10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended November 30, 2005

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                  to                                 

Commission File Number: 000-26579

TIBCO SOFTWARE INC.

(Exact name of registrant as specified in its charter)

Delaware	77-0449727
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3303 Hillview Avenue, Palo Alto, CA 94304

(Address of principal executive offices) (Zip Code)

(650) 846-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value per share

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x                        Accelerated filer  ¨                    Non-accelerated filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The aggregate market value of the voting stock held by non-affiliates of the registrant (based upon the closing sale price of such shares on the Nasdaq National Market on May 29, 2005) was approximately $1,078,725,456. Shares of common stock held by each executive officer and director and by each entity that owns 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of February 1, 2006, there were 211,136,985 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement for the 2006 Annual Meeting of Stockholders to be held on April 6, 2006 are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent stated herein.

TIBCO SOFTWARE INC. FORM 10-K

For the Fiscal Year Ended November 30, 2005

TABLE OF CONTENTS

		Page
PART I
ITEM 1.	BUSINESS	3
ITEM 1A.	RISK FACTORS	8
ITEM 2.	PROPERTIES	17
ITEM 3.	LEGAL PROCEEDINGS	17
PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	18
ITEM 6.	SELECTED FINANCIAL DATA	20
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	41
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	41
ITEM 9A.	CONTROLS AND PROCEDURES	42
PART III
ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT	43
ITEM 11.	EXECUTIVE COMPENSATION	44
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	44
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	45
ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	45
PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	45
	SIGNATURES	II-1

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Forward Looking Statements

This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements relate to expectations concerning matters that are not historical facts. Words such as “projects,” “believes,” “anticipates,” “plans,” “expects,” “intends” and similar words and expressions are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements related to our expected business, results of operations, future financial position, our ability to increase our revenues, the mix of our revenues between license, service and maintenance revenues, our financing plans and capital requirements, our costs of revenue, our expenses, our potential tax benefit or liabilities, the effect of recent accounting pronouncements, our investments, debt service and principal repayment obligations, cash flows and our ability to finance operations from cash flows and similar matters and include statements based on current expectations, estimates, forecasts and projections about the economies and markets in which we operate and our beliefs and assumptions regarding these economies and markets.

These forward-looking statements are based on current expectations and involve known and unknown risks and uncertainties that may cause our actual results, operating performance or achievements to be materially different from those expressed or implied by the forward-looking statements. We believe that the expectations reflected in the forward-looking statements are reasonable but we cannot assure you that those expectations will prove to be correct. Factors that could cause or contribute to such differences include but are not limited to our ability to address new markets and complex technologies by delivering successful, new products on a timely basis, the impact of competitive products and pricing, the success of our strategic relationships, charges for restructuring and option expenses and other costs and other risk factors detailed in this Annual Report on Form 10-K for the fiscal year ended November 30, 2005 and other periodic filings with the Securities and Exchange Commission. All forward-looking statements are expressly qualified in their entirety by these factors and all related cautionary statements. We do not undertake any obligation to update any forward-looking statements.

Trademarks

TIBCO, TIBCO Software, the Information Bus and TIBCO BusinessFactor are the trademarks or registered trademarks of TIBCO Software Inc. in the United States and other countries. This report also refers to the trademarks of other companies.

PART I

ITEM 1. BUSINESS

Overview

Our suite of business integration, process management and business optimization software solutions makes us a leading enabler of real-time business. We use the term “real-time business” to mean doing business in such a way that organizations can use current information to execute their critical business processes and make smarter decisions. We provide software that enables interoperability between applications and information sources, coordinates processes that span systems and people, and helps companies sense and respond to events and opportunities more quickly and with more certainty and control.

Our software can make corporate assets such as applications and databases more effective and valuable by tying them together with a common framework and coordinating the interactions between them. Our products can lower IT costs by enabling companies to more quickly and easily create, manage and modify these interactions and can make companies more efficient by automating routine processes to allow their employees to focus their efforts on managing exceptional problems and opportunities. Our products can also give managers and executives the information they need to identify and understand both the strengths and weaknesses of their business and external factors that shape their business, along with the ability to quickly reallocate their assets or adapt their operations to fix a problem or capitalize on an opportunity.

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Our products are currently licensed by companies worldwide in diverse industries such as financial services, telecommunications, retail, healthcare, manufacturing, energy, transportation, logistics, government and insurance. We sell our products through a direct sales force and through alliances with leading software vendors and systems integrators.

To meet our goal of becoming the world’s leading provider of business integration and process management software, we are providing our customers with a comprehensive suite of products and services, promoting the widespread adoption of our technology, leveraging our vertical market expertise and pursuing strategic acquisitions to expand and strengthen our offerings. We believe we are the market leader among independent integration software companies. See “—Competition.”

We are the successor to a portion of the business of Teknekron Software Systems, Inc. (“Teknekron”). Teknekron was founded in 1985 and was acquired by Reuters Group PLC (“Reuters”), a global information company, in 1994. In November 1996, we were incorporated in Delaware and in January 1997, we were established as an entity separate from Teknekron.

TIBCO Products

We offer a wide range of products that can be sold individually to solve specific technical challenges, but the emphasis of our product development and sales efforts is to create products that interoperate seamlessly and that can be sold together as a suite to enable businesses to be more cost-effective, agile and efficient. These products can help organizations achieve success in three areas: Service-Oriented Architecture (“SOA”), Business Process Management (“BPM”) and Business Optimization.

• SOA: Our software enables organizations to migrate their IT infrastructure to SOA by turning information and functions into discrete and reusable components that can be invoked from across the business and aggregated with other such services to create “composite applications.” This helps companies streamline the integration and orchestration of assets across technological, organizational, and geographical boundaries. Our products give companies the flexibility to do these things using the standards or technologies that best meet their needs in specific situations (such as HTTP, e-mail, J2EE, EDI, Messaging, .Net or Web Services) without replacing existing technologies or committing to any one technology across their enterprise. Our SOA offerings encompass our traditional messaging and integration products.

• BPM: Our software enables the automation and coordination of the assets and tasks that make up business processes. This software can coordinate the human and electronic resources inside a business and their network of customers and partners. Our products not only automate routine tasks and exception handling, but orchestrate long-lived activities and transactions that cut across organizational and geographical boundaries. Our software enables organizations to provide a higher level of customer satisfaction, retain customers, maximize partnerships with other businesses, and out-execute their competitors.

• Business Optimization: Our software automatically routes information to appropriate recipients, lets users access up-to-date information whenever they need it, and provides users with the ability to analyze and act on information. This helps line-level employees perform their jobs, helps managers identify and analyze problems and opportunities, and gives customers the ability to get accurate and consistent information directly or through salespeople, service personnel or customer care representatives.

Services

Professional Services

Our professional services offerings include a wide range of consulting services such as systems planning and design, installation and systems integration for the rapid deployment of TIBCO products. We offer our professional services with the initial deployment of our products as well as on an ongoing basis to address the

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continuing needs of our customers. Our professional services staff is located throughout the Americas, Europe, Africa and the Pacific Rim, enabling us to perform installations and respond to customer demands rapidly across our global customer base. Many of our professional services employees have advanced degrees, substantial TIBCO experience and industry expertise in systems architecture and design and also have domain expertise in financial services, telecommunications, manufacturing, energy, logistics, healthcare and other industries.

We also have relationships with resellers, professional service organizations and system integrators including Accenture, Cap Gemini, Deloitte Consulting, Atos Origin and BearingPoint, to participate in the deployment of our products to customers. These relationships help promote TIBCO products and provide additional technical expertise to enable us to provide the full range of professional services our customers require to deploy our products.

Maintenance and Support

We offer a suite of software support and maintenance options that are designed to meet the needs of our diverse customer base. These support options include twenty-four hour coverage that is available seven days a week, 365 days a year, to meet the needs of our global customers. To accomplish this level of support we have established a worldwide support organization with major support centers in Palo Alto, California; London and Swindon, England; and Woy Woy, Australia. These centers, working in conjunction with several smaller support offices located throughout the United States and India, as well as additional support offices in Europe, the Pacific Rim and the Americas, provide seamless support using a “follow-the-sun” support model.

In addition to support teams around the globe, we have a Customer Support Website that provides our customers with the ability to submit service requests, receive confirmation that a service request has been opened and to obtain current status on these requests. Additionally, the Customer Support Website provides access to our support procedures, escalation numbers and late breaking news (“LBN”). LBN is used to provide updates and new information about our products. It also provides customers with information on generally known problems and suggested solutions or workarounds that may be available.

We use TIBCO BusinessFactor^™ in conjunction with our Customer Relationship Management (“CRM”) system to provide real-time monitoring of service requests. Through the use of our CRM system, we are able to track high severity problems and latency, allowing us to enhance our responsiveness.

Training

We provide a comprehensive and global training program for customers and partners. Training is available at our main office in Palo Alto, California and at major training centers in Houston, Texas; Munich, Germany; and Tokyo, Japan. We also deliver training on-site at customer locations. We provide specialized training for our professional services partners to enhance their effectiveness in integrating our products. Our Educational Services group has the capability to develop solutions to address the specific needs of individual customers and partners. Our curriculum leads to an industry recognized technical certification in high visibility TIBCO technologies.

Sales and Marketing

Sales

We currently market our software and services primarily through a direct sales organization complemented by indirect sales channels. Our direct sales force is located across the U.S. and throughout the Americas, Europe, Africa and the Pacific Rim and operates globally through our foreign subsidiaries. We have established distribution and licensing relationships with several strategic hardware vendors, database providers, software and toolset developers and systems integrators. We have also developed alliances with key solution providers to target vertical industry sectors, including energy, telecommunications and manufacturing.

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Pursuant to the terms of our license, maintenance and distribution agreement with Reuters, we are permitted to market and sell our products, other than risk management and market data distribution products, directly and through third party resellers (other than a few specified resellers) to customers in the financial services market. Reuters may continue to internally use and to embed our products in its solutions. The limitations on our ability to sell risk management and market data distribution products and on reselling through the specified resellers will expire in May 2008. The distribution relationship with Reuters accounted for 5%, 7% and 12% of our total revenue in each of fiscal years 2005, 2004 and 2003 respectively.

Our revenue consists primarily of license, service and maintenance fees from our customers and distributors which were primarily attributable to sales of our software. License fees represented approximately 46%, 55% and 53% of our total revenue in 2005, 2004 and 2003, respectively. Revenue from services and maintenance represented approximately 54%, 45% and 47% of our total revenues in 2005, 2004 and 2003, respectively.

Sales to customers outside the United States totaled $219.9 million, representing 49% of our total revenue for the year ended November 30, 2005. For a geographic breakdown of our revenue and long-lived assets, see Note 13 to our Consolidated Financial Statements included in this report.

Marketing

We use a mix of market research, analyst updates, seminars, direct mail, print advertising, trade shows, speaking engagements, public relations, customer newsletters and web marketing in order to achieve our marketing goals. Our marketing department also produces collateral material for distribution to potential customers including presentation materials, white papers, brochures and fact sheets. We also host annual user conferences for our customers and provide support to our channel partners with a variety of programs, training and product marketing support materials.

Product Development

Reuters granted us a perpetual, royalty-free license to the Information Bus^™ (“TIB”) messaging technology as it existed on December 31, 1996. We have concentrated our product development efforts since then on further developing messaging technology and on developing new products. We expect that most of our enhancements to existing products and new products will be developed internally. However, we will evaluate on an ongoing basis the acquisition of externally developed technologies for integration into our product lines.

We expect that a majority of our research and development activities will focus on enhancing and extending our TIBCO products. In fiscal year 2005, we continued our development focus on creating products that interoperate seamlessly. We expect that we will continue to commit significant resources to product development in the future. Product development costs are recorded as research and development expenses. Our research and development expenses, including stock-based compensation, were $73.1 million, $61.1 million and $64.6 million in 2005, 2004 and 2003, respectively. To date, all product development costs have been expensed as incurred since the time period between the achievement of technical feasibility for a product and the general availability of such product has typically been very short.

Competition

The market for our products and services is extremely competitive, continually evolving and subject to rapid change. While we offer a comprehensive suite of integration solutions and believe we are the market leader among independent integration software companies, we compete with various providers of integration products including BEA, IBM, Microsoft, SAP and webMethods. We believe that none of these companies has a suite of integration products as complete as ours, but BEA, IBM, Microsoft, Oracle and SAP offer products outside our segment and routinely bundle their broader set of products. We expect additional competition from other established and emerging companies. In addition, we may face pricing pressures from our current competitors

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and new market entrants in the future. We believe that the competitive factors affecting the market for our products and services include product functionality and features, quality of professional services offerings, performance and price, ease of product implementation, quality of customer support services, customer training and documentation, and vendor and product reputation. The relative importance of each of these factors depends upon the specific customer environment. We believe that our products and services currently compete favorably with respect to such factors. However, we may not be able to maintain our competitive position against current and potential competitors.

Some of our current competitors have, and some of our potential competitors may have, longer operating histories, significantly greater financial, technical, product development and marketing resources, greater name recognition and larger customer bases than we do. Our present or future competitors may be able to develop products comparable or superior to those we offer; adapt more quickly than we do to new technologies, evolving industry trends or customer requirements; or devote greater resources to the development, promotion and sale of their products than we do. Accordingly, we may not be able to compete effectively in our markets, or competition may intensify and harm our business and operating results. If we are not successful in developing new products and enhancements to our existing products or achieving customer acceptance, our gross margins may decline, and our business and operating results may suffer.

Our license agreement with Reuters does not prohibit Reuters from providing enterprise infrastructure software products and services in competition with us. In addition, under this license agreement, we have the right to market and sell our products, other than risk management and market data distribution products, directly and through third party resellers (other than a few specified resellers) to customers in the financial services market. The limitations on our ability to sell risk management and market data distribution products to financial services customers and to resell through the specified resellers will expire in May 2008. Although Reuters currently does not create TIB-based products designed for general use in all markets, if Reuters were to decide to begin providing information integration products and services in our markets, we would face additional competition for customers in these markets.

Proprietary Technology

Our success is dependent upon our proprietary software technology. We license the patents relating to some of the technology underlying some of our software from Reuters on a royalty-free basis. We have several pending patent applications and five issued patents, although we rely principally on trade secret, copyright and trademark laws, and nondisclosure and other contractual agreements to protect our technology. We also believe that factors such as the technological and creative skills of our personnel, product enhancements and new product developments are essential to establishing and maintaining a technology leadership position. We enter into confidentiality and/or license agreements with our employees, distributors and customers, and limit access to and distribution of our software, documentation and other proprietary information. Nevertheless, the steps we have taken may fail to prevent misappropriation of our technology, and the protections we have may not prevent our competitors from developing products with functionality or features similar to our products.

Furthermore, third parties might independently develop competing technologies that are substantially equivalent or superior to our technologies. In addition, effective patent, copyright and trade secret protection may be unavailable or limited in certain foreign countries where we operate. If we fail to protect our proprietary technology, our business could be seriously harmed.

Although we do not believe our products infringe the proprietary rights of any third parties, third parties may nevertheless assert infringement claims against our customers or us in the future. Furthermore, we may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. Litigation, whether resolved in our favor or not, would cause us to incur substantial costs and divert our management resources from productive tasks, which would harm our business. Parties making claims against us could secure substantial damages, as well as injunctive or other equitable relief,

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which could effectively block our ability to sell our products in the United States or abroad. Such a judgment could seriously harm our business. If it appears necessary or desirable, we may seek licenses to intellectual property if we believe that our technology potentially infringes on such intellectual property. We may not, however, be able to obtain such licenses on commercially reasonable terms or at all, and the terms of any offered licenses might not be acceptable to us. The failure to obtain necessary licenses or other rights could seriously harm our business.

Employees

As of November 30, 2005, we employed 1,505 persons, including 437 in sales and marketing, 422 in research and development, 191 in finance and administration and 455 in professional services and technical support. Of our 1,505 employees, 380 were located in Europe and Africa, 245 in the Pacific Rim and 880 in the Americas. Our success is highly dependent on our ability to attract and retain qualified employees. Competition for employees is intense in the software industry. To date, we believe we have been successful in our efforts to recruit qualified employees, but there is no assurance that we will continue to be as successful in the future.

Available Information

We are subject to the informational requirements of the Securities Exchange Act of 1934. Therefore, we file periodic reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). Such reports, proxy statements and other information may be obtained by visiting the Public Reference Room of the SEC at 450 Fifth Street, NW, Washington, DC 20549 or by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy statements and other information required that issuers file electronically.

Our principal internet address is www.tibco.com. We make available free of charge on www.tibco.com our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Information contained or referenced on our website is not incorporated by reference in and does not form a part of this Annual Report on Form 10-K.

ITEM 1A.     RISK FACTORS

The following risk factors could materially and adversely affect our future operating results and could cause actual events to differ materially from those predicted in the forward-looking statements we make about our business.

Our future revenue is unpredictable and we expect our quarterly operating results to fluctuate, which may cause our stock price to decline.

Period-to-period comparisons of our operating results may not be a good indication of our future performance. Moreover, our operating results in some quarters have not in the past, and may not in the future, meet the expectations of stock market analysts and investors. This has in the past and may in the future cause our stock price to decline. As a result of the evolving nature of the markets in which we compete and the size of our customer agreements, we have difficulty accurately forecasting our revenue in any given period. In addition to the factors discussed elsewhere in this section, a number of factors may cause our revenue to fall short of our expectations, or those of stock market analysts and investors, or cause fluctuations in our operating results, including:

• the announcement or introduction of new or enhanced products or services by our competitors;

• the relatively long sales cycles for many of our products;

• the tendency of some of our customers to wait until the end of a fiscal quarter or our fiscal year in the hope of obtaining more favorable terms;

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• the timing of our new products or product enhancements or any delays in such introductions;

• the delay or deferral of customer implementations of our products;

• changes in customer budgets and decision making processes that could affect both the timing and size of any transaction;

• our dependence on large deals, which if not closed, can greatly impact revenues for a particular quarter;

• the impact of our provision of services on our recognition of license revenue;

• any difficulty we encounter in integrating acquired businesses, products or technologies;

• the amount and timing of operating costs and capital expenditures relating to the expansion of our operations;

• the impact of employee stock-based compensation expenses on our earnings per share; and

• changes in local, national and international regulatory requirements.

In addition, while we may in future years record positive net income and/or increases in net income over prior periods, we may not show period-over-period earnings per share growth or earnings per share growth that meets the expectations of stock market analysts or investors, as a result of the number of our shares outstanding during such periods. In such case, our stock price may decline.

Our stock price may be volatile, which could cause investors to lose all or part of their investments in our stock or negatively impact the effectiveness of our equity incentive plans.

The stock market in general and the stock prices of technology companies in particular, have experienced volatility which has often been unrelated to the operating performance of any particular company or companies. During fiscal year 2005, for example, our stock price fluctuated between a high of $13.50 and a low of $5.60. If market or industry-based fluctuations continue, our stock price could decline in the future regardless of our actual operating performance and investors could lose all or part of their investments.

Increases in services revenues as a percentage of total revenues may decrease overall margins.

We have in the past realized and may continue in the future realize a higher percentage of revenues from services and maintenance. For example, for the fiscal year ended November 30, 2005 a substantial increase in our service and maintenance revenue and a decrease in our license revenue meant approximately 54% of our total revenue for the year was derived from service and maintenance revenue. We realize lower profit margins on our services and maintenance revenues than on our software license revenues. In addition, we may contract with certain third parties to supplement the services we provide to customers, which generally yields lower margins than our internal services business. As a result, if services and maintenance revenues continue to increase as a percentage of total revenues or if we increase our use of third parties to provide services, our profit margins may decrease which could impact our stock price.

We must overcome significant competition in order to succeed.

The market for our products and services is extremely competitive and subject to rapid change. We compete with various providers of enterprise application integration solutions, including webMethods. We also compete with various providers of web services such as Microsoft, BEA, SAP and IBM. We believe that of these companies, IBM has the potential to offer the most complete competitive set of products for enterprise application integration. As a result of our acquisition of Staffware, we now also compete with various providers of BPM solutions. In addition, some of our competitors are expanding their competitive product offerings and market position through acquisitions. For example, Sun Microsystems acquired SeeBeyond in August 2005, potentially making Sun Microsystems a direct competitor of ours as well. We expect additional competition from

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other established and emerging companies. We also face competition for certain aspects of our product and service offerings from major systems integrators. Further, we may face increasing competition from open source software initiatives, in which competitors provide software and intellectual property without charging license fees. If customers choose such open source products over our proprietary software, our revenues and earnings could be adversely affected.

Many of our current and potential competitors have longer operating histories; significantly greater financial, technical, product development and marketing resources; greater name recognition and larger customer bases than we do. Our present or future competitors may be able to develop products comparable or superior to those we offer; adapt more quickly than we do to new technologies, evolving industry trends or customer requirements; or devote greater resources to the development, promotion and sale of their products than we do. Accordingly, we may not be able to compete effectively in our markets or competition may intensify and harm our business and operating results. If we are not successful in developing enhancements to existing products and new products in a timely manner, achieving customer acceptance or generating higher average selling prices, our gross margins may decline, and our business and operating results may suffer.

Future changes in financial accounting standards may adversely affect our reported results of operations.

A change in accounting standards can have a significant effect on our reported results. New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may occur in the future. These new accounting pronouncements may adversely affect our reported financial results.

For example, currently we calculate employee stock-based compensation expenses using the intrinsic value method, and recorded less than $0.1 million in employee compensation expense in each of fiscal years 2005 and 2004. We provided disclosure on pro forma net income and net income per share as if we had applied the fair value method of accounting only in the notes to our financial statements. Under Statement of Financial Accounting Standards No. 123(R), “Share Based Payment” (“SFAS 123(R)”), we will be required, starting from our first quarter of fiscal year 2006, to calculate compensation expense related to all share-based awards and recognize the expense in our financial statements. We expect such compensation expenses to be significant, and will cause our net income and net income per share to be significantly reduced.

Our strategy contemplates possible future acquisitions which may result in us incurring unanticipated expenses or additional debt, difficulty in integrating our operations, dilution to our stockholders and may harm our operating results.

Our success depends in part on our ability to continually enhance and broaden our product offerings in response to changing technologies, customer demands and competitive pressures. We have in the past and may in the future, acquire complementary businesses, products or technologies. In this regard, we have made strategic acquisitions, including the acquisition of certain assets of Velosel Corporation and ObjectStar International in 2005, and the acquisition of Staffware PLC and General Interface Corporation in 2004. We do not know if we will be able to complete any subsequent acquisition or that we will be able to successfully integrate any acquired business, operate it profitably, or retain its key employees. Integrating any newly acquired business, product or technology could be expensive and time-consuming, could disrupt our ongoing business and could distract our management. In particular, integrating sales forces and strategies for marketing and sales has in the past required and will likely require in the future, much time, effort and expense, especially from our management team. Therefore, we might not be able, either immediately post-acquisition or ever, to replicate the pre-acquisition revenues achieved by companies that we acquire or achieve the benefits of the acquisition we anticipated in valuing the businesses, products or technologies we acquire. Furthermore, the costs of integrating acquired companies in international transactions can be particularly high, due to local laws and regulations. If we are unable to integrate any newly acquired entity, products or technology effectively, our business, financial condition and operating results would suffer. In addition, any amortization or impairment of acquired intangible assets, stock-based compensation or other charges resulting from the costs of acquisitions could harm our operating results.

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In addition, we may face competition for acquisition targets from larger and more established companies with greater financial resources. Also, in order to finance any acquisition, we might need to raise additional funds through public or private financings or use our cash reserves. In that event, we could be forced to obtain equity or debt financing on terms that are not favorable to us and, in the case of equity financing, that may result in dilution to our stockholders. Use of our cash reserves for acquisitions could limit our financial flexibility in the future. Moreover, the terms of existing loan agreements may prohibit certain acquisitions or may place limits on our ability to incur additional indebtedness or issue additional equity securities to finance acquisitions. If we are not able to acquire strategically attractive businesses, products or technologies we may not be able to remain competitive in our industry.

The past slowdown in the market for infrastructure software and its protracted recovery have caused our revenue to decline in the past and could cause our revenue or results of operations to fall below expectations in the future.

The market for infrastructure software is relatively new and evolving. We earn a substantial portion of our revenue from licenses of our infrastructure software, including application integration software, and sales of related services. We expect to earn substantially all of our revenue in the foreseeable future from sales of these products and services. Our future financial performance will depend on continued growth in the number of organizations demanding software and services for application integration and information delivery and companies seeking outside vendors to develop, manage and maintain this software for their critical applications. Lower spending by corporate and governmental customers around the world, which has had a disproportionate impact on information technology spending, has led to a reduction in sales in the past and may continue to do so in the future. Many of our potential customers have made significant investments in internally developed systems and would incur significant costs in switching to third-party products, which may substantially inhibit the growth of the market for infrastructure software. If the market fails to grow, or grows more slowly than we expect, our sales will be adversely affected. Also, even as corporate and governmental spending increases and companies make greater investments in information technology and infrastructure software, our revenue may not grow at the same pace.

Our business is subject to seasonal variations which make quarter-to-quarter comparisons difficult.

Our business is subject to variations throughout the year due to seasonal factors in the U.S. and worldwide. These factors include fewer selling days in Europe during the summer vacation season which has a disproportionate effect on sales in Europe, the impact of the holidays and a slow down in capital expenditures by our customers at calendar year-end (during our first fiscal quarter). These factors typically result in lower sales activity in our first and third fiscal quarters compared to the rest of the year and they make quarter-to-quarter comparisons of our operating results less meaningful.

Any failure by us to meet the requirements of current or newly-targeted customers may have a detrimental impact on our business or operating results.

If we fail to meet the expectations or product and service requirements of our current customers, our reputation and business may be harmed. In addition, we may wish to expand our customer base into markets in which we have limited experience. In some cases, customers in different markets, such as financial services or government, have specific regulatory or other requirements which we must meet. For example, in order to maintain contracts with the U.S. Government, we must comply with specific rules and regulations relating to and that govern such contracts. While we have historically met the requirements of our customers, if we fail to meet such requirements in the future, we could be subject to civil or criminal liability or a reduction of revenue which could harm our business, operating results and financial condition.

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Any losses we incur as a result of our exposure to the credit risk of our customers could harm our results of operations.

Most of our licenses are sold on an “open credit” basis. We monitor individual customer payment capability in granting such open credit arrangements, seek to limit credit to amounts we believe the customers can pay, and maintain reserves we believe are adequate to cover exposure for doubtful accounts. As we have grown our revenue and customer base, our exposure to credit risk has increased. Although we have not had material losses to date as a result of customer defaults, future defaults, if incurred, could harm our business and have an adverse effect on our business, operating results and financial condition.

We are required to undertake an annual evaluation of our internal control over financial reporting (“ICFR”) that may identify internal control weaknesses requiring remediation, which could harm our reputation and confidence in our financial reporting.

Sarbanes-Oxley imposes duties on us, our executives, and directors. We completed our fiscal year 2005 evaluation of the design, remediation and testing of effectiveness of our internal control over financial reporting required to comply with the management certification and attestation by our independent registered public accounting firm as required by Section 404 of Sarbanes-Oxley (“Section 404”). While our assessment, testing and evaluation of the design and operating effectiveness of our internal control over financial reporting resulted in our conclusion that as of November 30, 2005, our ICFR were effective, we cannot predict the outcome of our testing in future periods. If we conclude in future periods that our ICFR is not effective, we may be required to change our ICFR to remediate deficiencies, investors may lose confidence in the reliability of our financial statements, and we may be subject to investigation and/or sanctions by regulatory authorities. Also, if we identify areas of our ICFR that require improvement, we could incur additional expenses to implement enhanced processes and controls to address such issues. Any such events could adversely affect our financial results and/or may result in a negative reaction in the stock market.

Regulatory requirements have caused us to incur increased costs and operating expenses, may limit our ability to obtain director and officer liability insurance and may make it more difficult for us to attract and retain qualified officers and directors.

Sarbanes-Oxley and rules enacted by the SEC and Nasdaq have caused us, and we expect will continue to cause us, to incur significant costs as a result of these regulatory requirements. In this regard, achieving and maintaining compliance with Sarbanes-Oxley and other rules and regulations, have caused us to hire additional personnel and use additional outside legal, accounting and advisory services and may require us to do so in the future.

Failure to satisfy the rules could make it more difficult for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, or as executive officers.

We may incur significant expenses in both hiring new employees and reducing or re-aligning our headcount in response to changing market conditions.

We have increased the scope of our operations both domestically and internationally. Our success is dependent on successfully managing our workforce. As we grow, we must invest significantly in building our sales, marketing and engineering groups. Competition for these people in the software industries is intense, and we may not be able to successfully recruit, train or retain qualified personnel. In addition, we must successfully integrate new employees into our operations and generate sufficient revenues to justify the costs associated with these employees. If we fail to successfully integrate employees or to generate the revenue necessary to offset employee-related expenses, we may be forced to reduce our headcount, which would force us to incur significant expenses and would harm our business and operating results. For example, in the year ended November 30, 2005, we recorded a $3.9 million restructuring charge for a workforce reduction to re-align our resources and cost structure. Failure to manage our operations effectively could interfere with the growth of our business as a whole.

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If we do not retain our key management personnel and attract, hire and retain other highly skilled employees, we may not be able to execute our business strategy effectively.

If we fail to retain and recruit key management and other skilled employees, our business and our ability to obtain new customers, develop new products and provide acceptable levels of customer service could suffer. The success of our business is heavily dependent on the leadership of our key management personnel, including Vivek Ranadivé, our President and Chief Executive Officer. The loss of one or more key employees could adversely affect our continued operations. We have experienced changes in our management organization over the past several years and may experience additional management changes in the future. Uncertainty created by turnover of key employees could also result in reduced confidence in our financial performance which could cause fluctuations in our stock price and result in further turnover of our employees.

The value of our equity incentive programs may diminish as a retention tool as a result of the changes in the financial accounting standards and our stock price volatility.

We have historically used equity incentive programs, such as employee stock options and stock purchase plans, as a part of overall employee compensation arrangements. As a result of changes in the financial accounting standards, we have changed our stock purchase plan and may reduce the size and number of stock option grants we give to our employees, both of which may decrease the effectiveness of our plans as employee retention tools. In addition, the volatility of our stock price may negatively impact the value of such equity incentives, thereby diminishing the value of such incentive programs to employees and decreasing the effectiveness of such programs as retention tools.

The inability to upsell to our current customers or the loss of any significant customer could harm our business and cause our stock price to decline.

We do not have long-term sales contracts with any of our customers. Our customers may choose not to purchase our products in the future. As a result, a customer that generates substantial revenue for us in one period may not be a source of revenue in subsequent periods. Any inability on our part to upsell to and generate revenues from our existing customers could adversely affect our business and operating results.

Our products may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling our products.

We cannot be certain that our products do not infringe issued patents or other intellectual property rights of others. In addition, our use of Open Source components in our products may make us increasingly vulnerable to claims that our products infringe third-party intellectual property rights, in particular because many of the Open Source components we may incorporate with our products are developed by numerous independent parties over whom we exercise no supervision or control. Further, because patent applications in the United States and many other countries are not publicly disclosed until a patent is issued, applications covering technology used in our software products may have been filed without our knowledge. While no claims have been filed against us to date, we may be subject to legal proceedings and claims from time to time, including claims of alleged infringement of the patents, trademarks and other intellectual property rights of third parties by us or our licensees in connection with their use of our products. Although no claims have been made in the past, our software license agreements typically provide for indemnification of our customers for intellectual property infringement claims. Intellectual property litigation is expensive and time-consuming and could divert our management’s attention away from running our business and seriously harm our business. If we were to discover that our products violated the intellectual property rights of others, we would have to obtain licenses from these parties in order to continue marketing our products without substantial reengineering. We might not be able to obtain the necessary licenses on acceptable terms or at all, and if we could not obtain such licenses, we might not be able to reengineer our products successfully or in a timely fashion. If we fail to address any infringement issues successfully, we would be forced to incur significant costs, including damages and potentially satisfying indemnification obligations that we have with our customers, and we could be prevented from selling certain of our products.

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Our intellectual property or proprietary rights could be misappropriated, which could force us to become involved in expensive and time-consuming litigation.

We regard our copyrights, service marks, trademarks, trade secrets, patents (licensed or others) and similar intellectual property as critical to our success. Any misappropriation of our proprietary information by third parties could harm our business, financial condition and operating results. In addition, the laws of some countries do not provide the same level of protection of our proprietary information as do the laws of the United States. If our proprietary information or material were misappropriated, we might have to engage in litigation to protect it. We might not succeed in protecting our proprietary information if we initiate intellectual property litigation, and, in any event, such litigation would be expensive and time-consuming, could divert our management’s attention away from running our business and could seriously harm our business.

Market acceptance of new platforms and web services standards may require us to undergo the expense of developing and maintaining compatible product lines.

Our software products can be licensed for use with a variety of platforms. There may be future or existing platforms that achieve popularity in the marketplace which may not be architecturally compatible with our software products. In addition, the effort and expense of developing, testing and maintaining software products will increase as more platforms achieve market acceptance within our target markets. Moreover, future or existing user interfaces that achieve popularity within the enterprise application integration marketplace may not be compatible with our current software products. If we are unable to achieve market acceptance of our software products or adapt to new platforms, our sales and revenues will be adversely affected.

Developing and maintaining different software products could place a significant strain on our resources and software product release schedules, which could harm our revenue and financial condition. If we are not able to develop software for accepted platforms or fail to adopt webservices standards, our license and service revenues and our gross margins could be adversely affected. In addition, if the platforms we have developed software for are not accepted, our license and service revenues and our gross margins could be adversely affected.

We may experience foreign currency gains and losses.

Our operating results are subject to fluctuations in foreign currency exchange rates. We attempt to mitigate a portion of these risks through foreign currency hedging, based on our judgment of the appropriate trade-offs among risk, opportunity and expense. We have established a hedging program designed to partially hedge our exposure to foreign currency exchange rate fluctuations, primarily the Euro and the British Pound. We regularly review our hedging program and will make adjustments based on our judgment. Although our hedging activities are designed to offset a portion of the financial impact resulting from the movement in foreign currency exchange rates, if we are unable to offset the effects of currency fluctuation, our operating results could be adversely affected.

Our agreement with Reuters places certain limitations on our ability to conduct our business.

Pursuant to the terms of our agreement with Reuters, we are permitted to market and sell our products, other than risk management and market data distribution products, directly and through third party resellers (other than a few specified resellers) to customers in the financial services market. The limitations on our ability to sell risk management and market data distribution products and on reselling through the specified resellers will continue through May 2008. While we currently do not offer any risk management and market data distribution solutions as part of our product offerings, if we were to develop any such products, we would have to rely on Reuters to sell those products in the financial services market until these restrictions end. Reuters is not required to help us sell any of these products in those markets and Reuters may choose not to sell our products over our competitors’ products.

In addition, we license from Reuters the intellectual property that was incorporated into early versions of some of our software products. We do not own this licensed technology. Because Reuters has access to

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intellectual property used in our products, it could use this intellectual property to compete with us. Reuters is not restricted from using the licensed technology it has licensed to us to produce products that compete with our products, and it can grant limited licenses to the licensed technology to others who may compete with us. In addition, we must license to Reuters all of the products we own, and the source code for one of our messaging products, through December 2012. This may place Reuters in a position to more easily develop products that compete with ours.

Natural or other disasters could disrupt our business and result in loss of revenue or in higher expenses.

Natural disasters, terrorist activities and other business disruptions could seriously harm our revenue and financial condition and increase our costs and expenses. Our corporate headquarters and many of our operations are located in California, a seismically active region. In addition, many of our current and potential customers are concentrated in a few geographic areas. A natural disaster in one of these regions could have a material adverse impact on our U.S. and foreign operations, operating results and financial condition. Further, although we have not experienced a disruption to date, any unanticipated business disruption caused by Internet security threats, damage to global communication networks or otherwise could have a material adverse impact on our operating results.

The outcome of litigation pending against us could require us to expend significant resources and could harm our business and financial resources.

In May 2005, three purported shareholder class action complaints were filed against us and several of our officers in the U.S. District Court for the Northern District of California. The plaintiffs in such actions are seeking to represent a class of purchasers of TIBCO’s common stock from September 21, 2004 through March 1, 2005. The complaints generally allege that we made false or misleading statements concerning our operating results, our business and internal controls and the integration of Staffware. The complaints seek unspecified monetary damages. We intend to defend ourselves vigorously; however, we expect to incur significant costs in mounting such defense.

