##### 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 September 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 001-10824
(Commission File Number)
 
 Borland Software Corporation
 (Exact Name of Registrant as Specified in its Charter)
 
 Delaware
    
    94-2895440(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 8303 N. MO-PAC EXPRESSWAY, SUITE A-300
AUSTIN, TEXAS 78759
 (Address of Principal Executive Offices) (Zip Code)
 Registrants Telephone Number, Including Area Code: (512) 340-2200
 Former address: 20450 Stevens Creek Blvd., Suite 800, Cupertino, CA 95014
(Former name, former address and former fiscal year, if changed since last report)
 þ o
  o þ o
 o þ




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##### 



BORLAND SOFTWARE CORPORATION FORM 10-Q
 TABLE OF CONTENTS
 PAGEPART I FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (unaudited)
    
    
    3Condensed Consolidated Balance Sheets at September 30, 2007 and December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations for the three months and nine months ended September
30, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Comprehensive Income (loss) for the three months and nine
months ended September 30, 2007 and 2006
    
    
    5Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2007 and 2006
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4.
    
    Controls and Procedures
    
    
    35PART II OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    36Item 1A.
    
    Risk Factors
    
    
    36Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    46Item 3.
    
    Defaults upon Senior Securities
    
    
    47Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    47Item 5.
    
    Other Information
    
    
    47Item 6.
    
    Exhibits
    
    
    48Signatures
    
    
    49EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
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##### Table of Contents



PART I
FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 BORLAND SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and share amounts, unaudited)
 September 30, 2007
    
    
    December 31, 2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    75,716
    
    
    $
    55,317Short-term investments
    
    
    65,003
    
    
    
    Accounts receivable, net of allowances of $7,112
and $5,413, respectively
    
    
    68,100
    
    
    
    62,154Prepaid expenses
    
    
    10,670
    
    
    
    13,341Other current assets
    
    
    3,022
    
    
    
    1,329Total current assets
    
    
    222,511
    
    
    
    132,141Property and equipment, net
    
    
    10,605
    
    
    
    11,176Goodwill
    
    
    253,192
    
    
    
    253,356Intangible assets, net
    
    
    33,834
    
    
    
    40,521Long-term investments
    
    
    50,002
    
    
    
    Other non-current assets
    
    
    11,887
    
    
    
    6,705Total assets
    
    $
    582,031
    
    
    $
    443,899LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    10,775
    
    
    $
    15,591Accrued expenses
    
    
    33,852
    
    
    
    36,438Short-term restructuring
    
    
    4,560
    
    
    
    9,582Income taxes payable
    
    
    2,710
    
    
    
    14,925Deferred revenue
    
    
    50,669
    
    
    
    58,930Other current liabilities
    
    
    8,729
    
    
    
    7,264Total current liabilities
    
    
    111,295
    
    
    
    142,730Convertible senior notes
    
    
    200,000
    
    
    
    Long-term restructuring
    
    
    4,163
    
    
    
    6,231Long-term deferred revenues
    
    
    1,116
    
    
    
    1,610Other long-term liabilities
    
    
    23,835
    
    
    
    7,848Total liabilities
    
    
    340,409
    
    
    
    158,419Stockholders 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; 72,782,662 and 78,704,764 shares
issued and outstanding, respectively
    
    
    728
    
    
    
    787Additional paid-in capital
    
    
    665,164
    
    
    
    659,932Accumulated deficit
    
    
    (293,772
    )
    
    
    (273,892
    )Cumulative other comprehensive income
    
    
    9,911
    
    
    
    9,121382,031
    
    
    
    395,948Less common
stock in treasury at cost, 21,158,980 and 15,275,899
shares, respectively
    
    
    (140,409
    )
    
    
    (110,468
    )Total stockholders equity
    
    
    241,622
    
    
    
    285,480Total liabilities and stockholders equity
    
    $
    582,031
    
    
    $
    443,899
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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BORLAND SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006License and other revenues
    
    $
    40,379
    
    
    $
    45,701
    
    
    $
    107,998
    
    
    $
    126,524Service revenues
    
    
    32,579
    
    
    
    36,665
    
    
    
    99,326
    
    
    
    102,364Total revenues
    
    
    72,958
    
    
    
    82,366
    
    
    
    207,324
    
    
    
    228,888Costs of revenues:Cost of license and other revenues
    
    
    1,622
    
    
    
    1,972
    
    
    
    4,692
    
    
    
    5,869Cost of service revenues
    
    
    9,955
    
    
    
    14,210
    
    
    
    31,525
    
    
    
    41,787Amortization of acquired intangibles and other charges
    
    
    2,107
    
    
    
    2,119
    
    
    
    6,345
    
    
    
    4,852Cost of revenues
    
    
    13,684
    
    
    
    18,301
    
    
    
    42,562
    
    
    
    52,508Gross profit
    
    
    59,274
    
    
    
    64,065
    
    
    
    164,762
    
    
    
    176,380Selling, general and administrative
    
    
    43,387
    
    
    
    52,518
    
    
    
    135,815
    
    
    
    149,128Research and development
    
    
    13,995
    
    
    
    19,968
    
    
    
    43,637
    
    
    
    53,673Restructuring, amortization of other intangibles, acquisition-related expenses and other
charges
    
    
    1,588
    
    
    
    5,060
    
    
    
    4,675
    
    
    
    15,356Total operating expenses
    
    
    58,970
    
    
    
    77,546
    
    
    
    184,127
    
    
    
    218,157Operating income (loss)
    
    
    304
    
    
    
    (13,481
    )
    
    
    (19,365
    )
    
    
    (41,777
    )Gain on sale of fixed assets
    
    
    
    
    
    
    1,658
    
    
    
    
    
    
    
    1,658Interest income
    
    
    2,352
    
    
    
    256
    
    
    
    6,499
    
    
    
    2,582Interest
expense and other income
    
    
    (1,850
    )
    
    
    (321
    )
    
    
    (4,659
    )
    
    
    (993
    )Total other income
    
    
    502
    
    
    
    1,593
    
    
    
    1,840
    
    
    
    3,247Income (loss) before income taxes
    
    
    806
    
    
    
    (11,888
    )
    
    
    (17,525
    )
    
    
    (38,530
    )Income tax provision
    
    
    306
    
    
    
    1,254
    
    
    
    2,442
    
    
    
    2,600Net income (loss)
    
    $
    500
    
    
    $
    (13,142
    )
    
    $
    (19,967
    )
    
    $
    (41,130
    )Net income (loss) per share:Net income (loss) per share  basic
    
    $
    0.01
    
    
    $
    (0.17
    )
    
    $
    (0.27
    )
    
    $
    (0.54
    )Net income (loss) loss per share  diluted
    
    $
    0.01
    
    
    $
    (0.17
    )
    
    $
    (0.27
    )
    
    $
    (0.54
    )Shares used in computing basic net income (loss) per share
    
    
    72,371
    
    
    
    77,263
    
    
    
    72,989
    
    
    
    76,799Shares used in computing diluted net income (loss) per share
    
    
    72,554
    
    
    
    77,263
    
    
    
    72,989
    
    
    
    76,799
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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BORLAND SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands, unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    500
    
    
    $
    (13,142
    )
    
    $
    (19,967
    )
    
    $
    (41,130
    )Other comprehensive income:Foreign currency translation adjustments
    
    
    1,210
    
    
    
    1,053
    
    
    
    740
    
    
    
    2,329Fair market value adjustment for
available-for-sale securities, net of
tax
    
    
    50
    
    
    
    
    
    
    
