##### Table of Contents





UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
   FORM 10-Q
   þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934.For the quarterly period ended
    June 30, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934.    Commission file number
    000-50784
   Blackboard Inc.
 (Exact Name of Registrant as
    Specified in Its Charter)
   Delaware

52-2081178(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)650 Massachusetts Avenue, N.W.
    Washington D.C.(Address of Principal
    Executive Offices)

20001(Zip Code)    Registrants Telephone Number, Including Area Code:
 (202) 463-4860
  þ o
  Regulation S-T o o
  Rule 12b-2
  Large accelerated filer þ

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
   Class

Outstanding at July 31, 2009Common Stock, $0.01 par value

31,998,796




---



##### 





Blackboard
    Inc.
    Quarterly Report on
    Form 10-Q
    For the Quarter Ended June 30, 2009
    INDEX
   
 PART I. FINANCIAL INFORMATIONItem 1.


Consolidated Financial StatementsUnaudited Consolidated Balance Sheets as of
    December 31, 2008 and June 30, 2009


1Unaudited Consolidated Statements of Operations
    for the Three and Six Months Ended June 30, 2008 and
    2009


2Unaudited Consolidated Statements of Cash Flows
    for the Six Months Ended June 30, 2008 and 2009


3Notes to Unaudited Consolidated Financial
    Statements


4Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


22Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


39Item 4.


Controls and Procedures


39PART II. OTHER INFORMATIONItem 1.


Legal Proceedings


40Item 1A.


Risk Factors


40Item 4.


Submission of Matters to a Vote of Security
    Holders


50Item 6.


Exhibits


51Signature


52EX-31.1EX-31.2EX-32.1EX-32.2     Throughout this Quarterly Report on
    Form 10-Q,
    the terms we, us, our and
    Blackboard refer to Blackboard Inc. and its
    subsidiaries.
 ii




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##### Table of Contents



PART I 
    FINANCIAL INFORMATION  Item 1.
    Consolidated
    Financial Statements  BLACKBOARD
    INC.UNAUDITED CONSOLIDATED BALANCE SHEETS(In thousands, except share and per share
    data)
  December 31,


June 30,2008


2009(As adjusted (1))Current assets:Cash and cash equivalents

$
141,746


$
58,691Accounts receivable, net of allowance for doubtful accounts of
    $926 and $2,049, respectively


92,529



87,845Inventories


1,783



1,675Prepaid expenses and other current assets


8,361



13,469Deferred tax asset, current portion


1,796



5,142Deferred cost of revenues


7,126



7,407Total current assets


253,341



174,229Deferred tax asset, noncurrent portion


18,897



10,477Investment in common stock warrant


1,990



3,124Restricted cash


4,249



4,169Property and equipment, net


31,950



38,151Other assets


549



1,196Goodwill


263,850



327,991Intangible assets, net


75,126



88,078Total assets

$
649,952


$
647,415Current liabilities:Accounts payable

$
2,579


$
6,484Accrued expenses


27,879



31,150Deferred rent, current portion


345



195Deferred revenues, current portion


179,238



152,737Total current liabilities


210,041



190,566Convertible senior notes, net of debt discount of $15,077 and
    $11,959, respectively


149,923



153,041Deferred rent, noncurrent portion


10,959



11,690Deferred revenues, noncurrent portion


5,554



6,383Total liabilities


376,477



361,680Commitments and contingenciesStockholders equity:Preferred stock, $0.01 par value; 5,000,000 shares
    authorized, and no shares issued or outstanding






Common stock, $0.01 par value; 200,000,000 shares
    authorized; 31,359,738 and 31,948,251 shares issued and
    outstanding, respectively


314



320Additional paid-in capital


356,683



373,047Accumulated deficit


(83,522
)


(87,632
)Total stockholders equity


273,475



285,735Total liabilities and stockholders equity

$
649,952


$
647,415       (1)
    
    On January 1, 2009, the Company adopted FASB Staff Position
    No. APB
    14-1,
    Accounting for Convertible Debt Instruments that May be
    Settled in Cash Upon Conversion (FSP APB
    14-1),
    which required adjustment of prior periods. See Note 7 of
    notes to unaudited consolidated financial statements. 1




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##### Table of Contents



BLACKBOARD
    INC.UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except share and per share
    data)
  Three Months Ended


Six Months EndedJune 30,


June 30,2008


2009


2008


2009(As adjusted (1))





(As adjusted (1))Revenues:Product

$
68,377


$
83,381


$
131,486


$
163,507Professional services


7,170



8,729



12,537



15,051Total revenues


75,547



92,110



144,023



178,558Operating expenses:Cost of product revenues, excludes $4,572 and $2,034 for the
    three months ended June 30, 2008 and 2009, respectively,
    and $8,660 and $5,672 for the six months ended June 30,
    2008 and 2009, respectively, in amortization of acquired
    technology included in amortization of intangibles resulting
    from acquisitions shown below(2)


18,000



21,762



33,971



43,207Cost of professional services revenues(2)


5,134



4,703



10,084



9,470Research and development(2)


9,944



11,219



19,677



22,045Sales and marketing(2)


22,763



25,771



43,620



49,713General and administrative(2)


12,461



14,238



25,215



27,840Patent related (proceeds) impairment and other costs


(3,313
)


10,984



(3,313
)


10,984Amortization of intangibles resulting from acquisitions


9,729



7,861



18,408



16,446Total operating expenses


74,718



96,538



147,662



179,705Income (loss) from operations


829



(4,428
)


