Bud Robertson - Senior Vice President of Finance and Administration and CFO Rick Reidy - President and CEO Chris Larsen - Senior Vice President of Global Field Operations Dave Ireland - Executive Vice President and General Manager

Brent Williams – Benchmark & Company David Hines – Needham & Company Jean Orr – Nutmeg Securities Brian Murphy – Sidoti & Company Steve Koenig – Longbow Research

(Operator Instructions) Welcome to the Progress Software Corporation Fourth Quarter Earnings Conference Call. At this time I would like to turn the conference over to Mr. Bud Robertson.

This is Bud Robertson, Senior Vice President of Finance and Administration and CFO of Progress Software Corporation. Joining me today are Rick Reidy, President and CEO, Chris Larsen, Senior Vice President of Global Field Operations, and Dave Ireland, Executive Vice President and General Manager. We have prepared a slide presentation to view during this call. The slide presentation can be found on the Investor Relations section of the Progress website by clicking on the live webcast icon. The matters we will be discussing today, other than historical financial information, consist of forward looking statements that involve certain risks and uncertainties. Statements indicating that we expect, estimate, believe, are planning or plan to, are forward looking, as are other statements concerning future financial results, product offerings or other events that have not yet occurred. There are several important risk factors which could cause actual results or events to differ materially from those anticipated by the forward looking statements contained in our discussion today. Information on these risk factors is included in our Securities and Exchange Commission reports. We reserve the right to change our budget, product focus, product release dates, plans and financial projections from time to time as circumstances warrant. We shall have no obligation to update or modify the information contained in our discussion in the future when such changes occur. With respect to any non-GAAP financial measures discussed in this call, we have provided on our website a presentation of the most directly comparable GAAP financial measure and a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure. You can access this information, which is included in our earnings release, at www.Progress.com. We reported this morning the following results for our fourth quarter and full fiscal year for 2009 which are reflected in the first few slides of the online presentation. On a GAAP basis we reported the following. Revenue for the quarter decreased 2% from $139.4 million in Q4 fiscal 2008 to $136.8 million. Operating income for the quarter increased 202% from $8.5 million in Q4 fiscal 2008 to $25.8 million. Net income increased 158% from $6.5 million in Q4 fiscal 2008 to $16.7 million. Diluted earnings per share increased 150% from $0.16 in Q4 2008 to $0.40. On a non-GAAP basis we reported the following. Non-GAAP revenue decreased 4% from $142.1 million in Q4 fiscal 2008 to $136.9 million. Non-GAAP operating income increased 10% from $34 million in Q4 fiscal 2008 to $37.4 million. Non-GAAP net income increased 7% from $24 million in Q4 fiscal 2008 to $25.6 million. Non-GAAP diluted earnings per share increased 5% from $0.58 in Q4 fiscal 2008 to $0.61 this quarter. The non-GAAP results in the fourth quarter fiscal 2009 exclude after tax charges of $3.5 million for stock based compensation, $4.3 million for amortization of acquired intangibles, and $1.1 million for other adjustments. The non-GAAP results in the fourth quarter fiscal 2008 exclude after tax charges of $6 million for stock based compensation, $4.4 million for restructuring acquisition related expenses, $4.7 million for amortization of acquired intangibles, and $2.4 million for other adjustments. For the full fiscal year on a GAAP basis we reported the following. Revenue for the year decreased 4% from $515.6 million in fiscal 2008 to $494.1 million. Operating income for the year decreased 21% from $64.4 million in fiscal 2008 to $51.1 million. Net income decreased 29% from $46.3 million in fiscal 2008 to $32.8 million. Diluted earnings per share decreased 26% from $1.08 in fiscal 2008 to $0.80. On a non-GAAP basis we reported the following. Non-GAAP revenue decreased 4% from $518.3 million in fiscal 2008 to $496.8 million. Non-GAAP operating income decreased 6% from $115.9 million in fiscal 2008 to $109.4 million. Non-GAAP net income decreased 10% from $81.9 million in fiscal 2008 to $73.9 million. Non-GAAP diluted earnings per share decreased 6% from $1.92 in fiscal 2008 to $1.80. The non-GAAP results in fiscal 2009 exclude after tax charges of $16.4 million for stock based compensation, $3.6 million for restructuring and acquisition related expenses, $18 million for amortization required intangibles, and $3.1 million for other adjustments. The non-GAAP results in fiscal 2008 exclude after tax charges of $14.7 million for stock based compensation, $4.4 million for restructuring and acquisition related expenses, $12.9 million