10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2003

OR

¨ 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, California 94304-1213

(Address of principal executive offices) (zip code)

Registrant’s telephone number, including area code: (650) 846-1000

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 whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).   Yes  ¨  No  x

The number of shares outstanding of the registrant’s Common Stock, $0.001 par value, as of July 1, 2003 was 211,640,921.

TIBCO SOFTWARE INC.

INDEX

Item		Page No.
	PART I – FINANCIAL INFORMATION
Item 1	Financial Statements:
	Condensed Consolidated Balance Sheets as of May 31, 2003 and November 30, 2002 (Unaudited)	3
	Condensed Consolidated Statements of Operations for the three-months and six-months ended May 31, 2003 and May 31, 2002 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the six-months ended May 31, 2003 and May 31, 2002 (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3	Quantitative and Qualitative Disclosures about Market Risk	36
Item 4	Controls and Procedures	36
	PART II – OTHER INFORMATION
Item 1	Legal Proceedings	37
Item 2	Changes in Securities and Use of Proceeds	37
Item 3	Defaults Upon Senior Securities	37
Item 4	Submission of Matters to a Vote of Security Holders	37
Item 5	Other Information	38
Item 6	Exhibits and Reports on Form 8-K	39
	Signatures	40

2

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TIBCO SOFTWARE INC.

Condensed Consolidated Balance Sheets

(in thousands)

	May 31, 2003			November 30, 2002
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	116,346		$	57,229
Short-term investments		530,192			580,624
Accounts receivable, net of allowances; $5,925 and $5,686, respectively		48,599			59,795
Due from related parties		3,127			1,483
Other current assets		15,267			14,462
Total current assets		713,531			713,593
Property and equipment, net of accumulated depreciation; $37,612 and $33,067, respectively		48,167			54,827
Other assets		8,886			8,348
Goodwill		103,183			101,993
Acquired intangibles, net of accumulated amortization; $18,363 and $18,033, respectively		11,257			15,827
	$	885,024		$	894,588
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,348		$	5,242
Amounts due related parties		122			1,846
Accrued liabilities		36,418			41,681
Accrued excess facilities costs		46,757			51,311
Deferred revenue		47,923			49,781
Total current liabilities		135,568			149,861
Commitments and contingencies (Note 4)
Stockholders’ equity:
Common stock		211			210
Additional paid-in capital		916,064			912,821
Unearned stock-based compensation		(632	)		(1,333	)
Accumulated other comprehensive income		2,580			2,897
Accumulated deficit		(168,767	)		(169,868	)
Total stockholders’ equity		749,456			744,727
	$	885,024		$	894,588

See accompanying notes to condensed consolidated financial statements.

3

TIBCO SOFTWARE INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

	Three Months Ended May 31,						Six Months Ended May 31,
	2003			2002			2003			2002
	(Unaudited)						(Unaudited)
License revenue:
Non-related parties	$	27,977		$	31,973		$	52,762		$	75,039
Related parties		2,823			3,800			13,013			7,600
Total license revenue		30,800			35,773			65,775			82,639
Service and maintenance revenue:
Non-related parties		26,303			24,781			51,211			48,689
Related parties		3,826			3,112			7,049			6,371
Reimbursable expenses		539			467			1,086			1,116
Total service and maintenance revenue		30,668			28,360			59,346			56,176
Total revenue		61,468			64,133			125,121			138,815
Cost of revenue:
Stock based compensation		65			169			119			322
Other cost of revenue non-related parties		13,297			15,664			26,529			30,216
Other cost of revenue related parties		199			1,408			602			2,411
Gross profit		47,907			46,892			97,871			105,866
Operating expenses:
Research and development:
Stock-based compensation		148			336			375			787
Other research and development		17,119			18,206			34,395			34,514
Sales and marketing:
Stock-based compensation		100			206			137			495
Other sales and marketing		29,099			34,398			55,948			65,420
General and administrative:
Stock-based compensation		18			76			57			655
Other general and administrative		5,728			6,217			10,753			11,013
Acquired in-process research and development		—			2,400			—			2,400
Restructuring charges		—			29,645			1,100			29,645
Amortization of acquired intangibles		1,691			6,020			3,382			11,874
Total operating expenses		53,903			97,504			106,147			156,803
Loss from operations		(5,996	)		(50,612	)		(8,276	)		(50,937	)
Interest and other income (expense), net		4,992			(5,122	)		10,095			3,044
Income (loss) before income taxes		(1,004	)		(55,734	)		1,819			(47,893	)
Provision for (benefit from) income taxes		(444	)		258			718			4,668
Net income (loss)	$	(560	)	$	(55,992	)	$	1,101		$	(52,561	)
Net income (loss) per share:
Basic	$	(0.00	)	$	(0.27	)	$	0.01		$	(0.26	)
Weighted average common shares outstanding		211,213			204,630			210,718			202,887
Net income (loss) per share:
Diluted	$	(0.00	)	$	(0.27	)	$	0.01		$	(0.26	)
Weighted average common shares outstanding		211,213			204,630			218,646			202,887

See accompanying notes to condensed consolidated financial statements.

4

TIBCO SOFTWARE INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

	Six Months Ended
	May 31, 2003			May 31, 20023
	(Unaudited)
Cash flows from operating activities:
Net income (loss)	$	1,101		$	(52,561	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		7,249			6,522
Amortization of acquired intangibles		3,382			11,874
Amortization of stock-based compensation		688			979
Realized (gain) loss on investments, net		(1,362	)		9,800
Acquired in-process research and development		—			2,400
Non-cash restructuring and impairment charges		—			6,409
Changes in assets and liabilities:
Accounts receivable		11,196			8,614
Due from related parties, net		(3,368	)		1,126
Other assets		(1,484	)		(623	)
Accounts payable		(894	)		9,966
Accrued liabilities and excess facilities		(9,447	)		4,679
Deferred revenue		(1,858	)		1,356
Net cash provided by operating activities		5,203			10,541
Cash flows from investing activities:
Purchases of short-term investments		(441,098	)		(327,248	)
Sales and maturities of short-term investments		492,614			447,343
Purchases of property and equipment, net		(974	)		(39,050	)
Purchases of private equity investments		—			(241	)
Cash used in acquisition, net of cash received		—			(6,363	)
Net cash provided by investing activities		50,542			74,441
Cash flows from financing activities:
Proceeds from exercise of stock options		596			6,550
Proceeds from employee stock purchase program		2,783			4,291
Net cash provided by financing activities		3,379			10,841
Effect of exchange rate changes on cash		(7	)		10
Net change in cash and cash equivalents		59,117			95,833
Cash and cash equivalents at beginning of period		57,229			100,158
Cash and cash equivalents at end of period	$	116,346		$	195,991

See accompanying notes to condensed consolidated financial statements.

5

TIBCO SOFTWARE INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared by TIBCO Software Inc. (the “Company” or “TIBCO”) in accordance with the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted in accordance with such rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company, and its results of operations and cash flows. These condensed consolidated financial statements should be read in conjunction with the annual audited consolidated financial statements and notes thereto as of and for the year ended November 30, 2002 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 5, 2003.

For purposes of presentation, the Company has indicated the second quarter of fiscal 2003 and 2002 as ending on May 31, 2003 and May 31, 2002, respectively; whereas in fact, the Company’s second fiscal quarters ended on the Friday nearest to the end of May.

The results of operations for the three months and six months ended May 31, 2003 are not necessarily indicative of the results that may be expected for the year ending November 30, 2003 or any other future interim period, and the Company makes no representations related thereto.

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

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

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted 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.

Goodwill and Other Intangibles

The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” on December 1, 2002. In accordance with SFAS No. 142, goodwill and intangible assets with indefinite useful lives are no longer amortized, but are instead tested for impairment annually or sooner if circumstances indicate they may no longer be recoverable. In addition, the standard includes provisions for the reclassification of certain existing recognized intangibles as goodwill and the reassessment of the useful lives of existing recognized intangibles. In accordance with this statement, assembled workforce has been reclassified to goodwill.

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 probable. When contracts contain multiple elements wherein vendor specific objective evidence exists for all undelivered elements, the Company accounts for the delivered elements in accordance with the “Residual Method” prescribed by Statement of Position (“SOP”) 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.

6

Service revenue consists primarily of revenue received for performing implementation of system solutions, on-site support, consulting and training. Service revenue is generally recognized as the services are performed.

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 recorded as deferred revenue. Allowances for estimated future returns and discounts are provided for upon recognition of revenue.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing the net income available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the net income for the period by the weighted average number of common and potential common shares outstanding during the period if their effect is dilutive. Certain potential common shares are not included in computing net income (loss) per share because they are anti-dilutive.

Stock-Based Compensation

The Company accounts for employee stock-based compensation plans using the intrinsic value method. Accordingly, deferred compensation is only recorded if the current market price of the underlying stock exceeds the exercise price on the date of grant.

The following is a summary of the effect on net income (loss) and per share impacts if the Company had applied a fair value method prescribed by SFAS No. 123, “Accounting for Stock-Based Compensation” to account for stock-based compensation for the periods indicated (in thousands, except per share data):

	Three Months Ended						Six Months Ended
	May 31, 2003			May 31, 2002			May 31, 2003			May 31, 2002
Net income (loss), as reported	$	(560	)	$	(55,992	)	$	1,101		$	(52,561	)
Add: Total stock-based employee compensation expense determined under intrinsic value based method for all awards, net of payroll taxes		316			1,341			775			2,763
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(13,870	)		(25,004	)		(29,167	)		(60,213	)
Pro forma net loss	$	(14,114	)	$	(79,655	)	$	(27,291	)	$	(110,011	)
Net income (loss) per share:
Basic – as reported	$	(0.00	)	$	(0.27	)	$	0.01		$	(0.26	)
Basic – pro forma	$	(0.07	)	$	(0.39	)	$	(0.13	)	$	(0.54	)
Diluted – as reported	$	(0.00	)	$	(0.27	)	$	0.01		$	(0.26	)
Diluted – pro forma	$	(0.07	)	$	(0.39	)	$	(0.13	)	$	(0.54	)

These pro forma amounts may not be representative of the effects for future years as options vest over several years and additional awards are generally made each year.

7

Stock-based compensation expense related to stock options granted to consultants is recognized as earned using the multiple option method, and is shown by expense category. At each reporting date, the Company re-values the unvested portion of the options using the Black-Scholes option pricing model. As a result, the stock-based compensation expense will fluctuate as the fair market value of the Company’s common stock fluctuates.

Restructuring Charges

The Company’s 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, the Company 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 was specifically identified and the period of time to implement the plan was set. For restructuring actions initiated after January 1, 2003, the Company adopted SFAS No. 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. SFAS No.146 is effective for exit or disposal activities that were initiated after December 31, 2002. The adoption of SFAS No. 146 did not have a material impact on the Company’s operating results or financial position.

The Company records the costs associated with lease termination or abandonment when the leased property has no substantive future use or benefit to the Company. A liability is recorded as the sum of the total remaining lease costs and related exit costs, less probable sublease income. The costs related to long-lived assets abandoned are accounted for through a charge to expense for the net carrying value of the long-lived assets when the Company ceases to use the assets.

Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities.” This interpretation of Accounting Research Bulletin No. 51, Consolidated Financial Statements, addresses consolidation by business enterprises of variable interest entities that possess certain characteristics. FIN 46 requires that if a business enterprise has a controlling financial interest in a variable interest entity, the assets, liabilities, and results of the activities of the variable interest entity must be included in the consolidated financial statements with those of the business enterprise. FIN 46 applies immediately to variable interest entities created after January 31, 2003 and to variable interest entities in which an enterprise obtains an interest after that date. The Company does not have any ownership in any variable interest entities as of January 31, 2003. The Company will apply the consolidation requirements of FIN 46 in future periods should interest in a variable interest entity be acquired.

In May 2003, the FASB issued SFAS No. 150 “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity and is effective for financial instruments entered into or modified after May 31, 2003. The Company adopted SFAS No. 150 on June 1, 2003 and does not expect the adoption to have a material impact on the Company’s results of operations or financial condition.

8

3. GOODWILL AND OTHER INTANGIBLES

In connection with the adoption of SFAS No. 142 on December 1, 2002, $103.2 million in goodwill, which includes $1.2 million in assembled workforce, net of accumulated amortization and taxes that was reclassified to goodwill, is no longer amortized, but is instead tested for impairment annually or sooner if circumstances indicate that it may no longer be recoverable.

SFAS No. 142 prescribes a two-step process for transitional impairment testing of goodwill. The first step, screens for impairment, while the second step, measures the impairment, if any. The Company performed its transitional goodwill impairment test during the first quarter of fiscal 2003, which did not indicate impairment existed. SFAS No. 142 requires impairment testing based on reporting units, however, the Company operates in one segment which it considers its sole reporting unit. Therefore, goodwill was tested for impairment at the entity level. The fair value of the entity, which was determined based on current market capitalization, exceeded its carrying value, and goodwill was determined not to be impaired.

The following is a summary of reported net income (loss) and net income (loss) per share as adjusted to exclude amortization of goodwill and assembled workforce for the periods indicated (in thousands, except per share amounts):

	Three Months Ended						Six Months Ended
	May 31, 2003			May 31, 2002			May 31, 2003		May 31, 2002
Reported net income (loss)	$	(560	)	$	(55,992	)	$	1,101	$	(52,561	)
Goodwill amortization		—			4,355			—		8,710
Assembled workforce amortization		—			298			—		595
Adjusted net income (loss)	$	(560	)	$	(51,339	)	$	1,101	$	(43,256	)
Basic earnings per share:
Reported net income (loss)	$	(0.00	)	$	(0.27	)	$	0.01	$	(0.26	)
Goodwill amortization		—			0.02			—		0.04
Assembled workforce amortization		—			—			—		—
Adjusted net income (loss)	$	(0.00	)	$	(0.25	)	$	0.01	$	(0.22	)
Diluted earnings per share:
Reported net income (loss)	$	(0.00	)	$	(0.27	)	$	0.01	$	(0.26	)
Goodwill amortization		—			0.02			—		0.04
Assembled workforce amortization		—			—			—		—
Adjusted net income (loss)	$	(0.00	)	$	(0.25	)	$	0.01	$	(0.22	)

The changes in the carrying amount of goodwill for the six months ended May 31, 2003 are as follows (in thousands):

	Amount
Balance as of November 30, 2002	$	101,993
Reclassification of assembled workforce		1,190
Balance as of May 31, 2003	$	103,183

9

The Company had no intangible assets that are not subject to amortization as of either of the periods presented. The following is a summary of amortized acquired intangible assets for the periods indicated (in thousands):

	May 31, 2003							November 30, 2002
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Existing technology	$	21,030	$	(13,105	)	$	7,925	$	21,030	$	(10,723	)	$	10,307
Customer base		4,960		(3,495	)		1,465		4,960		(2,949	)		2,011
Assembled workforce		—		—			—		4,240		(3,050	)		1,190
Trademarks		1,550		(1,063	)		487		1,550		(897	)		653
Non-compete agreement		480		(297	)		183		480		(197	)		283
OEM customer royalty agreements		1,000		(217	)		783		1,000		(117	)		883
Maintenance agreements		600		(186	)		414		600		(100	)		500
Total	$	29,620	$	(18,363	)	$	11,257	$	33,860	$	(18,033	)	$	15,827

The following is a summary of the aggregate amortization expense for acquired intangible assets for the periods indicated (in thousands):

	Amount
Three months ended, May 31, 2003	$	1,691
Three months ended, May 31, 2002	$	6,020
Six months ended, May 31, 2003	$	3,382
Six months ended, May 31, 2002	$	11,874

The estimated future amortization expense of acquired intangible assets as of May 31, 2003 is as follows (in thousands):

	Amount
Remaining 2003	$	3,383
2004		6,201
2005		1,391
2006		200
2007		82
Thereafter		—
Total	$	11,257

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4. COMMITMENTS AND CONTINGENCIES

Leases

As of May 31, 2003, future minimum lease payments under non-cancelable operating leases, including $41.7 million provided for as accrued restructuring costs and $5.1 million provided for as acquisition integration liabilities, are as follows (in thousands):

	Expense		Sublease Income		Net
Remaining 2003	$	13,961	$	642	$	13,319
2004		26,412		1,323		25,089
2005		25,989		1,068		24,921
2006		24,682		464		24,218
2007		25,254		470		24,784
Thereafter		144,510		1,552		142,958
Total	$	260,808	$	5,519	$	255,289

Derivative Instruments

The Company conducts business in North America, South America, Asia, the Middle East and Europe. As a result, the Company’s financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets. A majority of sales are currently made in U.S. dollars. The Company enters into foreign currency forward exchange contracts (“forward contracts”) to manage exposure related to accounts receivables denominated in foreign currencies. The Company does not enter into derivative financial instruments for trading purposes. Gains and losses on the contracts are included in other income (expense) in the Company’s Condensed Consolidated Statements of Operations. The Company’s foreign exchange forward contracts related to accounts receivable generally have original maturities corresponding to the due dates of the receivables. The Company had outstanding forward contracts with amounts totaling approximately $3.2 million at May 31, 2003, which expire at various dates through September 2003. The fair value of these forward contracts at May 31, 2003 was not significant.

Indemnifications

The Company’s software license agreements typically provide for indemnification of customers for intellectual property infringement claims. To date, no such claims have been filed against the Company. The Company also warrants 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.

Legal Proceedings

The Company, certain of the Company’s 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 United States District Court for the Southern District of New York, captioned In re TIBCO Software, Inc. Initial Public Offering Securities Litigation, 01 Civ. 6110 (SAS). This is one of the number of cases challenging underwriting practices in the initial public offerings (“IPOs”) of more than 300 companies. These cases have been coordinated for pretrial proceedings as In re Initial Public Offering Securities Litigation, 21 MC 92 (SAS). Plaintiffs generally allege that certain 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 the Company claims that the purported improper underwriting activities were not disclosed in the registration statements for the IPO and secondary public offering and seeks unspecified damages on behalf of a purported class of persons who purchased the Company’s securities or sold put options during the time period from July 13, 1999 to December 6, 2000. On February 19, 2003, the Court issued an Opinion and Order denying the motion to dismiss certain of the claims in the complaint. The Company has engaged in discussions with the plaintiffs regarding a proposed settlement of the claims. The Company believes that it has meritorious defenses to the allegations in the complaint and intends to defend the case vigorously.

11

A lawsuit with similar allegations of undisclosed improper underwriting practices, and part of the same coordinated proceedings, is pending against Talarian Corporation (“Talarian”), which the Company acquired in 2002. That action is captioned In re Talarian Corp. Initial Public Offering Securities Litigation, 01 Civ. 7474 (SAS). 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. On February 19, 2003, the Court issued an Opinion and Order granting the Company’s motion to dismiss certain of the claims in the complaint. The Company has engaged in discussions with the plaintiffs regarding a proposed settlement of the claims. The Company believes that it has meritorious defenses to the remaining claims against Talarian and intends to defend against those claims vigorously.

5. COMPREHENSIVE INCOME (LOSS)

A summary of comprehensive income (loss), on an after-tax basis where applicable, is as follows (in thousands):

	Three Months Ended						Six Months Ended
	May 31, 2003			May 31, 2002			May 31, 2003			May 31, 2002
Net income (loss)	$	(560	)	$	(55,992	)	$	1,101		$	(52,561	)
Translation gain (loss)		(64	)		(294	)		(166	)		100
Change in unrealized gain (loss) on investments		(890	)		1,490			(151	)		(7,569	)
Comprehensive income (loss)	$	(1,514	)	$	(54,796	)	$	784		$	(60,030	)

Components of accumulated other comprehensive income, on an after-tax basis where applicable, is as follows (in thousands):

	As of
	May 31, 2003		November 30, 2002
Cumulative translation adjustments	$	320	$	486
Unrealized gains on investments		2,260		2,411
Accumulated other comprehensive income	$	2,580	$	2,897

6. PROVISION FOR INCOME TAXES

The Company’s current estimate of its annual effective tax rate on anticipated operating income for the 2003 tax year is 40%. The estimated annual effective tax rate of 40% has been used to record the provision for income taxes for the six-month period ended May 31, 2003 compared with an effective tax rate of 10% used to record the provision for income taxes for the comparable period in 2002. The estimated annual effective tax rate differs from the U.S. statutory rate primarily due to state taxes, stock-based compensation charges, foreign tax rate differences, R&D tax credits and the net operating losses and temporary differences not recognized applicable to the net deferred tax assets. We maintained a full valuation allowance on the deferred tax assets because we expect that it is more likely than not that all deferred tax assets will not be realized in the foreseeable future.

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7. NET INCOME (LOSS) PER SHARE

The following table sets forth the computation of basic and diluted net income (loss) per share for the periods indicated (in thousands, except per share data):

	Three Months Ended						Six Months Ended
	May 31, 2003			May 31, 2002			May 31, 2003		May 31, 2002
Net income (loss) )	$	(560	)	$	(55,992	)	$	1,101	$	(52,561	)
Weighted-average common shares used to compute basic net income (loss) per share		211,213			204,630			210,718		202,887
Effect of dilutive securities:
Common stock equivalents		—			—			7,715		—
Common stock subject to repurchase		—			—			213		—
Weighted-average common shares used to compute diluted net income (loss) per share		211,213			204,630			218,646		202,887
Net income (loss) per share – basic	$	(0.00	)	$	(0.27	)	$	0.01	$	(0.26	)
Net income (loss) per share – diluted	$	(0.00	)	$	(0.27	)	$	0.01	$	(0.26	)
The following table sets forth potential weighted average common shares that are not included in the diluted net income (loss) per share calculation above because to do so would be anti-dilutive for the periods indicated (in thousands):
	Three Months Ended						Six Months Ended
	May 31, 2003			May 31, 2002			May 31, 2003		May 31, 2002
Common stock subject to repurchase		135			809			—		962
Options to purchase common stock		7,307			11,499			8,055		13,233
		7,442			12,308			8,055		14,195

8. RELATED PARTY TRANSACTIONS

Reuters

The Company has entered into commercial transactions with Reuters Group PLC, including its wholly owned and partially owned subsidiaries (collectively, “Reuters”), a principal stockholder of the Company.

