Form 10-Q

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 a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

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

The number of shares outstanding of the registrant’s Common Stock, $0.001 par value, as of October 8, 2007 was 190,562,372 shares.

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by TIBCO Software Inc. (“TIBCO,” the “Company,” “we” or “us”) in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in Consolidated Financial Statements prepared in accordance with generally accepted accounting principles in the United States of America 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 state 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 audited Consolidated Financial Statements and notes thereto for the fiscal year ended November 30, 2006, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 9, 2007.

Our fiscal year ends on November 30^th of each year. For purposes of presentation, we have indicated the third quarter of fiscal years 2007 and 2006 as ended on August 31, 2007 and 2006, respectively; whereas in fact, the third quarter of fiscal years 2007 and 2006 actually ended on September 2, 2007, and September 3, 2006, respectively. There were 91 days in the third quarter of both fiscal year 2007 and fiscal year 2006.

The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. For majority-owned subsidiaries, we reflect the minority interest of the portion we do not own on our Condensed Consolidated Balance Sheets between Total Liabilities and Stockholders’ Equity.

The results of operations for the three and nine months ended August 31, 2007, are not necessarily indicative of the results that may be expected for the year ending November 30, 2007, or any other future period, and we make no representations related thereto.

Our significant accounting policies were described in Note 2 to our audited Consolidated Financial Statements for the fiscal year ended November 30, 2006, included in our Annual Report on Form 10-K. These accounting policies have not significantly changed.

In February 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115 (“SFAS No. 159”). SFAS No. 159 expands the use of fair value accounting but does not affect existing standards which require assets or liabilities to be carried at fair value. The objective of SFAS No. 159 is to improve financial reporting by providing companies with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. Under SFAS No. 159, a company may elect to use fair value to measure eligible items at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. Eligible items include, but are not limited to, accounts and loans receivable, available-for-sale and held-to-maturity securities, equity method investments, accounts payable, guarantees, issued debt and firm commitments. If elected, SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We are currently assessing whether fair value accounting is appropriate for any of our eligible items and cannot estimate the impact, if any, on our results of operations and financial position.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods of those fiscal years. We are currently assessing the impact that SFAS No. 157 will have on our results of operations and financial position.

In June 2006, the FASB issued Interpretation No. (“FIN”) 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 (“FIN 48”). This interpretation requires companies to determine whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. FIN 48 provides guidance on de-recognition, classification, accounting in interim periods and disclosure requirements for tax contingencies. FIN 48 is effective for fiscal years beginning after December 15, 2006 and is required to be adopted by TIBCO in the first quarter of fiscal year 2008. The differences between the amounts recognized in the statements of financial position prior to the adoption of FIN 48 and the amounts reported after adoption will be accounted for as a cumulative-effect adjustment recorded to the beginning balance of retained earnings. In addition, in May 2007, the FASB published FASB Staff Position No. FIN 48-1, Definition of Settlement in FASB Interpretation No. 48 (“FSP FIN 48-1”). FSP FIN 48-1 is an amendment to FIN 48. It clarifies how an enterprise should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. FSP FIN 48-1 is effective upon the initial adoption of FIN 48, and therefore will be adopted by us in the first quarter of fiscal year 2008. The actual impact of the adoption of FIN 48 and FSP FIN 48-1 in our results of operations and financial position will depend on facts and circumstances that exist on the date of adoption. We are currently assessing the impact of the adoption of FIN 48 and FSP FIN 48-1.

In June 2007, the FASB also ratified Emerging Issues Task Force (“EITF”) Issue No. 07-3, Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities (“EITF No. 07-3”). EITF No. 07-3 requires that nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities be deferred and capitalized and recognized as an expense as the goods are delivered or the related services are performed. EITF No. 07-3 is effective, on a prospective basis, for fiscal years beginning after December 15, 2007. We are currently evaluating the effect that the adoption of EITF No. 07-3 will have on our consolidated results of operations and financial condition.

In the beginning of fiscal year 2007, we adopted SFAS No. 154, Accounting for Changes and Error Corrections, which had no material effect on our consolidated results of operations and financial position.

On June 5, 2007, we acquired Spotfire Holdings, Inc. (“Spotfire”), a privately held company headquartered in Massachusetts and a leading provider of next generation business intelligence software. Pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), we acquired all the outstanding equity excluding the unvested options of Spotfire for approximately $190.4 million in cash plus transaction costs. In addition, pursuant to the Merger Agreement, each unvested option of Spotfire was canceled and substituted with an option to purchase our common stock (each, a “Substitute Option”). We granted approximately 887,000 shares of Substitute Options on the closing date of the acquisition. Substitute Options were valued using the Black-Scholes model on the day of the acquisition with a fair value of $5.4 million and will be expensed as stock-based compensation on a straight-line basis over the remaining vesting period of the underlying awards.

The acquisition was accounted for using the purchase method of accounting. A summary of the purchase price of the acquisition is as follows (in thousands):

The preliminary allocation of the estimated purchase price for this acquisition, as of the date of the acquisition, is as follows (in thousands):

The allocation of the estimated purchase price is preliminary pending finalization of various estimates and analyses. The amount of the total purchase price allocated to the tangible assets acquired was assigned based on the fair values as of the date of the acquisition. The fair value assigned to identifiable intangible assets acquired was determined using the income approach which discounts expected future cash flows to present value using estimated assumptions determined by management. We believe that these identified intangible assets had no residual value after their estimated economic useful lives. Our methodology for allocating the purchase price relating to acquired in-process research and development (“IPR&D”) was determined through established valuation techniques. Acquired IPR&D was expensed upon acquisition as technological feasibility had not been established and no future alternate use existed. These identifiable intangible assets are subject to amortization on a straight line basis over their estimated economic useful lives as follows:

The excess of the purchase price over the identified tangible and intangible assets was recorded as goodwill. We anticipate that none of the goodwill recorded in connection with the Spotfire acquisition will be deductible for income tax purposes.

The purchase method of accounting requires us to reduce Spotfire’s deferred revenue as of the acquisition date to an amount equal to the fair value of the services and maintenance obligations assumed from Spotfire. We based our determination of the fair value of the service and maintenance obligations through established valuation techniques using estimates and assumptions provided by management. As a result, in allocating the purchase price, we recorded an adjustment to reduce the carrying value of Spotfire’s deferred revenue resulting in lower revenues in periods following the acquisition than Spotfire would have achieved as a separate company.

The acquired tangible assets included $34.3 million of accounts receivable for contracts with payment terms, of which $21.4 million are due within one year and are included in Other Current Assets and the remaining $12.9 million are due after one year and are classified as non-current Other Assets on the Balance Sheet. As the fair value of the service and maintenance obligations assumed is less than the amount of accounts receivable with future payment terms, our cash flows related to these contracts are anticipated to be greater than revenues recorded from these contracts.

Spotfire had a revolving line of credit with a bank secured by certain Spotfire property and equipment. On the closing date of the acquisition, the outstanding balance under the revolving line of credit of $4.0 million was paid in full and the associated revolving line of credit loan agreement was terminated.

The results of Spotfire’s operations have been included in the Condensed Consolidated Financial Statements since the acquisition date. The following unaudited pro forma adjusted summary reflects the Company’s condensed results of operations for the three and nine months ended August 31, 2007 and 2006, assuming Spotfire had been acquired at the beginning of the periods, and includes the acquired IPR&D charge of $1.6 million. The unaudited pro forma adjusted summary is not intended to be indicative of future results (in thousands, except per share data):

Marketable securities, which are classified as available-for-sale, are summarized below as of August 31, 2007, and November 30, 2006 (in thousands):

Fixed income securities included in short-term investments above are summarized by their contractual maturities as follows (in thousands):

The maturities of asset-backed and mortgage-backed securities were primarily based upon assumed prepayment forecasts utilizing interest rate scenarios and mortgage loan characteristics.

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

The following table summarizes the fair value and gross unrealized losses related to available-for-sale securities, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position, as of August 31, 2007 (in thousands):

The unrealized losses on our investments in the underlying securities listed above were caused by rising interest rates. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because we have the ability and intent to hold these investments until a recovery of fair value, which may be at maturity, we do not consider these securities to be other-than-temporarily impaired as of August 31, 2007.

We have invested in privately held companies. Such investments are classified as equity investments that are generally carried on a cost basis and are included in Other Assets. The carrying value of our equity investments was $1.0 million as of August 31, 2007, and $1.6 million as of November 30, 2006. No impairment losses were incurred in the periods presented.

The change in the carrying amount of goodwill for the nine months ended August 31, 2007, was as follows (in thousands):

Certain intangible assets were recorded in foreign currencies, and therefore, the gross carrying amount and accumulated amortization are subject to foreign currency translation adjustments. The carrying values of our amortized acquired intangible assets as of August 31, 2007, and November 30, 2006, are as follows (in thousands):

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

The estimated future amortization of acquired intangible assets as of August 31, 2007, is as follows (in thousands):

The following is a summary of activities in accrued restructuring and excess facilities costs for the nine months ended August 31, 2007 (in thousands):

In the third quarter of fiscal year 2007, we recorded a $1.1 million credit adjustment to the restructuring charges related to properties vacated in connection with facilities consolidation. The adjustment resulted from revisions to our estimates of future sublease income due to the recovery of the applicable real estate market.

In connection with our acquisition of Spotfire in the third quarter of fiscal year 2007, we recorded an accrual of $0.4 million for acquisition integration liabilities which include the incremental cost associated with the termination of certain employees. The accrual was recorded according to guidance provided by EITF No. 95-3, Recognition of Liabilities in Connection with a Purchase Business Combination, which requires that the 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 purchase price. We expect the accrued severance to be fully settled by the end of fiscal year 2007.

The remaining accrued facilities restructuring costs represent the estimated loss on abandoned excess facilities, net of estimated sublease income, which is expected to be paid over the next four years. As of August 31, 2007, $12.3 million of the $17.8 million accrued restructuring and excess facilities costs were classified as long-term liabilities based on our current expectation that we will have to pay the remaining lease payments over the remaining term of the related leases.

In connection with the purchase of our corporate headquarters in June 2003, we recorded a $54.0 million mortgage note payable to a financial institution collateralized by the commercial real property acquired. The balance on the mortgage note payable was $47.0 million and $48.3 million as of August 31, 2007, and November 30, 2006, respectively.