    50
    
    
    
    73Comprehensive income (loss)
    
    $
    1,760
    
    
    $
    (12,089
    )
    
    $
    (19,177
    )
    
    $
    (38,728
    )
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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BORLAND SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
 Nine Months Ended September 30,2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (19,967
    )
    
    $
    (41,130
    )Adjustments to reconcile net loss to net cash used in operating
activities:Depreciation and amortization
    
    
    11,295
    
    
    
    8,473Stock-based compensation
    
    
    4,784
    
    
    
    8,721Provision for accounts receivable allowances
    
    
    2,187
    
    
    
    (2,199
    )Acquired in-process research & development charge
    
    
    
    
    
    
    4,800Acquired developed technology impairment charge
    
    
    
    
    
    
    497Gain on disposals of fixed assets
    
    
    
    
    
    
    (1,658
    )Loss on sale of subsidiary
    
    
    226
    
    
    
    Write-off of fixed assets
    
    
    686
    
    
    
    323Changes in assets and liabilities, net of acquisitions:Accounts receivable
    
    
    (6,940
    )
    
    
    1,925Prepaid expenses and other assets
    
    
    (4,341
    )
    
    
    4,572Accounts payable and accrued expenses
    
    
    (6,922
    )
    
    
    10,533Income taxes payable
    
    
    3,184
    
    
    
    (2,090
    )Short-term restructuring
    
    
    (4,978
    )
    
    
    1,907Deferred revenues
    
    
    (8,935
    )
    
    
    (6,073
    )Long-term restructuring
    
    
    (2,068
    )
    
    
    (2,305
    )Other liabilities
    
    
    7,617
    
    
    
    (1,290
    )Cash used in operating activities
    
    
    (24,172
    )
    
    
    (14,994
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (4,802
    )
    
    
    (3,887
    )Proceeds from sale of fixed assets
    
    
    
    
    
    
    11,015Acquisition of Segue Software, net of cash acquired
    
    
    
    
    
    
    (102,457
    )Proceeds from sale of subsidiary
    
    
    178
    
    
    
    Acquisition of developed technology
    
    
    
    
    
    
    (497
    )Purchases of investments
    
    
    (125,156
    )
    
    
    Sales and maturities of short-term investments
    
    
    10,201
    
    
    
    125,672Cash provided by (used in) investing activities
    
    
    (119,579
    )
    
    
    29,846CASH FLOWS FROM FINANCING ACTIVITIES:Issuance of convertible senior notes, net
    
    
    194,230
    
    
    
    Proceeds from issuance of stock options, net
    
    
    964
    
    
    
    2,817Repurchase of common stock
    
    
    (29,941
    )
    
    
    Cash provided by financing activities
    
    
    165,253
    
    
    
    2,817Effect of exchange rate changes on cash
    
    
    (1,103
    )
    
    
    1,398Net change in cash and cash equivalents
    
    
    20,399
    
    
    
    19,067Beginning cash and cash equivalents
    
    
    55,317
    
    
    
    49,075Ending cash and cash equivalents
    
    $
    75,716
    
    
    $
    68,142
 The accompanying notes are an integral part of these condensed consolidated financial statements.
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BORLAND SOFTWARE CORPORATION
 Notes to Condensed Consolidated Financial Statements (unaudited)
 NOTE 1. BASIS OF PRESENTATION
   NOTE 2. STOCK-BASED COMPENSATION
 Share-Based
Payment
 Stock-Based Compensation Expenses
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006In Thousands
    
    
    In ThousandsCost of sales
    
    $
    43
    
    
    $
    105
    
    
    $
    128
    
    
    $
    354Research and development
    
    
    406
    
    
    
    632
    
    
    
    1,093
    
    
    
    1,733Selling, general and
administrative
    
    
    1,486
    
    
    
    2,071
    
    
    
    3,563
    
    
    
    6,634Stock-based
compensation expense
    
    $
    1,935
    
    
    $
    2,808
    
    
    $
    4,784
    
    
    $
    8,721
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Stock Options
  Weighted-Weighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateOptions
    
    
    Exercise
    
    
    Contractual
    
    
    Intrinsic Value(In Thousands)
    
    
    Price
    
    
    Term (Years)
    
    
    (In Thousands)Outstanding at December 31, 2006
    
    
    14,840
    
    
    $
    8.04Granted
    
    
    2,735
    
    
    $
    5.80Exercised
    
    
    (217
    )
    
    $
    5.35Forfeited/expired
    
    
    (4,143
    )
    
    $
    8.65Outstanding at September 30, 2007
    
    
    13,215
    
    
    $
    7.43
    
    
    
    6.67
    
    
    $
    10Vested and expected to vest at
September 30, 2007
    
    
    11,124
    
    
    $
    7.75
    
    
    
    6.24
    
    
    $
    10Exercisable at September 30, 2007
    
    
    7,087
    
    
    $
    8.91
    
    
    
    4.66
    
    
    $
    10
   Options OutstandingWeighted-Number
    
    
    Average
    
    
    Weighted-Outstanding at
    
    
    Remaining
    
    
    Average
    
    
    AggregateSeptember 30, 2007
    
    
    Contractual
    
    
    Exercise
    
    
    Intrinsic Value(In Thousands)
    
    
    Life
    
    
    Price
    
    
    (In Thousands)$3.50  $5.44
    
    
    2,766
    
    
    
    8.64
    
    
    $
    5.20$5.45  $5.84
    
    
    2,778
    
    
    
    4.87
    
    
    $
    5.61$5.85  $6.42
    
    
    4,151
    
    
    
    8.63
    
    
    $
    6.14$6.50   $13.17
    
    
    2,784
    
    
    
    4.59
    
    
    $
    9.26$13.30  $714.22
    
    
    736
    
    
    
    2.90
    
    
    $
    22.94Outstanding at
September 30, 2007
    
    
    13,215
    
    
    
    6.67
    
    
    $
    7.43
    
    
    $
    10Vested and expected
to vest at
September 30, 2007
    
    
    11,124
    
    
    
    6.24
    
    
    $
    7.75
    
    
    $
    10
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Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006Expected life
    
    5.10 years
    
    4.65 years
    
    4.98 years
    
    4.65 yearsRisk-free interest rate
    
    
    4.25
    %
    
    
    4.20
    %
    
    
    4.78
    %
    
    
    4.20
    %Volatility
    
    
    40.3
    %
    
    
    53.0
    %
    
    
    42.4
    %
    
    
    53.0
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
 Restricted Stock
  Unvested
    
    
    WeightedRestricted
    
    
    AverageStock
    
    
    Grant DateOutstanding
    
    
    Fair(In Thousands)
    
    
    ValueBalance at December 31, 2006
    
    
    850
    
    
    $
    5.94Vested
    
    
    (336
    )
    
    $
    6.02Forfeited
    
    
    (126
    )
    
    $
    5.73Balance at September 30, 2007
    
    
    388
    
    
    $
    5.95
  Employee Stock Purchase Plan
  NOTE 3. NET INCOME (LOSS) PER SHARE
 Earnings per Share.
  9




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Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator:Net income (loss)
    
    $
    500
    
    
    $
    (13,142
    )
    
    $
    (19,967
    )
    
    $
    (41,130
    )Denominator:Weighted-average shares outstanding,
excluding unvested restricted stock
    
    
    72,371
    
    
    
    77,263
    
    
    
    72,989
    
    
    
    76,799Effect of dilutive securities:Employee stock options, restricted
stock awards and ESPP shares
    
