In Re Portal Software, Inc. Securities Litigation 03-CV-5138

Case 3:03-cv-05138-VRW Document 145 Filed 02/08/2006 Page 1 of 5

1 LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP 2 SANFORD SVETCOV (36561) 100 Pine Street, Suite 2600 3 San Francisco, CA 94111 Telephone: 415/288-4545 4 415/288-4534 (fax) [email protected] 5 – and – SAMUEL H. RUDMAN 6 ROBERT M. ROTHMAN (Pro Hac Vice) RUSSELL J. GUNYAN 7 58 South Service Road, Suite 200 Melville, NY 11747 8 Telephone: 631/367-7100 631/367-1173 (fax) 9 [email protected] [email protected] 10 [email protected] 11 Lead Counsel for Plaintiff and the Class

12 GREEN WELLING LLP ROBERT S. GREEN (136183) 13 235 Pine Street, 15th Floor San Francisco, CA 94104 14 Telephone: 415/477-6700 415/477-6710 (fax) 15 Liaison Counsel for Plaintiff and the Class 16 UNITED STATES DISTRICT COURT 17 NORTHERN DISTRICT OF CALIFORNIA 18 In re PORTAL SOFTWARE, INC. ) Master File No. C-03-5138-VRW 19 SECURITIES LITIGATION ) ) CLASS ACTION 20 ) This Document Relates To: ) DECLARATION OF SANFORD SVETCOV 21 ) IN SUPPORT OF PLAINTIFFS’ ALL ACTIONS. ) OPPOSITION TO DEFENDANTS’ MOTION 22 ) TO DISMISS FOURTH CONSOLIDATED ) AMENDED COMPLAINT 23 DATE: March 23, 2006 24 TIME: 2:00 p.m. COURTROOM: 6, Hon. Vaughn R. Walker 25

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1 I, Sanford Svetcov, declare as follows: 2 I am a partner in the Lerach Coughlin Stoia Geller Rudman & Robbins LLP law firm, lead 3 counsel for plaintiffs and the class in this action. I am admitted to practice before this Court. I 4 submit this Declaration in Support of Plaintiffs’ Opposition to Defendants’ Motion to Dismiss 5 Fourth Consolidated Amended Complaint and Plaintiffs’ Request for Judicial Notice of New and 6 Additional Portal Documents for Incorporation in Fourth Consolidated Amended Complaint. 7 1. Attached hereto as plaintiffs’ Exhibit 1 are true and correct copies of Portal Software, 8 Inc.’s (“Portal” or the “Company”) Form 8-K dated 11/28/05, Form 8-K/A dated 12/23/05, and its 9 Form 8-K/A (Amendment No. 2), dated 12/30/05, with attachments. 10 2. Attached hereto as plaintiffs’ Exhibit 2 is a true and correct copy of the Bloomberg 11 Daily Stock Prices for Portal from 1/02/03 to 1/13/06. 12 3. Attached hereto as plaintiffs’ Exhibit 3 is a true and correct copy of the transcript of 13 Portal’s 8/19/03 conference call with market analysts to discuss the Company’s 2Q04 (ending 14 8/01/03) financial results. 15 4. Attached hereto as plaintiffs’ Exhibit 4 are true and correct copies of pertinent 16 excerpts from Portal’s Form 10-Q for 3Q04 (ending 10/31/03) filed with the SEC on 12/15/03. 17 5. Attached hereto as plaintiffs’ Exhibit 5 are true and correct copies of pertinent 18 excerpts from Portal’s Schedule 14A Proxy Statement for the Company’s 1/28/04 annual meeting 19 filed with the SEC on 12/23/03. 20 6. Attached hereto as plaintiffs’ Exhibit 6 is a true and correct copy of the Product Brief 21 from Portal’s website describing the “rating” function of its Infranet software. 22 I declare under penalty of perjury under the laws of the State of California that the foregoing 23 is true and correct. 24 Executed in San Francisco, California, on February 8, 2006. 25 26 /s/ Sanford Svetcov______SANFORD SVETCOV 27 T:\CasesSF\Portal Software Fed\DEC00027509.doc 28

