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

Progress Software Corporation

Massachusetts		04-2746201
(State or other jurisdiction of		(I.R.S. employer
incorporation or organization)		identification no.)

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:

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

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

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

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

 

 

Section 2 — Financial Information

Item 2.02 Results of Operations and Financial Condition

On March 23, 2010, Progress Software Corporation issued a press release announcing financial results for its first fiscal quarter ended February 28, 2010. The company also posted a copy of its supplemental prepared remarks with respect to the completed quarter on the Investor Relations section of its website at www.progress.com. A copy of the press release and a copy of the prepared remarks are furnished herewith as Exhibits 99.1 and 99.2, respectively.

This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the company, whether made before or after the date of this report, regardless of any general incorporation language in the filing.

Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits

     (c) Exhibits

99.1		Press Release dated March 23, 2010
99.2		Prepared Remarks

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.

Exhibit 99.1

PRESS ANNOUNCEMENT

John Stewart		Claire Rowberry
Progress Software Corporation		Lewis PR
(781) 280-4101		(617) 226-8841
jstewart@progress.com		progress@lewispr.com

PROGRESS SOFTWARE REPORTS 2010 FIRST QUARTER RESULTS

Progress Launches New Responsive Process Management Suite To Enable
Continuous Business Improvement; Achieves More Than 20% Growth in
Enterprise Business Solutions

BEDFORD, Mass., March 23, 2010—Progress Software Corporation (NASDAQ: PRGS), a leading software provider that enables enterprises to be operationally responsive announced today results for its first quarter ended February 28, 2010. On a generally accepted accounting principles (GAAP) basis, revenue for the quarter was $127.5 million, up 6 percent from $120.9 million in the first quarter of fiscal 2009. On a non-GAAP basis, revenue totaled $128.0 million, up 5 percent from the year ago period. Software license revenue increased 3 percent to $47.1 million from $45.9 million in the same quarter last year.

The GAAP operating results for the first quarter of fiscal 2010 reflect a restructuring charge of $25.8 million taken in connection with the previously announced restructuring of Progress Software’s operations. This restructuring was principally completed during the first quarter. It was undertaken to enhance and re-focus the company’s product strategy, to improve the way the company takes its products to market by becoming more customer and solutions driven, and to increase Progress Software’s market awareness. To accomplish these goals, and with a view toward better optimizing operations and improving productivity and efficiency, the company reduced its global workforce by approximately 13 percent primarily within its sales, development and marketing organizations. This workforce reduction was conducted across all geographies and also resulted in a consolidation of offices in certain locations.

On a GAAP basis, the company incurred an operating loss of $4.4 million as compared to an operating profit of $4.7 million in the first quarter of fiscal 2009. Net income represented a loss of $1.0 million as compared to a profit of $3.7 million in the same quarter last year. As noted above, the loss was the result of the restructuring charge. Diluted earnings per share represented a loss of 2 cents as compared to a profit of 9 cents in the first quarter of fiscal 2009.

On a non-GAAP basis, operating income increased 44 percent to $32.8 million from $22.8 million in the same quarter last year. Non-GAAP net income increased 44 percent to $22.7 million from $15.8 million in the same quarter last year and non-GAAP diluted earnings per share increased 36 percent to 53 cents from 39 cents in the first quarter of fiscal 2009.

Non-GAAP amounts primarily exclude the amortization of acquired intangibles, stock-based compensation, restructuring and acquisition-related costs, purchase accounting adjustments for deferred revenue and certain insurance reimbursements.

The non-GAAP results noted above and the non-GAAP financial outlook for 2010 discussed below represent non-GAAP financial measures. A reconciliation of these measures to the appropriate GAAP measures for the three months ended February 28, 2010 and February 28,

2009, and the 2010 outlook, as well as further information regarding these measures, is included in the condensed financial information provided with this release.

Progress Software’s cash and short-term investments at the end of the first quarter totaled $211 million. Progress Software repurchased approximately 351,000 shares at a cost of $10.0 million in the first quarter of fiscal 2010. The existing re-purchase authorization, under which approximately 646,000 shares remain available for repurchase, expires on September 30, 2010.