The mortgage note payable carries a 20-year amortization, and in the second quarter of fiscal year 2007, we amended the mortgage note payable such that it now carries a fixed annual interest rate of 5.50%. The $34.4 million principal balance that will be remaining at the end of the 10-year term will be due as a final lump sum payment on July 1, 2013. Under the currently applicable terms of the mortgage note agreements, we are prohibited from acquiring another company without prior consent from the lender unless we maintain at least $50.0 million of cash or cash equivalents and meet other non-financial terms as defined in the agreements. In addition, we are subject to certain non-financial covenants as defined in the agreements. We were in compliance with all covenants as of August 31, 2007.

We have a $20.0 million revolving line of credit that matures on June 19, 2008. The revolving line of credit is available for cash borrowings and for the issuance of letters of credit up to $20.0 million. As of August 31, 2007, no borrowings were outstanding under the facility and a $13.0 million irrevocable letter of credit was outstanding, leaving $7.0 million of available credit for additional letters of credit or cash borrowings. The $13.0 million irrevocable letter of credit outstanding was issued in connection with the mortgage note payable. The letter of credit automatically renews for successive one-year periods, until the mortgage note payable has been satisfied in full. Pursuant to the revolving line of credit, we are required to maintain a minimum of $40.0 million in unrestricted cash, cash equivalents and short-term investments, net of total current and long-term indebtedness, as well as comply with other non-financial covenants defined in the agreement. As of August 31, 2007, we were in compliance with all covenants under the revolving line of credit.

In connection with the mortgage note payable, we entered into an irrevocable letter of credit in the amount of $13.0 million. See Note 7. The letter of credit is collateralized by the line of credit and automatically renews for successive one-year periods until the mortgage note payable has been satisfied in full.

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

As of August 31, 2007, primarily in connection with bank guarantees issued by some of our international subsidiaries, we had $3.6 million of restricted cash, which is included in Other Assets on our Condensed Consolidated Balance Sheets.

In June 2003, we entered into a 51-year lease of the land upon which our corporate headquarters is located. The lease was paid in advance for a total of $28.0 million, but is subject to adjustments every 10 years based upon changes in fair market value. Should it become necessary, we have the option to prepay any rent increases due as a result of a change in fair market value. This prepaid land lease is being amortized using the straight-line method over the life of the lease; the portion to be amortized over the next 12 months is included in Prepaid Expenses and Other Current Assets, and the remainder is included in Other Assets on our Condensed Consolidated Balance Sheets.

At various locations worldwide, we lease office space and equipment under non-cancelable operating leases with various expiration dates through April 2015. Rental expense was $2.7 million and $2.3 million for the three month periods ended August 31, 2007 and 2006, respectively, and $7.5 million and $6.7 million for the nine month periods ended August 31, 2007 and 2006, respectively.

As of August 31, 2007, contractual commitments associated with indebtedness and lease obligations were as follows (in thousands):

Future minimum lease payments under restructured non-cancelable operating leases are included in Accrued Restructuring and Excess Facilities Costs on our Condensed Consolidated Balance Sheets.

We conduct business in North America, South America, Asia Pacific and Japan, and Europe, the Middle East and Africa (“EMEA”). As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or changes in economic conditions in foreign markets. The majority of our sales are currently made in U.S. dollars. We enter into forward contracts with financial institutions to manage our currency exposure related to net assets and liabilities denominated in foreign currencies. These forward contracts are generally settled monthly. Our forward contracts reduce, but do not eliminate, the impact of currency exchange rate movements. We do not enter into derivative financial instruments for trading purposes. Gains and losses on forward contracts are included in Other Income (Expense) on our Condensed Consolidated Statements of Operations. We had seven outstanding forward contracts with total notional amounts of $83.4 million as of August 31, 2007, which are summarized as follows (in thousands):

Our software license agreements typically provide for indemnification of customers for intellectual property infringement claims. To date, no such claims have been filed against us. We also warrant to customers that software products operate substantially in accordance with the software product’s specifications. Historically, we have incurred minimal costs related to product warranties, and, as such, no accruals for warranty costs have been made. In addition, we indemnify our officers and directors under the terms of indemnity agreements entered into with them, as well as pursuant to our certificate of incorporation, bylaws and applicable Delaware law. To date, we have incurred costs for the payment of legal fees in connection with the legal proceedings detailed in Note 9.

In May 2005, three purported shareholder class action complaints were filed against us and several of our officers in the U.S. District Court for the Northern District of California. The plaintiffs in such actions are seeking to represent a class of purchasers of our common stock from September 21, 2004, through March 1, 2005. Plaintiffs generally allege that we made false or misleading statements concerning our operating results, our business and internal controls and the integration of Staffware plc (“Staffware”). The actions were consolidated and in September 2006, the U.S. District Court for the Northern District of California dismissed the litigation with prejudice. Plaintiffs have appealed the dismissal. Plaintiffs seek unspecified monetary damages. We intend to defend ourselves vigorously; however, we expect to incur significant costs in mounting such defense.

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

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

In 2004, a stipulation of Settlement (the “Settlement”) was submitted to the Court, and in 2005, the Court granted preliminary approval. Under the Settlement, we and our Talarian subsidiary would have been dismissed of all claims in exchange for a contingent payment guarantee by the insurance companies responsible for insuring us and Talarian as issuers. Class certification was a condition of the Settlement. After the Second Circuit Court of Appeals issued a ruling overturning class certification in six test cases for the coordinated proceedings, the Settlement was terminated in June 2007 by stipulation of the parties and order of the Court. It is uncertain whether there will be any revised or future settlement. If no settlement is achieved, we believe that we and Talarian have meritorious defenses and intend to defend the actions vigorously. However, the litigation results cannot be predicted at this point.

1996 Stock Option Plan. As of August 31, 2007, there were 26.3 million shares reserved for grant, 37.3 million shares underlying stock options, 2.1 million shares of restricted stock and 0.6 million shares underlying restricted stock units outstanding under the 1996 Stock Option Plan. We expect to continue granting a majority of our new equity grants from the reserved shares under this plan for the foreseeable future.

Talarian Stock Option Plans. As of August 31, 2007, there were no shares reserved for grant and approximately 28,000 shares underlying stock options outstanding under the Talarian stock option plans.

2000 Extensibility Stock Option Plan. As of August 31, 2007, there were no shares reserved for grant and approximately 24,000 shares underlying stock options outstanding under the 2000 Extensibility Stock Option Plan.

1998 Director Option Plan. As of August 31, 2007, there were 2.1 million shares reserved for grant and 1.3 million shares underlying stock options outstanding under the 1998 Director Option Plan.

Employee Stock Purchase Program. We issued approximately 0.4 million shares under the Employee Stock Purchase Program (the “ESPP”), representing approximately $2.9 million in employee contributions for the nine months ended August 31, 2007. Shares are reserved under the 1996 Stock Option Plan for future purchases under the ESPP.

The summary of stock option activity for the nine months ended August 31, 2007, is presented below (in thousands, except per share data):

The intrinsic value of exercised stock options is calculated based on the difference between the exercise price and the quoted market price of our common stock as of the close of the exercise date. The total intrinsic value of stock options exercised in the nine months ended August 31, 2007 and 2006 was $11.2 million and $46.4 million, respectively. Upon the exercise of stock options, we issue common stock from our authorized shares. As of August 31, 2007, total unamortized stock-based compensation cost related to unvested stock options was $22.7 million, with a weighted-average recognition period of 2.36 years.

The total realized tax benefits attributable to stock options exercised were $7.3 million in the nine months ended August 31, 2007.

Our nonvested stock awards are comprised of restricted stock and restricted stock units. A summary of the status for nonvested stock awards as of August 31, 2007, and activities during the nine months ended August 31, 2007, is presented as follows (in thousands, except per share data):

We granted approximately 1.7 million shares of nonvested stock awards at no cost to recipients during the nine months ended August 31, 2007. As of August 31, 2007, there was $17.4 million of total unrecognized compensation cost related to nonvested stock awards. That cost is expected to be recognized on a straight-line basis over four years as the shares vest; the weighted-average recognition period is 3.43 years. The total fair value of shares vested pursuant to stock awards during the nine months ended August 31, 2007, was $2.5 million.

Stock-based compensation cost for the three months ended August 31, 2007 and 2006 was $5.1 million and $3.5 million, respectively, and was $12.8 million and $11.8 million for the nine months ended August 31, 2007 and 2006, respectively, which consisted primarily of stock-based compensation cost related to employee stock options recognized under SFAS No. 123 (revised 2004), Share-Based Payment (“SFAS No. 123(R)”). The tax benefit on stock-based compensation for the three months ended August 31, 2007 and 2006 was $1.2 million and $0.5 million, respectively, and was $2.6 million and $1.5 million for the nine months ended August 31, 2007 and 2006, respectively. We revised our ESPP effective from the purchase period beginning February 1, 2007. The revised ESPP is compensatory and is valued under the Black-Scholes option pricing model at each offering period. We recognize stock-based compensation cost on a straight-line basis over each six-month offering period.

We started granting restricted stock and restricted stock units to employees during the third quarter of fiscal year 2006. Approximately $1.6 million and $0.1 million of employee stock-based compensation was recognized related to restricted stock and restricted stock units for the three months ended August 31, 2007 and 2006, respectively, and $2.9 million and $0.1 million was recognized for the nine months ended August 31, 2007 and 2006, respectively.