    
    183
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Denominator
for diluted net income (loss) per
share  weighted-average shares and
assumed conversions
    
    
    72,554
    
    
    
    77,263
    
    
    
    72,989
    
    
    
    76,799Net income
(loss) per share attributable to
common stockholders:Net income
(loss) per share  basic and diluted
    
    $
    0.01
    
    
    $
    (0.17
    )
    
    $
    (0.27
    )
    
    $
    (0.54
    )Net income
(loss) per share  diluted
    
    $
    0.01
    
    
    $
    (0.17
    )
    
    $
    (0.27
    )
    
    $
    (0.54
    )
  NOTE 4. SENIOR NOTES OFFERING
 General
  Conversion Process and Other Terms of the Convertible Senior Notes
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Accounting for
Derivative Instruments and Hedging Activities Accounting for Convertible Securities with Beneficial
Conversion Features or Contingently Adjustable Conversion Ratios Application
of Issue 98-5 to Certain Convertible Instruments
  Earnings per Share Accounting Issues Related to
Certain Features of Contingently Convertible Debt and the Effect on Diluted Earnings per Share Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in,
a Companys Own Stock
 Registration Rights
  NOTE 5. INVESTMENTS IN MARKETABLE SECURITIES
  September 30, 2007Gross Amortized
    
    
    Gross Unrealized
    
    
    Gross Unrealized
    
    
    Estimated FairCosts
    
    
    Gains
    
    
    Loss
    
    
    ValueCorporate debt securities
    
    $
    45,827
    
    
    $
    30
    
    
    $
    (97
    )
    
    $
    45,760U.S. government debt securities
    
    
    19,370
    
    
    
    58
    
    
    
    
    
    
    
    19,428Asset-backed securities
    
    
    30,658
    
    
    
    59
    
    
    
    
    
    
    
    30,717Auction rate securities
    
    
    19,100
    
    
    
    
    
    
    
    
    
    
    
    19,100$
    114,955
    
    
    $
    147
    
    
    $
    (97
    )
    
    $
    115,005
  September 30, 2007Gross Amortized
    
    
    Estimated FairDue in
    
    Costs
    
    
    ValueLess than one year
    
    $
    64,752
    
    
    $
    65,003One to five years
    
    
    50,203
    
    
    
    50,002Total
    
    $
    114,955
    
    
    $
    115,005
  September 30, 2007Less than twelve months
    
    
    Greater than twelve months
    
    
    TotalEstimated Fair
    
    
    Gross Unrealized
    
    
    Estimated Fair
    
    
    Gross Unrealized
    
    
    Estimated Fair
    
    
    Gross UnrealizedValue
    
    
    Gains (Losses)
    
    
    Value
    
    
    Gains (Losses)
    
    
    Value
    
    
    Gains (Losses)Corporate debt securities
    
    $
    11,774
    
    
    $
    (6
    )
    
    $
    33,986
    
    
    $
    (61
    )
    
    $
    45,760
    
    
    $
    (67
    )U.S.
government debt securities
    
    
    13,918
    
    
    
    22
    
    
    
    5,510
    
    
    
    36
    
    
    
    19,428
    
    
    
    58Asset-backed securities
    
    
    20,211
    
    
    
    41
    
    
    
    10,506
    
    
    
    18
    
    
    
    30,717
    
    
    
    59Auction rate securities
    
    
    19,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,100
    
    
    
    $
    65,003
    
    
    $
    57
    
    
    $
    50,002
    
    
    $
    (7
    )
    
    $
    115,005
    
    
    $
    50
 NOTE 6. ACQUISITIONS
 Segue Software, Inc.
  11




---



##### Table of Contents



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
  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
    
    
    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
 12




---



##### Table of Contents



Pro Forma Financial Information
  September 30, 2006Three Months Ended
    
    

Nine Months EndedTotal revenues
    
    $
    239,049
    
    
    $
    231,531Net loss
    
    $
    (52,041
    )
    
    $
    (31,961
    )Net loss per share:Net loss per share  basic and diluted
    
    $
    (0.67
    )
    
    $
    (0.41
    )
 NOTE 7. GOODWILL AND INTANGIBLE ASSETS
  GoodwillBalance as of December 31, 2006
    
    $
    253,356Purchase accounting adjustments  Segue
    
    
    (539
    )Effect of exchange rates
    
    
    375Balance as of September 30, 2007
    
    $
    253,192
  13




---



##### Table of Contents



September 30, 2007Gross Carrying
    
    
    Accumulated
    
    
    Net CarryingAmount
    
    
    Amortization
    
    
    AmountAcquired technology
    
    $
    46,330
    
    
    $
    (28,822
    )
    
    $
    17,508Maintenance agreements
    
    
    11,300
    
    
    
    (2,332
    )
    
    
    8,968Trade names and trademarks
    
    
    1,100
    
    
    
    (428
    )
    
    
    672Customer relationship
    
    
    9,075
    
    
    
    (2,389
    )
    
    
    6,686Other
    
    
    400
    
    
    
    (400
    )
    
    
    $
    68,205
    
    
    $
    (34,371
    )
    
    $
    33,834
 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
  FutureAmortization2007 (3 months)
    
    $
    2,1722008
    
    
    8,4692009
    
    
    7,9672010
    
    
    6,4672011
    
    
    5,272Thereafter
    
    
    3,487Total
    
    $
    33,834
 NOTE 8. RESTRUCTURING
 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,
 Summary of Restructuring Activity for the First, Second and Third Quarters of 2007.
  14




---



##### Table of Contents



FY 2007 Restructuring
    
    
    FY 2006 RestructuringSeverance
    
    
    
    
    
    
    Severanceand Benefits
    
    
    Other
    
    
    and Benefits
    
    
    Facilities
    
    
    Other
    
    
    TotalAccrual at December 31, 2006
    
    $
    
    
    
    $
    
    
    
    $
    4,178
    
    
    $
    11,551
    
    
    $
    84
    
    
    $
    15,813Cash paid
    
    
    
    
    
    
    
    
    
    
    (2,666
    )
    
    
    (1,451
    )
    
    
    (79
    )
    
    
    (4,196
    )Accrual at March 31, 2007
    
    $
    
    
    
    $
    
    
    
    $
    1,512
    
    
    $
    10,100
    
    
    $
    5
    
    
    $
    11,617Additional accruals
    
    
    1,357
    
    
    
    62
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,419Cash paid
    
    
    (156
    )
    
    
    
    
    
    
    (373
    )
    
    
    (1,348
    )
    
    
    (5
    )
    
    
    (1,882
    )Reversal of previous restructuring
    
    
    
    
    
    
    
    
    
    
    (103
    )
    
    
    
    
    
    
    
    
    
    
    (103
    )Fixed asset disposal
    
    
    
    
    
    
    (23
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23
    )Accrual at June 30, 2007
    
    $
    1,201
    
    
    $
    39
    
    
    $
    1,036
    
    
    $
    8,752
    
    
    $
    
    
    
    $
    11,028Additional accruals
    
    
    444
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    444Cash paid
    
    
    (471
    )
    
    
    (39
    )
    
    
    (417
    )
    
    
    (1,410
    )
    
    
    
    
    
    
    (2,337
    )Reversal of previous restructuring
    
    
    
    
    
    
    
    
    
    
    (412
    )
    
    
    
    
    
    
    
    
    
    
    (412
    )Fixed asset disposal
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accrual at September 30, 2007
    
    $
    1,174
    
    
    $
    
    
    
    $
    207
    
    
    $
    7,342
    
    
    $
    
    
    