(3,639
)


(1,147
)Other (expense) income, net:Interest expense


(3,088
)


(2,971
)


(6,070
)


(5,862
)Interest income


258



59



1,148



167Other income


3,780



1,361



4,090



802Income (loss) before (provision) benefit for income taxes


1,779



(5,979
)


(4,471
)


(6,040
)(Provision) benefit for income taxes


(1,913
)


1,907



(108
)


1,930Net loss

$
(134
)

$
(4,072
)

$
(4,579
)

$
(4,110
)Net loss per common share:Basic

$
(0.00
)

$
(0.13
)

$
(0.15
)

$
(0.13
)Diluted

$
(0.00
)

$
(0.13
)

$
(0.15
)

$
(0.13
)Weighted average number of common shares:Basic


30,981,113



31,920,282



30,574,931



31,571,009Diluted


30,981,113



31,920,282



30,574,931



31,571,009(2) Includes the following amounts related to stock-based
    compensation:Cost of product revenues

$
258


$
307


$
435


$
576Cost of professional services revenues


69



169



232



259Research and development


190



258



352



485Sales and marketing


1,665



1,541



3,081



3,124General and administrative


1,615



1,676



3,378



3,495       (1)
    
    On January 1, 2009, the Company adopted FASB Staff Position
    No. APB
    14-1,
    Accounting for Convertible Debt Instruments that May be
    Settled in Cash Upon Conversion (FSP APB
    14-1),
    which required adjustment of prior periods. See Note 7 of
    notes to unaudited consolidated financial statements. 2




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##### Table of Contents



BLACKBOARD
    INC.UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)
  Six MonthsEnded June 30,2008


2009(As adjusted (1))Cash flows from operating activitiesNet loss

$
(4,579
)

$
(4,110
)Adjustments to reconcile net loss to net cash (used in) provided
    by operating activities:Deferred tax benefit


(2,914
)


(3,964
)Excess tax benefit from stock-based compensation


(1,021
)


(272
)Amortization of debt discount


3,182



3,118Depreciation and amortization


7,389



9,188Amortization of intangibles resulting from acquisitions


18,408



16,446Patent related impairment charge






7,447Change in allowance for doubtful accounts


335



(1,123
)Stock-based compensation


7,478



7,939Gain on investment in common stock warrant


(3,980
)


(1,136
)Changes in operating assets and liabilities, net of effect of
    acquisitions:Accounts receivable


(33,482
)


8,436Inventories


308



108Prepaid expenses and other current assets


(3,488
)


(4,812
)Deferred cost of revenues


1,023



(281
)Accounts payable


(2,544
)


3,846Accrued expenses


(295
)


1,329Deferred rent


6,186



581Deferred revenues


3,148



(28,886
)Net cash (used in) provided by operating activities


(4,846
)


13,854Cash flows from investing activities


(132,902
)


(86,164
)Acquisitions, net of cash acquiredPurchases of property and equipment


(17,358
)


(12,940
)Purchase of
    available-for-sale
    securities






(6,586
)Redemptions of
    available-for-sale
    securities






6,586Payments for patent enforcement costs


(2,448
)


(414
)Net cash used in investing activities


(152,708
)


(99,518
)Cash flows from financing activitiesReleases of letters of credit






80Payments on letters of credit


(27
)


Excess tax benefits from stock-based compensation


1,021



272Proceeds from exercise of stock options


5,297



2,257Net cash provided by financing activities


6,291



2,609Net decrease in cash and cash equivalents


(151,263
)


(83,055
)Cash and cash equivalents at beginning of period


206,558



141,746Cash and cash equivalents at end of period

$
55,295


$
58,691       (1)
    
    On January 1, 2009, the Company adopted FASB Staff Position
    No. APB
    14-1,
    Accounting for Convertible Debt Instruments that May be
    Settled in Cash Upon Conversion (FSP APB
    14-1),
    which required adjustment of prior periods. See Note 7 of
    notes to unaudited consolidated financial statements. 3




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##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 For
    the Six Months Ended June 30, 2008 and 2009
  In these Notes to Unaudited Consolidated Financial
    Statements, the terms the Company and
    Blackboard refer to Blackboard Inc. and its
    subsidiaries
  1.
    Nature of
    Business and Organization    2.
    Basis of
    Presentation  Form 10-Q Regulation S-X.
  Form 10-K
  Subsequent Events
  Principles
    of Consolidation
    Foreign
    Currency Translation
    Use of
    Estimates
   4




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##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair
    Value Measurements
  Fair Value Measurements No. 157-2, Effective Date of FASB Statement
    No. 157
  Level 1 
    quoted prices in active markets for identical assets and
    liabilitiesLevel 2 
    inputs other than Level 1 quoted prices in active markets
    that are either directly or indirectly observableLevel 3 
    unobservable inputs that are corroborated by little or no market
    data    Quoted Prices inActive Markets


Significant Other


Significantfor Identical


Observable


UnobservableAssets


Inputs


InputsJune 30, 2009


(Level 1)


(Level 2)


(Level 3)Assets:Cash equivalents(1)

$
30,872


$
30,872


$



$
Investment in common stock warrant


3,124











3,124Total Assets

$
33,996


$
30,872


$



$
3,124Liabilities:Convertible senior notes(2)

$
150,769


$
150,769


$



$
     (1)
    