We selected the Black-Scholes option pricing model as the most appropriate model for determining the estimated fair value for stock-based awards. The following table summarizes the assumptions used to value stock options granted in the respective periods:

Our comprehensive income includes net income and other comprehensive income (loss), which consists of unrealized gains and losses on available-for-sale securities and cumulative translation adjustments. A summary of the comprehensive income for the periods indicated is as follows (in thousands):

The balances of each component of accumulated other comprehensive income, net of tax, as of August 31, 2007, and November 30, 2006, consist of the following (in thousands):

In the first quarter of fiscal year 2007, we established a joint venture in South Africa, TS Innovations Limited (“Innovations”), with a local South Africa corporation, to assist with our sales efforts as well as to provide consulting services and training to our customers in the Sub-Saharan Africa region. For the nine months ended August 31, 2007, Innovations had total assets of $2.5 million and total revenues of $2.4 million. As of August 31, 2007, we owned a 74.9% interest in the joint venture. Because of this majority interest, our Condensed Consolidated Financial Statements include the balance sheets, results of operations and cash flows of Innovations, net of intercompany charges. We therefore eliminated 25.1% of financial results that pertain to the minority interest; the eliminated amount was reported as a separate line on our Condensed Consolidated Statements of Operations and Balance Sheets.

against our foreign source income and the reversal of related tax reserves. During the three months ended August 31, 2007, we revised our estimated foreign source income, resulting in the release of certain tax reserves. These tax benefits were partially offset by the tax impact of certain stock compensation charges under SFAS No. 123(R), state income taxes and the IPR&D write off. The effective tax rate of 38.3% for the three months ended August 31, 2006, differs from the statutory rate of 35% primarily due to the tax impact of certain stock compensation charges under SFAS No. 123(R), state income taxes and additional U.S. taxes on repatriated U.K. earnings.

The effective tax rate of 35.2% for the nine months ended August 31, 2007, differs from the effective tax rate of 17.2% for the nine months ended August 31, 2006, primarily due to the release of valuation allowance in the second quarter of fiscal year 2006.

In connection with the acquisition of Spotfire, we have recorded preliminary purchase accounting entries for current deferred tax assets of $1.8 million, current deferred tax liabilities of $17.4 million, long-term deferred tax assets of $11.9 million and long-term deferred tax liabilities of $17.5 million with a corresponding adjustment to goodwill. These deferred taxes were related to the acquired tangible and intangible assets, deferred revenue, unbilled accounts receivable and certain tax attributes of Spotfire. The IPR&D of $1.6 million that was expensed in the quarter is not deductible for income tax purposes. This resulted in an unfavorable effective tax rate impact of 11.5% for the three months ended August 31, 2007.

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

We assess the likelihood that we will be able to recover our deferred tax assets. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance. If it is not more likely than not that we will recover our deferred tax assets, we will increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. As a result of our analysis of all available evidence, both positive and negative, as of August 31, 2007, it was considered more likely than not that our deferred tax assets would be realized with the exception of certain capital loss and foreign tax credit carryovers as we cannot forecast sufficient future capital gains or foreign source income to realize these deferred tax assets. The remaining valuation allowance of approximately $9.9 million as of August 31, 2007, will result in an income tax benefit if and when we conclude it is more likely than not that the related deferred tax assets will be realized.

As of August 31, 2007, we believed that the amount of deferred tax assets recorded on our balance sheet would ultimately be recovered. However, should there be a change in our ability to recover our deferred tax assets, our tax provision would increase in the period in which we determine that it is more likely than not that we cannot recover our deferred tax assets.

With the exception of our subsidiaries in the United Kingdom, net undistributed earnings of our foreign subsidiaries are generally considered to be indefinitely reinvested, and accordingly, no provision for U.S. income taxes has been provided thereon. Upon distribution of these earnings in the form of dividends or otherwise, we will be subject to U.S. income taxes to the extent that available net operating loss carryovers and foreign tax credits are not sufficient to eliminate the additional tax liability.

While we do not expect any impact to the effective tax rate for U.S. non-qualified stock option, restricted stock or restricted stock units expense due to the adoption of SFAS No. 123(R), the effective tax rate has been and may continue to be negatively impacted by foreign stock option expense that may not be deductible in the foreign jurisdictions. Also, SFAS No. 123(R) requires that the tax benefit of stock option deductions relating to incentive stock options be recorded in the period of disqualifying disposition. This could result in significant fluctuations in our effective tax rate between accounting periods.

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

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

We operate our business in one operating 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. Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance.

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

No customer accounted for more than 10% of total revenue for the three and nine months ended August 31, 2007 or 2006. No customer had a balance in excess of 10% of our net accounts receivable at August 31, 2007, or November 30, 2006.

Our property and equipment by major country are summarized as follows (in thousands):

In December 2006, the Audit Committee on behalf of our Board of Directors approved an eighteen-month stock repurchase program pursuant to which we were authorized to repurchase up to $100.0 million of our outstanding common stock. In April 2007, our Board of Directors approved a new stock repurchase program pursuant to which we may repurchase up to $300.0 million of our outstanding common stock from time to time in the open market or through privately negotiated transactions. In connection with approving the April 2007 stock repurchase program, the December 2006 stock repurchase program was terminated and the remaining authorized amount of $58.2 million under the December 2006 stock repurchase program was canceled.

All repurchased shares of common stock have been retired. The following table summarizes the activities under the stock repurchase programs for the periods indicated (in thousands, except per share data):

In connection with the repurchase activities during the nine months ended August 31, 2007, we classified $49.9 million of the excess purchase price over the par value of our common stock to retained earnings and $177.0 million to additional paid-in capital.

The following contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements relate to expectations concerning matters that are not historical facts. Words such as “projects,” “believes,” “anticipates,” “plans,” “expects,” “intends,” and similar words and expressions are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to: the mix of our revenues between license, service and maintenance revenues; the effect of stock-based compensation on our financial results; our financing plans and capital requirements; our revenues and costs of revenues; our expenses and expenditures; our potential tax benefit or liabilities; the effect of recent accounting pronouncements and related interpretations; our investments, foreign currency risk, concentration of credit risk, debt service and principal repayment obligations; cash flows and our ability to finance operations from cash flows; seasonality in our business; the dependence of our license revenue on the timing and number of license deals; the effect of the Spotfire acquisition on earnings; the number of license transactions over $100,000; fluctuations in the amounts of royalty costs; increased acquired IPR&D expense; cash usages and an overall decrease in interest income; and other similar matters. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, these expectations or any of the forward-looking statements could prove to be incorrect, and actual results could differ materially from those projected or assumed in the forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to risks and uncertainties, including, but not limited to, the factors set forth in Part II, Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q. All forward-looking statements and reasons why results may differ included in this Quarterly Report on Form 10-Q are made as of the date hereof, and we assume no obligation to update any such forward-looking statements or reasons why actual results may differ.

We are a leading business integration and process management software company that enables real-time business. We provide a broad range of standards-based software solutions that helps organizations achieve the benefits of real-time business. Real-time business is about giving organizations the ability to sense and respond to changes and opportunities as they arise by enabling the use of current information to execute critical business processes and make smarter decisions.

We are the successor to a portion of the business of Teknekron Software Systems, Inc. (“Teknekron”). Teknekron developed software, known as The Information Bus^® (“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 (“Reuters”), the global information company, in 1994. Following the acquisition, continued development of the TIB^® technology was undertaken to expand its use in the financial services markets.

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

In the beginning of the third quarter of fiscal year 2007, we acquired Spotfire, a leading provider of next-generation business intelligence software with approximately 200 employees worldwide. The addition of Spotfire’s software is a natural extension of our business strategy that allows us to offer customers next-generation business intelligence solutions for data access and analysis. The results of Spotfire’s operations are included in our results of operations beginning on June 5, 2007.

We offer a wide range of software products that can be sold individually to solve specific technical challenges, but the emphasis of our product development and sales efforts is to create products that interoperate and can be sold together as a suite to enable businesses to be more cost-effective, agile and efficient. These products can help organizations achieve success in four areas: service-oriented architecture (“SOA”), business process management (“BPM”), business optimization and master data management (“MDM”).

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

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

First-year maintenance typically is sold with the related software license and renewed on an annual basis thereafter. Maintenance revenue is determined based on vendor-specific objective evidence of fair value and amortized over the term of the maintenance contract, typically 12 months. Consulting and training revenues are typically recognized as the services are performed, which services are usually performed on a time and materials basis. Such services primarily consist of implementation services related to the installation of our products and generally do not include significant customization to or development of the underlying software code.

Our revenue is generally derived from a diverse customer base. No single customer represented greater than 10% of total revenue for the three and nine months ended August 31, 2007 or 2006. As of August 31, 2007, no single customer had a balance in excess of 10% of our net accounts receivable. We establish allowances for doubtful accounts based on our evaluation of collectibility and an allowance for returns and discounts based on specifically identified credits and historical experience.

The discussion and analysis of our financial condition and results of operations are based upon our Condensed Consolidated Financial Statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America. The preparation of these financial statements requires us to make estimates, assumptions and

judgments that can have significant impact on 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. We base our estimates, assumptions and judgments on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On a regular basis we evaluate our estimates, assumptions and judgments and make changes accordingly. We also discuss our critical accounting estimates with the Audit Committee of our Board of Directors.

We believe that the estimates, assumptions and judgments involved in revenue recognition, allowances for doubtful accounts, returns and discounts, stock-based compensation, valuation and impairment of investments, impairment of goodwill, intangible assets and long-lived assets, restructuring and integration costs and accounting for income taxes have the greatest potential impact on our Condensed Consolidated Financial Statements, so we consider these to be our critical accounting policies. Historically, our estimates, assumptions and judgments relative to our critical accounting policies have not differed materially from actual results. The critical accounting estimates associated with these policies are described in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operation” of our Annual Report on Form 10-K filed with the SEC on February 9, 2007.

Recent accounting pronouncements are detailed in Note 2 to our Condensed Consolidated Financial Statements.

For purposes of presentation, we have indicated the third quarter of fiscal years 2007 and 2006 as ended on August 31, 2007 and 2006, respectively; whereas in fact, the third quarter of fiscal years 2007 and 2006 actually ended on September 2, 2007, and September 3, 2006, respectively. All amounts presented in the tables in the following sections on Results of Operations are stated in thousand of dollars, except for percentages and unless otherwise stated.

In connection with the Spotfire acquisition, we have incurred additional expenses, including amortization of intangible assets and acquired technology, acquired IPR&D costs, stock-based compensation, personnel and related costs, facility and infrastructure costs and other charges. As a result of these expenses, costs and charges, we expect the acquisition to be dilutive to earnings in fiscal year 2007.

Our consolidated results of operations have included incremental revenue and costs related to the former Spotfire operations since the date of acquisition. Due to the structure of our multi-product Enterprise License Agreements, which often combine TIBCO and acquired companies’ products, we are not able to separately report the portion of revenue attributable solely to acquired companies’ components. In addition, we have integrated and are in the process of integrating the operations and personnel from acquired companies into our worldwide operations, and therefore, we are not able to accurately track or report the performance of the former companies’ operations.

