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 future events or matters that are not historical facts. Words such as "projects," "believes," "anticipates," "plans," "expects," "intends," "strategy," "continue," "will," "estimate," "forecast," and similar words and expressions are intended to identify forward-looking statements, although these words are not the only means of identifying these statements. 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." This discussion should be read in conjunction with our Consolidated Financial Statements and accompanying notes and with our Annual Report on Form 10-K for the year ended November 30, 2008 and with our quarterly Condensed Consolidated Financial Statements and notes thereto which appear elsewhere in 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.

Executive Overview

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 system 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.

Our revenue is generally derived from a diverse customer base. No single customer represented greater than 10% of total revenue for the first nine months of fiscal year 2009. As of August 31, 2009, 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 collectability and an allowance for returns and discounts based on specifically identified credits and historical experience.

For the third quarter of fiscal year 2009, we recorded total revenue of $150.3 million, a decrease of 7% from the third quarter of fiscal year 2008. License revenue was $57.3 million, a decrease of 15% from the previous year. Service and maintenance revenue was $93.0 million, a decrease of 2% from the previous year. In addition, we generated cash flow from operations of $13.7 million in the third quarter of fiscal year 2009. Earnings per share was $0.09 in the third quarter of fiscal year 2009 as compared to $0.06 for the third quarter of fiscal year 2008. We ended the quarter with $286.9 million in cash, cash equivalents and short-term investments.

On August 21, 2009, pursuant to the Agreement and Plan of Merger (the "DataSynapse Merger Agreement"), we acquired DataSynapse, Inc., a Delaware corporation ("DataSynapse") and a provider of enterprise grid and cloud computing software. We paid $27.7 million of cash to acquire the outstanding shares of capital stock of DataSynapse. In connection with the acquisition, we have also incurred transaction costs of approximately $0.8 million. The total purchase price of DataSynapse, including transaction costs, was $28.5 million.

Critical Accounting Policies, Judgments and Estimates

The discussion and analysis of our financial condition and results of operations is 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 2008 Annual Report on Form 10-K for the fiscal year ended November 30, 2008.

Recent Accounting Pronouncements

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

Results of Operations

For purposes of presentation, we have indicated the third quarter of fiscal year 2009 as ended on August 31, 2009; whereas in fact, the third quarter of fiscal year 2009 actually ended on August 30, 2009. There were 91 days in the third quarter of each of fiscal years 2009 and 2008. All amounts presented in the tables in the following sections on our Results of Operations are stated in thousands of dollars, except for percentages and unless otherwise stated.

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

                                                 Three Months Ended             Nine Months Ended
                                                     August 31,                    August 31,
                                               2009             2008           2009            2008
Revenue:
License                                            38 %             42 %           36 %          40 %
Service and maintenance                            62               58             64            60

Total revenue                                     100              100            100           100

Cost of revenue:
License                                             4                4              5             5
Service and maintenance                            21               24             22            24

Total cost of revenue                              25               28             27            29

Gross profit                                       75               72             73            71
Operating expenses:
Research and development                           18               18             18            18
Sales and marketing                                34               34             34            36
General and administrative                          7                8              8             9
Amortization of acquired intangible
assets                                              2                3              2             3

Total operating expenses                           61               63             62            66

Income from operations                             14                9             11             5
Interest income                                    -                 1             -              2
Interest expense                                   -                -              (1 )          (1 )
Other income (expense), net                        -                -              -             -

Income before provision for income taxes
and minority interest                              14               10             10             6
Provision for income taxes                          4                3              3             2
Minority interest, net of tax                      -                -              -             -

Net income                                         10 %              7 %            7 %           4 %

Total Revenue

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



                           Three Months Ended                   Nine Months Ended
                               August 31,                           August 31,
                       2009        2008      Change         2009        2008      Change

Total revenue in the third quarter of fiscal year 2009 decreased by $12.1 million or 7% compared to the same quarter last year; on a constant currency basis, total revenue decreased by approximately 4%. The decrease was primarily comprised of a $10.3 million or a 15% decrease in license revenue and a $1.8 million or a 2% decrease in service and maintenance revenue. Total revenue in the first nine months of fiscal year 2009 decreased by $33.1 million or 7% compared to the same period last year; on a constant currency basis, total revenue decreased by approximately 2%.