Richard D. Reidy, president and chief executive officer of Progress Software, said: “We grew top line non-GAAP revenue by five percent and non-GAAP earnings per share by 36 percent during the quarter while increasing revenue in our Enterprise Business Solutions portfolio by more than 20 percent year over year. In January, we acquired Savvion, a best-in-class Business Process Management (BPM) solution that complements Progress products to enable enterprises to achieve Operational Responsiveness. More recently, the company announced the Progress^® Responsive Process Management (RPM) suite, a next generation business solution that better positions Progress to market and sell solutions to a broader market segment, comprising both its traditional IT target audience and business user segments.”

Quarterly Highlights

	•		Progress Software announced the acquisition of Savvion Inc., a privately held business enterprise software company based in Santa Clara, California, for approximately $49 million. Savvion is a pioneering and leading provider of Business Process Management (BPM) technology with 15 years of market experience. The company offers a comprehensive, standards-based BPM suite that helps more than 300 of the world’s top-performing companies — including 24 of the ‘Fortune 100’ — automate and continuously improve critical business processes. http://tinyurl.com/savvion-acquistion
	•		The company announced the launch of the Progress® Responsive Process Management (RPM) suite, a next generation business solution that enables enterprises to achieve a higher level of business performance than previously possible. The Progress RPM™ suite, which unifies comprehensive visibility, Business Event Processing (BEP) and Business Process Management (BPM) capabilities on a single platform, will be generally available in late April.
	•		Progress Software made two key appointments during the quarter: Dr. John Bates was promoted to the position of Chief Technology Officer (CTO) and senior vice president of Corporate Development, and Rob Levy was hired to fill the newly created executive position of Senior Vice President and Chief Product Officer (CPO). Both executives report to President and CEO, Richard D. Reidy.
	•		The company made two announcements regarding enhancements to the Progress® OpenEdge®SaaS platform. The first release focused on integration with key features from the Progress® Actional® product, a powerful offering providing business transaction assurance that enables companies to achieve operational and business visibility, root cause analysis, and the added control of services required in a heterogeneous environment. The second release focused on advanced User Interface (UI) flexibility simplifying the development and deployment of business applications for numerous users and devices, an increasingly important factor for Cloud Computing. http://tinyurl.com/OpenEdge-SaaS-development
	•		IDC ranked the Progress® OpenEdge® business application development platform as the number one pure-play embedded database management system (DBMS) in the world for the fifth consecutive year. http://tinyurl.com/IDC-ranks-OpenEdge

Additional highlights can be found at: http://web.progress.com/inthenews/pressreleases.html.

Business Outlook

Progress Software is providing the following guidance for the fiscal year ending November 30, 2010:

	•		GAAP revenue is expected to be in the range of $539 million to $549 million.
	•		On a non-GAAP basis, revenue is expected to be in the range of $540 million to $550 million.
	•		GAAP diluted earnings per share are expected to be in the range of $1.05 to $1.17.
	•		On a non-GAAP basis, diluted earnings per share are expected to be in the range of $2.20 to $2.32.

Progress Software is providing the following guidance for the second fiscal quarter ending May 31, 2010:

	•		GAAP revenue is expected to be in the range of $128 million to $132 million.
	•		On non-GAAP basis, revenue is expected to be in the range of $129 million to $133 million.
	•		GAAP diluted earnings per share are expected to be in the range of 30 cents to 33 cents.
	•		On a non-GAAP basis, diluted earnings per share are expected to be in the range of 51 cents to 54 cents.

The outlook for the non-GAAP amounts excludes the amortization of acquired intangibles, stock-based compensation, restructuring and acquisition-related costs, purchase accounting adjustments for deferred revenue and certain insurance reimbursements.

Legal Notice Regarding Non-GAAP Financial Information

Progress Software provides non-GAAP revenue, operating income, net income and earnings per share as additional information for investors. These measures are not in accordance with, or an alternative to, generally accepted accounting principles in the United States (GAAP). Such measures are intended to supplement GAAP and may be different from non-GAAP measures used by other companies. Progress Software believes that the non-GAAP results described in this release are useful for an understanding of its ongoing operations and provide additional detail and an alternative method of assessing its operating results. Management uses these non-GAAP results to compare the company’s performance to that of prior periods for analysis of trends and for budget and planning purposes. A reconciliation of non-GAAP adjustments to the company’s GAAP financial results is included in the tables below.

Conference Call

The Progress Software quarterly investor conference call to review its fiscal first quarter 2010 results and business outlook will be Webcast live at 9:00 a.m. (EDT) on Wednesday, 24 March, 2010 on the company’s Web site, located at www.progress.com/investors.