The following table sets forth the components of our results of operations as percentages of total revenue for the periods indicated:

Our total revenue consisted primarily of license, consulting and maintenance fees from our customers and partners.

Total revenue for the third quarter of fiscal year 2007 compared to the same quarter last year increased by $14.7 million or 12%. The increase was comprised of a $13.2 million or 19% increase in service and maintenance revenue and a $1.5 million or 3% increase in license revenue. Total revenue for the first nine months of fiscal year 2007 compared to the same period last year increased by $35.1 million or 10%.

For the first nine months of fiscal year 2007, we experienced growth in total revenue in the Americas, EMEA and Asia Pacific and Japan compared to the same period last year. See Note 15 to our Condensed Consolidated Financial Statements for amounts of total revenue by region. The percentages of total revenue from the geographic regions are summarized as follows:

License revenue increased $1.5 million or 3% for the third quarter of fiscal year 2007 compared to the same quarter last year, and increased $8.0 million or 5% for the first nine months of fiscal year 2007 compared to the same period last year. The increase was primarily due to increased revenue in EMEA and Asia Pacific and Japan as well as revenue attributable to the Spotfire acquisition. We also experienced a decline in license revenue in the Americas in the first nine months of fiscal year 2007 compared to the same period last year.

Our license revenue in a particular period is dependent upon the timing and number of license deals and their relative size. Selected data about our license revenue deals recognized for the respective periods is summarized as follows:

We currently expect the number of license transactions over $100,000 to increase for the fourth quarter of fiscal year 2007, while the size and timing of any particular multi-million dollar deal cannot be reasonably forecasted.

Cost of license revenue mainly consisted of royalty costs and amortization of developed technology acquired through corporate acquisitions. Cost of license revenue increased by $3.2 million or 94% for the third quarter of fiscal year 2007 compared to the same quarter last year. The increase in absolute dollars in cost of license revenue for the third quarter of fiscal year 2007 compared to the same quarter last year resulted primarily from an increase of $2.4 million in amortization expenses associated with acquired technologies and an increase of $0.7 million in royalty costs.

For the first nine months of fiscal year 2007 compared to the same period last year, cost of license revenue increased by $4.7 million or 43%. The increase in absolute dollars in cost of license revenue for the first nine months of fiscal year 2007 compared to the same period last year resulted primarily from an increase of $2.5 million in amortization expenses associated with acquired technologies and an increase of $1.9 million in royalty costs. The amount of royalty costs we incur is primarily dependent on the mix of products that we sell and will fluctuate from time to time.

Service and maintenance revenue increased $13.2 million or 19% for the third quarter of fiscal year 2007 compared to the same quarter last year. For the first nine months of fiscal year 2007, service and maintenance revenue increased $27.1 million or 13% compared to the same period last year. These increases were primarily due to growth in our installed software base and the Spotfire acquisition.

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

The cost of service and maintenance increased by $4.7 million or 16% for the third quarter of fiscal year 2007 compared to the same quarter last year, which was primarily due to the relative proportion of personnel costs. The increase in absolute dollars for the third quarter of fiscal year 2007 compared to the same quarter last year resulted primarily from a $3.4 million increase in employee-related expenses, a $0.9 million increase in subcontractors costs and a $0.4 million increase in information technology related expenses.

Cost of service and maintenance increased $9.8 million or 11% for the first nine months of fiscal year 2007 compared to the same period last year. The increase in absolute dollars for the first nine months of fiscal year 2007 compared to the same period last year resulted primarily from a $7.2 million increase in employee-related expenses, a $1.6 million increase in subcontractors costs and a $0.9 million increase in information technology related expenses.

Research and development expenses consisted primarily of personnel compensation, including stock-based compensation cost, third-party contractor fees and related costs associated with the development and enhancement of our products.

The acquisition of Spotfire added approximately $2.0 million in research and development expenses for the third quarter of fiscal year 2007. Total research and development expenses increased by $2.9 million or 14% for the third quarter of fiscal year 2007 compared to the same quarter last year with a $1.4 million increase in personnel expenses, a $0.9 million increase in consulting expenses, a $0.3 million increase in facilities expenses and a $0.2 million increase in information technology related expenses.

For the first nine months of fiscal year 2007 compared to the same period last year, research and development expenses increased by $1.9 million or 3%, resulting primarily from an increase of $1.2 million in consulting expenses, a $0.9 million increase in personnel expenses, a $0.5 million increase in information technology related expenses and a $0.3 million increase in facilities expenses. These increases were offset by an $0.8 million decrease in software licensing fees.

Sales and marketing expenses consisted primarily of personnel compensation including sales commissions and stock-based compensation cost and the cost of marketing programs, such as customer conferences, promotional materials, trade shows, advertising and related travel expenses.

The acquisition of Spotfire added approximately $7.7 million in sales and marketing expenses for the third quarter of fiscal year 2007. Total sales and marketing expenses increased by $8.6 million or 22% for the third quarter of fiscal year 2007 compared to the same quarter last year was primarily due to an $8.0 million increase in employee-related costs, a $0.6 million increase in travel expenses and a $0.1 million increase in expenses related to marketing programs. These increases were partially offset by a $0.4 million decrease in consulting expenses.

The $20.0 million or 17% increase in sales and marketing expenses for the first nine months of fiscal year 2007 compared to the same period last year was primarily due to a $18.0 million increase in employee-related expenses, a $1.3 million increase in travel expenses, a $0.9 million increase in expenses related to marketing programs and a $0.3 million increase in consulting expenses.

General and administrative expenses consisted primarily of personnel costs and related costs for general corporate functions including executive, legal, finance, accounting and human resources, and also included accounting, tax and legal fees and charges.

The acquisition of Spotfire added approximately $1.7 million in general and administrative expenses for the third quarter of fiscal year 2007. Total general and administrative expenses increased by $2.8 million or 25% for the third quarter of fiscal year 2007 compared to the same quarter last year, primarily due to a $1.5 million increase in employee-related expenses and a $1.1 million increase in consulting expenses.

The $6.9 million or 22% increase in general and administrative expenses for the first nine months of fiscal year 2007 compared to the same period last year was primarily due to a $3.2 million increase in employee-related expenses, a $2.2 million increase in consulting expenses and a $1.9 million increase in fees and charges. These increases were offset by an $0.8 million decrease in facilities related expenses for the first nine months of fiscal year 2007.

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

The increases in the third quarter and the first nine months of fiscal year 2007 compared to the same respective periods last year are a result of identifiable intangible assets acquired on June 5, 2007 in connection with the Spotfire acquisition.

In the third quarter of fiscal year 2007, in conjunction with our acquisition of Spotfire, we recorded acquired IPR&D charges of $1.6 million. Our methodology for allocating the purchase price relating to acquired IPR&D was determined through established valuation techniques. Acquired IPR&D was expensed upon acquisition as technological feasibility had not been established and no future alternate use existed. We may further incur acquired IPR&D expense in the future to the extent we make additional acquisitions.

In the third quarter of fiscal year 2007, we recorded a $1.1 million credit adjustment to the previously recorded restructuring charges related to properties vacated in connection with facilities consolidation. The adjustment resulted from revisions to our estimates of future sublease income due to the recovery of the applicable real estate market.

The stock-based compensation cost was included on the Condensed Consolidated Statements of Operations corresponding to the same functional lines as cash compensation paid to the same employees, as follows:

The decrease in interest income for the third quarter of fiscal year 2007 compared to the same quarter last year was primarily due to a lower average investment balance. The use of cash for our recent Spotfire acquisition as well as our stock repurchase program will continue to result in an overall decrease in interest income for the last quarter of fiscal year 2007.

Interest expense was primarily related to a $54.0 million mortgage note issued in connection with the purchase of our corporate headquarters. The mortgage note payable carries a 20-year amortization, and in the second quarter of fiscal year 2007, we amended the mortgage note payable such that it now carries a fixed annual interest rate of 5.50%. The balance of the mortgage note as of August 31, 2007, was $47.0 million. The $34.4 million principal balance that will be remaining at the end of the 10-year term will be due as a final lump sum payment on July 1, 2013. See Note 7 to our Condensed Consolidated Financial Statements for further detail on the mortgage note payable. Interest expense decreased by $0.3 million for the first nine months of fiscal year 2007 compared to the same period last year, which resulted primarily from a release of a transaction tax reserve due to a favorable tax ruling.

Other income (expense) included realized gains and losses on investments, foreign exchange gains and losses and other miscellaneous income and expense items.

The decrease in other income (expense) in absolute dollars for the third quarter and the first nine months of fiscal year 2007 compared to the same respective periods last year was primarily due to unfavorable exchange rates on foreign currency transactions in fiscal year 2007 as well as a $0.7 million gain from the sale of a long-term private equity investment during the third quarter of fiscal year 2006.

The effective tax rate of 13.5% for the three months ended August 31, 2007, differs from the statutory rate of 35% primarily due to research and development credits, the tax benefits resulting from the ability to claim foreign tax credits against our foreign source income and the reversal of related tax reserves. During the three months ended August 31, 2007, we revised our estimated foreign source income, resulting in the release of certain tax reserves. These tax benefits were partially offset by the tax impact of certain stock compensation charges under SFAS No. 123(R), state income taxes and the IPR&D write off. The effective tax rate of 38.3% for the three months ended August 31, 2006, differs from the statutory rate of 35% primarily due to the tax impact of certain stock compensation charges under SFAS 123(R), state income taxes and additional U.S. taxes on repatriated U.K. earnings.

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

We assess the likelihood that we will be able to recover our deferred tax assets. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. If it is not more likely than not that we will recover our deferred tax assets, we will increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately be recoverable. As a result of our analysis of all available evidence, both positive and negative, as of August 31, 2007, it was considered more likely than not that our deferred tax assets would be realized with the exception of certain capital loss and foreign tax credit carryovers. The remaining valuation allowance of approximately $9.9 million as of August 31, 2007, will result in an income tax benefit if and when we conclude it is more likely than not that the related deferred tax assets would be realized.

As of August 31, 2007, we believed that the amount of the deferred tax assets recorded on our balance sheet would ultimately be recovered. However, should there be a change in our ability to recover our deferred tax assets, our tax provision would increase in the period in which we determine that it is more likely than not that we cannot recover our deferred tax assets.

Minority interest represents the portion of net income belonging to minority stockholders of our consolidated subsidiaries.