In September 2005, a shareholder derivative complaint was filed against certain of our officers and directors in the Superior Court of the State of California, Santa Clara County. The complaint is based on substantially similar facts and circumstances as the class actions and generally alleged that the named directors and officers breached their fiduciary duties to TIBCO. The complaint seeks unspecified monetary damages. Given the nature of derivative litigation, any recovery in a derivative suit would be to the benefit of TIBCO.

In addition, certain of our directors and officers and certain investment bank underwriters have been named in a putative class action for violation of the federal securities laws in the U.S. District Court for the Southern District of New York, captioned “In re TIBCO Software Inc. Initial Public Offering Securities Litigation.” This is one of a number of cases challenging underwriting practices in the initial public offerings of more than 300 companies, which have been coordinated for pretrial proceedings as “In re Initial Public Offering Securities Litigation.” Plaintiffs generally allege that the underwriters engaged in undisclosed and improper underwriting activities, namely the receipt of excessive brokerage commissions and customer agreements regarding post-offering purchases of stock in exchange for allocations of IPO shares. Plaintiffs also allege that various investment bank securities analysts issued false and misleading analyst reports. The complaint against us claims that the purported improper underwriting activities were not disclosed in the registration statements for our IPO and secondary public offering and seeks unspecified damages on behalf of a purported class of persons who purchased our securities or sold put options during the time period from July 13, 1999 to December 6, 2000.

A lawsuit with similar allegations of undisclosed improper underwriting practices, and part of the same coordinated proceedings, is pending against Talarian, which we acquired in 2002. That action is captioned “In re Talarian Corp. Initial Public Offering Securities Litigation.” The complaint against Talarian, certain of its underwriters, and certain of its former directors and officers claims that the purported improper underwriting activities were not disclosed in the registration statement for Talarian’s IPO and seeks unspecified damages on behalf of a purported class of persons who purchased Talarian securities during the time period from July 20, 2000 to December 6, 2000.

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A proposal to settle the claims against all of the issuers and individual defendants in the coordinated litigation was accepted by us and given preliminary Court approval. The completion of the settlement is subject to a number of conditions, including final approval by the Court. Under the settlement, the plaintiffs will dismiss and release all claims against participating defendants in exchange for a contingent payment guaranty by the insurance companies collectively responsible for insuring the issuers in the action, and the assignment or surrender to the plaintiffs of certain claims the issuer defendants may have against the underwriters. Under the guaranty, the insurers will be required to pay an amount equal to $1.0 billion less any amounts ultimately collected by the plaintiffs from the underwriter defendants in all the cases. Unlike most of the defendant issuers’ insurance policies, including ours, Talarian’s policy contains a specific self-insured retention in the amount of $0.5 million for IPO “laddering” claims, including those alleged in this matter. Thus, under the proposed settlement, if any payment is required under the insurers’ guaranty, our subsidiary, Talarian, would be responsible for paying its pro rata share of the shortfall, up to $0.5 million of the self-insured retention remaining under its policy.

The uncertainty associated with substantial unresolved lawsuits could harm our business, financial condition and reputation. The defense of the lawsuits could result in the diversion of our management’s time and attention away from business operations, which could harm our business. Negative developments with respect to the lawsuits could cause our stock price to decline. In addition, although we are unable to determine the amount, if any, that we may be required to pay in connection with the resolution of the lawsuits by settlement or otherwise, any such payment could seriously harm our financial condition and liquidity.

The use of Open Source Software in our products may expose us to additional risks.

“Open Source Software” is software that is covered by a license agreement which permits the user to liberally copy, modify and distribute the software for free. Certain Open Source Software is licensed pursuant to license agreements that require a user who intends to distribute the Open Source Software as a component of the user’s software to disclose publicly part or all of the source code to the user’s software. This effectively renders what was previously proprietary software Open Source Software. As competition in our markets increases, we must reduce our product development costs. Many features we may wish to add to our products in the future may be available as Open Source Software and our development team may wish to make use of this software to reduce development costs and speed up the development process. While we monitor the use of all Open Source Software and try to ensure that no Open Source Software is used in such a way as to require us to disclose the source code to the related product, such use could inadvertently occur. Additionally, if a third party has incorporated certain types of Open Source Software into its software, has not disclosed the presence of such Open Source Software and we embed that third party software into one or more of our products, we could, under certain circumstances, be required to disclose the source code to our product. This could have a material adverse effect on our business.

Some provisions in our certificate of incorporation and bylaws, as well as a stockholder rights plan, may have anti-takeover effects.

We have a stockholder rights plan providing for one right for each outstanding share of our common stock. Each right, when exercisable, entitles the registered holder to purchase certain securities at a specified purchase price. The rights plan may have the anti-takeover effect of causing substantial dilution to a person or group that attempts to acquire TIBCO on terms not approved by our Board of Directors. The existence of the rights plan could limit the price that certain investors might be willing to pay in the future for shares of our common stock and could discourage, delay or prevent a merger or acquisition that stockholders may consider favorable. In addition, provisions of our current certificate of incorporation and bylaws, as well as Delaware corporate law, could make it more difficult for a third party to acquire us without the support of our Board of Directors, even if doing so would be beneficial to our stockholders.

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ITEM 2. PROPERTIES

Our principal administrative, sales, marketing, service and research and development facilities are located in a four building campus totaling approximately 292,000 square feet in Palo Alto, California. We purchased these buildings in June 2003. In connection with the purchase, we entered into a 51-year lease of the land upon which the buildings are located. Further information on the terms of the building acquisition can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 6 to our Consolidated Financial Statements included in this report.

In addition, we lease field support offices in 61 cities throughout the world. The field offices range from small executive offices to a 22,000 square foot facility, in Maidenhead, England, that serves as our European sales operations headquarters. Lease terms range from month-to-month on certain offices to ten years on certain direct leases. Because our professional services are generally performed at the client site, field facilities are generally small. Field facilities are sales offices, development centers or customer support sites, and are used for periodic meetings, training and administration. We are continually evaluating the adequacy of existing facilities and additional facilities in new cities and we believe that suitable additional space will be available in the future on commercially reasonable terms as needed.

We have certain facilities under lease that are in excess of our requirements that we no longer occupy, do not intend to occupy, and have either subleased or plan to sublease. The estimated loss on excess facilities net of sublease income has been included in the accrued excess facilities costs on the Consolidated Balance Sheet as of November 30, 2005 and 2004.

ITEM 3. LEGAL PROCEEDINGS

Securities Class Action and Shareholder Derivative Suits

In May 2005, three purported shareholder class action complaints were filed against us and several of our officers in the U.S. District Court for the Northern District of California. The plaintiffs in such actions are seeking to represent a class of purchasers of our common stock from September 21, 2004 through March 1, 2005. The complaints generally allege that we made false or misleading statements concerning our operating results, our business and internal controls, and the integration of Staffware and seek unspecified monetary damages. Because the outcome of this litigation is undetermined and we cannot reasonably estimate the possible loss or range of loss which may arise from the litigation, we have not recorded an accrual for possible damages.

In September 2005, a shareholder derivative complaint was filed against certain of our officers and directors in the Superior Court of the State of California, Santa Clara County. The complaint is based on substantially similar facts and circumstances as the class actions and generally alleged that the named directors and officers breached their fiduciary duties to the Company. The complaint seeks unspecified monetary damages. Given the nature of derivative litigation, any recovery in a derivative suit would be to the benefit of the Company.

IPO Allocation Suit

We, certain of our directors and officers and certain investment bank underwriters have been named in a putative class action for violation of the federal securities laws in the U.S. District Court for the Southern District of New York (“Court”), captioned “In re TIBCO Software Inc. Initial Public Offering Securities Litigation.” This is one of a number of cases challenging underwriting practices in the initial public offerings (“IPO”s) of more than 300 companies, which have been coordinated for pretrial proceedings as “In re Initial Public Offering Securities Litigation.” Plaintiffs generally allege that the underwriters engaged in undisclosed and improper underwriting activities, namely the receipt of excessive brokerage commissions and customer agreements regarding post-offering purchases of stock in exchange for allocations of IPO shares. Plaintiffs also allege that various investment bank securities analysts issued false and misleading analyst reports. The complaint against us claims that the purported improper underwriting activities were not disclosed in the registration statements for

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our IPO and secondary public offering and seeks unspecified damages on behalf of a purported class of persons who purchased our securities or sold put options during the time period from July 13, 1999 to December 6, 2000.

A lawsuit with similar allegations of undisclosed improper underwriting practices, and part of the same coordinated proceedings, is pending against Talarian Corporation (“Talarian”), which we acquired in 2002. That action is captioned “In re Talarian Corp. Initial Public Offering Securities Litigation.” The complaint against Talarian, certain of its underwriters, and certain of its former directors and officers claims that the purported improper underwriting activities were not disclosed in the registration statement for Talarian’s IPO and seeks unspecified damages on behalf of a purported class of persons who purchased Talarian securities during the time period from July 20, 2000 to December 6, 2000.

A proposal to settle the claims against all of the issuers and individual defendants in the coordinated litigation was accepted by us and given preliminary Court approval. The completion of the settlement is subject to a number of conditions, including final approval by the Court. Under the settlement, the plaintiffs will dismiss and release all claims against participating defendants in exchange for a contingent payment guaranty by the insurance companies collectively responsible for insuring the issuers in the action, and the assignment or surrender to the plaintiffs of certain claims the issuer defendants may have against the underwriters. Under the guaranty, the insurers will be required to pay an amount equal to $1.0 billion less any amounts ultimately collected by the plaintiffs from the underwriter defendants in all the cases. Unlike most of the defendant issuers’ insurance policies, including ours, Talarian’s policy contains a specific self-insured retention in the amount of $0.5 million for IPO “laddering” claims, including those alleged in this matter. Thus, under the proposed settlement, if any payment is required under the insurers’ guaranty, our subsidiary, Talarian, would be responsible for paying its pro rata share of the shortfall, up to $0.5 million of the self-insured retention remaining under its policy.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is quoted on the Nasdaq National Market (“Nasdaq”) under the symbol “TIBX”. The following table presents, for the periods indicated, the high and low intra-day sale prices per share of our common stock during the fiscal quarters indicated, as reported on Nasdaq.

Fiscal Year 2004	High		Low
First Quarter (from December 1, 2003 to February 29, 2004)	$	8.79	$	5.48
Second Quarter (from March 1, 2004 to May 30, 2004)	$	9.75	$	6.55
Third Quarter (from May 31, 2004 to August 29, 2004)	$	8.75	$	5.53
Fourth Quarter (from August 30, 2004 to November 30, 2004)	$	11.72	$	6.11
Fiscal Year 2005	High		Low
First Quarter (from December 1, 2004 to February 27, 2005)	$	13.50	$	10.51
Second Quarter (from February 28, 2005 to May 29, 2005)	$	10.75	$	6.10
Third Quarter (from May 30, 2005 to August 28, 2005)	$	8.00	$	5.60
Fourth Quarter (from August 29, 2005 to November 30, 2005)	$	8.63	$	6.86

Holders of Record

We had 949 stockholders of record as of November 30, 2005.

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Dividends

We have never declared or paid any cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.

Issuer Purchases of Equity Securities

In September 2004, our Board of Directors authorized a stock repurchase program for the repurchase of up to $50.0 million of common stock under this program. The remaining authorized amount for stock repurchases under this program as of November 30, 2005 was approximately $1.0 million. Subsequently, in December 2005, our Board of Directors authorized a new stock repurchase plan for the repurchase of up to $100.0 million of our common stock.

(In thousands, except per-share amounts)	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased under the Plans or Programs
August 29, 2005 to September 28, 2005	—	$	—	—	$	15,876
September 29, 2005 to October 28, 2005	1,000		7.94	1,000		7,939
October 29, 2005 to November 30, 2005	900		7.71	900		1,000
Total	1,900	$	7.83	1,900	$	1,000

Equity Compensation Plan Information

The following table sets forth information about our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans as of November 30, 2005.

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
Equity compensation plans approved by security holders	46,203,131	$	7.00	31,493,584
Equity compensation plans not approved by security holders(1)	62,886	$	14.50	167,061
Total	46,266,017	$	7.01	31,660,645

(1) Represents options assumed in connection with our acquisition of Talarian in 2002 and of Extensibility in 2000.

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ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data below have been derived from our audited financial statements. The following table should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and notes thereto included elsewhere in this annual report on Form 10-K. The historical results presented below are not indicative of any future results.

	Year Ended November 30,
	2005			2004			2003			2002			2001
	(in thousands, except per share amounts)
Statement of Operations:
Revenue	$	445,910		$	387,220		$	264,210		$	273,393		$	322,091
Cost of revenue		124,193			93,197			63,485			65,672			71,012
Gross profit		321,717			294,023			200,725			207,721			251,079
Operating expenses		263,643			223,273			198,249			294,403			305,830
Income (loss) from operations		58,074			70,750			2,476			(86,682	)		(54,751	)
Interest and other income, net		11,718			5,736			16,212			16,264			31,040
Interest expense		(2,711	)		(2,771	)		(1,205	)		—			—
Income (loss) before income taxes		67,081			73,715			17,483			(70,418	)		(23,711	)
Provision for (benefit from) income taxes		(5,474	)		28,795			6,043			24,162			(10,469	)
Net income (loss)	$	72,555		$	44,920		$	11,440		$	(94,580	)	$	(13,242	)
Total stock based compensation included in cost of revenue and operating expenses	$	129		$	243		$	1,063		$	4,050		$	26,965
Net income (loss) per share—Basic	$	0.34		$	0.22		$	0.05		$	(0.46	)	$	(0.07	)
Net income (loss) per share—Diluted	$	0.32		$	0.20		$	0.05		$	(0.46	)	$	(0.07	)
Shares used to compute net income (loss) per share—Basic		213,263			207,506			211,555			205,821			195,001
Shares used to compute net income (loss) per share—Diluted		223,977			220,927			221,519			205,821			195,001
	As of November 30,
	2005			2004			2003			2002			2001
	(in thousands)
Balance Sheet Data:
Cash, cash equivalents and short-term investments	$	477,638		$	473,535		$	604,669		$	637,853		$	677,340
Working capital		458,685			439,090			549,719			563,732			638,803
Total assets		1,122,424			1,082,811			943,259			894,588			892,127
Long-term debt		50,143			51,851			53,477			—			—
Stockholders’ equity		873,619			820,482			762,794			744,727			771,279

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements relate to expectations concerning matters that are not historical facts. Words such as “projects,” “believes,” “anticipates,” “plans,” “expects,” “intends” and similar words and expressions are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements related to our expected business, results of operations, future financial position, our ability to increase our revenues, the mix of our revenues between license, service and maintenance revenues, our financing plans and capital requirements, our costs of revenue, our expenses, our potential tax benefit or liabilities, the effect of recent accounting pronouncements, our investments, debt service and principal repayment obligations, cash flows and our ability to finance operations from cash flows and similar matters and include statements based on current expectations, estimates, forecasts and projections about the economies and markets in which we operate and our beliefs and assumptions regarding these economies and markets.

These forward-looking statements are based on current expectations and involve known and unknown risks and uncertainties that may cause our actual results, operating performance or achievements to be materially different from those expressed or implied by the forward-looking statements. We believe that the expectations reflected in the forward-looking statements are reasonable but we cannot assure you that those expectations will prove to be correct. Factors that could cause or contribute to such differences include but are not limited to our ability to address new markets and complex technologies by delivering successful, new products on a timely basis, the impact of competitive products and pricing, the success of our strategic relationships, charges for restructuring and option expenses and other costs and other risk factors detailed in this Annual Report on Form 10-K for the fiscal year ended November 30, 2005 and other periodic filings with the Securities and Exchange Commission. All forward-looking statements are expressly qualified in their entirety by these factors and all related cautionary statements. We do not undertake any obligation to update any forward-looking statements.

Executive Overview

Our suite of business integration and process management software solutions makes us a leading enabler of real-time business. We use the term “real-time business” to mean doing business in such a way that organizations can use current information to execute their critical business processes and make smarter decisions. We are the successor to a portion of the business of Teknekron Software Systems, Inc. Teknekron developed software, known as the TIB technology, for the integration and delivery of market data, such as stock quotes, news and other financial information, in trading rooms of large banks and financial services institutions. In 1992, Teknekron expanded its development efforts to include solutions designed to enable complex and disparate manufacturing equipment and software applications, primarily in the semiconductor fabrication market, to communicate within the factory environment. Teknekron was acquired by Reuters Group PLC, the global information company, in 1994. Following the acquisition, continued development of the TIB technology was undertaken to expand its use in the financial services markets.

In January 1997, our company, TIBCO Software Inc., was established as an entity separate from Teknekron. We were formed to create and market software solutions for use in the integration of business information, processes and applications. In connection with our establishment as a separate entity, Reuters transferred to us certain assets and liabilities related to our business and granted to us a royalty-free license to the intellectual property from which some of our messaging software products originated.

In June 2004, we acquired Staffware plc, a provider of BPM solutions that enable businesses to automate, refine and manage their processes. The addition of Staffware’s BPM solutions enabled us to offer our combined customer base an expanded real-time business integration solution, by making it easier for our customers to utilize their existing systems through real-time information exchange and automation and management of enterprise business processes regardless of where such processes reside. BPM enables companies to save time

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and money by driving costs and time out of business processes (for example, reducing error rates or manual steps), while at the same time ensuring that business processes are compliant with internal procedures and external regulations. Our acquisition of Staffware also increased our distribution capabilities through the cross-selling of products into new geographic regions, as well as an expanded customer and partner base.

Our products are currently licensed by companies worldwide in diverse industries such as financial services, telecommunications, retail, healthcare, manufacturing, energy, transportation, logistics, government and insurance. We sell our products through a direct sales force and through alliances with leading software vendors and systems integrators.

Our revenue consists primarily of license and maintenance fees from our customers and distributors. In addition, we receive fees from our customers for providing consulting services. We also receive revenue from our strategic relationships with business partners who embed our products in their hardware and networking systems as well as from systems integrators who resell our products.

First-year maintenance typically is sold with the related software license and renewed on an annual basis thereafter. Maintenance revenue is determined based on vendor-specific objective evidence (“VSOE”) of fair value and amortized over the term of the maintenance contract, typically twelve months. Consulting and training revenues are typically recognized as the services are performed, which services are usually performed on a time and materials basis. Such services primarily consist of implementation services related to the installation of our products and generally do not include significant customization to or development of the underlying software code.

Our revenue is generally derived from a diverse customer base. No single customer represented greater than 10% of total revenue for the year ended November 30, 2005 or 2004. As of November 30, 2005, no single customer had a balance in excess of 10% of our net accounts receivable. We establish allowances for doubtful accounts based on our evaluation of collectibility and an allowance for returns and discounts based on specifically identified credits and historical experience.

Relationship with Reuters

Reuters is a distributor of our products to customers in the financial services segment. Pursuant to the terms of our license, maintenance and distribution agreement with Reuters, Reuters has the right to distribute certain of our products in conjunction with the sale by Reuters to end users of its market data delivery solutions for a specified period of time. We have the right to market and sell our products, other than risk management and market data distribution products, directly and through third party resellers (other than a few specified resellers) to customers in the financial services market. The limitations on our ability to sell risk management and market data distribution products and on reselling through the specified resellers will expire in May 2008. In addition, Reuters may embed our products in its solutions.

As of November 30, 2004, Reuters owned less than 10% of our outstanding common stock. During fiscal year 2005, Reuters reduced its holdings such that as of November 30, 2005, Reuters owned less than 1% of our outstanding common stock. Revenue from Reuters was $23.0 million, or 5% of our total revenue, in fiscal year 2005.

Critical Accounting Policies, Judgments and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

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Our significant accounting policies are described in Note 2 to our Consolidated Financial Statements as of and for the year ended November 30, 2005. We believe our most critical accounting policies and estimates include the following:

• revenue recognition;

• allowances for doubtful accounts, returns and discounts;

• stock-based compensation;

• valuation and impairment of investments;

• goodwill and other intangible assets;

• impairment of long-lived assets;

• restructuring and integration costs; and

• accounting for income taxes.

Revenue Recognition.    We recognize license revenue when a signed contract or other persuasive evidence of an arrangement exists, the software has been shipped or electronically delivered, the license fee is fixed or determinable, and collection of the resulting receivable is reasonably assured. When contracts contain multiple elements wherein vendor specific objective evidence exists for all undelivered elements, we account for the delivered elements in accordance with the “Residual Method” prescribed by AICPA Statement of Position 98-9. Revenue from subscription license agreements, which include software, rights to future products and maintenance, is recognized ratably over the term of the subscription period. Revenue on shipments to resellers, when subject to certain rights of return and price protection, is recognized when the products are sold by the resellers to the end-user customer and is recorded net of related costs to the resellers. Providing all other revenue criteria are met, non-refundable, prepaid fees from OEM customers are generally recognized upon delivery and on going royalty fees are generally recognized upon receipt of royalty reports of units shipped.

We assess whether the fee is fixed or determinable and collection is reasonably assured at the time of the transaction. In determining whether the fee is fixed or determinable we compare the payment terms of the transaction to our normal payment terms. If a significant portion of a fee is due after our normal payment terms, we account for the fee as not being fixed or determinable and recognize revenue as the payments become due. We assess whether collection is reasonably assured based on a number of factors, including the customer’s past transaction history and credit-worthiness. Generally, we do not request collateral from our customers. If we determine that collection of a fee is not reasonably assured, we defer the fee and recognize revenue at the time collection becomes reasonably assured, which is generally upon receipt of cash.

First-year maintenance typically is sold with the related software license and renewed on an annual basis thereafter. For such arrangements with multiple elements, we allocate revenue to each component of the arrangement based on the fair value of the undelivered elements. Fair values of ongoing maintenance and support obligations are based on separate sales of renewals to other customers or upon renewal rates quoted in the contracts when the quoted renewal rates are deemed to be substantive. Maintenance revenue is deferred and recognized ratably over the term of the maintenance and support period. Fair value of services, such as consulting or training, is based upon separate sales of these services. Consulting and training services are generally billed based on hourly or daily rates and revenues are generally recognized as the services are performed. Consulting services primarily consist of implementation services related to the installation of our products and generally do not include significant customization to or development of the underlying software code. The determination as to whether services involve significant production, modification or customization of the underlying software code is a matter of judgment and can materially impact the timing of revenue recognition.

Many customers who license our software also enter into separate professional services arrangements with us. In determining whether professional services revenue should be accounted for separately from license revenue, we evaluate, among other factors, the nature of our software products, whether they are ready for use by

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the customer upon receipt, the nature of our implementation services, which typically do not involve significant customization to or development of the underlying software code, the availability of services from other vendors, whether the timing of payments for license revenue is coincident with performance of services and whether milestones or acceptance criteria exist that affect the realizability of the software license fee. Substantially all of our professional services arrangements are billed on a time and materials basis and accordingly, are recognized as the services are performed. Contracts with fixed or not to exceed fees are recognized on a proportional performance basis. If there is significant uncertainty about the project completion or receipt of payment for professional services, revenue is deferred until the uncertainty is sufficiently resolved. Training revenue is recognized as training services are delivered.

For arrangements that do not qualify for separate accounting for the license and professional services revenues, including arrangements that involve significant modification or customization of the software, that include milestones or customer specific acceptance criteria that may affect collection of the software license fees, or where payment for the software license is tied to the performance of professional services, software license revenue is generally recognized together with the professional services revenue using either the percentage-of-completion or completed-contract method. Under the percentage-of-completion method, revenue recognized is equal to the ratio of costs expended to date to the anticipated total contract costs, based on current estimates of costs to complete the project. If the total estimated costs to complete a project exceed the total contract amount, indicating a loss, the entire anticipated loss would be recognized currently.

Significant management judgments and estimates must be made in connection with determination of the revenue to be recognized in any accounting period. If we made different judgments or utilized different estimates for any period, material differences in the amount and timing of revenue recognized could result.

Allowance for Doubtful Accounts, Returns and Discounts.    We establish allowances for doubtful accounts, returns and discounts based on our review of credit profiles of our customers, contractual terms and conditions, current economic trends and historical payment, return and discount experience. We reassess the allowances for doubtful accounts, returns and discounts each period. Historically, our actual losses and credits have been consistent with these provisions. However, unexpected events or significant future changes in trends could result in a material impact to our future statements of operations and of cash flows. If we made different judgments or utilized different estimates for any period, material differences in the amount and timing of revenue or bad debt expense recognized could result. Our allowances for doubtful accounts, returns and discounts as a percentage of net revenues were 1.0%, 1.0% and 0.8% in fiscal years 2005, 2004 and 2003, respectively. See Note 5 to our Consolidated Financial Statements for a summary of activities during the years reported. Based on our results for the year ended November 30, 2005, a one-percentage point deviation in our allowances for doubtful accounts, returns and discounts as a percentage of net revenues would have resulted in an increase or decrease in expense of approximately $4.5 million.

Stock-Based Compensation.    We account for stock-based compensation related to employee stock-based compensation plans using the intrinsic value method prescribed by Accounting Principles Board Opinion (“APB”) No. 25 and have adopted the disclosure provisions of the Statement of Financial Accounting Standard (“SFAS”) No. 123 “Accounting for Stock-Based Compensation” and SFAS 148 “Accounting for Stock-Based Compensation—Transition and Disclosure”—an amendment of SFAS 123. Had we accounted for stock-based compensation related to employee stock-based compensation plans using the fair value method as prescribed by SFAS 123, our net income would have been reduced by $23.0 million, $38.0 million and $50.1 million in fiscal years 2005, 2004 and 2003, respectively. Also see Note 2 to our Consolidated Financial Statements.

We account for stock-based compensation related to stock options granted to consultants based on the fair value estimate using the Black-Scholes option pricing model on the date of grant and as remeasured at each reporting date in compliance with Emerging Issues Task Force (“EITF’) Issue No. 96-18 “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.” As a result, stock based compensation expense fluctuates as the fair market value of our common stock fluctuates. Compensation expense is amortized using the multiple option approach in compliance with the

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Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No. 28. Pursuant to FIN 44 “Accounting for Certain Transactions involving Stock Compensation—an interpretation of APB Opinion No. 25”, options assumed in a purchase business combination are valued at the date of acquisition at their fair value calculated using the Black-Scholes option pricing model. The fair value of assumed options is included as a component of the purchase price. The intrinsic value attributable to unvested options is recorded as unearned stock based compensation and amortized over the remaining vesting period of the options.

In December 2004, FASB issued SFAS No. 123 (Revised 2004) “Share-Based Payment” (“SFAS 123(R)”), which replaces SFAS 123 and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”. SFAS 123(R) requires that compensation costs relating to share-based payment transactions be recognized in financial statements. The pro forma disclosure previously permitted under SFAS 123, which we have provided in Note 2 to the Consolidated Financial Statements, will no longer be an acceptable alternative to recognition of expenses in the financial statements. Due to the Amendment to Rule 4-01(a) issued in April 2005, SFAS 123(R) must be adopted by the first interim reporting period of the fiscal year that begins on or after June 15, 2005. Accordingly, we are required to adopt SFAS 123(R) starting in our first quarter of fiscal year 2006. We expect the adoption of SFAS 123(R) will have a material adverse impact on our net income and our net income per share by decreasing our net income by the additional amount of such stock-based compensation charges, net of taxes. We cannot quantify the amount of such impact at this time.

Valuation and Impairment of Investments.    We determine the appropriate classification of marketable securities at the time of purchase and evaluate such designation as of each balance sheet date. As of November 30, 2005, $268.9 million of marketable securities have been classified as available-for-sale and are carried at fair value with unrealized gains and losses, if any, included as a component of “accumulated other comprehensive income” in stockholders’ equity. Marketable securities are presented as current assets as they are subject to use within one year in current operations. Realized gains and losses are recognized based on the “specific identification method”. As of November 30, 2005, gross unrealized losses on our investment portfolio totaled $2.0 million. The decline in value of these investments is primarily related to changes in interest rates and is considered temporary in nature.

Our investments also include minority equity investments in privately held companies that are generally carried at cost basis and included in other assets on the balance sheet. The fair value of these investments is dependent on the performance of the companies in which we invested, as well as the volatility inherent in external markets for these investments. In assessing potential impairment, we consider these factors as well as each of the companies’ cash position, earnings/revenue outlook, liquidity and management/ownership. If we believe that an other-than-temporary decline exists, we write down the investment to market value and record the related write-down as a loss on investments in our consolidated statement of operations. In fiscal year 2005, we did not recognize any impairment loss, while in fiscal years 2004 and 2003, we recognized impairment losses of $0.1 million and $0.3 million, respectively, relating to the other-than-temporary decline in value of certain equity investments. As of November 30, 2005, the net carrying value of our minority equity investments totaled $2.3 million.

Significant management judgment is required in determining whether an other-than-temporary decline in the value of our investments exists. Estimating the fair value of non-marketable equity investments in early-stage technology companies is inherently subjective. Changes in our assessment of the valuation of our investments could materially impact our operating results and financial position in future periods if anticipated events and key assumptions do not materialize or change.

Goodwill and Other Intangible Assets.    Our goodwill and intangible assets result from our corporate acquisition transactions. In accordance with SFAS 142, “Goodwill and Other Intangible Assets,” which we adopted on December 1, 2002, goodwill and intangible assets with indefinite useful lives are no longer amortized, but are instead tested for impairment at least annually or as circumstances indicate their value may no longer be recoverable. We generally perform our annual impairment test at the end of the fiscal year. As we

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operate our business in one reporting segment, our goodwill is tested for impairment at the enterprise level. Goodwill impairment testing is a two-step process. For the first step, we screen for impairment, and if any possible impairment exists, we undertake a second step of measuring such impairment. Other purchased intangible assets with definite useful lives are amortized on a straight line basis over their useful lives, and periodically tested for impairment. As of November 30, 2005, we had $261.1 million of goodwill and $64.7 million of intangible assets, and had not recorded any impairment charges. If our estimates or the related assumptions change in the future, we may be required to record impairment charges to reduce the carrying value of these assets. Changes in the valuation of goodwill and intangible assets could be substantial.

Impairment of Long-Lived Assets.    We evaluate the recoverability of our long-lived assets in accordance with SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” When events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable, we recognize such impairment in the event the net book value of such assets exceeds the future undiscounted cash flows attributable to such assets. We have not recorded any impairment losses to date. If our estimates or the related assumptions change in the future, we may be required to record impairment charges to reduce the carrying value of these assets. Changes in the valuation of long-lived assets could be substantial.

Restructuring and Integration Costs.    Our restructuring charges are comprised primarily of costs related to properties abandoned in connection with facilities consolidation, related write-down of leasehold improvements and severance and associated employee termination costs related to headcount reductions. For restructuring actions initiated prior to December 31, 2002, we followed the guidance provided by EITF 94-3 “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity”. We recorded the liability related to these termination costs when the plan was approved; the termination benefits were determined and communicated to the employees; the number of employees to be terminated, their locations and job were specifically identified; and the period of time to implement the plan was set. For restructuring actions initiated after January 1, 2003, we adopted SFAS 146, “Accounting for Costs Associated with Exit or Disposal Activities” which requires that a liability for costs associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred.

Our restructuring charges included accruals for estimated losses on facility costs based on our contractual obligations net of estimated sublease income based on current comparable market rates for leases. We reassess this liability periodically based on market conditions. Revisions to our estimates of this liability could materially impact our operating results and financial position in future periods if anticipated events and key assumptions, such as the timing and amounts of sublease rental income, either change or do not materialize. Should facilities operating lease rental rates continue to decrease in these markets or should it take longer than expected to find a suitable tenant to sublease these facilities, the actual loss could exceed this estimate by approximately $2.8 million.

Accounting for Income Taxes.    We make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

As part of the process of preparing our Consolidated Financial Statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves us estimating our current tax exposure under the most recent tax laws and assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our Consolidated Balance Sheet.

We assess the likelihood that we will be able to recover our deferred tax assets. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need

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for the valuation allowance. If recovery is not likely, we increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. The available positive evidence at November 30, 2005 included three years of historical operating profits and a projection of future income limited to three years which coincides with the period over which we recorded historical operating profits, due to our lack of visibility into earnings further into the future. As a result of our analysis of all available evidence, both positive and negative, we recorded a partial release of valuation allowance during fiscal year 2005. We continue to closely monitor available evidence and may adjust our valuation allowance in future periods.

As of November 30, 2005, we believed that the amount of the deferred tax assets recorded on our balance sheet as a result of the partial release of valuation allowance would ultimately be recovered. However, should there be a change in our ability to recover our deferred tax assets, our tax provision would increase in the period in which we determine that the recovery is not probable. If we have to re-establish the full valuation allowance, it may result in a charge of $19.6 million to the tax provision.

Of the remaining valuation allowance of approximately $219.3 million as of November 30, 2005, we estimate that when released, approximately $21.7 million will result in an income tax benefit, approximately $7.7 million will be credited to goodwill and approximately $189.9 million relating to stock option exercises and related tax credits will be credited directly to additional paid-in capital.

We have completed an R&D Credit study for fiscal years 1999 through 2003. As a result, additional credits have been identified and included in the deferred tax assets as of November 30, 2005. R&D credit carryforwards are approximately $25.3 million and $20.0 million, for federal and California, respectively.

U.S. income taxes and foreign withholding taxes have not been provided for on a cumulative total of $20.8 million of undistributed earnings for certain non-U.S. subsidiaries. With the exception of our subsidiaries in the United Kingdom, net undistributed earnings of our foreign subsidiaries are generally considered to be indefinitely reinvested, and accordingly, no provision for U.S. income taxes has been provided thereon. Upon distribution of these earnings in the form of dividends or otherwise, the company will be subject to U.S. income taxes net of available foreign tax credits associated with these earnings.

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Results of Operations

The following table sets forth, for the fiscal years indicated, certain consolidated statement of income information as a percentage of total revenue:

	Year Ended November 30,
	2005		2004		2003
Revenue:
License revenue:
Non-related parties	42	%	51	%	46	%
Related parties	4		4		7
Total license revenue	46		55		53
Service and maintenance revenue:
Non-related parties	51		41		40
Related parties	2		3		6
Reimbursable expenses	1		1		1
Total service and maintenance revenue	54		45		47
Total revenue	100		100		100
Cost of revenue:
Cost of license revenue	3		3		3
Cost of service and maintenance	25		21		20
Cost paid to related parties	—		—		1
Total cost of revenue	28		24		24
Gross profit	72		76		76
Operating expenses:
Research and development	16		16		24
Sales and marketing	32		32		42
General and administrative	8		7		8
Acquired in-process research and development	—		1		—
Restructuring charge	1		1		—
Amortization of acquired intangible assets	2		1		1
Total operating expenses	59		58		75
Income from operations	13		18		1
Interest income	3		2		5
Interest expense	(1	)	(1	)	—
Other income (expense), net	—		—		—
Income before income taxes	15		19		6
Provision for (benefit from) income taxes	(1	)	7		2
Net income	16	%	12	%	4	%

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Total Revenue

	Year Ended November 30,						% Change
	2005		2004		2003		Year 2004 to 2005		Year 2003 to 2004
(in thousands, except percentages)
Total revenue	$	445,910	$	387,220	$	264,210	15	%	47	%

Total revenue increased 15% for fiscal year 2005 compared to fiscal year 2004, primarily due to a 40% increase in service and maintenance revenue, offset by a 5% decrease in license revenue. Geographically, our total revenue increased by $35.0 million or 18% in the United States, $16.2 million or 11% in Europe and $5.5 million or 13% in the Pacific Rim in fiscal year 2005. See Note 13 to the Consolidated Financial Statements for further detail on total revenue by region.

Since June 2004, our consolidated results of operations have included incremental revenue (and costs) related to the former Staffware operations. Consequently, such incremental revenue has been included in our results for the second half of fiscal year 2004 and fiscal year 2005. Pro forma results as if we had acquired Staffware at the beginning of fiscal year 2003 are provided in Note 3 to our Consolidated Financial Statement. Due to the structure of our multi-product Enterprise License Agreements, which often combine TIBCO and Staffware products, we are not able to separately report the portion of revenue attributable solely to the Staffware components.