As previously disclosed, beginning this quarter, in combination with this press release, Progress Software is providing in advance a copy of prepared remarks for its conference call. The press release and the prepared remarks are available on the Progress website (www.progress.com) on the investor relations page. The conference call will include only brief comments followed by questions and answers. The prepared remarks will not be read on the call.

The conference call will be webcast and accessible on the Progress Website at http://www.progress.com/investors. The conference call will also be webcast live via Yahoo (http://www.yahoo.com), Motley Fool (http://www.fool.com), Streetevents (http://www.streetevents.com), TD Waterhouse (http://www.tdwaterhouse.com) and Fidelity.com (http://www.fidelity.com). An archived version of the conference call and supporting materials will be available on the Progress Software Investor Relations Website after the live conference call.

Progress Software Corporation

Progress Software Corporation (NASDAQ: PRGS) is a global software company that enables enterprises to be operationally responsive to changing conditions and customer interactions as they occur — to capitalize on new opportunities, drive greater efficiencies and reduce risk. The company offers a comprehensive portfolio of best-in-class infrastructure software spanning event-driven visibility and real-time response, open integration, data access and integration, and application development and deployment — all supporting on-premises and SaaS/Cloud deployments. Progress maximizes the benefits of operational responsiveness while minimizing IT complexity and total cost of ownership. Progress can be reached at www.progress.com or +1-781-280-4000.

Safe Harbor Statement

Except for the historical information and discussions contained herein, statements contained in this release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, which include statements regarding Progress Software’s business outlook and competitive position, involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including but not limited to the following: the receipt and shipment of new orders; the timely release and market acceptance of new products and/or enhancements to our existing products; the growth rates of certain market segments; the positioning of our products in those market segments; variations in the demand for professional services and technical support; pricing pressures and the competitive environment in the software industry; the continuing weakness in the U.S. and international economies, which could result in fewer sales of our products and may otherwise harm our business; business and consumer use of the Internet; the company’s ability to complete and integrate acquisitions; the company’s ability to realize the expected benefits and anticipated synergies from acquired businesses; the company’s ability to penetrate international markets and manage its international operations; the possibility that our efforts to contain our operating expenses may not have the effects we expect; and changes in exchange rates. The company undertakes no obligation to update information contained in this release. For further information regarding risks and uncertainties associated with the company’s business, please refer to the company’s filings with the Securities and Exchange Commission.

OpenEdge, Progress, Progress RPM are trademarks or registered trademarks of Progress Software Corporation or one of its subsidiaries or affiliates in the U.S. and other countries. Any other trademarks contained herein are the property of their respective owners.

END

Progress Software Corporation
GAAP Condensed Consolidated Statements of Operations

		Three Months Ended
		February 28,				February 28,				Percent
(In thousands except per share data)		2010				2009				Change
Revenue:
Software licenses		$	47,117			$	45,852				3	%
Maintenance and services			80,430				75,008				7	%
Total revenue			127,547				120,860				6	%
Costs of revenue:
Cost of software licenses			1,989				2,317				(14)	%
Cost of maintenance and services			16,914				17,333				(2)	%
Amortization of purchased technology			5,098				4,728				8	%
Total costs of revenue			24,001				24,378				(2)	%
Gross profit			103,546				96,482				7	%
Operating expenses:
Sales and marketing			43,206				44,315				(3)	%
Product development			23,387				24,919				(6)	%
General and administrative			12,782				14,575				(12)	%
Amortization of other acquired intangibles			2,364				2,366				0	%
Acquisition-related expenses			415				110				277	%
Restructuring expense			25,771				5,478				370	%
Total operating expenses			107,925				91,763				18	%
Income (loss) from operations			(4,379	)			4,719				(193)	%
Other income, net			2,756				1,229				124	%
Income (loss) before provision for income taxes			(1,623	)			5,948				(127)	%
Provision for (benefit from) income taxes			(617	)			2,296				(127)	%
Net income (loss)		$	(1,006	)		$	3,652				(128)	%
Earnings (loss) per share:
Basic			($0.02	)		$	0.09				(122)	%
Diluted			($0.02	)		$	0.09				(122)	%
Weighted average shares outstanding:
Basic			41,079				39,941				3	%
Diluted			41,079				40,521				1	%

Progress Software Corporation
Reconciliation of GAAP to Non-GAAP Financial Measures

