##### Table of Contents



SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
     Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2006ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file
    no. 001-10824
      BORLAND SOFTWARE
    CORPORATION
 (Exact name of registrant as
    specified in its charter)
  Delaware

94-2895440(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   20450 STEVENS CREEK BOULEVARD, SUITE 800,
 CUPERTINO, CALIFORNIA 95014
 (Address of principal executive
    offices, including zip code)
 (408)
    863-2800
 (Registrants telephone number, including area code)
     Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.01 per share

The NASDAQ Stock Market LLC   Securities registered pursuant to Section 12(g) of the
    Act:
 None
 (Title of classes)
    o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K þ
  Rule 12b-2
 Large accelerated
    filer o     Accelerated
    filer þ  Non-accelerated
    filer o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K,




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##### 



BORLAND
    SOFTWARE CORPORATION
  FORM 10-K
  For the
    Fiscal Year Ended December 31, 2006
  TABLE OF
    CONTENTS
  PagePART IITEM 1.


BUSINESS


2ITEM 1A.


RISK
    FACTORS


10ITEM 1B.


UNRESOLVED STAFF
    COMMENTS


21ITEM 2.


PROPERTIES


21ITEM 3.


LEGAL
    PROCEEDINGS


22ITEM 4.


SUBMISSION OF
    MATTERS TO A VOTE OF SECURITY HOLDERS


22PART IIITEM 5.


MARKET FOR
    REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
    ISSUER PURCHASES OF EQUITY SECURITIES


22ITEM 6.


SELECTED FINANCIAL
    DATA


26ITEM 7.


MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS


26ITEM 7A.


QUANTITATIVE AND
    QUALITATIVE DISCLOSURES ABOUT MARKET RISK


46ITEM 8.


FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA


48ITEM 9.


CHANGES IN AND
    DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
    DISCLOSURE


49ITEM 9A.


CONTROLS AND
    PROCEDURES


49ITEM 9B.


OTHER
    INFORMATION


51PART IIIITEM 10.


DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


51ITEM 11.


EXECUTIVE
    COMPENSATION


52ITEM 12.


SECURITY OWNERSHIP
    OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
    STOCKHOLDER MATTERS


52ITEM 13.


CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE


52ITEM 14.


PRINCIPAL
    ACCOUNTING FEES AND SERVICES


52PART IVITEM 15.


EXHIBITS, FINANCIAL
    STATEMENT SCHEDULES


53SIGNATURES


59EXHIBIT 10.95EXHIBIT 10.97EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




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##### Table of Contents



A CAUTION
    ABOUT FORWARD-LOOKING STATEMENTS
  Form 10-K
  Form 10-K, Form 10-K,
  GENERAL
    INFORMATION
    Form 10-K
  WHERE YOU
    CAN FIND MORE INFORMATION
  Form 10-K Form 10-Q Form 8-K 1-800-SEC-0330. Forms 10-K, 10-Q 8-K
 1




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##### Table of Contents



PART I  ITEM 1.
    BUSINESS  (408) 863-2800.
  Overview
        Recent
    Developments
      Industry
    Background
   2




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time-to-market
    
    accelerate application development and deployment by providing
    an integrated suite of technologies, consulting services and
    processes addressing every phase of the application development
    process;
    lower the cost of ownership and enhance the return on investment
    from existing technology infrastructure by integrating it with
    new software applications, including customer facing front ends;
    mitigate the risks of failed software delivery by enabling a
    more collaborative, disciplined approach to application
    lifecycle management; and
    are platform-neutral, facilitate interoperability and allow for
    maximum flexibility and freedom of choice across information
    technology systems, which increasingly require the ability to
    function in heterogeneous environments.  Strategy
    
    Technology: Our ALM product portfolio today includes
    capabilities for project and portfolio management, requirements
    definition and management, modeling, development, and software
    configuration and change management. We acquired Segue Software,
    Inc., or Segue, a provider of global quality and testing
    solutions in April 2006 to add lifecycle quality, testing and
    performance management to our ALM product lines. We intend to
    continue to develop and buy new technologies to advance and
    expand our existing technology set. 3




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
    People: Relying on technology alone is not enough.
    The individuals involved in the development process must be
    trained on the process and the technology to ensure effective
    implementation. We intend to continue to develop our educational
    service offerings to support the key roles and processes within
    the software delivery lifecycle, and to build out multiple
    avenues of delivering these services to our customers, including
    through a network of partners and through Web-based delivery
    programs.
    Process: We believe that an effective and repeatable
    process adhering to recognized standards such as Capability
    Maturity Model Index, or CMMI, is required for companies to get
    the most from their software development efforts. In January
    2005, we acquired TeraQuest Metrics, Inc., a software process
    optimization consulting firm. We have built this practice over
    the past two years and intend to expand our capability in this
    area.  Our
    Solutions, Products and Services
  Solutions
    
    Project and Portfolio Management  Enables
    organizations to gain visibility into whether they are using the
    right software, to determine if they are using the software in
    the right way, and to measure the results and manage the process.
    Requirements Definition and Management 
    Enables organizations to define, manage and certify system or
    project requirements to reduce miscommunication and ensure that
    IT is aligned with business priorities.
    Software Change Management  Enables
    organizations to manage and respond to changes within the
    software delivery lifecycle, ultimately helping IT teams to
    reduce complexity and improve agility and responsiveness to the
    business.
    Lifecycle Quality Management  Enables
    organizations to proactively address and ensure quality from the
    very beginning of the software delivery lifecycle, not just
    tested at the end of the lifecycle when quality issues are more
    expensive to fix.    Products
    Project and Portfolio Management.
  Requirements Management.
 4




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out-of-date
  Requirements Definition.
  Automated Test Management.
  Performance Test Management. easy-to-use
  Functional Test Automation. easy-to-use
  Continuous Build and Test Automation.
  Modeling.
  Software Configuration and Change
    Management.
  CodeGear Development Products. multi-language
 5




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Deployment.
  Services
      Technical Support.
  Consulting Services.
  
    Process Consulting Services. Our process consulting
    services are designed to establish a process foundation for our
    customers software delivery platform. Process optimization
    begins with formal appraisals and informal checklists to help
    enterprises evaluate current performance and set realistic
    goals. Borland Services builds on these assessments by working
    with management teams to define optimal software delivery
    practices. We then combine workshops and consulting to define
    and operationalize the necessary changes into software
    processes. Throughout the engagement, Borland Services uses a
    customer-tailored approach for deliverables and actionable
    recommendations to establish processes designed to improve
    reliability, reduce defects, and improve productivity.
    Technology Implementation Services. We offer
    integration services to streamline the assimilation of our
    solutions into an existing IT environment, thereby protecting
    existing investments. Borland Services works with enterprise
    teams to develop customized implementation plans, assess their
    ability to execute and, as necessary, fill gaps to provide
    additional leverage. Borland complements integration services
    with application and data migration services to successfully
    transition from an existing software development platform. We
    also offer packaged services, including QuickStart and Technical
    Account Management, designed to accelerate the rollout of the
    software delivery platform.  Education Services. e-seminar,
  Customers
    and Partners
  go-to-market
 6




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and/or
  go-to-market
  Sales and
    Marketing
    
    major accounts by named sales representatives;
    smaller accounts by sales personnel on the basis of
    geography; and
    a specific focus on global system integrators, to reach more
    customers through a comprehensive solution selling approach.    
    a worldwide network of independent distributors, dealers,
    value-added resellers, or VARs, specialty catalogue vendors and
    ISVs; and
    our
    e-commerce
    Internet site.  Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Critical Accounting Policies and
    Estimates.
    Research
    and Development
   7




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Competition
    Manufacturing
    Intellectual
    Property
    Employees
   8




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Executive
    Officers
    Name

Position


AgeTod Nielsen


President, Chief Executive Officer and Director



41Erik E. Prusch


Senior Vice President and Chief Financial Officer



40Gregory J. Wrenn


Senior Vice President, General Counsel and Secretary



45David Packer


Senior Vice President, Worldwide Field Operations



42Peter Morowski


Senior Vice President, Research and Development



48   Tod Nielsen.
  Erik E. Prusch.
  Gregory J. Wrenn.
  David Packer.
  Peter Morowski.
 9




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##### Table of Contents



ITEM 1A.
    RISK
    FACTORS  Risks
    Relating to Our Business
  We are
    re-focusing the company to primarily focus on the development
    and distribution of enterprise software development solutions.
    If we are unable to successfully complete this change to the
    business quickly and smoothly, our operating results could be
    harmed.
    
    Changes in
    go-to-market
    strategy.  Our ALM offerings are sold to
    enterprises, whereas our CodeGear offerings are primarily sold
    to individual software developers. As a result, to achieve
    revenue growth with our ALM strategy, we must enhance our
    enterprise selling capability, increase sales force productivity
    and generally complete more large revenue, multi-product sales
    of our ALM solutions. We will also need to further define our
    product roadmaps and generally continue to evolve our ALM
    offerings. To do so, we must coordinate the efforts of our
    marketing, sales, services and research and development
    organizations to focus on the needs of large enterprises. These
    tasks are complicated, involve many people and processes, and
    require consistency and persistence in the market place to be
    effective. In addition, this enterprise-focused strategy
    involves different skills, partners and competencies than our
    historical IDE strategy, which focused principally on sales
    through distribution channels. If we fail to coordinate our
    efforts and deliver broader value to large enterprise customers,
    our operating results may suffer.
    Changes in our sales organization and sales
    leadership.  Our ALM strategy requires us to focus
    our sales effort on enterprise customers. To drive these
    changes, we will continue to make changes throughout our global
    sales force, particularly in Asia Pacific, or APAC, markets
    (other than Japan and Australia) where direct sales models are
    being replaced in some instances with indirect partner models.
    While we believe these changes will enhance our leadership in
    those regions, these efforts may prove unsuccessful in
    increasing our sales to enterprise customers.
    Changes in our sales cycles.  Sales to large
    enterprises often involve long and unpredictable sales cycles.
    We are becoming more dependent on large revenue, multi-product
    transactions to meet our revenue expectations. These
    transactions often have long sales cycles and we may be unable
    to accurately forecast revenues derived from these transactions.
    If we fail to accurately forecast revenues, we may not achieve
    the anticipated financial performance, which could harm our
    business and operating results.
    Changes in our marketing strategy.  As part of
    our change in focus, we continue to redefine our marketing
    strategy. We must increase lead generation and develop
    appropriate marketing programs targeted at the enterprise
    customer. As an organization, we are relatively new at this. If
    we are unable to develop effective marketing programs and
    increase our pipeline of sales opportunities, or if our sales
    organization in turn is unable to effectively convert leads into
    customers, our revenues will suffer.
    Changes in our services organization.  In 2006,
    we consolidated our consulting services and sales organizations
    to better focus on customer engagements. We also combined our
    technical support organization with our field operations
    organization to more closely align our efforts relating to
    customers. The implementation of these changes will continue to
    require careful planning and coordination to ensure we maintain
    customer satisfaction. In addition, such changes may result in
    the loss of key services personnel. In the event customer
    satisfaction is harmed or we lose key personnel, our business
    could be harmed.   10




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Our
    failure to efficiently complete the separation of our CodeGear
    division from our enterprise business and effectively operate
    CodeGear could harm our operating results.
    We have
    experienced significant changes in our senior management team
    and if we are not able to effectively integrate new senior
    management members, our business could be harmed.
    Our
    failure to implement systems to meet the requirements and manage
    the large service projects necessary for our enterprise may
    result in delays in recognizing revenue on these projects and
    thus could harm our profit and adversely affect our results of
    operations.
    Our
    inability to forecast our revenue pipeline or convert revenue
    pipeline into contracts, especially given our increasing focus
    on enterprise customers, could increase fluctuations in our
    revenue and financial results.
   11




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and/or
  Because
    competition for qualified technical and management personnel is
    intense, we may not be able to recruit or retain qualified
    personnel, which could harm our business.
       12




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Our
    success is dependent upon our ability to enhance the quality and
    scalability of our various products, improve the integration and
    overall functionality of these products, and evolve our solution
    toward our ALM strategy.
      If we are
    unable to maintain revenue levels for our deployment products,
    our financial results may be harmed.
    We may
    not be able to compete successfully against current and
    potential competitors.
   13




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The
    complexity of accounting regulations and related interpretations
    and policies, particularly those related to revenue recognition,
    could materially affect our financial results for a given
    period.
  97-2, Software Revenue Recognition
  We, and
    our independent registered public accounting firm, have
    determined that we have a material weakness in our internal
    control over financial reporting as of December 31, 2006.
    As a result, current and potential stockholders could lose
    confidence in our financial reporting, which would harm our
    business and the trading price of our stock.
    Form 10-K Form 10-K
   14




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and/or
  We have
    been unable to timely file our annual and quarterly reports as
    required by the Securities Exchange Act of 1934, and our
    continued inability to file these reports on time could result
    in your not having access to important information about us and
    the delisting of our common stock from the Nasdaq Global
    Market.
  Form 10-K Forms 10-Q
  over-the-counter
  We are in
    the midst of significant changes to our financial reporting and
    accounting team and systems, which may impact our ability to
    comply with our financial reporting and accounting
    obligations.
    We are in
    the process of implementing plans for reducing expenses and if
    we fail to achieve the results we expect, there will be a
    negative effect on our financial condition.
   15




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Consolidation
    in our industry or fluctuation in our stock price may impede our
    ability to compete effectively.
      We depend
    on technologies licensed to us by third parties, such as Sun
    Microsystems and Microsoft, and the loss of or inability to
    maintain these licenses could prevent or delay sales or
    shipments of certain of our products.
  and/or
  Failure
    to manage our international operations could harm our
    results.
    