Total revenue increased 47% for fiscal year 2004 compared to fiscal year 2003, primarily due to incremental revenue from Staffware during fiscal year 2004, our direct sales to customers in the financial services market beginning in October 2003 (pursuant to our agreement with Reuters) and a general increase in information technology spending by our customers.

Revenue from Reuters was $23.0 million, $28.3 million and $30.7 million representing 5%, 7% and 12% of our total revenue in fiscal years 2005, 2004 and 2003, respectively. Until March 2005, our revenue from Reuters consisted primarily of fees under our license agreement, which includes minimum guaranteed fees of $5.0 million per quarter, reduced by an amount equal to 10% of the license and maintenance revenues from our sales to financial services companies (and, until October 2004, also reduced by 40% of our maintenance revenue from customers who were transitioned to us by Reuters).

License Revenue and Costs

	Year Ended November 30,									% Change
	2005			2004			2003			Year 2004 to 2005		Year 2003 to 2004
(in thousands, except percentages)
License revenue	$	203,888		$	214,086		$	140,509		(5	)%	52	%
As a percentage of total revenue		46	%		55	%		53	%
Cost of license revenue	$	12,694		$	11,586		$	8,835		10	%	31	%
As a percentage of total revenue		3	%		3	%		3	%
As a percentage of license revenue		6	%		5	%		6	%

We license a wide range of products to customers in various industries and geographic regions. Cost of license revenue mainly consisted of royalties and amortization of developed technology acquired through corporate acquisitions.

License revenue decreased by $10.2 million or 5% for fiscal year 2005 compared to fiscal year 2004, primarily due to a decrease in revenue from the telecommunications, consumer packaged goods and manufacturing sectors, partially offset by an increase in license revenue from the financial services market. License revenue increased 52% for fiscal year 2004 compared to fiscal year 2003, primarily due to increased revenue from the financial services, consumer packaged goods, telecommunications and manufacturing sectors, and also due to additional revenue generated from the Staffware acquisition.

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The total number of license revenue transactions over $100,000 increased to 316 in fiscal year 2005, from 260 in fiscal year 2004, and 225 in fiscal year 2003. The average deal size for transactions over $100,000 was approximately $0.6 million, $0.7 million, and $0.4 million in fiscal years 2005, 2004 and 2003, respectively. The number of transactions equal to or greater than $1 million was 42, 40 and 18 transactions in fiscal years 2005, 2004 and 2003, respectively. Our total license revenue in any particular period is to a certain extent, dependant on the size and timing of larger license deals. We expect the number of license transactions over $100,000 to increase in fiscal year 2006, while the size and timing of any particular multi-million dollar deal is more difficult to forecast.

Cost of license revenue mainly consisted of royalty costs and amortization of developed technology acquired through corporate acquisitions. Cost of license revenue remained approximately 3% of total revenue and 5% to 6% of license revenue in each of fiscal years 2005, 2004 and 2003. As stated above, our fiscal year 2005 financial results include incremental revenue and costs attributable to former Staffware operations; whereas, our fiscal year 2004 financial results only include such revenue and costs from June 2004.

We expect license revenues to be approximately 45% to 55% of our total revenue and cost of license revenue to remain approximately 5% to 7% of license revenue in fiscal year 2006.

Service and Maintenance Revenue and Costs

	Year Ended November 30,									% Change
	2005			2004			2003			Year 2004 to 2005		Year 2003 to 2004
(in thousands, except percentages)
Service and maintenance revenue	$	242,022		$	173,134		$	123,701		40	%	40	%
As a percentage of total revenue		54	%		45	%		47	%
Cost of service and maintenance revenue	$	111,499		$	81,611		$	52,370		37	%	56	%
As a percentage of total revenue		25	%		21	%		20	%
As a percentage of service and maintenance revenue		46	%		47	%		42	%

Service and maintenance revenue increased $68.9 million or 40% for fiscal year 2005 compared to fiscal year 2004, and increased 40% for fiscal year 2004 compared to fiscal year 2003. The increase in fiscal year 2005 was comprised of $33.6 million, or a 52% increase in consulting and training services revenue, and $35.3 million, or a 33% increase in maintenance revenue. The increase in fiscal year 2004 compared to fiscal year 2003 was comprised of $26.9 million, or a 71% increase in consulting and training services revenue, and $22.5 million, or a 26% increase in maintenance revenue. Consulting revenue increased due to more comprehensive and larger engagements with respect to a number of accounts and an increased focus on providing more services to customers. Maintenance revenue increased primarily due to growth in our installed software base and our acquisition of Staffware in third quarter of fiscal year 2004 and ObjectStar in the second quarter of fiscal year 2005. Also, in accordance with our agreement with Reuters, we began providing maintenance and support services directly to customers transitioned from Reuters in the fourth quarter of fiscal year 2003, which contributed to our growth in service and maintenance revenue in fiscal year 2004.

Cost of service and maintenance revenue consists primarily of compensation of professional services and customer support personnel and third-party contractors, and associated expenses related to providing consulting services.

The cost of service and maintenance revenue increased as a percentage of total revenue throughout the three years ended November 30, 2005, as the relative proportion of consulting revenue increased. The increase in absolute dollars in fiscal year 2005 as compared to the prior year resulted primarily from an increase of approximately $13.6 million related to personnel compensation, $12.7 million for third-party contractor compensation and consulting fees, and $2.4 million in travel costs. Increased compensation cost was primarily

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due to an increase in professional services and customer support staff during the year. Increased third-party contractor and consulting fees were also directly related to increased service revenues.

The increase in absolute dollars of cost of service and maintenance revenue in fiscal year 2004 as compared to fiscal year 2003 resulted primarily from an increase of approximately $14.8 million related to personnel compensation, $9.2 million for third-party contractor compensation and consulting fees, and $3.8 million in travel costs.

We expect service and maintenance revenue to be approximately 45% to 55% of total revenue in fiscal year 2006. We expect the cost of service and maintenance revenue to increase in absolute dollars and in line with increasing service and maintenance revenue. Beginning in the first quarter of fiscal year 2006, our cost of service and maintenance will include significant share-based compensation expense calculated using the fair value method as required by SFAS 123(R), however, we cannot quantify the amount of such increase at this time.

Research and Development Expenses

Research and development expenses consist primarily of personnel compensation, third-party contractor fees and related costs associated with the development and enhancement of our suite of products.

	Year Ended November 30,									% Change
	2005			2004			2003			Year 2004 to 2005		Year 2003 to 2004
(in thousands, except percentages)
Research and development expenses	$	73,136		$	61,100		$	64,588		20	%	(5	)%
As a percentage of total revenue		16	%		16	%		24	%

The increase in fiscal year 2005 compared to fiscal year 2004 was primarily due to a $9.5 million increase in personnel compensation as a result of headcount increases both from our acquisitions and our establishment of a new research and development center in India. The remainder of the increase in research and development expenses included increased travel expenses, depreciation of equipment and software and various license fees. Our fiscal year 2005 financial results include incremental costs attributable to former Staffware operations; whereas, our fiscal year 2004 financial results only include such costs from June 2004.

The decrease in fiscal year 2004 compared to fiscal year 2003 was primarily due to a $1.1 million decrease in third-party contractor fees and a $4.3 million reduction of facility cost expenses, partially offset by a $2.8 million increase in personnel compensation. The reduction in third party contractor fees was largely the result of renegotiated agreements with various third party contractors. The purchase of our corporate headquarters in June 2003 also contributed to the reduction of facility expenses in fiscal year 2004. Personnel compensation increased in fiscal year 2004 due to an increase in headcount primarily as a result of the Staffware acquisition, and an increase in variable incentive compensation.

We believe that continued investment in research and development is critical to attaining our strategic objectives and, as a result, we expect that spending on research and development will increase in absolute dollars in fiscal year 2006. Beginning in the first quarter of fiscal year 2006, our research and development expenses will include significant share-based compensation expense calculated using the fair value method as required by SFAS 123(R), however, we cannot quantify the amount of such increase at this time.

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Sales and Marketing Expenses

Sales and marketing expenses consist primarily of personnel and related costs of our direct sales force and marketing staff, the cost of marketing programs, including customer conferences, promotional materials, trade shows and advertising, and related travel expenses.

	Year Ended November 30,									% Change
	2005			2004			2003			Year 2004 to 2005		Year 2003 to 2004
(in thousands, except percentages)
Sales and marketing expenses	$	140,370		$	123,486		$	110,230		14	%	12	%
As a percentage of total revenue		32	%		32	%		42	%

The increase in fiscal year 2005 as compared to fiscal year 2004 was primarily due to a $9.5 million increase in personnel compensation, a $2.0 million increase in travel expenses, a $3.6 million increase in facility expenses, partially offset by a $2.1 million reduction in commission expenses and a $1.7 million decrease in sales referral fees. The increase in personnel compensation was due to an increase in headcount. The lower sales commission resulted from a lower effective rate on commissionable revenue and lower license revenue. Our fiscal year 2005 financial results include incremental costs attributable to former Staffware operations; whereas, our fiscal year 2004 financial results only include such costs from June 2004.

The increase in fiscal year 2004 as compared to fiscal year 2003 was primarily due to a $7.2 million increase in personnel compensation, a $6.2 million increase in commission expense and a $2.4 million increase in travel expenses, partially offset by a $2.0 million decrease in marketing program costs and a $1.0 million reduction of facility expenses. The increase in personnel compensation was due to an increase in headcount, most significantly in Europe, primarily as a result of the Staffware acquisition. The higher sales commission was a result of higher commissionable revenue. The reduction in marketing program costs was due to more specific and targeted advertising efforts. The reduction in facility expenses was attributable to the purchase of our corporate headquarters in June 2003.

We intend to selectively increase staff in our direct sales organization and to increase our marketing efforts in the coming year and, accordingly, expect that sales and marketing expenditures will increase in absolute dollars in fiscal year 2006. Beginning in the first quarter of fiscal year 2006, our sales and marketing expenses will include significant share-based compensation expense calculated using the fair value method as required by SFAS 123(R), however, we cannot quantify the amount of such increase at this time.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel and related costs for general corporate functions, including executive, legal, finance, accounting and human resources.

	Year Ended November 30,									% Change
	2005			2004			2003			Year 2004 to 2005		Year 2003 to 2004
(in thousands, except percentages)
General and administrative expenses	$	37,320		$	29,048		$	20,334		28	%	43	%
As a percentage of total revenue		8	%		7	%		8	%

The increase in fiscal year 2005 as compared to fiscal year 2004 was primarily due to a $1.8 million increase in personnel compensation and an $8.9 million increase in consulting and outside services, offset by reductions in other administrative costs. Increased headcount contributed to total higher personnel costs. Consulting and outside services increased substantially, due to our continuous effort to comply with the requirements of the Sarbanes-Oxley Act (“Sarbanes-Oxley”), and increased legal, tax consulting and other professional fees. Our fiscal year 2005 financial results include the incremental costs attributable to former Staffware operations; whereas, our fiscal year 2004 financial results only include such costs from June 2004.

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The increase in fiscal year 2004 as compared to fiscal year 2003 was primarily due to an $8.0 million increase in personnel compensation, a $2.1 million increase in consulting and outside services and a $1.0 million increase in travel expenses, offset by a $0.9 million reduction in facility expenses, and reductions in other administrative costs. Increased headcount together with an increase in variable incentive compensation contributed to total higher personnel costs. Consulting and outside services increased due to our initiatives to comply with Sarbanes-Oxley. The reduction in facility expenses was attributable to the purchase of our corporate headquarters in June 2003.

We will continue to invest in improving our corporate infrastructure to enhance effective management and internal controls and therefore expect that general and administrative spending will increase in absolute dollars in fiscal year 2006. Beginning in the first quarter of fiscal year 2006, our general and administrative expenses will include significant share-based compensation expense calculated using the fair value method as required by SFAS 123(R), however, we cannot quantify the amount of such increase at this time.

Stock-Based Compensation

We accounted for employee stock-based compensation using the intrinsic value method prescribed by APB 25 as discussed in Note 2 to our Consolidated Financial Statements. Stock-based compensation expense principally relates to employee stock options assumed in acquisitions and stock options granted to consultants. Stock-based compensation expense related to stock options granted to consultants is recognized as earned using the multiple option method and is recorded by expense category. At each reporting date, we re-measure consultant stock options using the Black-Scholes option-pricing model. As a result, stock-based compensation expense will fluctuate.

The stock-based compensation expenses have been incorporated into the respective cost or expense lines in the Consolidated Income Statement, and are not separately shown on the Consolidated Income Statement because such amounts were insignificant in fiscal year 2005 and 2004. The following table summarizes the expenses:

	Year Ended November 30,									% Change
	2005			2004			2003			Year 2004 to 2005		Year 2003 to 2004
(in thousands, except percentages)
Stock-based compensation expenses:
In cost of revenue	$	14		$	34		$	201
In operating expenses		115			209			862
Total stock-based compensation expenses	$	129		$	243		$	1,063		(47	)%	(77	)%
As a percentage of total revenue		—	%		—	%		—	%

The decrease in stock-based compensation was mainly the result of continuous amortization of unearned stock-based compensation cost brought forward from prior years, with minimal additions.

As prescribed by SFAS 123(R) issued in December 2004, we will be required to recognize the compensation costs relating to share-based payment transactions in our financial statements, using the fair value method, starting from our first fiscal quarter of 2006. We expect the adoption of SFAS 123(R) will increase our share-based compensation expense significantly, however we cannot quantify the amount of such increase at this time.

Acquired In-Process Research and Development

	Year Ended November 30,									% Change
	2005			2004			2003			Year 2004 to 2005		Year 2003 to 2004
(in thousands, except percentages)
Acquired in-process research and development expenses	$	—		$	2,200		$	—		(100	)%	N/A
As a percentage of total revenue		—	%		1	%		—	%

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In fiscal year 2004, we estimated that $2.2 million of the purchase price of Staffware represented acquired in-process research and development (“IPRD”) that had not yet reached technological feasibility and had no alternative future use. Accordingly, this amount was immediately charged to expense upon consummation of the acquisition. We calculated the value of IPRD by estimating the expected cash flows from the projects once commercially viable, discounting the net cash flows back to their present value and then applying a percentage of completion. In determining the value ultimately assigned to IPRD we considered the stage of completion, complexity of work to date, difficulty of completing the remaining development, costs already incurred and the expected cost to complete the project. As of November 30, 2005, we had substantially completed the Staffware projects that were in process at the date of the acquisition.

Restructuring Charge

	Year Ended November 30,									% Change
	2005			2004			2003			Year 2004 to 2005		Year 2003 to 2004
(in thousands, except percentages)
Restructuring charge	$	3,905		$	2,186		$	1,100		79	%	99	%
As a percentage of total revenue		1	%		1	%		—	%

During fiscal year 2005, we initiated a restructuring plan designed to re-align our resources and cost structure, and accordingly recognized a restructuring charge of approximately $3.9 million for the resulting workforce reduction. The restructuring plan eliminated 49 employees, across all functions and primarily in our European operations. As of November 30, 2005, all such employees have been terminated and of the $3.9 million restructuring charge, $3.2 million was paid, and the remaining $0.7 million accrual is expected to be utilized in fiscal year 2006.

During fiscal year 2004, we recorded $2.2 million in restructuring charges related to properties vacated in connection with facilities consolidation. The additional facilities charges resulted from revisions to our estimates of future sublease income due to further deterioration of real estate market conditions. The estimated facility costs were based on our contractual obligations, net of estimated sublease income, based on current comparable rates for leases in their respective markets. Should facilities rental rates continue to decrease in these markets or should it take longer than expected to find a suitable tenant to sublease these facilities, the actual loss could exceed this estimate by up to $2.8 million.

During the first quarter of fiscal year 2003, we recorded a restructuring charge of $1.1 million related to a reduction in headcount to align our cost structure with changing market conditions. This reduction of approximately 44 employees was comprised of 60% sales and marketing staff, 5% general and administrative staff, and 35% research and development staff. All severance actions were completed by August 31, 2003.

Also see Note 8 “Accrued Restructuring and Integration Costs” to our Consolidated Financial Statements.

Amortization of Acquired Intangible Assets

Intangible assets acquired through corporate acquisitions are comprised of the estimated value of developed technologies, patents, trademarks, established customer bases, non-compete agreements, as well as maintenance and OEM customer royalty agreements. Amortization of developed technologies is recorded as a cost of revenue, and amortization of other acquired intangibles is included in operating expenses.

	Year Ended November 30,									% Change
	2005			2004			2003			Year 2004 to 2005		Year 2003 to 2004
(in thousands, except percentages)
Amortization of acquired intangible assets:
In cost of revenue	$	5,958		$	6,702		$	4,767
In operating expenses		8,912			5,253			1,997
Total amortization expenses	$	14,870		$	11,955		$	6,764		24	%	77	%
As a percentage of total revenue		3	%		3	%		3	%

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The increase in amortization expense in fiscal year 2005 as compared to fiscal year 2004 was primarily due to a full year of amortization related to intangible assets acquired from Staffware, and additional amortization related to intangible assets acquired from ObjectStar in second quarter of fiscal year 2005. The increase in amortization expense in fiscal year 2004 as compared to fiscal year 2003 was primarily due to the amortization of acquired intangible assets from our acquisitions of Staffware and General Interface Corp. (“General Interface”) in the second half of fiscal year 2004.

We expect the amortization of acquired intangible assets to be approximately $14.8 million for fiscal year 2006, provided that there are no new acquisitions.

Interest Income

	Year Ended November 30,									% Change
	2005			2004			2003			Year 2004 to 2005		Year 2003 to 2004
(in thousands, except percentages)
Interest income	$	13,318		$	8,436		$	12,536		58	%	(33	)%
As a percentage of total revenue		3	%		2	%		5	%

The increase in interest income in fiscal year 2005 compared to fiscal year 2004 was primarily due to the effect of rising interest rates on our investments.

The decrease in interest income in fiscal year 2004 compared to fiscal year 2003 was primarily due to the decline in interest rates on our investments combined with a decrease in our investment asset base as a result of our repurchase and retirement of $115.0 million of our common stock from Reuters, as well as the net cash outlay of $115.0 million for the Staffware and General Interface acquisitions.

Interest Expense

	Year Ended November 30,									% Change
	2005			2004			2003			Year 2004 to 2005		Year 2003 to 2004
(in thousands, except percentages)
Interest expense	$	2,711		$	2,771		$	1,205		(2	)%	130	%
As a percentage of total revenue		1	%		1	%		—	%

Interest expense is related to the mortgage note payable for the purchase of our corporate headquarters in June 2003. We recorded a $54.0 million mortgage note payable to a financial institution collateralized by the commercial real property acquired. The balance of the mortgage note payable as of November 30, 2005 was $50.1 million. The mortgage note payable carries a fixed annual interest rate of 5.09% and a 20-year amortization. The principal balance that will be remaining at the end of the 10-year term of $33.9 million will be due as a final balloon payment on July 1, 2013.

Interest expense declined slightly for fiscal year 2005 compared to fiscal year 2004 due to principal amortization.

Interest expense increased for fiscal year 2004 compared to fiscal year 2003 due to the fact that the mortgage note was entered into in June 2003, so interest expense was incurred only for part of fiscal year 2003, as compared to the entire year for fiscal year 2004.

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Other Income (Expenses), net

Other income (expenses), net, includes realized gains and losses on investments, foreign exchange gain (loss) and other miscellaneous income and expense items.

	Year Ended November 30,									% Change
	2005			2004			2003			Year 2004 to 2005		Year 2003 to 2004
(in thousands, except percentages)
Other income (expenses):
Foreign exchange gain (loss)	$	(1,445	)	$	(2,326	)	$	738
Realized gain (loss) on short-term investments		(275	)		(416	)		2,924
Realized gain (loss) on long-term investments		—			14			84
Other income (expense), net		120			28			(70	)
Total other income (expenses), net	$	(1,600	)	$	(2,700	)	$	3,676		41	%	(173	)%
As a percentage of total revenue		—	%		(1	)%		1	%

Foreign exchange loss in fiscal year 2005 and 2004 was primarily attributable to the volatility of the U.S. dollar against the Euro and the British pound. Realized gain (loss) on short-term investments represents gains or losses realized when such short-term investments are sold and when other-than-temporary impairment on individual securities is recorded. The difference between the realized gain in fiscal year 2003 compared to the realized loss in fiscal year 2004 was primarily due to a rising interest rate environment in 2004 compared to 2003.

Income Taxes

	Year Ended November 30,									% Change
	2005			2004			2003			Year 2004 to 2005		Year 2003 to 2004
(in thousands, except percentages)
Provision for (benefit from) income tax	$	(5,474	)	$	28,795		$	6,043		(119	)%	377	%
Effective tax rate		(8.2	)%		39.1	%		34.6	%

Our effective tax rate was (8.2)%, 39.1% and 34.6% for the fiscal years ended November 30, 2005, 2004 and 2003, respectively. For fiscal year 2005, the decrease in the effective tax rate is primarily due to the tax benefit from the partial release of the valuation allowance.

We make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

As part of the process of preparing our Consolidated Financial Statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves us estimating our current tax exposure under the most recent tax laws and assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our Consolidated Balance Sheet.

We assess the likelihood that we will be able to recover our deferred tax assets. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance. If recovery is not likely, we increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. The available positive evidence at November 30, 2005 included three years of historical operating profits and a projection of future income limited to three years which coincides with the period over which we recorded historical operating

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profits, due to our lack of visibility into earnings further into the future. As a result of our analysis of all available evidence, both positive and negative, we recorded a partial release of valuation allowance in fiscal year 2005. We continue to closely monitor available evidence and may adjust our valuation allowance in future periods.

As of November 30, 2005, we believed that the amount of the deferred tax assets recorded on our balance sheet as a result of the partial release of valuation allowance would ultimately be recovered. However, should there be a change in our ability to recover our deferred tax assets, our tax provision would increase in the period in which we determine that the recovery is not probable. If we have to re-establish the full valuation allowance, it may result in a charge of $19.6 million to the tax provision.

Of the remaining valuation allowance of approximately $219.3 million at November 30, 2005, we estimate that when released, approximately $21.7 million will result in an income tax benefit, approximately $7.7 million will be credited to goodwill and approximately $189.9 million relating to stock option exercises and related tax credits will be credited directly to additional paid-in capital.

Our income taxes payable for federal purposes have been reduced by the tax benefits associated with the exercise of employee stock options during the year and utilization of net operating loss carryover applicable to both stock options and acquired entities. The benefits applicable to stock options were credited directly to stockholders’ equity and amounted to $26.3 million and $6.0 million for fiscal years 2005 and 2004, respectively. Of the $26.3 million for fiscal year 2005, $15.9 million reduced taxes payable in the current year and therefore is shown as an increase to cash flow from operating activities on the statement of cash flows. The remaining balance of $10.4 million represents the partial release of valuation allowance against deferred tax assets that resulted from stock option benefits and, accordingly, was credited directly to stockholders’ equity. The benefits applicable to acquired entities were credited directly to goodwill and amounted to $1.2 million and $4.3 million for fiscal years 2005 and 2004, respectively.

As of November 30, 2005, our federal and state net operating loss carryforwards for income tax purposes were $445.7 million and $153.7 million, respectively, which expire through 2023. As of November 30, 2005, our federal and state tax credit carryforwards for income tax purposes were $30.6 million and $20.0 million, respectively, which expire through 2025.

In the event of a change in ownership, as defined under federal and state tax laws, our net operating loss and tax credit carryforwards may be subject to annual limitations. The annual limitations may result in the expiration of the net operating loss and tax credit carryforwards before utilization.

Liquidity and Capital Resources

Current Cash Flows

As of November 30, 2005, we had cash, cash equivalents and short-term investments totaling $477.6 million, representing an increase of $4.1 million from November 30, 2004. Our total cash and cash equivalent balance was $208.7 million as of November 30, 2005. Our short-term available-for-sales investments totaled $268.9 million, primarily in high grade corporate bonds and U.S. government debt securities.

Net cash provided by operating activities in fiscal year 2005 was $82.8 million, resulting from net income of $72.5 million, adjusted for non-cash charges including $29.9 million of depreciation and amortization and $17.0 million tax benefits from acquisitions and employee stock options, less $21.9 million for deferred income tax valuation allowance release, and adjusted for net change in assets and liabilities (net of acquisitions), including a $18.9 million increase in deferred revenue mainly related to increased maintenance revenue, a $10.4 million decrease in accrued restructuring and excess facilities mainly due to payments during the year, and $23.6 million net cash used for other assets and liabilities.

To the extent that non-cash items increase or decrease our future operating results, there will be no corresponding impact on our cash flows. After excluding the effects of these non-cash charges, the primary changes in cash flows relating to operating activities result from changes in working capital. Our primary source of operating cash flows is the collection of accounts receivable from our customers, including maintenance which

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is typically billed annually in advance. Our operating cash flows are also impacted by the timing of payments to our vendors for accounts payable. We generally pay our vendors and service providers in accordance with the invoice terms and conditions. The timing of cash payments in future periods will be impacted by the terms of accounts payable arrangements and the timing of our cash inflows.

Net cash used for investing activities was $17.2 million in fiscal year 2005, resulting primarily from the use of $21.4 million for the acquisition of the assets of ObjectStar, $3.4 million for the acquisition of the assets of Velosel (also see Note 3 “Business Combinations”), and $14.9 million for capital expenditures, partially offset by net sales of short term investments of $23.4 million.

Net cash used for financing activities was $32.4 million in fiscal year 2005, primarily from our $48.3 million repurchase of shares of common stock on the open market, less $17.6 million cash received from the exercise of stock options and the sale of stock under our Employee Stock Purchase Program. In December 2005, our Board of Directors approved an additional eighteen-month Stock Repurchase Plan for the repurchase of up to $100 million of our common stock. The timing and amount of any repurchases under the plan will depend upon market conditions and other corporate considerations.

Starting in fiscal year 2006, in accordance with SFAS 123(R), a part of the tax benefit related to share-based payments will be classified as cash flows from financing activities, instead of cash flows from operating activities. As a result, our cash flows from operating activities are expected to decrease, offset by an increase in cash flows from financing activities.

We anticipate our operating expenses will grow in absolute dollars and in line with total revenue for the foreseeable future, and we intend to fund our operating expenses through cash flows from operations. Our capital expenditures are expected to be approximately $10.0 million to $15.0 million for fiscal year 2006. We expect to use primarily our current cash resources to fund capital expenditures, acquisitions or investments in complementary businesses, technologies or product lines, and repurchases of our common stock. We believe that our current cash, cash equivalents and short-term investments together with expected cash flows from operations will be sufficient to meet our anticipated cash requirements for working capital, capital expenditures, and currently approved stock repurchases for at least the next twelve months.

Commitments

In June 2003, we purchased our corporate headquarters with a $54.0 million mortgage note to lower our operating costs. Under the terms of the note, a balloon payment of $33.9 million, representing the remaining principal balance, will be due on July 1, 2013, the end of the 10-year term. Under the currently applicable terms of the mortgage note agreements, we are prohibited from acquiring another company without prior consent from the lender unless we maintain at least $300.0 million of cash and cash equivalents, and meet other non-financial terms as defined in the agreements. In addition, we are subject to certain non-financial covenants as defined in the agreements. We were in compliance with all covenants as of November 30, 2005.

In conjunction with the purchase of our corporate headquarters, we entered into a 51-year land lease of the property. The lease was paid in advance for a total of $28.0 million, but is subject to adjustment every ten years based upon fluctuations in fair market value of the land. We have the option to prepay any rent increase resulting from fluctuations in fair market value of the land.

We have a $20.0 million revolving line of credit that matures on June 21, 2006. The revolving line of credit is available for cash borrowings and for the issuance of letters of credit up to $20.0 million. As of November 30, 2005, no borrowings were outstanding under the facility and a $13.0 million irrevocable letter of credit was outstanding, leaving $7.0 million of available credit for additional letters of credit or cash loans. The $13.0 million irrevocable letter of credit outstanding was issued in connection with the mortgage note payable. The letter of credit automatically renews for successive one-year periods, until the mortgage note payable has been satisfied in full. We are required to maintain a minimum of $40.0 million in unrestricted cash, cash equivalents,

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and short-term investments net of total current and long-term indebtedness as well as comply with other non-financial covenants defined in the agreement. During fiscal 2005, we were in compliance with all covenants under the revolving line of credit.

As of November 30, 2005, we had $1.8 million in restricted cash in connection with bank guarantees issued by some of our international subsidiaries. The cash collateral is presented as restricted cash and included in Other Assets on the Consolidated Balance Sheet as of November 30, 2005.

As of November 30, 2005, our contractual commitments associated with indebtedness, lease obligations and operational restructuring are as follows, (in thousands):

	Total			2006			2007			2008			2009			2010			Thereafter
Operating commitments:
Debt principal	$	50,143		$	1,798		$	1,892		$	1,990		$	2,094		$	2,203		$	40,166
Debt interest		16,605			2,511			2,417			2,319			2,215			2,106			5,037
Operating leases		27,832			6,725			4,878			3,730			3,023			2,377			7,099
Total operating commitments		94,580			11,034			9,187			8,039			7,332			6,686			52,302
Restructuring-related commitments:
Gross lease obligations		39,789			7,761			7,700			7,779			7,816			8,051			682
Sublease income		(8,392	)		(2,818	)		(2,013	)		(1,293	)		(1,129	)		(1,050	)		(89	)
Net lease obligations		31,397			4,943			5,687			6,486			6,687			7,001			593
Total commitments	$	125,977		$	15,977		$	14,874		$	14,525		$	14,019		$	13,687		$	52,895

Future minimum lease payments under restructured non-cancelable operating leases as of November 30, 2005 include $28.1 million provided for as accrued restructuring costs and $1.1 million as accrued acquisition integration liabilities related to our acquisition of Staffware. See also Note 8 to our Consolidated Financial Statements for further details on accrued restructuring costs.

Indemnification

Our software license agreements typically provide for indemnification of customers for intellectual property infringement claims. To date, no such claims have been filed against us. We also warrant to customers that software products operate substantially in accordance with specifications. Historically, minimal costs have been incurred related to product warranties, and as such no accruals for warranty costs have been made. In addition, we indemnify our officers and directors under the terms of indemnity agreements entered into with them, as well as pursuant to our certificate of incorporation, bylaws, and applicable provisions of Delaware law. To date, we have not incurred any costs related to these indemnification arrangements.

Off Balance Sheet Arrangements

As of November 30, 2005, we had no off balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

Recent Accounting Pronouncements

In November 2005, FASB issued FSP FAS 115-1 and FAS 124-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments” (“FSP FAS 115-1”), which provides guidance on determining when investments in certain debt and equity securities are considered impaired, whether that impairment is other-than-temporary, and on measuring such impairment loss. FSP FAS 115-1 also includes

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accounting considerations subsequent to the recognition of an other-than temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. FSP FAS 115-1 is required to be applied to reporting periods beginning after December 15, 2005. We are required to adopt FSP FAS 115-1 in the second quarter of fiscal 2006. We do not expect that the adoption of the statement will have a material impact on our consolidated results or financial condition.

In May 2005, FASB issued SFAS 154, “Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3”. SFAS 154 changes the requirements for the accounting for and reporting of a change in accounting principle, and applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. This statement requires retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS 154 is effective for accounting changes made in fiscal years beginning after December 15, 2005. We do not expect that adoption of this statement will have a material impact on our results of operations or financial condition.

In December 2004, FASB issued SFAS 123(R), “Share-Based Payment (Revised 2004)”, which replaces SFAS 123 and supersedes APB 25. In March 2005, the SEC issued Staff Accounting Bulletin (“SAB”) No. 107, providing supplemental implementation guidance for SFAS 123(R). In April 2005, the SEC issued “Amendment to Rule 04-01(a) of Regulation S-X Regarding the Compliance Date for Statement of Financial Accounting Standard No.123(R), ‘Share-Based Payment’” (the “Amendment to Rule 4-01(a)”), changing the effective date for most public companies to adopt SFAS 123(R) to the first interim reporting period of a company’s fiscal year that begins on or after June 15, 2005. Under the Amendment to Rule 4-01(a), we are now required to adopt SFAS 123(R) in our first quarter of fiscal year 2006.

SFAS 123(R) requires that compensation costs relating to share-based payment transactions be recognized in the financial statements. The pro forma disclosure previously permitted under SFAS 123 will no longer be an acceptable alternative to recognition of expense in the financial statements. SFAS 123(R) also provides three alternative transition methods for its first adoption. Up to the end of fiscal year 2005, we had measured compensation costs related to share-based payments under APB 25 and as allowed by SFAS 123, and provided pro forma disclosure in notes to our financial statements as required by SFAS 123. On adoption of SFAS 123(R), we will use the modified prospective application transition method. SFAS 123(R) also requires a classification change in the statement of cash flows, whereby a portion of the tax benefits from stock options will be moved from cash from operating activities to cash from financing activities, without changing the total cash flows. We are still in the process of finalizing our study on the impact of applying various other provisions of SFAS 123(R). We expect the adoption of SFAS 123(R), SAB 107 and related pronouncements, will have a materially adverse impact on our net income and net income per share. However, we currently cannot accurately estimate the effect of such impact, as such costs will fluctuate as the fair market value of our common stock fluctuates.

In December 2004, FASB issued SFAS 153, “Exchanges of Nonmonetary Assets—an amendment to APB Opinion No. 29”. This statement amends APB 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. Adoption of this statement is not expected to have a material impact on our results of operations or financial condition.

40

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We invest in marketable securities in accordance with our investment policy. The primary objectives of our investment policy are to preserve principal, maintain proper liquidity to meet operating needs and maximize yields. Our investment policy specifies credit quality standards for our investments and limits the amount of credit exposure to any single issue, issuer or type of investment.

At the end of fiscal years 2005, 2004 and 2003, we had an investment portfolio of fixed income securities totaling $268.9 million, $292.7 million and $521.1 million, excluding those classified as cash and cash equivalents and restricted funds, respectively. Our investments consist primarily of bank and finance notes, various government obligations and asset-backed securities. These securities are classified as available-for-sale and are recorded on the balance sheet at fair market value with unrealized gains or losses reported as a separate component of stockholders’ equity. Unrealized losses are charged against income when a decline in fair market value is determined to be other-than-temporary. The specific identification method is used to determine the cost of securities sold.

The investment portfolio is subject to interest rate risk and will fall in value in the event market interest rates increase. If market interest rates were to increase immediately and uniformly by 100 basis points from levels as of November 30, 2005, the fair market value of the portfolio would decline by approximately $1.3 million.

We develop products in the United States of America and sell in North America, South America, Europe, the Pacific Rim and the Middle East. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets. The acquisition of Staffware increased our international sales and increased our exposure to foreign exchange fluctuations. A majority of sales are currently made in U.S. dollars; however, a strengthening of the dollar could make our products less competitive in foreign markets. To manage currency exposure related to net assets and liabilities denominated in foreign currencies, we enter into forward contracts for certain foreign denominated assets or liabilities. We do not enter into derivative financial instruments for trading purposes. We had two outstanding forward contracts with total notional amounts of $24.6 million as of November 30, 2005.

We performed sensitivity analyses as of November 30, 2005 and November 30, 2004, measuring the change in fair value arising from a hypothetical adverse movement in foreign currency exchange rates vis-à-vis the U.S. dollar, with all other variables held constant. The analyses covered all of our foreign currency contracts offset by underlying exposures. We used foreign currency exchange rates based on market rates in effect at November 30, 2005 and November 30, 2004, respectively. The sensitivity analyses indicated that a hypothetical 10% adverse movement in foreign currency exchange rates would result in a loss in the fair values of our foreign exchange derivative financial instruments, net of exposures, of $2.5 million as of November 30, 2005 and $1.1 million as of November 30, 2004.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Reference is made to the Index to Consolidated Financial Statements that appears on page F-1 of this report. The Report of Independent Registered Public Accounting Firm from PricewaterhouseCoopers LLP, the Consolidated Financial Statements and the Notes to Consolidated Financial Statements listed in the Index to Consolidated Financial Statements, which appear beginning on page F-2 of this report, are incorporated by reference into this Item 8.

41

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.    We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Based on their evaluation as of the end of the period covered by this Annual Report on Form 10-K, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective.