Reuters is a distributor of the Company’s products to customers in the financial services segment pursuant to a license, maintenance and distribution agreement between the Company and Reuters. Under the agreement, Reuters has agreed to pay a minimum guaranteed distribution fee, which consists of a portion of Reuters’ revenue from its sales of the Company’s products and related services and maintenance, to the Company in the amount of $20.0 million per year through December 2003. These fees are recognized ratably over the corresponding period as related party revenue. For each of the years ended December 31, 2002 and 2001, Reuters had guaranteed minimum distribution fees of $20.0 million. If actual distribution fees due from Reuters’ exceed the cumulative minimum year-to-date guarantee, incremental fees are due. Such incremental fees are recognized in the period when the year-to-date fees exceed the cumulative minimum guarantee. In the first quarter of fiscal 2003, the Company recognized $3.3 million in incremental fees related to Reuters exceeding the calendar 2002 guaranteed minimum distribution fees; no incremental fees were recognized in the second quarter of fiscal 2003 nor for the first or second quarters of fiscal 2002. Royalty payments to Reuters for resale of Reuters products and services and fees associated with sales to the financial services segment are classified as related party cost of sales. In addition, the agreement requires the Company to provide Reuters with internal maintenance and support until December 31, 2011 for a fee of $2.0 million per year plus an annual CPI-based increase, subject to Reuters annual renewal option. This amount is recognized ratably over the corresponding period as related party maintenance revenue.

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The Company recognized $6.1 million and $6.4 million in revenue from Reuters in the second fiscal quarter of 2003 and 2002, respectively, and $17.3 million and $13.0 million for the six month periods ended May 31, 2003 and 2002, respectively. Revenue from Reuters consists primarily of product and maintenance fees on its sales of TIBCO products under the terms of the license agreement with Reuters. In addition, during the first quarter of fiscal 2003, the Company recognized $1.7 million in distribution fees for arrangements outside the terms of the license agreement with Reuters. No distribution fees for arrangements outside the terms of the license agreement with Reuters were recognized in the second quarter of fiscal 2003 nor for the first or second quarters of fiscal 2002. Revenue from Reuters accounted for approximately 10.0% and 9.9% of total revenue for the second fiscal quarters of 2003 and 2002, respectively, and 13.8% and 9.4% of total revenue for the six month periods ended May 31, 2003 and 2002, respectively. The Company incurred $0.2 million and $1.4 million in royalty and commission expense to Reuters in the second quarters of fiscal 2003 and 2002, respectively, and $0.6 million and $2.4 million in royalty and commission expense for the six month periods ended May 31, 2003 and 2002, respectively.

Cisco Systems

The Company has entered into commercial transactions with Cisco Systems, Inc., a principal stockholder of the Company. Revenue from Cisco, an authorized reseller, consists primarily of product and maintenance fees on its sales of TIBCO products. The Company recognized $0.5 million and $0.5 million in revenue from Cisco Systems, Inc. in the second fiscal quarters of 2003 and 2002, respectively and $2.7 million and $1.0 million for the six month periods ended May 31, 2003 and 2002, respectively.

9. STOCK-BASED COMPENSATION

A summary of stock-based compensation, is as follows (in thousands):

	Three Months Ended				Six Months Ended
	May 31, 2003		May 31, 2002		May 31, 2003		May 31, 2002
Cost of sales	$	65	$	169	$	119	$	322
Research and development		148		336		375		787
Sales and marketing		100		206		137		495
General and administrative		18		76		57		655
Total	$	331	$	787	$	688	$	2,259

The Company has recorded a total of $58.4 million in unearned compensation through May 31, 2003, representing the difference between the fair value of its common stock at the date of option grant and the exercise price of such options and in connection with acquisitions. In addition, as of May 31, 2003, the Company expects to record additional acquisition related compensation expense of up to $0.2 million in connection with additional cash consideration contingent on the vesting and exercise of stock options and restricted stock, which were unvested at the acquisition date.

In connection with the grant of stock options to consultants, the Company recognized a negligible amount of stock-based compensation expense and $0.6 million of stock-based compensation income in the second quarters of fiscal 2003 and 2002, respectively, and stock-based compensation income of $0.1 million and $0.5 million for the six month periods ended May 31, 2003 and 2002, respectively.

In the second quarter of fiscal 2003 and for the six month period ended May 31, 2003, there were no payroll taxes due as a result of employee exercises of nonqualified stock options. In the second quarter of fiscal 2002, the Company recognized $0.6 million of stock compensation expense related to payroll taxes due as a result of employee exercises of nonqualified stock options and recognized $1.3 million of such expense for the six month period ended May 31, 2002.

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10. SEGMENT INFORMATION

The Company operates primarily in one industry 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. Revenue by geographic area is as follows (in thousands):

	Three Months Ended				Six Months Ended
	May 31, 2003		May 31, 2002		May 31, 2003		May 31, 2002
Americas	$	31,765	$	37,641	$	63,856	$	79,307
Europe		24,066		22,553		51,395		50,981
Pacific Rim		5,637		3,939		9,870		8,527
Total Revenue	$	61,468	$	64,133	$	125,121	$	138,815

Revenue from Reuters is primarily included in the European geographic segment. One customer accounted for 10.0% of revenues in the second quarter of fiscal 2003. One customer accounted for 13.8% of total revenue in the six month period ended May 31, 2003. No single customer accounted for greater than 10% of total revenue during the second quarter of fiscal 2002 and the six month period ended May 31, 2002. Long-lived assets outside the United States at May 31, 2003 and 2002 were not material.

11. RESTRUCTURING CHARGES

During the first quarter of fiscal 2003, the Company recorded a restructuring charge of $1.1 million related to a reduction in headcount to further align the Company’s 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.

In connection with the acquisition of Talarian in the second quarter of fiscal 2002, the Company abandoned the Talarian facilities and recorded an accrual for the estimated losses to be incurred to sublet such facilities. The accrual was recorded using the guidance provided by EITF 95-3 “Recognition of Liabilities in a Purchase Business Combination” and included as part of the purchase price of Talarian Corporation. The acquisition integration liabilities include the incremental costs to exit and consolidate activities at Talarian locations, termination of certain Talarian employees, and for other costs to integrate operating locations and other activities of Talarian with those of the Company. Generally accepted accounting principles require 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. The components of the acquisition integration liabilities include workforce reductions and facilities related costs.

The following sets forth the Company’s accrued restructuring costs as of May 31, 2003. Accrued excess facilities costs represent the estimated loss on abandoned facilities, net of sublease income, that are expected to be paid over the next eight years. Accrued severance costs for the four remaining employees are expected to be paid during fiscal 2003.

	Excess Facilities			Severance *			Total
Balance at November 30, 2002	$	51,311		$	198		$	51,509
Activity during first quarter of fiscal 2003:
Restructuring charges recorded		—			1,100			1,100
Cash utilized		(2,168	)		(1,168	)		(3,336	)
Balance at February 28, 2003		49,143			130			49,273
Activity during second quarter of fiscal 2003:
Non cash write down of furniture and fixtures		(385	)		—			(385	)
Cash utilized		(2,001	)		(42	)		(2,043	)
Balance at May 31, 2003	$	46,757		$	88		$	46,845

* Included in consolidated balance sheet as a component of accrued liabilities.

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12. BUSINESS COMBINATION

The following pro forma supplemental information presents selected financial information as though the purchase of Talarian had been completed at the beginning of the periods presented and after giving effect to purchase accounting adjustments. The results of operations of Talarian are included in the Company’s Consolidated Statement of Operations from the date of the acquisition. The Company’s unaudited pro forma net revenues, net loss and net loss per share from continuing operations would have been as follows (in thousands, except per share data):

	Three Months Ended			Six Months Ended
	May 31, 2002			May 31, 2002
Revenue	$	68,024		$	147,975
Net loss		(59,317	)		(60,690	)
Net loss per share (basic and diluted)	$	(0.29	)	$	(0.30	)

13. SUBSEQUENT EVENT

On June 25, 2003, the Company agreed to purchase the four buildings comprising the Company’s corporate headquarters in Palo Alto, California for $80.0 million. In addition, the Company entered into a 51-year lease of the land upon which the buildings are located. The lease was paid in advance for a total of $28.0 million. In connection with this purchase and lease arrangement, the Company obtained a $54.0 million mortgage note payable to a financial institution that is collateralized by the commercial real estate property.

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ITEM 2. 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. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions identify such forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements. Factors which could cause actual results to differ materially include those set forth in the following discussion, and, in particular, the risks discussed below under the subheading “Factors that May Affect Operating Results” and in other documents filed with the Securities and Exchange Commission. Unless required by law, we undertake no obligation to update any forward-looking statements.

We are a leading enabler of real-time business. 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 news and information group, 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 diverse markets and industries outside the financial services sector. 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. Reuters also assigned to us at that time license and service contracts primarily within the high-tech manufacturing and energy markets, including contracts with NEC, Motorola, Mobil and Chevron.

Our revenue in the second quarter of fiscal 2003 and 2002 consisted primarily of license and maintenance fees from our customers and distributors, including fees from Reuters pursuant to our license agreement, both of which were primarily attributable to sales of our TIBCO ActiveEnterprise product suite. In addition, we receive fees from our customers for providing project integration 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.

Reuters is a distributor of our products to customers in the financial services segment. As of May 31, 2003, Reuters owns approximately 49.1% of our outstanding capital stock and nominated two members on our Board of Directors. We have a license, maintenance, and distribution agreement with Reuters pursuant to which Reuters pays a minimum guaranteed distribution fee to us in the amount of $20 million per year through December 2003. For the calendar years ended December 31, 2002 and 2001, Reuters’ guaranteed minimum distribution fees were $20.0 million per year. These fees are recognized ratably over the corresponding period as related party revenue. If actual distribution fees due from Reuters’ exceed the cumulative minimum year-to-date guarantee, incremental fees are due. Such incremental fees are recognized in the period when the year-to-date fees exceed the cumulative minimum level. Royalty payments to Reuters for resale of Reuters’ products and services or fees associated with sales to the financial services segment are classified as related party cost of revenue. In addition, our agreement with Reuters also requires us to provide Reuters with internal maintenance and support until December 31, 2011 for a fee of $2.0 million per year plus an annual CPI-based increase, subject to Reuters’ annual renewal option. This amount is recognized ratably over the corresponding period as related party service and maintenance revenue. Reuters’ obligation to pay us minimum guaranteed product fees expires at the end of 2003. The potential effect of the expiration of Reuters minimum fee obligations on our revenues from the financial services market and otherwise, is unclear, and in this regard, we may attempt to renegotiate the terms of our licensing and distribution relationship with Reuters. Any new agreement with Reuters would be the result of negotiations between Reuters and us, and, because of Reuters’ relationship with us and its

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influence over our business, would be approved by a majority of our Board of Directors, including a majority of our independent and disinterested directors.