    fluctuations in foreign currency exchange rates;
    the difficulty of staffing and managing an organization spread
    over various countries and continents; 16




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
    potentially reduced or less certain protection for intellectual
    property rights than is available under the laws of the United
    States;
    longer payment cycles in some countries and greater difficulty
    in collecting accounts receivable;
    restrictions on the expatriation of currency;
    foreign taxes, export restrictions, tariffs, duties and other
    trade barriers;
    changes in regulatory requirements and resulting costs;
    differing cultures and business practices not consistent with
    our regulatory obligations in the United States;
    compliance with various conflicting laws and regulations,
    including employment laws, and resulting costs; and
    war, threats of war, terrorist activity or political or economic
    instability in certain parts of the world.    Bundling
    arrangements or product give-aways by our competitors, including
    available, cost-free development technologies, may diminish
    demand for our products or pressure us to reduce our
    prices.
    Our
    future success depends upon enhancing existing relationships and
    establishing new technology alliances.
    Our
    products may contain unknown defects that could result in a loss
    of revenues, decreased market acceptance, injury to our
    reputation and product liability claims.
   17




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
    delayed shipping of the product;
    delay in or failure to ever achieve market acceptance;
    diversion of development resources;
    damage to our reputation;
    product liability claims; and
    increased service and warranty costs.    Third-party
    claims of intellectual property infringement may subject us to
    costly litigation or settlement terms or limit the sales of our
    products.
  and/or
  If we are
    unable to protect our intellectual property, we may lose
    valuable assets.
   18




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Our debt
    obligations expose us to risks that could adversely affect our
    business, operating results and financial condition.
    
    require us to dedicate a portion of our expected cash flow or
    our existing cash to service our indebtedness, which would
    reduce the amount of our cash available for other purposes,
    including working capital, capital expenditures and research and
    development expenditures;
    make it difficult for us to incur additional debt or obtain any
    necessary financing in the future for working capital, capital
    expenditures, debt service, acquisitions or general corporate
    purposes;
    limit our flexibility in planning for or reacting to changes in
    our business;
    limit our ability to sell ourselves or engage in other strategic
    transactions;
    make us more vulnerable in the event of a downturn in our
    business; or
    place us at a possible competitive disadvantage relative to less
    leveraged competitors and competitors that have greater access
    to capital resources.    Conversion
    of the convertible senior notes will dilute the ownership
    interests of existing stockholders.
      Form 10-K
 19




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Under the
    terms of the 2.75% Convertible Senior Notes due 2012,
    events that we do not control may trigger conversion rights
    that, if exercised, may have an adverse effect on our
    liquidity.
    Our
    rights plan and our ability to issue additional preferred stock
    could harm the rights of our common stockholders.
          
    adversely affect the voting power of the stockholders of our
    common stock;
    make it more difficult for a third party to gain control of us;
    discourage bids for our common stock at a premium;
    limit or eliminate any payments the stockholders of our common
    stock could expect to receive upon our liquidation; or
    otherwise adversely affect the market price of our common stock.   20




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Provisions
    of our certificate of incorporation and bylaws might discourage,
    delay or prevent a change of control of our company or changes
    in our management and, therefore, depress the trading price of
    our common stock.
    
    authorize the issuance of blank check preferred
    stock by our board that could increase the number of outstanding
    shares and discourage a takeover attempt;
    limit the ability of our stockholders to call special meetings
    of stockholders;
    prohibit stockholder action by written consent, which requires
    all stockholder actions to be taken at a meeting of our
    stockholders;
    provide that our board is expressly authorized to amend our
    bylaws, or enact such other bylaws as in their judgment may be
    advisable; and
    establish advance notice requirements for nominations for
    election to our board or for proposing matters that can be acted
    upon by stockholders at stockholder meetings.    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    ApproximateSquareLocation

Footage


UseScotts Valley,
    California  Enterprise Way


149,627


Sales, general and administrative
    and research and developmentCupertino, California


85,247


Corporate headquarters, sales,
    general and administrative and research and developmentAtlanta, Georgia


39,839


Sales, customer support and
    research and developmentSingapore


24,210


Sales, general and administrative
    and research and developmentSanta Ana, California


21,622


Sales, research and developmentAmstelveen, the Netherlands


14,978


Sales, customer supportTwyford, United Kingdom


13,956


Sales, general and administrativeBelfast, United Kingdom


13,097


Technical supportAustin, Texas


11,936


Research and developmentSt. Petersburg, Russia


6,948


Research and development    21




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ITEM 3.
    LEGAL
    PROCEEDINGS    Accounting for Contingencies
    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES   22




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High


LowFiscal 2005First Quarter

$
11.46


$
7.67Second Quarter

$
8.03


$
5.33Third Quarter

$
6.92


$
5.61Fourth Quarter

$
6.68


$
5.05Fiscal Year

$
11.46


$
5.05Fiscal 2006First Quarter

$
6.77


$
5.15Second Quarter

$
5.54


$
4.91Third Quarter

$
6.00


$
5.07Fourth Quarter

$
6.15


$
5.05Fiscal Year

$
6.77


$
4.91   Form 10-K,
  Purchases
    of Equity Securities
  Discretionary
    Stock Repurchase Program
       23




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PURCHASES
    OF EQUITY
    SECURITIES(1)
  (d)(c)


Maximum NumberTotal Number


(or Approximate(a)





of Shares


Dollar Value) ofTotal


(b)


Purchased as


Shares that MayNumber


Average


Part of Publicly


Yet Be Purchasedof Shares


Price Paid


Announced


Under the PlansPeriod

Purchased(2)


per Share


Plans or Programs


or Programs(in thousands)Beginning dollar value available
    to be repurchased as of September 30, 2006(3)













$
59,332October 1, 2006 
    October 31, 2006


27,613


$
5.82







November 1, 2006 
    November 30, 2006


256


$
5.36







December 1, 2006 
    December 31, 2006


2,982


$
5.45







Total shares repurchased


30,851


$
5.78







Ending dollar value available to
    be repurchased under the Discretionary Program as of
    December 31, 2006













$
59,332     (1)
    
    This table shows repurchased made pursuant to the Discretionary
    Program described above. Additional information is provided
    under Note 10 of the notes to Consolidated Financial
    Statements.(2)
    
    Consists of shares of restricted stock surrendered by Borland
    employees in order to meet tax withholding obligations in
    connection with the vesting of an installment of their
    restricted stock awards.(3)
    
    Consists of $59,332,000 available for repurchase under our
    Discretionary Program.  10b5-1
    Repurchase Program
  Form 8-K
    EQUITY
    COMPENSATION PLAN INFORMATION
  Regulation S-K
 24




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PERFORMANCE
    GRAPH
  
 25




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ITEM 6.
    SELECTED
    FINANCIAL DATA  Form 10-K.
  Five Year
    Summary
 Fiscal Year2006


2005


2004


2003


2002(In thousands, except per share data)Selected Consolidated
    Statements of Operations DataTotal revenues

$
304,660


$
276,743


$
309,548


$
295,236


$
244,579Restructuring, amortization of
    other intangibles, acquisition-related expenses and other
    charges(a)

$
22,073


$
20,611


$
9,841


$
32,758


$
4,574Operating income (loss)

$
(53,093
)

$
(34,975
)

$
18,674


$
(39,934
)

$
19,131Other income (charge) items(b)

$
1,658


$
4,372


$



$
500


$
(2,916
)Net income (loss)

$
(51,953
)

$
(29,832
)

$
11,370


$
(40,544
)

$
17,360Net income (loss) per
    share  basic

$
(0.67
)

$
(0.38
)

$
0.14


$
(0.51
)

$
0.24Net income (loss) per
    share  diluted

$
(0.67
)

$
(0.38
)

$
0.14


$
(0.51
)

$
0.23Shares used in computing basic
    income (loss) per share


77,096



77,557



80,425



80,249



71,423Shares used in computing diluted
    income (loss) per share


77,096



77,557



82,052



80,249



74,769   Fiscal Year2006


2005


2004


2003


2002Selected Consolidated Balance
    Sheet DataCash, cash equivalents and
    short-term investments

$
55,317


$
175,078


$
221,198


$
202,646


$
296,156Total assets

$
443,899


$
464,530


$
515,283


$
511,789


$
433,126Total long-term obligations

$
15,689


$
15,514


$
8,930


$
7,156


$
3,938     (a)
    
    Charges consisted of net restructuring costs resulting from
    workforce reduction activities and facility lease exit costs,
    amortization of other intangibles, acquisition-related expenses,
    acquired in-process research and development expenses and
    earn-out provisions associated with previous company and
    technology acquisitions.(b)
    
    Other income consisted of a gain on sale of fixed assets and
    gains or collections on investments previously written down or
    written off.  ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K
 26




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Overview
        Recent
    Developments
      CRITICAL
    ACCOUNTING POLICIES AND ESTIMATES
     27




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Revenue
    Recognition
    Software Revenue
    Recognition, SOP 97-2, SOP No. 98-9 ,
    Modification of
    SOP No. 97-2
    with Respect to Certain Transactions.
  percentage-of-completion Percentage-of-completion and/or SOP No. 81-1, Accounting for Performance of Construction-Type and
    Certain Production-Type Contracts
 28




---



##### Table of Contents



Accounting
    for Acquisitions
       29




---



##### Table of Contents



Business
    Combinations five-day
  Goodwill and
    Other Intangibles,
  No. 95-3, Recognition of Liabilities in Connection with a
    Purchase Business Combination,
  Restructuring
  Accounting for Costs Associated with Exit or Disposal
    Activities, Restructuring
    and Impairment Charges, Employers Accounting for Postemployment Benefits,
    an Amendment of FASB Statements No. 5 and 43, 60-days
 30




---



##### Table of Contents



Allowances
    for Doubtful Accounts
    Stock-Based
    Compensation
      Impairment
    or Disposal of Long-Lived Assets
  Accounting
    for the Impairment or Disposal of Long-Lived Assets,
 31




---



##### Table of Contents



Investments
    Income
    Taxes
    Accounting for Income
    Taxes,
    Contingencies
    Determining
    Functional Currencies for the Purpose of Consolidation
   32




---



##### Table of Contents



Recent
    Accounting Pronouncements
   33




---



##### Table of Contents



Results
    of Operations
    2006


2005


2004License and other revenues

$
165,886



54
%

$
163,182



59
%

$
214,021



69
%Service revenues


138,774



46



113,561



41



95,527



31Total revenues


304,660



100



276,743



100



309,548



100Cost of license and other revenues


7,439



2



8,884



3



9,426



3Cost of service revenues


55,381



18



40,491



15



25,963



8Amortization of acquired
    intangibles and other charges


6,972



2



10,043



4



9,718



3Cost of revenues


69,792



23



59,418



21



45,107



15Gross profit


234,868



77



217,325



79



264,441



85Selling, general and administrative


195,710



64



174,002



63



167,833



54Research and development


70,178



23



57,687



21



68,093



22Restructuring, amortization of
    other intangibles, acquisition-related expenses and other charges


22,073



7



20,611



7



9,841



3Total operating expenses


287,961



95



252,300



91



245,767



79Operating income (loss)


(53,093
)


(17
)


(34,975
)


(13
)


18,674



6Gain on investments, net










4,372



2







Gain on sale of fixed assets


1,658



1















Interest and other income, net


2,004



1



5,155



2



1,734



1Income (loss) before income taxes


(49,431
)


(16
)


(25,448
)


(9
)


20,408



7Income tax provision


2,522



1



4,384



2



9,038



3Net income (loss)

$
(51,953
)


(17
)%

$
(29,832
)


(11
)%

$
11,370



4
%   Total
    Revenue
    Change





Change2006


$


%


2005


$


%


2004Total revenues

$
304,660


$
27,917



10
%

$
276,743


$
(32,805
)


(11
)%

$
309,548     License
    and Other Revenue by Product
    34




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##### Table of Contents



For the Twelve Months Ended


For the Twelve Months EndedDecember 31, 2006


December 31, 2005ALM


DPG


IDE


Total


ALM


DPG


IDE


TotalLicense and other revenues

$
85,030


$
29,224


$
51,632


$
165,886


$
52,059


$
50,923


$
60,200


$
163,182Service revenues


90,352



24,373



24,049



138,774



59,061



24,201



30,299



113,561Total

$
175,382


$
53,597


$
75,681


$
304,660


$
111,120


$
75,124


$
90,499


$
276,743   License
    and Other Revenue
    Change





Change2006


$


%


2005


$


%


2004License and other revenues

$
165,886


$
2,704



2
%

$
163,182


$
(50,839
)


(24
)%

$
214,021As percent of total revenues


54
%










59
%










69
%         Service
    Revenue
    Change





Change2006


$


%


2005


$


%


2004Service revenues

$
138,774


$
25,213



22
%

$
113,561


$
18,034



19
%

$
95,527As percent of total revenues


46
%










41
%










31
%  35




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##### Table of Contents



International
    Revenue
        2006


2005


2004United States

$
147,050



48
%

$
118,936



43
%

$
120,380



39
%Germany


29,210



10



31,010



11



35,072



11United Kingdom


24,427



8



22,484



8



34,116



11All other countries


103,973



34



104,313



38



119,980



39Total revenues

$
304,660



100
%

$
276,743



100
%

$
309,548



100
%      36




---



##### Table of Contents



Regional
    Revenues
    2006


2005


2004Americas

$
168,278



55
%

$
138,008



50
%

$
139,585



45
%Europe, Middle East and Africa


99,218



33



97,529



35



121,515



39Asia Pacific


37,164



12



41,206



15



48,448



16Total revenues

$
304,660



100
%

$
276,743



100
%

$
309,548



100
%     Americas.
    EMEA.
    APAC.
   37




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##### Table of Contents



Cost of
    Revenue
    Change





Change2006


$


%


2005


$


%


2004Cost of license and other revenues

$
7,439


$
(1,445
)