Management’s Report on Internal Control over Financial Reporting.    Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We assessed the effectiveness of the company’s internal control over financial reporting as of November 30, 2005. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework. Based on our assessment using those criteria, we concluded that our internal control over financial reporting was effective as of November 30, 2005.

Our management’s assessment of the effectiveness of our internal control over financial reporting as of November 30, 2005 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears on page F-2 of this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting.    There was no change in our internal control over financial reporting that occurred during the period covered by this Annual Report on Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

42

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item concerning our directors and executive officers is incorporated by reference from the information to be set forth in the sections entitled Election of Directors, Executive Officers, Code of Ethics and Executive Compensation and Employment Agreements—Section 16(a) Beneficial Ownership Reporting Compliance in our Proxy Statement for the 2006 Annual Meeting of Stockholders to be filed with the Commission within 120 days after the end of our fiscal year ended November 30, 2005.

We have adopted a Code of Ethics for Chief Executive and Senior Financial Officers that applies to our Chief Executive Officer, Chief Financial Officer and Corporate Controller. The Code of Ethics is posted on our website at www.tibco.com. The information concerning our Code of Ethics required by this item is incorporated by reference from the information to be set forth under the heading “Code of Ethics” in our proxy statement. We intend to disclose any amendment to the provisions of the Code of Ethics that apply specifically to our Chief Executive Officer, Chief Financial Officer or Corporate Controller by posting such information on our website. We intend to disclose any waiver to the provisions of the Code of Ethics that apply specifically to our Chief Executive Officer, Chief Financial Officer or Corporate Controller by filing such information on a Current Report on Form 8-K with the SEC, to the extent such filing is required by the Nasdaq National Market’s listing requirements; otherwise, we will disclose such waiver by posting such information on our website.

Directors

During fiscal year 2005, the following individuals served on our Board of Directors: Vivek Y. Ranadivé, Bernard Bourigeaud, Eric Dunn, Naren Gupta, Peter Job and Philip K. Wood.

The following table lists the names, ages and positions held by each of our directors as of January 31, 2006:

Name	Age	Position with our Company
Vivek Y. Ranadivé	48	Director, President, Chief Executive Officer and Chairman of the Board
Bernard Bourigeaud	61	Director
Eric Dunn (1)	47	Director
Naren Gupta (1)(2)(3)	57	Director
Peter Job (3)	64	Director
Philip K. Wood (1)(2)	50	Director

(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

(3) Member of the Nominating and Governance Committee.

Vivek Y. Ranadivé has served as our President, Chief Executive Officer and Chairman of our Board of Directors since our inception in January 1997. From 1985 to 1997, Mr. Ranadivé served as the Chairman and Chief Executive Officer of Teknekron Software Systems, Inc., our predecessor company. In addition, Mr. Ranadivé served as President, Chief Executive Officer and Chairman of the Board of TIBCO Finance Technology Inc., a wholly owned subsidiary of Reuters, from its inception until December 1998.

Bernard Bourigeaud has been one of our directors since April 2005. Mr. Bourigeaud currently serves as the Chairman of the Management Board and Chief Executive Officer of Atos Origin. He has been with Atos Origin, or its predecessors, since 1991, conducting the merger which led to the creation of Axime of which he became chairman. In 1996, Axime acquired Sligos, forming Atos. In November 2000, Atos merged with the Dutch company Origin to create Atos Origin. In 2002, he completed the acquisition of KPMG Consulting in the UK and The Netherlands, now trading as Atos KPMG Consulting. Before joining Axime, Mr. Bourigeaud spent 11 years

43

at Deloitte Haskins and Sells France, where he headed the management consulting group with responsibility for French operations and corporate finance in Europe. Mr. Bourigeaud is also a qualified French chartered accountant.

Eric Dunn has been one of our directors since April 2004. Since 2003, Mr. Dunn has been a General Partner at Cardinal Venture Capital. From 2000 to 2003, Mr. Dunn owned and operated Kingston Creek Ventures. From 1986 to 2000, Mr. Dunn served in a number of senior executive capacities at Intuit, Inc., including Chief Financial Officer and Senior Vice President and Chief Technology Officer. Mr. Dunn is currently on the Board of Directors of Corillian Corporation and several private companies.

Naren Gupta has been one of our directors since April 2002. Since February 2000, Dr. Gupta has served as Vice Chairman of the Board of Directors of WindRiver Systems, Inc. From June 2004 to January 2005, Dr. Gupta also served as the Interim President and Chief Executive Officer and as a director of Quick Eagle Networks. He also served as Interim President and Chief Executive Officer of WindRiver Systems from June 2003 to January 2004. Prior to joining WindRiver Systems, Dr. Gupta was Chief Executive Officer and President of Integrated Systems Inc. from 1980 until 1994 and Chairman of its Board of Directors from 1992 until 2000. In addition, Dr. Gupta serves on the Boards of Directors of several privately held companies. Dr. Gupta is a fellow of the Institute of Electrical and Electronics Engineers.

Peter Job has been one of our directors since June 2000. From 1963 through his retirement in July 2001, Mr. Job was employed by Reuters, most recently as its Chief Executive. In addition, Mr. Job currently serves on the Boards of Directors for Schroders PLC, Deutsche Bank AG and Royal Dutch Shell, as well as on the Board of Directors of a privately held company. Until December 2004, Mr. Job also served on the Board of Directors of Glaxo Smith Kline PLC.

Philip K. Wood has been one of our directors since our inception. From August 2004 to January 2006, Mr. Wood was employed by D1 Oils plc as its Chief Executive Officer. From September 1990 through May 2004, Mr. Wood was employed by Reuters and served as Managing Director of Business Development. Prior to joining Reuters, Mr. Wood was a partner at Price Waterhouse, a predecessor to PricewaterhouseCoopers LLP. Mr. Wood was on the Board of Directors of Independent Television News Limited until January 2004. He is a fellow of the Institute of Chartered Accountants and a member of the Association of Corporate Treasurers.

The size of our board is currently set at six members. As of January 31, 2006, we had six directors serving on our board.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item regarding executive compensation is incorporated by reference from the information to be set forth in the sections entitled Election of Directors—Director Compensation and Executive Compensation and Employment Agreements in our Proxy Statement for the 2006 Annual Meeting of Stockholders to be filed with the Commission within 120 days after the end of our fiscal year ended November 30, 2005.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item regarding security ownership of certain beneficial owners and management is incorporated by reference from the information to be set forth in the section entitled Security Ownership of Certain Beneficial Owners and Management in our Proxy Statement for the 2006 Annual Meeting of Stockholders to be filed with the Commission within 120 days after the end of our fiscal year ended November 30, 2005.

The information required by this item regarding equity compensation plans is incorporated by reference from the section entitled Equity Compensation Plan Information set forth in Item 5 of this Annual Report on Form 10-K.

44

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item regarding certain relationships and related transactions is incorporated by reference from the information to be set forth in the sections entitled Compensation Committee Interlocks, Insider Participation in Compensation Decisions and Certain Transactions in our Proxy Statement for the 2006 Annual Meeting of Stockholders to be filed with the Commission within 120 days after the end of our fiscal year ended November 30, 2005.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item regarding principal accounting fees and services is incorporated by reference from the information to be set forth in the section entitled Audit Fees and Services in our Proxy Statement for the 2006 Annual Meeting of Stockholders to be filed with the Commission within 120 days after the end of our fiscal year ended November 30, 2005.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this report:

1. Financial Statements.    Please see the accompanying Index to Consolidated Financial Statements, which appears on page F-1 of the report. The Report of Independent Registered Public Accounting Firm, the Consolidated Financial Statements and the Notes to Consolidated Financial Statements listed in the Index to Consolidated Financial Statements, which appear beginning on page F-2 of this report, are incorporated by reference into Item 8 above.

2. Financial Statement Schedules.    Financial Statement Schedules have been omitted because the information required to be set forth therein is either not applicable or is included in the Consolidated Financial Statements or the notes thereto.

3. Exhibits.    See Item 15(b) below. Each management contract and compensatory plan or arrangement required to be filed has been identified.

(b) Exhibits.    The exhibits listed on the accompanying Exhibit Index immediately following the signature page are filed as part of, or are incorporated by reference into, this Annual Report on Form 10-K.

(c) Financial Statement Schedules.    Reference is made to Item 15(a)(2) above.

45

TIBCO SOFTWARE INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets	F-4
Consolidated Statements of Operations	F-5
Consolidated Statements of Stockholders’ Equity and Comprehensive Income	F-6
Consolidated Statements of Cash Flows	F-7
Notes to Consolidated Financial Statements	F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

TIBCO Software Inc.:

We have completed integrated audits of TIBCO Software Inc.’s 2005 and 2004 consolidated financial statements and of its internal control over financial reporting as of November 30, 2005 and an audit of its 2003 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions on TIBCO Software Inc.’s 2005, 2004, and 2003 consolidated financial statements and on its internal control over financial reporting as of November 30, 2005, based on our audits, are presented below.

Consolidated financial statements

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of TIBCO Software Inc. and its subsidiaries at November 30, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended November 30, 2005 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Internal control over financial reporting

Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A, that the Company maintained effective internal control over financial reporting as of November 30, 2005 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of November 30, 2005, based on criteria established in Internal Control—Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

(continued)

accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/    PRICEWATERHOUSECOOPERS LLP

San Jose, California

February 10, 2006

F-3

TIBCO SOFTWARE INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

	As of November 30,
	2005			2004
ASSETS
Current assets:
Cash and cash equivalents	$	208,756		$	180,849
Short-term investments		268,882			292,686
Accounts receivable, net		121,159			109,002
Due from related parties		1,243			2,886
Other current assets		18,111			16,984
Total current assets		618,151			602,407
Property and equipment, net		116,457			118,058
Goodwill		261,075			265,137
Acquired intangible assets, net		64,742			64,820
Long-term deferred income tax assets		27,440			—
Other assets		34,559			32,389
Total assets	$	1,122,424		$	1,082,811
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	9,656		$	7,058
Accrued liabilities		59,872			84,429
Accrued restructuring and excess facilities costs		5,840			9,489
Deferred revenue		82,300			60,633
Current portion of long-term debt		1,798			1,708
Total current liabilities		159,466			163,317
Accrued excess facilities costs, less current portion		24,149			29,878
Long-term deferred income tax liabilities		13,875			18,991
Long-term debt		48,345			50,143
Other long-term liabilities		2,970			—
Total long-term liabilities		89,339			99,012
Total liabilities		248,805			262,329
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value; 1,200,000 shares authorized; 210,548 and 213,912 shares issued and outstanding, respectively		211			214
Additional paid-in capital		928,830			933,223
Unearned stock-based compensation		(123	)		(149	)
Accumulated other comprehensive income (loss)		(14,346	)		702
Accumulated deficit		(40,953	)		(113,508	)
Total stockholders’ equity		873,619			820,482
Total liabilities and stockholders’ equity	$	1,122,424		$	1,082,811

The accompanying notes are an integral part of these consolidated financial statements.

F-4

TIBCO SOFTWARE INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Year Ended November 30,
	2005			2004			2003
License revenue:
Non-related parties	$	187,850		$	197,753		$	121,393
Related parties		16,038			16,333			19,116
Total license revenue		203,888			214,086			140,509
Service and maintenance revenue:
Non-related parties		228,539			155,864			106,031
Related parties		6,973			12,692			15,098
Reimbursable expenses		6,510			4,578			2,572
Total service and maintenance revenue		242,022			173,134			123,701
Total revenue		445,910			387,220			264,210
Cost of revenue:
Cost of license		12,694			11,586			8,835
Cost of service and maintenance		111,499			81,611			52,370
Cost paid to related parties		—			—			2,280
Total cost of revenue		124,193			93,197			63,485
Gross profit		321,717			294,023			200,725
Operating expenses:
Research and development		73,136			61,100			64,588
Sales and marketing		140,370			123,486			110,230
General and administrative		37,320			29,048			20,334
Acquired in-process research and development		—			2,200			—
Restructuring charges		3,905			2,186			1,100
Amortization of acquired intangible assets		8,912			5,253			1,997
Total operating expenses		263,643			223,273			198,249
Income from operations		58,074			70,750			2,476
Interest income		13,318			8,436			12,536
Interest expense		(2,711	)		(2,771	)		(1,205	)
Other income (expense), net		(1,600	)		(2,700	)		3,676
Income before income taxes		67,081			73,715			17,483
Provision for (benefit from) income taxes		(5,474	)		28,795			6,043
Net income	$	72,555		$	44,920		$	11,440
Net income per share:
Basic	$	0.34		$	0.22		$	0.05
Shares used to compute net income per share—Basic		213,263			207,506			211,555
Net income per share:
Diluted	$	0.32		$	0.20		$	0.05
Shares used to compute net income per share—Diluted		223,977			220,927			222,519

The accompanying notes are an integral part of these consolidated financial statements.

F-5

TIBCO SOFTWARE INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

(in thousands)

	Common Stock					Additional Paid-In Capital			Unearned Stock-Based Compensation			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Equity			Comprehensive Income (Loss) for the Year
	Shares		Amount
Balance at November 30, 2002	210,254		$	210		$	912,821		$	(1,333	)	$	2,897		$	(169,868	)	$	744,727
Components of comprehensive income:
Net income	—			—			—			—			—			11,440			11,440		$	11,440
Cumulative translation adjustment	—			—			—			—			(359	)		—			(359	)		(359	)
Change in net unrealized loss on investments, no tax	—			—			—			—			(2,313	)		—			(2,313	)		(2,313	)
Total comprehensive income																					$	8,768
Common stock issued for exercise of options, net	1,918			2			2,501			—			—			—			2,503
Common stock issued for employee stock purchase plan	1,194			1			5,378			—			—			—			5,379
Tax benefits from employee stock option plans	—			—			550			—			—			—			550
Unearned stock-based compensation, net	—			—			(212	)		1,079			—			—			867
Balance at November 30, 2003	213,366			213			921,038			(254	)		225			(158,428	)		762,794
Components of comprehensive income:
Net income	—			—			—			—			—			44,920			44,920		$	44,920
Cumulative translation adjustment	—			—			—			—			2,449			—			2,449			2,449
Change in net unrealized loss on investments, no tax	—			—			—			—			(1,972	)		—			(1,972	)		(1,972	)
Total comprehensive income																					$	45,397
Common stock repurchased from Reuters and retired	(16,788	)		(17	)		(114,983	)		—			—			—			(115,000	)
Common stock repurchased and retired	(75	)		—			(702	)		—			—			—			(702	)
Common stock issued for acquisition of Staffware	10,935			11			92,259			—			—			—			92,270
Common stock issued for exercise of options, net	5,362			6			24,850			—			—			—			24,856
Common stock issued for employee stock purchase plan	1,112			1			5,046			—			—			—			5,047
Tax benefits from employee stock option plans	—			—			6,006			—			—			—			6,006
Unearned stock-based compensation, net	—			—			(291	)		105			—			—			(186	)
Balance at November 30, 2004	213,912			214			933,223			(149	)		702			(113,508	)		820,482
Components of comprehensive income:
Net income	—			—			—			—			—			72,555			72,555		$	72,555
Cumulative translation adjustment	—			—			—			—			(14,904	)		—			(14,904	)		(14,904	)
Change in net unrealized loss on investments, net of $42 tax	—			—			—			—			(144	)		—			(144	)		(144	)
Total comprehensive income																					$	57,507
Common stock repurchased and retired	(6,550	)		(7	)		(48,293	)		—			—			—			(48,300	)
Common stock issued for exercise of options, net	2,524			3			13,556			—			—			—			13,559
Common stock issued for employee stock purchase plan	662			1			4,041			—			—			—			4,042
Tax benefits from employee stock option plans	—			—			26,210			—			—			—			26,210
Unearned stock-based compensation, net	—			—			93			26			—			—			119
Balance at November 30, 2005	210,548		$	211		$	928,830		$	(123	)	$	(14,346	)	$	(40,953	)	$	873,619

The accompanying notes are an integral part of these consolidated financial statements.

F-6

TIBCO SOFTWARE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended November 30,
	2005			2004			2003
Cash flows from operating activities:
Net income	$	72,555		$	44,920		$	11,440
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization of property and equipment		14,990			13,152			15,591
Amortization of acquired intangibles		14,870			11,955			6,764
Loss on disposal of property and equipment		109			—			—
Write-off of in-process research and development		—			2,200			—
Stock-based compensation		129			236			1,063
Realized (gain) loss on investments, net		275			402			(1,128	)
Deferred income tax		(21,893	)		666			—
Tax benefits related to acquisitions		1,149			4,315			—
Tax benefits related to employee stock option plans		15,851			6,006			550
Changes in assets and liabilities (net of acquisitions):
Accounts receivable		(8,764	)		(36,817	)		6,136
Due from related parties, net		1,643			(73	)		(3,176	)
Prepaid land lease		549			549			(27,770	)
Other assets		(3,402	)		3,861			681
Accounts payable		2,774			1,315			(1,550	)
Accrued liabilities and excess facilities costs		(26,823	)		16,461			(14,430	)
Deferred revenue		18,816			5,592			(6,692	)
Net cash provided by (used for) operating activities		82,828			74,740			(12,521	)
Cash flows from investing activities:
Purchases of short-term investments		(231,489	)		(530,754	)		(1,284,336	)
Sales and maturities of short-term investments		254,917			757,085			1,342,626
Cash used in acquisitions, net of cash received		(24,849	)		(115,009	)		—
Purchase of corporate facilities		—			—			(78,009	)
Purchases of other property and equipment		(14,946	)		(7,101	)		(2,309	)
Purchases of private equity investments		(382	)		(454	)		(120	)
Restricted cash and short-term investments pledged as security		(465	)		4,565			—
Net cash provided by (used for) investing activities		(17,214	)		108,332			(22,148	)
Cash flows from financing activities:
Proceeds from exercise of stock options		13,559			24,452			2,503
Proceeds from employee stock purchase program		4,042			5,047			5,379
Repurchase of the Company’s common stock		(48,300	)		(115,702	)		—
Proceeds from long term debt		—			—			54,000
Principal payments on long term debt		(1,708	)		(1,626	)		(523	)
Payment of financing fees		—			—			(716	)
Net cash provided by (used for) financing activities		(32,407	)		(87,829	)		60,643
Effect of exchange rate changes on cash		(5,300	)		2,328			75
Net change in cash and cash equivalents		27,907			97,571			26,049
Cash and cash equivalents at beginning of year		180,849			83,278			57,229
Cash and cash equivalents at end of year	$	208,756		$	180,849		$	83,278
Supplemental cash flow information:
Cash paid during the year for taxes	$	7,915		$	4,445		$	3,775
Cash paid during the year for interest		2,711			2,771			1,205
Non-cash investing and financing activities:
Common stock and options issued in connection with acquisition		—			92,270			—
Fair value of net assets (liabilities) assumed in acquisitions		(514	)		23,850			—

The accompanying notes are an integral part of these consolidated financial statements.

F-7

TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. The Company

TIBCO Software Inc. is the successor to a portion of the business of Teknekron Software Systems, Inc. Teknekron developed software, known as the TIB technology, for the integration and delivery of market data, such as stock quotes, news and other financial information, in trading rooms of large banks and financial services institutions. In 1992, Teknekron expanded its development efforts to include solutions designed to enable complex and disparate manufacturing equipment and software applications, primarily in the semiconductor fabrication market, to communicate within the factory environment. Teknekron was acquired by Reuters Group PLC, the global information company, in 1994. Following the acquisition, continued development of the TIB technology was undertaken to expand its use in the financial services markets.

In January 1997, our company, TIBCO Software Inc., was established as an entity separate from Teknekron. We were formed to create and market software solutions for use in the integration of business information, processes and applications. In connection with our establishment as a separate entity, Reuters transferred to us certain assets and liabilities related to our business and granted to us a royalty-free license to the intellectual property from which some of our messaging software products originated.

As of November 30, 2003, Reuters owned approximately 49% of the issued and outstanding shares of our capital stock and had a representative on the Board of Directors. In February 2004, Reuters sold 69 million of our outstanding shares in a registered public offering and we repurchased from Reuters and retired 16.8 million shares of our common stock. Since February 2004, Reuters’ ownership of our issued and outstanding shares has been less than 10%, and as of November 30, 2005, Reuter’s ownership was less than 1% of our issued and outstanding common stock.

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of TIBCO Software and our wholly owned subsidiaries. All significant intercompany balances have been eliminated in consolidation.

Fiscal Years

Our fiscal year is a twelve month period ending on November 30 of a stated year. For the purpose of presentation, we also refer to the years ended November 30, 2005, 2004 and 2003, as our fiscal years 2005, 2004, and 2003, respectively.

Reclassifications

Certain reclassifications have been made to prior year balances in order to conform to the current period presentation. These reclassifications have no impact on previously reported net loss or cash flows.

Use of Estimates

The preparation of the consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

F-8

TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Foreign Currency Translation

All of our foreign subsidiaries use the local currency of their respective countries as their functional currency. Assets and liabilities of these subsidiaries are translated into U.S. dollars at exchange rates at the balance sheet date. Income and expense items are translated at average exchange rates for the period. Cumulative translation adjustments are included as a component of accumulated other comprehensive income (loss) in stockholders’ equity.

Fair Value of Financial Instruments

Carrying amounts of our financial instruments including accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short maturities. The fair values of our available-for-sale investments in marketable securities and derivative instruments are disclosed in their respective sections of this Note.

Concentration of Credit Risk

Our cash, cash equivalents, short-term investments and accounts receivable are potentially subject to concentration of credit risk. Cash, cash equivalents and investments are deposited with financial institutions that management believes are creditworthy. Our accounts receivable are derived from revenue earned from customers located primarily in the United States and Europe. We perform ongoing credit evaluations of our customers’ financial condition and, generally, require no collateral from our customers. We maintain an allowance for doubtful accounts receivable based on various factors, including our review of credit profiles of our customers, contractual terms and conditions, current economic trends and historical payment experience. (Also see Note 5.) We do not expect to incur material losses with respect to financial instruments that potentially subject the Company to concentration of credit risk.

Cash, Cash Equivalents, and Short-Term Investments

We consider all highly liquid investment securities with remaining maturities, at the date of purchase, of three months or less to be cash equivalents. Management determines the appropriate classification of marketable securities at the time of purchase and evaluates such designation as of each balance sheet date. To date, all marketable securities have been classified as available-for-sale and are carried at fair value with unrealized gains and losses, if any, included as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Interest, dividends and realized gains and losses are included in interest and other income (expense). Realized gains and losses are recognized based on the specific identification method.

F-9

TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Marketable securities, which are classified as available-for-sale, are summarized below for November 30, 2005 and 2004 (in thousands):

										Classified on Balance Sheet as:
	Purchase/ Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Aggregate Fair Value		Cash and Cash Equivalents		Short-term Investments
As of November 30, 2005
U.S. Government debt securities	$	117,639	$	—	$	(950	)	$	116,689	$	—	$	116,689
Corporate debt securities		270,779		10		(797	)		269,992		153,823		116,169
Asset-Backed Securities		36,273		7		(264	)		36,016		—		36,016
Marketable equity securities		6		2		—			8		—		8
Money market funds		8,865		—		—			8,865		8,865		—
Total	$	433,562	$	19	$	(2,011	)	$	431,570	$	162,688	$	268,882
As of November 30, 2004
U.S. Government debt securities	$	161,180	$	—	$	(1,022	)	$	160,158	$	—	$	160,158
Corporate debt securities		93,183		7		(568	)		92,622		—		92,622
Notes and other		60,117		12		(320	)		59,809		19,943		39,866
Marketable equity securities		40		—		—			40		—		40
Money market funds		237		—		—			237		237		—
Total	$	314,757	$	19	$	(1,910	)	$	312,866	$	20,180	$	292,686

As of November 30, 2005 and 2004, $152.5 million and $123.3 million of fixed income securities had contractual maturities of one year or less, respectively. As of November 30, 2005 and 2004, $116.4 million and $169.4 million of fixed income securities had contractual maturities of more than one year through three years, respectively.

The following table summarizes the net realized gains (losses) on short term investments for the years presented (in thousands):

	Year Ended November 30,
	2005			2004			2003
Realized gains	$	—		$	2,508		$	3,173
Realized losses		(275	)		(2,924	)		(249	)
Net realized gains (losses)	$	(275	)	$	(416	)	$	2,924

Impairment of Investments

We monitor our investment portfolio for impairment on a periodic basis. In the event that the carrying value of an investment exceeds its fair value and the decline in value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis for the investment is established. In order to determine whether a decline in value is other-than-temporary, we evaluate, among other factors: the duration and extent to which the fair value has been less than the carrying value; our financial condition and business outlook, including key operational and cash flow metrics, current market conditions and future trends in the company’s industry; our relative competitive position within the industry; and our intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value.

F-10

TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In accordance with FASB Staff Position Nos. FAS 115-1 and FAS 124-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments” (“FSP FAS 115-1”), the following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of November 30, 2005 (in thousands):

	Less than 12 months					Greater than 12 months					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. Government debt securities	$	37,418	$	(479	)	$	79,271	$	(471	)	$	116,689	$	(950	)
Corporate debt securities		59,469		(500	)		47,090		(297	)		106,559		(797	)
Asset-Backed Securities		26,390		(254	)		2,408		(10	)		28,798		(264	)
Total	$	123,277	$	(1,233	)	$	128,769	$	(778	)	$	252,046	$	(2,011	)

U.S. Government Debt Securities.    The unrealized losses on our investments in U.S. Treasury obligations and direct obligations of the U.S. Government agencies were caused by rising interest rates. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because we have the ability to hold these investments until a recovery of fair value, which may be maturity, we do not consider these investments to be other-than-temporarily impaired as of November 30, 2005.

Corporate Debt Securities.    The unrealized losses on our investments in corporate bonds were caused by rising interest rates. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. The corporate bonds we hold are all high investment grade and there were no credit events on any of the corporate bonds held by us. Therefore, we do not believe it is probable that we will be unable to collect all amounts due according to the contractual terms of the investments. It is expected that the corporate bonds would not be settled at a price less than the amortized cost of the investment. Because we have the ability to hold these investments until a recovery of fair value, which may be maturity, we do not consider these investments to be other-than-temporarily impaired as of November 30, 2005.

Asset-Backed Securities.    The unrealized losses on our investments in asset-backed securities were caused by rising interest rates. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. The asset-backed securities we hold are all high investment grade and there were no credit events on any of the asset-backed securities held by us. Therefore, we do not believe it is probable that we will be unable collect all amounts due according to the contractual terms of the investments. It is expected that the asset-backed securities would not be settled at a price less than the amortized cost of the investment. Because we have the ability to hold these investments until a recovery of fair value, which may be maturity, we do not consider these investments to be other-than-temporarily impaired as of November 30, 2005.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. (Also see Note 6.) Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows:

	Estimated useful lives
Equipment and software	2-5 years
Furniture and fixtures	5 years
Buildings	25 years
Leasehold improvements	Shorter of the lease term or the estimated useful life

F-11

TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Depreciation and amortization expense of property and equipment was $15.0 million, $13.2 million and $15.6 million for fiscal years 2005, 2004 and 2003, respectively.

Capitalized Software Development Costs

Costs related to research and development are generally charged to expense as incurred. Capitalization of material software development costs begins when a product’s technological feasibility has been established in accordance with the provisions of SFAS 86, “Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed”. To date, the period between achieving technological feasibility, which we have defined as the establishment of a working model, and which typically occurs when beta testing commences, and the general availability of such software has been very short. Accordingly, software development costs have been expensed as incurred.

Costs related to software acquired, developed or modified solely to meet our internal requirements and for which there are no substantive plans to market are capitalized in accordance with the provisions of AICPA Statement of Position (“SOP”) 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.” Costs incurred after the preliminary planning stage of the project and after management has authorized and committed funds to the project are capitalized. Costs capitalized for computer software developed or obtained for internal use are included in Property and Equipment on the Consolidated Balance Sheets.

Goodwill and Other Intangible Assets

Our goodwill and intangible assets are recorded from our corporate acquisition transactions. In accordance with SFAS 142, “Goodwill and Other Intangible Assets,” which we adopted effective December 1, 2002, our goodwill and intangible assets with indefinite useful lives are no longer amortized, but are instead tested for impairment at least annually, or as circumstances indicate their value may no longer be recoverable. We generally perform our annual impairment test at the end of the fiscal year. As we operate our business in one reporting segment, our goodwill is tested for impairment at the enterprise level. Goodwill impairment testing is a two-step process. For the first step, we screen for impairment, and if any possible impairment exists, we undertake a second step of measuring such impairment. Other purchased intangible assets with definite useful lives are amortized on a straight-line basis over their useful lives, and periodically tested for impairment. (Also see Note 7.) No impairment losses were incurred in the years presented.

Impairment of Long-Lived Assets

We evaluate the recoverability of our long-lived assets in accordance with SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” When events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable we recognize such impairment in the event the net book value of such assets exceeds the future undiscounted cash flows attributable to such assets. No impairment losses were incurred in the years presented.

Revenue Recognition

License revenue consists principally of revenue earned under software license agreements. License revenue is generally recognized when a signed contract or other persuasive evidence of an arrangement exists, the software has been shipped or electronically delivered, the license fee is fixed or determinable, and collection of the resulting receivable is reasonably assured. When contracts contain multiple elements wherein vendor specific objective evidence exists for all undelivered elements, we account for the delivered elements in accordance with the “Residual Method” prescribed by SOP 98-9. Revenue from subscription license agreements, which include

F-12

TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

software, rights to unspecified future products and maintenance, is recognized ratably over the term of the subscription period. Revenue on shipments to resellers, which is generally subject to certain rights of return and price protection, is recognized when the products are sold by the resellers to an end-user customer and recorded net of related costs to the resellers. Providing all other revenue criteria are met, non-refundable, prepaid fees from OEM customers are generally recognized upon delivery and on going royalty fees are generally recognized upon reported units shipped.

Professional services revenue consists primarily of revenue received for performing implementation of our software, on-site support, consulting and training. Many customers who license our software also enter into separate professional services arrangements with us. In determining whether professional services revenue should be accounted for separately from license revenue, we evaluate, among other factors, the nature of our software products, whether they are ready for use by the customer upon receipt, the nature of our implementation services, which typically do not involve significant customization to or development of the underlying software code, the availability of services from other vendors, whether the timing of payments for license revenue is coincident with performance of services and whether milestones or acceptance criteria exist that affect the realizability of the software license fee. Substantially all of our professional services arrangements are billed on a time and materials basis and accordingly, are recognized as the services are performed. Contracts with fixed or not to exceed fees are recognized on a proportional performance basis. If there is significant uncertainty about the project completion or receipt of payment for professional services, revenue is deferred until the uncertainty is sufficiently resolved. Training revenue is recognized as training services are delivered.

For arrangements that do not qualify for separate accounting for the license and professional services revenues, including arrangements that involve significant modification or customization of the software, that include milestones or customer specific acceptance criteria that may affect collection of the software license fees, or where payment for the software license is tied to the performance of professional services, software license revenue is generally recognized together with the professional services revenue using either the percentage-of-completion or completed-contract method. Under the percentage-of-completion method, revenue recognized is equal to the ratio of costs expended to date to the anticipated total contract costs, based on current estimates of costs to complete the project. If the total estimated costs to complete a project exceed the total contract amount, indicating a loss, the entire anticipated loss would be recognized currently.

Maintenance revenue consists of fees for providing software updates on a when and if available basis and technical support for software products (“post-contract support” or “PCS”). Maintenance revenue is recognized ratably over the term of the agreement.

Payments received in advance of services performed are deferred. Allowances for estimated future returns and discounts are provided for upon recognition of revenue.

Advertising Expense

Advertising costs are expensed as incurred and totaled approximately $1.1 million, $0.4 million and $2.9 million for the fiscal years 2005, 2004, and 2003, respectively.

Restructuring Charges

Our restructuring charges are comprised primarily of costs related to properties abandoned in connection with facilities consolidation, related write-down of leasehold improvements and severance and associated employee termination costs related to headcount reductions. For restructuring actions initiated prior to December 31, 2002, we complied with the guidance provided by EITF 94-3 “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity.” We recorded the liability related to these termination costs when the plan was approved; the termination benefits were determined and communicated to the employees; the number of employees to be terminated, their locations and job were specifically identified;

F-13

TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

and the period of time to implement the plan was set. For restructuring actions initiated after January 1, 2003, we adopted SFAS 146, “Accounting for Costs Associated with Exit or Disposal Activities” which requires that a liability for costs associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred. (Also see Note 8.)

Stock-Based Compensation

We accounted for employee stock-based compensation plans using the intrinsic value method prescribed by APB 25 and have adopted the disclosure provisions of SFAS 123 “Accounting for Stock-Based Compensation” and SFAS 148 “Accounting for Stock-Based Compensation—Transition and Disclosure—an amendment of FASB Statement No. 123”. We accounted for stock compensation expense related to stock options granted to consultants based on the fair value estimated using the Black-Scholes option pricing model on the date of grant and remeasured at each reporting date in compliance with EITF 96-18 “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services.” As a result, stock based compensation expense fluctuates as the fair market value of our common stock fluctuates. Compensation expense is amortized using the multiple option approach in compliance with FIN 28. Pursuant to FIN 44 “Accounting for Certain Transactions involving Stock Compensation—an interpretation of APB Opinion No. 25”, options assumed in a purchase business combination are valued at the date of acquisition at their fair value calculated using the Black-Scholes option pricing model. The fair value of assumed options is included as a component of the purchase price. The intrinsic value attributable to unvested options is recorded as unearned stock based compensation and amortized over the remaining vesting period of the options.

In our Consolidated Statements of Operations, stock-based compensation expenses have been incorporated into the respective cost and expense lines, and are summarized as follows (in thousands):

	Year Ended November 30,
	2005		2004		2003
Stock-based compensation related to:
Cost of revenue	$	14	$	34	$	201
Research and development		10		40		513
Sales and marketing		104		156		276
General and administrative		1		13		73
Total	$	129	$	243	$	1,063

F-14

TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

If we had applied a fair value method for stock-based compensation as prescribed by SFAS 123, the effect on our net income and net income per share for the years indicated would have been as follows (in thousands, except per share data):

	Year Ended November 30,
	2005			2004			2003
Net income, as reported	$	72,555		$	44,920		$	11,440
Add: Total stock-based employee compensation expense determined under intrinsic value based method for all awards, net of related tax effects		24			94			1,136
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(22,993	)		(38,080	)		(51,283	)
Pro forma net income (loss)	$	49,586		$	6,934		$	(38,707	)
Net income (loss) per share:
Basic—as reported	$	0.34		$	0.22		$	0.05
Basic—pro forma	$	0.23		$	0.03		$	(0.18	)
Diluted—as reported	$	0.32		$	0.20		$	0.05
Diluted—pro forma	$	0.23		$	0.03		$	(0.18	)

The following table summarizes the assumptions we used to calculate the value of each option grant on the date of the grant using the Black-Scholes option-pricing model:

	Stock Option Plans						Employee Stock Purchase Plan
	Year Ended November 30,						Year Ended November 30,
	2005		2004		2003		2005		2004		2003
Risk free interest rates	3.5-4.4	%	2.1-3.3	%	1.9-3.5	%	1.8-2.5	%	1.0-2.5	%	2.6	%
Expected lives (in years)	3.0		3.0		3.0		0.5-2.0		0.5-2.0		0.5-2.0
Dividend yield	0.0		0.0		0.0		0.0		0.0		0.0
Expected volatility	52-64	%	67-102	%	97-113	%	54-63	%	47-116	%	98	%

In December 2004, FASB issued SFAS 123(R), “Share-Based Payment (Revised 2004)”, which replaces SFAS 123 and supersedes APB 25. From the first quarter of fiscal year 2006, we will be required to adopt SFAS 123(R) and measure all employee share-based compensation awards using a fair value based method and record the share-based compensation expenses in our consolidated statements of operations if the requisite service to earn the award is provided. The above disclosed pro forma results and assumptions used in fiscal years 2005, 2004 and 2003 were based solely on historical volatility of our common stock over the most recent period commensurate with the estimated expected life of our stock options, and will not be indicative of the effect for future periods or years after adoption of SFAS 123(R). Upon adoption of SFAS 123(R), we will change the computation of expected volatility used in the Black-Scholes calculations for new grants from being solely based on historical volatility to being based on a combination of historical and implied volatilities. In addition, we will also refine the expected life assumptions by excluding certain options, such as pre-IPO options and very highly priced options, for the purpose of deriving the normalized exercise behavior.