For the three and nine months ended August 31, 2009, we experienced a reduction in total revenue in all geographic regions compared to the same periods last year. See Note 16 to our Condensed Consolidated Financial Statements for total revenue by region. The percentages of total revenue from the geographic regions are summarized as follows:

                           Three Months Ended          Nine Months Ended
                               August 31,                  August 31,
                          2009            2008         2009           2008
              Americas        55 %            54 %         53 %         51 %
              EMEA            38              36           39           39
              APJ              7              10            8           10

                             100 %           100 %        100 %        100 %

License Revenue and Cost



                                              Three Months Ended                        Nine Months Ended
                                                  August 31,                                August 31,
                                        2009          2008        Change         2009           2008         Change
License revenue                       $ 57,257      $ 67,542         (15 )%    $ 152,563      $ 182,991         (17 )%
As percent of total revenue                 38 %          42 %                        36 %           40 %
Cost of license revenue               $  6,050      $  7,193         (16 )%    $  20,353      $  21,957          (7 )%
As percent of total revenue                  4 %           4 %                         5 %            5 %
As percent of license revenue               11 %          11 %                        13 %           12 %

License revenue in the third quarter of fiscal year 2009 decreased by $10.3 million or 15% compared to the same quarter last year; on a constant currency basis, license revenue decreased by approximately 11%. License revenue in the first nine months of fiscal year 2009 decreased by $30.4 million or 17% compared to the same period last year; on a constant currency basis, license revenue decreased by approximately 11%.

Our license revenue in the third quarter and first nine months of fiscal years 2009 and 2008 was derived from the following three product lines: service oriented architecture ("SOA"), business optimization and business process management ("BPM"). The percentages of license revenue from the three product lines are summarized as follows:

                                  Three Months Ended          Nine Months Ended
                                      August 31,                  August 31,
                                 2009            2008         2009           2008
        SOA                          69 %            53 %         63 %         56 %
        Business optimization        22              35           25           29
        BPM                           9              12           12           15

                                    100 %           100 %        100 %        100 %

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

                                                  Three Months Ended           Nine Months Ended
                                                      August 31,                  August 31,
                                                  2009          2008          2009          2008
Number of license deals of $1.0 million or
more                                                   17            14            39            35
Number of license deals over $0.1 million              85           101           239           279
Average size of license deals over $0.1

Cost of license revenue mainly consisted of amortization of developed technology acquired through corporate acquisitions and royalty costs. Cost of license revenue in the third quarter of fiscal year 2009 decreased by $1.1 million or 16% compared to the same quarter last year. The decrease was primarily due to a $1.1 million decrease in amortization expenses associated with acquired technologies, while royalty costs remained consistent compared to the same period last year.

Cost of license revenue in the first nine months of fiscal year 2009 decreased by $1.6 million or 7% compared to the same period last year. The decrease in absolute dollars in cost of license revenue was primarily due to a $1.7 million decrease in amortization expenses associated with acquired technologies, which was partially offset by a $0.1 million increase in royalty costs.

Service and Maintenance Revenue and Cost



                                              Three Months Ended                        Nine Months Ended
                                                  August 31,                                August 31,
                                        2009          2008        Change         2009           2008         Change
Service and maintenance revenue       $ 92,995      $ 94,795          (2 )%    $ 273,255      $ 275,956          (1 )%
As percent of total revenue                 62 %          58 %                        64 %           60 %
Cost of service and maintenance       $ 32,253      $ 38,083         (15 )%    $  95,902      $ 111,941         (14 )%
As percent of total revenue                 21 %          24 %                        22 %           24 %
As percent of service and
maintenance revenue                         35 %          40 %                        35 %           41 %

Service and maintenance revenue in the third quarter of fiscal year 2009 decreased by $1.8 million or 2% compared to the same quarter last year; on a constant currency basis, service and maintenance revenue increased by approximately 2%. Service and maintenance revenue in the first nine months of fiscal year 2009 decreased by $2.7 million or 1% compared to the same period last year; on a constant currency basis, service and maintenance revenue increased by approximately 3%.

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

Cost of service and maintenance in the third quarter of fiscal year 2009 decreased by $5.8 million or 15% compared to the same quarter last year. The decrease in absolute dollars was primarily due to a $2.7 million decrease in employee-related expenses, a $1.7 million decrease in subcontractor costs, a $0.8 million decrease in travel expenses and a $0.5 million decrease in facilities expenses. The decrease in employee-related expenses was primarily due to a reduction in salaries.

Cost of service and maintenance in the first nine months of fiscal year 2009 decreased by $16.0 million or 14% compared to the same period last year. The decrease in absolute dollars was primarily due to a $8.0 million decrease in employee-related expenses, a $3.2 million decrease in subcontractor costs, a $2.7 million decrease in travel expenses and a $1.8 million decrease in facilities expenses. The decrease in employee-related expenses was primarily due to a reduction in salaries.

Operating Expenses

Using constant currency, total operating expenses were favorably impacted by approximately 4% and 7% due to currency movement for the three and nine month periods ended August 31, 2009, respectively.

Research and Development Expenses

Research and development expenses consisted primarily of employee-related
expenses, including salary, bonus, benefits, stock-based compensation expenses,
recruiting expense and office support, third-party contractor fees and related
costs associated with the development and enhancement of our products.



                                                Three Months Ended                       Nine Months Ended
                                                    August 31,                               August 31,
                                          2009          2008        Change         2009          2008        Change
Research and development expenses       $ 26,449      $ 28,496          (7 )%    $ 77,843      $ 80,706          (4 )%

Research and development expenses in the third quarter of fiscal year 2009 decreased by $2.0 million or 7% compared to the same quarter last year. The decrease was primarily due to a $1.2 million decrease in employee-related expenses, a $0.6 million decrease in contractor expenses and a $0.2 million decrease in travel expenses.