(16
)%

$
8,884


$
(542
)


(6
)%

$
9,426As percent of license and other
    revenues


4
%










5
%










4
%Cost of service revenues

$
55,381


$
14,890



37
%

$
40,491


$
14,528



56
%

$
25,963As percent of service revenues


40
%










36
%










27
%Amortization of acquired
    intangibles

$
6,972


$
(3,071
)


(31
)%

$
10,043


$
325



3
%

$
9,718As percent of license and other
    revenues


4
%










6
%










5
%   Cost
    of License and Other Revenue
      Cost
    of Service Revenue
      Amortization
    of Acquired Intangibles
   38




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##### Table of Contents



Operating
    Expenses
  Selling,
    General and Administrative Expenses
    Change





Change2006


$


%


2005


$


%


2004Selling, general and
    administrative expenses

$
195,710


$
21,708



12
%

$
174,002


$
6,169



4
%

$
167,833As percent of total revenue


64
%










63
%










54
%      39




---



##### Table of Contents



Research
    and Development Expenses
    Change





Change2006


$


%


2005


$


%


2004Research and development expenses

$
70,178


$
12,491



22
%

$
57,687


$
(10,406
)


(15
)%

$
68,093As percent of total revenues


23
%










21
%










22
%       Restructuring,
    Amortization of Other Intangibles, Acquisition-Related Expenses
    and Other Charges
    2006


2005


2004Restructuring

$
12,880



58
%

$
16,110



78
%

$
2,851



29
%Amortization of other intangibles


557



3



2,850



14



4,681



48Acquisition-related expenses


3,836



17



1,642



8



2,309



23Other charges:






















In-process research and development


4,800



22



300



1







Other charges










(291
)


(1
)






Total

$
22,073



100
%

$
20,611



100
%

$
9,841



100
%   Restructuring.
     40




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##### Table of Contents



Severanceand Benefits


Facilities


Other


TotalAccrual at December 31, 2003

$
3,499


$
6,158


$
474


$
10,1312004 restructuring


1,073



3,372



395



4,840Cash paid and write-offs during
    2004


(3,812
)


(5,101
)


(787
)


(9,700
)Reversal of previous restructuring


(436
)


(1,302
)






(1,738
)Reclassification of previous
    restructuring


(226
)






226



Accrual at December 31, 2004


98



3,127



308



3,5332005 restructuring


3,976



13,121



38



17,135Cash paid and write-offs during
    2005


(3,802
)


(2,680
)


(42
)


(6,524
)Reversal of previous restructuring


(80
)


(884
)






(964
)Accrual at December 31, 2005


192



12,684



304



13,180Acquired from Segue


3,507



542







4,0492006 restructuring


9,577



3,177



446



13,200Cash paid and write-offs during
    2006


(8,904
)


(4,800
)


(592
)


(14,296
)Reversal of previous restructuring


(194
)


(52
)


(74
)


(320
)Accrual at December 31, 2006

$
4,178


$
11,551


$
84


$
15,813         Amortization of other intangibles.
 41




---



##### Table of Contents



Acquisition-related expenses.
  Write-off of in-process research and
    development.
  Other charges.
  Gain on
    Investments, net
    Gain on
    Sale of Fixed Assets
    Interest
    and Other Income, Net
    Change





Change2006


$


%


2005


$


%


2004Interest and other income, net

$
2,004


$
(3,151
)


(61
)%

$
5,155


$
3,421



197
%

$
1,734As percent of total revenues


1
%










2
%










1
%    42




---



##### Table of Contents



Income
    Tax Provision
    Change





Change2006


$


%


2005


$


%


2004Income tax provision

$
2,522


$
(1,862
)


(42
)%

$
4,384


$
(4,654
)


(51
)%

$
9,038As percent of total revenues


1
%










2
%










3
%   non-U.S. taxes.
      non-U.S. withholding
   43




---



##### Table of Contents



Liquidity
    and Capital Resources
  Cash and cash equivalents and short-term
    investments.
  Net cash provided by and used in operating
    activities.
        Net cash provided by and used in investing
    activities.
 44




---



##### Table of Contents



Net cash provided by and used in financing
    activities.
      CodeGear Plans.
  Operating Capital and Capital Expenditure
    Requirements. and/or
      Currency.
 45




---



##### Table of Contents



Contractual
    Obligations and Off-Balance Sheet Arrangements
  Leases. Accounting for Leases.
    2007


2008


2009


2010


2011


Thereafter


TotalOperating leases

$
13,263


$
10,486


$
9,086


$
7,327


$
6,453


$
19,328


$
65,943Restructured operating leases


4,815



3,148



2,985



760











11,708Gross commitments


18,078



13,634



12,071



8,087



6,453



19,328



77,651Sublease income


(611
)


(314
)


(95
)


(32
)










(1,052
)Net commitments

$
17,467


$
13,320


$
11,976


$
8,055


$
6,453


$
19,328


$
76,599       Indemnifications.
  Royalties.
  Off-Balance Sheet Arrangements.
  Effect of
    New Accounting Pronouncements
    ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   46




---



##### Table of Contents



Foreign
    Currency Risk
          Weighted


Net FairAverage


Value atNotional


Contracts


December 31,Amount


Rate


2006Foreign currency forward exchange
    contracts:Australian dollar

$
153



0.7873


$
153Brazilian Real


1,569



2.1773



1,547Canadian dollar


1,632



1.1666



1,634Czech Koruna


(341
)


20.9553



(341
)Euro


(2,650
)


1.3150



(2,650
)Hong Kong dollar


927



7.7655



927Japanese Yen


1,380



118.7300



1,386Russian Ruble


(318
)


26.2300



(320
)Singapore dollar


10,151



1.5470



10,154Taiwan dollar


123



32.6770



123United Kingdom Pound Sterling


3,454



1.9490



3,454$
16,080






$
16,067  47




---



##### Table of Contents



Interest
    Rate Risk
        Credit
    Risks
    ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  SELECTED
    QUARTERLY DATA
  period-to-period
 48




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##### Table of Contents



Fiscal 2006 (Unaudited)Fourth


Third


Second


FirstQuarter


Quarter


Quarter


QuarterTotal revenues

$
75,772


$
82,366


$
76,950


$
69,572Gross profit

$
58,488


$
64,065


$
58,540


$
53,775Restructuring, amortization of
    other intangibles, acquisition-related expenses and other
    expenses(*)

$
6,717


$
5,060


$
9,246


$
1,050Net income (loss)

$
(10,823
)

$
(13,142
)

$
(19,049
)

$
(8,939
)Net income (loss) per share-basic

$
(0.14
)

$
(0.17
)

$
(0.25
)

$
(0.12
)Net income (loss) per share-diluted

$
(0.14
)

$
(0.17
)

$
(0.25
)

$
(0.12
)Shares used in computing basic net
    income (loss) per share


77,622



77,263



76,876



76,640Shares used in computing diluted
    net income (loss) per share


77,622



77,263



76,876



76,640   Fiscal 2005 (Unaudited)Fourth


Third


Second


FirstQuarter


Quarter


Quarter


QuarterTotal revenues

$
71,005


$
67,850


$
66,564


$
71,324Gross profit

$
54,611


$
53,693


$
52,415


$
56,606Restructuring, amortization of
    other intangibles, acquisition-related expenses and other
    expenses(*)

$
1,240


$
1,646


$
16,577


$
1,148Net income (loss)

$
(10,512
)

$
(5,268
)

$
(17,546
)

$
3,494Net income (loss) per share-basic

$
(0.14
)

$
(0.07
)

$
(0.23
)

$
0.04Net income (loss) per share-diluted

$
(0.14
)

$
(0.07
)

$
(0.23
)

$
0.04Shares used in computing basic net
    income (loss) per share


76,301



76,017



77,421



80,373Shares used in computing diluted
    net income (loss) per share


76,301



76,017



77,421



81,590     (*)
    Charges consisted of net restructuring costs resulting from
    workforce reduction activities, facility lease exit costs,
    amortization of other intangibles, acquisition-related expenses,
    acquired in-process research and development expenses, earn-out
    provisions associated with previous company and technology
    acquisitions.  Form 10-K
  ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  CEO and
    CFO Certifications
  Form 10-K Rule 13a-14(a) Rule 13a-14(a) Rule 13a-14(a)
 49




---



##### Table of Contents



Evaluation
    of Our Disclosure Controls and Procedures
    Form 10-K, Form 10-K
  Managements
    Report on Internal Control Over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
  
    pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect our transactions and dispositions
    of our assets;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with GAAP, and that receipts and expenditures are
    being made only in accordance with authorizations of our
    management and directors; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of our
    assets that could have a material effect on the financial
    statements.    Internal Control 
    Integrated Framework
     50




---



##### Table of Contents



Form 10-K.
  Remediation
    Plan
  Form 10-K
  Changes
    in Internal Control Over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
  ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Regulation S-K
 51




---



##### Table of Contents



ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES   52




---



##### Table of Contents



PART IV  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES  Form 10-K,
        (408) 863-2917.
  Index to
    Exhibits
  Form 10-K:
  Exhibit



Incorporated by Reference

FiledNumber

Description of Exhibit

Form

Date

Number

Herewith2
.1

Agreement and Plan of Merger and
    Reorganization by and among Borland Software Corporation, Targa
    Acquisition Corp. I, Targa Acquisition Corp. II,
    TogetherSoft Corporation, Peter Coad, as Primary
    Stockholders Agent, and Kurt Jaggers, as Secondary
    Stockholders Agent, dated as of October 29, 2002.

8-K

11/1/2002


2
.12
.2

Agreement and Plan of Merger among
    Borland Software Corporation, Galaxy Acquisition Corp. and
    Starbase Corporation, dated as of October 8, 2002.

8-K

10/10/2002


2
.12
.3

Agreement and Plan of Merger,
    dated as of February 7, 2006, by and among Segue Software,
    Inc., Borland Software Corporation and Beta Merger Sub, Inc.

8-K

2/8/2006


2
.12
.4

Form of Voting Agreement, dated as
    of February 7, 2006, by and among Borland Software
    Corporation and the other parties signatory thereto.

8-K

2/8/2006


2
.23
.1

Restated Certificate of
    Incorporation of Borland Software Corporation.

10-Q

8/9/2005


3
.13
.2

Amended and Restated Bylaws of
    Borland Software Corporation.

10-Q

8/9/2005


3
.24
.1

Stockholder Rights Agreement,
    dated as of October 26, 2001, between Borland Software
    Corporation and Mellon Investor Services, L.L.C.

8-A

10/31/2001


14
.2

Specimen Stock Certificate of
    Borland Software Corporation.

10-Q

5/13/2002


4
.14
.3

Indenture by and between the
    Company and U.S. Bank National Association, as trustee,
    dated February 6, 2007.

8-K

2/08/2007


4
.14
.4

Global Note representing the
    Companys 2.75% Convertible Senior Note due 2012.

8-K

2/08/2007


4
.24
.5

Registration Rights Agreement by
    and between the Company and J.P. Morgan Securities Inc.,
    dated February 6, 2007.