In response to the recent changes in accounting for share-based payments, as stated in SFAS 123(R), we also modified our Employee Stock Purchase Plan (“ESPP”) from February 2005. The duration for ESPP offering

F-15

TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

periods was changed to six months and the price at which the common stock is purchased under the plan was set at 95% of the fair market value of our common stock on the last day of the purchase period. The modified ESPP is no longer considered compensatory and therefore there was no ESPP related compensation expense after February 2005.

Income Taxes

We make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

We assess the likelihood that we will be able to recover our deferred tax assets. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance. If recovery is not likely, we increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. (Also see Note 9.)

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income and other comprehensive income (loss), which consists of unrealized gains and losses on available-for-sale securities and cumulative translation adjustments.

Total comprehensive income (loss) of fiscal years 2005, 2004 and 2004 are presented in the accompanying Consolidated Statement of Stockholders’ Equity. Total accumulated other comprehensive income (loss) is displayed as a separate component of stockholder’s equity in the accompanying Consolidated Balance Sheets. The accumulated balances for each component of other comprehensive income (loss) consist of the following, net of taxes (in thousands):

	Unrealized Gain (Loss) in Available-for-Sale Securities			Foreign Currency Translation			Accumulated Other Comprehensive Income (Loss)
Balance as of November 30, 2002	$	2,412		$	485		$	2,897
Change during year		(2,313	)		(359	)		(2,672	)
Balance as of November 30, 2003		99			126			225
Change during year		(1,972	)		2,449			477
Balance as of November 30, 2004		(1,873	)		2,575			702
Change during year		(144	)		(14,904	)		(15,048	)
Balance as of November 30, 2005	$	(2,017	)	$	(12,329	)	$	(14,346	)

F-16

TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Net Income Per Share

Basic net income per share is computed by dividing the net income available to common stockholders for the period by the weighted-average number of common stock shares outstanding during the period less common stock subject to repurchase. Diluted net income per share is computed by dividing the net income for the period by the weighted-average number of common stock shares and potential common stock equivalents outstanding during the period if their effect is dilutive. Certain potential common stock equivalents were not included in computing net income per share because their effect was anti-dilutive. The following table sets forth the computation of basic and diluted net income per share for the years indicated (in thousands, except per share amounts):

	Year Ended November 30,
	2005		2004		2003
Net income	$	72,555	$	44,920	$	11,440
Weighted-average common stock shares used to compute basic net income per share		213,263		207,506		211,555
Effect of dilutive common stock equivalents:
Options to purchase common stock		10,714		13,418		10,781
Common stock subject to repurchase		—		3		183
Weighted-average common stock shares used to compute diluted net income per share		223,977		220,927		222,519
Net income per share—Basic	$	0.34	$	0.22	$	0.05
Net income per share—Diluted	$	0.32	$	0.20	$	0.05

The following potential common stock equivalents were not included in the diluted net income per share calculation above, because their effect was anti-dilutive for the years indicated (in thousands):

	Year Ended November 30,
	2005	2004	2003
Options to purchase common stock	17,099	18,393	32,047
Common stock subject to repurchase	—	—	23
Total	17,099	18,393	32,070

Derivative Financial Instruments

We account for derivative instruments and hedging activities under SFAS 133 “Accounting for Derivative Instruments and Hedging Activities.” This statement establishes accounting and reporting standards for derivative instruments and requires recognition of all derivatives as assets or liabilities in the statement of financial position and measurement of those instruments at fair value. Derivatives that are not hedges must be adjusted to fair value through earnings. If the derivative is a hedge, depending on the nature of the hedge, its change in fair value will either be offset against the change in fair value of the hedged asset or liability, firm commitment through earnings or recognized in other comprehensive income (loss) until the hedged item is recognized in earnings.

To manage currency exposure related to net assets and liabilities denominated in foreign currencies, we enter into forward contracts for certain foreign denominated assets or liabilities. We do not enter into derivative

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

financial instruments for trading purposes. We had two outstanding forward contracts with total notional amounts of $24.6 million as of November 30, 2005. These derivative instruments are fair value hedges of certain foreign currency transaction exposures in various currencies. The fair value of these forward contracts as of November 30, 2005 was approximately $24.6 million.

These derivative instruments do not subject us to material balance sheet risk due to exchange rate movements because gains and losses on these derivatives are intended to offset gains and losses on the foreign currency denominated assets and liabilities being hedged. As of November 30, 2005, the outstanding balance sheet hedging derivatives had maturities of 30 days or less.

Recent Accounting Pronouncements

In November 2005, FASB issued FSP FAS 115-1 and FAS 124-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments” (“FSP FAS 115-1”), which provides guidance on determining when investments in certain debt and equity securities are considered impaired, whether that impairment is other-than-temporary, and on measuring such impairment loss. FSP FAS 115-1 also includes accounting considerations subsequent to the recognition of an other-than temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. FSP FAS 115-1 is required to be applied to reporting periods beginning after December 15, 2005. We are required to adopt FSP FAS 115-1 in the second quarter of fiscal 2006. We do not expect the adoption of this statement will have a material impact on our results of operations or financial condition.

In May 2005, FASB issued SFAS 154, “Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3”. SFAS 154 changes the requirements for the accounting for and reporting of a change in accounting principle, and applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. This statement requires retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS 154 is effective for accounting changes made in fiscal years beginning after December 15, 2005. We do not expect the adoption of this statement will have a material impact on our results of operations or financial condition.

In December 2004, FASB issued SFAS 123(R), “Share-Based Payment (Revised 2004)”, which replaces SFAS 123 and supersedes APB 25. In March 2005, the SEC issued Staff Accounting Bulletin (“SAB”) No. 107, providing supplemental implementation guidance for SFAS 123(R). In April 2005, the SEC issued “Amendment to Rule 04-01(a) of Regulation S-X Regarding the Compliance Date for Statement of Financial Accounting Standard No.123(R), ‘Share-Based Payment’” (the “Amendment to Rule 4-01(a)”), changing the effective date for most public companies to adopt SFAS 123(R) to the first interim reporting period of a company’s fiscal year that begins on or after June 15, 2005. Under the Amendment to Rule 4-01(a), we are now required to adopt SFAS 123(R) in our first quarter of fiscal year 2006.

SFAS 123(R) requires that compensation costs relating to share-based payment transactions be recognized in the financial statements. The pro forma disclosure previously permitted under SFAS 123 will no longer be an acceptable alternative to recognition of expense in the financial statements. SFAS 123(R) also provides three alternative transition methods for its first adoption. Up to the end of fiscal year 2005, we had measured compensation costs related to share-based payments under APB 25 and as allowed by SFAS 123, and provided pro forma disclosure in notes to our financial statements as required by SFAS 123. On adoption of SFAS 123(R), we will use the modified prospective application transition method. SFAS 123(R) also requires a classification change in the statement of cash flows, whereby a portion of the tax benefits from stock options will be moved

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

from cash from operating activities to cash from financing activities, without changing the total cash flows. We are still in the process of finalizing our study on the impact of applying various other provisions of SFAS 123(R). We expect the adoption of SFAS 123(R) and SAB 107 will have a material adverse impact on our net income and net income per share. However, we currently cannot accurately estimate the effect of such impact, as the compensation costs will fluctuate.

In December 2004, FASB issued SFAS 153, “Exchanges of Nonmonetary Assets—an amendment to APB Opinion No. 29”. This statement amends APB 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. Adoption of this statement is not expected to have a material impact on our results of operations or financial condition.

Note 3. Business Combinations

Velosel Corporation

On August 1, 2005, we acquired certain assets of Velosel Corporation (“Velosel”), a Delaware corporation providing product information management. The total purchase price was approximately $3.4 million which was paid in cash. Under the purchase price allocation, substantially all of the purchase price is related to amortizable intangible assets, including developed technology. The acquired intangible assets are amortizable over their estimated useful lives of three to six years. No goodwill has been recorded for this acquisition as the fair value of acquired assets exceeds the purchase price.

ObjectStar International Limited

On March 7, 2005, we acquired substantially all of the assets and certain liabilities of ObjectStar International Limited (“ObjectStar”), a privately held native mainframe integration solutions provider.

The total purchase price was approximately $21.4 million, comprised of $20.9 million in cash and $0.5 million in direct transaction costs, including legal and valuation fees. The ObjectStar acquisition was accounted for under SFAS 141 “Business Combinations” and certain specified provisions of SFAS 142 “Goodwill and Other Intangible Assets”. The assets acquired and liabilities assumed are based on their fair values at the date of acquisition. ObjectStar’s existing technology had reached technological feasibility at the time of the acquisition; therefore we did not record an in-process research and development charge. The results of operations of ObjectStar have been included in our Consolidated Statement of Operations from March 7, 2005. As the effect of this acquisition would not have been material to our results of operations in past fiscal years, pro forma results as if we had acquired ObjectStar at the beginning of any reported fiscal years, are not presented in this report.

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TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values on the date of acquisition (in thousands):

Tangible assets acquired:
Accounts Receivable	$	3,331
Other		205
Total tangible assets acquired		3,536		$	3,536
Amortizable intangible assets:
Developed technology		1,600
Patents/core technology		1,100
Maintenance contracts		9,400
Non-compete agreements		200
Customer base		1,600
Total amortizable intangible assets		13,900			13,900
Goodwill					7,359
Total assets acquired					24,795
Liabilities assumed:
Deferred revenue		(3,018	)
Other		(328	)
Total liabilities assumed		(3,346	)		(3,346	)
Total purchase price				$	21,449

We assessed the potential benefits from this acquisition, including the broadening of our mainframe product set, improvement of our competitive position and the possibility of increased revenues, and determined that the purchase price represented appropriate consideration for the acquisition. As the purchase price exceeded the fair value of the assets purchased, we recorded $7.4 million of goodwill in connection with this transaction, of which approximately $1.8 million is amortizable for income tax purposes. In accordance with SFAS 142, goodwill is not being amortized and is tested for impairment at least annually or sooner if circumstances indicate that impairment may have occurred.

In-process research and development, relating to development projects which had not reached technological feasibility and that were of no future alternative use, were expensed upon consummation of the acquisition. Developed technology and in-process research and development were identified and valued through extensive interviews, analysis of data provided by Staffware concerning development projects, their stage of development, the time and resources needed to complete them, if applicable, and their expected income generating ability and associated risks. Where development projects had reached technological feasibility, they were classified as developed technology and the value assigned to developed technology was capitalized. The income approach, which includes an analysis of the cash flows and risks associated with achieving such cash flows, was the primary technique utilized in valuing acquired intangible assets. Key assumptions included a discount rate of 16% and estimates of revenue growth, maintenance contract renewal rates, cost of sales, operating expenses and taxes.

Amounts allocated to developed technology, patents/core technology, and customer base are amortized over their estimated useful lives of five years. Maintenance agreements are amortized over their estimated useful lives of nine years and non-competition agreements are amortized over their estimated useful lives of three years.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

General Interface Corp.

On October 12, 2004, we acquired General Interface Corp. (“General Interface”), a provider of a solution for developing and deploying rich, high-performance client-side applications in a standards-based browser environment. The addition of General Interface’s solution enables us to offer a user-interface for building rich composite applications in a browser-based environment, enabling companies to leverage their existing IT investment.

The total purchase price of the acquisition was $3.5 million in cash. The total purchase price was allocated to the assets acquired, principally $1.1 million in identifiable intangible assets and approximately $2.4 million in goodwill. Identifiable intangible assets consist of developed technology, trade name, and customer relationships, and are being amortized on a straight-line basis over three to four years. Goodwill is not amortized, but tested for impairment at least annually or sooner if circumstances indicate that impairment may have occurred. The goodwill recorded is deductible through amortization for income tax purposes. The results of operations of General Interface are included in our Consolidated Statements of Operations from the date of acquisition.

Staffware plc

On June 7, 2004, we acquired Staffware plc (“Staffware”), a provider of business process management (“BPM”) solutions that enable companies to automate, refine and manage their business processes. The addition of Staffware’s BPM solutions enabled us to offer our combined customer base a more robust and expanded real-time business integration solution, and increased our distribution capabilities through the cross-selling of products into new geographic regions. These factors contributed to a purchase price exceeding the fair value of Staffware’s net tangible and intangible assets acquired. As a result, we recorded $163.3 million of goodwill in connection with this transaction, which is not deductible for income tax purposes. In accordance with SFAS 142, goodwill is not being amortized and will be tested for impairment at least annually or sooner if circumstances indicate that impairment may have occurred.

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TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values at the date of acquisition, and as adjusted (in thousands):

Cash acquired:				$	27,190
Tangible assets acquired:
Accounts receivable	$	16,967
Other current assets		2,078
Property and equipment		4,623
Deferred tax assets		5,244
Other non-current assets		1,743
Total tangible assets acquired		30,655			30,655
Amortizable intangible assets:
Developed technology		21,700
Patents/core technology		14,200
Maintenance contracts		14,400
Customer base		14,000
Trademarks		3,500
Total amortizable intangible assets		67,800			67,800
In-process research and development					2,200
Goodwill, as adjusted					163,147
Total assets acquired					290,992
Liabilities assumed:
Accounts payable		(1,854	)
Accrued liabilities		(19,882	)
Deferred revenue		(11,391	)
Total liabilities assumed		(33,127	)		(33,127	)
Deferred tax liability for acquired intangibles					(20,736	)
Total purchase price				$	237,129

The total purchase price of approximately $237.1 million was comprised of $139.7 million in cash, the issuance of 10.9 million shares of our common stock valued at $92.3 million and approximately $5.1 million in direct transaction costs, including legal, valuation and accounting fees.

In-process research and development of $2.2 million was expensed upon consummation of the acquisition. Other identifiable intangible assets, including developed technology, customer base and trademarks, are being amortized over their useful lives of five years; and patents/core technology and maintenance contracts are being amortized over their estimated useful lives of eight years.

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TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The results of operations of Staffware have been included in our Consolidated Statements of Operations from the date of acquisition, June 7, 2004. If we had acquired Staffware at the beginning of fiscal year 2003, our unaudited pro forma net revenues, net income and net income per share for fiscal year 2004 and 2003 would have been as follows (in thousands, except per share data):

	Year Ended November 30,
	2004		2003
Revenue	$	423,573	$	334,233
Net income	$	35,253	$	7,206
Net income per share - Basic	$	0.17	$	0.03
Net income per share - Diluted	$	0.16	$	0.03

Talarian Corporation

On April 23, 2002, we acquired Talarian Corporation (“Talarian”), a provider of infrastructure software that enables businesses to exchange information in real time, both internally and with their partners, suppliers, and customers. We recorded $68.3 million of goodwill in connection with this acquisition in fiscal year 2002, which had taken into account, accrued acquisition integration expenses for incremental costs to exit and consolidate activities at various Talarian facilities. In fourth quarter of fiscal year 2005, in accordance with EITF 95-3 “Recognition of Liabilities in a Purchase Business Combination”, we determined that there are no further liabilities related to Talarian facilities and therefore the carrying value of goodwill was reduced by $0.9 million. (Also see Notes 7 and 8.)

Note 4. Balance Sheet Components

Certain balance sheet components are summarized below (in thousands):

	As of November 30,
	2005			2004
Other non-current assets:
Prepaid land lease	$	26,124		$	26,673
Private equity investments, net		2,305			1,923
Restricted cash		1,798			1,333
Other		4,332			2,460
Total other non-current assets	$	34,559		$	32,389
Accrued liabilities:
Compensation and benefits	$	36,879		$	46,127
Taxes		7,911			19,695
Expenses		15,082			18,607
Total accrued liabilities	$	59,872		$	84,429
Accrued restructuring and excess facilities costs:
Restructuring costs	$	28,852		$	34,421
Acquisition integration costs		1,137			4,946
Total accrued restructuring and excess facilities costs		29,989			39,367
Less: current portion		(5,840	)		(9,489	)
Long-term accrued excess facilities costs	$	24,149		$	29,878

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TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 5. Accounts Receivable and Allowances for Doubtful Accounts, Returns and Discounts

	As of November 30,
	2005			2004
Accounts receivable	$	116,434		$	104,582
Unbilled fees and services		9,246			8,265
		125,680			112,847
Less: Allowances for doubtful accounts, returns and discounts		(4,521	)		(3,845	)
Net Accounts receivable	$	121,159		$	109,002

Trade accounts receivable are recorded at invoiced or to be invoiced amounts and do not bear interest. We perform ongoing credit evaluations of our customers’ financial condition and, generally, require no collateral from our customers. Allowances for doubtful accounts, returns and discounts were established based on various factors including credit profiles of our customers, contractual terms and conditions, historical payments, returns and discounts experience, and current economic trends. We review our allowances monthly by assessing individual accounts receivable over a specific aging and amount, and all other balances on a pooled basis based on historical collection experience. Accounts receivable are written off on a case-by-case basis, net of any amounts that may be collected.

The following is a summary of activities in allowances for doubtful accounts, returns and discounts for the years indicated (in thousands):

	Allowances Beginning Balance		Charged Against Revenue		Charged to Expenses		Write-offs, Adjustments, Net of Recovery			Allowances Ending Balance
Year ended November 30, 2003	$	5,686	$	1,760	$	400	$	(3,131	)	$	4,715
Year ended November 30, 2004		4,715		—		230		(1,100	)		3,845
Year ended November 30, 2005		3,845		1,599		197		(1,120	)		4,521

Note 6. Property and Equipment

Property and equipment by category is as follows (in thousands):

	As of November 30,
	2005			2004
Property and equipment:
Buildings	$	77,938		$	77,938
Equipment and software		64,498			57,276
Furniture and fixtures		6,569			5,622
Facility improvements		39,284			35,604
		188,289			176,440
Less: Accumulated depreciation		(71,832	)		(58,382	)
	$	116,457		$	118,058

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TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Building acquisition

In June 2003, we purchased the four buildings comprising our corporate headquarters in Palo Alto, California for $80.0 million. In connection with the purchase we entered into a 51-year lease of the land upon which the buildings are located. The lease was paid in advance in the amount of $28.0 million. (Also see Note 11.) The total consideration paid for the land lease and the buildings of $108.0 million was comprised of $54.0 million in cash and a $54.0 million mortgage note payable. (Also see Note 10.)

The capitalized cost of the buildings was reduced by the existing deferred rent in the amount of $3.1 million related to the previous operating lease on the buildings. In addition, we capitalized $1.1 million of acquisition costs incurred in connection with the purchase. The net purchase price of the buildings of $78.0 million is stated at cost, net of accumulated depreciation, and is included as a component of Property and Equipment on the Consolidated Balance Sheets. Depreciation is computed using the straight-line method over the estimated useful life of 25 years.

Note 7. Goodwill and Other Acquired Intangible Assets

Goodwill

Goodwill represents the excess of costs of our corporate acquisitions, over the fair value of assets acquired and liabilities assumed from the acquired entities. In accordance with SFAS 142, goodwill is not amortized, but is tested for impairment annually or sooner if circumstances indicate that impairment may have occurred. SFAS 142 requires impairment testing of goodwill based on reporting units and prescribes a two-step process for the impairment testing. The first step screens for impairment, while the second step, measures the impairment, if any.

Periodically and after major acquisitions, such as our Staffware acquisition in fiscal year 2004, we re-evaluate our business to determine if we operate in one reportable segment. We have concluded that as of November 30, 2005, we are operating and will continue to operate in one reportable segment which we consider our sole reporting unit. Therefore, our goodwill will continue to be tested for impairment at the enterprise level. Our most current annual impairment test was performed at the end of fiscal year 2005. The fair value of the enterprise, which was determined based on our current market capitalization, exceeded its carrying value, and the goodwill was determined not to be impaired. No goodwill impairment charges have been recorded as of November 30, 2005.

The changes in the carrying amount of goodwill for the years ended November 30, 2005 and 2004 are as follows (in thousands):

	Goodwill
Balance as of November 30, 2003	$	103,006
Acquisition of Staffware		164,023
Acquisition of General Interface		2,423
Tax benefit from acquired deferred tax assets		(4,315	)
Balance as of November 30, 2004		265,137
Acquisition of ObjectStar		7,359
Tax benefit from acquired deferred tax assets		(1,149	)
Foreign currency translation		(8,957	)
Write-back excess accrued integration cost for Talarian		(878	)
Other adjustments		(437	)
Balance as of November 30, 2005	$	261,075

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TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Acquired Intangible Assets

Our acquired intangible assets are subject to amortization on a straight line basis over their estimated useful lives, as follows:

	Estimated Life	Weighted Average Life As of November 30,2005
Developed technology	3 to 5 years	4.8 years
Customer base	3 to 5 years	4.8 years
Patents/core technology	4 to 8 years	7.7 years
Trademarks	3.5 to 5 years	4.9 years
Non-compete agreements	2 to 3 years	2.3 years
OEM customer royalty agreements	5 years	5.0 years
Maintenance agreements	3.5 to 9 years	8.2 years

The carrying values of our amortized acquired intangible assets as of November 30, 2005 and 2004 are as follows (in thousands):

	As of November 30, 2005							As of November 30, 2004
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Developed technology	$	45,721	$	(27,811	)	$	17,910	$	43,630	$	(22,230	)	$	21,400
Customer base		21,156		(9,380	)		11,776		19,060		(6,365	)		12,695
Patents/core technology		14,671		(2,689	)		11,982		14,200		(887	)		13,313
Trademarks		4,947		(2,568	)		2,379		5,150		(1,878	)		3,272
Non-compete agreements		680		(530	)		150		480		(480	)		—
OEM customer royalty agreements		1,000		(717	)		283		1,000		(517	)		483
Maintenance agreements		24,280		(4,018	)		20,262		15,000		(1,343	)		13,657
Total	$	112,455	$	(47,713	)	$	64,742	$	98,520	$	(33,700	)	$	64,820

Amortization of developed technologies is recorded in cost of revenue, while the amortization of other acquired intangibles is included in operating expenses. The following summarizes the amortization expense of acquired intangible assets for the years indicated (in thousands):

	Year Ended November 30,
	2005		2004		2003
Amortization of acquired intangible assets:
In cost of revenue	$	5,958	$	6,702	$	4,767
In operating expenses		8,912		5,253		1,997
Total	$	14,870	$	11,955	$	6,764

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TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of November 30, 2005, we expect the amortization of acquired intangible assets for the future years to be as follows (in thousands):

	Estimated Amortization Expense
Year ending November 30, 2006	$	14,777
Year ending November 30, 2007		14,655
Year ending November 30, 2008		14,329
Year ending November 30, 2009		9,777
Year ending November 30, 2010		4,888
Thereafter		6,316
Total	$	64,742

Note 8. Accrued Restructuring and Integration Costs

In fiscal year 2005, we initiated a restructuring plan designed to re-align our resources and cost structure, and accordingly recognized a restructuring charge of approximately $3.9 million for the resulting workforce reduction. The restructuring plan eliminated 49 employees, across all functions and primarily in our European operations. As of November 30, 2005, $3.2 million related to this plan has been paid. We expect to utilize the remaining accrual by the end of fiscal year 2006.

In fiscal year 2003 we recorded restructuring charges totaling $1.1 million related to headcount reduction. This plan was completed in fiscal year 2003.

In fiscal year 2002, we recorded restructuring charges totaling $49.3 million, consisting of $1.7 million for headcount reductions, and $47.6 million related to consolidation of facilities. These restructuring charges were recorded to align our cost structure with changing market conditions. We have been working with corporate real estate brokers to sublease unoccupied facilities, and since 2003, we have subleased certain facilities.

In fiscal year 2004, we recorded an additional $2.2 million restructuring charges related to properties vacated in connection with facilities consolidation. The additional facilities charges resulted from revisions to our estimates of future sublease income due to further deterioration of real estate market conditions. The estimated facility costs were based on our contractual obligations, net of estimated sublease income, based on current comparable rates for leases in their respective markets. Should facilities operating lease rental rates continue to decrease in these markets or should it take longer than expected to find a suitable tenant to sublease these facilities, the actual loss could exceed this estimate by approximately $2.8 million.

In connection with our acquisitions of Staffware in the third quarter of fiscal year 2004, and Talarian in the second quarter of fiscal year 2002, we recorded accruals for acquisition integration liabilities which include the incremental costs to exit and consolidate activities at acquired locations, termination of certain employees, and other costs to integrate operating locations and other activities of the acquired companies. The accruals were recorded using the guidance provided by EITF 95-3 “Recognition of Liabilities in a Purchase Business Combination” which requires that these acquisition integration expenses, which are not associated with the generation of future revenues and have no future economic benefit, be reflected as assumed liabilities in the allocation of the purchase price to the net assets acquired. In connection with the acquisition of Staffware, we recorded an accrual of $2.9 million for the estimated losses on Staffware facilities that we abandoned. In addition, we recorded an accrual of $2.6 million for severance related to the termination of redundant Staffware personnel and $0.2 million related to cancellation of marketing programs. In connection with the acquisition of Talarian, we abandoned the Talarian facilities and recorded an accrual of $7.4 million for the estimated losses to

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

be incurred to sublet such facilities. In addition, we recorded an accrual of $1.0 million for severance related to the termination of redundant personnel. As of November 30, 2005, we had determined that there are no future liabilities relating to Talarian acquisition integration costs and consequently released the excess accrual of $0.9 million, offsetting goodwill by the same amount.

The following is a summary of activities in accrued restructuring related and acquisition integration costs for each of the three years ended November 30, 2005 (in thousands):

	Accrued Excess Facilities												Accrued Severance and Other									Total
	Headquarter Facilities			Talarian Integration			Staffware Integration			Subtotal			Restructuring			Staffware Integration			Subtotal
Balance as of Nov 30, 2002	$	45,187		$	6,124		$	—		$	51,311		$	198		$	—		$	198		$	51,509
Restructuring charge		—			—			—			—			1,100			—			1,100			1,100
Cash utilized in 2003		(6,432	)		(1,972	)		—			(8,404	)		(1,298	)		—			(1,298	)		(9,702	)
Non-cash write-down of furniture and fixture		(385	)		—			—			(385	)		—			—			—			(385	)
Balance as of Nov 30, 2003		38,370			4,152			—			42,522			—			—			—			42,522
Restructuring charge		2,186			—			—			2,186			—			—			—			2,186
Acquisition integration costs		—			—			2,913			2,913			—			2,774			2,774			5,687
Cash utilized in 2004		(6,135	)		(1,693	)		(68	)		(7,896	)		—			(1,719	)		(1,719	)		(9,615	)
Non-cash write-down of furniture and fixture		—			(358	)		—			(358	)		—			—			—			(358	)
Balance as of Nov 30, 2004		34,421			2,101			2,845			39,367			—			1,055			1,055			40,422
Restructuring charge		—			—			—			—			3,905			—			3,905			3,905
Adjustments to acquisition integration costs		—			(878	)		—			(878	)		—			(352	)		(352	)		(1,230	)
Cash utilized in 2005		(6,196	)		(1,223	)		(827	)		(8,246	)		(3,158	)		(690	)		(3,848	)		(12,094	)
Non-cash write-down of furniture and fixture		(120	)		—			(881	)		(1,001	)		—			—			—			(1,001	)
Balance as of Nov 30, 2005	$	28,105		$	—		$	1,137		$	29,242		$	747		$	13		$	760		$	30,002

The remaining accrued excess facilities costs represent the estimated loss on abandoned facilities, net of sublease income, which is expected to be paid over the next five years. As of November 30, 2005, $24.1 million of the $30.0 million accrued restructuring and excess facilities costs were classified as long-term liabilities based on our current expectation that we will have to pay the remaining lease payments over the remaining term of the related leases. Accrued severance costs related to the Staffware integration are included in the Consolidated Balance Sheets as a component of accrued liabilities.

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TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 9. Income Taxes

Significant components of the provision for (benefit from) income taxes are as follows (in thousands):

	Year Ended November 30,
	2005			2004		2003
Federal:
Current	$	10,370		$	10,865	$	550
Deferred		(17,552	)		—		1,578
		(7,182	)		10,865		2,128
State:
Current		2,575			3,314		510
Deferred		(2,086	)		—		302
		489			3,314		812
Foreign:
Current		3,474			13,950		3,103
Deferred		(2,255	)		666		—
		1,219			14,616		3,103
Provision for (benefit from) income taxes	$	(5,474	)	$	28,795	$	6,043

We paid income taxes of $7.9 million, $4.4 million and $3.8 million for the years ended November 30, 2005, 2004 and 2003, respectively. Income before provision for income taxes consisted of the following (in thousands):

	Year Ended November 30,
	2005		2004		2003
United States	$	61,690	$	38,419	$	14,549
International		5,391		35,296		2,934
Total	$	67,081	$	73,715	$	17,483

The provision for income taxes was at rates other than the U.S. Federal statutory tax rate for the following reasons:

	Year Ended November 30,
	2005		2004		2003
U.S. Federal statutory rate	35.0	%	35.0	%	35.0	%
State taxes	0.5		2.9		5.0
Research and Development credits	(0.8	)	(0.2	)	(2.5	)
Goodwill and intangibles	(0.6	)	(0.3	)	(1.5	)
Stock option compensation	0.1		0.1		2.4
Foreign income taxed at different rate	1.0		1.1		6.0
Change in valuation allowance	(43.3	)	(1.3	)	(11.9	)
Meals and entertainment	0.6		0.6		2.5
Other	(0.7	)	1.2		(0.4	)
Provision for (benefit from) income taxes	(8.2	)%	39.1	%	34.6	%

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TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

U.S. income taxes and foreign withholding taxes have not been provided for on a cumulative total of $20.8 million of undistributed earnings for certain non-U.S. subsidiaries. With the exception of our subsidiaries in the United Kingdom, net undistributed earnings of our foreign subsidiaries are generally considered to be indefinitely reinvested, and accordingly, no provision for U.S. income taxes has been provided thereon. Upon distribution of these earnings in the form of dividends or otherwise, we will be subject to U.S. income taxes net of available foreign tax credits associated with these earnings.

The components of deferred tax assets (liabilities) are as follows (in thousands):

	As of November 30,
	2005			2004
Deferred tax assets:
Net operating loss carryforward	$	154,982		$	187,641
Reserves and accruals		19,820			20,640
Credit carryforwards		48,447			7,197
Depreciation and amortization		19,487			12,050
Unrealized losses on investments		7,475			6,658
Other		196			1,225
		250,407			235,411
Deferred tax liabilities:
Intangible assets		(14,440	)		(19,575	)
Net deferred tax assets before valuation allowance		235,967			215,836
Valuation allowance		(219,320	)		(232,202	)
Net deferred tax assets/(liabilities)	$	16,647		$	(16,366	)

As of November 30, 2005, approximately $189.9 million of the deferred tax assets resulted from stock option benefits. When the tax benefits of these assets are recognized, they will be credited to stockholders’ equity.

As of November 30, 2005, approximately $7.7 million of the deferred tax assets relate to acquired entities. When the tax benefits of these assets are recognized, they will be allocated to reduce goodwill.

As of November 30, 2005, we believed that the amount of the deferred tax assets recorded on our balance sheet as a result of the partial release of valuation allowance would ultimately be recovered. However, should there be a change in our ability to recover our deferred tax assets, our tax provision would increase in the period in which we determine that the recovery is not probable. If we have to re-establish the full valuation allowance, it may result in a charge of $19.6 million to the tax provision.

In fiscal year 2005, the valuation allowance decreased by a net of $12.9 million primarily resulting from the partial release of valuation allowance. In fiscal year 2004, the valuation allowance decreased by $5.6 million primarily resulting from the utilization of $4.3 million of pre-acquisition net operating loss carryforwards, the benefit of which was credited directly to goodwill, and a $1.0 million reduction in temporary differences. In fiscal year 2003, the valuation allowance increased by $7.2 million resulting from a $2.2 million increase in other temporary differences and a $5.0 million adjustment to deferred tax assets due to a change in the federal tax rate.

Our income taxes payable for federal purposes have been reduced by the tax benefits associated with the exercise of employee stock options during the year and utilization of net operating loss carryover applicable to

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TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

both stock options and acquired entities. The benefits applicable to stock options were credited directly to stockholders’ equity and amounted to $26.3 million and $6.0 million for fiscal years 2005 and 2004, respectively. Of the $26.3 million for fiscal year 2005, $15.9 million reduced taxes payable in the current year and therefore is shown as an increase to cash flows from operating activities on the statement of cash flows. The remaining balance of $10.4 million represents the partial release of valuation allowance against deferred tax assets that resulted from stock option benefits and, accordingly, was credited directly to stockholders’ equity. The benefits applicable to acquired entities were credited directly to goodwill and amounted to $1.2 million and $4.3 million for fiscal years 2005 and 2004, respectively.

As of November 30, 2005, our federal and state net operating loss carryforwards for income tax purposes were $445.7 million and $153.7 million, respectively, which expire through 2023. As of November 30, 2005, our federal and state tax credit carryforwards for income tax purposes were $30.6 million and $20.0 million, respectively, which expire through 2025.

In the event of a change in ownership, as defined under federal and state tax laws, our net operating loss and tax credit carryforwards may be subject to annual limitations. The annual limitations may result in the expiration of the net operating loss and tax credit carryforwards before utilization.

Note 10. Long Term Debt and Line of Credit

Mortgage Note Payable

In connection with the corporate headquarters purchase in June 2003, we recorded a $54.0 million mortgage note payable to a financial institution collateralized by the commercial real property acquired. The balance on the mortgage note payable was $50.1 million as of November 30, 2005.

The mortgage note payable carries a fixed annual interest rate of 5.09% and a 20-year amortization. The principal balance of $33.9 million that will be remaining at the end of the 10-year term will be due as a final balloon payment on July 1, 2013. Under the currently applicable terms of the mortgage note agreements, we are prohibited from acquiring another company without prior consent from the lender unless we maintain at least $300.0 million of cash and cash equivalents, and meet other non-financial terms as defined in the agreements. In addition, we are subject to certain non-financial covenants as defined in the agreements. We were in compliance with all covenants as of November 30, 2005.

We also capitalized $0.7 million in financing fees in connection with the mortgage note payable. These fees are being amortized to interest expense over the term of the loan of 10 years.

Line of Credit

We have a $20.0 million revolving line of credit that matures on June 21, 2006. The revolving line of credit is available for cash borrowings and for the issuance of letters of credit up to $20.0 million. As of November 30, 2005, no borrowings were outstanding under the facility and a $13.0 million irrevocable letter of credit was outstanding, leaving $7.0 million of available credit for additional letters of credit or cash loans. The $13.0 million irrevocable letter of credit outstanding was issued in connection with the mortgage note payable. The letter of credit automatically renews for successive one-year periods, until the mortgage note payable has been satisfied in full. We are required to maintain a minimum of $40.0 million in unrestricted cash, cash equivalents, and short-term investment net of total current and long-term indebtedness as well as comply with other non-financial covenants defined in the agreement. During fiscal year 2005, we were in compliance with all covenants under the revolving line of credit.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 11. Commitments and Contingencies

Letters of Credit and Bank Guarantees

In connection with the mortgage note payable (also see Note 10), we entered into an irrevocable letter of credit in the amount of $13.0 million. The letter of credit automatically renews for successive one-year periods, until the mortgage note payable has been satisfied in full and is collateralized by the line of credit.

In connection with a facility lease, we entered into an irrevocable letter of credit in the amount of $4.5 million. The letter of credit automatically renews annually for the duration of the lease term, which expires in December 2010.

In connection with a facility surrender agreement, we entered into an irrevocable letter of credit in the amount of $0.9 million. The letter of credit automatically renews annually and expires in June 2006.

As of November 30, 2005, in connection with bank guarantees issued by some of our international subsidiaries, we had $1.8 million of restricted cash which is included in Other Assets on our Condensed Consolidated Balance Sheets.

Prepaid Land Lease

In June 2003, we purchased the four buildings comprising our corporate headquarters in Palo Alto, California, and entered into a 51-year lease of the land upon which the buildings are located. The land lease was paid in advance for a total of $28.0 million, but is subject to adjustments every ten years based upon changes in fair market value. Should it become necessary, we have the option to prepay any rent increases due as a result of a change in fair market value. This prepaid land lease is being amortized using the straight-line method over the life of the lease; the portion to be amortized over the next twelve months is included in Other Current Assets and the remainder is included in Other Assets on the Consolidated Balance Sheets.

