expectation of non-GAAP earnings per share for full year 2006 (excluding stock option expense and the impact of contract revenue) of $1.00 to $1.20 per fully diluted share.

The company’s statements regarding future financial performance are based on current expectations, which include the company achieving projected software solutions and services revenue and bookings expectations as well as continued cost controls. These statements regarding future financial performance are forward looking. Actual results may differ materially. See “i2 Cautionary Language” below.

Earnings Conference Call and Web Cast Information

The i2 management team will host a live conference call with investors today, May 4 at 10 a.m. EDT to discuss the first quarter 2006 financial results. Investors and other interested parties may access the call and accompanying slide presentation via web cast through the company’s Web site at www.i2.com/investor.

An audio replay of the conference call will be available for approximately 24 hours following the call. To access the replay, dial (800) 475-6701 (USA) or (320) 365-3844 (International) and enter access code 825819. The web-cast will also be archived via the company’s Web site at http://www.i2.com/investor.

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i2 Reports First Quarter 2006 Results

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In addition, i2 will host a meeting for investors and analysts next week at i2 Planet 2006. The meeting is scheduled from 5 -7 p.m. EDT on Thursday, May 11 at the Wynn Hotel in Las Vegas, NV. The meeting will be open to the public via webcast and available on the company’s Web site at http://www.i2.com/investor.

About i2

i2 helps business leaders make better supply chain decisions. i2’s flexible next-generation solutions are designed to synchronize demand and supply across ever-changing global business networks. i2’s innovative supply chain management tools and services are pervasive in a wide cross-section of industries; 20 of the AMR Research Top 25 Global Supply Chains belong to i2 customers. Learn more at www.i2.com.

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 i2’s outlook for 2006 operating revenue and non-GAAP earnings per share, as well as the company’s investment in revenue generating areas of its business. 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 filed March 15, 2006. i2 assumes no obligation to update the forward-looking information contained in this news release.

For More Information Contact:

Tom Ward

i2 Investor Relations

469-357-3854

tom_ward@i2.com

Beth Elkin

i2 Corporate Communications

469-357-4225

beth_elkin@i2.com

i2 TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

	March 31 2006			December 31, 2005
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	109,227		$	112,882
Restricted cash		5,903			4,773
Accounts receivable, net		22,732			25,887
Deferred contract costs		311			311
Other current assets		18,373			19,219
Total current assets		156,546			163,072
Premises and equipment, net		13,295			14,056
Intangible assets, net		5,154			4,906
Goodwill		14,760			14,440
Non-current deferred tax asset		5,373			5,971
Total assets	$	195,128		$	202,445
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	10,569		$	11,766
Accrued liabilities		33,452			36,925
Accrued compensation and related expenses		14,907			23,847
Deferred revenue		93,678			99,870
Current portion of long-term debt		23,860			25,000
Total current liabilities		176,466			197,408
Long-term debt		83,349			75,691
Total liabilities		259,815			273,099
Commitments and contingencies
Stockholders’ 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 shares authorized, 104 issued and outstanding		100,077			100,065
Common stock, $0.00025 par value, 2,000,000 shares authorized, 20,702 issued and outstanding		5			5
Warrants for common stock		3,125			3,125
Additional paid-in capital		10,424,058			10,420,262
Accumulated other comprehensive loss		(735	)		(1,147	)
Accumulated deficit		(10,591,217	)		(10,592,964	)
Net stockholders’ deficit		(64,687	)		(70,654	)
Total liabilities and stockholders’ deficit	$	195,128		$	202,445

I2 TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three Months Ended
	March 31,
	2006			2005
	(unaudited)			(unaudited)
Revenues:
Software solutions	$	16,922		$	25,409
Services		23,874			27,627
Maintenance		23,214			25,818
Contract		33			3,057
Total revenues		64,043			81,911
Costs and expenses:
Cost of revenues:
Software solutions		3,403			4,927
Services and maintenance		23,336			28,685
Sales and marketing		10,954			18,368
Research and development		8,698			11,800
General and administrative		13,455			25,643
Restructuring charges and adjustments		(50	)		11,848
Total costs and expenses		59,796			101,271
Operating income (loss)		4,247			(19,360	)
Non-operating income (expense), net		157			(4,760	)
Income (loss) before income taxes		4,404			(24,120	)
Income tax expense		2,014			1,582
Income (loss) from continuing operations		2,390			(25,702	)
Income from discontinued operations, net of taxes		—			1,210
Net income (loss)	$	2,390		$	(24,492	)
Preferred stock dividend and accretion of discount		629			743
Net income (loss) applicable to common shareholders	$	1,761		$	(25,235	)
Net income (loss) per common share applicable to common shareholders:
Total:
Basic	$	0.07		$	(1.36	)
Diluted	$	0.07		$	(1.36	)
Discontinued operations
Basic	$	—		$	0.06
Diluted	$	—		$	0.06
Continuing operations including preferred stock dividend and accretion of discount
Basic	$	0.07		$	(1.42	)
Diluted	$	0.07		$	(1.42	)
Weighted-average common shares outstanding:
Basic		25,195			18,613
Diluted		25,653			18,613