		Three Months Ended February 28, 2010												Three Months Ended February 28, 2009
		As												As												Percent
(In thousands except per share data)		Reported				Adjustments				Non-GAAP				Reported				Adjustments				Non-GAAP				Change
Total revenue		$	127,547			$	454			$	128,001			$	120,860				1,548			$	122,408				5	%
Purchase accounting adjustments for deferred revenue (1)			(454	)			454								(1,548	)			1,548
Income (loss) from operations		$	(4,379	)		$	37,133			$	32,754			$	4,719			$	18,077			$	22,796				44	%
Purchase accounting adjustments for deferred revenue (1)			(454	)			454								(1,548	)			1,548
Amortization of acquired intangibles			(7,462	)			7,462								(7,094	)			7,094
Acquisition-related expenses			(415	)			415								(110	)			110
Restructuring expense			(25,771	)			25,771								(5,478	)			5,478
Stock option investigation (2)			1,200				(1,200	)							(31	)			31
Stock-based compensation (3)			(4,231	)			4,231								(3,816	)			3,816
Operating margin percentage			-3.4	%							25.6	%			3.9	%							18.6	%			37	%
Other income, net (4)		$	2,756			$	(899	)		$	1,857			$	1,229			$	—			$	1,229				51	%
Provision for (benefit from) income taxes (5)		$	(617	)		$	12,558			$	11,941			$	2,296			$	5,969			$	8,265				44	%
Net income (loss)		$	(1,006	)		$	23,676			$	22,670			$	3,652			$	12,108			$	15,760				44	%
Earnings (loss) per share — diluted			($0.02	)						$	0.53			$	0.09							$	0.39				36	%
Weighted average shares outstanding — diluted (6)			42,684								42,684				40,521								40,521				5	%

		Three Months Ended February 28, 2010												Three Months Ended February 28, 2009
		GAAP				Adjustments				Non-GAAP				GAAP				Adjustments				Non-GAAP
Cost of software licenses		$	9			$	(9	)		$	—			$	12			$	(12	)		$	—
Cost of maintenance and services			254				(254	)			—				237				(237	)			—
Sales and marketing			1,578				(1,578	)			—				1,488				(1,488	)			—
Product development			1,107				(1,107	)			—				944				(944	)			—
General and administrative			1,283				(1,283	)			—				1,135				(1,135	)			—
		$	4,231			$	(4,231	)		$	—			$	3,816			$	(3,816	)		$	—

Progress Software Corporation
Condensed Consolidated Balance Sheets

		February 28,				November 30,
(In thousands)		2010				2009
Assets
Cash and short-term investments		$	210,567			$	224,121
Accounts receivable, net			96,000				98,872
Other current assets			43,205				34,626
Total current assets			349,772				357,619
Property and equipment, net			57,783				59,625
Goodwill and intangible assets, net			344,159				304,887
Other assets			79,134				76,719
Total		$	830,848			$	798,850
Liabilities and shareholders’ equity
Accounts payable and other current liabilities		$	89,689			$	85,681
Short-term deferred revenue			157,739				141,243
Total current liabilities			247,428				226,924
Long-term deferred revenue			3,679				4,511
Other liabilities			12,687				11,963
Shareholders’ equity:
Common stock and additional paid-in capital			268,073				247,265
Retained earnings			298,981				308,187
Total shareholders’ equity			567,054				555,452
Total		$	830,848			$	798,850

Condensed Consolidated Statements of Cash Flows

		Three Months Ended
		February 28,				February 28,
(In thousands)		2010				2009
Cash flows from operations:
Net income (loss)		$	(1,006	)		$	3,652
Depreciation, amortization and other noncash items			15,098				13,529
Other changes in operating assets and liabilities			20,156				(12,790	)
Net cash flows from operations			34,248				4,391
Capital expenditures			(1,502	)			(2,056	)
Redemptions of auction-rate securities			550				5,400
Acquisitions, net of cash acquired			(49,086	)			—
Share issuances (repurchases), net			11,106				(355	)
Other			(8,870	)			(2,060	)
Net change in cash and short-term investments			(13,554	)			5,320
Cash and short-term investments, beginning of period			224,121				118,529
Cash and short-term investments, end of period		$	210,567			$	123,849