Minority Interest is detailed in Note 12 to our Condensed Consolidated Financial Statements.

As of August 31, 2007, we had cash, cash equivalents and short-term investments totaling $223.5 million, representing a decrease of $316.0 million from November 30, 2006. Our total cash and cash equivalents balance as of August 31, 2007, was $109.1 million. As of August 31, 2007, our short-term available-for-sale investments totaled $114.4 million, primarily consisting of high grade corporate bonds, U.S. government debt, asset-backed and mortgage-backed securities and money market funds.

Net cash provided by operating activities for the nine months ended August 31, 2007, was $71.9 million, resulting from net income of $24.2 million, adjusted for $37.8 million in non-cash charges and a $9.9 million net change in assets and liabilities. The non-cash charges included depreciation and amortization, stock-based compensation, tax benefits related to stock benefit plans and IPR&D, less excess tax benefits from stock-based compensation recorded in financing activities and deferred income tax. Net change in assets and liabilities included a decrease in accounts receivable due to significant cash collections for the first nine months of fiscal year 2007 resulting from a strong revenue quarter in the fourth quarter of fiscal year 2006, an increase in prepaid expenses and other assets due to the payment of the Company’s annual corporate insurance premium and a decrease in accrued liabilities other than those liabilities assumed in the Spotfire acquisition.

To the extent that non-cash items increase or decrease our future operating results, there will be no corresponding impact on our cash flows. After excluding the effects of these non-cash charges, the primary changes in cash flows relating to operating activities resulted from changes in working capital. Our primary source of operating cash flows is the collection of accounts receivable from our customers, including maintenance which is typically billed annually in advance. Our operating cash flows are also impacted by the timing of payments to our vendors for accounts payable and other liabilities. We generally pay our vendors and service providers in accordance with the invoice terms and conditions. The timing of cash payments in future periods will be impacted by the terms of our accounts payable arrangements. In addition, we usually pay our annual bonuses in the first quarter.

Net cash provided by investing activities was $98.9 million for the nine months ended August 31, 2007, resulting primarily from the net cash proceeds from short-term investments of $289.9 million, which was partially offset by cash usages of $181.3 million for the Spotfire acquisition and $10.0 million for capital expenditures. In addition, we used part of the net proceeds from sales of short-term investments to finance our stock repurchase program.

Net cash used for financing activities was $202.1 million for the nine months ended August 31, 2007, resulting primarily from our $226.9 million repurchase of shares of our common stock in the open market, $4.0 million complete repayment of the revolving line of credit of Spotfire and $1.5 million repayment on other long-term debts, less $21.5 million cash received from the exercise of stock options and the sale of our common stock under our ESPP, and $8.7 million excess tax benefits from stock-based compensation. Additionally, proceeds of $0.2 million were received from minority investors.

We currently anticipate that our operating expenses will grow in absolute dollars for the foreseeable future, and we intend to fund our operating expenses primarily through cash flows from operations. Our capital expenditures are currently expected to be approximately $2.5 million to $5.0 million for the fourth quarter of fiscal year 2007. We believe that our current cash, cash equivalents and short-term investments together with expected cash flows from operations will be sufficient to meet our anticipated cash requirements for working capital, capital expenditures and currently approved stock repurchases for at least the next 12 months. However, we may require or desire additional funds to support our operating expenses and capital requirements or for other purposes, such as acquisitions, and may seek to raise such additional funds through public or private equity or debt financing or from other sources.

In June 2003, we purchased our corporate headquarters with a $54.0 million mortgage note to lower our operating costs. The mortgage note payable carries a 20-year amortization and, as amended in the second quarter of fiscal year 2007, a fixed annual interest rate of 5.50%. The principal balance of $34.4 million that will be remaining at the end of the 10-year term will be due as a final lump sum payment on July 1, 2013. Under the applicable terms of the mortgage note agreements, we are prohibited from acquiring another company without prior consent from the lender unless we maintain at least $50.0 million of cash or cash equivalents and meet other non-financial terms as defined in the agreements. In addition, we are subject to certain non-financial covenants as defined in the agreements. We were in compliance with all covenants as of August 31, 2007.

In conjunction with the purchase of our corporate headquarters, we entered into a 51-year lease of the land upon which the property is located. The lease was paid in advance for a total of $28.0 million, but is subject to adjustments every 10 years based upon changes in fair market value of the land. Should it become necessary, we have the option to prepay any rent increases due as a result of a change in fair market value.

We have a $20.0 million revolving line of credit that matures on June 19, 2008. The revolving line of credit is available for cash borrowings and for the issuance of letters of credit up to $20.0 million. As of August 31, 2007, no borrowings were outstanding under the facility and a $13.0 million irrevocable letter of credit was outstanding, leaving $7.0 million of available credit for additional letters of credit or cash borrowings. The $13.0 million irrevocable letter of credit outstanding was issued in connection with the mortgage note payable. The letter of credit automatically renews for successive one-year periods, until the mortgage note payable has been satisfied in full. We are required to maintain a minimum of $40.0 million in unrestricted cash, cash equivalents and short-term investments, net of total current and long-term indebtedness, as well as comply with other non-financial covenants defined in the agreement. As of August 31, 2007, we were in compliance with all covenants under the revolving line of credit.

As of August 31, 2007, we had $3.6 million in restricted cash in connection with bank guarantees issued by some of our international subsidiaries. The cash collateral is presented as restricted cash and included in Other Assets on our Condensed Consolidated Balance Sheets.

As of August 31, 2007, our contractual commitments associated with indebtedness, lease obligations and operational restructuring are as follows (in thousands):

Future minimum lease payments under restructured non-cancelable operating leases are included in Accrued Restructuring and Excess Facilities Costs on our Condensed Consolidated Balance Sheets.

Our indemnification obligations are detailed in Note 8 to our Condensed Consolidated Financial Statements.

We are exposed to the impact of interest rate changes and foreign currency fluctuations.

Our exposure to market rate risk for changes in interest rates relates primarily to our investment portfolio. We invest excess cash in marketable debt instruments of the U.S. government and its agencies, high grade corporate debt securities, asset-backed and mortgage-backed debt securities, money market funds and obligations in foreign sovereigns and, by policy, limit the amount of credit exposure to any one issuer. We protect and preserve invested funds by limiting default, market and investment risk.

Investments in both fixed rate and floating rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment income may fall short of expectations due to changes in interest rates, or we may suffer losses in principal if forced to sell securities which have declined in market value due to changes in interest rates. As of August 31, 2007, we had an investment portfolio of fixed income securities totaling $114.4 million, excluding those classified as cash and cash equivalents. These securities are classified as available-for-sale and are recorded on the balance sheets 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.

A hypothetical 100 basis point increase in interest rates would result in an approximate $1.3 million decrease in the fair value of our available-for-sale debt securities as of August 31, 2007.

We conduct business in North America, South America, Asia Pacific and Japan, and EMEA. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets. The 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 forward contracts with financial institutions to manage our currency exposure related to net assets and liabilities denominated in foreign currencies. These forward contracts are generally settled monthly. We do not enter into derivative financial instruments for trading purposes.

As of August 31, 2007, we had seven outstanding forward contracts with total notional amounts of $83.4 million, which are summarized as follows (in thousands):

We are also exposed to foreign exchange rate fluctuations as we convert the financial statements of our foreign subsidiaries into U.S. dollars in consolidation. If there is a change in foreign currency exchange rates, the conversion of the foreign subsidiaries’ financial statements into U.S. dollars will lead to translation adjustments which are recorded as a component of other comprehensive income.

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and

that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

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

There was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our legal proceedings are detailed in Note 9 to our Condensed Consolidated Financial Statements.

The following risk factors, as well as other factors of which we may be unaware or do not currently view as significant, could materially and adversely affect our future operating results and could cause actual events to differ materially from those predicted in the forward-looking statements we make about our business.

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

Period-to-period comparisons of our operating results may not be a good indication of our future performance. Moreover, our operating results in some quarters, including the quarter ended September 2, 2007, have not in the past, and may not in the future, meet the expectations of stock market analysts and investors. This has in the past, and may in the future, cause our stock price to decline. As a result of the evolving nature of the markets in which we compete and the size of our customer agreements, we have difficulty accurately forecasting our revenue in any given period. In addition to the factors discussed elsewhere in this section, a number of factors may cause our revenue to fall short of our expectations, or those of stock market analysts and investors, or cause fluctuations in our operating results, including:

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

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

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 the first nine months of fiscal year 2007, our stock price fluctuated between a high of $10.45 and a low of $6.97. If market or industry-based fluctuations continue, our stock price could decline in the future regardless of our actual operating performance and investors could lose all or part of their investments.

Any failure to successfully integrate Spotfire’s business operations could adversely affect our financial results.

We completed our acquisition of Spotfire in the third quarter of fiscal year 2007. We have begun to integrate certain of our operations with those of Spotfire to reduce the expenses of the combined company. If we are unable to integrate our operations with Spotfire’s operations in a timely manner, we may be unable to achieve the anticipated synergies. Risks we may face in connection with the integration include, among other things:

The occurrence of any of these risks could have a material adverse effect on our business, results of operations or financial condition.

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

Our success depends in part on our ability to continually enhance and broaden our product offerings in response to changing technologies, customer demands and competitive pressures. We expect to acquire complementary businesses, products or technologies in the future as part of our corporate strategy. In this regard, we have made strategic acquisitions, including the acquisition of Spotfire in 2007 and the acquisition of certain assets of Velosel Corporation and ObjectStar International Limited in 2005. We do not know if we will be able to complete any subsequent acquisition or that we will be able to successfully integrate any acquired business, operate it profitably or retain its key employees. Integrating any newly acquired business, product or technology could be expensive and time-consuming, could disrupt our ongoing business and financial performance and could distract our management. Therefore, we might not be able, either immediately post-acquisition or ever, to replicate the pre-acquisition revenues achieved by companies that we acquire or achieve the benefits of the acquisition we anticipated in valuing the businesses, products or technologies we acquire. Furthermore, the costs of integrating acquired companies in international transactions can be particularly high, due to local laws and regulations. If we are unable to integrate any newly acquired entity, products or technology effectively, our business, financial condition and operating results would suffer. In addition, any amortization or impairment of acquired intangible assets, stock-based compensation or other charges resulting from the costs of acquisitions could harm our operating results.