8-K

2/08/2007


4
.310
.1

Form of Indemnity Agreement.+

S-8

9/26/199010
.2

2005 Incentive Compensation Plan
    for Executive Officers.+

10-K

3/25/2005


10
.2 53




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Description of Exhibit

Form

Date

Number

Herewith10
.3

2006 Incentive Compensation Plan
    for Executive Officers.+

8-K

3/20/2006


10
.8610
.4

1985 Stock Option Plan.+

10-K

3/28/2003


10
.410
.5

Non-Employee Directors Stock
    Option Plan.+

8-K

12/27/199110
.6

1992 Stock Option Plan.+

S-8

7/4/199210
.7

1993 Stock Option Plan.+

S-8

3/11/199310
.8

1997 Stock Option Plan.+

S-8

12/19/1997


4
.410
.9

Amendment to the 1997 Stock Option
    Plan.+

S-8

9/1/2000


4
.910
.10

Second Amendment to the 1997 Stock
    Option Plan.+

S-8

6/1/2001


4
.610
.11

1997 Employee Stock Purchase Plan.+

S-8

12/19/1997


4
.510
.12

1998 Nonstatutory Stock Option
    Plan.+

10-K

3/28/2003


10
.1210
.13

1999 Employee Stock Purchase Plan.+

10-Q

8/9/2005


10
.1210
.14

Borland Software Corporation Dale
    Fuller Individual Stock Option Plan.+

10-K

4/4/2000


10
.1810
.15

2002 Stock Incentive Plan.+

8-K

5/16/2005


99
.210
.16

Form of Notice of Grant under the
    Discretionary Option Grant Program of the 2002 Stock Incentive
    Plan.+

10-Q

11/9/2004


10
.7310
.17

Form of Stock Option Agreement
    under the Discretionary Option Grant Program of the 2002 Stock
    Incentive Plan.+

10-Q

11/9/2004


10
.7410
.18

Form of Stock Issuance Agreement
    under the 2002 Stock Incentive Plan.+

10-K

3/25/2005


10
.1710
.19

Form of Option Agreement under the
    Automatic Option Grant Program of the 2002 Stock Incentive Plan.+

10-K

3/25/2005


10
.1810
.20

Form of Addendum to Stock Option
    Agreement under the 2002 Stock Incentive Plan (Twelve Months
    Acceleration).+

10-K

3/25/2005


10
.1910
.21

Form of Addendum to Stock Option
    Agreement under the 2002 Stock Incentive Plan (50%
    Acceleration).+

10-K

3/25/2005


10
.2010
.22

Form of Addendum to Stock Option
    Agreement under the 2002 Stock Incentive Plan (100%
    Acceleration).+

10-K

3/25/2005


10
.2110
.23

Form of Stock Issuance Agreement
    under the Stock Issuance Program of the 2002 Stock Incentive
    Plan.+

10-Q

11/8/2005


10
.7410
.24

Form of Acceleration Addendum to
    Stock Issuance Agreement under the Stock Issuance Program of the
    2002 Stock Incentive Plan.+

10-Q

11/8/2005


10
.7510
.25

Form of Stock Option Agreement
    under the Discretionary Option grant program of the 2002 Stock
    Incentive Plan, as amended on October 27, 2005.+

10-Q

11/8/2005


10
.7610
.26

Form of Acceleration Addendum to
    Stock Option Agreement under the Discretionary grant program of
    the 2002 Stock Incentive Plan.+

10-Q

11/8/2005


10
.7710
.27

Borland Software Corporation 2003
    Supplemental Stock Option Plan.+

8-K

3/20/2006


10
.8710
.28

Segue Software Inc. Special
    Termination and Vesting Plan.+

8-K

7/6/2006


10
.8910
.29

Open Environment Corporation
    Amended and Restated 1993 Stock Option Plan.+

10-K

3/28/2003


10
.1710
.30

Visigenic Software, Inc. 1995
    Stock Option Plan.+

10-K

3/28/2003


10
.1810
.31

Starbase Corporation 2001 Stock
    Plan.+

S-8

1/24/2003


99
.110
.32

Starbase Corporation 1996 Stock
    Option Plan.+

S-8

1/24/2003


99
.2 54




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Description of Exhibit

Form

Date

Number

Herewith10
.33

Starbase Corporation NSO Stock
    Option Program.+

S-8

1/24/2003


99
.310
.34

Premia Corporation 1998 Stock
    Option Plan.+

S-8

1/24/2003


99
.410
.35

Technology Builders, Inc. Amended
    and Restated Stock Option and Stock Incentive Plan.+

S-8

1/24/2003


99
.510
.36

TogetherSoft Corporation 2000
    Stock Plan.+

S-8

1/24/2003


99
.610
.37

TogetherSoft Corporation 2001
    Officer Stock Plan.+

S-8

1/24/2003


99
.710
.38

TogetherSoft Corporation 2001
    Non-U.S. Plan.+

S-8

1/24/2003


99
.810
.39

TogetherSoft Corporation 2001
    California Plan.+

S-8

1/24/2003


99
.910
.40

Employment Agreement between Dale
    L. Fuller and Borland Software Corporation dated as of
    January 1, 2001.+

10-K

3/29/2001


10
.2010
.41

Amendment to Employment Agreement
    between Borland Software Corporation and Dale L. Fuller, dated
    July 1, 2003.+

10-Q

11/14/2003


10
.310
.42

Employment Agreement between
    Borland Software Corporation and Kenneth R. Hahn dated as of
    August 7, 2002.+

10-Q

11/14/2002


99
.310
.43

Amendment to Employment Agreement
    between Borland Software Corporation and Kenneth R. Hahn dated
    as of October 22, 2002.+

10-Q

11/14/2002


99
.410
.44

Amendment to the Employment
    Agreement between Borland Software Corporation and Kenneth R.
    Hahn, dated as of June 7, 2004.+

10-Q

8/9/2004


10
.7210
.45

Addendum to Stock Option Agreement
    between Borland Software Corporation and Kenneth R. Hahn dated
    as of November 3, 2004.+

10-K

3/25/2005


10
.3910
.46

Amendment to Employment Agreement
    between Borland Software Corporation and Kenneth R. Hahn dated
    as of May 12, 2005.+

8-K

5/16/2005


99
.310
.47

Employment Agreement between
    Borland Software Corporation and Scott Arnold, dated
    October 2, 2003.+

10-Q

11/14/2003


10
.410
.48

Addendum to Stock Option Agreement
    between Borland Software Corporation and Scott Arnold dated as
    of November 3, 2004.+

10-K

3/25/2005


10
.4110
.49

Separation and Mutual Release
    Agreement between the Company and Scott J. Arnold, dated
    December 2, 2005.+

8-K

12/6/2005


10
.8110
.50

Employment Agreement between
    Borland Software Corporation and Timothy J. Stevens, dated
    September 17, 2003.+

10-Q

11/14/2003


10
.510
.51

Amendment to Employment Agreement
    between Borland Software Corporation and Timothy J. Stevens,
    dated March 4, 2004.+

10-K

3/15/2004


10
.3410
.52

Addendum to Stock Option Agreement
    between Borland Software Corporation and Timothy J. Stevens
    dated as of November 3, 2004.+

10-K

3/25/2005


10
.4410
.53

Separation and Mutual Release
    Agreement between the Company and Timothy J. Stevens dated
    June 16, 2006.+

8-K

6/19/2006


10
.110
.54

Employment Agreement between
    Borland Software Corporation and Matthew Thompson, dated
    October 1, 2003.+

10-Q

11/14/2003


10
.6 55




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Description of Exhibit

Form

Date

Number

Herewith10
.55

Separation Agreement and Full and
    Final Release of Claims between the Company and Matthew
    Thompson, dated January 5, 2007.+

8-K

1/08/2007


10
.10010
.56

Employment Agreement between the
    Company and Tod Nielsen, dated November 1, 2005.+

8-K

11/8/2005


10
.7310
.57

Form of Addendum to Employment
    Offer Letters for Severance Benefits for Named Executive
    Officers.+

10-Q

11/8/2005


10
.7810
.58

2003 Stock Option Agreement for
    Tod Nielsen under the 2003 Supplemental Stock Option Plan.+

10-K

5/02/2006


10
.5210
.59

Addendum to Stock Option Agreement
    for Tod Nielsen.+

10-K

5/02/2006


10
.5310
.60

Stock Issuance Agreement for Tod
    Nielsen.+

10-K

5/02/2006


10
.5410
.61

Addendum to Stock Issuance
    Agreement for Tod Nielsen.+

10-K

5/02/2006


10
.5510
.62

Amendment to Employment Agreement
    between the Company and Tod Nielsen effective as of
    November 1, 2005.+

8-K/A

11/23/2005


10
.7910
.63

Employment Offer Letter between
    the Company and Peter Morowski, dated June 3, 2006.+

8-K

8/21/2006


10
.9310
.64

Addendum to Employment Offer
    Letter for Severance Benefits between the Company and Peter
    Morowski, dated June 3, 2006.+

8-K

8/21/2006


10
.9410
.65

Employment Offer Letter between
    the Company and Greg Wrenn, dated September 7, 2006.+

8-K

10/19/2006


10
.9610
.66

Addendum to Employment Offer
    Letter for Severance Benefits between the Company and Greg
    Wrenn, dated September 7, 2006.+

8-K

10/19/2006


10
.9710
.67

Employment Agreement between the
    Company and Michael Sullivan, dated July 5, 2006.+

8-K

7/6/2006


10
.8810
.68

Separation Agreement and Full and
    Final Release of Claims between the Company and Michael
    Sullivan, dated September 18, 2006.+

8-K

9/22/2006


10
.9510
.69

Employment Offer Letter between
    the Company and Erik Prusch, dated October 2, 2006.+

8-K

11/14/2006


10
.9810
.70

Addendum to Employment Offer
    Letter for Severance Benefits between the Company and Erik
    Prusch, dated October 2, 2006.+

8-K

11/14/2006


10
.9910
.71

Employment Offer Letter between
    the Company and David Packer, dated January 4, 2007.+

8-K

1/08/2007


10
.10110
.72

Addendum to Employment Offer
    Letter for Severance Benefits between the Company and David
    Packer.+

8-K

1/08/2007


10
.10210
.73

Summary of Board Compensation.+

8-K

1/17/2007


10
.10310
.74

Lease Agreement by and between
    Borland Software Corporation and ScanlanKemperBard Companies
    dated as of February 17, 2000.

10-K

3/29/2001


10
.4410
.75

First Amendment to Lease Agreement
    by and between Borland Software Corporation and Enterprise Way
    Associates, LLC as dated as of September 30, 2000.

10-K

3/29/2001


10
.4510
.76

Second Amendment to Lease
    Agreement by and between Borland Software Corporation and
    Enterprise Way Associates, LLC as dated as of June 1, 2001.

10-K

3/28/2003


10
.54 56




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Description of Exhibit

Form

Date

Number

Herewith10
.77

Third Amendment to Lease Agreement
    by and between Borland Software Corporation and Enterprise Way
    Associates, LLC as dated as of November 1, 2001.

10-K

3/28/2003


10
.5510
.78

Net Office Lease and related
    agreements by and  between Sun Microsystems, Inc., Cupertino
    City Center Buildings and Borland Software Corporation.

10-K

3/28/2003


10
.5610
.79

Office Lease and amendment between
    Starwood O.C. Portfolio I, L.L.C., and Starbase Corporation.

10-K

3/28/2003


10
.5710
.80

Lease and amendment between
    Davis-Sandler Three LLC and TogetherSoft Corporation.

10-K

3/28/2003


10
.5810
.81

Agreement of Purchase and Sale
    dated May 30, 2006 between Borland Software Corporation and
    Fowler Property Acquisitions, LLC.

8-K

6/5/2006


10
.110
.82

First Amendment to Agreement of
    Purchase and Sale dated May 30, 2006 between Borland
    Software Corporation and Fowler Property Acquisitions, LLC,
    dated June 30, 2006.

8-K

7/7/2006


10
.9110
.83

Technology License and
    Distribution Agreement between Sun Microsystems, Inc. and
    Borland Software Corporation, dated as of October 31,
    1995.++

10-Q

8/13/2001


10
.210
.84

Addendum Number 1 to
    Technology License and Distribution Agreement between Sun
    Microsystems, Inc. and Borland Software Corporation, dated as of
    June 25, 1998. (To the best of our knowledge, no executed
    document titled Addendum Number 2 exists.)

10-Q

8/13/2001


10
.310
.85

Addendum Number 3 to
    Technology License and Distribution Agreement between Sun
    Microsystems, Inc. and Borland Software Corporation, dated as of
    June 15, 2000.

10-Q

8/13/2001


10
.410
.86

Amendment No. 4 to Technology
    License and Distribution Agreement Sun Microsystems, Inc. and
    Borland Software Corporation, dated as of December 29, 2000
    (Attached as
    Exhibit A-1
    to the Software License Agreement between Sun Microsystems, Inc.
    and Borland Software Corporation, dated as of December 29,
    2000).

10-Q

8/13/2001


10
.1110
.87

Letter Agreement between Sun
    Microsystems, Inc. and Borland Software Corporation, dated as of
    November 7, 1995.

10-Q

8/13/2001


10
.510
.88

Letter Agreement between Sun
    Microsystems, Inc. and Borland Software Corporation, dated as of
    March 9, 1998.

10-Q

8/13/2001


10
.610
.89

Letter Agreement between Sun
    Microsystems, Inc. and Borland Software Corporation, dated as of
    November 5, 1998.

10-Q

8/13/2001


10
.710
.90

Letter Agreement between Sun
    Microsystems, Inc. and Borland Software Corporation, dated as of
    February 1, 1999.

10-Q

8/13/2001


10
.810
.91

Software License Agreement between
    Sun Microsystems, Inc. and Borland Software Corporation, dated
    as of December 29, 2000.

10-Q

8/13/2001


10
.1110
.92

Amendment Number 1 to
    Software License Agreement between Sun Microsystems, Inc. and
    Borland Software Corporation, dated as of December 12, 2001.

10-Q

5/13/2002


10
.110
.93

Trademark License for Java Powered
    between Sun Microsystems, Inc. and Borland Software Corporation,
    dated as of December 29, 2000.

10-Q

8/13/2001


10
.12 57




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Description of Exhibit

Form

Date

Number

Herewith10
.94

Wireless Toolkit Supplement to the
    Sun Community Source Licenses between Sun Microsystems, Inc. and
    Borland Software Corporation, dated as of December 21,
    2001.++

10-Q

5/13/2002


10
.510
.95

Amendment Number 2 to the
    Software License Agreement between Sun Microsystems, Inc. and
    Borland Software Corporation, dated as of December 22, 2005.









X10
.96

Amendment to Stock Option
    Agreement between Borland Software Corporation and Dale L.
    Fuller, dated February 2, 2005.+

10-Q

5/10/2005


10
.7210
.97

Visual Studio Partner Master
    Agreement between Microsoft Corporation and Borland Software
    Corporation, dated August 11, 2006.

10-K







X21
.1

Subsidiaries of Borland Software
    Corporation.









X23
.1

Consent of PricewaterhouseCoopers
    LLP, Independent Registered Public Accounting Firm.









X31
.1

Certification of Tod Nielsen,
    Chief Executive Officer of Borland Software Corporation,
    pursuant to
    Rule 13a-14(a).









X31
.2

Certification of Erik E.
    Prusch, Chief Financial Officer of Borland Software Corporation,
    pursuant to
    Rule 13a-14(a).