    $
    8,723
  FY 2007 Restructuring
   FY 2006 Restructuring
    15




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##### Table of Contents



NOTE 9. INCOME TAXES
   Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No.
109
    NOTE 10. STOCK REPURCHASES
  Discretionary Repurchase Program
  16




---



##### Table of Contents



Repurchase Following Senior Notes Offering
  NOTE 11. COMMITMENTS AND CONTINGENCIES
 Indemnification Obligations and Guarantees
 Guarantors Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others
      17




---



##### Table of Contents



Leases
   In Thousands
 Remainderof 2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    TotalOperating Leases
    
    $
    2,905
    
    
    $
    10,322
    
    
    $
    9,169
    
    
    $
    5,924
    
    
    $
    3,992
    
    
    $
    14,054
    
    
    $
    46,366Restructured Operating Leases
    
    
    1,600
    
    
    
    5,914
    
    
    
    5,832
    
    
    
    3,497
    
    
    
    2,778
    
    
    
    4,843
    
    
    
    24,464Capital Lease
    
    
    10
    
    
    
    41
    
    
    
    43
    
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    135Gross Commitments
    
    
    4,515
    
    
    
    16,277
    
    
    
    15,044
    
    
    
    9,462
    
    
    
    6,770
    
    
    
    18,897
    
    
    
    70,965Sublease Income
    
    
    (597
    )
    
    
    (3,056
    )
    
    
    (2,937
    )
    
    
    (2,824
    )
    
    
    (2,819
    )
    
    
    (4,909
    )
    
    
    (17,142
    )Net Commitments
    
    $
    3,918
    
    
    $
    13,221
    
    
    $
    12,107
    
    
    $
    6,638
    
    
    $
    3,951
    
    
    $
    13,988
    
    
    $
    53,823
   Litigation
 Accounting for Contingencies,
  18




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##### Table of Contents



Service Commitments
  NOTE 12. REPORTABLE SEGMENTS
 Disclosures about Segments of an
Enterprise and Related Information
 Description of Segments
  Enterprise.
 CodeGear.
 Segment Data
   Three Months Ended September 30, 2007
    
    Enterprise
    
    
    CodeGear
    
    
    TotalLicense and other revenues
    
    $
    31,611
    
    
    $
    8,768
    
    
    $
    40,379Service revenues
    
    
    28,839
    
    
    
    3,740
    
    
    
    32,579Total revenues
    
    $
    60,450
    
    
    $
    12,508
    
    
    $
    72,958Operating income (loss)
    
    $
    (1,372
    )
    
    $
    1,676
    
    
    $
    304
 19




---



##### Table of Contents



Nine Months Ended September 30, 2007
    
    Enterprise
    
    
    CodeGear
    
    
    TotalLicense and other revenues
    
    $
    80,366
    
    
    $
    27,632
    
    
    $
    107,998Service revenues
    
    
    86,835
    
    
    
    12,491
    
    
    
    99,326Total revenues
    
    $
    167,201
    
    
    $
    40,123
    
    
    $
    207,324Operating income (loss)
    
    $
    (24,191
    )
    
    $
    4,826
    
    
    $
    (19,365
    )
  Long-lived assets:
    
    Enterprise
    
    
    CodeGear
    
    
    TotalGoodwill
    
    $
    185,852
    
    
    $
    67,340
    
    
    $
    253,192Other non-current assets
    
    
    105,866
    
    
    
    462
    
    
    
    106,328Non-current assets
    
    
    291,718
    
    
    
    67,802
    
    
    
    359,520Total assets
    
    $
    478,603
    
    
    $
    103,428
    
    
    $
    582,031
 Enterprise-wide disclosures
  20




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006In Thousands
    
    
    In ThousandsTotal revenues from unaffiliated customers:Americas
    
    $
    32,497
    
    
    $
    52,439
    
    
    $
    105,679
    
    
    $
    126,684EMEA
    
    
    32,112
    
    
    
    21,541
    
    
    
    75,713
    
    
    
    73,879Asia Pacific
    
    
    8,349
    
    
    
    8,386
    
    
    
    25,932
    
    
    
    28,325Total revenues
    
    
    72,958
    
    
    
    82,366
    
    
    
    207,324
    
    
    
    228,888License and other revenues
    
    $
    40,379
    
    
    $
    45,701
    
    
    $
    107,998
    
    
    $
    126,524Technical support
    
    
    25,619
    
    
    
    25,767
    
    
    
    77,120
    
    
    
    73,152Consulting and education services
    
    
    6,960
    
    
    
    10,898
    
    
    
    22,206
    
    
    
    29,212Total revenues
    
    
    72,958
    
    
    
    82,366
    
    
    
    207,324
    
    
    
    228,888Inter-company revenue U.S.
    
    $
    3,316
    
    
    $
    7,274
    
    
    $
    10,702
    
    
    $
    8,781Elimination of inter-company-revenues
    
    
    (3,316
    )
    
    
    (7,274
    )
    
    
    (10,702
    )
    
    
    (8,781
    )Reported inter-company revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating income (loss):Americas
    
    $
    (13,633
    )
    
    $
    (11,125
    )
    
    $
    (44,114
    )
    
    $
    (61,157
    )EMEA
    
    
    12,517
    
    
    
    (1,602
    )
    
    
    19,337
    
    
    
    16,666Asia Pacific
    
    
    1,420
    
    
    
    (754
    )
    
    
    5,412
    
    
    
    2,714Operating income (loss)
    
    
    304
    
    
    
    (13,481
    )
    
    
    (19,365
    )
    
    
    (41,777
    )Interest and other income, net
    
    
    502
    
    
    
    1,593
    
    
    
    1,840
    
    
    
    3,247Income (loss) before income taxes
    
    $
    806
    
    
    $
    (11,888
    )
    
    $
    (17,525
    )
    
    $
    (38,530
    )
 September 30, 2007
    
    
    December 31, 2006In ThousandsLong-lived assets:Americas
    
    $
    66,600
    
    
    $
    11,143EMEA
    
    
    2,799
    
    
    
    2,549Asia Pacific
    
    
    1,734
    
    
    
    4,190Long-lived assets:
    
    
    71,133
    
    
    
    17,882Other non-current assets
    
    
    288,387
    
    
    
    293,876Non-current assets
    
    
    359,520
    
    
    
    311,758Identifiable assets:Americas
    
    $
    382,099
    
    
    $
    339,424EMEA
    
    
    50,594
    
    
    
    38,308Asia Pacific
    
    
    8,619
    
    
    
    10,850Identifiable assets:
    
    
    441,312
    
    
    
    388,582General corporate assets (cash, cash equivalents and short-term investments)
    
    
    140,719
    
    
    
    55,317Total assets
    
    $
    582,031
    
    
    $
    443,899
 NOTE 13. RECENT ACCOUNTING PRONOUNCEMENTS
 21




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##### Table of Contents



Fair Value Option for Financial Assets
and Financial LiabilitiesIncluding an amendment of FASB Statement No. 115
 Fair Value Measurements .
 Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement No. 109 Accounting for
Income Taxes.
 Accounting for Certain Hybrid Financial
Instruments Accounting for Derivative Instruments and
Hedging Activities Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-Looking Statements
  22




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##### Table of Contents



Overview
  Enterprise
  CodeGear
 Summary of key financial results
  
    
    Total revenues decreased 11% to $73.0 million for the three months ended September
30, 2007, from $82.4 million for the three months ended September 30, 2006 and decreased
9% to $207.3 million for the nine months ended September 30, 2007, from $228.9 million
for the nine months ended September 30, 2006.
    