    Cash equivalents consist of money market funds with original
    maturity dates of less than three months for which the fair
    value is based on quoted market prices.(2)
    
    The fair value of the Companys convertible senior notes is
    based on the quoted market price.  other-than-temporarily
 5




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##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Investment inCommon StockWarrantBalance on December 31, 2008

$
Transfers in and/or (out) of Level 3


1,990Total gains (losses) realized / unrealized included in earnings


1,134Purchases, sales, issuances and settlements, net


Balance on June 30, 2009

$
3,124     SFAS 107-1 28-1 Interim Disclosures about Fair Value of Financial
    Instruments,
  Investment
    in Common Stock Warrant
  Accounting for
    Derivative Instruments and Hedging Activity
  Business
    Combinations
  Business Combinations
 6




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##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Income
    Taxes
    Share-Based
    Payment
  Accounting for Uncertainty in Income
    Taxes  an interpretation of FASB Statement
    No. 109 Accounting for
    Income Taxes
  Revenue
    Recognition and Deferred Revenue
  97-2, Software Revenue Recognition, SOP 98-9, Modification of
    SOP 97-2,
    Software Revenue Recognition, with Respect to Certain
    Transactions.
   7




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##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    00-3, Application of AICPA
    SOP 97-2
    to Arrangements That Include the Right to Use Software Stored on
    Another Entitys Hardware. set-up
  SOP 97-2. time-and-materials
  when-and-if-available SOP 97-2.
  Cost
    of Revenues and Deferred Cost of Revenues
  Blackboard Connect
    Basic
    and Diluted Net Loss per Common Share
   8




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##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three Months Ended


Six Months EndedJune 30,


June 30,2008


2009


2008


2009(Unaudited)(In thousands, except share and per share amounts)Net loss

$
(134
)

$
(4,072
)

$
(4,579
)

$
(4,110
)Weighted average shares outstanding, basic


30,981,113



31,920,282



30,574,931



31,571,009Dilutive effect of:Stock options related to the purchase of common stock














Weighted average shares outstanding, diluted


30,981,113



31,920,282



30,574,931



31,571,009Basic net loss per common share

$
(0.00
)

$
(0.13
)

$
(0.15
)

$
(0.13
)Diluted net loss per common share

$
(0.00
)

$
(0.13
)

$
(0.15
)

$
(0.13
)     Stock-Based
    Compensation
    Comprehensive
    Net Loss
    Recent
    Accounting Pronouncements
  The Hierarchy of Generally Accepted Accounting
    Principles  a replacement of FASB Statement
    No. 162.
 9




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##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   3.
    Mergers  ANGEL
    Learning, Inc. Merger
    e-learning e-learning.
    Preliminary
    Purchase Price Allocation
    Cash and cash equivalents

$
6,579Accounts receivable


2,629Prepaid expenses and other current assets


897Property and equipment


2,133Other assets


43Accounts payable


(59
)Other accrued liabilities


(1,216
)Deferred tax liabilities, net


(9,039
)Deferred revenue


(3,213
)Net tangible liabilities acquired


(1,246
)Definite-lived intangible assets acquired


36,760Goodwill


65,791Total estimated purchase price

$
101,305  10




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##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Goodwill and Other Intangible Assets
 11




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##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Deferred
    Revenue
  build-up build-up
  Pro
    Forma Financial Information
     12




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##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three Months Ended


Six Months EndedJune 30,


June 30,2008


2009


2008


2009(Unaudited)(In thousands, except per share amounts)Total revenues

$
80,603


$
94,525


$
157,126


$
186,721Net loss

$
(334
)

$
(4,883
)

$
(6,379
)

$
(7,448
)Basic net loss per common share

$
(0.01
)

$
(0.15
)

$
(0.21
)

$
(0.24
)Diluted net loss per common share

$
(0.01
)

$
(0.15
)

$
(0.21
)

$
(0.24
)   NTI
    Group, Inc. Merger
      Business Combinations
     13




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##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   4.
    Stock-Based
    Compensation  Stock
    Incentive Plans
      Stock
    Options
    Number of


Weighted Average


AggregateShares


Price/Share


Intrinsic ValueExercisable at December 31, 2008


2,416,333


$
22.91Outstanding at December 31, 2008


4,864,260


$
27.80Granted


918,850


$
28.16Exercised


(139,063
)

$
16.22


$
1,862Cancelled


(135,715
)

$
31.25Outstanding at June 30, 2009


5,508,332


$
28.07


$
18,318Exercisable at June 30, 2009


2,819,355


$
25.05


$
16,496     Three Months Ended June 30


Six Months Ended June 30,2008


2009


2008


2009Dividend yield


0
%


0
%


0
%


0
%Expected volatility


39.7
%


47.6
%


39.6
%


47.5
%Risk-free interest rate


3.0
%


2.7
%


2.9
%


1.7
%Expected life of options


4.9 years



4.9 years



4.9 years



4.9 yearsForfeiture rate


15.3
%


12.0
%


10.5
%


14.2
%   Dividend yield
 14




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##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Expected volatility
  Risk-free interest rate
  Expected life of the options Share-Based
    Payment
  Forfeiture rate
    Restricted
    Stock
    Number of


Weighted Average


AggregateShares


Fair Value/Share


Intrinsic ValueUnvested at December 31, 2008


70,000


$
29.25Granted


206,000



29.15Vested and issued


Cancelled


(5,000
)