Under our agreement with Reuters, we are restricted through May 28, 2004, from selling our products and providing consulting services directly to companies in the financial services market. We are also restricted from selling the TIB technology we license from Reuters directly to companies in the financial services market or major competitors of Reuters, or from using the TIB technology to develop products specifically for use by these companies. Accordingly, through May 28, 2004, we must rely on Reuters and, to a lesser extent, other third-party resellers and distributors to sell our products to these companies. Furthermore, Reuters is required to pay us product fees based on a percentage of its revenue from sales of our products in the financial services market, excluding products that are embedded in any Reuters products. These product fees may be materially less than the product fees we could obtain from other distributors or resellers in the financial services market. In addition, when we sell our products into the financial services market other than through Reuters, we are required to pay fees to Reuters, which we record as related party cost of revenue.

CRITICAL ACCOUNTING POLICIES

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 accounting principles generally accepted 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.

Our significant accounting policies are described in Note 2 to the annual consolidated financial statements as of and for the year ended November 30, 2002, included in our Form 10-K filed with the Securities and Exchange Commission on February 5, 2003 and Note 2 to condensed consolidated financial statements as of and for the three and six month periods ended May 31, 2003, included herein. We believe our most critical accounting policies include the following:

• revenue recognition;

• valuation allowances and accrued liabilities: allowance for doubtful accounts and returns and discounts;

• accrued restructuring costs;

• accounting for income taxes;

• valuation of long-lived and intangible assets; and

• accounting for investments.

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 probable. 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 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.

We assess whether the fee is fixed or determinable and collection is probable at the time of the transaction. In determining whether the fee is fixed and 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 and determinable and recognize revenue as the fees become due. We assess whether collection is probable based on a number of factors, including the customer’s past transaction history and credit-worthiness. We do not request collateral from our customers. If we determine that collection of a fee is not probable, we defer the fee and recognize revenue at the time collection becomes probable, which is generally upon receipt of cash.

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First-year maintenance typically is sold with the related software license and renewed on an annual basis thereafter. For such arrangements with multiple obligations, 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. 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 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.

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.

Valuation allowances and accrued liabilities: Allowance for doubtful accounts and 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, and return and discount experience. We reassess the allowance for doubtful accounts, returns and discounts each period. If we made different judgments or utilized different estimates for any period, material differences in the amount and timing of revenue or expense recognized could result.

Accrued restructuring costs. We have recorded restructuring charges to align our cost structure with changing market conditions. These restructuring plans resulted in a reduction in headcount and the consolidation of facilities through the closing of excess field offices and relocation of corporate offices into one campus. Our restructuring charges included accruals for the estimated loss on facilities that we intend to sublease based on estimates of the timing and amount of sublease income. We reassess this liability each period 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.

Accounting for income taxes. 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 together with 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 within our consolidated balance sheet. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income, and, to the extent we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we must include an expense within the tax provision in the statement of operations. A valuation allowance is currently set against the deferred tax assets because management believes that it is more likely than not that the deferred tax assets will not be realized through the generation of future taxable income. We also do not provide for taxes on undistributed earnings of our foreign subsidiaries, as it is our intention to reinvest undistributed earnings indefinitely.

Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and our future taxable income for purposes of assessing our ability to realize any future benefit from our deferred tax assets. In the event that actual results differ from these estimates or we adjust these estimates in future periods, our operating results and financial position could be materially affected.

Valuation of long-lived and intangible assets. We assess other intangible assets and other long-lived assets for recoverability whenever events or changes in circumstances indicate that their carrying value may not be recoverable through the estimated undiscounted future cash-flows resulting from the use of the assets. If we determine that the carrying value of other intangible assets and other long-lived assets may not be recoverable we measure impairment by using the projected discounted cash-flow method.

On December 1, 2002 we adopted the remaining provisions of SFAS No. 142, “Goodwill and Other Intangible Assets” as related to goodwill and intangibles acquired prior to July 1, 2002. In accordance with SFAS No. 142,

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goodwill and intangible assets deemed to have indefinite lives are no longer amortized but, instead, tested for impairment annually or sooner if circumstances indicate that it might not be recoverable. Additionally, workforce no longer qualifies as a separately identifiable intangible and was reclassified as goodwill. The adoption of SFAS No. 142 resulted in the cessation of approximately $4.7 million in goodwill amortization per quarter including reclassified amounts at the time of implementation. In the event that goodwill is not recoverable, we may be required to record an impairment charge that could materially impact our operating results and financial position.

Accounting for investments. We determine the appropriate classification of marketable securities at the time of purchase and evaluate 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 in stockholders’ equity. Marketable securities are presented as current assets as we expect to use them within one year in current operations even though some have scheduled maturities of greater than one year. Realized gains and losses are recognized based on the specific identification method. Our investments also include minority equity investments in privately-held companies that are generally carried at cost and included in other assets on the balance sheet.

We review our investments on a regular basis to evaluate whether or not each security has experienced an other-than-temporary decline in fair value. Our policy includes, but is not limited to, reviewing each of the companies’ cash position, earnings/revenue outlook, stock price performance, 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 to other income (expense) in our consolidated statement of operations.

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.

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RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain financial data as a percentage of total revenue:

	Three Months Ended				Six Months Ended
	May 31, 2003		May 31, 2002		May 31, 2003		May 31, 2002
Revenue:
License	50.1	%	55.8	%	52.6	%	59.5	%
Service and maintenance	49.9		44.2		47.4		40.5
Total revenue	100.0		100.0		100.0		100.0
Stock-based compensation	0.1		0.3		0.1		0.2
Cost of revenue	22.0		26.6		21.7		23.5
Gross profit	77.9		73.1		78.2		76.3
Operating expenses:
Research and development:
Stock-based compensation	0.2		0.5		0.3		0.6
Other research and development	27.9		28.4		27.5		24.9
Sales and marketing:
Stock-based compensation	0.2		0.3		0.1		0.4
Other sales and marketing	47.3		53.7		44.7		47.0
General and administrative:
Stock-based compensation	—		0.1		—		0.5
Other general and administrative	9.3		9.7		8.6		7.9
Acquired in-process research and development	—		3.7		—		1.7
Restructuring charges	—		46.2		0.9		21.4
Amortization of acquired intangibles	2.8		9.4		2.7		8.6
Total operating expenses	87.7		152.0		84.8		113.0
Loss from operations	(9.8	)	(78.9	)	(6.6	)	(36.7	)
Interest and other income (expense), net	8.2		(8.0	)	8.1		2.2
Net income (loss) before income taxes	(1.6	)	(86.9	)	1.5		(34.5	)
Provision for (benefit from) income taxes	(0.7	)	0.4		0.6		3.4
Net income (loss)	(0.9	)	(87.3	)	0.9		(37.9	)

REVENUE

Total Revenue

	Three-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
Total revenue	$	61,468		(4.2	)%	$	64,133
As percent of total revenue		100.0	%	—			100.0	%

Total revenue decreased for the three months ended May 31, 2003 compared to the same period of the prior year. The decrease in total revenue was due primarily to the global economic slowdown and a reduction in information technology spending in general. We recognized $6.1 million and $6.4 million in revenue from Reuters in the second quarters of fiscal 2003 and 2002, respectively. Reuters accounted for approximately 10.0% and 9.9% of total revenue for

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the second fiscal quarters of 2003 and 2002, respectively. No single customer accounted for more than 10% of total revenue in either of the second fiscal quarters of 2003 or 2002.

	Six-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
Total revenue	$	125,121		(9.9	)%	$	138,815
As percent of total revenue		100.0	%	—			100.0	%

Total revenue decreased for the six-month period ended May 31, 2003 compared to the same period of the prior year. The decrease in total revenue was due primarily to the global economic slowdown and a reduction in information technology spending in general. We recognized $17.3 million and $13.0 million in revenue from Reuters during the six-month periods ended May 31, 2003 and 2002, respectively. Reuters accounted for approximately 13.8% and 9.4% of total revenue for the six-month periods ending May 31, 2003 and 2002, respectively. Other than Reuters, no single customer accounted for more than 10% of total revenue for the six-month period ended May 31, 2003. No single customer accounted for more than 10% of total revenue for the six-month period ended May 31, 2002.

License Revenue

	Three-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
License revenue	$	30,800		(13.9	)%	$	35,773
As percent of total revenue		50.1	%	(5.7	)%		55.8	%

	Six-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
License revenue	$	65,775		(20.4	)%	$	82,639
As percent of total revenue		52.6	%	(6.9	)%		59.5	%

License revenue decreased for the three and six months ended May 31, 2003 as compared to the same periods of the prior year. This decrease was due primarily to the global economic slowdown and a reduction in information technology spending in general. Many telecommunication customers, in particular, have reduced spending on enterprise wide technology deployments from 2002 levels.

Service and Maintenance Revenue

	Three-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
Service and maintenance revenue	$	30,668		8.1	%	$	28,360
As percent of total revenue		49.9	%	5.7	%		44.2	%

The increase in service and maintenance revenue in absolute dollars for the second fiscal quarter of 2003 as compared to the same quarter of 2002 was primarily due to an increase of approximately 300 new customers. In addition, we continued to focus on renewals of maintenance contracts with our existing customer base. Maintenance

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revenue increased from $18.6 million in the second quarter of fiscal 2002 to $21.0 million in the same quarter of 2003. Service revenue decreased from $9.8 million to $9.6 million primarily due to lower training revenue.

	Six-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
Service and maintenance revenue	$	59,346		5.6	%	$	56,176
As percent of total revenue		47.4	%	6.9	%		40.5	%

The increase in service and maintenance revenue in absolute dollars for the six months ended May 31, 2003 as compared to the same period of 2002 was primarily due to an increase of approximately 300 new customers. In addition, we continued to focus on renewals of maintenance contracts with our existing customer base. Maintenance revenue increased from $34.9 million in the second quarter of fiscal 2002 to $41.5 million in the same quarter of 2003. Service revenue decreased from $21.3 million to $17.9 million as the global economic slowdown forced customers to reduce consulting services and employee training.

COST OF REVENUE

Cost of revenue consists primarily of salaries, third party contractors and associated expenses related to providing project integration services, the cost of providing maintenance and customer support services, royalties and product fees. The majority of our cost of revenue is directly related to our service revenue.

	Three-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
Cost of revenue	$	13,561		(21.3	)%	$	17,241
As percent of total revenue		22.1	%	(4.8	)%		26.9	%

The decrease in cost of revenue in absolute dollars for the second quarter of fiscal 2003 as compared to the same quarter of 2002 resulted primarily from lower royalties, compensation and travel costs. Related party cost of revenue was $0.2 million and $1.4 million for the second quarter of fiscal 2003 and 2002, respectively. The decrease was a result of royalties due to Reuters in the second quarter of fiscal 2002 for sales in the financial services market, as required by our agreement with Reuters. Compensation expenses decreased by approximately $1.5 million as a result of a reduction in services and customer support staff. A decreased level of travel in addition to renegotiated arrangements with travel providers resulted in a savings of approximately $0.6 million in travel costs.