Operating Commitments

We lease office space and equipment in various worldwide locations under non-cancelable operating leases with various expiration dates through March 2014. Rental expense, net of sublease income, was approximately $8.5 million, $7.1 million, and $15.3 million for the fiscal years 2005, 2004 and 2003, respectively.

As of November 30, 2005, contractual commitments associated with indebtedness and lease obligations are as follows (in thousands):

	Total			2006			2007			2008			2009			2010			Thereafter
Operating commitments:
Debt principal	$	50,143		$	1,798		$	1,892		$	1,990		$	2,094		$	2,203		$	40,166
Debt interest		16,605			2,511			2,417			2,319			2,215			2,106			5,037
Operating leases		27,832			6,725			4,878			3,730			3,023			2,377			7,099
Total operating commitments		94,580			11,034			9,187			8,039			7,332			6,686			52,302
Restructuring-related commitments:
Gross lease obligations		39,789			7,761			7,700			7,779			7,816			8,051			682
Sublease income		(8,392	)		(2,818	)		(2,013	)		(1,293	)		(1,129	)		(1,050	)		(89	)
Net lease obligations		31,397			4,943			5,687			6,486			6,687			7,001			593
Total commitments	$	125,977		$	15,977		$	14,874		$	14,525		$	14,019		$	13,687		$	52,895

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TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Future minimum lease payments under restructured non-cancelable operating leases as of November 30, 2005 include $28.1 million provided for as accrued restructuring costs and $1.1 million as accrued acquisition integration liabilities related to our acquisitions of Staffware. (Also see Note 8.)

Derivative Instruments

We conduct business in North America, South America, Europe, the Pacific Rim and the Middle East. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or changes in economic conditions in foreign markets. A majority of our sales are currently made in U.S. dollars. To manage currency exposure related to net assets and liabilities denominated in foreign currencies, we enter into forward contracts for certain foreign denominated assets and liabilities. We do not enter into derivative financial instruments for trading purposes. Gains and losses on forward contracts are included in Other Income (Expense) in our Condensed Consolidated Statements of Operations. Our forward contracts generally have original maturities of thirty days. We had two outstanding forward contracts with total notional amounts of $24.6 million as of November 30, 2005. The fair value of these contracts was insignificant as of November 30, 2005.

Indemnification

Our software license agreements typically provide for indemnification of customers for intellectual property infringement claims. To date, no such claims have been filed against us. We also warrant to customers that software products operate substantially in accordance with such software products’ specifications. Historically, minimal costs have been incurred related to product warranties, and as such no accruals for warranty costs have been made. In addition, we indemnify our officers and directors under the terms of indemnity agreements entered into with them, as well as pursuant to our certificate of incorporation, bylaws, and applicable Delaware law. To date, we have not incurred any costs related to these indemnifications.

Legal Proceedings

In May 2005, three purported shareholder class action complaints were filed against us and several of our officers in the U.S. District Court for the Northern District of California. The plaintiffs in such actions are seeking to represent a class of purchasers of TIBCO’s common stock from September 21, 2004 through March 1, 2005. The complaints generally allege that we made false or misleading statements concerning our operating results, our business and internal controls and the integration of Staffware. The complaints seek unspecified monetary damages. We intend to defend ourselves vigorously; however we expect to incur significant costs in mounting such defense.

In September 2005, a shareholder derivative complaint was filed against certain of our officers and directors in the Superior Court of the State of California, Santa Clara County. The complaint is based on substantially similar facts and circumstances as the class actions and generally alleged that the named directors and officers breached their fiduciary duties to the Company. The complaint seeks unspecified monetary damages. Given the nature of derivative litigation, any recovery in a derivative suit would be to the benefit of the Company.

In addition, certain of our directors and officers and certain investment bank underwriters have been named in a putative class action for violation of the federal securities laws in the U.S. District Court for the Southern District of New York, captioned “In re TIBCO Software Inc. Initial Public Offering Securities Litigation.” This is one of a number of cases challenging underwriting practices in the initial public offerings of more than 300 companies, which have been coordinated for pretrial proceedings as “In re Initial Public Offering Securities Litigation.” Plaintiffs generally allege that the underwriters engaged in undisclosed and improper underwriting

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TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

activities, namely the receipt of excessive brokerage commissions and customer agreements regarding post-offering purchases of stock in exchange for allocations of IPO shares. Plaintiffs also allege that various investment bank securities analysts issued false and misleading analyst reports. The complaint against us claims that the purported improper underwriting activities were not disclosed in the registration statements for our IPO and secondary public offering and seeks unspecified damages on behalf of a purported class of persons who purchased our securities or sold put options during the time period from July 13, 1999 to December 6, 2000.

A lawsuit with similar allegations of undisclosed improper underwriting practices, and part of the same coordinated proceedings, is pending against Talarian, which we acquired in 2002. That action is captioned “In re Talarian Corp. Initial Public Offering Securities Litigation.” The complaint against Talarian, certain of its underwriters, and certain of its former directors and officers claims that the purported improper underwriting activities were not disclosed in the registration statement for Talarian’s IPO and seeks unspecified damages on behalf of a purported class of persons who purchased Talarian securities during the time period from July 20, 2000 to December 6, 2000.

A proposal to settle the claims against all of the issuers and individual defendants in the coordinated litigation was accepted by us and given preliminary Court approval. The completion of the settlement is subject to a number of conditions, including final approval by the Court. Under the settlement, the plaintiffs will dismiss and release all claims against participating defendants in exchange for a contingent payment guaranty by the insurance companies collectively responsible for insuring the issuers in the action, and the assignment or surrender to the plaintiffs of certain claims the issuer defendants may have against the underwriters. Under the guaranty, the insurers will be required to pay an amount equal to $1.0 billion less any amounts ultimately collected by the plaintiffs from the underwriter defendants in all the cases. The disposition of this matter is limited to our $0.5 million corporate insurance deductible. We completed payment of the insurance deductible in the third quarter of fiscal year 2003. Unlike most of the defendant issuers’ insurance policies, including ours, Talarian’s policy contains a specific self-insured retention in the amount of $0.5 million for IPO “laddering” claims, including those alleged in this matter. Thus, under the proposed settlement, if any payment is required under the insurers’ guaranty, Talarian would be responsible for paying its pro rata share of the shortfall, up to $0.5 million of the self-insured retention remaining under its policy. The self insured retention of $0.5 million was accrued at the time of the acquisition.

Note 12. Stockholders’ Equity

Preferred Stock

Our certificate of incorporation, as amended, authorizes us to issue 75.0 million shares of $0.001 par value preferred stock. As of November 30, 2005, no preferred stock is issued or outstanding.

Common Stock

Our certificate of incorporation, as amended, authorizes us to issue 1.2 billion shares of $0.001 par value common stock. As of November 30, 2005, 210,548,428 shares of common stock were issued and outstanding. There were no shares subject to repurchase as of November 30, 2005 or 2004.

Benefit Plans

1996 Stock Option Plan.    In 1996, we adopted the 1996 Stock Option Plan (“1996 Plan”). The 1996 Plan provides for the granting of stock options to our employees and consultants. Options granted under the 1996 Plan may be either incentive stock options or nonqualified stock options. Incentive stock options may be granted only

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TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

to employees (including officers and directors who are employees). Nonqualified stock options may be granted to our employees and consultants. Options granted before our IPO in 1999 are exercisable immediately upon grant and generally vest over five years and are subject to repurchase until vested. Options granted after our IPO are not generally exercisable immediately and generally vest over four years. The 1996 Plan provides for an automatic increase to the number of shares of common stock reserved for issuance (to be added on the first day of each fiscal year beginning in 2000) equal to the lesser of (i) 60 million shares, (ii) 5% of the outstanding shares of our common stock, or (iii) a lesser amount determined by the Board of Directors. As of November 30, 2005, there were 28.1 million shares reserved for grant under this plan.

Talarian Stock Option Plans.    In April 2002, we assumed all of the Talarian Stock Option Plans (the “Talarian Plans”) in connection with our acquisition of Talarian. At the date of acquisition all outstanding options of Talarian common stock were converted, according to the exchange ratio, into options of our common stock with terms and conditions equivalent to those applicable at the time of conversion. We recorded an initial $0.7 million of deferred compensation related to 486,000 options assumed and converted under this plan in fiscal year 2002. Though we have no intention of issuing additional grants, there were 0.1 million shares reserved for grant under this plan as of November 30, 2005.

2000 Extensibility Stock Option Plan.    In 2000, we adopted the 2000 Extensibility Stock Option Plan (the “Extensibility Plan”) in connection with options assumed in our acquisition of Extensibility. Extensibility employees who continued service with us were granted options with terms and conditions equivalent to those applicable at the date of acquisition. Though we have no intention of issuing additional grants, there were 22,000 shares reserved for grant under this plan as of November 30, 2005.

1998 Director Option Plan.    In February 1998, we adopted the 1998 Director Option Plan (the “Director Plan”). As amended in April 2002, the Director Plan provides for an automatic initial grant of 100,000 shares to members of the Board who are not employees of the Company or Reuters (“External Directors”). At any subsequent annual re-election, each External Director shall be granted an option to purchase 40,000 additional shares. Options are granted at an exercise price not less than the fair market value of the stock on the date of grant, have a term not to exceed ten years and become exercisable over a three-year period with a third of the shares vesting annually. Any External Director with over one year of consecutive service prior to the effective date of the Director Plan received an initial grant of 450,000 shares. As of November 30, 2005, there were 2.5 million shares reserved for grant under this plan.

The activities under all stock option plans are summarized as follows (in thousands, except per share data):

	Year Ended November 30,
	2005				2004				2003
	Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price
Outstanding at beginning of year	44,194		$	6.96	42,330		$	7.18	43,460		$	7.55
Granted	7,310			7.18	13,618			7.06	7,179			4.92
Exercised	(2,524	)		5.44	(5,362	)		4.63	(2,047	)		1.62
Canceled	(2,714	)		8.03	(6,392	)		10.58	(6,262	)		8.99
Outstanding at end of year	46,266			7.01	44,194			6.96	42,330			7.18
Options exercisable at year end	30,718		$	6.98	27,287		$	6.82	26,795		$	6.83

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TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The estimated weighted-average fair value of options at the grant date during fiscal years 2005, 2004 and 2003, were $3.06, $3.69, and $3.94, respectively. See Note 2 for the assumptions we used to calculate the value of each option grant on the date of the grant using the Black-Scholes option-pricing model.

The following table summarizes information about stock options outstanding at November 30, 2005 (in thousands, except number of years and per share data):

	Options Outstanding				Options Exercisable
Range of Exercise Price	Number of Shares Underlying Options	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number of Shares Underlying Options	Weighted Average Exercise Price
$0.20	5,866	1.09	$	0.20	5,866	$	0.20
$0.21 to $5.54	5,727	5.55		3.35	4,299		2.89
$5.55 to $5.99	5,219	7.42		5.99	2,931		5.99
$6.00 to $6.63	6,014	9.19		6.58	1,162		6.46
$6.64 to $7.50	5,955	8.52		7.24	1,898		7.27
$7.51 to $8.00	6,470	6.44		7.95	5,396		7.98
$8.01 to $11.96	4,798	6.84		10.44	3,469		10.95
$11.97 to $13.58	5,602	6.16		12.54	5,112		12.50
$13.59 to $71.81	615	4.56		29.52	585		29.23
Total	46,266	6.37	$	7.01	30,718	$	6.98

Employee Stock Purchase Program.    In June 1999, we amended the 1996 Plan to include the Employee Stock Purchase Program. Employees are generally eligible to participate in the ESPP if they are customarily employed by us for more than 20 hours per week and more than 5 months in a calendar year and are not (and would not become as a result of being granted an option under the ESPP) 5% stockholders of the Company. Under the ESPP, eligible employees may select a rate of payroll deduction up to 10% of their eligible compensation subject to certain maximum purchase limitations.

Our ESPP was modified in 2005, in response to the recent changes in accounting for stock-based payments, as stated in SFAS 123(R) issued in December 2004. The duration for offering periods was changed to six months and the price at which the common stock is purchased under the ESPP was set at 95% of the fair market value of our common stock on the last day of the respective purchase period. These modifications to the ESPP are effective as of the purchase period beginning February 1, 2005. Since the administrative burden and tax consequences appear to outweigh any benefit that our international employees might receive from participating in the ESPP, we have also chosen to exclude all non-U.S. employees from the ESPP, on a country-by-country basis.

We issued approximately 0.6 million, 1.1 million and 1.2 million shares under our ESPP, representing approximately $4.0 million, $5.0 million and $5.4 million in employee contributions for fiscal years 2005, 2004 and 2003, respectively. As of November 30, 2005, there were 0.9 million shares reserved for grant under this program.

401(k) Plan.    Our employee savings and retirement plan is qualified under Section 401 of the Internal Revenue Code. Employees may elect to reduce their current compensation by up to the statutory prescribed annual limit and have the amount of such reduction contributed to the 401(k) Plan. We provide 100% match to employee contributions up to 4% of an employee’s base pay and an additional 25% match (reduced from 50% in

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TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

fiscal year 2004 and earlier) on employee contributions of the next 2% of base pay. Our matching contributions to the 401(k) Plan totaled $4.1 million, $3.2 million and $3.5 million in fiscal years 2005, 2004 and 2003, respectively.

Adoption of Stockholder Rights Plan

In February 2004, our Board of Directors adopted a stockholder rights plan designed to guard against partial tender offers and other coercive tactics to gain control of the Company without offering a fair and adequate price and terms to all of our stockholders.

In connection with the plan, the Board declared a dividend of one right (a “Right”) to purchase one one-thousandth share of our Series A Participating Preferred Stock (“Series A Preferred”) for each share of our common stock outstanding on March 5, 2004 (the “Record Date”). Of the 75.0 million shares of preferred stock authorized under our certificate of incorporation, as amended, 25.0 million have been designated as Series A Preferred. The Board further directed the issuance of one such right with respect to each share of our common stock that is issued after the Record Date, except in certain circumstances. The rights will expire on March 5, 2014.

The Rights are initially attached to our common stock and will not be traded separately. If a person or a group (an “Acquiring Person”) acquires 15% or more of our common stock, or announces an intention to make a tender offer for 15% or more of our common stock, the Rights will be distributed and will thereafter be traded separately from the common stock. Each Right will be exercisable for 1/1000th of a share of Series A Preferred at an exercise price of $70 (the “Purchase Price”). The Series A Preferred has been structured so that the value of 1/1000th of a share of such preferred stock will approximate the value of one share of common stock. Upon a person becoming an Acquiring Person, holders of the Rights (other than the Acquiring Person) will have the right to receive, upon exercise, shares of our common stock having a value equal to two times the Purchase Price.

If a person becomes an Acquiring Person and we are acquired in a merger or other business combination, or 50% or more of our assets are sold to an Acquiring Person, the holder of Rights (other than the Acquiring Person) will have the right to receive shares of common stock of the acquiring corporation having a value equal to two times the Purchase Price. After a person has become an Acquiring Person, our Board of Directors may, at its option, require the exchange of outstanding Rights (other than those held by the Acquiring Person) for common stock at an exchange ratio of one share of our common stock per Right.

The Board may redeem outstanding rights at any time prior to a person becoming an Acquiring Person at a price of $0.001 per Right. Prior to such time, the terms of the Rights may be amended by the Board.

Repurchased Shares from Reuters in Fiscal Year 2004

As of November 30, 2003, Reuters owned approximately 49% of the issued and outstanding shares of our capital stock. In February 2004, Reuters sold 69 million of our outstanding shares in a registered public offering at a price of $6.85. Pursuant to the terms of the Registration and Repurchase Agreement with Reuters, we purchased from Reuters and retired 16.8 million shares of our common stock at the same price of $6.85 per share, totaling $115.0 million.

Stock Repurchase Program

In September 2004, our Board of Directors approved a two-year stock repurchase program pursuant to which we may repurchase up to $50.0 million of our outstanding common stock from time to time on the open market or through privately negotiated transactions.

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TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In December 2005, the Board of Directors approved a new eighteen-month stock repurchase program pursuant to which we may repurchase up to $100.0 million of our outstanding common stock. The timing and amount of any repurchases is dependent upon market conditions and other corporate considerations.

Since the inception of the stock repurchase program, we have repurchased a total of 6.6 million shares of our common stock for a total of $49.0 million, of which, 6.6 million shares for a total of $48.3 million was repurchased in fiscal year 2005. The repurchased shares of common stock have been retired.

Note 13. Segment Information

We operate our business in one reportable segment: the development and marketing of a suite of software products that enables businesses to link internal operations, business partners and customer channels through the real-time distribution of information. Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our Chief Executive Officer.

Our revenue by geographic region, based on the location at which each sale originates, is summarized as follows (in thousands):

	Year Ended November 30,
	2005		2004		2003
Americas:
United States	$	226,024	$	191,004	$	134,776
Other Americas		5,923		3,877		6,196
Europe:
United Kingdom		68,029		62,722		47,502
Other Europe		98,921		88,076		59,150
Pacific Rim		47,013		41,541		16,586
Total Revenue	$	445,910	$	387,220	$	264,210

Revenue from Reuters is primarily included in the revenue from European geographic region and accounted for 5%, 7% and 12% of total revenue for the years ended November 30, 2005, 2004 and 2003, respectively. (Also see Note 14.)

No other customer accounted for more than 10% of total revenue for the fiscal year 2005, 2004 or 2003. No customer had a balance in excess of 10% of our net accounts receivable as of November 30, 2005 or 2004.

Our long-lived assets, which are tangible assets such as property and equipment, by major country are summarized as follows (in thousands):

	November 30,
	2005		2004
United States	$	110,063	$	111,871
United Kingdom		3,615		3,401
Other countries		2,779		2,786
Total long-lived assets	$	116,457	$	118,058

F-38

TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 14. Transactions with Reuters and Other Related Parties

Reuters

We have commercial arrangement with affiliates of Reuters Group PLC (“Reuters”), one of our stockholders. During fiscal year 2005, Reuters reduced its holding such that as of November 30, 2005, Reuters owned less than 1% of our outstanding shares of common stock. Revenue from Reuters consists primarily of product license and maintenance fees on its sales of TIBCO products under the terms of our license, maintenance and distribution agreement with Reuters. We have presented revenue from Reuters as related party revenue for all periods.

Reuters is a distributor of our products to customers in the financial services market. In February 2005, we entered into an amended license, maintenance and distribution agreement with Reuters, pursuant to which Reuters has the right to distribute certain of our products in conjunction with the sale by Reuters to end users of its market data delivery solutions. The initial term of the amendment is one year, which may be extended by Reuters for two additional one-year periods, on payment of additional license fees. The initial $9.9 million non-refundable prepaid royalty was recognized as related party license revenue in the first quarter of fiscal year 2005. Another $1.1 million under the amended agreement represents maintenance fees and is being recognized ratably over the one year maintenance period. In addition, Reuters is eligible to receive between 5% and 30% of revenue (depending upon the level of assistance provided by Reuters) from sales to approved customers referred to TIBCO by Reuters. Furthermore, the amended agreement requires us to provide Reuters with internal maintenance and support for a fee of $1.0 million per year plus an annual CPI-based increase until December 2012. This amount was recognized ratably over the corresponding period as related party service and maintenance revenue.

The following is a summary of revenue from Reuters (in thousands):

	Year Ended November 30,
	2005		2004		2003
License fees	$	16,038	$	16,308	$	16,936
Service and maintenance revenue:
Maintenance		6,827		11,566		13,145
Services contracts		146		432		654
Total service and maintenance		6,973		11,998		13,799
Total revenue from Reuters	$	23,011	$	28,306	$	30,735

We had no royalty costs payable to Reuters in fiscal year 2005 and 2004, while such cost of revenue was $2.3 million for fiscal years 2003. We incurred a total of $0.4 million in referral fees payable to Reuters during fiscal year 2005, and the fees were included in our sales and marketing expenses. Such fees were in negligible amounts in fiscal year 2004 and 2003. Accounts receivable due from Reuters totaled $1.2 million and $2.9 million, as of November, 2005 and 2004, respectively.

Cisco Systems

Prior to the third quarter of fiscal year 2004, Cisco Systems, Inc. (“Cisco”) owned more than 5% of our outstanding common stock. During the second half of fiscal year 2004, Cisco’s ownership was reduced to less than 5% of our outstanding common stock. Accordingly, beginning in the third quarter of fiscal year 2004, we no longer considered Cisco to be a related party.

We recorded revenue of $0.7 million in the first half of fiscal year 2004 when Cisco was considered a related party, and revenue of $3.5 million for the entire fiscal year 2003.

F-39

TIBCO SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 15. Unaudited Quarterly Results of Operations

The following sets forth our quarterly results of operations for fiscal years 2005 and 2004 (in thousands, except per share data):

	Fiscal Year 2005, Three Months Ended												Fiscal Year 2004, Three Months Ended
	Nov. 30, 2005			Aug. 31, 2005			May 31, 2005			Feb. 28, 2005			Nov. 30, 2004			Aug. 31, 2004			May 31, 2004			Feb. 29, 2004
Revenue:
License revenue:
Non-related parties	$	66,753		$	44,365		$	40,082		$	36,650		$	66,336		$	53,697		$	41,261		$	36,459
Related parties		—			—			1,668			14,370			4,214			3,751			4,057			4,311
Total license revenue		66,753			44,365			41,750			51,020			70,550			57,448			45,318			40,770
Services and maintenance revenue:
Non-related parties		64,457			58,488			56,456			49,138			50,599			44,279			31,644			29,342
Related parties		1,233			1,404			1,556			2,780			2,996			2,860			3,317			3,519
Billed expenses		1,988			1,688			1,626			1,208			1,514			1,324			970			770
Total services and maintenance revenue		67,678			61,580			59,638			53,126			55,109			48,463			35,931			33,631
Total revenue		134,431			105,945			101,388			104,146			125,659			105,911			81,249			74,401
Cost of revenue:
Cost of license		3,542			2,995			3,225			2,932			3,940			3,853			1,968			1,825
Cost of service and maintenance		30,644			28,039			28,177			24,639			26,761			23,811			16,451			14,588
Total cost of revenue		34,186			31,034			31,402			27,571			30,701			27,664			18,419			16,413
Gross profit		100,245			74,911			69,986			76,575			94,958			78,247			62,830			57,988
Operating expenses:
Research and development		21,604			18,073			17,269			16,190			17,954			16,189			13,839			13,118
Sales and marketing		36,683			34,392			35,089			34,206			36,998			32,960			26,891			26,637
General and administrative		10,051			8,814			8,655			9,800			9,766			8,740			5,736			4,806
Acquired in-process research and development		—			—			—			—			—			2,200			—			—
Restructuring charges		—			162			3,743			—			2,186			—			—			—
Amortization of goodwill and acquired intangibles		2,397			2,317			2,315			1,883			2,053			2,218			483			499
Total operating expenses		70,735			63,758			67,071			62,079			68,957			62,307			46,949			45,060
Income from operations		29,510			11,153			2,915			14,496			26,001			15,940			15,881			12,928
Interest income		3,786			3,150			3,598			2,784			2,311			1,920			2,092			2,113
Interest expense		(671	)		(670	)		(688	)		(682	)		(693	)		(690	)		(691	)		(697	)
Other income (expenses), net		(1,217	)		(1,142	)		406			353			(1,087	)		(569	)		(1,243	)		199
Income before income taxes		31,408			12,491			6,231			16,951			26,532			16,601			16,039			14,543
Provision for (benefit from) income taxes		4,821			(1,358	)		(15,500	)		6,563			8,308			8,031			6,441			6,015
Net income	$	26,587		$	13,849		$	21,731		$	10,388		$	18,224		$	8,570		$	9,598		$	8,528
Net income per share—Basic	$	0.13		$	0.07		$	0.10		$	0.05		$	0.09		$	0.04		$	0.05		$	0.04
Shares used to compute net income per share—Basic		211,444			212,308			214,551			214,751			212,432			209,442			198,816			209,188
Net income per share—Diluted	$	0.12		$	0.06		$	0.10		$	0.04		$	0.08		$	0.04		$	0.05		$	0.04
Shares used to compute net income per share—Diluted		220,513			219,775			221,943			233,675			227,628			221,413			212,658			222,452

F-40

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on this 10th day of February 2006.

TIBCO Software Inc.
By:	/s/ MURRAY D. RODE
	Murray D. Rode
	Chief Financial Officer and Executive Vice President, Strategic Operations

II-1

POWER OF ATTORNEY

KNOW ALL THESE, PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Vivek Y. Ranadivé and Murray D. Rode, and each of them, his attorneys-in-fact, each with full power of substitution, for him in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each said attorneys-in-fact or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/S/ VIVEK Y. RANADIVÉ     Vivek Y. Ranadivé	President, Chief Executive Officer, and Chairman of the Board and Director (Principal Executive Officer)	February 10, 2006
/S/ MURRAY D. RODE     Murray D. Rode	Chief Financial Officer and Executive Vice President, Strategic Operations (Principal Financial Officer)	February 10, 2006
/S/ SYDNEY L. CAREY     Sydney L. Carey	Senior Vice President, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer)	February 10, 2006
/S/ BERNARD BOURIGEAUD     Bernard Bourigeaud	Director	February 10, 2006
/S/ ERIC DUNN     Eric Dunn	Director	February 10, 2006
/S/ NAREN GUPTA     Naren Gupta	Director	February 10, 2006
/S/ PETER JOB     Peter Job	Director	February 10, 2006
/S/ PHILIP K. WOOD     Philip K. Wood	Director	February 10, 2006

II-2

EXHIBIT INDEX

Exhibit No.	Exhibits
3.1(1)	Certificate of Incorporation of Registrant.
3.2	Bylaws of Registrant.
4.1(2)	Form of Registrant’s Common Stock certificate.
10.1(2)	Form of Indemnification Agreement.
10.2(3)	Third Amended and Restated Stockholders Agreement, dated as of July 13, 1999, among Reuters Nederland B.V., Reuters Limited, Cisco Systems, Inc., Mayfield IX, Mayfield Associated Fund III, Vivek Ranadivé and Registrant.
10.3(4)#	1996 Stock Plan, as amended.
10.4(4)#	1998 Director Option Plan, as amended.
10.5(4)#	Employment Agreement between Registrant and Vivek Y. Ranadivé dated November 30, 2004.
10.6(5)	Lease Agreement dated January 21, 2000 between Spieker Properties, L.P. and the Registrant.
10.7(6)#	Extensibility Inc. 2000 Stock Option Plan.
10.8(7)#	Talarian Corporation 2000 Equity Incentive Plan.
10.9(7)#	Talarian Corporation 1998 Equity Incentive Plan.
10.10(7)#	White Barn, Inc. Stock Option Plan.
10.11(7)#	White Barn, Inc. 2000 Equity Incentive Plan.
10.12(8)†	Second Amended and Restated License, Maintenance and Distribution Agreement, dated October 1, 2003, between Reuters Limited and the Registrant.
10.13(9)†	Amendment No. 1, dated February 27, 2005, to Second Amended and Restated License, Maintenance and Distribution Agreement, dated October 1, 2003, between Reuters Limited and the Registrant.
10.14(10)	Agreement to Lease and Sell Assets, dated as of June 2, 2003, by and between the Board of Trustees of the Leland Stanford Junior University and 3301 Hillview Holdings, Inc.
10.15(10)	Ground Lease, dated as of June 25, 2003, by and between the Board of Trustees of the Leland Stanford Junior University and 3301 Hillview Holdings, Inc.
10.16(10)	Promissory Note issued on June 25, 2003 to SunAmerica Life Insurance Company by 3301 Hillview Holdings, Inc.
10.17(11)#	Change in Control Severance Plan.
10.18(12)#	Summary of 2005 Executive Incentive Compensation Plan.
10.19#	Transition Agreement and Release between the Registrant and Chris O’Meara dated October 11, 2005.
21.1	List of subsidiaries.
23.1	Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.
24.1	Power of Attorney (included on signature page).
31.1	Rule 13a – 14(a) / 15d – 14(a) Certification by Chief Executive Officer.
31.2	Rule 13a – 14(a) / 15d – 14(a) Certification by Chief Financial Officer.
32.1	Section 1350 Certification by Chief Executive Officer.
32.2	Section 1350 Certification by Chief Financial Officer.

(1) Incorporated by reference to exhibits filed with the Registrant’s Registration Statement on Form 8-A, filed with the Commission on February 23, 2004.

(2) Incorporated by reference to exhibits filed with the Registrant’s Registration Statement on Form S-1 File No. 333-78195, filed with the Commission on June 18, 1999, as amended.

(3) Incorporated by reference to exhibits filed with the Registrant’s Registration Statement on Form S-1 File No. 333-31358, filed with the Commission on February 29, 2000, as amended.

(4) Incorporated by reference to exhibits filed with the Registrant’s Annual Report on Form 10-K, filed with the Commission on February 14, 2005.

(5) Incorporated by reference to exhibits filed with the Registrant’s Quarterly Report on Form 10-Q, filed with the Commission on April 17, 2000.

(6) Incorporated by reference to exhibits filed with the Registrant’s Registration Statement on Form S-8 File No. 333-48260, filed with the Commission on October 19, 2000.

(7) Incorporated by reference to exhibits filed with the Registrant’s Registration Statement on Form S-8 File No. 333-88730, filed with the Commission on May 21, 2002.

(8) Incorporated by reference to exhibits filed with the Registrant’s Registration Statement on Form S-3 File No. 333-110304, filed with the Commission on November 6, 2003, as amended.

(9) Incorporated by reference to exhibits filed with the Registrant’s Quarterly Report on Form 10-Q, filed with the Commission on April 8, 2005.

(10) Incorporated by reference to exhibits filed with the Registrant’s Annual Report on Form 10-K, filed with the Commission on January 20, 2004.

(11) Incorporated by reference to exhibits filed with the Registrant’s Current Report on Form 8-K, filed with the Commission on July 13, 2005.

(12) Incorporated by reference to exhibits filed with the Registrant’s Current Report on Form 8-K, filed with the Commission on July 6, 2005.

 # Indicates management contract or compensatory plan or arrangement.

 † Confidential treatment granted for certain portions of this exhibit.

EX-3.2

Exhibit 3.2

BYLAWS

OF

TIBCO SOFTWARE INC.

(A Delaware Corporation)

as amended and restated as of March 2, 2004

BYLAWS

OF

TIBCO SOFTWARE INC.

as amended and restated as of March 2, 2004

ARTICLE I

CORPORATE OFFICES

1.1 REGISTERED OFFICE

The registered office of the corporation shall be in the City of Wilmington, County of New Castle, State of Delaware. The name of the registered agent of the corporation at such location is The Corporation Trust Company.

1.2 OTHER OFFICES

The board of directors may at any time establish other offices at any place or places where the corporation is qualified to do business.

ARTICLE II

MEETINGS OF STOCKHOLDERS

2.1 PLACE OF MEETINGS

Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the board of directors. In the absence of any such designation, stockholders’ meetings shall be held at the registered office of the corporation.

2.2 ANNUAL MEETING

(a) The annual meeting of stockholders shall be held each year on a date and at a time designated by the board of directors. In the absence of such designation, the annual meeting of stockholders shall be held on the third Thursday in May of each year at 10:00 a.m. However, if such day falls on a legal holiday, then the meeting shall be held at the same time and place on the next succeeding full business day. At the meeting, directors shall be elected, and any other proper business may be transacted.

(b) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an

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annual meeting, business must be: (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (ii) otherwise properly brought before the meeting by or at the direction of the board of directors, or (iii) otherwise properly brought before the meeting by a stockholder of record at the time of giving notice provided for in these Bylaws, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.2. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the secretary of the corporation. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than 120 calendar days in advance of the date specified in the corporation’s proxy statement released to stockholders in connection with the previous year’s annual meeting of stockholders; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after the anniversary date of the previous year’s meeting, notice by the stockholder to be timely must be so received not earlier than the close of business on the one hundred twentieth (120th) day prior to such meeting and not later than the close of business on the later of (x) the ninetieth (90th) day prior to such meeting and (y) the tenth (10) day following the date on which public announcement of the date of such meeting is first made. For purposes of this Section 2.2, a “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission. In no event shall the public announcement of an adjournment of a stockholders meeting commence a new time period for the giving of a stockholder’s notice as described above. A stockholder’s notice to the secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (1) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (2) the name and address, as they appear on the corporation’s books, of the stockholder proposing such business, (3) the class and number of shares of the corporation which are beneficially owned by the stockholder, (4) any material interest of the stockholder in such business, and (5) any other information that is required to be provided by the stockholder pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “1934 Act”), in his capacity as a proponent to a stockholder proposal. Notwithstanding the foregoing, in order to include information with respect to a stockholder proposal in the proxy statement and form of proxy for a stockholder’s meeting, stockholders must provide notice as required by the regulations promulgated under the 1934 Act. In addition, with respect to a stockholder proposal, if the stockholder has provided the corporation a notice as described above, the stockholder must have delivered a proxy statement and form of proxy to holders of a sufficient number of shares to carry such proposal in order for such proposal to be properly presented. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this paragraph (b). The chairman of the annual meeting shall, if the facts warrant, determine and declare at the meeting that business was not properly brought before the meeting and in accordance with the provisions of this paragraph (b), and, if he or she should so determine, he or she shall so declare at the meeting that any such business not properly brought before the meeting shall not be transacted.

(c) Only persons who are nominated in accordance with the procedures set forth in this paragraph (c) shall be eligible for election as directors. Nominations of persons for election to the board of directors of the corporation may be made at a meeting of stockholders by or at the

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direction of the board of directors or by any stockholder of record of the corporation at the time of giving notice provided for in these Bylaws, who is entitled to vote in the election of directors at the meeting and who complies with the notice procedures set forth in this paragraph (c). Such nominations, other than those made by or at the direction of the board of directors, shall be made pursuant to timely notice in writing to the secretary of the corporation in accordance with the provisions of paragraph (b) of this Section 2.2. Such stockholder’s notice shall set forth (i) as to each person, if any, whom the stockholder proposes to nominate for election or re-election as a director: (A) the name, age, business address and residence address of such person, (B) the principal occupation or employment of such person, (C) the class and number of shares of the corporation which are beneficially owned by such person, (D) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder, and (E) any other information relating to such person that is required to be disclosed in solicitations of proxies for elections of directors, or is otherwise required, in each case pursuant to Regulation 14A under the 1934 Act (including without limitation such person’s written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected); (ii) as to such stockholder giving notice, the information required to be provided pursuant to paragraph (b) of this Section 2.2; and (iii) a written statement executed by such nominee acknowledging that, as a director of such corporation, such person will owe a fiduciary duty, under the General Corporation Law of the State of Delaware, exclusively to the corporation and its stockholders. In addition, if the stockholder has provided the corporation a notice as described above, the stockholder must have delivered a proxy statement and form of proxy to holders of a sufficient number of shares to elect such nominee in order for the proposal to be properly nominated. At the request of the board of directors or the chairman of the board, any person nominated by a stockholder for election as a director shall furnish to the secretary of the corporation that information required to be set forth in the stockholder’s notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in this paragraph (c). The chairman of the meeting shall, if the facts warrants, determine and declare at the meeting that a nomination was not made in accordance with the procedures prescribed by these Bylaws, and if he or she should so determine, he or she shall so declare at the meeting, and the defective nomination shall be disregarded.

2.3 SPECIAL MEETING

A special meeting of the stockholders may be called at any time by the board of directors, or by any of the following persons with the concurrence of a majority of the board of directors: the chairman of the board of directors, the chairman of the executive committee, or the chief executive officer, but such special meetings may not be called by any other person or persons except as provided in Section 3.4 below. Only such business shall be considered at a special meeting of stockholders as shall have been stated in the notice for such meeting.

2.4 ORGANIZATION

Meetings of stockholders shall be presided over by the chairman of the board of directors, if any, or in his or her absence by a person designated by the board of directors, or, in the absence of a person so designated by the board of directors, by the chief financial officer, if any, or in his or her

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absence by the secretary, if any, or in his or her absence by a chairman chosen at the meeting by the vote of a majority in interest of the stockholders present in person or represented by proxy and entitled to vote thereat. The secretary, or in his or her absence, an assistant secretary, or, in the absence of the secretary and all assistant secretaries, a person whom the chairman of the meeting shall appoint shall act as secretary of the meeting and keep a record of the proceedings thereof.