DEC. OF SANFORD SVETCOV IN SUPPORT OF PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS FOURTH CONSOLIDATED AMENDED COMPLAINT - C-03-5138-VRW - 1 -

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1 DECLARATION OF SERVICE BY E-FILING

2 I, the undersigned, declare: 3 1. That declarant is and was, at all times herein mentioned, a citizen of the United States 4 and employed in the City and County of San Francisco, over the age of 18 years, and not a party to 5 or interested party in the within action; that declarant’s business address is 100 Pine Street, 6 Suite 2600, San Francisco, California 94111. 7 2. That on February 8, 2006, declarant served by e-filing pursuant to N.D. of Cal. 8 General Order No. 45, Electronic Case Filing Guidelines Sec. IX the DECLARATION OF 9 SANFORD SVETCOV IN SUPPORT OF PLAINTIFFS’ OPPOSITION TO DEFENDANTS’ 10 MOTION TO DISMISS FOURTH CONSOLIDATED AMENDED COMPLAINT to the parties 11 listed on the attached Service List and this document was forwarded to the following designated 12 Internet site at: 13 http://securities.lerachlaw.com/ 14 I declare under penalty of perjury that the foregoing is true and correct. Executed this 8th 15 day of February, 2006, at San Francisco, California. 16

17 /s/ Tamara J. Love TAMARA J. LOVE 18

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PORTAL SOFTWARE, INC. SEC. Service List - 2/7/2006 (04-0566) Page 1 of 2 Counsel For Defendant(s) Boris Feldman Nina F. Locker Peri B. Nielsen Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, CA 94304-1050 650/493-9300 650/493-6811(Fax)

Counsel For Plaintiff(s) Christopher T. Heffelfinger Mel E. Lifshitz Michael W. Stocker Joseph R. Seidman, Jr. Joseph J. Tabacco, Jr. Bernstein Liebhard & Lifshitz, LLP Berman DeValerio Pease Tabacco Burt & Pucillo 10 East 40th Street 425 California St., Suite 2025 New York, NY 10016 San Francisco, CA 94104-2205 212/779-1414 415/433-3200 212/779-3218(Fax) 415/433-6382(Fax)

Steven J. Toll Peter A. Binkow Daniel S. Sommers Lionel Z. Glancy Cohen, Milstein, Hausfeld & Toll, P.L.L.C. Michael M. Goldberg 1100 New York Ave., N.W., Suite 500 Glancy Binkow & Goldberg LLP Washington, DC 20005-3964 1801 Avenue of the Stars, Suite 311 202/408-4600 Los Angeles, CA 90067 202/408-4699(Fax) 310/201-9150 310/201-9160(Fax)

Solomon B. Cera Robert S. Green Joseph M. Barton Green Welling LLP Gold Bennett Cera & Sidener LLP 595 Market Street, Suite 2750 595 Market Street, Suite 2300 San Francisco, CA 94105 San Francisco, CA 94105 415/477-6700 415/777-2230 415/477-6710(Fax) 415/777-5189(Fax) Case 3:03-cv-05138-VRW Document 145 Filed 02/08/2006 Page 5 of 5

PORTAL SOFTWARE, INC. SEC. Service List - 2/7/2006 (04-0566) Page 2 of 2 Christopher J. Keller Sanford Svetcov Jonathan M. Plasse Lerach Coughlin Stoia Geller Rudman & Labaton Sucharow & Rudoff LLP Robbins LLP 100 Park Avenue, 12th Floor 100 Pine Street, Suite 2600 New York, NY 10017-5563 San Francisco, CA 94111-5238 212/907-0700 415/288-4545 212/818-0477(Fax) 415/288-4534(Fax)

Jonathan M. Stein Samuel H. Rudman Lerach Coughlin Stoia Geller Rudman & Robert M. Rothman Robbins LLP David A. Rosenfeld 197 S. Federal Highway, Suite 200 Lerach Coughlin Stoia Geller Rudman & Boca Raton, FL 33432 Robbins LLP 561/750-3000 58 South Service Road, Suite 200 561/750-3364(Fax) Melville, NY 11747 631/367-7100 631/367-1173(Fax)