for amortization required intangibles, and $3.6 million for other adjustments. The following operational analyses are presented utilizing our non-GAAP financial information. In reviewing the fiscal 2009 fourth quarter, within the year over year total revenue decrease of 4% software license revenue was down 7%, maintenance revenue increased 3% and professional services revenue decreased 22%. For the full fiscal year software license revenue was down 9%, maintenance revenue increased 2% and professional services revenue decreased 22%. With regard to the impact of changes in foreign exchange rates on the fourth quarter, total revenue in the fourth quarter of fiscal 2009 would have decreased 7% on a constant currency basis versus the 4% decrease reported. Software license revenue would have decreased 10% on a constant currency basis versus the 7% decrease reported. Maintenance & Services revenue would have decreased by 5% on a constant currency basis versus 1% decrease reported. For the full fiscal year on a constant currency basis total revenue in fiscal 2009 would have increased by 1% versus the 4% decrease reported. Software license revenue would have decreased by 4% on a constant currency basis versus the 9% decrease reported. Maintenance & Services revenue would have increased 4% on a constant currency basis versus the 1% decrease reported. As noted on slide 12, international business was 57% of the quarterly total as compared to 54% in Q4 fiscal 2008. For the full fiscal year, international business was 55% in fiscal 2009 versus 57% in fiscal 2008. Revenue from the OpenEdge product line decreased 9% to $73 million this quarter from $79.9 million in Q4 fiscal 2008. Revenue from the Data Infrastructure product line decreased 15% to $24.2 million from $28.5 million in Q4 fiscal 2008. Revenue from the Enterprise Infrastructure product line increased 18% to $39.7 million from $33.7 million in Q4 fiscal 2008. For the full fiscal year, revenue from the OpenEdge product line decreased 17% to $275.9 million from $331.4 million in fiscal 2008. Revenue from the Data Infrastructure product line decreased 9% to $92.7 million from $101.4 million in fiscal 2008. Revenue from the Enterprise Infrastructure product line increased 50% to $128.2 million from $85.4 million in fiscal 2008. Revenue from channel partners including application partners and OEMs accounted for 46% of our total licensed business this quarter as compared to 50% in Q4 fiscal 2008. Within the OpenEdge product line, partners accounted for 65% of our licensed business this quarter as compared to 69% in Q4 fiscal 2008. For the full fiscal year, revenue from channel partners accounted for 50% of our licensed business as compared to 53% in fiscal 2008. Within the OpenEdge product line, partners accounted for 72% of our licensed business this year as compared to 71% in fiscal 2008. Our aggregate revenue backlog at the end of the fourth quarter fiscal 2009 was approximately $186 million of which $146 million was included on our balance sheet as deferred revenue, primarily related to unexpired maintenance and support contracts. The remaining amount of backlog of approximately $40 million was composed of multi-year license arrangements of approximately $22 million and open software licenses orders received but not shipped of approximately $18 million. Our aggregate revenue backlog at the end of the fourth quarter fiscal 2008 was approximately $176 million of which $144 million is included on our balance sheet as deferred revenue. The remaining amount of back log of approximately $32 million was composed of multi-year license arrangements of approximately $22 million and open software licenses received but not shipped of approximately $10 million. We do not believe that backlog as of any particular date is indicative of future results. Quarter end headcount of 1,821 was down approximately 5% from one year ago. Looking at slide 16, highlighting balance sheet information, our cash balance was approximately $224 million at the end of the quarter. Our DSO was 65 days at the end of the fourth quarter, up four days from one year ago and up two days from last quarter end. In September 2009 our Board of Directors extended our stock repurchase program by authorizing us to purchase up to an aggregate of one million shares during the period from October 1, 2009, until September 30, 2010. During the fourth quarter fiscal 2009 we repurchased approximately 3,000 shares of our stock at a cost of less than $100,000 under this repurchase program. A summary of our share buybacks is reflected in slide 17. At the beginning of December we announced a series of initiatives to better position the company for long term growth and improved profitability. These initiatives are designed to enhance our product strategy by focusing on growth opportunities in the enterprise software market and aggressively bring new products and solutions to market and change the way we take our products to market by becoming more customer and solutions driven. This strategy will enable us to be even more focused on ensuring