28.75Unvested at June 30, 2009


271,000


$
29.18


$
7,821    15




---



##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    5.
    Inventories    December 31,


June 30,2008


2009(Unaudited)(In thousands)Raw materials

$
678


$
712Work-in-process


547



367Finished goods


558



596Total inventories

$
1,783


$
1,675   6.
    Goodwill
    and Intangible Assets    Weighted-AverageDecember 31,


June 30,


Amortization2008


2009


Period(Unaudited)


(In years)(In thousands)Goodwill

$
263,850


$
327,991Acquired technology

$
65,255


$
67,755



2.9Accumulated amortization


(49,199
)


(54,871
)Acquired technology, net


16,056



12,884Contracts and customer lists


94,732



128,032



5.0Accumulated amortization


(43,704
)


(54,233
)Contracts and customer lists, net


51,028



73,799Trademarks and domain names


1,016



1,976



2.3Accumulated amortization


(443
)


(648
)Trademarks and domain names, net


573



1,328Patents and related costs


8,198



101



2.0Accumulated amortization


(729
)


(34
)Patents and related costs, net


7,469



67Intangible assets, net

$
75,126


$
88,078      16




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##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      7.
    Notes
    Payable      EITF 04-8,
    The Effect of Contingently Convertible Instruments on
    Diluted Earnings per Share,
  in-the-money
   17




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##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Adoption
    of FSP APB
    14-1
  14-1, Accounting for Convertible Debt Instruments that May be
    Settled in Cash Upon Conversion 14-1). 14-1 14-1
  14-1
  14-1.
   18




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##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      14-1
  Three Months Ended June 30, 2008


Three Months Ended June 30, 2009Incremental








IncrementalImpact of





Before the


Impact ofAs Previously


Adoption of FSP





Impact of FSP


Adoption of FSPReported


APB 14-1


As Adjusted


APB 14-1


APB 14-1


As ReportedInterest expense

$
(1,917
)

$
(1,171
)

$
(3,088
)

$
(1,714
)

$
(1,257
)

$
(2,971
)(Provision) Benefit for income taxes


(1,913
)






(1,913
)


1,907







1,907Net income (loss)


1,037



(1,171
)


(134
)


(2,815
)


(1,257
)


(4,072
)Net income (loss) per common share:Basic

$
0.03


$
(0.03
)

$
(0.00
)

$
(0.09
)

$
(0.04
)

$
(0.13
)Diluted

$
0.03


$
(0.03
)

$
(0.00
)

$
(0.09
)

$
(0.04
)

$
(0.13
)   14-1
  Six Months Ended June 30, 2008


Six Months Ended June 30, 2009Incremental








IncrementalImpact of





Before the


Impact ofAs Previously


Adoption of FSP





Impact of FSP


Adoption of FSPReported


APB 14-1


As Adjusted


APB 14-1


APB 14-1


As ReportedInterest expense

$
(3,747
)

$
(2,323
)

$
(6,070
)

$
(3,383
)

$
(2,479
)

$
(5,862
)(Provision) Benefit for income taxes


(108
)






(108
)


1,930







1,930Net loss


(2,256
)


(2,323
)


(4,579
)


(1,631
)


(2,479
)


(4,110
)Net loss per common share:Basic

$
(0.07
)

$
(0.08
)

$
(0.15
)

$
(0.05
)

$
(0.08
)

$
(0.13
)Diluted

$
(0.07
)

$
(0.08
)

$
(0.15
)

$
(0.05
)

$
(0.08
)

$
(0.13
)   14-1
  December 31, 2008


June 30, 2009Incremental





Balance Before


IncrementalImpact of





Incremental


Impact ofAs Previously


Adoption of FSP





Impact of FSP


Adoption of FSPReported


APB 14-1


As Adjusted


APB 14-1


APB 14-1


As ReportedPrepaid expenses and other current assets

$
8,518


$
(157
)

$
8,361


$
13,625


$
(156
)

$
13,469Deferred tax assets


28,942



(8,249
)


20,693



23,868



(8,249
)


15,619Notes payable, net of debt discount


163,172



(13,249
)


149,923



163,811



(10,770
)


153,041Additional paid-in capital


344,698



11,985



356,683



361,062



11,985



373,047Accumulated deficit


(76,380
)


(7,142
)


(83,522
)


(78,011
)


(9,621
)


(87,632
)  19




---



##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  No. 07-5, Determining Whether an Instrument (or Embedded Feature)
    Is Indexed to an Entitys Own Stock (EITF 07-5) EITF 07-5 EITF 07-5
  8.
    Commitments
    and Contingencies        9.
    Quarterly
    Financial Information   20




---



##### Table of Contents



BLACKBOARD
    INC.
  NOTES TO
    UNAUDITED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    10.
    Subsequent
    Event  MobilEdu tm Blackboard MobilEdu
 21




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  This report contains forward-looking
    statements.  For this purpose, any statements
    contained herein that are not statements of historical fact may
    be deemed to be forward-looking statements. Without limiting the
    foregoing, the words believes,
    anticipates, plans, expects,
    intends and similar expressions are intended to
    identify forward-looking statements. The important factors
    discussed under the caption Risk Factors, presented
    below, could cause actual results to differ materially from
    those indicated by forward-looking statements made herein. We
    undertake no obligation to publicly update or revise any
    forward-looking statements, whether as a result of new
    information, future events or otherwise.
  General
      MobilEdu tm Blackboard MobilEdu
    time-and-materials
  Blackboard Academic
    Suitetm, Blackboard Commerce
    Suitetm Blackboard
    Connecttm Blackboard Learning
    Systemtm Blackboard Community
    Systemtm Blackboard Content
    Systemtm Blackboard Outcomes
    Systemtm Blackboard Portfolio
    Systemtm,