	Six-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
Cost of revenue	$	27,250		(17.3	)%	$	32,949
As percent of total revenue		21.8	%	(1.9	)%		23.7	%

The decrease in cost of revenue in absolute dollars for the six months ended May 31, 2003 as compared to the same period of 2002, resulted primarily from lower royalties, compensation and travel costs. Related party cost of revenue was $0.6 million and $2.4 million for the six-month periods ended May 31, 2003 and 2002, respectively. The decrease was primarily a result of royalties due to Reuters during the first six months of fiscal 2002 for sales in the financial services market, as required by our agreement with Reuters. Compensation expenses decreased by approximately $1.7 million as a result of a reduction in services and customer support staff. A decreased level of travel in addition to renegotiated arrangements with travel providers resulted in a savings of approximately $0.9 million in travel costs.

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OPERATING EXPENSES

Research and Development Expenses

Research and development expenses consist primarily of personnel, third party contractors and related costs associated with the development of our TIBCO ActiveEnterprise, TIBCO ActiveExchange, TIBCO ActivePortal, TIBCO BusinessWorks and TIBCO BusinessFactor product suites.

	Three-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
Research and development expenses	$	17,267		(6.9	)%	$	18,542
As percent of total revenue		28.1	%	(0.8	)%		28.9	%

The decrease in research and development expense in absolute dollars for the second quarter of fiscal 2003 as compared to the same quarter of 2002 was primarily due to a reduction in the cost of third party contractors resulting in a savings of approximately $1.3 million. Research and development expenses remained relatively flat as a percent of total revenue due to 4.2% lower total revenue offsetting the savings on third party contractors.

	Six-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
Research and development expenses	$	34,770		(1.5	)%	$	35,301
As percent of total revenue		27.8	%	2.3	%		25.5	%

The decrease in research and development expense in absolute dollars for the six months ended May 31, 2003 as compared to the same period of 2002 was primarily due to a reduction in the cost of third party contractors resulting in a savings of approximately $2.0 million. Research and development expenses remained relatively flat as a percent of total revenue due to 9.9% lower total revenue offsetting the savings on third party contractors.

We believe that continued investment in research and development is important to attaining our strategic objectives and, as a result, expect that spending on research and development will remain relatively stable for the remainder of fiscal 2003.

Sales and Marketing Expenses

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

	Three-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
Sales and marketing expenses	$	29,199		(15.6	)%	$	34,604
As percent of total revenue		47.5	%	(6.5	)%		54.0	%

The decrease in sales and marketing expense in absolute dollars for the second quarter of fiscal 2003 as compared to the same quarter of 2002 resulted primarily from lower commissions, compensation and travel costs. Lower total revenue

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resulted in approximately $1.0 million savings in commission costs over the same quarter of the prior year. Compensation expenses decreased by approximately $0.8 million as a result of a reduction in sales and marketing staff. A decreased level of travel in addition to renegotiated arrangements with travel providers resulted in a savings of approximately $1.6 million in travel costs. The decrease in sales and marketing expense as a percentage of revenue was partially offset by the decrease in total revenue.

	Six-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
Sales and marketing expenses	$	56,085		(14.9	)%	$	65,915
As percent of total revenue		44.8	%	(2.6	)%		47.4	%

The decrease in sales and marketing expense in absolute dollars for the six months ended May 31, 2003 as compared to the same period of 2002 resulted primarily from lower commissions, compensation and travel costs. Lower total revenue resulted in approximately $2.8 million savings in commission costs over the same quarter of the prior year. Compensation expense decreased by approximately $1.5 million as a result of a reduction in sales and marketing staff. A decreased level of travel in addition to renegotiated arrangements with travel providers resulted in a savings of approximately $2.2 million in travel costs. The decrease in sales and marketing expense as a percentage of revenue was partially offset by the decrease in total revenue.

We intend to continue to maintain our current focus on direct sales organization and to develop product-marketing programs and, accordingly, expect that sales and marketing expenditures will remain relatively stable for the remainder of fiscal 2003.

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.

	Three-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
General and administrative expenses	$	5,746		(8.7	)%	$	6,293
As percent of total revenue		9.3	%	(0.5	)%		9.8	%

The decrease in general and administrative expense in absolute dollars for the second quarter of fiscal 2003 as compared to the same quarter of 2002 was primarily due to non-recurring accounting and legal fees of $0.6 million incurred as a result of acquisition due diligence. General and administrative expense remained relatively flat as a percent of total revenue due to 4.2% lower total revenue offsetting the decrease in acquisition due diligence costs.

	Six-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
General and administrative expenses	$	10,810		(7.4	)%	$	11,668
As percent of total revenue		8.6	%	0.2	%		8.4	%

The decrease in general and administrative expense in absolute dollars and as a percentage of revenue for the six months ended May 31, 2003 as compared to the same period of 2002, was primarily due to non-recurring accounting and legal fees of $1.0 million incurred as a result of acquisition due diligence. General and administrative expense remained relatively flat as a percent of total revenue due to 9.9% lower total revenue offsetting the savings on acquisition costs.

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We expect that general and administrative expenses will remain relatively stable as a percentage of revenue for the remainder of fiscal 2003.

Stock-Based Compensation

We recorded a total of $58.4 million in unearned compensation through May 31, 2003, representing the difference between the deemed fair value of our common stock at the date of option grant and the exercise price of such options and in connection with acquisitions. In addition, as of May 31, 2003, we expect to record additional acquisition related compensation expense of up to $0.2 million in connection with additional cash consideration contingent on the vesting and exercise of stock options and restricted stock, which were unvested at the acquisition date. The employer portion of payroll taxes due as a result of employee exercises of nonqualified stock options is included a part of stock-based compensation expense in the period the option is exercised.

Stock-based compensation expense related to stock options granted to consultants is recognized as earned using the multiple option method, and is shown by expense category. At each reporting date, we re-value the stock options using the Black-Scholes option-pricing model. As a result, stock-based compensation expense will fluctuate as the fair market value of our common stock fluctuates.

	Three-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
Stock-based compensation expense	$	331		(57.9	)%	$	787
As percent of total revenue		0.5	%	(0.7	)		1.2	%

The decrease in stock-based compensation in absolute dollars for the second quarter of fiscal 2003 as compared to the same quarter of 2002 is primarily due to a decrease in employee- and acquisition- related stock-based compensation from $0.7 million to $0.3 million. Stock-based compensation related to consultants increased $0.6 million but was offset by $0.6 million decrease in employer-required payroll taxes for nonqualified stock option exercises.

	Six-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
Stock-based compensation expense	$	688		(69.5	)%	$	2,259
As percent of total revenue		0.6	%	(1.0	)%		1.6	%

The decrease in stock-based compensation in absolute dollars for the six months ended May 31, 2003 as compared to the same period of 2002 is primarily due to a $0.7 million decrease in employee- and acquisition- related stock-based compensation. Stock-based compensation related to consultants increased $0.5 million but was offset by $0.6 million decrease in employer-required payroll taxes for nonqualified stock option exercises.

Amortization of Acquired Intangibles

Intangible assets are comprised of purchased technology, trademarks and established customer bases, as well as non-compete, maintenance and OEM customer royalty agreements.

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	Three-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
Amortization of acquired intangibles	$	1,691		(71.9	)%	$	6,020
As percent of total revenue		2.8	%	(6.6	)%		9.4	%
	Six-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
Amortization of acquired intangibles	$	3,382		(71.5	)%	$	11,874
As percent of total revenue		2.7	%	(5.9	)%		8.6	%

The decrease in amortization of acquired intangibles is due to our adoption of SFAS No. 142 on December 1, 2002, which requires that goodwill and intangible assets deemed to have indefinite lives are no longer amortized but, instead, subject to impairment tests at least annually.

Restructuring Charges

During fiscal 2002 and 2001, we recorded restructuring charges totaling $70.5 million, consisting of $4.5 million for headcount reductions, $54.3 million for consolidation of facilities, $11.1 million for related write-down of leasehold improvements and $0.6 million of other related restructuring charges. These restructuring charges were recorded to align our cost structure with changing market conditions. We recorded an additional accrual of $7.4 million in fiscal 2002 for the estimated losses on facilities acquired in connection with the acquisition of Talarian as acquisition integration costs. Through fiscal 2002, we made cash payments of $10.4 million associated with abandoned facilities and $4.9 million related to headcount reductions and other charges. We are currently working with corporate real estate brokers to sublease unoccupied facilities.

During the first quarter of fiscal 2003, we recorded a restructuring charge of $1.1 million related to a reduction in headcount to further 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.

The following sets forth our accrued restructuring costs as of May 31, 2003. Accrued excess facilities costs represent the estimated loss on abandoned facilities, net of sublease income, and are expected to be paid over the next eight years. Accrued severance costs for the four remaining employees are expected to be paid during fiscal 2003.

	Excess Facilities			Severance *			Total
Balance at November 30, 2002	$	51,311		$	198		$	51,509
Activity during first quarter of fiscal 2003:
Restructuring charges recorded		—			1,100			1,100
Cash utilized		(2,168	)		(1,168	)		(3,336	)
Balance at February 28, 2003		49,143			130			49,273
Activity during second quarter of fiscal 2003:
Non cash write-down of furniture and fixtures		(385	)		—			(385	)
Cash utilized		(2,001	)		(42	)		(2,043	)
Balance at May 31, 2003	$	46,757		$	88		$	46,845

* Included in consolidated balance sheet as a component of accrued liabilities.

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Interest and Other Income (Expense), net

Interest and other income (expense), net, includes interest, realized gains and losses on investments and other miscellaneous income and expense items. We hold minority interests in several companies with complementary technologies or products or companies that provide us with access to additional vertical markets and customers and evaluate the investments for other-than-temporary declines in value on a regular basis.

	Three-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
Interest and other income (expense), net	$	4,992		197.5	%	$	(5,122	)
As percent of total revenue		8.2	%	16.2	%		(8.0	)%

The increase in interest and other income in absolute dollars for the second quarter of fiscal 2003 as compared to the same quarter of 2002 was primarily due to the non-recurring investment impairment charge in 2002 partially offset by lower interest income in 2003. In the second quarter of fiscal 2002, we recognized an other-than-temporary impairment of our investments in the amount of $10.7 million. The global economic slowdown and reduction in technology spending in general during fiscal 2002 had, and continues to have, a negative impact on these development stage companies. No impairment charges were recognized during the second quarter of fiscal 2003. Interest income decreased 39.7% from $5.8 million in the second quarter of fiscal 2002 to $3.5 million in the second quarter of fiscal 2003 due to the decline in interest rates.