Progress Software Corporation
Reconciliation of Forward-Looking Guidance

Diluted Earnings Per Share Range

		Three Months Ended May 31, 2010
GAAP expectation		$	0.30			-		$	0.33
Adjustment to exclude stock-based compensation		$	0.08			-		$	0.09
Adjustment to exclude amortization of acquired intangibles		$	0.11			-		$	0.11
Adjutment to include purchase accounting deferred revenue write-down		$	0.01			-		$	0.01
Non-GAAP expectation		$	0.51			-		$	0.54

		Twelve Months Ended November 30, 2010
GAAP expectation		$	1.05			-		$	1.17
Adjustment to exclude stock-based compensation		$	0.29			-		$	0.30
Adjustment to exclude amortization of acquired intangibles		$	0.45			-		$	0.45
Adjustment to exclude restructuring expenses		$	0.41					$	0.41
Other adjustments			($0.02	)		-			($0.01	)
Non-GAAP expectation		$	2.20			-		$	2.32

Exhibit 99.2

Progress Software Corporation
First Quarter Fiscal 2010
Earnings Conference Call — Prepared Remarks

This quarter we have adopted a new approach to releasing our financial information. Progress Software is providing a copy of prepared remarks in connection with its press release. This process and these remarks are offered to provide shareholders and financial analysts with additional time and detail for analyzing our results in advance of our quarterly earnings conference call. As previously announced, the conference call will be held Wednesday, March 24, 2010 at 9:00 am EDT and will include only brief comments followed by questions and answers. These prepared remarks will not be read on the call.

With respect to any non-GAAP financial measures contained in these prepared remarks or included within our earnings release, we have provided below a table of the most directly comparable GAAP financial measure and a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure. You can access this information, which is also included in our earnings release, at www.progress.com.

The matters presented herein and to be discussed on the ensuing conference call, other than historical financial information, consist of forward-looking statements that involve certain risks and uncertainties. Statements indicating that we “expect,” “estimate,” “believe,” “are planning” or “plan to” are forward-looking, as are other statements concerning future financial results, product offerings or other events that have not yet occurred. There are several important risk factors which could cause actual results or events to differ materially from those anticipated by the forward-looking statements contained in our discussion today. Information on these risk factors is included in our Securities and Exchange Commission reports. We reserve the right to change our budget, product focus, product release dates, plans and financial projections from time to time as circumstances warrant. We have no obligation to update or modify the information contained in our discussion in the future when such changes occur.

To access the live broadcast, please visit the Progress website at www.progress.com/investors. The call will also be webcast live via Yahoo (www.yahoo.com), Motley Fool (www.fool.com), Streetevents (www.streetevents.com), TD Waterhouse (www.tdwaterhouse.com) and Fidelity.com (www.fidelity.com). An archived version of the conference call and supporting materials will be available on the Progress Software Investor Relations website after the live conference call.

Overall Results

On a GAAP basis, we reported the following:

	•		Revenue for the quarter increased 6% to $127.5 million from $120.9 million in the first quarter of fiscal 2009.
	•		Operating income for the quarter was a loss of $4.4 million as compared to a profit of $4.7 million in first quarter of fiscal 2009.
	•		Net income was a loss of $1.0 million as compared to a profit of $3.7 million in first quarter of fiscal 2009.
	•		And diluted earnings per share were a loss of 2 cents as compared to a profit of 9 cents in first quarter of fiscal 2009.

The GAAP results for the first quarter of fiscal 2010 reflect a restructuring charge of $25.8 million taken in connection with the previously announced restructuring of our operations. This restructuring, which was principally completed during the first quarter, was undertaken to enhance and re-focus the company’s product strategy, improve the way the company takes its products to market by becoming more customer and solutions driven and increase our market awareness. To accomplish these goals, and with a view toward better optimizing operations and improving productivity and efficiency, the company reduced its global workforce by approximately 13 percent primarily within its sales, development and marketing organizations. This reduction was across all geographies resulting in a consolidation of offices in certain locations.

On a non-GAAP basis, we reported the following:

•

Non-GAAP revenue increased 5% to $128.0 million from $122.4 million in first quarter of fiscal 2009.

	•		Non-GAAP operating income increased 44% to $32.8 million from $22.8 million in first quarter of fiscal 2009.
	•		Non-GAAP net income increased 44% to $22.7 million from $15.8 million in first quarter of fiscal 2009.
	•		And non-GAAP diluted earnings per share increased 36% to 53 cents from 39 cents in first quarter of fiscal 2009.