    Blackboard Transaction
    Systemtm One tm Blackboard
    Connecttm
 22




---



##### Table of Contents




    Blackboard
    Learntm;
    Blackboard
    Transacttm; and
    Blackboard
    Connecttm.  Blackboard
    Learn tm Blackboard Academic
    Suite tm Blackboard
    Learn tm Release 9.0 Blackboard Learn Course Delivery Community Engagement Content
    Management Portfolio Management Outcomes
    Assessment Blackboard Academic Suite
  Offered
in Blackboard Academic
Suitetm

Offered
in Blackboard
LearntmThe
Blackboard Learning
Systemtm

Course DeliverymoduleThe
Blackboard Community
Systemtm

Community EngagementmoduleThe
Blackboard Content
Systemtm

Content ManagementmoduleThe
Blackboard Portfolio
Systemtm

Portfolio ManagementmoduleThe
Blackboard Outcomes
Systemtm

Outcomes Assessmentmodule   Blackboard Commerce
    Suitetm Blackboard
    Transacttm.

    Blackboard
    Connect tm
      Blackboard Connect
     23




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
      Revenue recognition. 97-2, Software Revenue Recognition, SOP 98-9, Modification of
    SOP 97-2,
    Software Revenue Recognition, with Respect to Certain
    Transactions.
   24




---



##### Table of Contents



00-3, Application of AICPA
    SOP 97-2
    to Arrangements That Include the Right to Use Software Stored on
    Another Entitys Hardware. set-up
  SOP 97-2. time-and-materials
  when-and-if-available SOP 97-2.
  Allowance for doubtful accounts.
  Fair Value Measurements. Fair Value
    Measurements No. 157-2, Effective Date of FASB Statement
    No. 157
  Level 1 
    quoted prices in active markets for identical assets and
    liabilitiesLevel 2 
    inputs other than Level 1 quoted prices in active markets
    that are either directly or indirectly observableLevel 3 
    unobservable inputs that are corroborated by little or no market
    data  other-than-temporarily
 25




---



##### Table of Contents



SFAS 107-1 28-1 Interim Disclosures about Fair Value of Financial
    Instruments,
  Business combinations. Business
    Combinations
  Long-lived assets. Accounting for the Impairment or Disposal of Long-Lived
    Assets.
  Goodwill and intangible assets. Goodwill and
    Other Intangible Assets.
 26




---



##### Table of Contents



Notes payable. 14-1, Accounting for Convertible Debt Instruments that May be
    Settled in Cash Upon Conversion 14-1). 14-1 14-1
  14-1
  14-1.
     27




---



##### Table of Contents



14-1
  Three Months Ended June 30, 2008


Three Months Ended June 30, 2009Incremental








IncrementalImpact of





Before the


Impact ofAs Previously


Adoption of





Impact of FSP


Adoption ofReported


FSP APB 14-1


As Adjusted


APB 14-1


FSP APB 14-1


As ReportedInterest expense

$
(1,917
)

$
(1,171
)

$
(3,088
)

$
(1,714
)

$
(1,257
)

$
(2,971
)(Provision) Benefit for income taxes


(1,913
)






(1,913
)


1,907







1,907Net income (loss)


1,037



(1,171
)


(134
)


(2,815
)


(1,257
)


(4,072
)Net income (loss) per common share:Basic

$
0.03


$
(0.03
)

$
(0.00
)

$
(0.09
)

$
(0.04
)

$
(0.13
)Diluted

$
0.03


$
(0.03
)

$
(0.00
)

$
(0.09
)

$
(0.04
)

$
(0.13
)   14-1
  Six Months Ended June 30, 2008


Six Months Ended June 30, 2009Incremental








IncrementalImpact of





Before the


Impact ofAs Previously


Adoption of





Impact of FSP


Adoption ofReported


FSP APB 14-1


As Adjusted


APB 14-1


FSP APB 14-1


As ReportedInterest expense

$
(3,747
)

$
(2,323
)

$
(6,070
)

$
(3,383
)

$
(2,479
)

$
(5,862
)(Provision) Benefit for income taxes


(108
)






(108
)


1,930







1,930Net loss


(2,256
)


(2,323
)


(4,579
)


(1,631
)


(2,479
)


(4,110
)Net loss per common share:Basic

$
(0.07
)

$
(0.08
)

$
(0.15
)

$
(0.05
)

$
(0.08
)

$
(0.13
)Diluted

$
(0.07
)

$
(0.08
)

$
(0.15
)

$
(0.05
)

$
(0.08
)

$
(0.13
)   14-1
  December 31, 2008


June 30, 2009Incremental





Balance Before


IncrementalImpact of





Incremental


Impact ofAs Previously


Adoption of





Impact of FSP


Adoption ofReported


FSP APB 14-1


As Adjusted


APB 14-1


FSP APB 14-1


As ReportedPrepaid expenses and other current assets

$
8,518


$
(157
)

$
8,361


$
13,625


$
(156
)

$
13,469Deferred tax assets


28,942



(8,249
)


20,693



23,868



(8,249
)