The board of directors of the corporation shall be entitled to make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the board of directors, if any, the chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in such meeting to stockholders of record of the corporation and their duly authorized and constituted proxies, and such other persons as the chairman shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for balloting and matters which are to be voted on by ballot. Unless and to the extent determined by the board of directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with rules of parliamentary procedure.

2.5 NOTICE OF STOCKHOLDERS’ MEETINGS

All notices of meetings with stockholders shall be in writing and shall be sent or otherwise given in accordance with Section 2.6 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, date, and hour of the meeting, and (i) in the case of a special meeting, the general nature of the business to be transacted (no business other than that specified in the notice may be transacted) or (ii) in the case of the annual meeting, those matters which the board of directors, at the time of giving the notice, intends to present for action by the stockholders (but any proper matter may be presented at the meeting for such action). The notice of any meeting at which directors are to be elected shall include the name of any nominee or nominees who, at the time of the notice, the board intends to present for election. Any previously scheduled meeting of the stockholders may be postponed, and (unless the Certificate of Incorporation otherwise provides) any special meeting of the stockholders may be cancelled, by resolution of the board of directors upon public notice given prior to the date previously scheduled for such meeting of stockholders.

2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

Notice of any meeting of stockholders shall be given either personally or by mail, telecopy, telegram or other electronic or wireless means. Notices not personally delivered shall be sent postage or charges prepaid and shall be addressed to the stockholder at the address of that stockholder appearing on the books of the corporation or given by the stockholder to the corporation for the purpose of notice. Notice shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by telecopy, telegram or other electronic or wireless means.

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An affidavit of the mailing or other means of giving any notice of any stockholders’ meeting, executed by the secretary, assistant secretary or any transfer agent of the corporation giving the notice, shall be prima facie evidence of the giving of such notice or report.

2.7 QUORUM

The holders of a majority in voting power of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or the Certificate of Incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairman of the meeting or (ii) the stockholders by the vote of the holders of a majority of the stock present in person or represented by proxy at the meeting, shall have power to adjourn the meeting from time to time in accordance with Section 2.8, each without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.

When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provision of the laws of the State of Delaware or of the Certificate of Incorporation or these Bylaws, a vote of a greater number or voting by classes is required, in which case such express provision shall govern and control the decision of the question.

If a quorum be initially present, the stockholders may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

2.8 ADJOURNED MEETING; NOTICE

Any meeting of stockholders, annual or special, whether or not a quorum is present, may be adjourned for any reason from time to time by either (i) the chairman of the meeting or (ii) the stockholders by the vote of the holders of a majority of the stock represented at the meeting, either in person or by proxy. In the absence of a quorum, no other business may be transacted at that meeting except as provided in Section 2.7 of these Bylaws.

When any meeting of stockholders, either annual or special, is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place are announced at the meeting at which the adjournment is taken. However, if a new record date for the adjourned meeting is fixed or if the adjournment is for more than thirty (30) days from the date set for the original meeting, then notice of the adjourned meeting shall be given. Notice of any such adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting in accordance with the provisions of Sections 2.5 and 2.6 of these Bylaws. At any adjourned meeting the corporation may transact any business which might have been transacted at the original meeting.

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2.9 VOTING

The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.12 of these Bylaws, subject to the provisions of Sections 217 and 218 of the General Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgers and joint owners, and to voting trusts and other voting agreements).

Except as may be otherwise provided in the Certificate of Incorporation, by these Bylaws or required by law, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder.

Any stockholder entitled to vote on any matter may vote part of the shares in favor of the proposal and refrain from voting the remaining shares or, except when the matter is the election of directors, may vote them against the proposal; but if the stockholder fails to specify the number of shares which the stockholder is voting affirmatively, it will be conclusively presumed that the stockholder’s approving vote is with respect to all shares which the stockholder is entitled to vote.

2.10 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT

The transactions of any meeting of stockholders, either annual or special, however called and noticed, and wherever held, shall be as valid as though they had been taken at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy.

Attendance by a person at a meeting shall also constitute a waiver of notice of and presence at that meeting, except when the person objects at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Attendance at a meeting is not a waiver of any right to object to the consideration of matters required by law to be included in the notice of the meeting but not so included, if that objection is expressly made at the meeting.

2.11 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING

Unless otherwise provided in the certificate of incorporation, any action required by this chapter to be taken at any annual or special meeting of stockholders of a corporation, or any action that may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. If the action which is consented to is such as would have required the filing of a certificate under any section of the General Corporation Law of Delaware if such action had been voted on by stockholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of stockholders, that written notice and written consent have been given as provided in Section 228 of the General Corporation Law of Delaware.

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2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS

For purposes of determining the stockholders entitled to notice of any meeting or to vote thereat, the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before the date of any such meeting, and in such event only stockholders of record on the date so fixed are entitled to notice and to vote, notwithstanding any transfer of any shares on the books of the corporation after the record date, except as otherwise provided in the Certificate of Incorporation, by these Bylaws, by agreement or by applicable law.

If the board of directors does not so fix a record date, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the business day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting unless the board of directors fixes a new record date for the adjourned meeting, but the board of directors shall fix a new record date if the meeting is adjourned for more than thirty (30) days from the date set for the original meeting.

The record date for any other purpose shall be as provided in Section 8.10 of these Bylaws.

2.13 PROXIES

Every person entitled to vote for directors, or on any other matter, shall have the right to do so either in person or by one or more agents authorized by a written proxy, which may be in the form of a telegram, cablegram, or other means of electronic transmission, signed by the person and filed with the secretary of the corporation, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholder’s name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the stockholder or the stockholder’s attorney-in-fact. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or by filing another duly executed proxy bearing a later date with the secretary of the corporation.

A proxy is not revoked by the death or incapacity of the maker unless, before the vote is counted, written notice of such death or incapacity is received by the corporation.

2.14 INSPECTORS OF ELECTION

Before any meeting of stockholders, the board of directors may appoint an inspector or inspectors of election to act at the meeting or its adjournment. If no inspector of election is so appointed, then the chairman of the meeting may, and on the request of any stockholder or a stockholder’s proxy shall, appoint an inspector or inspectors of election to act at the meeting. The number of inspectors shall be either one or three. If inspectors are appointed at a meeting pursuant

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to the request of one or more stockholders or proxies, then the holders of a majority of the voting power of shares or their proxies present at the meeting shall determine whether one or three inspectors are to be appointed. If any person appointed as inspector fails to appear or fails or refuses to act, then the chairman of the meeting may, and upon the request of any stockholder or a stockholder’s proxy shall, appoint a person to fill that vacancy.

Such inspectors shall:

(i) determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies;

(ii) receive votes, ballots or consents;

(iii) hear and determine all challenges and questions in any way arising in connection with the right to vote;

(iv) count and tabulate all votes or consents;

(v) determine when the polls shall close;

(vi) determine the result; and

(vii) do any other acts that may be proper to conduct the election or vote with fairness to all stockholders.

ARTICLE III

DIRECTORS

3.1 POWERS

Subject to the provisions of the General Corporation Law of Delaware and any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors. In addition to the powers and authorities these Bylaws expressly confer upon them, the board of directors may exercise all such powers of the corporation and do all such lawful acts and things as are not by the General Corporation Law of Delaware or by the Certificate of Incorporation or by these Bylaws required to be exercised or done by the stockholders.

3.2 NUMBER OF DIRECTORS

The number of directors which constitute the whole Board of Directors shall be fixed at six (6) unless increased by one or more resolutions adopted from time to time by the Board of Directors.

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No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS

Except as provided in Section 3.4 of these bylaws or the certificate of incorporation, directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws, wherein other qualifications for directors may be prescribed. Each director, including a director elected to fill a vacancy, shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal.

Elections of directors at all meetings of the stockholders at which directors are to be elected shall be by ballot, and, a plurality of the votes cast thereat shall elect directors.

3.4 RESIGNATION AND VACANCIES

Any director may resign effective on giving written notice to the chairman of the board of directors, the secretary or the entire board of directors, unless the notice specifies a later time for that resignation to become effective. If the resignation of a director is effective at a future time, the board of directors may elect a successor to take office when the resignation becomes effective.

Unless otherwise provided in the Certificate of Incorporation or by these Bylaws, vacancies in the board of directors may be filled by a majority of the remaining directors, even if less than a quorum, or by a sole remaining director; however, a vacancy created by the removal of a director by the vote of the stockholders or by court order may be filled only by the affirmative vote of a majority of the voting power of shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute a majority of the required quorum). Each director so elected shall hold office until the next annual meeting of the stockholders and until a successor has been elected and qualified.

Unless otherwise provided in the Certificate of Incorporation or these Bylaws:

(i) Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.

(ii) Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the Certificate of Incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.

Any directors chosen pursuant to this Section 3.4 shall hold office for a term expiring at the next annual meeting of stockholders and until such director’s successor shall have been duly elected and qualified.

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If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the Certificate of Incorporation or these Bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the General Corporation Law of Delaware.

If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board of directors (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of the then outstanding shares having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the General Corporation Law of Delaware as far as applicable.

3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE

The board of directors of the corporation may hold meetings, both regular and special, either within or outside the State of Delaware.

Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

3.6 REGULAR MEETINGS

Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board.

3.7 SPECIAL MEETINGS; NOTICE

Special meetings of the board of directors for any purpose or purposes may be called at any time by the chairman of the board of directors, the chairman of the executive committee, the chief executive officer, the secretary or a majority of the members of the board of directors then in office.

The person or persons authorized to call special meetings of the board of directors may fix the place and time of the meetings. The secretary or any assistant secretary shall give notice of any special meeting to each director personally or by telephone to each director or sent by first-class mail, courier service or telegram, telecopy or other electronic or wireless means, postage or charges prepaid, addressed to each director at that director’s address as it is shown on the records of the corporation or if the address is not readily ascertainable, notice shall be addressed to the director at the city or place in which the meetings of directors are regularly held. If the notice is by mail, such notice shall be deposited in the United States mail at least four (4) days prior to the time set for such

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meeting. If the notice is by telegram, overnight mail or courier service, such notice shall be deemed adequately delivered when the telegram is delivered to the telegram company or the notice is delivered to the overnight mail or courier service company at least twenty-four (24) hours prior to the time set for such meeting. If the notice is by facsimile transmission or other electronic means, such notice shall be deemed adequately delivered when the notice is transmitted at least twenty-four (24) hours prior to the time set for such meeting. If the notice is by telephone or by hand delivery, such notice shall be deemed adequately delivered when the notice is given at least twenty-four (24) hours prior to the time set for such meeting. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason to believe will promptly communicate it to the director. If the meeting is to be held at the principal executive office of the corporation, the notice need not specify the purpose or the place of the meeting. Moreover, a notice of special meeting need not state the purpose of such meeting, and, unless indicated in the notice thereof, any and all business may be transacted at a special meeting.

3.8 QUORUM

At all meetings of the board of directors, a majority of the authorized number of] directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by the certificate of incorporation or by applicable law. If a quorum is not present at any meeting of the board of directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors to have less than a quorum, if any action taken is approved by at least a majority of the required quorum for that meeting prior to the loss of such quorum.

3.9 WAIVER OF NOTICE

Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the certificate of incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors, or members of a committee of directors, need be specified in any written waiver of notice unless so required by the certificate of incorporation or these bylaws.

3.10 ADJOURNMENT

A majority of the directors present, whether or not constituting a quorum, may adjourn any meeting to another time and place.

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3.11 NOTICE OF ADJOURNMENT

Notice of the time and place of holding an adjourned meeting need not be given if announced unless the meeting is adjourned for more than twenty-four (24) hours. If the meeting is adjourned for more than twenty-four (24) hours, then notice of the time and place of the adjourned meeting shall be given before the adjourned meeting takes place, in the manner specified in Section 3.7 of these Bylaws, to the directors who were not present at the time of the adjournment.

3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board or committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the board or committee.

3.13 ORGANIZATION

Meetings of the board of directors shall be presided over by the chairman of the board of directors, if any. In his or her absence, a majority of the directors present at the meeting, assuming a quorum, shall designate a president pro tem of the meeting who, if any such person be present, shall be a chairman of a committee of the board of directors and who shall preside at the meeting. The secretary shall act as secretary of the meeting, but in his or her absence the chairman of the meeting may appoint any person to act as secretary of the meeting.

3.14 FEES AND COMPENSATION OF DIRECTORS

Unless otherwise restricted by the certificate of incorporation or these bylaws, the board of directors shall have the authority to fix the compensation of directors. This Section 3.14 shall not be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee or otherwise and receiving compensation for those services.

3.15 REMOVAL OF DIRECTORS

Unless otherwise restricted by statute, and except as otherwise provided by the certificate of incorporation or these bylaws, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors; provided, however, that, if and so long as stockholders of the corporation are entitled to cumulative voting, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against his or her removal would be sufficient to elect such director if then cumulatively voted at an election of the entire board of directors.

No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.

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3.16 EXECUTIVE SESSION

It is the intent of the board of directors that the members of the board of directors who are not employees of the corporation shall confer in executive session at least annually. Such independent directors may confer in additional executive sessions from time to time throughout the year, as determined by a majority of such independent directors.

ARTICLE IV

COMMITTEES

4.1 COMMITTEES OF DIRECTORS

The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, with each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors or in the bylaws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) amend the certificate of incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) of the General Corporation Law of Delaware, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), (ii) adopt an agreement of merger or consolidation under Sections 251 or 252 of the General Corporation Law of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation’s property and assets, (iv) recommend to the stockholders a dissolution of the corporation or a revocation of a dissolution, or (v) amend the bylaws of the corporation; and, unless the board resolution establishing the committee, the by-laws or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of Delaware. So long as the board of directors delegates compensation issues to a compensation committee or other entity dealing with compensation issues, Reuters shall have the right to have a Reuters Director on such committee, until such time as Reuters no longer has the right to nominate to any directors to the board of directors pursuant to section 3.4 of the bylaws.

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4.2 COMMITTEE MINUTES

Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.

4.3 MEETINGS AND ACTION OF COMMITTEES

Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Article III of these bylaws, Section 3.5 (place of meetings and meetings by telephone), Section 3.6 (regular meetings), Section 3.7 (special meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice), and Section 3.12 (action without a meeting), with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the board of directors and its members; provided, however, that the time of regular meetings of committees may be determined either by resolution of the board of directors or by resolution of the committee, that special meetings of committees may also be called by resolution of the board of directors and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.

4.4 EXECUTIVE COMMITTEE

In the event that the board of directors appoints an executive committee, such executive committee, in all cases in which specific directions to the contrary shall not have been given by the board of directors, shall have and may exercise, during the intervals between the meetings of the board of directors, all the powers and authority of the board of directors in the management of the business and affairs of the corporation (except as provided in Section 4.1 hereof) in such manner as the executive committee may deem in the best interests of the corporation.

ARTICLE V

OFFICERS

5.1 OFFICERS

The officers of the corporation shall be a president, a secretary, and a chief financial officer. The corporation may also have, at the discretion of the board of directors, a chairman of the board, one or more vice presidents, one or more assistant vice presidents, one or more assistant secretaries, one or more assistant treasurers, and any such other officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws. Any number of offices may be held by the same person.

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5.2 APPOINTMENT OF OFFICERS

The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Sections 5.3 or 5.5 of these bylaws, shall be appointed by the board of directors, subject to the rights, if any, of an officer under any contract of employment.

5.3 SUBORDINATE OFFICERS

The board of directors may appoint, or empower the chief executive officer of the corporation to appoint, such other officers and agents as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the board of directors may from time to time determine.

5.4 REMOVAL AND RESIGNATION OF OFFICERS

Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the board of directors at any regular or special meeting of the board or, except in the case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors.

Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.

5.5 VACANCIES IN OFFICES

Any vacancy occurring in any office of the corporation shall be filled by the board of directors.

5.6 CHAIRMAN OF THE BOARD

The chairman of the board, if such an officer be elected and unless otherwise designated by the board of directors, shall, if present, preside at meetings of the board of directors. In addition, such officer shall exercise and perform such other powers and duties as may from time to time be assigned to him by the board of directors or as may be prescribed by these bylaws. If so designated by the board of directors, then the chairman of the board shall also be the chief executive officer of the corporation and shall have the powers and duties prescribed in Section 5.7 of these bylaws.

5.7 CHAIRMAN OF EXECUTIVE COMMITTEE

The chairman of the executive committee, if there be one, shall have the power to call meetings of the stockholders and also of the board of directors to be held subject to the limitations prescribed by law or by these Bylaws, at such times and at such places as the chairman of the executive committee shall deem proper. The chairman of the executive committee shall have such other powers and be subject to such other duties as the board of directors may from time to time prescribe.

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5.8 PRESIDENT

Subject to such powers and duties, if any, as may be given by the board of directors to the chairman of the board or any vice chairman, if there be such an officer, the president shall be the chief executive officer of the corporation and shall, subject to the control of the board of directors, have general supervision, direction, and control of the business and the officers of the corporation. The president shall preside at all meetings of the stockholders and, in the absence or nonexistence of a chairman of the board or if otherwise designated by the board of directors, at all meetings of the board of directors. The president shall have the general powers and duties of management usually vested in the office of president of a corporation and shall have such other powers and duties as may be prescribed by the board of directors or these bylaws.

In case of the disability or death of the president, the board of directors shall meet promptly to confer the powers of the president on another elected officer. Until the board of directors takes such action, the chief financial officer shall exercise all the power and perform all the duties of the president.

5.9 VICE PRESIDENTS

In the absence or disability of the chairman of the board, any vice chairman and the president, the vice presidents, if any, in order of their rank as fixed by the board of directors or, if not ranked, a vice president designated by the board of directors, shall perform all the duties of the president and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the board of directors, these bylaws, the president or the chairman of the board.

5.10 SECRETARY

The secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the board of directors may direct, a book of minutes of all meetings and actions of directors, committees of directors, and stockholders. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors’ meetings or committee meetings, the number of shares present or represented at stockholders’ meetings, and the proceedings thereof.

The secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation’s transfer agent or registrar, as determined by resolution of the board of directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation.

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The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the board of directors required to be given by law or by these bylaws. The secretary shall keep the seal of the corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the board of directors or by these bylaws.

5.11 CHIEF FINANCIAL OFFICER

The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital retained earnings, and shares. The books of account shall at all reasonable times be open to inspection by any director.

The chief financial officer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the board of directors. The chief financial officer shall disburse the funds of the corporation as may be ordered by the board of directors, shall render to the chief executive officer and directors, whenever they request it, an account of all his or her transactions as chief financial officer and of the financial condition of the corporation, and shall have other powers and perform such other duties as may be prescribed by the board of directors or these bylaws.

The chief financial officer shall be the treasurer of the corporation unless otherwise designated by the board of directors.

5.12 ASSISTANT SECRETARY

The assistant secretary, or, if there is more than one, the assistant secretaries in the order determined by the stockholders or board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as may be prescribed by the board of directors or these bylaws.

5.13 ASSISTANT TREASURER

The assistant treasurer, or, if there is more than one, the assistant treasurers, in the order determined by the stockholders or board of directors (or if there be no such determination, then in the order of their election), shall, in the absence of the chief financial officer or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the chief financial officer and shall perform such other duties and have such other powers as may be prescribed by the board of directors or these bylaws.

5.14 REPRESENTATION OF SHARES OF OTHER CORPORATIONS

The chairman of the board, the president, any vice president, the chief financial officer, the secretary or assistant secretary of this corporation, or any other person authorized by the board of directors or the president or a vice president, is authorized to vote, represent, and exercise on behalf

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of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

5.15 AUTHORITY AND DUTIES OF OFFICERS

In addition to the foregoing authority and duties, all officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the board of directors or the stockholders.

ARTICLE VI

INDEMNITY

6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS

Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit, or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was a director or officer of the corporation (or any predecessor) or is or was serving at the request of the corporation (or any predecessor) as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise (or any predecessor of any of such entities), including service with respect to employee benefit plans maintained or sponsored by the corporation (or any predecessor), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit or his or her heirs, executors and administrators; provided, however, that except as provided in the third paragraph of this Bylaw, the corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the board of directors. The right to indemnification conferred in this Bylaw shall be a contract right and shall include the right to be paid by the corporation the expenses incurred in defending any such proceeding in advance of its final disposition, such advances to be paid by the corporation within twenty (20) days after the receipt by the corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided, however, that if the General Corporation Law of the State of Delaware requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other

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capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the corporation of an undertaking by or on behalf of such director or officer to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Bylaw or otherwise.

To obtain indemnification under this Bylaw, a claimant shall submit to the corporation a written request, including therein or therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification. Upon written request by a claimant for indemnification pursuant to the preceding sentence, a determination, if required by applicable law, with respect to the claimant’s entitlement thereto shall be made as follows: (i) if requested by the claimant, by Independent Counsel (as hereinafter defined), or (ii) if no request is made by the claimant for a determination by Independent Counsel, (A) by the board of directors by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), or (B) if a quorum of the board of directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the board of directors, a copy of which shall be delivered to the claimant, or (C) if a quorum of Disinterested Directors so directs, by the stockholders of the corporation. In the event the determination of entitlement to indemnification is to be made by Independent Counsel at the request of the claimant, the Independent Counsel shall be selected by the board of directors unless there shall have occurred within two years prior to the date of the commencement of the action, suit or proceeding for which indemnification is claimed a “Change of Control” as defined below, in which case the Independent Counsel shall be selected by the claimant unless the claimant shall request that such selection be made by the board of directors. If it is so determined that the claimant is entitled to indemnification, payment to the claimant shall be made within ten (10) days after such determination.

If a claim for the indemnification under this Bylaw is not paid in full by the corporation within thirty (30) days after a written claim pursuant to the preceding paragraph of this Bylaw has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the corporation) that the claimant has not met the standard of conduct which makes it permissible under the General Corporation Law of the State of Delaware for the corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its board of directors, Independent Counsel or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the corporation (including its board of directors, Independent Counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

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If a determination shall have been made pursuant to this Bylaw that the claimant is entitled to indemnification, the corporation shall be bound by such determination in any judicial proceeding commenced pursuant to the proceeding paragraph of this Bylaw. The corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to the third paragraph of this Bylaw that the procedures and presumptions of this Bylaw are not valid, binding and enforceable and shall stipulate in such proceeding that the corporation is bound by all the provisions of this Bylaw. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Bylaw shall not be exclusive or any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise. No repeal or modification of this Bylaw shall in any way diminish or adversely affect the rights of any director, officer, employee or agent of the corporation hereunder in respect of any occurrence or matter arising prior to any such repeal or modification.

If any provision or provisions of this Bylaw shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this Bylaw (including, without limitation, each portion of any paragraph of this Bylaw containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (ii) to the fullest extent possible, the provisions of this Bylaw (including, without limitation, each such portion of any paragraph of this Bylaw containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

For the purpose of this Bylaw, a “Change of Control” shall mean:

(1) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 20% or more of either (i) the then outstanding shares of common stock of the corporation (the “Outstanding Corporation Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of the corporation entitled to vote generally in the election of directors (the “Outstanding Corporation Voting Securities”); provided, however, that for purposes of this part (1), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the corporation or any acquisition from other stockholders where (A) such acquisition was approved in advance by the board of directors of the corporation, and (B) such acquisition would not constitute a Change of Control under part (1) of this definition, (ii) any acquisition by the corporation, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the corporation or any corporation controlled by the corporation, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of part (1) of this definition; or

(2) individuals who, as of the date hereof, constitute the board of directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the board of directors; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such

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individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies of consents by or on behalf of a Person other than the board of directors; or

(3) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the corporation (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the corporation or all or substantially all of the corporation’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the corporation or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the board of directors, providing for such Business Combination; or

(4) approval by the stockholders of a complete liquidation or dissolution of the corporation.

For purposes of this Bylaw:

“Disinterested Director” shall mean a director of the corporation who is not and was not a party to the matter in respect of which indemnification is sought by the claimant.

“Independent Counsel” shall mean a law firm, a member of a law firm, or an independent practitioner, that is experienced in matters of corporation law and shall include any person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the corporation or the claimant in an action to determine the claimant’s rights under this Bylaw.

Any notice, request or other communication required or permitted to be given to the corporation under this Bylaw shall be in writing and either delivered in person or sent by telecopy, telex, telegram, overnight mail or courier service, or certified or registered mail, postage or charges prepaid, return copy requested, to the secretary of the corporation and shall be effective only upon receipt by the secretary.

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6.2 INDEMNIFICATION OF OTHERS

The corporation shall have the power, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware, to indemnify each of its employees and agents (other than directors and officers) against expenses (including attorneys’ fees), judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.2, an “employee” or “agent” of the corporation (other than a director or officer) includes any person (i) who is or was an employee or agent of the corporation, (ii) who is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

6.3 INSURANCE

The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of the General Corporation Law of Delaware.

6.4 EXPENSES

The corporation shall advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefor, all expenses incurred by any director or officer in connection with such proceeding, upon receipt of an undertaking by or on behalf of such person to repay said amounts if it should be determined ultimately that such person is not entitled to be indemnified under this Bylaw or otherwise; provided, however, that the corporation shall not be required to advance expenses to any director or officer in connection with any proceeding (or part thereof) initiated by such person unless the proceeding was authorized in advance by the board of directors of the corporation.

Notwithstanding the foregoing, unless otherwise determined pursuant to Section 6.5, no advance shall be made by the corporation to an officer of the corporation (except by reason of the fact that such officer is or was a director of the corporation in which event this paragraph shall not apply) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a

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determination is reasonably and promptly made (i) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the corporation.

6.5 NON-EXCLUSIVITY OF RIGHTS

The rights conferred on any person by this Bylaw shall not be exclusive of any other right which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office. The corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advances, to the fullest extent not prohibited by the General Corporation Law of Delaware.

6.6 SURVIVAL OF RIGHTS

The rights conferred on any person by this Bylaw shall continue as to a person who has ceased to be a director, officer, employee or other agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

6.7 AMENDMENTS

Any repeal or modification of this Bylaw shall only be prospective and shall not affect the rights under this Bylaw in effect at the time of the alleged occurrence of any action or omission to act that is the cause of any proceeding against any agent of the corporation.

ARTICLE VII

RECORDS AND REPORTS

7.1 MAINTENANCE AND INSPECTION OF RECORDS

The corporation shall, either at its principal executive officer or at such place or places as designated by the board of directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books, and other records.

Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or

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other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent so to act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in Delaware or at its principal place of business.

The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

7.2 INSPECTION BY DIRECTORS

Any director shall have the right to examine the corporation’s stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.

7.3 ANNUAL STATEMENT TO STOCKHOLDERS

The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation.

ARTICLE VIII

GENERAL MATTERS

8.1 CHECKS

From time to time, the board of directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments.

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8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS

The board of directors, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

8.3 STOCK CERTIFICATES

The shares of the corporation shall be represented by certificates, provided that the board of directors of the corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the board of directors, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the corporation by the chairman or vice-chairman of the board of directors, or the president or vice-president, and by the chief financial officer or an assistant treasurer, or the secretary or an assistant secretary of such corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if the person were such officer, transfer agent or registrar at the date of issue.

8.4 SPECIAL DESIGNATION ON CERTIFICATES

If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

8.5 LOST CERTIFICATES

Except as provided in this Section 8.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and canceled

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at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or the owner’s legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares. The board of directors may adopt such other provisions and restrictions with reference to lost certificates, not inconsistent with applicable law, as it shall in its discretion deem appropriate.

8.6 CONSTRUCTION; DEFINITIONS

Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the Delaware General Corporation Law shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.

8.7 DIVIDENDS

The directors of the corporation, subject to any restrictions contained in (i) the General Corporation Law of Delaware or (ii) the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property, or in shares of the corporation’s capital stock.

The directors of the corporation may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies.

8.8 FISCAL YEAR

The fiscal year of the corporation shall be fixed by resolution of the board of directors and may be changed by the board of directors.

8.9 SEAL

The corporation may adopt a corporate seal, which shall be adopted and which may be altered by the board of directors, and may use the same by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

8.10 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING

For purposes of determining the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or for purposes of determining the stockholders entitled to exercise any rights in respect of any other lawful action (other than action by stockholders by written consent without a meeting), the board of directors may fix, in advance, a record date, which shall not be more than 60 days before any such action. In that case, only stockholders of record at

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the close of business on the date so fixed are entitled to receive the dividend, distribution or allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date so fixed, except as otherwise provided by law.

If the board of directors does not so fix a record date, then the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board adopts the applicable resolution, or the 60th day before the date of that action, whichever is later.

8.11 PROVISIONS ADDITIONAL TO PROVISIONS OF LAW

All restrictions, limitations, requirements and other provisions of these Bylaws shall be construed, insofar as possible, as supplemental and additional to all provisions of law applicable to the subject matter thereof and shall be fully complied with in addition to the said provisions of law unless such compliance shall be illegal.

8.12 PROVISIONS CONTRARY TO PROVISIONS OF LAW

Any article, section, subsection, subdivision, sentence, clause or phrase of these Bylaws which upon being construed in the manner provided in Section 8.11 hereof, shall be contrary to or inconsistent with any applicable provisions of law, shall not apply so long as said provisions of law shall remain in effect, but such result shall not affect the validity or applicability of any other portions of these Bylaws, it being hereby declared that these Bylaws would have been adopted and each article, section, subsection, subdivision, sentence, clause or phrase thereof, irrespective of the fact that any one or more articles, sections, subsections, subdivisions, sentences, clauses or phrases is or are illegal.

ARTICLE IX

AMENDMENTS

Subject to any voting requirements set forth in the corporation’s certificate of incorporation, the bylaws of the corporation may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal these bylaws. Notwithstanding the foregoing, amendment or deletion of all or any portion of Article II hereof, Section 3.2 hereof, Section 3.3 hereof, Section 3.4 hereof, Section 6.1 hereof or this Article IX by the stockholders of the corporation shall require the affirmative vote of sixty-six and two-thirds percent (66 ²/3%) of the outstanding shares entitled to vote thereon.

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ARTICLE X

DISSOLUTION

If it should be deemed advisable in the judgment of the board of directors of the corporation that the corporation be dissolved, the board, after the adoption of a resolution to that effect by a majority of the whole board at any meeting called for that purpose, shall cause notice to be mailed to each stockholder entitled to vote thereon of the adoption of the resolution and of a meeting of stockholders to take action upon the resolution.

At the meeting a vote shall be taken for and against the proposed dissolution. If a majority of the voting power of the outstanding stock of the corporation entitled to vote thereon votes for the proposed dissolution, then a certificate stating that the dissolution has been authorized in accordance with the provisions of Section 275 of the General Corporation Law of Delaware and setting forth the names and residences of the directors and officers shall be executed, acknowledged, and filed and shall become effective in accordance with Section 103 of the General Corporation Law of Delaware. Upon such certificate’s becoming effective in accordance with Section 103 of the General Corporation Law of Delaware, the corporation shall be dissolved.

Whenever all the stockholders entitled to vote on a dissolution consent in writing, either in person or by duly authorized attorney, to a dissolution, no meeting of directors or stockholders shall be necessary. The consent shall be filed and shall become effective in accordance with Section 103 of the General Corporation Law of Delaware. Upon such consent’s becoming effective in accordance with Section 103 of the General Corporation Law of Delaware, the corporation shall be dissolved. If the consent is signed by an attorney, then the original power of attorney or a photocopy thereof shall be attached to and filed with the consent. The consent filed with the Secretary of State shall have attached to it the affidavit of the secretary or some other officer of the corporation stating that the consent has been signed by or on behalf of all the stockholders entitled to vote on a dissolution; in addition, there shall be attached to the consent a certification by the secretary or some other officer of the corporation setting forth the names and residences of the directors and officers of the corporation.

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ARTICLE XI

CUSTODIAN

11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES

The Court of Chancery, upon application of any stockholder, may appoint one or more persons to be custodians and, if the corporation is insolvent, to be receivers, of and for the corporation when:

(a) at any meeting held for the election of directors the stockholders are so divided that they have failed to elect successors to directors whose terms have expired or would have expired upon qualification of their successors; or

(b) the business of the corporation is suffering or is threatened with irreparable injury because the directors are so divided respecting the management of the affairs of the corporation that the required vote for action by the board of directors cannot be obtained and the stockholders are unable to terminate this division; or

(c) the corporation has abandoned its business and has failed within a reasonable time to take steps to dissolve, liquidate or distribute its assets.

11.2 DUTIES OF CUSTODIAN

The custodian shall have all the powers and title of a receiver appointed under Section 291 of the General Corporation Law of Delaware, but the authority of the custodian shall be to continue the business of the corporation and not to liquidate its affairs and distribute its assets, except when the Court of Chancery otherwise orders and except in cases arising under Sections 226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware.

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EX-10.19

Exhibit 10.19

TRANSITION AGREEMENT AND RELEASE

This Transition Agreement and Release (“Agreement”) dated October 11, 2005, is made by and between Chris O’Meara (“Employee”) and TIBCO Software Inc. (the “Company”) (Employee and Company are jointly referred to as the “Parties”).

WHEREAS, the Employee signed an offer letter dated August 14, 1998 with attached exhibits, including an Employment Agreement dated August 18, 1998 (the “Employment Agreement”) and a Non-Disclosure/Assignment Agreement dated August 18, 1998 (the “NDA Agreement”) (collectively, the “Offer Letter”);

WHEREAS, the Employee entered into that Indemnification Agreement, dated as of June 1, 2004 (the “Indemnification Agreement”), with the Company;

WHEREAS, Employee is employed by the Company at-will as Executive Vice President and Chief Financial Officer (“CFO”);

WHEREAS, the Company and Employee have entered into certain stock option agreements, granting Employee the option to purchase shares of the Company’s common stock subject to the terms and conditions of the applicable Company Stock Plan and the Company’s form of written stock option agreement(s) (collectively, the “Stock Option Agreements”);

WHEREAS, the Parties are modifying and preparing to terminate their employment relationship;

WHEREAS, Employee shall no longer serve in the position of Executive Vice President and CFO, as of October 11, 2005;

WHEREAS, Employee’s employment with the Company is at will, shall remain at will, and either party may terminate the employment relationship with or without cause and with or without notice, but Employee’s employment with the Company will cease no later than October 10, 2006. The date of Employee’s actual termination of employment shall be the “Termination Date”;

WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions and demands that the Employee may have against the Company, including, but not limited to, any and all claims arising or in any way related to Employee’s current employment with and future separation from the Company;

THUS, in consideration of the promises made herein, the Parties agree as follows:

1. Consideration.

(a) Up-Front Cash Payment. In consideration for executing this Agreement, the Company shall pay Employee the total amount of Five Thousand Dollars ($5,000) (the “Initial Payment”), less applicable withholding, in accordance with the Company’s regular payroll practices. This Initial Payment shall be made to Employee within five (5) business days after the Effective Date, as defined below.