X32
.1

Certification of Tod Nielsen,
    Chief Executive Officer of Borland Software Corporation,
    pursuant to
    Rule 13a-14(b)
    and 18 U.S.C. Section 1350.+++









X32
.2

Certification of Erik E.
    Prusch, Chief Financial Officer of Borland Software Corporation,
    pursuant to
    Rule 13a-14(b)
    and 18 U.S.C. Section 1350.+++









X     +
    
    Management contract or compensatory plan or arrangement.++
    
    Confidential treatment has been requested with respect to
    certain portions of this exhibit. Omitted portions have been
    filed separately with the SEC.+++
    
    The certifications attached as Exhibit 32.1 and
    Exhibit 32.2 that accompany this Annual Report on
    Form 10-K,
    are not deemed filed with the Securities and Exchange Commission
    and are not to be incorporated by reference into any filing of
    Borland Software Corporation under the Securities Act of 1933 or
    the Securities Exchange Act of 1934 whether made before or after
    the date of this
    Form 10-K,
    irrespective of any general incorporation language contained in
    such filing.   58




---



##### Table of Contents



SIGNATURES  Form 10-K
  Borland Software
    Corporation
   By:
    /s/  ERIK
    E. PRUSCH   Senior Vice President and Chief Financial Officer
 (principal financial and accounting officer)
  attorney-in-fact, Form 10-K, attorney-in-fact,
    /s/  John
    F. OlsenJohn
    F. Olsen

Chairman of the Board/s/  Tod
    NielsenTod
    Nielsen

President, Chief Executive
    Officer and Director (principal executive officer)/s/  Erik
    E. PruschErik
    E. Prusch

Senior Vice President and Chief
    Financial Officer (principal financial and accounting
    officer)/s/  Mark
    GarrettMark
    Garrett

Director/s/  T.
    Michael
    NevensT.
    Michael Nevens

Director/s/  William
    K. HooperWilliam
    K. Hooper

Director/s/  Robert
    TarkoffRobert
    Tarkoff

Director  59




---



##### Table of Contents



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PageReport of
    Independent Registered Public Accounting Firm


F-2Consolidated
    Balance Sheets as of December 31, 2006 and 2005


F-4Consolidated
    Statements of Operations for the years ended December 31,
    2006, 2005 and 2004


F-5Consolidated
    Statements of Comprehensive Income (Loss) for the years ended
    December 31, 2006, 2005 and 2004


F-6Consolidated
    Statements of Stockholders Equity for the years ended
    December 31, 2006, 2005 and 2004


F-7Statements
    Consolidated of Cash Flows for the years ended December 31,
    2006, 2005 and 2004


F-8Notes to Consolidated Financial
    Statements


F-9  F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM      Consolidated
    financial statements
      Internal
    control over financial reporting
  Internal Control  Integrated
    Framework
     F-2




---



##### Table of Contents



Internal Control  Integrated Framework Internal Control 
    Integrated Framework
      F-3




---



##### Table of Contents



BORLAND
    SOFTWARE CORPORATION
  CONSOLIDATED BALANCE SHEETS
  December 31, 2006


December 31, 2005(In thousands, except par value and share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
55,317


$
49,075Short-term investments






126,003Accounts receivable, net of
    allowances of $5,413 and $7,235, respectively


62,154



54,405Prepaid expenses


13,341



13,583Other current assets


1,329



2,287Total current assets


132,141



245,353Property and equipment, net


11,176



17,837Goodwill


253,356



187,337Intangible assets, net


40,521



3,900Other non-current assets


6,705



10,103Total assets

$
443,899


$
464,530LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
15,591


$
14,002Accrued expenses


36,438



40,204Short-term restructuring


9,582



3,905Income taxes payable


14,925



17,285Deferred revenue


58,930



55,470Other current liabilities


7,264



6,210Total current liabilities


142,730



137,076Long-term restructuring


6,231



9,275Long-term deferred revenues


1,610



1,709Other long-term liabilities


7,848



4,530Total liabilities


158,419



152,590Commitments and ContingenciesStockholders equity:Preferred stock; $.01 par
    value; 1,000,000 shares authorized; 0 shares issued
    and outstanding






Common stock; $.01 par value;
    200,000,000 shares authorized; 78,704,764 and
    77,806,793 shares issued and outstanding, respectively


787



778Additional paid-in capital


659,932



650,947Accumulated deficit


(273,892
)


(228,658
)Deferred compensation






(7,191
)Cumulative other comprehensive
    income


9,121



6,532395,948



422,408Less common stock in treasury at
    cost, 15,275,899 and 15,310,399 shares, respectively


(110,468
)


(110,468
)Total stockholders equity


285,480



311,940Total liabilities and
    stockholders equity

$
443,899


$
464,530    F-4




---



##### Table of Contents



BORLAND
    SOFTWARE CORPORATION
  CONSOLIDATED STATEMENTS OF OPERATIONS
  Year Ended December 31,2006


2005


2004(In thousands, except per share data)License and other revenues

$
165,886


$
163,182


$
214,021Service revenues


138,774



113,561



95,527Total revenues


304,660



276,743



309,548Cost of license and other revenues


7,439



8,884



9,426Cost of service revenues


55,381



40,491



25,963Amortization of acquired
    intangibles and other charges


6,972



10,043



9,718Cost of revenues


69,792



59,418



45,107Gross profit


234,868



217,325



264,441Selling, general and administrative


195,710



174,002



167,833Research and development


70,178



57,687



68,093Restructuring, amortization of
    other intangibles, acquisition-related expenses and other charges


22,073



20,611



9,841Total operating expenses


287,961



252,300



245,767Operating income (loss)


(53,093
)


(34,975
)


18,674Gain on sale of investment, net






4,372



Gain on sale of fixed assets


1,658







Interest and other income, net


2,004



5,155



1,734Income (loss) before income taxes


(49,431
)


(25,448
)


20,408Income tax provision


2,522



4,384



9,038Net income (loss)

$
(51,953
)

$
(29,832
)

$
11,370Net income (loss) per share:Net income (loss) per
    share  basic

$
(0.67
)

$
(0.38
)

$
0.14Net income (loss) per
    share  diluted

$
(0.67
)

$
(0.38
)

$
0.14Shares used in computing basic net
    income (loss) per share


77,096



77,557



80,425Shares used in computing diluted
    net income (loss) per share


77,096



77,557



82,052    F-5




---



##### Table of Contents



BORLAND
    SOFTWARE CORPORATION
  CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    (LOSS)
  Year Ended December 31,2006


2005


2004(In thousands)Net income (loss)

$
(51,953
)

$
(29,832
)

$
11,370Other comprehensive income (loss):Foreign currency translation
    adjustments


2,517



(6,067
)


3,100Fair market value adjustment for
    available-for-sale
    securities, net of tax


72



(72
)


Comprehensive income (loss)

$
(49,364
)

$
(35,971
)

$
14,470    F-6




---



##### Table of Contents



BORLAND
    SOFTWARE CORPORATION
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY
  CumulativeCommon Stock


Additional





Treasury Stock


OtherNumber of





Paid in


Accumulated


Number of





Comprehensive


DeferredShares


Amount


Capital


(Deficit)


Shares


Amount


Income


Compensation


Total(In thousands)Balance at December 31, 2003


81,002


$
810


$
624,713


$
(210,196
)


7,678


$
(54,555
)

$
9,571


$
(2,475
)

$
367,868Employee stock option, employee
    stock purchase plan and other, net


2,256



23



14,198























14,221Cancellation of restricted stock










(834
)


















834



Repurchase of Common Stock


(2,270
)


(23
)










2,270



(20,137
)










(20,160
)Amortization of TogetherSoft option
    value






























185



185Release of TogetherSoft escrow
    shares


(51
)


(1
)










51



(657
)










(658
)Amortization of deferred
    compensation






























454



454Foreign currency translation
    adjustments


























3,100







3,100Net income














11,370



















11,370Balance at December 31, 2004


80,937



809



638,077



(198,826
)


9,999



(75,349
)


12,671



(1,002
)


376,380Employee stock option, employee
    stock purchase plan and other, net


1,013



10



5,726























5,736Issuance of restricted stock in
    connection with TeraQuest acquisition


87



1



849



















(850
)


Issuance of restricted stock, net


1,041



11



6,295







34











(6,385
)


(79
)Repurchase of Common Stock


(5,270
)


(53
)










5,276



(35,119
)










(35,172
)Amortization of TogetherSoft option
    value






























41



41Release of TogetherSoft escrow
    shares


(1
)














1















Amortization of TeraQuest deferred
    compensation






























212



212Amortization of deferred
    compensation






























793



793Fair market value adjustment
    available-for-sale
    securities


























(72
)






(72
)Foreign currency translation
    adjustments


























(6,067
)






(6,067
)Net Loss














(29,832
)


















(29,832
)Balance at December 31, 2005


77,807



778



650,947



(228,658
)


15,310



(110,468
)


6,532



(7,191
)


311,940Cumulative effect of adjustments
    from the adoption of SAB No. 108, net of taxes










1,460



6,719



















8,179Adjusted balances as of
    December 31, 2005


77,807



778



652,407



(221,939
)


15,310



(110,468
)


6,532



(7,191
)


320,119Employee stock option, employee
    stock purchase plan and other, net


1,076



11



4,863























4,874Issuance of restricted stock


363































Repurchase of Common Stock


















(34
)














Cancellation of restricted stock


(390
)






























Repurchases and retirements of
    restricted stock


(151
)


(2
)


(835
)






















(837
)Amortization of restricted stock










3,515























3,515Stock-based compensation










7,173























7,173Reclassification of unearned
    stock-based compensation upon adoption of SFAS 123R










(7,191
)


















7,191



Fair market value adjustment
    available-for-sale
    securities


























72







72Foreign currency translation
    adjustments


























2,517







2,517Net Loss














(51,953
)


















(51,953
)Balance at December 31, 2006


78,705



787



659,932



(273,892
)


15,276



(110,468
)


9,121







285,480    F-7




---



##### Table of Contents



BORLAND
    SOFTWARE CORPORATION
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  Year Ended December 31,2006


2005


2004(In thousands)CASH FLOWS FROM OPERATING
    ACTIVITIES:Net loss

$
(51,953
)

$
(29,832
)

$
11,370Adjustments to reconcile net loss
    to net cash provided by (used in) operating activities:Depreciation and amortization


12,773



19,449



21,597Stock-based compensation


10,688







Acquired in-process
    research & development charge


4,800



300



Developed technology impairment
    charge


497







Gain on sale of investment






(4,680
)


Loss (gain) on disposal of fixed
    assets


(1,658
)


30



33Changes in assets and liabilities,
    net of acquisitions:Accounts receivable, net


(1,992
)


7,440



(5,341
)Prepaid expenses and other assets


5,456



420



4,459Accounts payable and accrued
    expenses


3,400



(1,509
)


(7,377
)Income taxes payable


(1,747
)


363



5,271Short-term restructuring


2,513



2,041



(4,919
)Deferred revenues


(7,559
)


7,738



2,034Long-term restructuring


(3,208
)






Other liabilities


(120
)


6,854



(2,504
)Cash provided by (used in)
    operating activities


(28,110
)


8,614



24,623CASH FLOWS FROM INVESTING
    ACTIVITIES:Purchases of property and equipment


(6,187
)


(7,190
)


(3,127
)Proceeds from sale of fixed assets


11,015







Acquisition of Legadero, net of
    cash acquired






(12,744
)Acquisition of TeraQuest, net of
    cash acquired






(4,436
)


Acquisition of Segue Software, net
    of cash acquired


(102,457
)






Acquisition of developed technology


(497
)






Proceeds from the sale of an
    investment






4,680



Purchases of short-term investments






(328,000
)


(133,441
)Sales and maturities of short-term
    investments


125,944



346,706



91,025Cash provided by (used in)
    investing activities


27,818



(984
)


(45,543
)CASH FLOWS FROM FINANCING
    ACTIVITIES:Proceeds from issuance of stock
    options, net


4,863



5,657



14,683Repurchase of common stock






(35,172
)


(20,160
)Cash provided by (used in)
    financing activities


4,863



(29,515
)


(5,477
)Effect of exchange rate changes on
    cash


1,671



(5,472
)


2,331Net increase (decrease) in cash
    and cash equivalents


6,242



(27,357
)


(24,066
)Beginning cash and cash equivalents


49,075



76,432



100,498Ending cash and cash equivalents

$
55,317


$
49,075


$
76,432Cash paid during the year for:Interest

$
300


$
302


$
183Income taxes, net of refunds

$
3,715


$
752


$
5,333Supplemental disclosure of
    non-cash transactions:Assets acquired under capital lease

$



$



$
Deferred tax asset effect of
    acquired tax attributes, net of valuation allowance

$
17,835


$
1,977


$
Deferred tax liabilities effect on
    acquired amortizable intangibles

$
17,835


$
1,977


$
    F-8




---



##### Table of Contents



BORLAND
    SOFTWARE CORPORATION
    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    December 31, 2006
  NOTE 1.
    THE
    COMPANY  (408) 863-2800. http://www.borland.com.
              NOTE 2.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Principles
    of Consolidation
    Management
    Estimates and Assumptions
  percentage-of-completion
 F-9




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
   Basis
    of Presentation
    Revenue
    Recognition
    Software Revenue
    Recognition, SOP 97-2, SOP No. 98-9 ,
    Modification of
    SOP No. 97-2
    with Respect to Certain Transactions.
  percentage-of-completion Percentage-of-completion and/or SOP No. 81-1, Accounting for Performance of Construction-Type and
    Certain Production-Type Contracts
       F-10