customer and partner success. In addition, we intend to increase our market awareness, leveraging our more visible product brands that carry strong recognition in their respective markets. To execute these initiatives we are restructuring our sales and services, development, and marketing organizations as well as other functions to better optimize operations and improve productivity and efficiency. This will result in a reduction in our global workforce of approximately 12% to 14% across all functions and geographies as well as consolidation of offices in certain locations. We expect to report a charge in our GAAP operating income in the first quarter fiscal 2010 of between $20 and $30 million. In connection with this action we have reorganized into three business units for fiscal 2010. Our three units are Application Development Platforms which primarily includes our OpenEdge, Orbix and ObjectStore product lines. Enterprise Data Solutions which primarily include our DataDirect Connect and Shadow, DataXtend and Data Services product line. Enterprise Business Solutions which primarily includes our Actional, Sonic, and Apama product lines. Revenue in fiscal 2009 was $328.5 million for Application Development Platforms, $83.1 million for Enterprise Data Solutions, and $85.2 million for Enterprise Business Solutions. Information on other announcements and upcoming events can be found on our website at www.Progress.com. In looking to fiscal 2010 and the first quarter, we are providing the following guidance: For fiscal 2010 we expect revenue on a GAAP and non-GAAP basis to be in the range of $520 to $530 million. Software license revenue is expected to be in the range of $190 to $200 million. We expect revenue from Application Development Platforms to be in the range of $315 to $325 million representing a year over year decline of approximately 1% to 4%. We expect revenue from Enterprise Data Solutions to be in the range of $91 to $101 million representing a year over year increase of approximately 10% to 20%. We expect revenue for Enterprise Business Solutions to be in the range of $94 to $104 million representing a year over year increase of approximately 10% to 20%. We expect GAAP operating income to be between $66 and $82 million. We expect non-GAAP operating income to be between $139 and $145 million. We estimate that non-operating income will be less than $1 million for fiscal 2010 although this may vary depending on interest rates, potential stock repurchases, fluctuations in foreign exchange rates, and our cash balances. We expect our effective tax rate to be between 36% and 37% for GAAP purposes and between 33% and 34% for non-GAAP purposes. The difference primarily relates to the tax treatment of stock based compensation and amortization of acquired intangibles. Estimating future weighted average share counts for earnings per share depends on future option activity, future share repurchases, share prices, and other factors. For now, we think using a share count of between 42 and 43 million for each of the quarters of fiscal 2010 for diluted earnings per share seems reasonable. We expect diluted earnings per share on a GAAP basis to be in a range of $1.00 to $1.25. On a non-GAAP basis which excludes total charges of between $1.00 and $1.18 we expect non-GAAP diluted earnings per share to be in the range of $2.15 to $2.25. For the first quarter of fiscal 2010 we expect revenue to be between $123 and $126 million. We expect software license revenue between $46 and $48 million. We expect diluted earnings per share on a GAAP basis to be in the range of a loss of $0.18 to break even. On a non-GAAP basis which excludes total charges of between $0.46 and $0.62 we expect non-GAAP diluted earnings per share to be in the range of $0.44 to $0.46. Our non-GAAP results primarily exclude stock based compensation, amortization required intangibles, purchase accounting adjustments for deferred revenue, restructuring charges and acquisition related expenses. A reconciliation between our GAAP and non-GAAP expectations is included in our press release. This guidance assumes no further economic shocks, a stabilization of revenue from our application partner channel, improvement in our ability to generate new business and end user counts, and no further strengthening of the US dollar against currencies from which we derive a significant portion of our business. As we’ve advised, these and a number of additional factors may affect future results and actual results may differ materially. Consequently, there can be no assurance that we will achieve results consistent with these comments. We plan to release the financial results for our first quarter on Wednesday, March 24th and hold the usual conference call that morning at 9am. This conference call will be recorded in its entirety and be available on our website at www.Progress.com in the investor relations section. I’d not like to open up the call to your questions. We’ll first take questions from the analysts that publish research on Progress software and then questions from anyone on the call.