    License and other revenues decreased 12% to $40.4 million for the three months
ended September 30, 2007, from $45.7 million for the three months ended September 30,
2006 and decreased 15% to $108.0 million for the nine months ended September 30, 2007,
from $126.5 million for the nine months ended September 30, 2006.
    
    Service revenues decreased 11% to $32.6 million for the three months ended
September 30, 2007, from $36.7 million for the three months ended September 30, 2006 and
decreased 3% to $99.3 million for the nine months ended September 30, 2007, from 102.4
million for the nine months ended September 30, 2006.
    
    Gross profit as a percentage of revenue increased to 81% for the three months ended
September 30, 2007, compared to 78% in the three months ended September 30, 2006 and
increased to 79% for the nine months ended September 30, 2007, from 77% for the nine
months ended September 30, 2006.
 23




---



##### Table of Contents




    
    Operating expenses decreased 24% to $59.0 million for the three months ended
September 30, 2007, from $77.5 million for the three months ended September 30, 2006 and
decreased 16% to $184.0 million for the nine months ended September 30, 2007, from $218.2
million for the nine months ended September 30, 2006.
    
    Net income was $0.5 million for the three months ended September 30, 2007, compared
to net loss of $13.1 million for the three months ended September 30, 2006 and net loss
was $20.0 million for the nine months ended September 30, 2007, compared to $41.1 million
for the nine months ended September 30, 2006.
    
    Cash, cash equivalents and short-term investments increased $85.4 million to $140.7
million as of September 30, 2007, from $55.3 million as of December 31, 2006.
  Results of Operations
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    % of Rev
    
    
    2006
    
    
    % of Rev
    
    
    2007
    
    
    % of Rev
    
    
    2006
    
    
    % of RevLicense and other revenues
    
    $
    40,379
    
    
    
    55
    %
    
    $
    45,701
    
    
    
    55
    %
    
    $
    107,998
    
    
    
    52
    %
    
    $
    126,524
    
    
    
    55
    %Service revenues
    
    
    32,579
    
    
    
    45
    %
    
    
    36,665
    
    
    
    45
    %
    
    
    99,326
    
    
    
    48
    %
    
    
    102,364
    
    
    
    45
    %Total revenues
    
    
    72,958
    
    
    
    100
    %
    
    
    82,366
    
    
    
    100
    %
    
    
    207,324
    
    
    
    100
    %
    
    
    228,888
    
    
    
    100
    %Cost of license and other revenues
    
    
    1,622
    
    
    
    2
    %
    
    
    1,972
    
    
    
    2
    %
    
    
    4,692
    
    
    
    2
    %
    
    
    5,869
    
    
    
    3
    %Cost of service revenues
    
    
    9,955
    
    
    
    14
    %
    
    
    14,210
    
    
    
    17
    %
    
    
    31,525
    
    
    
    15
    %
    
    
    41,787
    
    
    
    18
    %Amortization of acquired intangibles and other charge
    
    
    2,107
    
    
    
    3
    %
    
    
    2,119
    
    
    
    3
    %
    
    
    6,345
    
    
    
    3
    %
    
    
    4,852
    
    
    
    2
    %Total cost of revenues
    
    
    13,684
    
    
    
    19
    %
    
    
    18,301
    
    
    
    22
    %
    
    
    42,562
    
    
    
    21
    %
    
    
    52,508
    
    
    
    23
    %Gross profit
    
    
    59,274
    
    
    
    81
    %
    
    
    64,065
    
    
    
    78
    %
    
    
    164,762
    
    
    
    79
    %
    
    
    176,380
    
    
    
    77
    %Operating expenses:Selling, general and administrative
    
    
    43,387
    
    
    
    59
    %
    
    
    52,518
    
    
    
    64
    %
    
    
    135,815
    
    
    
    66
    %
    
    
    149,128
    
    
    
    65
    %Research and development
    
    
    13,995
    
    
    
    19
    %
    
    
    19,968
    
    
    
    24
    %
    
    
    43,637
    
    
    
    21
    %
    
    
    53,673
    
    
    
    23
    %Restructuring, amortization of other intangibles and
acquisition related expenses and other charges
    
    
    1,588
    
    
    
    2
    %
    
    
    5,060
    
    
    
    6
    %
    
    
    4,675
    
    
    
    2
    %
    
    
    15,356
    
    
    
    7
    %Total operating expenses
    
    
    58,970
    
    
    
    81
    %
    
    
    77,546
    
    
    
    94
    %
    
    
    184,127
    
    
    
    89
    %
    
    
    218,157
    
    
    
    95
    %Operating income (loss)
    
    
    304
    
    
    
    0
    %
    
    
    (13,481
    )
    
    
    (16
    %)
    
    
    (19,365
    )
    
    
    (9
    %)
    
    
    (41,777
    )
    
    
    (18
    %)Gain on sale of fixed assets
    
    
    
    
    
    
    0
    %
    
    
    1,658
    
    
    
    2
    %
    
    
    
    
    
    
    0
    %
    
    
    1,658
    
    
    
    1
    %Interest income
    
    
    2,352
    
    
    
    3
    %
    
    
    256
    
    
    
    (0
    %)
    
    
    6,499
    
    
    
    3
    %
    
    
    2,582
    
    
    
    1
    %Interest
expense and other income
    
    
    (1,850
    )
    
    
    (3
    %)
    
    
    (321
    )
    
    
    (0
    %)
    
    
    4,659
    
    
    
    (2
    %)
    
    
    (993
    )
    
    
    (0
    %)Total other income
    
    
    502
    
    
    
    1
    %
    
    
    1,593
    
    
    
    2
    %
    
    
    1,840
    
    
    
    1
    %
    
    
    3,247
    
    
    
    1
    %Income (loss) before income taxes
    
    
    806
    
    
    
    1
    %
    
    
    (11,888
    )
    
    
    (14
    %)
    
    
    (17,525
    )
    
    
    (8
    %)
    
    
    (38,530
    )
    
    
    (17
    %)Income tax provision
    
    
    306
    
    
    
    0
    %
    
    
    1,254
    
    
    
    2
    %
    
    
    2,442
    
    
    
    1
    %
    
    
    2,600
    
    
    
    1
    %Net income (loss)
    
    $
    500
    
    
    
    1
    %
    
    $
    (13,142
    )
    
    
    (16
    %)
    
    $
    (19,967
    )
    
    
    (10
    %)
    
    $
    (41,130
    )
    
    
    (18
    %)
 24




---



##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    Change
    
    
    2007
    
    
    2006
    
    
    ChangeAmount
    
    
    % of Total
    
    
    Amount
    
    
    % of Total
    
    
    $
    
    
    %
    
    
    Amount
    
    
    % of Total
    
    
    Amount
    
    
    % of Total
    
    
    $
    
    
    %License and other revenues
    
    $
    40,379
    
    
    
    55
    %
    
    $
    45,701
    
    
    
    55
    %
    
    $
    (5,322
    )
    
    
    (12
    %)
    
    $
    107,998
    
    
    
    52
    %
    
    $
    126,524
    
    
    
    55
    %
    
    $
    (18,526
    )
    
    
    (15
    %)Service revenues
    
    
    32,579
    
    
    
    45
    %
    
    
    36,665
    
    
    
    45
    %
    
    
    (4,086
    )
    
    
    (11
    %)
    
    
    99,326
    
    
    
    48
    %
    
    
    102,364
    
    
    
    45
    %
    
    
    (3,038
    )
    
    
    (3
    %)Total revenues
    
    $
    72,958
    
    
    