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
    Basic
    and Diluted Net Income (Loss) per Share
      Year Ended December 31,2006


2005


2004Numerator:Net income (loss)

$
(51,953
)

$
(29,832
)

$
11,370Denominator:Weighted-average shares
    outstanding, excluding unvested restricted stock


77,096



77,557



80,425Effect of dilutive securities:Employee stock option










1,556Other










71Denominator for diluted net income
    (loss) per share  weighted-average shares and assumed
    conversions


77,096



77,557



82,052Net income (loss) per
    share  basic

$
(0.67
)

$
(0.38
)

$
0.14Net income (loss) per
    share  diluted

$
(0.67
)

$
(0.38
)

$
0.14       Cash,
    Cash Equivalents and Short-Term Investments
   F-11




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
     Foreign
    Currency and Forward Contracts
        Financial
    Instruments
    Concentration
    of Credit Risk
     F-12




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
        Valuation
    of Long-Lived Assets
  Accounting
    for the Impairment or Disposal of Long-Lived Assets
  Property
    and Equipment
    Buildings


31.5 yearsComputer equipment


3 to 5 yearsFurniture, fixtures and equipment


5 yearsLeasehold improvements


Shorter of lease term or useful life     SOP No. 98-1, Accounting for the Costs of Computer Software Developed
    or Obtained for Internal Use. and/or
  Accounting for Asset
    Retirement Obligations
 F-13




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##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
    Stock-Based
    Compensation Plans
  Change in
    Accounting Principle
  Accounting for Stock
    Issued to Employees Statement of Cash Flows.
     F-14




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
   Prior
    Years Pro Forma Disclosure
    Year Ended December 31,2005


2004Net income (loss):Net income (loss)

$
(29,832
)

$
11,370Stock compensation
    adjustment  intrinsic value


1,166



93Stock compensation expense, net of
    tax


(29,077
)


(11,209
)Pro Forma

$
(57,743
)

$
254Net income (loss) per share:As reported basic

$
(0.38
)

$
0.14As reported diluted

$
(0.38
)

$
0.14Pro Forma basic

$
(0.74
)

$
0.00Pro Forma diluted

$
(0.74
)

$
0.00   Research
    and Development
  Accounting for the Costs of Computer Software to be
    Sold, Leased, or Otherwise Marketed.
  Goodwill
    and Acquired Intangibles
    Goodwill and
    Other Intangibles,
 F-15




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
    Advertising
    Costs
  No. 01-09, Accounting for Consideration Given by a Vendor to a
    Customer or a Reseller of the Vendors Products 01-09,
  Income
    Taxes
    Accounting for Income
    Taxes
   F-16




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
   Recent
    Accounting Pronouncements
          Stock-based compensation

$
(1,460
)Accrued expenses


7,595Deferred revenue


500Other


84Decrease in accumulated deficit

$
6,719  F-17




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
    2000 andprior years


2001


2002


2003


2004


2005


TotalStock-based compensation

$
(317
)

$
(220
)

$
(140
)

$
(39
)

$
(662
)

$
(82
)

$
(1,460
)Accrued expenses


7,410



447



(198
)


(146
)


62



20



7,595Deferred revenue














500











500Other


















(67
)


151



84Total

$
7,093



227



(338
)


315



(667
)


89


$
6,719Tax effect






















Total, net of tax






227



(338
)


315



(667
)


89Income (loss) before tax





$
28,951


$
23,084


$
(36,573
)

$
20,408


$
(25,448
)Percent of income before taxes






1
%


(1
%)


(1
%)


(3
%)


   Fair Value
    Measurements.
  Accounting for
    Uncertainty in Income Taxes, an interpretation of FASB Statement
    No. 109.
  Accounting Changes and Error Corrections, Accounting Changes Reporting Accounting Changes in Interim
    Financial Statements  An Amendment of APB Opinion
    No. 28.
 F-18




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##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
   NOTE 3.
    INVESTMENTS  available-for-sale available-for-sale
  December 31, 2005Gross


Gross


GrossAmortized


Unrealized


Unrealized


EstimatedCosts


Gains


Losses


Fair ValueAuction rate securities

$
85,900


$



$



$
85,900Government issues


26,386







(56
)


26,330Commercial paper


13,394



4



(20
)


13,378Certificates of deposit


395











395$
126,075


$
4


$
(76
)

$
126,003   available-for-sale
    available-for-sale
  Maturities of theUnderlying VariableRate Long-termBonds atDecember 31,2005Due within one year

$
Due after one year through twenty
    years


6,150Due after twenty years through
    thirty-nine years


45,550Due after thirty-nine years


34,200$
85,900     NOTE 4.
    GOODWILL
    AND INTANGIBLE ASSETS   F-19




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
     GoodwillBalance as of December 31,
    2005

$
187,337Acquisition of Segue


65,528Foreign exchange and purchase
    accounting adjustments


491Balance as of December 31,
    2006

$
253,356       December 31,2006Gross Carrying


Accumulated


Net CarryingAmount


Amortization


AmountAcquired technology

$
46,330


$
(24,701
)

$
21,629Maintenance agreements


11,300



(1,121
)


10,179Trade names and trademarks


1,100



(215
)


885Customer relationship


9,075



(1,376
)


7,699Other


400



(271
)


129$
68,205


$
(27,684
)

$
40,521   December 31,2005Gross Carrying


Accumulated


Net CarryingAmount


Amortization


AmountAcquired developed technology

$
33,120


$
(30,566
)

$
2,554Trade names and trademarks


8,400



(8,215
)


185Customer relationship


1,521



(446
)


1,075Other


5,199



(5,113
)


86$
48,240


$
(44,340
)

$
3,900    F-20




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
    FutureAmortization2007

$
8,2692008


7,8792009


9,1472010


6,4672011


5,272Thereafter


3,487Total

$
40,521   NOTE 5.
    CONSOLIDATED
    BALANCE SHEETS AND STATEMENTS OF OPERATIONS COMPONENTS    December 31,


December 31,2006


2005Accounts receivable, net:Gross accounts receivable

$
67,567


$
61,640Allowance for rebates and returns


(2,199
)


(3,988
)Allowance for doubtful accounts


(3,214
)


(3,247
)Total

$
62,154


$
54,405Property and equipment, net:Buildings

$



$
10,171Computer equipment


34,067



32,642Furniture, fixtures and equipment


7,137



8,203Other


12,573



11,89253,777



62,908Less accumulated depreciation and
    amortization


(42,601
)


(49,105
)11,176



13,803Land






4,034Total

$
11,176


$
17,837Accrued expenses:Accrued payroll and incentives

$
24,461


$
19,329Professional service fees and
    settlement costs


2,440



3,349Other


9,537



17,526Total

$
36,438


$
40,204  F-21




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
    Year Ended December 31,2006


2005


2004Restructuring

$
12,880


$
16,110


$
2,851Amortization of other intangibles


557



2,850



4,681Acquisition-related expenses


3,836



1,642



2,309Other charges:In-process research and development


4,800



300



Other charges:






(291
)


$
22,073


$
20,611


$
9,841        F-22




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
   NOTE 6.
    ACQUISITIONS  Segue
    Software, Inc.
    Cash paid for outstanding common
    shares

$
105,358Cash paid for outstanding vested
    common stock options


8,130Direct transaction costs


2,451Total purchase price

$
115,939  F-23




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
    Current assets and other tangible
    assets:Cash and short-term investments

$
13,482Accounts receivable


4,199Other current assets


1,210Property and equipment


902Deferred tax assets, net of
    valuation allowance


17,835Goodwill


65,528Amortizable intangible assets:Developed technology


23,400In-process research and development


4,800Customer relationships


7,500Trademarks


1,000Non-compete agreements


300Maintenance agreements


11,300Total assets acquired


151,456Liabilities assumed:Deferred revenues


(9,042
)Current liabilities


(7,276
)Deferred tax liabilities


(17,835
)Other long-term liabilities


(1,364
)Net assets acquired

$
115,939       Accounting for Income
    Taxes
 F-24




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
     Pro Forma
    Financial Information
    Twelve Months EndedDecember 31,


December 31,2006


2005(In thousands, exceptper share data)Total revenues

$
315,057


$
312,539Net loss

$
(57,671
)

$
(44,383
)Net loss per share:Net loss per share 
    basic

$
(0.75
)

$
(0.57
)Net loss per share 
    diluted

$
(0.75
)

$
(0.57
)   Legadero
    Cash tendered

$
7,509Direct transaction costs


131Total purchase price

$
7,640  F-25




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
    Current assets and other tangible
    assets:Cash

$
287Current assets


31Deferred tax assets, net of
    valuation allowance


1,107Goodwill


4,425Amortizable intangible assets:Developed technology


2,400Customer list


100Trademarks, trade names and
    service marks


100Non-compete covenants


100In-process research and development


300Total assets acquired


8,850Liabilities assumed:Current liabilities


(103
)Deferred tax liabilities


(1,107
)Net assets acquired

$
7,640     Accounting for Income
    Taxes
    TeraQuest
    Metrics, Inc.
   F-26




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
     Cash tendered

$
5,391Direct transaction costs


523Total purchase price

$
5,914     Current assets and other tangible
    assets:Cash

$
1,478Current assets


2,049Deferred tax assets, net of
    valuation allowance


870Goodwill


2,692Customer list


1,475Total assets acquired


8,564Liabilities assumed:Current liabilities


(1,780
)Deferred tax liabilities


(870
)Net assets acquired

$
5,914        F-27




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
   NOTE 7.
    RESTRUCTURING
    AND MERGER-RELATED CHARGES  Accounting for Costs Associated
    with Exit or Disposal Activities Employers Accounting for
    Postemployment Benefits  an amendment of FASB
    Statement No. 5 and 43, Restructuring and
    Impairment Charges,
  Severanceand Benefits


Facilities


Other


TotalAccrual at December 31, 2003

$
3,499


$
6,158


$
474


$
10,1312004 restructuring


1,073



3,372



395



4,840Cash paid and write-offs during
    2004


(3,812
)


(5,101
)


(787
)


(9,700
)Reversal of previous restructuring


(436
)


(1,302
)






(1,738
)Reclassification of previous
    restructuring


(226
)






226



Accrual at December 31, 2004


98



3,127



308



3,5332005 restructuring


3,976



13,121



38



17,135Cash paid and write-offs during
    2005


(3,802
)


(2,680
)


(42
)


(6,524
)Reversal of previous restructuring


(80
)


(884
)






(964
)Accrual at December 31, 2005


192



12,684



304



13,180Acquired from Segue


3,507



542







4,0492006 restructuring


9,577



3,177



446



13,200Cash paid and write-offs during
    2006


(8,904
)


(4,800
)


(592
)


(14,296
)Reversal of previous restructuring


(194
)


(52
)


(74
)


(320
)Accrual at December 31, 2006

$
4,178


$
11,551


$
84


$
15,813          F-28




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
      NOTE 8.
    INCOME
    TAXES    Year Ended December 31,2006


2005


2004U.S.

$
(52,033
)

$
(33,783
)

$
9,391Non-U.S.


2,602



8,335



11,017$
(49,431
)

$
(25,448
)

$
20,408     Year Ended December 31,2006


2005


2004Current:Federal

$
(70
)

$
(62
)

$
275State


118



19



681Non-U.S.


930



4,450



7,681$
978


$
4,407


$
8,637Deferred:Federal

$



$



$
State










Non-U.S.


1,544



(23
)


4011,544



(23
)


401$
2,522


$
4,384


$
9,038  F-29




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
    Year Ended December 31,2006


2005


2004Tax provision computed at
    U.S. statutory rate

$
(17,301
)

$
(8,907
)

$
7,141State taxes


(2,966
)


(1,527
)


1,224Limitation or (benefit) on
    utilization of U.S. losses, credits and future deductions


13,350



4,329



(8,752
)Non-U.S. withholding
    taxes


1,139



1,271



1,432Tax effect of acquisition-related
    non-deductible goodwill and intangibles


4,821



5,384



5,858Tax effect of foreign income
    inclusions


3,209



4,285



Subsidiaries results subject
    to tax at rates other than U.S. statutory rates


(1,569
)


(237
)


2,290Limitation or (benefit) on
    utilization of
    non-U.S. losses,
    credits and future deductions


972



537



(155
)Change in valuation allowance


867



(751
)


Income tax provision

$
2,522


$
4,384


$
9,038     Year Ended December 31,2006


2005Accrued expenses

$
12,917


$
10,492Accounts receivables reserves


1,312



1,221Deprecation, amortization and other


5,473



671U.S. federal and state loss
    and credit carryforwards


112,931



146,768Non-U.S. loss
    carryforwards


3,359



8,721Gross deferred tax assets


135,992



167,873Deferred tax assets valuation
    allowance


(110,446
)


(164,487
)Deferred tax assets, net of
    valuation allowance

$
25,546


$
3,386Deferred tax liability

$
(9,618
)

$
(895
)Acquired intangibles

$
(16,533
)

$
(1,585
)Deferred tax liability, net

$
(26,151
)

$
(2,480
)Total deferred tax assets
    (liabilities), net

$
(605
)

$
906    F-30




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
        Share-Based Payments Accounting for
    Stock Issued to Employees.
     F-31




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
   NOTE 9.
    COMMON
    SHARES RESERVED FOR FUTURE ISSUANCE    Stock Incentive Plans