I2 TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Three Months Ended March 31
	2006			2005
	(unaudited)			(unaudited)
Cash flows from operating activities:
Net income (loss)	$	2,390		$	(24,492	)
Adjustments to reconcile net income (loss) to net cash used in operating activities
Depreciation and amortization		1,814			1,713
Stock option expense		3,652			—
Amortization of deferred compensation		138			188
Gain on sale of securities		(501	)		—
(Gain) loss on disposal of equipment		(29	)		718
Provision (credit) for bad debts charged to costs and expenses		(34	)		163
Deferred income taxes		905			230
Changes in operating assets and liabilities:
Accounts receivable, net		3,254			3,431
Other current assets		625			(491	)
Accounts payable		(1,181	)		964
Accrued liabilities		(4,049	)		15,873
Accrued compensation and related expenses		(8,916	)		(4,991	)
Deferred revenue		(6,042	)		1,189
Net cash used in operating activities		(7,974	)		(5,505	)
Cash flows from investing activities:
Restrictions (added to) released from cash		(1,130	)		1,720
Purchases of premises and equipment		(578	)		(1,008	)
Disposal of premises and equipment		141			—
Purchases of short-term investments		—			(20,000	)
Sale of short-term investments		—			16,850
Proceeds from sale of securities		501			—
Purchase of business		(569	)		—
Purchase of long-term investments		—			(500	)
Net cash used in investing activities		(1,635	)		(2,938	)
Cash flows from financing activities:
Repurchase of debt		(1,140	)		—
Proceeds from issuance of debt		7,500			—
Payment of debt issuance costs		(493	)		—
Net proceeds from common stock issuance from options and employee stock purchase plans		6			8
Net cash provided by financing activities		5,873			8
Effect of exchange rates on cash		81			(1,319	)
Net change in cash and cash equivalents		(3,655	)		(9,754	)
Cash and cash equivalents at beginning of period		112,882			133,273
Cash and cash equivalents at end of period	$	109,227		$	123,519

i2 TECHNOLOGIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

($ in thousands, except per share data)

	Q1 2006
	GAAP Results			Net Contract Revenue			Stock Option Expense			Non-GAAP Results			Non-Operating Legal and Restructuring			Pro Forma
Revenue	$	64,043		$	(33	)	$	—		$	64,010		$	—		$	64,010
Costs and Expenses		59,796			—			(3,652	)		56,144			(2,168	)		53,976
Operating income		4,247			(33	)		3,652			7,866			2,168		$	10,034
Non-operating income (expense)		157			—			—			157
Pre-tax income		4,404			(33	)		3,652			8,023
Less: Income tax expense (1)		2,014			—			—			2,014
Less: Preferred dividend and accretion of discount		629			—			—			629
Net income applicable to common shareholders	$	1,761		$	(33	)	$	3,652		$	5,380
EPS applicable to common shareholders	$	0.07								$	0.21
	Q1 2005
	GAAP Results			Net Contract Revenue			Stock Option Expense			Non-GAAP Results			Non-Operating Legal and Restructuring			Pro Forma
Revenue	$	81,911		$	(3,057	)	$	—		$	78,854		$	—		$	78,854
Costs and Expenses		101,271			—			—			101,271			(23,644	)		77,627
Operating income (loss)		(19,360	)		(3,057	)		—			(22,417	)		23,644		$	1,227
Non-operating income (expense)		(4,760	)		—			—			(4,760	)
Pre-tax income		(24,120	)		(3,057	)		—			(27,177	)
Less: Income tax expense (1)		1,582			—			—			1,582
Add: Income from discontinued operations, net		1,210			—			—			1,210
Less: Preferred dividend and accretion of discount		743			—			—			743
Net income (loss) applicable to common shareholders	$	(25,235	)	$	(3,057	)	$	—		$	(28,292	)
EPS applicable to common shareholders	$	(1.36	)							$	(1.52	)

(1) Adjustments to the company’s GAAP results do not include a tax effect due to the company’s current tax position

i2 TECHNOLOGIES, INC.

KEY PERFORMANCE INDICATORS

(unaudited)

	1Q 05			2Q 05			3Q 05			4Q 05			1Q 06
Software Solutions Bookings (in $ millions) (1)	$	7.2		$	8.7		$	4.6		$	11.8		$	9.4
Total Bookings (in $ millions) (2)		N/A			N/A			N/A		$	81.4		$	61.6
Total Revenue Recognized by Region
Greater APAC		15	%		20	%		20	%		20	%		21	%
EMEA		31	%		32	%		21	%		13	%		19	%
Americas		54	%		48	%		59	%		67	%		60	%
Total Revenue		100	%		100	%		100	%		100	%		100	%
Software Solutions transactions recognized > $1M		3			3			1			3			3
Average amount recognized (in $ thousands)	$	122		$	211		$	279		$	486		$	244
Deferred Contract Costs (in $ millions)	$	1.9		$	0.3		$	0.3		$	0.3		$	0.3
Deferred Revenue Contract (in $ millions)	$	50.2		$	31.8		$	30.8		$	7.6		$	7.6
Deferred Revenue Other	$	116.5		$	116.5		$	99.4		$	92.3		$	86.1
Total Deferred Revenue	$	166.7		$	148.3		$	130.2		$	99.9		$	93.7
Days Sales Outstanding		34			26			31			32			32
Total Headcount		1,538			1,345			1,268			1,257			1,259
Direct Sales Representatives		53			43			40			37			42

1. Software solutions bookings includes bookings for recurring transactions, beginning in the first quarter of 2006.

2. Total bookings represents potential future revenue that was sold each quarter.