Research and development expenses in the first nine months of fiscal year 2009 decreased by $2.9 million or 4% compared to the same period last year. The decrease was primarily due to a $1.0 million decrease in facilities expenses, a $0.8 million decrease in employee-related expenses, a $0.6 million decrease in travel expenses and a $0.5 million decrease in contractor expenses.

Sales and Marketing Expenses

Sales and marketing expenses consisted primarily of employee-related expenses, including sales commissions, salary, bonus, benefits, stock-based compensation expenses, recruiting expense and office support, related costs of our direct sales force and marketing staff, and the costs of marketing programs, including customer conferences, promotional materials, trade shows, advertising and related travel expenses.

                                              Three Months Ended                        Nine Months Ended
                                                  August 31,                                August 31,
                                        2009          2008        Change         2009           2008         Change
Sales and marketing expenses          $ 50,657      $ 55,683          (9 )%    $ 144,228      $ 166,525         (13 )%

Sales and marketing expenses in the third quarter of fiscal year 2009 decreased by $5.0 million or 9% compared to the same quarter last year. The decrease was primarily due to a $5.8 million decrease in employee-related expenses, a $1.4 million decrease in travel expenses and a $0.1 million decrease in marketing programs, which were partially offset by a $2.3 million increase in referral fees. The decrease in employee-related expenses was primarily due to a reduction in salaries, benefits and commissions. The decrease in travel expenses and marketing programs was due to cost management efforts.

Sales and marketing expenses in the first nine months of fiscal year 2009 decreased by $22.3 million or 13% compared to the same period last year. The decrease was primarily due to a $16.0 million decrease in employee-related expenses, a $4.9 million decrease in travel expenses, a $3.0 million decrease in marketing programs and a $1.0 million decrease in facilities expenses, which were partially offset by a $2.2 million increase in referral fees and a $0.4 million increase in consulting expenses. The decrease in employee-related expenses was primarily due to a reduction in salaries, benefits and commissions. The decrease in travel expenses and marketing programs was due to cost management efforts.

General and Administrative Expenses

General and administrative expenses consisted primarily of employee-related
expenses, including salary, bonus, benefits, stock-based compensation expenses,
recruiting expense and office support 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.



                                                Three Months Ended                       Nine Months Ended
                                                    August 31,                               August 31,
                                          2009          2008        Change         2009          2008        Change
General and administrative expenses     $ 11,227      $ 13,468         (17 )%    $ 33,172      $ 40,257         (18 )%

General and administrative expenses in the third quarter of fiscal year 2009 decreased by $2.2 million or 17% compared to the same quarter last year. The decrease was primarily due to a $1.3 million decrease in employee-related expenses and a $0.8 million decrease in consulting expenses. The decrease in employee-related and consulting expenses was primarily due to a reduction in salaries and contractor costs.

General and administrative expenses in the first nine months of fiscal year 2009 decreased by $7.1 million or 18% compared to the same period last year. The decrease was primarily due to a $3.4 million decrease in employee-related expenses, a $2.8 million decrease in consulting expenses and a $0.8 million decrease in travel expenses. The decrease in employee-related and consulting expenses was primarily due to a reduction in salaries and contractor costs.

Amortization of Acquired Intangible Assets

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 is recorded as a cost of revenue, and amortization of other acquired intangible assets is included in operating expenses.

                                                Three Months Ended                      Nine Months Ended
                                                    August 31,                              August 31,
                                          2009         2008        Change         2009          2008        Change
Amortization of acquired intangible
assets:
Cost of revenue                          $ 2,873      $ 3,989                   $ 10,008      $ 11,788
Operating expenses                         3,107        4,156                     10,559        12,531

Total amortization of acquired
intangible assets                        $ 5,980      $ 8,145         (27 )%    $ 20,567      $ 24,319         (15 )%

As percent of total revenue 4 % 5 % 5 % 5 %

Stock-Based Compensation Cost

Stock-based compensation cost is included in our Condensed Consolidated Statements of Operations corresponding to the same functional lines as cash compensation paid to the same employees in the respective departments as follows:

                                                 Three Months Ended                     Nine Months Ended
                                                     August 31,                             August 31,
                                           2009         2008        Change        2009          2008        Change
Stock-based compensation:
Cost of license                           $    12      $    12                  $     35      $     29
Cost of service and maintenance               646          633                     1,865         1,943

Total in cost of revenue                      658          645                     1,900         1,972

Research and development                    1,486        1,181                     4,140         3,456
Sales and marketing                         1,906        1,682                     5,318         5,089
General and administrative                  1,925        1,749                     5,797         5,101

Total in operating expenses                 5,317        4,612                    15,255        13,646

Total stock-based compensation            $ 5,975      $ 5,257          14 %    $ 17,155      $ 15,618          10 %

. . .