(Operator Instructions) Your first question comes from Brent Williams – Benchmark & Company Brent Williams – Benchmark & Company: Share count for fiscal year ’10 I did not hear so can you give me the share count number again?

From 42 to 43 million for each quarter. Brent Williams – Benchmark & Company: To get a sense of sort of the organic piece of the Enterprise Infrastructure number, can you give me a sense of what Iona’s contribution to that line was. I know we anniversary it next quarter right?

No, its anniversaried actually this year, year over year, Iona is in both quarters. Brent Williams – Benchmark & Company: Going forward, as you reorganize divisions I believe you said that the Application Development Platform, did that get Orbix or Artix.

Application Development Platform is OpenEdge, Orbix, and Orbix Store. You can remember it by OQ. Brent Williams – Benchmark & Company: The A cubed plus Sonic gets the Business Solutions.

Business Solutions is made up of Sonic, Artix/Actional, and Apama. It’s the ESB plus Actional and Apama. Brent Williams – Benchmark & Company: On the Actional and Apama numbers that you called out there any impact on any larger deals coming in, in the end of the year or were deal sizes very much consistent with what you’d been doing?

They’ve been very consistent. We had one close to seven figure deal which wasn’t actually all Actional but it included the multi-product deal with an existing Orbix account that took on Actional to manage the entire infrastructure. Brent Williams – Benchmark & Company: Progress on Apama branching out outside of financial services was that a factor in the strong numbers this quarter or was it just a rebound on financial services spending in general or was it just the deals you had in the pipeline?

It was a little bit of both. There really was a turnaround particularly in Q4 with the FX aggregation product and some strength in Brazil as well in Algo trading market. Also in the overall area of market surveillance we signed up a partner who’s going to have Apama do surveillance for ten different exchanges. Having said that though, we had some nice deals outside of capital markets including in healthcare and drug control and defense. Brent Williams – Benchmark & Company: Any quarterly by quarterly comps on the new division structure are you going to put out a restated number for the last couple of quarters?

We will put out restate last year ’09 and guidance forward we’ll compare against those numbers. We’ll give you ’09 restated in the new comps. Brent Williams – Benchmark & Company: The revenue guidance for 2010 is in line with current consensus and where we were at which is really impressive given the breadth of the changes that you’re making to the sales organization. We could look at that fact as a couple ways. One is that you’re just absolutely really confident that you’re just not going to see any deals on the floor with all the reshuffling that’s going on and essentially the pipeline remains the same and there’s 0% deals getting just shuffled. Another way to look at this is that you have baked in some assumptions that some number of deals get lost in the shuffle but that the pipeline is stronger and that that offsets it potentially more then offsets it. Can you give any sense of how the build up to stay at the current number might have been arrived at? Do you see what I’m saying? In other words, are we seeing essentially a conservative deal closure rate change mask the pipeline coming up or is it just business continuing?

We did a bottoms up analysis on a per product basis and then added a bit more, we had a bit more confidence in the sense that now that we have one sales person on these major accounts and the ability to do multi-product sales and what not made me feel pretty good. We did, if anything, if we were cautious at all it might be in the first quarter, I think that’s reflected in our guidance. Overall for the year I expect it to go very well.

Your next question comes from David Hines – Needham & Company David Hines – Needham & Company: Around the reduction of force, why now versus any other time and how much of this action is proactive versus reactive to the current environment and does it imply that you think 2010 will be challenging for you guys and I guess everyone else in infrastructure?

This restructuring is clearly an offensive move on our part. We have had risks in the past that were defensive that the result of maybe weakness in a particular product line or the economy at large or as the result of acquiring a company and eliminating redundant positions. This particular one is really the culmination of a fairly methodical approach that we’ve taken over the last 12 to 18 months to restructure the entire company from very, very strong division models with separate sales teams and separate marketing teams and separate support teams into what we call one Progress. The timing really coincides with really fitting in the last piece of that puzzle which is to bring in Chris Larsen to lead the entire field, a consolidation of all our consulting support and sales services. That’s really what led to the timing. David Hines – Needham & Company: Historically Progress has been a successful collector and acquirer of technologies and companies but I guess from the outside it seems like the firm’s never sold a business or closed it down. Would you ever consider selling off non-core operations? If you could talk about the philosophy there why or why not.