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

Our success depends on our ability to overcome significant competition and to offer products and enhancements that respond to emerging technological trends and customers’ needs.

The market for our products and services is extremely competitive and subject to rapid change. We compete with a variety of large and small providers of solutions for enterprise application integration, SOA, BPM, business optimization and MDM, including companies such as IBM, Oracle, Microsoft, BEA, SAP, Pegasystems and Software AG. We believe that of these companies, IBM has the potential to offer the most complete competitive set of products relative to our offerings. In

addition, some of our competitors are expanding their competitive product offerings and market position through acquisitions and internal research and development. For example, Sun Microsystems has become a direct competitor of ours since its acquisition of SeeBeyond. BEA has also acquired companies that expand its offerings, such as Fuego, which makes BEA a more direct competitor in BPM solutions. We expect additional competition from other established and emerging companies. We also face competition for certain aspects of our product and service offerings from major systems integrators. Further, we may face increasing competition from open source software initiatives, in which competitors provide software and intellectual property, typically without charging license fees. If customers choose such open source products over our proprietary software, our revenues and earnings could be adversely affected.

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

If we are not successful in developing enhancements to existing products and new products in a timely manner, achieving customer acceptance for our existing and new product offerings or generating higher average selling prices, our gross margins may decline, and our business and operating results may suffer. Furthermore, any of our new product offerings or significant enhancements to current product offerings could cause some customers to delay making new or additional purchases while they fully evaluate any new offerings we might have introduced to the market, which in turn may slow sales and adversely affect operating results for an indeterminate period of time. Also, we may not execute successfully on our product plans because of errors in product planning or timing, technical hurdles that we fail to overcome in a timely fashion or a lack of appropriate resources. This could result in competitors providing those solutions before we do and loss of market share, net sales and earnings.

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

We have in the past realized and may continue in the future to realize a higher percentage of revenues from services and maintenance on a combined basis. For example, in the first nine months of fiscal year 2007, our service and maintenance revenue represented 58% of our total revenue. Our profit margin for maintenance is higher than our profit margin for services, but both are lower than our license revenue profit margin. As a result, if services and maintenance revenues increase as a percentage of total revenues, our overall profit margin may decrease which could impact our stock price.

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

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

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

The market for infrastructure software is relatively new and evolving. We earn a substantial portion of our revenue from licenses of our infrastructure software, including application integration software and sales of related services. We expect to earn substantially all of our revenue in the foreseeable future from sales of these products and services. Our future financial performance will depend on continued growth in the number of organizations demanding software and services for application integration and information delivery and companies seeking outside vendors to develop, manage and maintain this software for their critical applications. Lower spending by corporate and governmental customers around the world, which has had a disproportionate impact on information technology spending, has led to a reduction in sales in the past and may continue to do so in the future. Many of our potential customers have made significant investments in internally developed systems and would incur significant costs in switching to third-party products, which may substantially inhibit the growth of the market for infrastructure software. If the market fails to grow, or grows more slowly than we expect, our sales will be adversely affected. Also, even as corporate and governmental spending increases and companies make greater investments in information technology and infrastructure software, our revenue may not grow at the same pace. In addition, any weakening in the global economy or the industries of our customers could cause a decrease in demand for our products and result in a decline in revenues. In this regard, the losses incurred in the financial industry as a result of the decline in the credit markets in 2007 could cause a decrease in our sales, which could be material, particularly due to our customer concentration in the financial services industry.

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

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

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

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

If we fail to manage our exposure to worldwide financial and securities market risk successfully, our operating results and financial statements could be materially impacted.

We are exposed to financial market risks, including changes in interest rates, foreign currency exchange rates and prices of marketable equity and fixed-income securities. We do not use derivative financial instruments for speculative or trading purposes.

The primary objective of most of our investment activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. To achieve this objective, a majority of our marketable investments are investment grade, liquid, short-term fixed-income securities and money market instruments denominated in U.S. dollars. If the carrying value of our investments exceeds the fair value, and the decline in fair value is deemed to be other-than-temporary, we will be required to further write down the value of our investments, which could materially harm our results of operations and financial condition.

A significant portion of our net revenue and expenses are transacted in U.S. dollars. However, some of these activities are conducted in other currencies, primarily currencies in EMEA and Asia. As a response to the risks of changes in value of foreign currency denominated transactions, we may enter into foreign currency forward contracts or other instruments, the majority of which mature within approximately one month. Our foreign currency forward contracts reduce, but do not eliminate, the impact of currency exchange rate movements. For example, we do not execute forward contracts in all currencies in which we conduct business. Accordingly, such amounts denominated in foreign currencies may fluctuate in value and produce significant earnings and cash flow volatility.

We earn a significant portion of our total revenues from international sales generated through our foreign direct and indirect operations. As a result of these sales operations, we face risks arising from local political, legal and economic factors such as the general economic conditions in each country or region, varying regulatory requirements and compliance with international and local trade, labor and other laws. We may also face difficulties in managing our international operations, collecting receivables in a timely fashion and repatriating earnings. Any of these factors, either individually or in combination, could materially impact our international operations and adversely affect our business as a whole.

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

The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) imposes duties on us, our executives and directors. We completed our fiscal year 2006 evaluation of the design and testing of effectiveness of our ICFR required to comply with the management certification and attestation by our independent registered public accounting firm as required by Section 404 of Sarbanes-Oxley. While our assessment, testing and evaluation of the design and operating effectiveness of our ICFR resulted in our conclusion that as of November 30, 2006, our ICFR was effective, we cannot predict the outcome of our testing in future periods. If we conclude in future periods that our ICFR is not effective, we may be required to change our ICFR to remediate deficiencies, investors may lose confidence in the reliability of our financial statements, and we may be subject to investigation and/or sanctions by regulatory authorities. Also, if we identify areas of our ICFR that require improvement, we could incur additional expenses to implement enhanced processes and controls to address such issues. Any such events could adversely affect our financial results and/or may result in a negative reaction in the stock market.

If we cannot successfully recruit and retain highly skilled employees, we may not be able to execute our business strategy effectively.

If we fail to retain and recruit key management and other skilled employees, our business and our ability to obtain new customers, develop new products and provide acceptable levels of customer service could suffer. As we grow, we must invest significantly in building our sales, marketing and engineering groups. Competition for these people in the SOA market is intense, and we may not be able to successfully recruit, train or retain qualified personnel. We are competing against companies with greater financial resources and name recognition for these employees, and as such, there is no assurance that we will be able to meet our hiring needs or hire the most qualified candidates. The success of our business is also heavily dependent on the leadership of our key management personnel, including Vivek Ranadivé, our President and Chief Executive Officer. The loss of one or more key employees could adversely affect our continued operations.

In addition, we must successfully integrate new employees into our operations and generate sufficient revenues to justify the costs associated with these employees. If we fail to successfully integrate employees or to generate the revenue necessary to offset employee-related expenses, we may be forced to reduce our headcount, which would force us to incur significant expenses and would harm our business and operating results.

Because the value of our equity incentive programs have diminished as a retention and recruiting tool, we may need to change our compensation packages in order to remain competitive which in turn could negatively affect our profit margins.

We have historically used equity incentive programs, such as employee stock options and stock purchase plans, as a part of overall employee compensation arrangements. As a result of changes in the financial accounting standards, we have changed our stock purchase plan, reduced the size and number of stock option grants we give to our employees, changed the form of equity compensation we give to some of our employees and may make further changes to our equity compensation programs, all of which may decrease the effectiveness of our plans as employee retention and recruiting tools. In addition, the volatility of our stock price may negatively impact the value of such equity incentives, thereby diminishing the value of such incentive programs to employees and decreasing the effectiveness of such programs as retention and recruiting tools. Given this, we may need to change our compensation packages to employees to remain competitive which could negatively affect our profit margins.

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

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

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

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

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 intellectual property as critical to our success. Accordingly, we rely upon a combination of copyrights, service marks, trademarks, trade secret rights, patents, confidentiality agreements and licensing agreements to protect our intellectual property. Despite these protections, a third party could misappropriate our intellectual property. Any misappropriation of our proprietary information by third parties could harm our business, financial condition and operating results. In addition, the laws of some countries do not provide the same level of protection of our proprietary information as do the laws of the United States. If our proprietary information or material were misappropriated, we might have to engage in litigation to protect it. We might not succeed in protecting our proprietary information if we initiate intellectual property litigation, and, in any event, such litigation would be expensive and time-consuming, could divert our management’s attention away from running our business and could seriously harm our business.

The use of open source software in our products may expose us to additional risks.

Certain open source software is licensed pursuant to license agreements that require a user who distributes the open source software as a component of the user’s software to disclose publicly part or all of the source code to the user’s software. This effectively renders what was previously proprietary software open source software. As competition in our markets increases, we must reduce our product development costs. Many features we may wish to add to our products in the future may be available as open source software and our development team may wish to make use of this software to reduce development costs and speed up the development process. While we carefully monitor the use of all open source software and try to ensure that no open source software is used in such a way as to require us to disclose the source code to the related product, such use could inadvertently occur. Additionally, if a third party has incorporated certain types of open source software into its software but has failed to disclose the presence of such open source software and we embed that third party software into one or more of our products, we could, under certain circumstances, be required to disclose the source code to our product. This could have a material adverse effect on our business.

Market acceptance of new platforms, standards and technologies 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, standards and technologies, and we are constantly evaluating the feasibility of adding new platforms, standards and technologies. There may be future or existing platforms, standards and technologies that achieve popularity in the marketplace which may not be architecturally compatible with our software products. In addition, the effort and expense of developing, testing and maintaining software products will increase as more platforms, standards and technologies achieve market acceptance within our target markets. If we are unable to achieve market acceptance of our software products or adapt to new platforms, standards and technologies, our sales and revenues will be adversely affected.

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

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

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

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

We cannot accurately predict the impact of stock-based compensation cost on the trading price of our common stock.