The non-GAAP results in the first quarter of fiscal 2010 exclude pre-tax charges of $26.2 million for restructuring and acquisition-related expenses, $4.2 million for stock-based compensation, $7.5 million for amortization of acquired intangibles, $0.5 million for purchase accounting adjustments for deferred revenue and a credit of $2.1 million for certain insurance reimbursements.

The non-GAAP results in the first quarter of fiscal 2009 exclude pre-tax charges of $5.6 million for restructuring and acquisition-related expenses, $3.8 million for stock-based compensation, $7.1 million for amortization of acquired intangibles and $1.5 million for purchase accounting adjustments for deferred revenue.

The following operational analyses are presented utilizing our non-GAAP financial information.

Revenue

In reviewing the results for the fiscal 2010 first quarter, within the year-over-year total revenue increase of 5%, software license revenue increased 3%, maintenance revenue increased 5% and professional services revenue increased 7%. The trend over the past several quarters was as follows:

(in millions)

		Q1				Q2				Q3				Q4				FY				Q1
		2009				2009				2009				2009				2009				2010
Licenses		$	45.9			$	38.5			$	39.2			$	52.0			$	175.6			$	47.1
Year-over-year growth			2	%			(14	)%			(15	)%			(7	)%			(9	)%			3	%
Maintenance		$	67.1			$	69.2			$	71.2			$	74.3			$	281.8			$	70.9
Year-over-year growth			3	%			0	%			4	%			3	%			2	%			5	%
Professional services		$	9.4			$	10.1			$	9.3			$	10.6			$	39.4			$	10.0
Year-over-year growth			(18	)%			(27	)%			(22	)%			(22	)%			(22	)%			7	%
Total		$	122.4			$	117.8			$	119.7			$	136.9			$	496.8			$	128.0
Year-over-year growth			1	%			(8	)%			(5	)%			(4	)%			(4	)%			5	%

With regard to the impact of changes in foreign exchange rates on the first quarter, total revenue in the first quarter of fiscal 2010 would have decreased 1% on a constant currency basis versus the 5% increase reported. Software license revenue would have decreased 3% on a constant currency basis versus the 3% increase reported. Maintenance revenue would have decreased by 1% on a constant currency basis versus the 5% increase reported. Professional services revenue would have increased by 1% on a constant currency basis versus the 7% increase reported.

Revenue by geographic region was as follows:

(in millions)

		Q1				Q2				Q3				Q4				FY				Q1
		2009				2009				2009				2009				2009				2010
North America		$	55.0			$	55.2			$	54.9			$	58.7			$	223.8			$	58.2
Year-over-year growth			9	%			7	%			6	%			(11	)%			2	%			6	%
EMEA		$	53.2			$	48.1			$	48.4			$	58.3			$	208.0			$	52.3
Year-over-year growth			(7	)%			(19	)%			(16	)%			(2	)%			(11	)%			(2	)%
Latin America		$	6.5			$	6.9			$	8.7			$	11.8			$	33.9			$	9.8
Year-over-year growth			(4	)%			(20	)%			(1	)%			36	%			3	%			51	%
Asia Pacific		$	7.7			$	7.6			$	7.7			$	8.1			$	31.1			$	7.7
Year-over-year growth			5	%			(11	)%			(6	)%			1	%			(3	)%			0	%
Total		$	122.4			$	117.8			$	119.7			$	136.9			$	496.8			$	128.0
Year-over-year growth			1	%			(8	)%			(5	)%			(4	)%			(4	)%			5	%

International business was 55% of the quarterly total in the first quarter of fiscal 2010 which was the same as in the first quarter of fiscal 2009.

Revenue by product line was as follows:

(in millions)

		Q1				Q2				Q3				Q4				FY				Q1
		2009				2009				2009				2009				2009				2010
Application Development Platforms		$	81.2			$	77.8			$	79.8			$	89.8			$	328.6			$	81.9
Year-over-year growth			(5	)%			(14	)%			(6	)%			(4	)%			(7	)%			1	%
Enterprise Business Solutions		$	21.4			$	17.9			$	19.8			$	26.0			$	85.1			$	27.7
Year-over-year growth			36	%			3	%			7	%			14	%			14	%			29	%
Enterprise Data Solutions		$	19.8			$	22.1			$	20.1			$	21.1			$	83.1			$	18.4
Year-over-year growth			(1	)%			8	%			(14	)%			(18	)%			(7	)%			(7	)%
Total		$	122.4			$	117.8			$	119.7			$	136.9			$	496.8			$	128.0
Year-over-year growth			1	%			(8	)%			(5	)%			(4	)%			(4	)%			5	%

We completed the acquisition of Savvion in January. The incremental revenue in the first quarter of fiscal 2010 associated with the Savvion product line was approximately $2 million. These amounts are included within Enterprise Business Solutions.