Your initial assertion we have sold off product lines in the past, the most recent one being the Easy product line and if you go back years and talk about others. I think that type of strategy, divestiture of non-core assets in particular if there’s not a lot of profit that we can get out of it as well is something that we would always consider. David Hines – Needham & Company: Have you guys ever considered paying a dividend so I guess an additional cost investors can invest in the stock?

We’ve talked at the Board level and at this particular time the Board has stated the cash is for growing the business and I’m sure dividends always come up and I’m sure it will come up. Right now again to grow the business and look for acquisitions.

Your next question comes from Jean Orr – Nutmeg Securities Jean Orr – Nutmeg Securities: I would like to know what the timeframe for the restructuring is, when it starts, when it finishes, that kind of thing.

Are you talking about the specific restructuring we’re doing now? Jean Orr – Nutmeg Securities: Yes.

We’ll complete that in Q1.

Your next question comes from Brian Murphy – Sidoti & Company Brian Murphy – Sidoti & Company: I think last quarter you gave us some color on the pipeline and you mentioned that in the Data Infrastructure and Enterprise Infrastructure segments you maybe had some bigger deals that were delayed there. Obviously some pretty strong results on the Enterprise Infrastructure side here. Is that a function of some of those deals coming through and maybe could you give us some updated color on both of those pipelines heading into fiscal 2010.

On the Data Infrastructure side the pipeline actually remains particularly in the mainframe area, although the results weren’t particularly good in the mainframe area, for the entire year let alone the fourth quarter. What we found there, the classic Data Direct Connect business is just doing fine as it always has. What we found in the mainframe area is we’ve typically sell a lot of that into financial services, particularly insurance and other areas. There was just a lot of slow down in activity throughout most of ’09. Very strong pipe, it continues to be very strong and I remain cautiously optimistic that as the economy turns around that’ll rebound as well. In addition, in that area we also have a lot of interest in a new feature in that particular product what’s called the Zip and Zap processor which we think will significantly reduce the cost of using standard IBM products. I think we have a lot of healthy pipeline in that area. Lastly, we are introducing some major new products in Data Infrastructure area in ’10, in the Data Services area which we think will drive a lot of growth as well.

Your next question comes from Steve Koenig – Longbow Research Steve Koenig – Longbow Research: In terms of results, I would love to get a little bit more color on, can you explained a little bit about what happened in Data integration with regard to mainframe. Can you talk a little bit about how for the quarter end or for the year SOA and Apama did, how Orbix is fairing and your expectations by product family? Any sort of color on that for next year to help us parse through the reorganization that you’ve done here so we can figure out what’s going on underneath.

In Q4 Orbix had a very good quarter, Sonic had a very good quarter, Actional had a very good quarter and Apama had a very good quarter. All those product lines we feel pretty good about going forward. I think partly what we’re particularly fascinated and really interested in is more and more we’re getting into these multi-product deals, and more and more where we used to have to fight for nine months to get 150K ESB led deal now we fight six to nine months and we get a much larger deal which these products are line items on the invoice. Overall we’ve increased the overall average selling price and improved the productivity of the field. As a result, our ESB business is actually looking pretty good even through we may not actually lead that as the major value proposition or particular situation. Actional is getting a ton of traction because of a lot of folks these days really focus on what’s called business transaction management or business transaction assurance which is to take legacy systems and be able to run a product like this over it and be able to intercept transactions as they occur on the network and then feed that into other systems which is going to analyze what’s going on in the applications and drive alerts or do business process or whatever it might be. Visibility into legacy systems is a big issue now.