20,589,388Employee Stock Purchase Plan


309,637Total


20,899,025   NOTE 10.
    STOCK
    REPURCHASE PROGRAMS  Discretionary
    Repurchase Program
        10b5-1
    Repurchase Program
  10b5-1
  10b5-1
  NOTE 11.
    STOCK
    BENEFIT PLAN AND STOCK-BASED COMPENSATION  General
    Stock
    Incentive Plans
   F-32




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
         Stock
    Option Activities
    Weighted-Weighted-


AverageAverage


RemainingExercise


Contractual


AggregateShares


Price


Term


Intrinsic Value(Years)


(Thousands)Outstanding at December 31,
    2005


16,030


$
9.23Granted


4,290


$
5.44Exercised


(389
)

$
4.59Forfeited/expired


(5,091
)

$
9.87Outstanding at December 31,
    2006


14,840


$
8.04



5.57


$
751Vested and expected to vest at
    December 31, 2006


13,359


$
8.31



5.05


$
578Exercisable at December 31,
    2006


9,283


$
9.47



3.76


$
136    F-33




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
  in-the-money
    Year Ended December 31,2006


2005


2004Shares


Price


Shares


Price


Shares


PriceOptions outstanding at beginning
    of period:


16,030


$
9.23



12,567


$
10.99



13,722


$
11.42Stock options:Granted


4,290


$
5.44



6,721


$
6.69



3,412


$
9.44Exercised


(389
)

$
4.59



(367
)

$
5.85



(1,599
)

$
6.55Canceled


(5,091
)

$
9.87



(2,891
)

$
11.47



(2,968
)

$
13.36Options outstanding at end of
    period:


14,840


$
8.04



16,030


$
9.23



12,567


$
10.99Exercisable


9,283


$
9.47



12,581


$
10.09



7,047


$
11.83       Options OutstandingWeighted-





Options ExercisableNumber


Average


Weighted-


Number


Weighted-Outstanding at


Remaining


Average


Exercisable at


AverageDecember 31,


Contractual


Exercise


December 31,


Exercise2006


Life


Price


2006


Price$3.50  $5.44


3,200



9.25


$
5.21



222


$
4.83$5.45  $5.84


3,269



6.78


$
5.64



2,457


$
5.65$5.85  $7.45


3,104



8.39


$
6.43



1,361


$
6.57$7.49  $10.15


3,008



7.29


$
8.88



2,984


$
8.88$10.18  $714.22


2,259



5.07


$
16.61



2,259


$
16.6114,840



7.49


$
8.04



9,283


$
9.47       Restricted
    Stock
  and/or
 F-34




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
        WeightedUnvested


AverageRestricted


Grant DateStock


FairOutstanding


ValueBalance at December 31, 2005


1,310


$
6.42Granted


363


$
5.55Vested


(433
)

$
6.10Forfeited


(390
)

$
7.00Balance at December 31, 2006


850


$
5.94     Employee
    Stock Purchase Plan
       F-35




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
         Form S-8
  Stock-Based
    Compensation Expense
  paid-in-capital
    true-up
  Assumptions
    for Estimating Fair Value of Stock Option Grants and Stock
    Purchases
   F-36




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
     Year Ended December 31,2006


2005


2004Expected Life


5.01 years



4.0 years



4.2 yearsRisk-free interest rate


4.51
%


4.39
%


3.49
%Volatility


47.5
%


57.0
%


60.0
%Dividend yield


0.00
%


0.00
%


0.00
%     Year Ended December 31,2006


2005


2004Expected Life


6 months



6 months



6 monthsRisk-free interest rate


4.39
%


4.32
%


2.12
%Volatility


40.7
%


38.0
%


41.0
%Dividend yield


0.00
%


0.00
%


0.00
%         Twelve Months Ended December 31, 2006Employee Stock


RestrictedStock Options


Purchase Rights


Stock


TotalCost of service revenues

$
204


$
59


$
168


$
431Selling, general and administrative


4,768



528



3,083



8,379Research and development


1,278



336



264



1,878Total

$
6,250


$
923


$
3,515


$
10,688    F-37




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
    NOTE 12.
    EMPLOYEE
    401(k) PLAN    NOTE 13.
    STOCKHOLDER
    RIGHTS AGREEMENT   F-38




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
   NOTE 14.
    ENTERPRISE-WIDE
    DISCLOSURES  and/or Disclosures about Segments of an Enterprise and Related
    Information,
  Year Ended December 31,2006


2005


2004Total revenues from unaffiliated
    customers:Americas

$
168,278


$
138,008


$
139,585EMEA


99,218



97,529



121,515Asia Pacific


37,164



41,206



48,448Total revenues


304,660



276,743



309,548License and other revenues

$
165,886


$
163,182


$
214,021Technical Support


99,713



84,525



75,690Consulting and education services


39,061



29,036



19,837Total revenues


304,660



276,743



309,548Inter-company revenue U.S.

$
11,264


$
10,493


$
10,344Elimination of
    inter-company-revenues


(11,264
)


(10,493
)


(10,344
)Reported inter-company revenues

$



$



$
Operating income (loss):Americas

$
(76,308
)

$
(81,422
)

$
(60,733
)EMEA


18,955



35,912



62,918Asia Pacific


4,260



10,535



16,489Operating income (loss):


(53,093
)


(34,975
)


18,674Gain on sales of investment






4,372



Interest and other income, net


3,662



5,155



1,734Income (loss) before income taxes

$
(49,431
)

$
(25,448
)

$
20,408Long-lived assets:Americas

$
11,143


$
21,546


$
16,680EMEA


2,549



2,103



2,256Asia Pacific


4,190



4,146



4,246Long-lived assets:


17,882



27,795



23,182Other non-current assets


293,876



191,422



195,337Non-current assets


311,758



219,217



218,519 F-39




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
  Year Ended December 31,2006


2005


2004Identifiable assets:Americas

$
339,424


$
243,119


$
233,360EMEA


38,308



33,990



46,077Asia Pacific


10,850



12,343



14,648Identifiable assets:


388,582



289,452



294,085General corporate assets (cash,
    cash equivalents and short-term investments)


55,317



175,078



221,198Total assets


443,899



464,530



515,283       2006


2005


2004United States

$
147,050



48
%

$
118,936



43
%

$
120,380



39
%Germany


29,210



10
%


31,010



11
%


35,072



11
%United Kingdom


24,427



8
%


22,484



8
%


34,116



11
%All other countries


103,973



34
%


104,313



38
%


119,980



39
%Total revenues

$
304,660



100
%

$
276,743



100
%

$
309,548



100
%        F-40




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
     For the Twelve Months Ended


For the Twelve Months EndedDecember 31, 2006


December 31, 2005Enterprise


CodeGear





Enterprise


CodeGearALM


DPG


IDE


Total


ALM


DPG


IDE


TotalLicense and other revenues

$
85,030


$
29,224


$
51,632


$
165,886


$
52,059


$
50,923


$
60,200


$
163,182Service revenues


90,352



24,373



24,049



138,774



59,061



24,201



30,299



113,561Total

$
175,382


$
53,597


$
75,681


$
304,660


$
111,120


$
75,124


$
90,499


$
276,743     TotalLong-lived assets:

Enterprise


CodeGear


ConsolidatedGoodwill

$
186,016


$
67,340


$
253,356Other non-current assets


57,828



574



58,402Non-current assets


243,844



67,914



311,758Total assets

$
343,508


$
100,391


$
443,899   NOTE 15.
    COMMITMENTS
    AND CONTINGENCIES  Indemnifications
    and Guarantees
  Guarantors Accounting and Disclosure
    Requirements for Guarantees, Including Indirect Guarantees of
    Indebtedness of Others
       F-41




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
          Leases
  Accounting for Leases.
 F-42




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
     2007


2008


2009


2010


2011


Thereafter


TotalOperating leases

$
13,263


$
10,486


$
9,086


$
7,327


$
6,453


$
19,328


$
65,943Restructured operating leases


4,815



3,148



2,985



760











11,708Gross commitments


18,078



13,634



12,071



8,087



6,453



19,328



77,651Sublease income


(611
)


(314
)


(95
)


(32
)










(1,052
)Net commitments

$
17,467


$
13,320


$
11,976


$
8,055


$
6,453


$
19,328


$
76,599       Litigation
  Accounting for Contingencies
    Service
    Commitments
   F-43




---



##### Table of Contents



BORLAND SOFTWARE CORPORATION
 NOTES TO THE CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31, 2006
   NOTE 16.
    SUBSEQUENT
    EVENTS  Convertible
    senior notes
         F-44




---



##### Table of Contents



EXHIBIT
    INDEX
  Exhibit



Incorporated by Reference

FiledNumber

Description of Exhibit

Form

Date

Number

Herewith2
.1

Agreement and Plan of Merger and
    Reorganization by and among Borland Software Corporation, Targa
    Acquisition Corp. I, Targa Acquisition Corp. II,
    TogetherSoft Corporation, Peter Coad, as Primary
    Stockholders Agent, and Kurt Jaggers, as Secondary
    Stockholders Agent, dated as of October 29, 2002

8-K

11/1/2002


2
.12
.2

Agreement and Plan of Merger among
    Borland Software Corporation, Galaxy Acquisition Corp. and
    Starbase Corporation, dated as of October 8, 2002

8-K

10/10/2002


2
.12
.3

Agreement and Plan of Merger,
    dated as of February 7, 2006, by and among Segue Software,
    Inc., Borland Software Corporation and Beta Merger Sub, Inc.

8-K

2/8/2006


2
.12
.4

Form of Voting Agreement, dated as
    of February 7, 2006, by and among Borland Software
    Corporation and the other parties signatory thereto

8-K

2/8/2006


2
.23
.1

Restated Certificate of
    Incorporation of Borland Software Corporation

10-Q

8/9/2005


3
.13
.2

Amended and Restated Bylaws of
    Borland Software Corporation

10-Q

8/9/2005


3
.24
.1

Stockholder Rights Agreement,
    dated as of October 26, 2001, between Borland Software
    Corporation and Mellon Investor Services, L.L.C.

8-A

10/31/2001


14
.2

Specimen Stock Certificate of
    Borland Software Corporation

10-Q

5/13/2002


4
.14
.3

Indenture by and between the
    Company and U.S. Bank National Association, as trustee,
    dated February 6, 2007

8-K

2/08/2007


4
.14
.4

Global Note representing the
    Companys 2.75% Convertible Senior Note due 2012

8-K

2/08/2007


4
.24
.5

Registration Rights Agreement by
    and between the Company and J.P. Morgan Securities Inc.,
    dated February 6, 2007

8-K

2/08/2007


4
.310
.1

Form of Indemnity Agreement.+

S-8

9/26/199010
.2

2005 Incentive Compensation Plan
    for Executive Officers.+

10-K

3/25/2005


10
.210
.3

2006 Incentive Compensation Plan
    for Executive Officers.+

8-K

3/20/2006


10
.8610
.4

1985 Stock Option Plan.+

10-K

3/28/2003


10
.410
.5

Non-Employee Directors Stock
    Option Plan.+

8-K

12/27/199110
.6

1992 Stock Option Plan.+

S-8

7/4/199210
.7

1993 Stock Option Plan.+

S-8

3/11/199310
.8

1997 Stock Option Plan.+

S-8

12/19/1997


4
.410
.9

Amendment to the 1997 Stock Option
    Plan.+

S-8

9/1/2000


4
.910
.10

Second Amendment to the 1997 Stock
    Option Plan.+

S-8

6/1/2001


4
.610
.11

1997 Employee Stock Purchase Plan.+

S-8

12/19/1997


4
.510
.12

1998 Nonstatutory Stock Option
    Plan.+

10-K

3/28/2003


10
.1210
.13

1999 Employee Stock Purchase Plan.+

10-Q

8/9/2005


10
.1210
.14

Borland Software Corporation Dale
    Fuller Individual Stock Option Plan.+

10-K

4/4/2000


10
.1810
.15

2002 Stock Incentive Plan.+

8-K

5/16/2005


99
.210
.16

Form of Notice of Grant under the
    Discretionary Option Grant Program of the 2002 Stock Incentive
    Plan.+

10-Q

11/9/2004


10
.73




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Description of Exhibit

Form

Date

Number

Herewith10
.17

Form of Stock Option Agreement
    under the Discretionary Option Grant Program of the 2002 Stock
    Incentive Plan.+

10-Q

11/9/2004


10
.7410
.18

Form of Stock Issuance Agreement
    under the 2002 Stock Incentive Plan.+

10-K

3/25/2005


10
.1710
.19

Form of Option Agreement under the
    Automatic Option Grant Program of the 2002 Stock Incentive Plan.+

10-K

3/25/2005


10
.1810
.20

Form of Addendum to Stock Option
    Agreement under the 2002 Stock Incentive Plan (Twelve Months
    Acceleration).+

10-K

3/25/2005


10
.1910
.21

Form of Addendum to Stock Option
    Agreement under the 2002 Stock Incentive Plan (50%
    Acceleration).+

10-K

3/25/2005


10
.2010
.22

Form of Addendum to Stock Option
    Agreement under the 2002 Stock Incentive Plan (100%
    Acceleration).+

10-K

3/25/2005


10
.2110
.23

Form of Stock Issuance Agreement
    under the Stock Issuance Program of the 2002 Stock Incentive
    Plan.+

10-Q

11/8/2005


10
.7410
.24

Form of Acceleration Addendum to
    Stock Issuance Agreement under the Stock Issuance Program of the
    2002 Stock Incentive Plan.+