	Six-months ended May 31,
	2003			Change		2002
	(in thousands, except percentages)
Interest and other income (expense), net	$	10,095		231.6	%	$	3,044
As percent of total revenue		8.1	%	5.9	%		2.2	%

The increase in interest and other income in absolute dollars for the six months ended May 31, 2003 as compared to the same period of the prior year was primarily due to the non-recurring investment impairment charge in 2002 partially offset by lower interest income in 2003. In the first six months of fiscal 2003, we recognized an other-than-temporary impairment of our investments in the amount of $0.3 million as compared to $10.7 million during the same period of 2002. The global economic slowdown and reduction in technology spending in general during fiscal 2002 had, and continues to have, a negative impact on these development stage companies. Interest income decreased 40.9% from $12.7 million in the six months ended May 31, 2002 to $7.5 million in the six months ended May 31, 2003 due to the decline in interest rates.

Provision for (Benefit from) Income Taxes

The current estimate of our annual effective tax rate on anticipated operating income for the 2003 tax year is 40%. The estimated annual effective tax rate of 40% has been used to record the provision for income taxes for the six-month period ended May 30, 2003 as compared to an effective tax rate of 10% used to record the provision for income taxes for the comparable period in 2002. The estimated annual effective tax rate differs from the U.S. statutory rate primarily due to state taxes, stock-based compensation charges, foreign tax rate differences, R&D tax credits and net operating losses and temporary differences not recognized applicable to the net deferred tax assets. We maintained a full valuation allowance on the deferred tax assets because we expect that it is more likely than not that all deferred tax assets will not be realized in the foreseeable future.

LIQUIDITY AND CAPITAL RESOURCES

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At May 31, 2003, we had cash and cash equivalents of $116.3 million, representing an increase of $59.1 million from November 30, 2002.

Net cash provided by operations for the six months ended May 31, 2003 was $5.2 million compared to $10.5 million for the comparable period of the prior year. Cash provided by operating activities for the six months ended May 31, 2003 resulted primarily from net income of $1.1 million that was offset by non-cash charges of $10.0 million and a net decrease in assets and liabilities of $5.9 million. The net decrease in assets and liabilities was principally due to payments for year-end sales commission accruals and rent for abandoned facilities.

Net cash provided by investing activities for the six months ended May 31, 2003 was $50.5 million compared to cash used by investing activities of $74.4 million for the same period in 2002. Cash provided by investing activities resulted primarily from the net sales of short-term investments of $51.5 million partially offset by capital expenditures of $1.0 million. Capital expenditures were primarily related to office facilities.

Cash flow from financing activities for the six months ended May 31, 2003 of $3.4 million resulted from the exercise of stock options and stock purchases under our Employee Stock Purchase Program.

At May 31, 2003 and 2002, we had $646.5 million and $644.7 million in cash, cash equivalents and investments, respectively. We anticipate our operating expenses to remain relatively stable for the foreseeable future and as a result intend to fund our operating expenses through cash flows from operations. We expect to use our cash resources to fund capital expenditures as well as acquisitions or investments in complementary businesses, technologies or product lines. We believe that our current cash, cash equivalents and investments and cash flows from operations will be sufficient to meet our anticipated cash requirements for working capital and capital expenditures for at least the next twelve months.

As of May 31, 2003, future minimum lease payments under non-cancelable operating leases, including $41.7 million provided for as accrued restructuring costs and $5.1 million provided for as acquisition integration liabilities, are as follows (in thousands):

	Expense		Sublease Income		Net
Remaining 2003	$	13,961	$	642	$	13,319
2004		26,412		1,323		25,089
2005		25,989		1,068		24,921
2006		24,682		464		24,218
2007		25,254		470		24,784
Thereafter		144,510		1,552		142,958
Total	$	260,808	$	5,519	$	255,289

As of May 31, 2003, we had a $5.0 million irrevocable standby letter of credit outstanding in connection with a facility lease. The letter of credit automatically renews annually for the duration of the lease term, which expires in December 2010. The investments pledged for security of the letter of credit are presented as restricted cash and included in Other Assets in the Condensed Consolidated Balance Sheets.

As of May 31, 2003, we had a $0.9 million irrevocable standby letter of credit outstanding in connection with a facility surrender agreement. The letter of credit automatically renews annually for the duration of the letter of credit requirement of the surrender agreement, which expires in June 2006. The investments pledged for security of the letter of credit are presented as restricted cash and included in Other Assets in the Condensed Consolidated Balance Sheets.

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FACTORS THAT MAY AFFECT OPERATING RESULTS

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.

We have a history of losses, we expect future losses, and if we do not achieve and sustain profitability our business will suffer and our stock price may decline

We may not be able to achieve revenue or earnings growth or obtain sufficient revenue to achieve and sustain profitability. We incurred net losses of approximately $94.6 million and $13.2 million in fiscal 2002 and 2001, respectively. In addition, we incurred a net loss of $0.6 million in the second quarter of fiscal 2003 and net income of $1.1 million for the six months ended May 31, 2003, respectively. As of May 31, 2003, we had an accumulated deficit of approximately $168.8 million.

We have invested significantly in building our sales and marketing organization and in our technology research and development. We expect to continue to spend financial and other resources on developing and introducing enhancements to our existing and new software products and our direct sales and marketing activities. As a result, we need to generate significant revenue to achieve and maintain profitability. In addition, we believe that we must continue to dedicate a significant amount of our resources to our research and development efforts to maintain our competitive position. However, we do not expect to receive significant revenues from these investment for several years.

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 our limited operating history and the evolving nature of the markets in which we compete, 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 cause fluctuations in our operating results, including:

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

• the correlation between our sales forecasts and our revenue;

• 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;

• 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 process that could affect both the timing and size of any transaction;

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

• variations throughout the year due to seasonal factors, which generally result in lower sales activity in our first and third fiscal quarters; and

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• changes in local, national and international regulatory requirements.

There can be no assurance that our current customers will continue to purchase our products in the future

We do not have long-term contracts with any of our customers, except for our license and distribution relationship with Reuters described below. There can be no assurance that any of our customers will continue 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. Sales to Reuters, a related party, accounted for 10.0% of our total revenue in the second quarter of fiscal 2003 and 13.8% of total revenue for the six month period ended May 31, 2003.

We are exposed to the credit risk of some of our customers and to credit exposures in weakened markets

Most of our licenses are on an “open credit” basis, with payment terms of 30 days typically in the United States, and, because of local customs or conditions, longer in some markets outside the United States. We monitor individual customer payment capability in granting such open credit arrangements, seek to limit such open credit to amounts we believe the customers can pay, and maintain reserves we believe are adequate to cover exposure for doubtful accounts.

Because of the current slowdown in the global economy however, our exposure to credit risks has increased. Although we have programs in place to monitor and mitigate the associated risk, including monitoring of particular risks in certain geographic areas, there can be no assurance that such programs will be effective in reducing our credit risks. There can be no assurance that, should economic conditions not improve, additional losses would not be incurred, and that such losses would not be material or exceed our reserves. Although these losses have not been material to date, future losses, if incurred, could harm our business and have a material adverse effect on our business, operating results and financial condition.

Our licensing and distribution relationship with Reuters places limitations on our ability to conduct our business

Our predecessor company was acquired by Reuters in 1994. In January 1997, Reuters established us as a separate entity, transferred to us certain assets and liabilities related to our business and granted to us a royalty-free license to intellectual property that is still incorporated into some of our software products. Reuters continues to hold approximately 49.1% of our stock and has the right to nominate one third of our directors, and accordingly is able to exert significant influence over our business. We have a significant relationship with Reuters for licensing and distribution. Our relationship with Reuters involves limitations and restrictions on our business, as well as other risks described below.

We license from Reuters the underlying TIB messaging technology that existed as of December 31, 1996 (“Licensed TIB Technology”), from which some of our important TIBCO ActiveEnterprise messaging products originated. We do not own Licensed TIB Technology. Because Reuters has access to the intellectual property used in our products, it could use this intellectual property to compete with us. Reuters is not restricted from using the Licensed TIB Technology to produce products that compete with our products, and it can grant limited licenses to the Licensed TIB Technology to others who may compete with us. In addition, we must license to Reuters all of the intellectual property and products we create through December 2011. This will place Reuters in a position to more easily develop products that compete with ours.

Under our agreements with Reuters, we are generally prohibited, through May 28, 2004, from selling our products and providing consulting services directly to companies in the financial services market. We are also prohibited from directly licensing products containing the Licensed TIB Technology to financial services customers and major competitors of Reuters, and from using the Licensed TIB Technology to develop products specifically for use by financial services companies. Accordingly, through May 28, 2004, we must rely on Reuters and, to a lesser extent, other third-party resellers and distributors to sell our products to these companies. After May 28, 2004, we may, unless we otherwise agree with Reuters be able to license our products (except for those, if any, that still include the Licensed TIB Technology) and provide consulting services directly to companies in the financial services market. There are no assurances, however, that we will be successful in licensing our products or providing consulting services directly to companies in the financial services market. A failure in this respect could harm our business and our operating results may suffer.

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Under the license, maintenance and distribution agreement, Reuters is required to pay us a minimum guaranteed distribution fee in the amount of $20 million per calendar year through December 2003. If actual distribution fees due from Reuters, as a result of their sales of our products in the financial services market, exceed the cumulative minimum year-to-date guarantee, incremental fees are due. These product fees may be materially less than the product fees we could obtain from other distributors or resellers in the financial services market. In addition, when we sell our products into the financial services market other than through Reuters, we are required to pay fees to Reuters, which we record as related party royalty expense.

Neither Reuters nor any third-party reseller or distributor has any contractual obligation to distribute our products to financial services customers. Reuters and other distributors may not be successful in selling our products into the financial services market, or they may elect to sell competitive third-party products into that market, either of which may adversely affect our revenue in that market.

In addition, if Reuters declines to continue the minimum guaranteed distribution fee at the end of December 2003, there can be no assurances that we will be successful in generating enough revenue to replace the minimum guaranteed fee, which would adversely affect our business and operating results

Our license agreement with Reuters imposes also practical restrictions on our ability to acquire other companies. The license agreement places no specific restrictions on our ability to acquire companies with all or part of their business in the financial services market and to continue such business. However, under the terms of the license agreement, we are prohibited from bundling or combining our products that are based on the Licensed TIB Technology with an acquired company’s products and services and then selling the bundled or combined products directly to financial services companies. This prohibition could prevent us from realizing potential synergies with companies we acquire.

The market for infrastructure software may not grow as quickly as we anticipate, which would cause our revenues to fall below expectations

The market for infrastructure software is relatively new and evolving. We earn a substantial portion of our revenue from sales of our infrastructure software, including application integration software, and 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 seeking outside vendors to develop, manage and maintain this software for their critical applications. A weakening United States and global economy, which has had a disproportionate impact on information technology spending by businesses, has led to a reduction in sales over the past several quarters 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.

Our acquisition strategy could cause financial or operational problems

Our success depends on our ability to continually enhance and broaden our product offerings in response to changing technologies, customer demands, and competitive pressures. To this end, we may acquire new and complementary businesses, products or technologies. We do not know if we will be able to complete any acquisitions or that we will be able to successfully integrate any acquired business, operate them profitably, or retain their 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. We may face competition for acquisition targets from larger and more established companies with greater financial resources. In addition, in order to finance any acquisition, we might need to raise additional funds through public or private financings. 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 results in dilution to our stockholders. 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

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impairment of acquired intangible assets, stock-based compensation or other charges resulting from the costs of acquisitions could harm our operating results.