Like we said in the guidance, the application Development Platforms we expect to have a slight decline and again that’s driven by the OpenEdge, Orbix, and ObjectStore. That business as you know is a GDP type business and GDP has been negative. In GDP terms we expect it hopefully to get to flat and up when the economy improves. Like Rick said, the Enterprise Data Solutions we expect that to grow 10% to 20% and that’s primarily driven off Apama and Actional with a higher growth rate then the Sonic business in that group. The Enterprise Data Solutions we expect also to grow 10% to 20% and that’s driven by the Dixie business with the highest growth rate and again Shadow, like Rick said, coming back with a strong pipeline and Connect which always does well. Those three businesses that’s what we expect them to grow if you want to model that. We’ll give you historical ’09 numbers very shortly for quarter over quarter comparisons so you can model. Steve Koenig – Longbow Research: When we look at the new groupings, product families, the ADP area its products that are more mature, it’s a little older technology. The other areas a little newer, in particularly the enterprise Business Solutions is newer technologies including Apama and SOA. Was that contrast at all behind any of your thinking in the reorg and if its not part of what drove your reorg how will you manage the fact that one business unit is just slower growth, older technologies and the others aren’t? Does that pose any internal challenges from a management perspective?

Your first question did that drive or at least factor into our organization consideration that is yes. We did want to organize around some of the higher growth areas as well as there was obviously a strategic fit in the products on the data side as well as in the integration/business solutions side. What was the second question, did it factor into...

When we put these together the marketplace we were going after were set up the Enterprise Business Solutions that’s the market we’re doing after and those products fit together. As far as Data Solutions, that’s the market we’re going after and those solutions fit together. The other businesses which are OpenEdge, Orbix and our platform plays big customers and taking care of those customers is a different model then taking care of the new Business Solutions. All strategic thrust, all look at growing the business but software and service which is growing in excess of 25% so as we move our customers to that model we expect that product to also accelerate like into the GDP model so we have strategies pushing each on of these. Its not really which ones are slow and which ones are growing, they actually fit different strategies for growth, they’re all looking at growth, some higher then others right now and they’re going after different market pieces that even though the products work together the point of the arrow is going after a different market. Steve Koenig – Longbow Research: Will your sales rep work across those segments at all? Will you have sales reps that are able sell direct a broad selection of products as you used to?

We’ve talked about how we’re reporting the business units. How we’re going to market in the field we’ve made a significant adjustment to really emphasize that is our direct business and what is our indirect business. Before, things were merged a big geographically with the same management structure but we’re emphasizing that as Bud just pointed out, our application partners, what their value proposition is and how they use things like OpenEdge as a core product and even some are growing in using Sonic as an integration layer that they’re including within it. The different value prop it’s a different coverage model so we’ll have a global team now that is attacking that application partner customer base. The same is true at our OEMs, we are now going to have a global team targeted and dedicated to our OEM customers. In both these cases, indirect, they could bring everything to bear. Every product that we have in our portfolio that is appropriate on how to solve that specific partners business strategy they can bring to bear with the appropriate port. The other side of the equation is that our direct business we have direct field organization that is laser focused on the global 2000 really bringing to bear the Enterprise Data Solutions and especially the Enterprise Business Solutions. That’s where we’re seeing the natural grouping of some of these products as we go into solve a bigger problem for our client and explain to them how for example when we combine the capabilities of Actional with Apama we actually can at times exponentially increase the value proposition which then increases the deal size because they’re relative. That’s how we’re going to market direct and indirect which actually is reported then by these business units from how we develop our products. Even within that we’re taking a very industry focused solution as well within the geographic deployment on the direct side.

Your next question comes from Brent Williams – Benchmark & Company Brent Williams – Benchmark & Company: You guys threw out a teaser in response to Brian Murphy’s question about introducing major new products in Data Connectivity in 2010, Data Services driving a lot of growth. Could you drill down a little bit more color on that one?

I knew you’d get fascinated with that. This is a combination of several products that we have in Federated back end queries as well as Symantec integration, Symantec mapping into one platform which we haven’t named yet but it’s Data Services Platform. Brent Williams – Benchmark & Company: Symantec Integration piece is new?

It’s what we now call Dixie, DataXtend.

It appears that we have no further questions. I’ll now turn the conference back over to Bud Robertson for any further comments and closing remarks.

One further question that you didn’t ask and I know you wanted to ask was that the Euro rate we’re using is $1.43 for guidance purposes. With that, this concludes today’s conference call. Thank you for participating.

That does conclude today’s conference. We thank you for your participation.