15,619Notes payable, net of debt discount


163,172



(13,249
)


149,923



163,811



(10,770
)


153,041Additional paid-in capital


344,698



11,985



356,683



361,062



11,985



373,047Accumulated deficit


(76,380
)


(7,142
)


(83,522
)


(78,011
)


(9,621
)


(87,632
)   No. 07-5, Determining Whether an Instrument (or Embedded Feature)
    Is Indexed to an Entitys Own Stock (EITF 07-5) EITF 07-5
 28




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##### Table of Contents



EITF 07-5
  Income Taxes.
    Accounting for Uncertainty in Income Taxes 
    an interpretation of FASB Statement No. 109 Accounting for Income
    Taxes
  Stock-Based Compensation. Share-Based
    Payment
  Recent Accounting Pronouncements. The Hierarchy of Generally Accepted Accounting
    Principles  a replacement of FASB Statement
    No. 162
  Important
    Factors Considered by Management
       29




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##### Table of Contents




    Recurring ratable revenues include those product revenues that
    are recognized ratably over the contract term, which is
    typically one year, and that recur each year assuming clients
    renew their contracts. These revenues include revenues from the
    licensing of all of our software products, hosting arrangements,
    subscription fees from customers accessing our on-demand
    application services and enhanced support and maintenance
    contracts related to our software products, including certain
    professional services performed by our professional services
    groups.
    Non-recurring ratable revenues include those product revenues
    that are recognized ratably over the term of the contract, which
    is typically one year, but that do not contractually recur.
    These revenues include certain hardware components of our
    Blackboard Transaction Systemproducts and certain
    third-party hardware and software sold to our clients in
    conjunction with our software licenses.
    Other revenues include those revenues that are recognized as
    earned and are not deferred to future periods. These revenues
    include professional services, the sales of BbOne,
    certain sales of licenses, as well as the supplies and
    commissions we earn from publishers related to digital course
    supplement downloads.      Results
    of Operations
    Three Months Ended


Six Months EndedJune 30,


June 30,2008


2009


2008


2009(As adjusted (1))





(As adjusted (1))(Unaudited)Revenues:Product


91
%


91
%


91
%


92
%Professional services


9



9



9



8Total revenues


100



100



100



100Operating expenses:Cost of product revenues, excludes amortization of acquired
    technology included in amortization of intangibles resulting
    from acquisitions shown below


24



24



24



24Cost of professional services revenues


7



5



7



6Research and development


13



12



14



12Sales and marketing


30



28



30



28General and administrative


16



15



17



16Patent related (proceeds) impairment and other costs


(4
)


12



(2
)


6Amortization of intangibles resulting from acquisitions


13



9



13



9Total operating expenses


99



105



103



101Income (loss) from operations


1
%


(5
)%


(3
)%


(1
)%     (1)
    
    On January 1, 2009, we adopted FSP APB
    14-1, which
    required adjustment of prior periods. See note 7 of Notes
    to unaudited consolidated financial statements. 30




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##### Table of Contents



Three
    Months Ended June 30, 2009 Compared to Three Months Ended
    June 30, 2008
      Three Months Ended June 30,2008


2009Professional








ProfessionalProduct


Services





Product


ServicesRevenues


Revenues


Total


Revenues


Revenues


Total(Unaudited)(In millions)Recurring ratable revenues

$
58.6


$
1.0


$
59.6


$
73.6


$
1.2


$
74.8Non-recurring ratable


6.6







6.6



6.2







6.2revenuesOther revenues


3.1



6.2



9.3



3.6



7.5



11.1Total revenues

$
68.3


$
7.2


$
75.5


$
83.4


$
8.7


$
92.1   Product revenues. Blackboard Connect Blackboard Learn Blackboard Learn Blackboard Learn Blackboard Learn Blackboard Learn Blackboard Learn Blackboard Learn Blackboard Learn Blackboard Learn
      Blackboard Connect Blackboard Learn
 31




---



##### Table of Contents



Professional services revenues.
  Cost of product revenues. Blackboard Connect
    Cost of professional services revenues.
  Research and development expenses.
  Sales and marketing expenses.
  General and administrative expenses.
 32




---



##### Table of Contents



Patent related (proceeds) impairment and other
    costs.
  Net interest expense.
  Other income.
      (Provision) benefit for income taxes.
  Six
    Months Ended June 30, 2009 Compared to Six Months Ended
    June 30, 2008
   33




---



##### Table of Contents



Six Months Ended June 30,2008


2009Professional








ProfessionalProduct


Services





Product


ServicesRevenues


Revenues


Total


Revenues


Revenues


Total(Unaudited)(In millions)Recurring ratable revenues

$
112.3


$
1.8


$
114.1


$
143.9


$
2.4


$
146.3Non-recurring ratable


12.2







12.2



12.4







12.4revenuesOther revenues


7.0



10.7



17.7



7.2



12.7



19.9Total revenues

$
131.5


$
12.5


$
144.0


$
163.5


$
15.1


$
178.6   Product revenues. Blackboard Connect Blackboard Learn Blackboard Learn Blackboard Learn Blackboard Learn Blackboard Learn Blackboard Learn Blackboard Learn Blackboard Learn Blackboard Learn
  Blackboard Transact
    Blackboard Connect Blackboard Learn
  Professional services revenues.
 34




---



##### Table of Contents



Blackboard Connect
  Cost of product revenues. Blackboard Connect
    Cost of professional services revenues.
  Research and development expenses.
  Sales and marketing expenses.
  General and administrative expenses.
 35