On December 1, 2005, we adopted SFAS No. 123(R) which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values. As a result, starting with fiscal year 2006, our operating results contain a charge for stock-based compensation cost related to employee stock options. This charge is in addition to stock-based compensation cost we have recognized in prior periods related to non-employee stock options and business acquisitions. The application of SFAS No. 123(R) requires the use of an option-pricing model to determine the fair value of stock-based awards. This determination of fair value is affected by our stock price, as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, expected stock price volatility, expected term, risk-free interest rate and expected dividends. As a result of the adoption of SFAS No. 123(R), in fiscal year 2006, our earnings were lower than they would have been had we not been required to adopt SFAS No. 123(R). This will continue to be the case for future periods, and we cannot accurately predict the magnitude of this effect on our earnings in future periods. Further, we cannot predict what the impact will be on the trading price of our common stock as a result of the stock-based compensation costs we may record. Also, SFAS No. 123(R) requires that the tax benefit of stock option deductions relating to incentive stock options be recorded in the period of disqualifying disposition. This could result in significant fluctuations in our effective tax rate between accounting periods.

Future changes in financial accounting standards, financial reporting regulations and interpretations of these standards and regulations may adversely affect our reported results of operations.

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

Although we use standardized license agreements designed to meet current revenue recognition criteria under generally accepted accounting principles, we must often negotiate and revise terms and conditions of these standardized agreements, particularly in larger license transactions. Negotiation of mutually acceptable terms and conditions can extend the sales cycle and, in certain situations, may require us to defer recognition of license revenue. While we believe that we are in compliance with Statement of Position 97-2, Software Revenue Recognition, as amended, the American Institute of Certified Public Accountants continues to issue implementation guidelines for these standards and the accounting profession continues to discuss a wide range of potential interpretations. Additional implementation guidelines, and changes in interpretations of such guidelines, could lead to unanticipated changes in our current revenue accounting practices that could cause us to defer the recognition of revenue to future periods or to recognize lower revenue and profits.

Moreover, policies, guidelines and interpretations related to revenue recognition, accounting for acquisitions, income taxes, facilities consolidation charges, allowances for doubtful accounts and other financial reporting matters require difficult judgments on complex matters that are often subject to multiple sources of authoritative guidance. To the extent that management’s judgment is incorrect, it could result in an adverse impact on our financial statements. Some of these matters are also among topics currently under re-examination by accounting standard setters and regulators. These standard setters and regulators could promulgate interpretations and guidance that could result in material and potentially adverse changes to our accounting policies.

As a multinational corporation, we are subject to income taxes as well as non-income based taxes, in both the United States and various foreign jurisdictions. Significant judgment is required in determining our worldwide provision for income taxes and other tax liabilities. In the ordinary course of a global business, there are many intercompany transactions and calculations where the ultimate tax determination is uncertain. We are regularly under audit by tax authorities.

Although we believe that our tax estimates are reasonable, we cannot assure that the final determination of tax audits or tax disputes will not be different from what is reflected in our historical income tax provisions and accruals.

We are also subject to non-income taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes, in both the United States and various foreign jurisdictions. We are regularly under audit by tax authorities with respect to these non-income taxes and may have exposure to additional non-income tax liabilities.

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

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

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

Our software may have defects and errors that could lead to a loss of revenues or product liability claims.

Our products and platforms use complex technologies and, despite extensive testing and quality control procedures, may contain defects or errors, especially when first introduced or when new versions or enhancements are released. If defects or errors are discovered after commercial release of either new versions or enhancements of our products and platforms:

If any or all of the foregoing occur, we may lose revenues, incur higher operating expenses and lose market share, any of which could severely harm our financial condition and operating results.

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

Note 9 to our Condensed Consolidated Financial Statements describes the litigation pending against us and our directors and officers. The uncertainty associated with substantial unresolved lawsuits could harm our business, financial condition and reputation. The defense of the lawsuits could result in the diversion of our management’s time and attention away from business operations, which could harm our business. Negative developments with respect to the lawsuits could cause our stock price to decline. In addition, although we are unable to determine the amount, if any, that we may be required to pay in connection with the resolution of the lawsuits by settlement or otherwise, any such payment could seriously harm our financial condition and liquidity.

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

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

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

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

In April 2007, our Board of Directors approved a stock repurchase program pursuant to which we may repurchase up to $300.0 million of our outstanding common stock. The remaining authorized amount for stock repurchases under this program was approximately $114.9 million as of the end of the third quarter of fiscal year 2007.

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/ MURRAY D. RODE
		Murray D. Rode
		Chief Financial Officer and Executive Vice President, Strategic Operations

By:		/s/ SYDNEY L. CAREY
		Sydney L. Carey
		Senior Vice President, Finance and Corporate Controller


Item		Page No.
	PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets as of August 31, 2007 and November 30, 2006	3

	Condensed Consolidated Statements of Operations for the three months and nine months ended August 31, 2007 and August 31, 2006	4

	Condensed Consolidated Statements of Cash Flows for the nine months ended August 31, 2007 and August 31, 2006	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32

Item 4.	Controls and Procedures	33

	PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44

Item 6.	Exhibits	45

	Signatures	46


	August 31, 2007		November 30, 2006
Assets
Current assets:
Cash and cash equivalents	$	109,113	$	138,912
Short-term investments		114,430		400,658
Accounts receivable, net of allowances of $3,626 and $4,255		114,794		149,141
Prepaid expenses and other current assets		63,750		35,699

Total current assets		402,087		724,410
Property and equipment, net		112,752		113,787
Goodwill		401,630		274,442
Acquired intangible assets, net		113,103		55,072
Long-term deferred income tax assets		33,348		21,437
Other assets		49,257		37,211

Total assets	$	1,112,177	$	1,226,359

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	8,611	$	12,651
Accrued liabilities		89,490		74,347
Accrued restructuring and excess facilities costs		5,463		4,251
Deferred revenue		115,421		102,269
Current portion of long-term debt		2,070		1,892

Total current liabilities		221,055		195,410
Accrued excess facilities costs, less current portion		12,315		18,150
Long-term deferred revenue		9,632		4,151
Long-term deferred income tax liabilities		27,965		11,439
Long-term debt, less current portion		45,205		46,453
Other long-term liabilities		5,267		4,749

Total liabilities		321,439		280,352

Commitments and contingencies (Note 8)
Minority interest		344		—
Stockholders’ equity:
Common stock, $0.001 par value; 1,200,000 shares authorized; 190,527 and 211,208 shares issued and outstanding		190		211
Additional paid-in capital		774,126		909,289
Accumulated other comprehensive income		16,078		10,809
Retained earnings		—		25,698

Total stockholders’ equity		790,394		946,007

Total liabilities and stockholders’ equity	$	1,112,177	$	1,226,359


	Three Months Ended August 31,						Nine Months Ended August 31,
	2007			2006			2007			2006
Revenue:
License revenue	$	52,593		$	51,076		$	159,704		$	151,738
Service and maintenance revenue:
Service and maintenance		80,608			67,620			226,233			199,112
Reimbursable expenses		1,913			1,707			5,348			5,380

Total service and maintenance revenue		82,521			69,327			231,581			204,492

Total revenue		135,114			120,403			391,285			356,230

Cost of revenue:
License		6,632			3,422			15,433			10,764
Service and maintenance		34,771			30,048			97,355			87,519

Total cost of revenue		41,403			33,470			112,788			98,283

Gross profit		93,711			86,933			278,497			257,947
Operating expenses:
Research and development		23,843			20,957			66,855			64,908
Sales and marketing		48,755			40,121			138,137			118,184
General and administrative		13,664			10,908			38,529			31,658
Amortization of acquired intangible assets		4,058			2,364			9,000			7,091
Acquired in-process research and development		1,600			—			1,600			—
Restructuring adjustment		(1,095	)		—			(1,095	)		—

Total operating expenses		90,825			74,350			253,026			221,841

Income from operations		2,886			12,583			25,471			36,106
Interest income		2,842			5,319			14,948			14,675
Interest expense		(641	)		(702	)		(1,654	)		(2,002	)
Other income (expense), net		330			1,037			(1,237	)		1,145

Income before provision for income taxes and minority interest		5,417			18,237			37,528			49,924
Provision for income taxes		731			6,987			13,215			8,601
Minority interest, net of tax		52			—			70			—

Net income	$	4,634		$	11,250		$	24,243		$	41,323

Net income per share:
Basic	$	0.02		$	0.05		$	0.12		$	0.20

Diluted	$	0.02		$	0.05		$	0.12		$	0.19

Shares used in computing net income per share:
Basic		193,817			207,616			202,263			209,323

Diluted		200,128			214,498			209,439			218,150


	Nine Months Ended August 31,
	2007			2006
Operating activities
Net income	$	24,243		$	41,323
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment		12,115			11,625
Amortization of acquired intangible assets		15,497			11,083
Stock-based compensation		12,825			11,751
Acquired in-process research and development		1,600			—
Realized (gain) loss on investment, net		36			(833	)
Deferred income tax		(3,774	)		(10,816	)
Tax benefits related to stock benefit plans		7,280			9,675
Excess tax benefits from stock-based compensation		(8,652	)		(8,814	)
Minority interest, net of tax		70			—
Other non-cash adjustments, net		766			(16	)
Changes in assets and liabilities:
Accounts receivable		41,648			27,840
Due from related parties, net		—			1,243
Prepaid expenses and other assets		(6,852	)		(3,039	)
Accounts payable		(4,270	)		914
Accrued liabilities, restructuring and excess facilities costs		(21,363	)		(8,230	)
Deferred revenue		740			10,126

Net cash provided by operating activities		71,909			93,832

Investing activities
Purchases of short-term investments		(140,928	)		(341,079	)
Maturities and sales of short-term investments		430,811			214,514
Purchases of private equity investments		(59	)		(76	)
Proceeds from private equity investments		737			1,488
Purchases of property and equipment		(10,020	)		(8,667	)
Restricted cash pledged as security		(275	)		(1,309	)
Acquisitions, net of cash acquired		(181,336	)		—

Net cash provided by (used in) investing activities		98,930			(135,129	)

Financing activities
Proceeds from exercise of stock options, net		18,570			12,661
Proceeds from employee stock purchase program		2,945			1,966
Repurchases of the Company’s common stock		(226,932	)		(66,791	)
Excess tax benefits from stock-based compensation		8,652			8,814
Principal payments on long-term debt		(5,484	)		(1,340	)
Proceeds from minority investors		189			—

Net cash used in financing activities		(202,060	)		(44,690	)

Effect of foreign exchange rate changes on cash and cash equivalents		1,422			2,163