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(b) Continued Employment. Employee’s at-will employment with the Company shall not continue past the Termination Date, and can be terminated at any time prior to the Termination Date by either the Company or Employee (hereinafter referred to as the “Continued Employment Period”). The Company and Employee acknowledge and agree that as of the Effective Date, Employee’s title shall be Special Advisor to the Chief Executive Officer (“CEO”). The Company and Employee further acknowledge and agree that as Special Advisor, during the Continued Employment Period, Employee shall (i) earn a salary of Twenty-One Thousand, Six Hundred Dollars and Sixty-Six Cents ($21,666.66) per month, less applicable withholding (“Monthly Payments”) (Two Hundred Sixty Thousand Dollars ($260,000) annualized, less applicable withholding) paid in accordance with the Company’s regular payroll practices, (ii) be available to work 30 hours per week and (iii) perform such services as are directed by the Company’s CEO. For the avoidance of doubt, during the Continued Employment Period, Employee shall not be considered an individual subject to Section 16 reporting requirements as defined by the Securities and Exchange Commission with regard to his employment with the Company. In addition, during the Continued Employment Period, Employee may continue to use the Blackberry pager provided to him by the Company. Employee will be entitled to receive the normal, discretionary bonus for his position for the 2005 Fiscal Year as declared by the Board of Directors (“FY 2005 Bonus”), but in no event an amount less than the average (mean) amount paid to the other executive vice presidents covered under the TIBCO Executive Incentive Compensation Program for fiscal year 2005 (the “2005 EICP Plan”). If the FY 2005 Bonus becomes due under the terms of the 2005 EICP Plan, but payment for the other executive vice presidents covered under the 2005 EICP Plan is deferred to later than January 2006, then the Company shall pay Employee the amount of the bonus actually owed in accordance with the terms of the 2005 EICP Plan and the preceding sentence no later than January 31, 2006. Employee will not be entitled to any bonus for the 2006 Fiscal Year. If Employee accepts another position at another company or business or otherwise resigns prior to the Termination Date, then Employee shall notify the Company in writing immediately. Unless the Employee’s employment is terminated by the Company for “Cause” as defined in this Agreement, if the Employee resigns prior to October 10, 2006, the Company agrees that it shall pay to Employee an amount which (the “Early Termination Payment”), when combined with the Initial Payment and the Monthly Payments made prior to the Termination Date, will equal Two Hundred Sixty-Five Thousand Dollars (US$265,000), less applicable withholdings. In addition, if Employee’s employment is terminated by the Company other than for “Cause,” as defined in this Agreement, then (i) Employee shall be paid his FY 2005 Bonus (if not previously paid); (ii) until the earlier of October 10, 2006 and the date Employee obtains comparable medical insurance, the Company shall pay the monthly premiums for the Employee’s health and dental benefits under the Consolidated Omnibus Reconciliation Act of 1985, as amended (“COBRA”) provided that Employee enrolls in COBRA upon the Termination Date and is otherwise eligible for such benefits. Except as otherwise provided for in this Agreement, Employee shall not be entitled to continued salary payments under this section (but will be entitled to the Early Termination Payment unless the Company terminates Employee for Cause), benefits or stock option vesting after the Termination Date, if either the Company or Employee terminates Employee’s employment with the Company. The Early Termination Payment and any unpaid FY 2005 Bonus shall be made within ten (10) business days after the Termination Date.

(c) Definitions.

(i) For purposes of this Agreement, “Cause” shall mean (i) Employee engages in any material act of dishonesty, fraud or misrepresentation, or any violation of the

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Company’s anti-harassment and discrimination policies; (ii) Employee’s violation of any federal, state or other law or regulation applicable to the Company’s business or violation of Company policies, as set forth in the Company’s Employee Handbook, designed to ensure compliance with a federal, state or other law or regulation applicable to the Company’s business; (iii) Employee’s material breach of any material provision of any confidentiality agreement or invention assignment agreement between Employee and the Company; (iv) Employee’s acknowledgement of the commission of, being convicted of, or entering a plea of guilty or nolo contendere to, any felony or misdemeanor involving moral turpitude; or (v) Employee’s failure to notify the Company that he has accepted a position during the Continued Employment Period with another company and/or Employee accepting a position during the Continued Employment Period, directly or indirectly, of providing services for a competitor of the Company (as defined below) while continuing to receive salary and other payments from the Company. In the event that the Company believes that Employee has committed an act or acts constituting “Cause” under subsections 1(b)(i) through (v) above, the Company shall provide specific written notice thereof to Employee describing the acts which constitute Cause, if such “Cause” is reasonably susceptible of being cured, and the termination of Employee’s employment therefore shall become effective fourteen (14) days after that notice, provided that it has not been cured by that date.

(ii) For purposes of this Agreement, a “competitor of the Company” shall be any one of the following companies, together with their successors and/or assigns: WebMethods Inc., Vitria Technology Inc., BEA Systems, SAP, the division(s) of Sun Microsystems into which SeeBeyond has been integrated, Sonic Software, Progress Software Corporation, the messaging software or infrastructure software departments of IBM Corporation or Microsoft Corporation; or the portal division of Oracle Corporation.

(d) Supplemental Severance. The Company agrees to offer Employee an additional lump sum payment of Ten Thousand Dollars ($10,000) less applicable withholdings (“Final Lump Sum”), in consideration for the execution by Employee of a Supplemental Severance Agreement and Release, the form of which is attached hereto as Exhibit A (the “Supplemental Agreement”).

(e) Aggregate Consideration. For the sake of clarity, except as set forth in Section 16 of this Agreement, the Company will not pay more than Two Hundred Seventy-Five Thousand Dollars ($275,000) less applicable withholdings, under the terms of this agreement for the Initial Payment, the Monthly Payments and the Final Lump Sum, inclusive of any applicable withholding or other taxes and payment reimbursements. The Final Lump Sum will therefore be reduced, as necessary, to offset any amount of prior overpayment to ensure no more than an aggregate consideration paid of Two Hundred Seventy-Five Thousand Dollars ($275,000) less applicable withholdings. Notwithstanding the foregoing, the Company will also pay Employee the FY 2005 Bonus in accordance with Section 1(b) of this Agreement, less applicable withholdings, as well as any applicable payments on Employee’s behalf pursuant to Section 1(b)(ii) of this Agreement.

2. Benefits. Except as set forth in Section 1(b)(ii) of this Agreement, Employee’s health insurance benefits shall cease on the Termination Date, subject to Employee’s right to continue his health insurance under COBRA. Employee’s participation in all other benefits and incidents of employment shall also cease on the Termination Date.

3. Stock. The vesting and exercise of any stock options shall continue to be subject to the terms and conditions of the Stock Option Agreements. For the avoidance of doubt, except for the

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next sentence, nothing in this Agreement shall impact Employee’s rights with respect to the exercise of his vested options after the Termination Date, as set forth in his Stock Option Agreements. Notwithstanding the foregoing, the remaining contents of this Agreement and the terms of the Stock Option Agreements, to the extent any vested options would otherwise be exercisable after December 31, 2006, such options shall terminate on December 31, 2006 after which they shall no longer be exercisable, and Employee hereby waives any such rights to and agrees that he shall not exercise any vested options after December 31, 2006.

4. Confidential Information. Employee shall continue to comply with the terms and conditions of the Employment Agreement and NDA Agreement between Employee and the Company, specifically including the provisions therein regarding nondisclosure of the Company’s trade secrets and confidential and proprietary information, and non-solicitation of Company employees. Employee shall return to the Company by the Termination Date or any earlier date at the written request of the Company, with reasonable notice, all of the Company’s property and confidential and proprietary information in his possession, with the exception of his laptop computer, which he will retain.

5. [THIS SECTION IS INTENTIONALLY LEFT BLANK.]

6. Release of Claims. Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Employee by the Company and its past and present administrators, managers, officers, directors, employees, investors, attorneys, stockholders, agents, employee benefit plans and their fiduciaries, subsidiaries, divisions, affiliates, and its predecessor and successor corporations, representatives and assigns (“the Releasees”). Employee hereby fully and forever releases the Releasees from, and agrees not to sue concerning, or in any manner to institute, prosecute or pursue, any claim, complaint, charge, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Employee may possess against any of the Releasees arising from any omissions, acts or facts that have occurred up until and including the Effective Date including, without limitation:

(a) any and all claims relating to or arising from Employee’s employment relationship with the Company as of the Effective Date;

(b) subject to the last sentence of Section 3 of this Agreement, any and all claims relating to, or arising from, Employee’s right to purchase or actual purchase (if any) of shares of stock of the Company, including, without limitation, any claims for fraud; misrepresentation; breach of fiduciary duty; breach of duty under applicable state corporate law; and securities fraud under any state or federal law;

(c) any and all claims under the law of any jurisdiction including, but not limited to, wrongful discharge of employment; constructive discharge from employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of a covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; workers’ compensation; and disability benefits;

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(d) any and all claims for violation of any federal, state or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967; the Americans with Disabilities Act of 1990; the Fair Labor Standards Act; the Employee Retirement Income Security Act of 1974; the Fair Credit Reporting Act; the Worker Adjustment and Retraining Notification Act; the Older Workers Benefit Protection Act; the Family and Medical Leave Act; the California Family Rights Act; the California Fair Employment and Housing Act; the California Workers’ Compensation Act; and the California Labor Code, including, but not limited to, Labor Code Sections 1400-1408;

(e) any and all claims for violation of the federal, or any state, constitution;

(f) any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;

(g) any claim for any loss, cost, damage, or expense arising out of any dispute over the non-withholding or other tax treatment of any of the proceeds received by Employee as a result of this Agreement; and

(h) any and all claims for attorneys’ fees and costs, except as otherwise provided in Section 16 of this Agreement.

Employee acknowledges and agrees that any material breach by Employee of this paragraph 6 or of Employee’s obligations under paragraphs 4, 7, 8, 9, 11, 12 or 13 hereof or any material breach of any material provision of the NDA Agreement, shall constitute a material breach of this Agreement, and shall entitle the Company immediately to recover the consideration provided to Employee by this Agreement, except as provided by law.

The Company and Employee agree that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not extend to any obligations incurred under this Agreement, the Indemnification Agreement, or the indemnification provisions of Delaware law.

7. Acknowledgement of Waiver of Claims Under ADEA. Employee acknowledges that he is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and voluntary. Employee and the Company agree that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date. Employee acknowledges that the consideration given for this waiver and release Agreement is in addition to anything of value to which Employee was already entitled. Employee further acknowledges that he has been advised by this writing that:

(a) he should consult with an attorney prior to executing this Agreement;

(b) he has twenty-one (21) days within which to consider this Agreement;

(c) he has seven (7) days following his execution of this Agreement to revoke the Agreement;

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(d) this Agreement shall not be effective until the revocation period has expired; and

(e) nothing in this Agreement prevents or precludes Employee from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by federal law.

8. Civil Code Section 1542. Employee represents that he is not aware of any claim by him against any of the Releasees other than the claims that are released by this Agreement. Employee acknowledges that he has had the opportunity to be advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

Employee, being aware of said code section, agrees to expressly waive any rights he may have thereunder, as well as under any other statute or common law principles of similar effect.

9. No Pending or Future Lawsuits. Employee represents that he has no lawsuits, claims, or actions pending in his name, or on behalf of any other person or entity, against the Company or any of the Releasees. Employee also represents that he does not intend to bring any claims on his own behalf or on behalf of any other person or entity against the Company or any of the Releasees, except as necessary to enforce his rights under this Agreement.

10. Application for Employment. Employee understands and agrees that, as a condition of this Agreement, he shall not be entitled to any employment with the Company following the Termination Date and he hereby waives any right, or alleged right, of employment or re-employment with the Company. Employee further agrees that he will not apply for employment with the Company once his employment has been terminated.

11. Mutual Confidentiality. The Parties acknowledge that their agreement to keep the contents of, terms and conditions of, and the consideration for this Agreement confidential was a material factor on which all parties relied in entering into this Agreement. Except as permitted herein, the Parties hereto agree to maintain in confidence the existence of this Agreement, the contents, terms and conditions of this Agreement, and the consideration for this Agreement (hereinafter collectively referred to as “Severance Information”). The Parties may also disclose, on a reasonable “need to know” basis the contents of, terms and conditions of, and the consideration for this Agreement (i) to immediate family, (ii) to legal and/or other professional advisors, or Company personnel necessary to implement the Agreement (as determined by the Company in its sole discretion), (iii) to enforce (or defend against asserted claims of) breaches of this Agreement, or (iv) as required by law (e.g., by subpoena or for tax disclosures) or pursuant to Court order. Except as to (iii) and (iv), such recipients of Severance Information shall also be informed of the confidentiality requirements contained herein. Each Party hereto otherwise agrees to take every reasonable precaution to prevent disclosure of any Severance Information to other third parties, and agrees that there will be no other publicity, directly or indirectly, concerning any Severance Information. In the event of a disclosure under Section 11(iv) above, no continuing obligation of confidentiality shall apply with respect to the information that was disclosed under Section 11(iv) above.

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12. Non-Disparagement. Employee agrees to refrain from any defamation, libel or slander of the Releasees, and any tortious interference with the contracts, relationships and prospective economic advantage of the Releasees. Company, its officers and the members of its board of directors agree to refrain from any defamation, libel or slander of Employee. Employee agrees that he shall direct all inquiries by potential future employers to the Company’s Human Resources Department for references from the Company. Upon inquiry, the Company shall only confirm the following: Employee’s positions held and dates of employment, compensation and any other information and/or documentation legally required to be disclosed. In addition, during and after the period of his employment, Employee agrees to make himself available to the Company and/or its counsel to assist or consult in any litigation, proceeding, investigation, or inquiry involving the Company. Employee further acknowledges that he will at all times provide complete and truthful testimony in any such matter.

13. No Cooperation. Employee agrees not to act in any manner that might damage the business of the Company. Employee further agrees that following the termination of his employment, he will not knowingly counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against any of the Releasees, unless under a subpoena or court order to do so. Employee agrees to use diligent, reasonable and good faith efforts both to promptly notify the Company upon receipt of any such subpoena or court order, and to furnish, within three (3) business days of its receipt, a copy of such subpoena or court order to the Company. After the termination of his employment, if approached by anyone for counsel or assistance in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints against any of the Releasees, Employee shall state no more than that he cannot provide counsel or assistance.

14. Attorneys’ Fees. In the event that either Party brings an action to enforce or effect its rights under this Agreement, the prevailing Party shall be entitled to recover its reasonable costs and expenses, including the costs of mediation, arbitration, litigation,court fees, and reasonable attorneys’ fees incurred in connection with such an action.

15. No Admission of Liability. Employee understands and acknowledges that this Agreement constitutes a compromise and settlement of any and all potential disputed claims. No action taken by the Company hereto, either previously or in connection with this Agreement, shall be deemed or construed to be: (a) an admission of the truth or falsity of any potential claims; or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to Employee or to any third party.

16. Costs. The Company agrees to pay Employee’s attorney’s fees of up to $5,000 incurred in the negotiation of this Agreement. Such attorney’s fees shall be paid by the Company within fifteen (15) days of Employee’s provision to the Company of documentation substantiating such expenses

17. Authority. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement. Employee represents and warrants that he has the capacity

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to act on his own behalf and on behalf of all who might claim through him to bind them to the terms and conditions of this Agreement. Each Party warrants and represents that there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes of action released herein.

18. No Representations. Each Party represents that it has consulted with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement. In entering into this Agreement, neither Party has relied upon any representations or statements made by the other party hereto which are not specifically set forth in this Agreement.

19. Severability. In the event that any provision, or any portion thereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby, and the parties shall substitute for the affected portion an enforceable provision which closest approximates the intent and effect thereof.

20. Entire Agreement. This Agreement, the attached Exhibits, the Employment Agreement, the NDA Agreement, the Indemnification Agreement and the Stock Option Agreements represent the entire agreement and understanding between the Company and Employee concerning the subject matter of this Agreement and Employee’s employment with and separation from Company and the events leading thereto and associated therewith, and supersede and replace any and all prior agreements and understandings between the Parties concerning the subject matter of this Agreement and Employee’s relationship with the Company.

21. No Waiver. The failure of the Company to insist upon the performance of any of the terms and conditions in this Agreement, or the failure to prosecute any breach of any of the terms and conditions of this Agreement, shall not be construed thereafter as a waiver of any such terms or conditions. This entire Agreement shall remain in full force and effect as if no such forbearance or failure of performance had occurred.

22. No Oral Modification. This Agreement may only be amended in a writing signed by Employee and either the Executive Vice President, General Counsel & Secretary of the Company or the CEO.

23. Governing Law. This Agreement shall be construed, interpreted, governed, and enforced in accordance with California law, without regard to choice-of-law provisions. Both parties consent to personal and exclusive jurisdiction and venue in California.

24. Effective Date. This Agreement is effective after both parties have signed it and after seven (7) days have passed since Employee has signed the Agreement (the “Effective Date”). Each party has seven days after that party signs the Agreement to revoke it. Revocation must be made in writing delivered no later than seven days after execution, and if by employee, must be delivered to the Executive Vice President, General Counsel & Secretary for the Company.

25. Counterparts; Facsimile. This Agreement may be executed in counterparts and by facsimile, and each counterpart and facsimile shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned. A signature shall be treated as a fully enforceable signature hereto upon receipt by facsimile or mail by the other Party.

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26. Arbitration. The parties agree that any and all disputes arising out of the terms of this Agreement, their interpretation, and any of the matters herein released, shall be subject to arbitration in Santa Clara County before the American Arbitration Association, under its National Rules for the Resolution of Employment Disputes and California law. The arbitrator may grant injunctions and other relief in such disputes. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. The parties agree that the prevailing party in any arbitration shall be entitled to injunctive relief in any court of competent jurisdiction to enforce the arbitration award. The parties hereby agree to waive their right to have any dispute between them resolved in a court of law by a judge or jury.

27. Tax Consequences. The Company makes no representations or warranties with respect to the tax consequences of the payments provided to Employee or made on his behalf under the terms of this Agreement. Employee agrees and understands that he is responsible for payment, if any, of local, state and/or federal taxes on the payments made hereunder by the Company and any penalties or assessments thereon (subject to crediting of any withholding done by the Company). Employee further agrees to indemnify and hold the Company harmless from any claims, demands, deficiencies, penalties, interest, assessments, executions, judgments, or recoveries by any government agency against the Company for any amounts claimed due on account of: (a) Employee’s failure to pay or the Company’s failure to withhold (provided that if the Company’s failure to withhold is due to the Company’s negligence, Employee’s liability to the Company shall be limited to the original amount of tax withholding and Employee shall not be responsible for any other amounts, including any penalties or interest assessed against the Company solely for such negligent failure to withhold), or Employee’s delayed payment of, federal or state taxes; or (b) damages sustained by the Company by reason of any such claims, including attorneys’ fees and costs. Notwithstanding the foregoing, the Company agrees to notify Employee if it believes that any payment to be made pursuant to this Agreement or any of Employee’s stock options will or may subject Employee to taxation under Section 409A and will take reasonable steps, in consultation with Employee, to minimize the possibility that any payments made under this Agreement or any of Employee’s stock options are subject to Section 409A.

28. Voluntary Execution of Agreement. This Agreement is executed voluntarily and without any duress or undue influence on the part or behalf of the Parties hereto, with the full intent of releasing all claims. The Parties acknowledge that:

(a) They have read this Agreement;

(b) They have been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such counsel;

(c) They understand the terms and consequences of this Agreement and of the releases it contains; and

(d) They are fully aware of the legal and binding effect of this Agreement.

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

		TIBCO SOFTWARE INC.
Dated:	11/30/2005	By:	/s/ William R. Hughes
			William R. Hughes
			EVP, General Counsel & Secretary
		CHRIS O’MEARA, an individual
Dated:	11/30/2005		/s/ Chris O’Meara
			Chris O’Meara

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EXHIBIT A

SUPPLEMENTAL RELEASE

This Supplemental Release (“Supplemental Agreement”) is made by and between Chris O’Meara (“Employee”) and TIBCO Software Inc. (the “Company”) (Employee and Company jointly referred to as the “Parties”). Capitalized terms not defined in this Supplemental Agreement shall have the meaning ascribed to them in the Transition Agreement (defined below).

WHEREAS, Employee was employed by the Company;

WHEREAS, Employee and the Company entered into a Transition and Release Agreement dated as of [                                      ] (the “Transition Agreement”);

WHEREAS, Employee’s employment with the Company ceased on [                                      ] (the “Termination Date”);

WHEREAS, as a condition precedent to the provision of certain consideration under the Transition Agreement and this Supplemental Agreement, the Parties agreed in the Transition Agreement to resolve, following the Termination Date, any and all disputes, claims, complaints, grievances, charges, actions, petitions and demands that the Employee may have against the Company, including, but not limited to, any and all claims arising or in any way related to Employee’s employment with the Company;

THUS, in consideration of the promises made herein and in the Transition Agreement, the Parties agree as follows:

1. Consideration. The Company shall pay Employee the total amount of Ten Thousand Dollars ($10,000), less applicable withholding, in accordance with the Company’s regular payroll practices. This payment shall be made to Employee within five (5) business days after the Effective Date of this Supplemental Agreement, as defined below.

2. Benefits. Employee’s benefits ceased on the Termination Date, subject to Employee’s right to continue his health insurance under COBRA.

3. Stock. The Parties agree that for the purpose of determining the number of shares of the Company’s common stock that Employee is entitled to purchase from the Company, pursuant to the exercise of outstanding options, the Employee will be considered to have vested only up to the Termination Date. Employee acknowledges that as of the Termination Date, Employee has vested in and may exercise                  shares subject to the Company’s stock options and no more. The exercise of Employee’s vested stock options, if any, shall continue to be governed by the terms and conditions of the Stock Option Agreements. For the avoidance of doubt, nothing in this Supplemental Agreement, except for the next sentence, shall impact Employee’s rights with respect to the exercise of his vested options after the Termination Date, as set forth in his Stock Option Agreements. Notwithstanding the foregoing, the remaining contents of this Agreement and the terms of the Stock Option Agreements, to the extent any vested options would otherwise be exercisable after December 31, 2006, such options shall terminate on December 31, 2006 after which they shall no longer be exercisable, and Employee hereby waives any such rights to and agrees that he shall not exercise any vested options after December 31, 2006.

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4. Confidential Information. Employee shall continue to comply with the terms and conditions of the Employment Agreement and NDA Agreement between Employee and the Company, specifically including the provisions therein regarding nondisclosure of the Company’s trade secrets and confidential and proprietary information, and non-solicitation of Company employees. Employee shall return to the Company, by the Effective Date of this Supplemental Agreement, all of the Company’s property and confidential and proprietary information in his possession, with the exception of his laptop, which he will retain. By signing this Supplemental Agreement, Employee declares under penalty of perjury that he has returned all documents and other items provided to Employee by the Company, developed or obtained by Employee as a result of his employment with the Company, or otherwise belonging to the Company, with the exception of the aforementioned laptop computer.

5. Payment of Salary. Employee acknowledges and represents that as of the Effective Date of this Supplemental Agreement that the Company has paid all salary, wages, bonuses, accrued vacation, commissions, distributions, interest, equity, severance, fees, penalties and any and all other benefits and compensation due to Employee.

6. Release of Claims. Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Employee by the Company and its past and present administrators, managers, officers, directors, employees, investors, attorneys, stockholders, agents, employee benefit plans and their fiduciaries, subsidiaries, divisions, affiliates, and its predecessor and successor corporations, representatives and assigns (“the Releasees”). Employee hereby fully and forever releases the Releasees from, and agrees not to sue concerning, or in any manner to institute, prosecute or pursue, any claim, complaint, charge, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Employee may possess against any of the Releasees arising from any omissions, acts or facts that have occurred up until and including the Effective Date of this Supplemental Agreement including, without limitation:

(a) any and all claims relating to or arising from Employee’s employment relationship with the Company and the termination of that relationship;

(b) subject to the last sentence of Section 3 of this Agreement, any and all claims relating to, or arising from, Employee’s right to purchase or actual purchase (if any) of shares of stock of the Company, including, without limitation, any claims for fraud; misrepresentation; breach of fiduciary duty; breach of duty under applicable state corporate law; and securities fraud under any state or federal law;

(c) any and all claims under the law of any jurisdiction including, but not limited to, wrongful discharge of employment; constructive discharge from employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of a covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; workers’ compensation; and disability benefits;

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(d) any and all claims for violation of any federal, state or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967; the Americans with Disabilities Act of 1990; the Fair Labor Standards Act; the Employee Retirement Income Security Act of 1974; the Fair Credit Reporting Act; the Worker Adjustment and Retraining Notification Act; the Older Workers Benefit Protection Act; the Family and Medical Leave Act; the California Family Rights Act; the California Fair Employment and Housing Act; the California Workers’ Compensation Act; and the California Labor Code, including, but not limited to, Labor Code Sections 1400-1408;

(e) any and all claims for violation of the federal, or any state, constitution;

(f) any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;

(g) any claim for any loss, cost, damage, or expense arising out of any dispute over the non-withholding or other tax treatment of any of the proceeds received by Employee as a result of this Supplemental Agreement; and

(h) any and all claims for attorneys’ fees and costs.

Employee acknowledges and agrees that any material breach by Employee of this paragraph 6 or of Employee’s obligations under paragraphs 4, 7, 8, 9, 11, 12 or 13 hereof or any material breach of any material provision of the NDA Agreement, shall constitute a material breach of this Supplemental Agreement, and shall entitle the Company immediately to recover the consideration provided to Employee by this Supplemental Agreement, except as provided by law.

The Company and Employee agree that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not extend to any obligations incurred under this Supplemental Agreement or any Company obligations or amounts unpaid under the Transition Agreement and Release, the Indemnification Agreement or the indemnification provisions of Delaware law.

7. Acknowledgement of Waiver of Claims Under ADEA. Employee acknowledges that he is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and voluntary. Employee and the Company agree that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date of this Supplemental Agreement. Employee acknowledges that the consideration given for this Supplemental Agreement is in addition to anything of value to which Employee was already entitled. Employee further acknowledges that he has been advised by this writing that:

(a) he should consult with an attorney prior to executing this Supplemental Agreement;

(b) he has twenty-one (21) days within which to consider this Supplemental Agreement;

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(c) he has seven (7) days following his execution of this Supplemental Agreement to revoke this Supplemental Agreement;

(d) this Supplemental Agreement shall not be effective until the revocation period has expired; and

(e) nothing in this Supplemental Agreement prevents or precludes Employee from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by federal law.

8. Civil Code Section 1542. Employee represents that he is not aware of any claim by him against any of the Releasees other than the claims that are released by this Supplemental Agreement. Employee acknowledges that he has had the opportunity to be advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

Employee, being aware of said code section, agrees to expressly waive any rights he may have thereunder, as well as under any other statute or common law principles of similar effect.

9. No Pending or Future Lawsuits. Employee represents that he has no lawsuits, claims, or actions pending in his name, or on behalf of any other person or entity, against the Company or any of the Releasees. Employee also represents that he does not intend to bring any claims on his own behalf or on behalf of any other person or entity against the Company or any of the Releasees, except as necessary to enforce his rights under this Supplemental Agreement and the Transition and Release Agreement.

10. No Application for Employment. Employee understands and agrees that, as a condition of this Supplemental Agreement, he shall not be entitled to any employment with the Company, and he hereby waives any right, or alleged right, of employment or re-employment with the Company. Employee further agrees that he will not apply for employment with the Company.

11. Mutual Confidentiality. The Parties acknowledge that their agreement to keep the contents of, terms and conditions of, and the consideration for this Supplemental Agreement confidential was a material factor on which all parties relied in entering into this Supplemental Agreement. Except as permitted herein, the Parties hereto agree to maintain in confidence the existence of this Supplemental Agreement, the contents, terms and conditions of this Supplemental Agreement, and the consideration for this Supplemental Agreement (hereinafter collectively referred to as “Settlement Information”). The Parties may also disclose, on a reasonable “need to know” basis the contents of, terms and conditions of, and the consideration for this Supplemental Agreement: a) to immediate family; b) to legal and/or other professional advisors, or Company personnel necessary to implement the Supplemental Agreement (as determined by the Company in its sole discretion); c) to enforce (or defend against asserted claims of) breaches of this Supplemental Agreement; or d) as required by law (e.g., by subpoena or for tax disclosures) or

Page 14 of 18

pursuant to Court order. Except as to the latter two categories, such recipients of Settlement Information shall also be informed of the confidentiality requirements contained herein. Each Party hereto otherwise agrees to take every reasonable precaution to prevent disclosure of any Settlement Information to other third parties, and agrees that there will be no other publicity, directly or indirectly, concerning any Settlement Information. In the event of a disclosure under Section 11(iv) above, no continuing obligation of confidentiality shall apply with respect to the information that was disclosed under Section 11(iv) above.

12. No Cooperation. Employee agrees not to act in any manner that might damage the business of the Company. Employee further agrees that he will not knowingly encourage, counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against any of the Releasees, unless under a subpoena or other court order to do so. Employee agrees to use diligent, reasonable and good faith efforts both to promptly notify the Company upon receipt of any such subpoena or court order, and to furnish, within three (3) days of its receipt, a copy of such subpoena or court order to the Company. If approached by anyone for counsel or assistance in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints against any of the Releasees, Employee shall state no more than that he cannot provide counsel or assistance.

13. Non-Disparagement. Employee agrees to refrain from any defamation, libel or slander of the Releasees, and any tortious interference with the contracts, relationships and prospective economic advantage of the Releasees. Company, its officers and the members of its board of directors agree to refrain from any defamation, libel or slander of Employee. Employee agrees that he shall direct all inquiries by potential future employers to the Company’s Human Resources Department for references from the Company. Upon inquiry, the Company shall only confirm the following: Employee’s last position held and dates of employment, final compensation and any other information and/or documentation legally required to be disclosed.

14. Attorneys’ Fees. In the event that either Party brings an action to enforce or effect its rights under this Supplemental Agreement, the prevailing Party shall be entitled to recover its reasonable costs and expenses, including the costs of mediation, arbitration, litigation, court fees and reasonable attorneys’ fees incurred in connection with such an action.

15. No Admission of Liability. Employee understands and acknowledges that this Supplemental Agreement constitutes a compromise and settlement of any and all potential disputed claims. No action taken by the Company hereto, either previously or in connection with this Supplemental Agreement, shall be deemed or construed to be: (a) an admission of the truth or falsity of any potential claims; or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to Employee or to any third party.

16. Costs. The Parties shall each bear their own costs, attorneys’ fees and other fees incurred in connection with the preparation of this Supplemental Agreement.

17. Arbitration. The Parties agree that any and all disputes arising out of the terms of this Supplemental Agreement, their interpretation, and any of the matters herein released, shall be subject to binding arbitration in Santa Clara County before the American Arbitration Association, under its National Rules for the Resolution of Employment Disputes and California law. The arbitrator may grant injunctions and other relief in such disputes. The decision of the arbitrator

Page 15 of 18

shall be final, conclusive and binding on the parties to the arbitration. The Parties agree that the prevailing party in any arbitration shall be entitled to injunctive relief in any court of competent jurisdiction to enforce the arbitration award. The Parties hereby agree to waive their right to have any dispute between them resolved in a court of law by a judge or jury.

18. Authority. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Supplemental Agreement. Employee represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through him to bind them to the terms and conditions of this Supplemental Agreement. Each Party warrants and represents that there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes of action released herein.

19. No Representations. Each Party represents that it has consulted with an attorney, and has carefully read and understands the scope and effect of the provisions of this Supplemental Agreement. In entering into this Supplemental Agreement, neither Party has relied upon any representations or statements made by the other party hereto which are not specifically set forth in this Supplemental Agreement.

20. Severability. In the event that any provision, or any portion thereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby, and the parties shall substitute for the affected portion an enforceable provision which closest approximates the intent and effect thereof.

21. Entire Agreement. This Supplemental Agreement, the Transition Agreement and Release, the Employment Agreement, Indemnification Agreement, Stock Option Agreements and the NDA Agreement represent the entire agreement and understanding between the Company and Employee concerning the subject matter of this Supplemental Agreement and Employee’s employment with and separation from the Company and the events leading thereto and associated therewith, and supersede and replace any and all prior agreements and understandings between the Parties concerning the subject matter of this Supplemental Agreement and Employee’s relationship with the Company.

22. No Waiver. The failure of the Company to insist upon the performance of any of the terms and conditions in this Supplemental Agreement, or the failure to prosecute any breach of any of the terms and conditions of this Supplemental Agreement, shall not be construed thereafter as a waiver of any such terms or conditions. This entire Supplemental Agreement shall remain in full force and effect as if no such forbearance or failure of performance had occurred.

23. No Oral Modification. This Supplemental Agreement may only be amended in a writing signed by Employee and either the Executive Vice President, General Counsel & Secretary of the Company or the CEO.

24. Governing Law. This Supplemental Agreement shall be construed, interpreted, governed, and enforced in accordance with California law, without regard to choice-of-law provisions. Both parties consent to personal and exclusive jurisdiction and venue in California.

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25. Effective Date. This Supplemental Agreement is effective after both parties have signed it and after seven (7) days have passed since Employee has signed the Supplemental Agreement (the “Effective Date”). Each party has seven days after that party signs the Supplemental Agreement to revoke it. Revocation must be made in writing delivered no later than seven days after execution, and if by employee, must be delivered to the Executive Vice President, General Counsel & Secretary for the Company.

26. Counterparts; Facsimile. This Supplemental Agreement may be executed in counterparts and by facsimile, and each counterpart and facsimile shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned. A signature shall be treated as a fully enforceable signature hereto upon receipt by facsimile or mail by the other Party.

27. Tax Consequences. The Company makes no representations or warranties with respect to the tax consequences of the payments provided to Employee or made on his behalf under the terms of this Supplemental Agreement. Employee agrees and understands that he is responsible for payment, if any, of local, state and/or federal taxes on the payments made hereunder by the Company and any penalties or assessments thereon. Employee further agrees to indemnify and hold the Company harmless from any claims, demands, deficiencies, penalties, interest, assessments, executions, judgments, or recoveries by any government agency against the Company for any amounts claimed due on account of: (a) Employee’s failure to pay or the Company’s failure to withhold, or Employee’s delayed payment of, federal or state taxes; or (b) damages sustained by the Company by reason of any such claims, including attorneys’ fees and costs.

28. Voluntary Execution of Agreement. This Supplemental Agreement is executed voluntarily and without any duress or undue influence on the part or behalf of the Parties hereto, with the full intent of releasing all claims. The Parties acknowledge that:

(a) They have read this Supplemental Agreement;

(b) They have been represented in the preparation, negotiation, and execution of this Supplemental Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such counsel;

(c) They understand the terms and consequences of this Supplemental Agreement and of the releases it contains; and

(d) They are fully aware of the legal and binding effect of this Supplemental Agreement.

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IN WITNESS WHEREOF, the Parties have executed this Supplemental Agreement on the respective dates set forth below.

	TIBCO SOFTWARE INC.
Dated:	By:
		William R. Hughes
		EVP, General Counsel & Secretary
	CHRIS O’MEARA, an individual
Dated:
		Chris O’Meara

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EX-21.1

Exhibit 21.1

TIBCO SOFTWARE INC.

SUBSIDIARIES OF THE REGISTRANT*

1. 3301 Hillview Holdings Inc. – United States of America

2. TIBCO BPM – United Kingdom

* Pursuant to Item 601(b)(21)(ii) of Regulation S-K, the names of other subsidiaries of TIBCO Software Inc. are omitted because, considered in the aggregate, they would not constitute a significant subsidiary as of the end of the year covered by this report.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (Nos. 333-124354, 333-102082, 333-88770, 333-88730, 333-30088, 333-88811, 333-48260, 333-52644, 333-75736 and 333-111548) of TIBCO Software Inc. of our report dated February 10, 2006 relating to the financial statements, management’s assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/S/    PRICEWATERHOUSECOOPERS LLP

San Jose, California

February 10, 2006

EX-31.1

Exhibit 31.1

TIBCO SOFTWARE INC.

CERTIFICATION

I, Vivek Y. Ranadivé, certify that:

1. I have reviewed this annual report on Form 10-K of TIBCO Software Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: February 10, 2006

/s/ VIVEK Y. RANADIVÉ

Vivek Y. Ranadivé

President, Chief Executive Officer and

Chairman of the Board of Directors

EX-31.2

Exhibit 31.2

TIBCO SOFTWARE INC.

CERTIFICATION

I, Murray D. Rode, certify that:

1. I have reviewed this annual report on Form 10-K of TIBCO Software Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: February 10, 2006

/s/ MURRAY D. RODE

Murray D. Rode

Chief Financial Officer and

Executive Vice President, Strategic Operations

EX-32.1

Exhibit 32.1

TIBCO SOFTWARE INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Vivek Y. Ranadivé, President and Chief Executive Officer of TIBCO Software Inc. (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(a) the Annual Report on Form 10-K of the Company for the fiscal year ended November 30, 2005, as filed with the Securities and Exchange Commission (the Report), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 10, 2006

/s/ VIVEK Y. RANADIVÉ

Vivek Y. Ranadivé

President, Chief Executive Officer and

Chairman of the Board of Directors

EX-32.2

Exhibit 32.2

TIBCO SOFTWARE INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Murray D. Rode, Chief Financial Officer and Executive Vice President, Strategic Operations of TIBCO Software Inc. (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(a) the Annual Report on Form 10-K of the Company for the fiscal year ended November 30, 2005, as filed with the Securities and Exchange Commission (the Report), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: February 10, 2006

/s/ MURRAY D. RODE

Murray D. Rode

Chief Financial Officer and

Executive Vice President, Strategic Operations