    100
    %
    
    $
    82,366
    
    
    
    100
    %
    
    $
    (9,408
    )
    
    
    (11
    %)
    
    $
    207,324
    
    
    
    100
    %
    
    $
    228,888
    
    
    
    100
    %
    
    $
    (21,564
    )
    
    
    (9
    %)
  Revenues by Product
   Three Months Ended
    
    
    Three Months EndedSeptember 30, 2007
    
    
    September 30, 2006ALM
    
    
    DPG
    
    
    IDE
    
    
    Total
    
    
    ALM
    
    
    DPG
    
    
    IDE
    
    
    TotalLicense and other revenues
    
    $
    23,661
    
    
    $
    7,950
    
    
    $
    8,768
    
    
    $
    40,379
    
    
    $
    29,721
    
    
    $
    6,661
    
    
    $
    9,319
    
    
    $
    45,701Service revenues
    
    
    23,717
    
    
    
    5,122
    
    
    
    3,740
    
    
    
    32,579
    
    
    
    25,008
    
    
    
    5,931
    
    
    
    5,726
    
    
    
    36,665Total
    
    $
    47,378
    
    
    $
    13,072
    
    
    $
    12,508
    
    
    $
    72,958
    
    
    $
    54,729
    
    
    $
    12,592
    
    
    $
    15,045
    
    
    $
    82,366
 Nine Months Ended
    
    
    Nine Months EndedSeptember 30, 2007
    
    
    September 30, 2006ALM
    
    
    DPG
    
    
    IDE
    
    
    Total
    
    
    ALM
    
    
    DPG
    
    
    IDE
    
    
    TotalLicense and other revenues
    
    $
    58,213
    
    
    $
    22,150
    
    
    $
    27,632
    
    
    $
    107,995
    
    
    $
    65,302
    
    
    $
    21,327
    
    
    $
    39,895
    
    
    $
    126,524Service revenues
    
    
    71,723
    
    
    
    15,115
    
    
    
    12,491
    
    
    
    99,329
    
    
    
    64,582
    
    
    
    18,780
    
    
    
    19,002
    
    
    
    102,364Total
    
    $
    129,936
    
    
    $
    37,265
    
    
    $
    40,123
    
    
    $
    207,324
    
    
    $
    129,884
    
    
    $
    40,107
    
    
    $
    58,897
    
    
    $
    228,888
 License and Other Revenues
  25




---



##### Table of Contents



Service Revenues
     International Revenues
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    Change
    
    
    September 30,
    
    
    Change2007
    
    
    2006
    
    
    $
    
    
    %
    
    
    2007
    
    
    2006
    
    
    $
    
    
    %United States
    
    $
    27,539
    
    
    $
    46,606
    
    
    $
    (19,067
    )
    
    
    (41
    %)
    
    $
    87,773
    
    
    $
    110,349
    
    
    $
    (22,576
    )
    
    
    (20
    %)Germany
    
    
    10,056
    
    
    
    7,224
    
    
    
    2,832
    
    
    
    39
    %
    
    
    24,342
    
    
    
    21,551
    
    
    
    2,791
    
    
    
    13
    %United Kingdom
    
    
    13,945
    
    
    
    4,561
    
    
    
    9,384
    
    
    
    206
    %
    
    
    24,163
    
    
    
    17,351
    
    
    
    6,812
    
    
    
    39
    %All other countries
    
    
    21,418
    
    
    
    23,975
    
    
    
    (2,557
    )
    
    
    (11
    %)
    
    
    71,046
    
    
    
    79,637
    
    
    
    (8,591
    )
    
    
    (11
    %)Total revenues
    
    $
    72,958
    
    
    $
    82,366
    
    
    $
    (9,408
    )
    
    
    (11
    %)
    
    $
    207,324
    
    
    $
    228,888
    
    
    $
    (21,564
    )
    
    
    (9
    %)
  Regional Revenues
  26




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    Change
    
    
    September 30,
    
    
    Change2007
    
    
    2006
    
    
    $
    
    
    %
    
    
    2007
    
    
    2006
    
    
    $
    
    
    %Americas
    
    $
    32,497
    
    
    $
    52,439
    
    
    $
    (19,942
    )
    
    
    (38
    %)
    
    $
    105,679
    
    
    $
    126,684
    
    
    $
    (21,005
    )
    
    
    (17
    %)Europe, Middle East and Africa
    
    
    32,112
    
    
    
    21,541
    
    
    
    10,571
    
    
    
    49
    %
    
    
    75,713
    
    
    
    73,879
    
    
    
    1,834
    
    
    
    2
    %Asia Pacific
    
    
    8,349
    
    
    
    8,386
    
    
    
    (37
    )
    
    
    (0
    %)
    
    
    25,932
    
    
    
    28,325
    
    
    
    (2,393
    )
    
    
    (8
    %)Total revenues
    
    $
    72,958
    
    
    $
    82,366
    
    
    $
    (9,408
    )
    
    
    (11
    %)
    
    $
    207,324
    
    
    $
    228,888
    
    
    $
    (21,564
    )
    
    
    (9
    %)
  Americas.
  EMEA.
  APAC.
  Cost of Revenues
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    Change
    
    
    September 30,
    
    
    Change2007
    
    
    2006
    
    
    $
    
    
    %
    
    
    2007
    
    
    2006
    
    
    $
    
    
    %Cost of license and other revenues
    
    $
    1,622
    
    
    $
    1,972
    
    
    $
    (350
    )
    
    
    (18
    %)
    
    $
    4,692
    
    
    $
    5,869
    
    
    $
    (1,177
    )
    
    
    (20
    %)As a percentage of license and other revenues
    
    
    4
    %
    
    
    4
    %
    
    
    
    
    
    
    
    
    
    
    4
    %
    
    
    5
    %Cost of service revenues
    
    $
    9,955
    
    
    $
    14,210
    
    
    $
    (4,255
    )
    
    
    (30
    %)
    
    $
    31,525
    
    
    $
    41,787
    
    
    $
    (10,262
    )
    
    
    (25
    %)As a percentage of service revenues
    
    
    31
    %
    
    
    39
    %
    
    
    
    
    
    
    
    
    
    
    32
    %
    
    
    41
    %Amortization of acquired intangibles and other charges
    
    $
    2,107
    
    
    $
    2,119
    
    
    $
    (12
    )
    
    
    (1
    %)
    
    $
    6,345
    
    
    $
    4,852
    
    
    $
    1,493
    
    
    
    31
    %As a percentage of total revenues
    
    
    3
    %
    
    
    3
    %
    
    
    
    
    
    
    
    
    
    
    3
    %
    
    
    2
    %
 27




---



##### Table of Contents



Cost of License and Other Revenues
  Cost of Service Revenues
  Amortization of Acquired Intangibles and Other Charges
  Operating Expenses
 Selling, General and Administrative Expenses
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    Change
    
    September 30,
    
    Change2007
    
    2006
    
    $
    
    %
    
    2007
    
    2006
    
    $
    
    %Selling, general and administrative expenses
    
    $
    43,387
    
    
    $
    52,518
    
    
    $
    (9,131
    )
    
    
    (17
    %)
    
    $
    135,815
    
    
    $
    149,128
    
    
    $
    (13,313
    )
    
    
    (9
    %)As a percentage of total revenues
    
    
    59
    %
    
    
    64
    %
    
    
    
    
    
    
    
    
    
    
    66
    %
    
    
    65
    %
   28




---



##### Table of Contents



Research and Development Expenses
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    Change
    