Revenue from channel partners, including Application Partners and OEMs, accounted for 48% of our total license business this quarter as compared to 46% in first quarter of fiscal 2009. Within the OpenEdge product line, partners accounted for 66% of our license business this quarter as compared to 74% in first quarter of fiscal 2009. The trend over the past several quarters was as follows:

		Q1				Q2				Q3				Q4				FY				Q1
		2009				2009				2009				2009				2009				2010
Overall:
Direct			54	%			46	%			46	%			54	%			50	%			52	%
Channel			46	%			54	%			54	%			46	%			50	%			48	%
OpenEdge Product Line:
Direct			26	%			22	%			27	%			35	%			28	%			34	%
Application Partners			74	%			78	%			73	%			65	%			72	%			66	%

Backlog

Our aggregate revenue backlog at the end of the first quarter of fiscal 2010 was approximately $188 million, of which $161 million was included on our balance sheet as deferred revenue, primarily related to unexpired maintenance and support contracts. The remaining amount of backlog of approximately $27 million was composed of multi-year licensing arrangements of approximately $21 million and open software license orders received but not shipped of approximately $6 million.

For comparison purposes, our aggregate revenue backlog at the end of the first quarter of fiscal 2009 was approximately $179 million of which $159 million was included on our balance sheet as deferred revenue, primarily related to unexpired maintenance and support contracts. The remaining amount of backlog of approximately $20 million was composed of multi-year licensing arrangements of approximately $20 million and open software license orders received but not shipped of less than $1 million.

We do not believe that backlog as of any particular date is indicative of future results. In addition, there is no industry standard for the definition of backlog and there may be an element of estimation in determining the amount. As such, direct comparisons with other companies may be difficult or potentially misleading.

Other Operating and Balance Sheet Information

Our non-GAAP operating margin was 26%, up from 19% in the first quarter of fiscal 2009. The improvement in our operating margin is a result of improving business conditions and the impact of the restructuring described above.

Other income for the first quarter of fiscal 2010 was above our guidance due to an increase in value of approximately $1.9 million (3 cents) relating to our foreign currency average rate option contracts, which we use to economically hedge the annual expected international cash flows that we will receive. These contracts do not qualify for hedge accounting and are marked-to-market each reporting period. The contracts cover our expected international cash flows for the whole fiscal year and expire in November 2010.

Quarter-end headcount of 1,806 was down approximately 3% from one year ago, reflecting the impact of the restructuring, partially offset by the addition of employees via the acquisition of Savvion.

Our cash balance was approximately $211 million at the end of the quarter as compared to $224 million at the end of the year and $124 million one year ago. In addition, we had approximately $40 million in auction rate securities, included in other assets, at the end of the quarter. Our DSO was 68 days at the end of the first

quarter, down 4 days from one year ago and up 3 days from last quarter-end.

During the first quarter of fiscal 2010, we repurchased approximately 351,000 shares of our common stock at a cost of $10.0 million. At the end of the first quarter, there were approximately 646,000 shares available for repurchase under our Board authorized share repurchase program that expires on September 30, 2010.

Business Outlook

In looking to fiscal 2010 and the second quarter, we are providing the following guidance:

	•		For fiscal 2010, we expect GAAP revenue to be between $539 million and $549 million. On a non-GAAP basis, we expect revenue to be between $540 million and $550 million. Software license revenue is expected to be between $195 million and $205 million.
	•		We expect revenue from Application Development Platforms to be between $315 million and $325 million, representing a year-over-year decline of approximately 1% to 4%.
	•		We expect revenue from Enterprise Data Solutions to be between $91 million and $101 million, representing a year-over-year increase of approximately 10% to 20%.
	•		We expect revenue from Enterprise Business Solutions to be between $114 million and $124 million, representing a year-over-year increase of approximately 30% to 45%, including revenue from products acquired in the recently completed Savvion acquisition.
	•		We expect GAAP operating income to be between $71 million and $80 million.
	•		We expect non-GAAP operating income to be between $141 million and $150 million.
	•		We estimate that non-operating income will be between zero and $1 million for each remaining quarter of fiscal 2010, although this may vary depending on interest rates, potential stock repurchases, fluctuations in foreign exchange rates and our cash balances.
	•		We expect our effective tax rate to be between 37% and 38% for GAAP purposes and between 34% and 35% for non-GAAP purposes. The difference in the effective tax rate between GAAP and non-GAAP primarily relates to the tax treatment of stock-based compensation and amortization of acquired intangibles. The increase in the effective tax rate from fiscal 2009 relates to the expiration of the research and development credit in December 2009.
	•		Estimating future weighted average share counts for earnings per share depends on future option activity, future share repurchases, share prices and other factors. For now, we think using a share count of between 43 million and 44 million for each of the remaining quarters for fiscal 2010 for diluted earnings per share seems reasonable.
	•		We expect diluted earnings per share, on a GAAP basis, to be between $1.05 and $1.17. On a non-GAAP basis, which excludes total charges of approximately $1.15, we expect non-GAAP diluted earnings per share to be between $2.20 and $2.32.
	•		For the second quarter of fiscal 2010, we expect GAAP revenue to be between $128 million and $132 million. We expect non-GAAP revenue to be between $129 million and $133 million. We expect software license revenue between $45 million and $47 million. We expect diluted earnings

per share, on a GAAP basis, to be between 30 cents and 33 cents. On a non-GAAP basis, which excludes total charges of approximately 21 cents, we expect non-GAAP diluted earnings per share to be between 51 cents and 54 cents.

Our non-GAAP results primarily exclude stock-based compensation, amortization of acquired intangibles, purchase accounting adjustments for deferred revenue, restructuring charges, acquisition-related expenses and certain insurance reimbursements. A reconciliation between our GAAP and non-GAAP expectations is included in our press release.

This guidance assumes no further economic shocks, a stabilization of revenue from our application partner channel, improvement in our ability to generate new business in end user accounts and no further strengthening of the US dollar against currencies from which we derive a significant portion of our business.

We plan on releasing financial results and prepared remarks relating to our second quarter on Tuesday, June 22^nd after the market closes, and holding the usual conference call the next morning on Wednesday, June 23^rdat 9 a.m.

Reconciliation of Non-GAAP Financial Measures to GAAP Results

The following table reconciles our non-GAAP financial measures to the most directly comparable GAAP financial statement item:

(in millions)

		Q1				Q2				Q3				Q4				FY				Q1
		2009				2009				2009				2009				2009				2010
GAAP Revenue		$	120.8			$	117.1			$	119.4			$	136.8			$	494.1			$	127.5
Non-GAAP adjustments:
Purchase accounting adjustments for deferred revenue			1.6				0.7				0.3				0.1				2.7				0.5
Non-GAAP revenue		$	122.4			$	117.8			$	119.7			$	136.9			$	496.8			$	128.0
GAAP income (loss) from operations		$	4.7			$	11.5			$	9.1			$	25.8			$	51.1			$	(4.4	)
Non-GAAP adjustments:
Stock-based compensation expense			3.8				4.3				8.8				4.6				21.5				4.2
Amortization of purchased intangibles			7.1				7.5				7.1				6.8				28.5				7.5
Purchase accounting adjustment for deferred revenue			1.6				0.7				0.3				0.1				2.7				0.5
Stock option investigation-related expenses			0.0				0.2				(0.3	)			(0.0	)			(0.1	)			(1.2	)
Restructuring and acquisition-related expenses			5.6				0.1				(0.1	)			0.1				5.7				26.2
Non-GAAP income from operations		$	22.8			$	24.3			$	24.9			$	37.4			$	109.4			$	32.8
GAAP net income (loss)		$	3.7			$	6.9			$	5.5			$	16.7			$	32.8			$	(1.0	)
Non-GAAP adjustments:
Non-GAAP income from operations adjustments per detail above			18.1				12.8				15.8				11.6				58.3				37.2
Non-operating income adjustments			—				—				—				—				—				(0.9	)
Tax-effect of non-GAAP adjustments			(6.0	)			(3.6	)			(4.8	)			(2.7	)			(17.1	)			(12.6	)
Non-GAAP net income		$	15.8			$	16.1			$	16.5			$	25.6			$	73.9			$	22.7