Our stock price may be volatile, which could cause investors to lose all or part of their investments in our stock

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 2002, for example, our stock price fluctuated between a high of $16.90 and a low of $3.28. If market or industry-based fluctuation 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.

The volatile nature of our operations could strain our resources and cause our business to suffer

Our ability to successfully offer products and services and implement our business plan in a rapidly evolving market requires an effective planning and management process. We have increased the scope of our operations both domestically and internationally. 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 response to changing market conditions, in fiscal 2001 and 2002, we recorded restructuring charges totaling $70.5 million, including $66.0 million related to abandoned facilities and $4.5 million related to a reduction of our headcount by approximately 235 employees. During the first quarter of fiscal 2003, we recorded an additional restructuring charge of $1.1 million related to a reduction of our headcount by approximately 44 employees. Our growth has placed and will continue to place a significant strain on our management systems, infrastructure and resources. We expect that we will need to continue to improve our financial and managerial controls, reporting systems and procedures. We will also need to continue to train and manage our workforce worldwide. Furthermore, we expect that we will be required to manage an increasing number of relationships with various customers and other third parties. Failure to expand or control costs in any of the foregoing areas efficiently and effectively could interfere with the growth of our business as a whole.

Pending litigation could harm our business

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 United States District Court for the Southern District of New York, captioned In re TIBCO Software, Inc. Initial Public Offering Securities Litigation, 01 Civ. 6110 (SAS). This is one of the number of cases challenging underwriting practices in the initial public offerings (“IPOs”) of more than 300 companies. These cases have been coordinated for pretrial proceedings as In re Initial Public Offering Securities Litigation, 21 MC 92 (SAS). Plaintiffs generally allege that certain 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. On February 19, 2003, the Court issued an Opinion and Order denying the motion to dismiss certain of the claims in the complaint. We have engaged in discussions with the plaintiffs regarding a proposed settlement of the claims. We believe that we have meritorious defenses to the allegations in the complaint and intend to defend the case vigorously.

A lawsuit with similar allegations of undisclosed improper underwriting practices, and part of the same coordinated proceedings, is pending against Talarian Corporation (“Talarian”), which the Company acquired in 2002. That action is captioned In re Talarian Corp. Initial Public Offering Securities Litigation, 01 Civ. 7474 (SAS). 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. On February 19, 2003, the Court issued an Opinion and Order granting the Company’s motion to dismiss certain of the claims in the complaint. We have engaged in discussions with the plaintiffs regarding a proposed settlement of the claims. We believe that we have meritorious defenses to the remaining claims against Talarian and intend to defend against those claims vigorously.

33

The remaining complaints do not specify the amount of damages that the plaintiffs seek, and as a result, we are unable to estimate the possible range of damages that might be incurred as a result of the lawsuits. We have not accrued any amounts relating to potential damages associated with the lawsuits. The uncertainty associated with a substantial unresolved lawsuit 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, such a payment could seriously harm our financial condition and liquidity.

If we do not retain our key management personnel and attract and retain other highly skilled employees, our business will suffer

If we fail to retain and recruit the necessary personnel, 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 Ranadive, our President and Chief Executive Officer. All of our executive officers and key personnel are employees at-will. If any of these people were to leave us it would be difficult to replace them and our business would be harmed. In addition, provisions of the recently enacted Sarbanes-Oxley Act of 2002 and related rules proposed by the SEC and NASDAQ impose heightened personal liability on some of our key management personnel. The threat of such liability could potentially divert the attention of such personnel away from their normal management duties.

Our success also depends on our ability to recruit, retain and motivate highly skilled sales, marketing and engineering personnel. 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 have experienced turnover in our marketing and sales management. Although we have recruited a new marketing manager, there can be no assurance that we will be successful in our retention and training efforts.

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. Because patent applications in the United States are not publicly disclosed until the patent is issued, applications relating to our software products may have been filed without our knowledge. 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. Intellectual property litigation is expensive and time-consuming, and could divert our management’s attention away from running our business and could 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 will be forced to incur significant costs including, damages and satisfying indemnification obligations that we have with our customers, and could be prevented from selling our products.

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, licensed patents 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 were misappropriated, we might have to engage in litigation to protect it. We might not succeed in protecting our proprietary information by initiating intellectual property litigation, and in any invent such litigation is expensive and time-consuming, and could divert our management’s attention away from running our business and could seriously harm our business.

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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 and SeeBeyond. We also compete with various providers of webservices such as Microsoft, BEA and IBM. We believe that of these companies, IBM has the potential to offer the most complete set of products for enterprise application integration. We also face competition for certain aspects of our product and service offerings from major systems integrators. We expect additional competition from other established and emerging companies.

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.

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 or 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 or 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 adversely affect our revenue and financial condition. If we are not able to develop software for accepted platforms or fail to adopt webservice 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.

Recently enacted and proposed regulatory changes may cause us to incur increased costs

Recently enacted and proposed changes in the laws and regulations affecting public companies, including the provisions of the Sarbanes-Oxley Act of 2002 and rules proposed by the SEC and NASDAQ could cause us to incur increased costs as we evaluate the implications of new rules and responds to new requirements. The new rules could make it more difficult for us to obtain certain types of insurance, including directors 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 are presently evaluating and monitoring developments with respect to these new and proposed rules, and we cannot predict or estimate the amount of the additional costs we may incur or the timing of such costs.

If we account for employee stock option and employee stock purchase plans using the fair value method, it could significantly reduce our net income and earnings per share

There has been ongoing public debate whether employee stock option and employee stock purchase plans shares should be treated as a compensation expense and, if so, how to properly value such charges. If we elected or were required to record an expense for out stock-based compensation plans using the fair value method, we could have significant accounting charges. For example in fiscal year 2002, had we accounted for stock-based compensation plans under SFAS No. 123 as amended by SFAS No. 148, annual earnings per share would have been reduced by $0.53 per

35

share. Although we are not currently required to record any compensation expense using the fair value method in connection with option grants that have an exercise price at or above fair market value and for shares issued under our employee stock purchase plan, it is possible that future laws or regulations will require us to treat all stock-based compensation as a compensation expense using the fair value method. See Note 9 to the Condensed Consolidated Financial Statements and our discussion in the Amortization of Stock-based Compensation section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for a more detailed presentation of accounting for stock-based compensation plans.

ITEM 3. 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, to 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. The maximum allowable duration of a single issue is 2.5 years and the maximum allowable duration of the portfolio is 1.3 years.

At May 31, 2003, we had an investment portfolio of fixed income securities totaling $530.0 million, excluding those classified as cash and cash equivalents and restricted funds. 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 its value will fall in the event market interest rates increase. If market interest rates were to increase immediately and uniformly by 100 basis points (approximately 69.8% of current rates in the portfolio) from levels as of May 31, 2003, the fair market value of the portfolio would decline by approximately $5.5 million.

We develop products in the United States and sell in North America, South America, Asia, the Middle East and Europe. 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. 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. We enter into foreign currency forward exchange contracts (“forward contracts”) to manage exposure related to accounts receivable denominated in foreign currencies. We do not enter into derivative financial instruments for trading purposes. We had outstanding forward contracts with notional amounts totaling approximately $3.2 million at May 31, 2003. These open contracts mature at various dates through September 2003 and are economic hedges of certain foreign currency transaction exposures in the Euro, British Pound, Canadian Dollar, Swedish Krona, Japanese Yen and Danish Krone. The fair value of these forward contracts at May 31, 2003 was not significant.

ITEM 4. CONTROLS AND PROCEDURES

Within 90 days prior to the filing of this report, we undertook an evaluation of our disclosure controls and procedures. Based upon that evaluation and related improvements to our system of disclosure controls and procedures, we have concluded that we have in place disclosure controls and procedures necessary to insure that material information relating to our company, including our consolidated subsidiaries, is made known to us by others in our company, particularly with respect to the period covered by this report. Subsequent to the date of this evaluation there have been no significant changes in our internal controls or in other factors that could significantly affect our internal controls.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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 United States District Court for the Southern District of New York, captioned In re TIBCO Software, Inc. Initial Public Offering Securities Litigation, 01 Civ. 6110 (SAS). This is one of the number of cases challenging underwriting practices in the initial public offerings (“IPOs”) of more than 300 companies. These cases have been coordinated for pretrial proceedings as In re Initial Public Offering Securities Litigation, 21 MC 92 (SAS). Plaintiffs generally allege that certain 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. On February 19, 2003, the Court issued an Opinion and Order denying the motion to dismiss certain of the claims in the complaint. We have engaged in discussions with the plaintiffs regarding a proposed settlement of the claims. We believe that we have meritorious defenses to the allegations in the complaint and intend to defend the case vigorously.

A lawsuit with similar allegations of undisclosed improper underwriting practices, and part of the same coordinated proceedings, is pending against Talarian Corporation (“Talarian”), which the Company acquired in 2002. That action is captioned In re Talarian Corp. Initial Public Offering Securities Litigation, 01 Civ. 7474 (SAS). 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. On February 19, 2003, the Court issued an Opinion and Order granting the Company’s motion to dismiss certain of the claims in the complaint. We have engaged in discussions with the plaintiffs regarding a proposed settlement of the claims. We believe that we have meritorious defenses to the remaining claims against Talarian and intend to defend against those claims vigorously.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. SUBMISSION OF A MATTER TO A VOTE OF SECURITY HOLDERS

At our annual meeting of stockholders on April 15, 2003 the following three proposals were voted on and approved as follows:

PROPOSAL I (To elect seven directors to serve until our next annual meeting of stockholders, or until their successors are duly elected and qualified.)

	Total Vote For Each Director	Total Vote Withheld From Each Director
Vivek Y. Ranadivé	164,213,193	14,199,127
Philip Green	157,934,801	20,477,519
Naren Gupta	169,582,789	8,829,531
Peter Job	159,736,027	18,676,293
William A. Owens	177,338,070	1,074,250
Matthew J. Szulik	169,569,167	8,843,153
Philip K. Wood	164,843,324	13,568,996

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PROPOSAL II (To amend our 1996 Stock Option Plan to provide for the award of stock awards, and to approve the material terms of our 1996 Stock Option Plan to preserve our ability to receive corporate income tax deductions that may become available pursuant to Internal Revenue Code Section 162(m).)

For	Against	Abstain	Broker Non-Votes
119,334,711	31,669,258	125,015	27,283,337

PROPOSAL III (To ratify the appointment of PricewaterhouseCoopers LLP as our independent public accountants for the fiscal year ending November 30, 2003.)

For	Against	Abstain
165,505,722	12,866,844	39,755

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits:

Exhibit 3.2	Bylaws of Registrant
Exhibit 99.1	Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002
Exhibit 99.2	Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002

(b) Reports on Form 8-K:

We filed a Current Report on Form 8-K on June 19, 2003 to furnish the press release we issued on June 19, 2003 entitled “TIBCO Software Reports Second Quarter Financial Results.”

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SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.