---



##### Table of Contents



Patent related (proceeds) impairment and other
    costs.
  Net interest expense.
  Other income.
      (Provision) benefit for income taxes.
  Liquidity
    and Capital Resources
     36




---



##### Table of Contents



MobilEdu tm Blackboard MobilEdu
  Notes
    Payable
      EITF 04-8, The
 37




---



##### Table of Contents



Effect of Contingently Convertible Instruments on Diluted
    Earnings per Share,
  in-the-money
        Working
    Capital Needs
   38




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
    Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk.      Item 4.
    Controls
    and Procedures.  (a)
    Evaluation
    of Disclosure Controls and Procedures.  Rules 13a-15(e) 15d-15(e)
  (b)
    Changes
    in Internal Control over Financial Reporting.  Rules 13a-15(f) 15d-15(f)
 39




---



##### Table of Contents



PART II.
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings        Item 1A.
    Risk
    Factors.  Form 10-K Form 10-Q
  Challenging
    economic conditions may adversely affect our
    business.
   40




---



##### Table of Contents



We
    could lose revenues if there are changes in the spending
    policies or budget priorities for government funding of
    colleges, universities, schools and other education
    providers.
    There
    is no assurance that our investments in product development and
    product acquisition will be successful; if our products do not
    gain market acceptance, our revenues may decrease and we may not
    realize a return on such investments.
  Blackboard Learn Blackboard Learn
  Blackboard Outcomes System,
    Blackboard Connect Blackboard MobilEdu Blackboard Outcomes System Blackboard Connect Blackboard MobilEdu
  We
    face intense and growing competition, which could result in
    price reductions, reduced operating margins and loss of market
    share.
   41




---



##### Table of Contents



Blackboard Learn Blackboard Transact Blackboard Connect and/or
    If
    potential clients or competitors use open source software to
    develop products that are competitive with our products and
    services, we may face decreased demand and pressure to reduce
    the prices for our products.
    Our
    mergers with The NTI Group, Inc. (NTI) and ANGEL
    Learning, Inc. (ANGEL) present many risks, and we
    may not realize the financial and strategic goals that were
    contemplated at the time of the transactions.
    
    we may not realize the anticipated financial benefits if we are
    unable to sell the acquired company products to our customer
    base, if a larger than predicted number of customers decline to
    renew their contracts, or if the acquired contracts do not allow
    us to recognize revenues on a timely basis;
    we may have difficulty incorporating the acquired technologies
    or products with our existing product lines and maintaining
    uniform standards, controls, procedures and policies; 42




---



##### Table of Contents




    we may face contingencies related to product liability,
    intellectual property, financial disclosures, and accounting
    practices or internal controls;
    we may have higher than anticipated costs in supporting and
    continuing development of the acquired company products and in
    servicing new and existing clients of a company we acquire;
    we may not be able to retain key employees from the companies we
    acquire;
    we may be unable to manage effectively the increased size and
    complexity of the combined company, and our managements
    attention may be diverted from our ongoing business by
    transition or integration issues;
    we may lose anticipated tax benefits or have additional legal or
    tax exposures; and
    we will not be able to determine whether all or any of the
    0.4 million shares of stock consideration in the NTI merger
    that remains contingent on the achievement of certain
    performance milestones will be issued until the completion of
    the financial results for fiscal year 2009.  Our
    business strategy contemplates future business combinations and
    acquisitions which may be difficult to integrate, disrupt our
    business, dilute stockholder value or divert management
    attention.
          Our
    existing indebtedness could adversely affect our financial
    condition and we may not be able to fulfill our debt
    obligations, including the 3.25% Convertible Senior Notes
    due 2027 (the Notes).
    
    upon conversion or redemption of the Notes, we will be required
    to repay the principal amount of $165.0 million in cash;
    we will use a significant portion of our cash flow to pay
    interest on our outstanding debt, limiting the amount available
    for working capital, capital expenditures and other general
    corporate purposes; 43




---



##### Table of Contents




    lenders may be unwilling to lend additional amounts to us for
    future working capital needs, additional acquisitions or other
    purposes or may only be willing to provide funding on terms we
    would consider unacceptable;
    if our cash flow were inadequate to make interest and principal
    payments on our debt, we might have to refinance our
    indebtedness or issue additional equity or other securities and
    may not be successful in those efforts or may not obtain terms
    favorable to us; and
    our ability to finance working capital needs and general
    corporate purposes for the public and private markets, as well
    as the associated cost of funding, is dependent, in part, on our
    credit ratings, which may be adversely affected if we experience
    declining revenues.    We may
    not be able to repurchase the Notes when required by the
    holders, including upon a defined fundamental change or other
    specified dates at the option of the holder, or pay cash upon
    conversion of the Notes.
    Conversion
    of the Notes may affect the market price of our common stock and
    may dilute the ownership of existing stockholders.
    Our
    reported earnings per share may be more volatile because of the
    contingent conversion provision of the Notes.
   44




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##### Table of Contents



Because
    most of our licenses are renewable on an annual basis, a
    reduction in our license renewal rate could significantly reduce
    our revenues.
      Because
    we generally recognize revenues ratably over the term of our
    contract with a client, downturns or upturns in sales will not
    be fully reflected in our operating results until future
    periods.
    Our
    operating margins may suffer if our professional services
    revenues increase in proportion to total revenues because our
    professional services revenues have lower gross
    margins.
    If our
    products contain errors, new product releases are delayed or our
    services are disrupted, we could lose new sales and be subject
    to significant liability claims.
    