Net decrease in cash and cash equivalents		(29,799	)		(83,824	)
Cash and cash equivalents at beginning of period		138,912			208,756

Cash and cash equivalents at end of period	$	109,113		$	124,932

Supplemental disclosures:
Income taxes paid	$	7,870		$	10,739

Interest paid	$	1,869		$	2,002

Supplemental disclosures of non-cash financing activities:
Non-cash contributions from minority investors	$	85		$	—


Cash paid	$	190,430
Direct transaction costs		3,226

Total purchase price	$	193,656


Cash acquired	$	10,408
Other assets acquired		43,209
Deferred income tax assets		13,745
Identifiable intangible assets		72,300
Acquired in-process research and development		1,600
Goodwill		122,195

Total assets acquired		263,457
Liabilities assumed		(34,852	)
Deferred income tax liabilities		(34,949	)

Total liabilities assumed		(69,801	)

Net assets acquired	$	193,656


	Gross Amount at Acquisition Date		Weighted Average Amortization Period
Existing technology	$	35,600	4.0 years
Customer base		18,300	7.0 years
Patents/core technology		5,500	4.0 years
Trademarks		1,500	5.0 years
Non-compete agreements		800	2.0 years
Maintenance agreements		10,600	6.8 years

	$	72,300


	Purchased/ Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Aggregate Fair Value		Classified on Balance Sheet
	Purchased/ Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Aggregate Fair Value		Cash and Cash Equivalents		Short-term Investments
As of August 31, 2007
U.S. government debt securities	$	30,780	$	25	$	(6	)	$	30,799	$	—	$	30,799
Corporate debt securities		39,227		20		(220	)		39,027		—		39,027
Asset-backed securities		25,859		37		(114	)		25,782		—		25,782
Mortgage-backed securities		18,969		28		(175	)		18,822		—		18,822
Money market funds		5,154		—		—			5,154		5,154		—

	$	119,989	$	110	$	(515	)	$	119,584	$	5,154	$	114,430

As of November 30, 2006
U.S. government debt securities	$	104,759	$	97	$	(313	)	$	104,543	$	—	$	104,543
Corporate debt securities		177,983		104		(370	)		177,717		21,758		155,959
Asset-backed securities		90,223		272		(165	)		90,330		—		90,330
Mortgage-backed securities		48,759		113		(49	)		48,823		—		48,823
Obligations in foreign sovereigns		1,004		—		(1	)		1,003		—		1,003
Money market funds		3,597		—		—			3,597		3,597		—

	$	426,325	$	586	$	(898	)	$	426,013	$	25,355	$	400,658


	August 31, 2007		November 30, 2006
Contractual maturities:
Less than one year	$	24,548	$	165,453
One to three years		89,882		235,205

	$	114,430	$	400,658


	Less than 12 months					More than 12 months					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government debt securities	$	9,683	$	(6	)	$	—	$	—		$	9,683	$	(6	)
Corporate debt securities		21,565		(159	)		11,630		(61	)		33,195		(220	)
Asset-backed securities		13,169		(66	)		8,496		(48	)		21,665		(114	)
Mortgage-backed securities		10,380		(175	)		—		—			10,380		(175	)

	$	54,797	$	(406	)	$	20,126	$	(109	)	$	74,923	$	(515	)


Balance as of November 30, 2006	$	274,442
Goodwill recorded for the Spotfire acquisition		122,195
Foreign currency translation		4,993

Balance as of August 31, 2007	$	401,630


	As of August 31, 2007							As of November 30, 2006
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Developed technologies	$	84,870	$	(41,102	)	$	43,768	$	48,515	$	(34,279	)	$	14,236
Customer base		41,419		(17,198	)		24,221		22,721		(13,561	)		9,160
Patents/core technologies		22,397		(7,323	)		15,074		16,500		(5,201	)		11,299
Trademarks		6,996		(4,193	)		2,803		5,398		(3,478	)		1,920
Non-compete agreements		1,480		(747	)		733		680		(597	)		83
OEM customer royalty agreements		1,000		(1,000	)		—		1,000		(917	)		83
Maintenance agreements		36,553		(10,049	)		26,504		25,549		(7,258	)		18,291

	$	194,715	$	(81,612	)	$	113,103	$	120,363	$	(65,291	)	$	55,072


Year ending November 30,
2007 (remaining)	$	7,090
2008		28,134
2009		24,399
2010		18,293
2011		13,609
Thereafter		21,578

	$	113,103


	Accrued Spotfire Severance			Accrued Excess Facilities
	Accrued Spotfire Severance			Headquarter Facilities			Staffware Integration			Total
As of November 30, 2006	$	—		$	21,844		$	557		$	22,401
Integration liabilities		404			—			—			404
Restructuring adjustment		—			(1,095	)		—			(1,095	)
Cash utilized		(101	)		(3,701	)		(130	)		(3,932	)

As of August 31, 2007	$	303		$	17,048		$	427		$	17,778


	Total			Remainder of 2007			2008			2009			2010			2011			Thereafter
Operating commitments:
Debt principal	$	47,259		$	511		$	2,087		$	2,131		$	2,153		$	2,269		$	38,108
Debt interest		13,345			649			2,524			2,404			2,285			2,164			3,319
Operating leases		30,948			1,839			6,332			5,492			5,635			4,257			7,393

		91,552			2,999			10,943			10,027			10,073			8,690			48,820

Restructuring-related commitments:
Gross lease obligations		24,718			1,278			7,526			7,551			7,720			643			—
Estimated sublease income		(7,240	)		(519	)		(2,114	)		(2,178	)		(2,240	)		(189	)		—

		17,478			759			5,412			5,373			5,480			454			—

Total commitments	$	109,030		$	3,758		$	16,355		$	15,400		$	15,553		$	9,144		$	48,820


	Notional Value Local Currency	Notional Value USD		Fair Value Gain (Loss) USD
Forward contracts sold:
EURO	27,600	$	37,676	$	24
Australian dollar	2,900		2,363		3
British pound	13,200		26,606		(41	)
Indian rupee	22,000		541		(10	)
Japanese yen	300,000		2,598		23
South African rand	36,000		5,009		(69	)
Forward contracts purchased:
Swedish krona	59,000		8,583		(2	)

		$	83,376	$	(72	)


Stock Options	Number of Shares Underlying Stock Options		Weighted Average Exercise Price		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding at November 30, 2006	38,461		$	8.09	6.16	$	81,328

Granted	4,919			7.90
Exercised	(3,324	)		5.79
Forfeited or expired	(1,460	)		9.12

Outstanding at August 31, 2007	38,596		$	8.23	5.52	$	37,815

Vested and expected to vest at August 31, 2007	35,895		$	8.26	5.42	$	35,978

Exercisable at August 31, 2007	28,094		$	8.46	5.01	$	29,663


Nonvested Stock Awards	Restricted Stock		Restricted Stock Units		Total Number of Shares Underlying Stock Awards		Weighted- Average Grant-Date Fair Value
Nonvested at November 30, 2006	1,177		319		1,496		$	7.34
Granted	1,321		396		1,717		$	8.89
Vested	(270	)	(74	)	(344	)	$	7.34
Forfeited	(139	)	(34	)	(173	)	$	7.73

Nonvested at August 31, 2007	2,089		607		2,696		$	8.28


	Three Months Ended August 31,						Nine Months Ended August 31,
	2007			2006			2007			2006
Stock Option Grants:
Expected term of stock options (years)		3.7			4.6			3.7-4.6			4.3-4.6
Risk-free interest rate		4.79	%		4.95	%		4.64-4.79	%		4.46-4.95	%
Expected volatility		37	%		41	%		37-39	%		40-43	%
Weighted-average grant-date fair value (per share)	$	4.28		$	3.05		$	4.00		$	3.09
ESPP:
Expected term of ESPP (years)		0.5			n/a			0.5			n/a
Risk-free interest rate		4.96	%		n/a			4.96-5.16	%		n/a
Expected volatility		32	%		n/a			32-34	%		n/a
Weighted-average grant-date fair value (per share)	$	2.35			n/a		$	2.20			n/a


	Unrealized Gain (Loss) in Available-for-sale Securities			Foreign Currency Translation		Accumulated Other Comprehensive Income
Balance as of November 30, 2006	$	(313	)	$	11,122	$	10,809
Net change during nine month period		(92	)		5,361		5,269

Balance as of August 31, 2007	$	(405	)	$	16,483	$	16,078


	August 31, 2007		November 30, 2006
Property and equipment, net:
United States	$	103,977	$	105,591
United Kingdom		3,580		4,028
Other		5,195		4,168

	$	112,752	$	113,787


	Three Months Ended August 31,						Nine Months Ended August 31,
	2007		2006		Change		2007		2006		Change
Total revenue	$	135,114	$	120,403	12	%	$	391,285	$	356,230	10	%


(In thousands, except per share data)	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
June 4, 2007 – July 3, 2007	—	$	—	—	$	199,037
July 4, 2007 – August 3, 2007	7,638	$	8.64	7,638	$	133,072
August 4, 2007 – September 2, 2007	2,392	$	7.61	2,392	$	114,881

Total	10,030	$	8.39	10,030	$	114,881


3.1(1)		Certificate of Incorporation of Registrant.

3.2(2)		Bylaws of Registrant.

4.1(3)		Form of Registrant’s Common Stock Certificate.

10.1(4)#		Summary of FY 2007 Spotfire Division Executive Incentive Compensation Plan.

31.1		Rule 13a-14(a) / 15d-14(a) Certification by Chief Executive Officer.

31.2		Rule 13a-14(a) / 15d-14(a) Certification by Chief Financial Officer.

32.1		Section 1350 Certification by Chief Executive Officer.

32.2		Section 1350 Certification by Chief Financial Officer.


Exhibit No.		Description
3.1(1)		Certificate of Incorporation of Registrant.

3.2(2)		Bylaws of Registrant.

4.1(3)		Form of Registrant’s Common Stock Certificate.

10.1(4)#		Summary of FY 2007 Spotfire Division Executive Incentive Compensation Plan.

31.1		Rule 13a-14(a) / 15d-14(a) Certification by Chief Executive Officer.

31.2		Rule 13a-14(a) / 15d-14(a) Certification by Chief Financial Officer.

32.1		Section 1350 Certification by Chief Executive Officer.

32.2		Section 1350 Certification by Chief Financial Officer.