TIBCO SOFTWARE INC.
By:	/S/    CHRISTOPHER G. O’MEARA
	Christopher G. O’Meara Executive Vice President, Finance and Chief Financial Officer

By:	/S/    MARCIA GUTIERREZ
	Marcia Gutierrez   Director of Accounting

Date: July 9, 2003

40

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Vivek Y. Ranadive, certify that:

1. I have reviewed this quarterly report on Form 10-Q of TIBCO Software Inc.;

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly 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-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures 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 quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, 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 in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; 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; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: July 9, 2003

/s/    VIVEK Y. RANADIVÉ         

Vivek Y. Ranadivé

President and Chief Executive Officer

41

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Christopher G. O’Meara, certify that:

1. I have reviewed this quarterly report on Form 10-Q of TIBCO Software Inc.;

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly 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-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures 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 quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, 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 in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; 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; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: July 9, 2003

/s/    CHRISTOPHER G. O’MEARA        

Christopher G. O’Meara

Executive Vice President, Finance

and Chief Financial Officer

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EX-3.2

EXHIBIT 3.2

BYLAWS

OF

TIBCO SOFTWARE INC.

(A Delaware Corporation)

as amended and restated as of April 2, 2003

BYLAWS

OF

TIBCO SOFTWARE INC.

as amended and restated as of April 2, 2003

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 annual meeting, business must be: (A) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (B) otherwise properly brought before the meeting by or at the direction of the board of directors, or (C) otherwise properly brought before the meeting by a stockholder. 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 has been changed by more than 30 days from the date contemplated at the time of the previous year’s proxy statement, notice by the stockholder to be timely must be so received a reasonable time before the solicitation is made. A stockholder’s notice to the secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (i) 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, (ii) the name and address, as they appear on the corporation’s books, of the stockholder proposing such business, (iii) the class and number of shares of the corporation which are beneficially owned by the stockholder, (iv) any material interest of the stockholder in such business and (v) 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 or her capacity as a proponent of 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, a stockholder must provide notice as required by the regulations promulgated under the 1934 Act. 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 direction of the board of directors or by any stockholder of the corporation entitled to vote in the election of directors at the meeting 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 being 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); and (ii) as to such stockholder giving notice, the information required to be provided pursuant to paragraph (b) of this Section 2.2. At the request of the board of directors, 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 warrant, 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, the chairman of the board, the president or one or more affiliated stockholders holding shares in the aggregate entitled to cast not less than ten percent (10%) of the votes at the meeting.

If a special meeting is called by any person or persons other than the board of directors or the president or the chairman of the board, then the request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by telegraphic or other facsimile transmission to the chairman of the board, the president, any vice president or the secretary of the corporation. No business may be transacted at such special meeting otherwise than specified in such notice. The officer receiving the request shall cause notice to be promptly given to the stockholders entitled to vote, in accordance with the provisions of Sections 2.4 and 2.5 of these bylaws, that a meeting will be held at the time requested by the person or persons calling the meeting so long as that time is not less than fifteen (15) nor more than sixty (60) days after the receipt of the request. If the notice is not given within twenty (20) days after receipt of the request, then the person or persons in this paragraph of this Section 2.3 shall be construed as limiting, fixing or affecting the time when a meeting of stockholders called by action of the board of directors may be held.

2.4 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 2.5 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

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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.

2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

Written notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the corporation. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

2.6 QUORUM

The holders of a majority 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. If, however, such quorum is not present or represented at any meeting of the stockholders, then the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, 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.

2.7 ADJOURNED MEETING; NOTICE

When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than forty-five (45) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

2.8 CONDUCT OF BUSINESS

Meetings of stockholders shall be presided over by the chairman of the board, if any, or in his or her absence by the vice chairman of the board, if any, or in his or her absence by the chief executive officer, if any, or in his or her absence by the president, if any, or in his or her absence a vice president, or in the absence of the foregoing persons by a chairman designated by the board of

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directors, or in the absence of such designation by a chairman chosen 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.

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, pledgors and joint owners of stock and to voting trusts and other voting agreements).

Except as may be otherwise provided in the certificate of incorporation, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder; provided, that Reuters Limited and its affiliates have agreed, under the Third Amended and Restated Stockholders Agreement among Reuters, the corporation and other stockholders of the corporation, to waive their voting rights with respect to certain shares of the corporation’s capital stock, as more fully set forth in such agreement.

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.

If a quorum is present, the affirmative vote of at least a majority of the voting power of the shares represented, in person or by proxy, and voting at a duly held meeting (which shares voting affirmatively also constitute at least a majority of the voting power of the required quorum) shall be the act of the stockholders, unless the vote of a greater number or a vote by classes is required by law or by the Certificate of Incorporation.

2.10 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 stockholders need be specified in any written waiver of notice unless so required by the certificate of incorporation or these bylaws.

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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.

2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS

In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action, and in such event only stockholders of record on the date so fixed are entitled to notice and to vote or to give consents, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date.

If the board of directors does not so fix a record date:

(i) 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 day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

(ii) The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the board of directors is necessary, shall be the day on which the first written consent is expressed.

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(iii) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto.

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; provided, however, that the board of directors may fix a new record date for the adjourned meeting.

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 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 another duly executed proxy bearing a later date with the secretary of 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 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;

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(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.

3.2 NUMBER OF DIRECTORS

The number of directors which constitute the whole Board of Directors shall be fixed at nine (9) unless increased by one or more resolutions adopted from time to time by the Board of Directors.

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.

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Elections of directors need not be by written ballot.

3.4 BOARD REPRESENTATION

If the corporation has nine (9) or less directors, Reuters has the right to nominate the following individuals to the board of directors: (i) so long as Reuters PLC and its subsidiaries, including Reuters Limited (“Reuters”) and Reuters Nederland B.V., but not including the corporation (the “Reuters Parties”) own shares of capital stock representing forty percent (40%) or more of the issued and outstanding voting securities of the Corporation (“Voting Shares”), three directors, (ii) so long as Reuters Parties own less than forty percent (40%) but at least twenty-five percent (25%) of the issued and outstanding Voting Shares, two directors, (iii) so long as Reuters Parties own less than twenty-five percent (25%) but at least ten percent (10%) of the issued and outstanding Voting Shares, one director (each director nominated by Reuters pursuant hereto, a “Reuters Director”). Notwithstanding the foregoing, prior to the nomination of any person as a Reuters Director, such person shall be approved by the chief executive officer of Reuters and by the chief executive officer of the corporation.

If a vacancy occurs or exists on the Board of Directors at any time and the vacant position was held by a Reuters Director, then Reuters (in accordance with the previous sentence) shall have the sole right to nominate an individual to fill such vacancy. If the total number of directors is increased above nine (9), the number of Reuters Directors shall be increased so that the adjusted ratio of Reuters Directors to total directors is not less than ratio set forth above.

3.5 RESIGNATION AND VACANCIES

Any director may resign at any time upon written notice to the attention of the secretary of the corporation. Subject to the provisions of the certificate of incorporation and section 3.4 of these bylaws, when one or more directors so resigns and the resignation is effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies.

Unless otherwise provided in the certificate of incorporation or section 3.4 of 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

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directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.

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 (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 shares at the time outstanding 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.

3.6 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.

3.7 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.

3.8 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, the president, any vice president, the secretary or any one director.

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Notice of the time and place of special meetings shall be delivered personally or by telephone to each director or sent by first-class mail or telegram, charges prepaid, addressed to each director at that director’s address as it is shown on the records of the corporation. If the notice is mailed, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting. If the notice is delivered personally or by telephone or by telegram, it shall be delivered personally or by telephone or to the telegraph company at least forty-eight (48) hours before the time of the holding of the 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. The notice need not specify the purpose or the place of the meeting, if the meeting is to be held at the principal executive office of the corporation.

3.9 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, if any action taken is approved by at least a majority of the required quorum for that meeting.

3.10 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.

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3.11 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.

3.12 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.

3.13 APPROVAL OF LOANS TO OFFICERS

The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the board of directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in this section contained shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.

3.14 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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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 these 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 3.6 (place of meetings and meetings by telephone), Section 3.7 (regular meetings), Section 3.8 (special meetings and notice), Section 3.8 (quorum), Section 3.10 (waiver of notice), and Section 3.11 (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.

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.

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.

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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 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

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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.

5.8 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.

5.9 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.

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.

5.10 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.

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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.

5.11 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.

5.12 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.

5.13 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 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.

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5.14 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

The corporation shall, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware, indemnify each of its 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 6.1, a “director” or “officer” of the corporation includes any person (i) who is or was a director or officer of the corporation, (ii) who 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, or (iii) who was a director or officer of a corporation that was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

6.2 INDEMNIFICATION OF OTHERS

The corporation shall have the power, to the 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 attorney’s 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

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venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him 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 such person 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 Article VI or otherwise. In addition, the corporation shall indemnify any such person against any and all expenses incurred by such person in connection with any action brought by such person for indemnification or advance of expenses from the corporation under any indemnification agreement between such person and the corporation or under any directors’ and officers’ liability insurance policies maintained by the corporation, regardless of whether such person ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery, as the case may be, and, if requested by such person, shall (within ten (10) days after receipt by the corporation of a written request therefor) advance such expenses to such person.

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 determination is reasonably and promptly made by the board of directors (i) 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, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the determining 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 either to be in or not to be 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, either as to action in his or her official capacity or as to action in any other capacity while holding office. The corporation is specifically authorized to enter into individual contracts with any or all of its

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directors, officers, employees and 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 person.

6.7 AMENDMENTS

Any repeal or modification of this bylaw shall have prospective effect only, and shall not affect the rights of any person under this bylaw as in effect at the time of an alleged action or omission to act giving rise to a proceeding against such person, if such alleged action or omission occurred prior to the repeal or modification of this bylaw.

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 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

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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.

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

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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; PARTLY PAID SHARES

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.

The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.

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.

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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 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.

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.

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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 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.

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. Provided that so long as Reuters and its affiliates own at least twenty percent (20%) of the outstanding voting securities of the company, sections 2.3, 2.11 and 3.8 of these bylaws cannot be amended by the directors of the corporation without the express written consent of Reuters and the affirmative vote of a majority of the outstanding voting securities; and provided further that so long as Reuters holds ten percent (10%) of the outstanding voting securities of the corporation, section 3.4 cannot be amended by the directors of the corporation without the express written consent of Reuters and the affirmative vote of a majority of the outstanding voting securities.

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

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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.

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

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(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-99.1

Exhibit 99.1

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. Ranadive, 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, to my knowledge:

(a) the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended May 31, 2003, 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 operation of the Company.

Dated: July 9, 2003

/s/    VIVEK Y. RANADIVÉ        

Vivek Y. Ranadivé

President and Chief Executive Officer

EX-99.2

Exhibit 99.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Christopher G. O’Meara, Executive Vice President and Chief Financial 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, to my knowledge:

(c) the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended May 31, 2003, 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

(d) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Dated: July 9, 2003

/S/    CHRISTOPHER G. O’MEARA            

Christopher G. O’Meara

Executive Vice President and Chief Financial Officer