    September 30,
    
    Change2007
    
    2006
    
    $
    
    %
    
    2007
    
    2006
    
    $
    
    %Research and development expenses
    
    $
    13,995
    
    
    $
    19,968
    
    
    $
    (5,973
    )
    
    
    (30
    %)
    
    $
    43,637
    
    
    $
    53,673
    
    
    $
    (10,036
    )
    
    
    (19
    %)As a percentage of total revenues
    
    
    19
    %
    
    
    24
    %
    
    
    
    
    
    
    
    
    
    
    21
    %
    
    
    23
    %
   Restructuring, Amortization of Other Intangibles, Acquisition-Related Expenses and Other
Charges
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    Change
    
    
    September 30,
    
    
    Change2007
    
    
    2006
    
    
    $
    
    
    %
    
    
    2007
    
    
    2006
    
    
    $
    
    
    %Restructuring
    
    $
    791
    
    
    $
    3,871
    
    
    $
    (3,080
    )
    
    
    (80
    %)
    
    $
    2,138
    
    
    $
    7,169
    
    
    $
    (5,031
    )
    
    
    (70
    %)Amortization of other intangibles
    
    
    84
    
    
    
    158
    
    
    
    (74
    )
    
    
    (47
    %)
    
    
    342
    
    
    
    398
    
    
    
    (56
    )
    
    
    (14
    %)Acquisition-related expenses
    
    
    713
    
    
    
    1,031
    
    
    
    (318
    )
    
    
    (31
    %)
    
    
    2,195
    
    
    
    2,989
    
    
    
    (794
    )
    
    
    (27
    %)Write-off of in-process research and development
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,800
    
    
    
    (4,800
    )
    
    
    (100
    %)Total
    
    $
    1,588
    
    
    $
    5,060
    
    
    $
    (3,472
    )
    
    
    (69
    %)
    
    $
    4,675
    
    
    $
    15,356
    
    
    $
    (10,681
    )
    
    
    (70
    %)As a percentage of total revenues
    
    
    2
    %
    
    
    6
    %
    
    
    
    
    
    
    
    
    
    
    2
    %
    
    
    7
    %
 Restructuring.
  29




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##### Table of Contents



FY 2007 Restructuring
    
    
    FY 2006 RestructuringSeverance
    
    
    
    
    
    
    Severanceand Benefits
    
    
    Other
    
    
    and Benefits
    
    
    Facilities
    
    
    Other
    
    
    TotalAccrual at December 31, 2006
    
    $
    
    
    
    $
    
    
    
    $
    4,178
    
    
    $
    11,551
    
    
    $
    84
    
    
    $
    15,813Cash paid
    
    
    
    
    
    
    
    
    
    
    (2,666
    )
    
    
    (1,451
    )
    
    
    (79
    )
    
    
    (4,196
    )Accrual at March 31, 2007
    
    $
    
    
    
    $
    
    
    
    $
    1,512
    
    
    $
    10,100
    
    
    $
    5
    
    
    $
    11,617Additional accruals
    
    
    1,357
    
    
    
    62
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,419Cash paid
    
    
    (156
    )
    
    
    
    
    
    
    (373
    )
    
    
    (1,348
    )
    
    
    (5
    )
    
    
    (1,882
    )Reversal of previous restructuring
    
    
    
    
    
    
    
    
    
    
    (103
    )
    
    
    
    
    
    
    
    
    
    
    (103
    )Fixed asset disposal
    
    
    
    
    
    
    (23
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23
    )Accrual at June 30, 2007
    
    $
    1,201
    
    
    $
    39
    
    
    $
    1,036
    
    
    $
    8,752
    
    
    $
    
    
    
    $
    11,028Additional accruals
    
    
    444
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    444Cash paid
    
    
    (471
    )
    
    
    (39
    )
    
    
    (417
    )
    
    
    (1,410
    )
    
    
    
    
    
    
    (2,337
    )Reversal of previous restructuring
    
    
    
    
    
    
    
    
    
    
    (412
    )
    
    
    
    
    
    
    
    
    
    
    (412
    )Fixed asset disposal
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accrual at September 30, 2007
    
    $
    1,174
    
    
    $
    
    
    
    $
    207
    
    
    $
    7,342
    
    
    $
    
    
    
    $
    8,723
  Amortization of other intangibles.
 Acquisition-related expenses.
 Interest
Income and Expense and Other Income
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    Change
    
    September 30,
    
    Change2007
    
    2006
    
    $
    
    %
    
    2007
    
    2006
    
    $
    
    %Interest income
    
    $
    2,352
    
    
    $
    256
    
    
    $
    2,096
    
    
    
    819
    %
    
    $
    6,499
    
    
    $
    2,582
    
    
    $
    3,917
    
    
    
    152
    %Interest expense and other income
    
    
    (1,850
    )
    
    
    (321
    )
    
    
    (1,529
    )
    
    
    476
    %
    
    
    (4,659
    )
    
    
    (993
    )
    
    
    (3,666
    )
    
    
    369
    %Total
    
    $
    502
    
    
    $
    (65
    )
    
    $
    567
    
    
    
    (872
    %)
    
    $
    1,840
    
    
    $
    1,589
    
    
    $
    251
    
    
    
    16
    %As a percentage of total revenues
    
    
    1
    %
    
    
    0
    %
    
    
    
    
    
    
    
    
    
    
    1
    %
    
    
    1
    %
  30




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##### Table of Contents



Income Taxes
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    Change
    
    September 30,
    
    Change2007
    
    2006
    
    $
    
    %
    
    2007
    
    2006
    
    $
    
    %Income tax provision (benefit)
    
    $
    306
    
    
    $
    1,254
    
    
    $
    (948
    )
    
    
    (76
    %)
    
    $
    2,442
    
    
    $
    2,600
    
    
    $
    (158
    )
    
    
    (6
    %)As a percentage of total revenues
    
    
    0
    %
    
    
    2
    %
    
    
    
    
    
    
    
    
    
    
    1
    %
    
    
    1
    %
   Liquidity and Capital Resources
 Nine Months EndedSeptember 30,2007
    
    
    2006In ThousandsNet cash provided by (used for):Operating activities
    
    $
    (24,172
    )
    
    $
    (14,994
    )Investing activities
    
    
    (119,579
    )
    
    
    29,846Financing activities
    
    
    165,253
    
    
    
    2,817Effect of exchange rate changes on cash
    
    
    (1,103
    )
    
    
    1,398Net change in cash and cash equivalents
    
    $
    20,399
    
    
    $
    19,067
 Cash, cash equivalents and short-term investments.
  Net cash used in operating activities.
 Net cash used in investing activities.
 31




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##### Table of Contents



Net cash provided by financing activities.
 Currency.
 Contractual Obligations and Off-Balance Sheet Arrangements
 Leases.
  In Thousands
 Remainderof 2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    Thereafter
    
    
    TotalOperating Leases
    
    $
    2,905
    
    
    $
    10,322
    
    
    $
    9,169
    
    
    $
    5,924
    
    
    $
    3,992
    
    
    $
    14,054
    
    
    $
    46,366Restructured Operating Leases
    
    
    1,600
    
    
    
    5,914
    
    
    
    5,832
    
    
    
    3,497
    
    
    
    2,778
    
    
    
    4,843
    
    
    
    24,464Capital Lease
    
    
    10
    
    
    
    41
    
    
    
    43
    
    
    
    41
    
    
    
    
    
    
    
    
    
    
    
    135Gross Commitments
    
    
    4,515
    
    
    
    16,277
    
    
    
    15,044
    
    
    