    delays in or loss of market acceptance of our products;
    diversion of our resources;
    a lower rate of license renewals or upgrades;
    injury to our reputation; and
    increased service expenses or payment of damages. 45




---



##### Table of Contents



The
    length and unpredictability of the sales cycle for our software
    could delay new sales and cause our revenues and cash flows for
    any given quarter to fail to meet our projections or market
    expectations.
    
    clients budgetary constraints and priorities;
    the timing of our clients budget cycles;
    the need by some clients for lengthy evaluations that often
    include both their administrators and faculties; and
    the length and timing of clients approval processes.    Our
    sales cycle with international postsecondary education providers
    and U.S. K-12 schools may be longer than our historical U.S.
    postsecondary sales cycle, which could cause us to incur greater
    costs and could reduce our operating margins.
    We may
    have exposure to greater than anticipated tax
    liabilities.
   46




---



##### Table of Contents



Our
    ability to utilize our net operating loss carryforwards may be
    limited.
      The
    investment of our cash balances are subject to risks which may
    cause losses and affect the liquidity of these
    investments.
  other-than-temporary,
  Our
    future success depends on our ability to continue to retain and
    attract qualified employees.
    If we
    do not maintain the compatibility of our products with
    third-party applications that our clients use in conjunction
    with our products, demand for our products could
    decline.
    If we
    are unable to protect our proprietary technology and other
    rights, it will reduce our ability to compete for
    business.
   47




---



##### Table of Contents



If we
    are found to infringe the proprietary rights of others, we could
    be required to redesign our products, pay significant royalties
    or enter into license agreements with third
    parties.
    
    be expensive and time consuming to defend;
    force us to stop licensing our products that incorporate the
    challenged intellectual property;
    require us to redesign our products and reimburse certain costs
    to our clients;
    divert managements attention and other company
    resources; and
    require us to enter into royalty or licensing agreements in
    order to obtain the right to use necessary technologies, which
    may not be available on terms acceptable to us, or at all.  The
    nature of our business and our reliance on intellectual property
    and other proprietary information subjects us to the risks of
    litigation.
    Expansion
    of our business internationally will subject our business to
    additional economic and operational risks that could increase
    our costs and make it difficult for us to operate
    profitably.
    
    foreign currency fluctuations, which could result in reduced
    revenues and increased operating expenses;
    potentially longer payment and sales cycles;
    difficulty in collecting accounts receivable;
    the effect of applicable foreign tax structures, including tax
    rates that may be higher than tax rates in the United States or
    taxes that may be duplicative of those imposed in the United
    States;
    tariffs and trade barriers;
    general economic and political conditions in each country; 48




---



##### Table of Contents




    inadequate intellectual property protection in foreign countries;
    uncertainty regarding liability for information retrieved and
    replicated in foreign countries;
    the difficulties and increased expenses of complying with a
    variety of foreign laws, regulations and trade
    standards; and
    unexpected changes in regulatory requirements.  Unauthorized
    disclosure of data, whether through breach of our computer
    systems or otherwise, could expose us to protracted and costly
    litigation or cause us to lose clients.
    Operational
    failures in our network infrastructure could disrupt our remote
    hosting services, could cause us to lose clients and sales to
    potential clients and could result in increased expenses and
    reduced revenues.
    U.S.
    and foreign government regulation of our products and services
    could cause us to incur significant expenses, and failure to
    comply with applicable regulations could make our business less
    efficient or even impossible.
   49




---



##### Table of Contents



We may
    be subject to state and federal financial services regulation,
    and any violation of any present or future regulation could
    expose us to liability, force us to change our business
    practices or force us to stop selling or modify our products and
    services.
  Blackboard Transact
  
    disclosure of consumer rights and our business policies and
    practices;
    restrictions on uses and disclosures of customer information;
    error resolution procedures;
    limitations on consumers liability for unauthorized
    account activity;
    data security requirements;
    government registration; and
    reporting and documentation requirements.    Item 4.
    Submission
    of Matters to a Vote of Security Holders.    Item 1.

For

WithheldElection of DirectorsMichael L. Chasen


29,081,364



1,120,460Thomas Kalinske


29,714,286



487,538   50




---



##### Table of Contents



Item 2.

For


Against


AbstainApproval of an Amendment to the Amended and Restated 2004
    Stock Incentive Plan to increase the number of shares authorized
    for issuance under the plan from 8,700,000 to 10,500,000 and
    other specified changes


19,474,151



8,156,616



57,469Item 3.Ratification of Selection of Independent Public Accounting
    Firm


29,381,193



753,920



66,709   Item 6.
    Exhibits.    Exhibit No.

Description10
.1

Amended and Restated 2004 Stock Incentive Plan, as amended(1)31
.1

Certification of Chief Executive Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certification of Chief Financial Officer Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1

Certification of Chief Executive Officer Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Certification of Chief Financial Officer Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     (1)
    
    Incorporated by reference to Appendix A of the
    Companys Definitive Proxy Statement filed on Schedule 14A
    on April 21, 2009. 51




---



##### Table of Contents



SIGNATURE    Blackboard Inc.
  By:
    /s/  Michael
    J. Beach    (On behalf of the registrant and as Principal
 Financial Officer)
   52