10-Q

11/8/2005


10
.7510
.25

Form of Stock Option Agreement
    under the Discretionary Option grant program of the 2002 Stock
    Incentive Plan, as amended on October 27, 2005.+

10-Q

11/8/2005


10
.7610
.26

Form of Acceleration Addendum to
    Stock Option Agreement under the Discretionary grant program of
    the 2002 Stock Incentive Plan.+

10-Q

11/8/2005


10
.7710
.27

Borland Software Corporation 2003
    Supplemental Stock Option Plan.+

8-K

3/20/2006


10
.8710
.28

Segue Software Inc. Special
    Termination and Vesting Plan.+

8-K

7/6/2006


10
.8910
.29

Open Environment Corporation
    Amended and Restated 1993 Stock Option Plan.+

10-K

3/28/2003


10
.1710
.30

Visigenic Software, Inc. 1995
    Stock Option Plan.+

10-K

3/28/2003


10
.1810
.31

Starbase Corporation 2001 Stock
    Plan.+

S-8

1/24/2003


99
.110
.32

Starbase Corporation 1996 Stock
    Option Plan.+

S-8

1/24/2003


99
.210
.33

Starbase Corporation NSO Stock
    Option Program.+

S-8

1/24/2003


99
.310
.34

Premia Corporation 1998 Stock
    Option Plan.+

S-8

1/24/2003


99
.410
.35

Technology Builders, Inc. Amended
    and Restated Stock Option and Stock Incentive Plan.+

S-8

1/24/2003


99
.510
.36

TogetherSoft Corporation 2000
    Stock Plan.+

S-8

1/24/2003


99
.610
.37

TogetherSoft Corporation 2001
    Officer Stock Plan.+

S-8

1/24/2003


99
.710
.38

TogetherSoft Corporation 2001
    Non-U.S. Plan.+

S-8

1/24/2003


99
.810
.39

TogetherSoft Corporation 2001
    California Plan.+

S-8

1/24/2003


99
.910
.40

Employment Agreement between Dale
    L. Fuller and Borland Software Corporation dated as of
    January 1, 2001.+

10-K

3/29/2001


10
.2010
.41

Amendment to Employment Agreement
    between Borland Software Corporation and Dale L. Fuller, dated
    July 1, 2003.+

10-Q

11/14/2003


10
.310
.42

Employment Agreement between
    Borland Software Corporation and Kenneth R. Hahn dated as of
    August 7, 2002.+

10-Q

11/14/2002


99
.310
.43

Amendment to Employment Agreement
    between Borland Software Corporation and Kenneth R. Hahn dated
    as of October 22, 2002.+

10-Q

11/14/2002


99
.4




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Description of Exhibit

Form

Date

Number

Herewith10
.44

Amendment to the Employment
    Agreement between Borland Software Corporation and Kenneth R.
    Hahn, dated as of June 7, 2004.+

10-Q

8/9/2004


10
.7210
.45

Addendum to Stock Option Agreement
    between Borland Software Corporation and Kenneth R. Hahn dated
    as of November 3, 2004.+

10-K

3/25/2005


10
.3910
.46

Amendment to Employment Agreement
    between Borland Software Corporation and Kenneth R. Hahn dated
    as of May 12, 2005.+

8-K

5/16/2005


99
.310
.47

Employment Agreement between
    Borland Software Corporation and Scott Arnold, dated
    October 2, 2003.+

10-Q

11/14/2003


10
.410
.48

Addendum to Stock Option Agreement
    between Borland Software Corporation and Scott Arnold dated as
    of November 3, 2004.+

10-K

3/25/2005


10
.4110
.49

Separation and Mutual Release
    Agreement between the Company and Scott J. Arnold, dated
    December 2, 2005.+

8-K

12/6/2005


10
.8110
.50

Employment Agreement between
    Borland Software Corporation and Timothy J. Stevens, dated
    September 17, 2003.+

10-Q

11/14/2003


10
.510
.51

Amendment to Employment Agreement
    between Borland Software Corporation and Timothy J. Stevens,
    dated March 4, 2004.+

10-K

3/15/2004


10
.3410
.52

Addendum to Stock Option Agreement
    between Borland Software Corporation and Timothy J. Stevens
    dated as of November 3, 2004.+

10-K

3/25/2005


10
.4410
.53

Separation and Mutual Release
    Agreement between the Company and Timothy J. Stevens dated
    June 16, 2006.+

8-K

6/19/2006


10
.110
.54

Employment Agreement between
    Borland Software Corporation and Matthew Thompson, dated
    October 1, 2003.+

10-Q

11/14/2003


10
.610
.55

Separation Agreement and Full and
    Final Release of Claims between the Company and Matthew
    Thompson, dated January 5, 2007.+

8-K

1/08/2007


10
.10010
.56

Employment Agreement between the
    Company and Tod Nielsen, dated November 1, 2005.+

8-K

11/8/2005


10
.7310
.57

Form of Addendum to Employment
    Offer Letters for Severance Benefits for Named Executive
    Officers.+

10-Q

11/8/2005


10
.7810
.58

2003 Stock Option Agreement for
    Tod Nielsen under the 2003 Supplemental Stock Option Plan.+

10-K

5/02/2006


10
.5210
.59

Addendum to Stock Option Agreement
    for Tod Nielsen.+

10-K

5/02/2006


10
.5310
.60

Stock Issuance Agreement for Tod
    Nielsen.+

10-K

5/02/2006


10
.5410
.61

Addendum to Stock Issuance
    Agreement for Tod Nielsen.+

10-K

5/02/2006


10
.5510
.62

Amendment to Employment Agreement
    between the Company and Tod Nielsen effective as of
    November 1, 2005.+

8-K/A

11/23/2005


10
.7910
.63

Employment Offer Letter between
    the Company and Peter Morowski, dated June 3, 2006.+

8-K

8/21/2006


10
.9310
.64

Addendum to Employment Offer
    Letter for Severance Benefits between the Company and Peter
    Morowski, dated June 3, 2006.+

8-K

8/21/2006


10
.9410
.65

Employment Offer Letter between
    the Company and Greg Wrenn, dated September 7, 2006.+

8-K

10/19/2006


10
.96




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Description of Exhibit

Form

Date

Number

Herewith10
.66

Addendum to Employment Offer
    Letter for Severance Benefits between the Company and Greg
    Wrenn, dated September 7, 2006.+

8-K

10/19/2006


10
.9710
.67

Employment Agreement between the
    Company and Michael Sullivan, dated July 5, 2006.+

8-K

7/6/2006


10
.8810
.68

Separation Agreement and Full and
    Final Release of Claims between the Company and Michael
    Sullivan, dated September 18, 2006.+

8-K

9/22/2006


10
.9510
.69

Employment Offer Letter between
    the Company and Erik Prusch, dated October 2, 2006.+

8-K

11/14/2006


10
.9810
.70

Addendum to Employment Offer
    Letter for Severance Benefits between the Company and Erik
    Prusch, dated October 2, 2006.+

8-K

11/14/2006


10
.9910
.71

Employment Offer Letter between
    the Company and David Packer, dated January 4, 2007.+

8-K

1/08/2007


10
.10110
.72

Addendum to Employment Offer
    Letter for Severance Benefits between the Company and David
    Packer.+

8-K

1/08/2007


10
.10210
.73

Summary of Board Compensation.+

8-K

1/17/2007


10
.10310
.74

Lease Agreement by and between
    Borland Software Corporation and ScanlanKemperBard Companies
    dated as of February 17, 2000.

10-K

3/29/2001


10
.4410
.75

First Amendment to Lease Agreement
    by and between Borland Software Corporation and Enterprise Way
    Associates, LLC as dated as of September 30, 2000.

10-K

3/29/2001


10
.4510
.76

Second Amendment to Lease
    Agreement by and between Borland Software Corporation and
    Enterprise Way Associates, LLC as dated as of June 1, 2001.

10-K

3/28/2003


10
.5410
.77

Third Amendment to Lease Agreement
    by and between Borland Software Corporation and Enterprise Way
    Associates, LLC as dated as of November 1, 2001.

10-K

3/28/2003


10
.5510
.78

Net Office Lease and related
    agreements by and  between Sun Microsystems, Inc., Cupertino
    City Center Buildings and Borland Software Corporation.

10-K

3/28/2003


10
.5610
.79

Office Lease and amendment between
    Starwood O.C. Portfolio I, L.L.C., and Starbase Corporation.

10-K

3/28/2003


10
.5710
.80

Lease and amendment between
    Davis-Sandler Three LLC and TogetherSoft Corporation.

10-K

3/28/2003


10
.5810
.81

Agreement of Purchase and Sale
    dated May 30, 2006 between Borland Software Corporation and
    Fowler Property Acquisitions, LLC.

8-K

6/5/2006


10
.110
.82

First Amendment to Agreement of
    Purchase and Sale dated May 30, 2006 between Borland
    Software Corporation and Fowler Property Acquisitions, LLC,
    dated June 30, 2006.

8-K

7/7/2006


10
.9110
.83

Technology License and
    Distribution Agreement between Sun Microsystems, Inc. and
    Borland Software Corporation, dated as of October 31,
    1995.++

10-Q

8/13/2001


10
.210
.84

Addendum Number 1 to
    Technology License and Distribution Agreement between Sun
    Microsystems, Inc. and Borland Software Corporation, dated as of
    June 25, 1998. (To the best of our knowledge, no executed
    document titled Addendum Number 2 exists.)

10-Q

8/13/2001


10
.3




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##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Description of Exhibit

Form

Date

Number

Herewith10
.85

Addendum Number 3 to
    Technology License and Distribution Agreement between Sun
    Microsystems, Inc. and Borland Software Corporation, dated as of
    June 15, 2000.

10-Q

8/13/2001


10
.410
.86

Amendment No. 4 to Technology
    License and Distribution Agreement Sun Microsystems, Inc. and
    Borland Software Corporation, dated as of December 29, 2000
    (Attached as
    Exhibit A-1
    to the Software License Agreement between Sun Microsystems, Inc.
    and Borland Software Corporation, dated as of December 29,
    2000).

10-Q

8/13/2001


10
.1110
.87

Letter Agreement between Sun
    Microsystems, Inc. and Borland Software Corporation, dated as of
    November 7, 1995.

10-Q

8/13/2001


10
.510
.88

Letter Agreement between Sun
    Microsystems, Inc. and Borland Software Corporation, dated as of
    March 9, 1998.

10-Q

8/13/2001


10
.610
.89

Letter Agreement between Sun
    Microsystems, Inc. and Borland Software Corporation, dated as of
    November 5, 1998.

10-Q

8/13/2001


10
.710
.90

Letter Agreement between Sun
    Microsystems, Inc. and Borland Software Corporation, dated as of
    February 1, 1999.

10-Q

8/13/2001


10
.810
.91

Software License Agreement between
    Sun Microsystems, Inc. and Borland Software Corporation, dated
    as of December 29, 2000.

10-Q

8/13/2001


10
.1110
.92

Amendment Number 1 to
    Software License Agreement between Sun Microsystems, Inc. and
    Borland Software Corporation, dated as of December 12, 2001.

10-Q

5/13/2002


10
.110
.93

Trademark License for Java Powered
    between Sun Microsystems, Inc. and Borland Software Corporation,
    dated as of December 29, 2000.

10-Q

8/13/2001


10
.1210
.94

Wireless Toolkit Supplement to the
    Sun Community Source Licenses between Sun Microsystems, Inc. and
    Borland Software Corporation, dated as of December 21,
    2001.++

10-Q

5/13/2002


10
.510
.95

Amendment Number 2 to the
    Software License Agreement Amendment Number 2, between Sun
    Microsystems, Inc. and Borland Software Corporation, dated as of
    December 22, 2005.









X10
.96

Amendment to Stock Option
    Agreement between Borland Software Corporation and Dale L.
    Fuller, dated February 2, 2005.+

10-Q

5/10/2005


10
.7210
.97

Visual Studio Partner Master
    Agreement between Microsoft Corporation and Borland Software
    Corporation, dated August 11, 2006.









X21
.1

Subsidiaries of Borland Software
    Corporation.









X23
.1

Consent of PricewaterhouseCoopers
    LLP, Independent Registered Public Accounting Firm.









X31
.1

Certification of Tod Nielsen,
    Chief Executive Officer of Borland Software Corporation,
    pursuant to
    Rule 13a-14(a).









X31
.2

Certification of Erik Prusch,
    Chief Financial Officer of Borland Software Corporation,
    pursuant to
    Rule 13a-14(a).









X




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Description of Exhibit

Form

Date

Number

Herewith32
.1

Certification of Tod Nielsen,
    Chief Executive Officer of Borland Software Corporation,
    pursuant to
    Rule 13a-14(b)
    and 18 U.S.C. Section 1350.+++









X32
.2

Certification of Erik Prusch,
    Chief Financial Officer of Borland Software Corporation,
    pursuant to
    Rule 13a-14(b)
    and 18 U.S.C. Section 1350.+++









X     +
    
    Management contract or compensatory plan or arrangement.++
    
    Confidential treatment has been requested with respect to
    certain portions of this exhibit. Omitted portions have been
    filed separately with the SEC.+++
    
    The certifications attached as Exhibit 32.1 and
    Exhibit 32.2 that accompany this Annual Report on
    Form 10-K,
    are not deemed filed with the Securities and Exchange Commission
    and are not to be incorporated by reference into any filing of
    Borland Software Corporation under the Securities Act of 1933 or
    the Securities Exchange Act of 1934 whether made before or after
    the date of this
    Form 10-K,
    irrespective of any general incorporation language contained in
    such filing.