    9,462
    
    
    
    6,770
    
    
    
    18,897
    
    
    
    70,965Sublease Income
    
    
    (597
    )
    
    
    (3,056
    )
    
    
    (2,937
    )
    
    
    (2,824
    )
    
    
    (2,819
    )
    
    
    (4,909
    )
    
    
    (17,142
    )Net Commitments
    
    $
    3,918
    
    
    $
    13,221
    
    
    $
    12,107
    
    
    $
    6,638
    
    
    $
    3,951
    
    
    $
    13,988
    
    
    $
    53,823
   FIN
48 Liability.
 Indemnification Obligations and Guarantees.
 32




---



##### Table of Contents



Off-Balance Sheet Arrangements.
 Critical Accounting Estimates and Policies
 Goodwill and Purchased Intangible Assets
 Business Combinations Goodwill and Other Intangible Assets.
  Reportable Segments
 Disclosures about Segments of an Enterprise and Related Information,
  Effect of New Accounting Pronouncements
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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Foreign Currency Risk
    Interest Rate Risk
  Short-term investments
 Long-term investments.
 Credit Risks
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ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Our Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
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PART II
 
 OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
 Accounting for Contingencies
  
 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.
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
    
    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 balancing the sales people that focus on
larger deals and those that focus on acquiring new customers and smaller transactions.
While we believe these changes will enhance our leadership globally, 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. Further, we focused our consulting organizations on
working with customers that have or will purchase software licenses. We have de-emphasized
selling services when there is no software license opportunity. 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.
  Our failure to effectively operate CodeGear following the separation of this division from our
enterprise business could harm our operating results. *
  We have experienced significant changes in our senior management team over the past two years and
if we are not able to effectively integrate new senior management members, our business could be
harmed. *
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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.
   Because competition for qualified finance, technical and management personnel is intense and
because we recently moved our headquarters, we may not be able to recruit or retain qualified
personnel quickly, which could harm our business.
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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
solutions 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.
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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.
 Software Revenue Recognition
 We previously had material weaknesses in our internal control over financial reporting. While our
management has determined that we do not currently have any material weaknesses in our internal
control over financial reporting, there can be no assurance that we will maintain an effective
framework for internal control over financial reporting in the future, which would harm our
business and the trading price of our stock.*
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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.
   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 have recently moved our headquarters and are implementing plans for reducing expenses. If we
fail to achieve the results we expect, there will be a negative effect on our financial condition.*
  Consolidation in our industry or fluctuation in our stock price may impede our ability to compete
effectively.
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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.
  Failure to effectively 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;
    
    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.
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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.
  
    
    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.
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If we are unable to protect our intellectual property, we may lose valuable assets.
  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.
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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
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
    
    otherwise adversely affect the market price of our common stock.
  Changes in generally accepted accounting principles may adversely affect us. *
  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 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 SALES OF UNREGISTERED SECURITES
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ISSUER PURCHASES OF EQUITY SECURITIES
 Total Number of
    
    
    Maximum Number (orAverage
    
    
    Shares (or Units)
    
    
    Approximate Dollar Value) ofTotal Number
    
    
    Price Paid
    
    
    Purchased as Part of
    
    
    Shares (or Units) that May Yetof Shares (or Units)
    
    
    per share
    
    
    Publicly Announced
    
    
    Be Purchased Under the PlansPeriod
    
    Purchased
    
    
    (or Unit)
    
    
    Plans or Programs
    
    
    or Programs (1)Beginning dollar value
available to be
repurchased as of
June 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    59,332July 1, 2007 
July 31, 2007 (2)
    
    
    13,331
    
    
    $
    5.76
    
    
    
    
    
    
    
    August 1, 2007 
August 31, 2007 (2)
    
    
    10,835
    
    
    $
    4.46
    
    
    
    
    
    
    
    September 1, 2007 
September 30, 2007 (2)
    
    
    2,435
    
    
    $
    4.46
    
    
    
    
    
    
    
    Total shares repurchased
    
    
    26,601
    
    
    $
    5.11
    
    
    
    
    
    
    $
    59,332Ending dollar value available
to be repurchased under
the Discretionary Program
as of September 30, 2007 (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    59,332
 
 (1)
    
    In September 2001, our Board of Directors authorized the use of up to $30 million to
repurchase shares of our outstanding common stock under a discretionary stock repurchase
program (Discretionary Program). In February 2004, our Board of Directors authorized an
additional $30 million of repurchases under the Discretionary Program, which was announced in
our Current Report on Form 8-K filed with the Securities and Exchange Commission, or SEC, on
February 4, 2004. In May 2005, our Board of Directors authorized an additional $75 million of
repurchases under the Discretionary Program, which was announced in our Current Report on Form
8-K filed with the SEC on May 20, 2005. No shares were repurchased through our Discretionary
Program during the three months ended September 30, 2007.(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. 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS
   Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Description of Exhibit
    
    Form
    
    Date
    
    Number
    
    Herewith3.1
    
    Restated Certificate of Incorporation of Borland Software
Corporation.
    
    10-Q
    
    08/09/05
    
    
    3.13.2
    
    Amended and Restated Bylaws of Borland Software
Corporation.
    
    10-Q
    
    08/09/05
    
    
    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
    
    10/31/01
    
    
    14.2
    
    Specimen Stock Certificate of Borland Software Corporation.
    
    10-Q
    
    05/13/02
    
    
    4.131.1
    
    Certification of Tod Nielsen, Chief Executive Officer of
Borland Software Corporation, pursuant to Rule 13a-14(a).
    
    
    
    
    
    
    
    
    
    X31.2
    
    Certification of Erik E. Prusch, Principal 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, Principal Financial
Officer of Borland Software Corporation, pursuant to Rule
13a-14(b) and 18 U.S.C. Section 1350. +
    
    
    
    
    
    
    
    
    
    X
 
 +
    
    The certifications attached as Exhibit 32.1 and Exhibit 32.2 that accompany this Quarterly
Report on Form 10-Q, 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-Q, irrespective of any general incorporation language contained in such
filing.  48




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SIGNATURES
  BORLAND SOFTWARE CORPORATION
(Registrant)/s/ ERIK E. PRUSCHErik E. Prusch Principal Financial Officer(Principal Financial Officer and Duly Authorized Officer) 49




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EXHIBIT INDEX
 Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Description of Exhibit
    
    Form
    
    Date
    
    Number
    
    Herewith3.1
    
    Restated Certificate
of Incorporation of
Borland Software
Corporation.
    
    10-Q
    
    08/09/05
    
    
    3.13.2
    
    Amended and Restated
Bylaws of Borland
Software Corporation.
    
    10-Q
    
    08/09/05
    
    
    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
    
    10/31/01
    
    
    14.2
    
    Specimen Stock
Certificate of
Borland Software
Corporation.
    
    10-Q
    
    05/13/02
    
    
    4.131.1
    
    Certification of Tod
Nielsen, Chief
Executive Officer of
Borland Software
Corporation, pursuant
to Rule 13a-14(a).
    
    
    
    
    
    
    
    
    
    X31.2
    
    Certification of Erik
E. Prusch, Principal
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, Principal
Financial Officer of
Borland Software
Corporation, pursuant
to Rule 13a-14(b) and
18 U.S.C. Section
1350. +
    
    
    
    
    
    
    
    
    
    X
 
 +
    
    The certifications attached as Exhibit 32.1 and Exhibit 32.2 that accompany this Quarterly
Report on Form 10-Q, 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-Q, irrespective of any general incorporation language contained in such
filing. 50