Marc Topaz Jeffrey M. Norton Schiffrin & Barroway, LLP Robert I. Harwood 280 King of Prussia Road Wechsler Harwood LLP Radnor, PA 19087 488 Madison Avenue, 8th Floor 610/667-7706 New York, NY 10022 610/667-7056(Fax) 212/935-7400 212/753-3630(Fax) EXHIBIT 1 :' inn 8-K Page 1 of 4

8-K 1 d8k.htm FORM 8-K

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 8-K

CURRENT REPOR T Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) : November 21, 200 5

PORTAL SOFTWARE, INC . (Exact name of Registrant as specified in its cha rter)

Delaware 000-25829 77-0369737 (State or other jurisdiction of (Commission File Number) (I .R.S. Employer incorporation or organization) I dentification Number)

10200 South De Anza Boulevard Cupertino, CA 95014 (Address, including zip code, of principal executive offices)

(408) 572-200 0 (Registrant' s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A .2. below):

❑ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230 .425)

❑ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240 .14a-12 )

❑ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240 .14d-2(b))

❑ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240 .13e-4(c) )

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Item 2 .02 Results of Operations and Financial Conditio n On November 28, 2005, Portal Software, Inc . (the "Registrant") announced that it will restate its previously issued financial statements for the first, second and third quarters of fiscal 2005 and provided preliminary estimates of the principal effects of such restatements. The Registrant also released preliminary unaudited financial information for its third quarter ended October 28, 2005 . A copy of the press release issued by the Registrant concerning the foregoing preliminary unaudited financial information is furnished herewith as Exhibit 99 .1 .

Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. (a) On November 21, 2005, the Registrant and the Audit Committee of the Registrant's Board of Directors, in consultation with Ernst & Young LLP, the Registrant's independent auditors, concluded that the Registrant's financial statements for the first, second and third quarters of fiscal 2005 should no longer be relied upon because of certain errors in such financial statements.

The adjustments that give rise to the restatements and adjustments to the previously reported prelimina ry unaudited financials fall into four categories: 1 . The accounting for revenue on certain complex multi -element contracts. The largest of the changes results from the Regis trant's application of certain paragraphs of SOP 97-2 on one large multi -element contract where Vendor Specific Objective Evidence (VSOE) of fair value for consulting services was not present ; 2. The accounting for deferred costs on certain long term projects. The Registrant had incorrectly deferred costs on certain large fixed price services contracts ; 3. The accounting for certain international withholding and payroll taxes. The Registrant had over accrued for certain international withholding taxes and had not accrued properly for international payroll taxes in international countries where the comp any had small operations. This adjustment relates to a material weakness previously disclosed in the Regis trant's press release dated June 30, 2005 ; and 4. The impact of a number of individually insignificant adjustments.

The Registrant intends to restate its financial statements for the periods referenced above .

On November 28, 2005, the Registrant issued a press release relating to these matters, a copy is furnished herewith as Exhibit 99 .1.

Item 9.01 Financial Statements and Exhibits . (c) Exhibits 99.1 Press release, dated November 28, 2005, entitled "Portal Software to Restate Previously Filed Fiscal 2005 Quarterly Results and Provide Update on Business ."

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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PORTAL SOFTWARE, INC .

Dated: November 28, 2005 By : /s/ Larry Bercovich

Larry Bercovich SVP, General Counsel & Secretary

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EXHIBIT INDEX

Exhibit Number Description

99.1 Press release, dated November 28, 2005, entitled "Portal Software to Restate Previously Filed Fiscal 2005 Quarterly Results and Provide Update on Business."

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EX-99.1 2 dex991 .htm PRESS RELEAS E Exhibit 99.1 F= C3 M or #4 L.. Press Release 10200 South De Anza Boulevard, Cupertino, California 95014 USA www .portal.com Tel: + 1 408.572.2000 Portal Software to Restate Previously Filed Fiscal 2005 Quarterly Results and Provide Update on Business

Investor Conference Call Scheduled for Wednesday, November 30

CUPERTINO, November 28, 2005 - Portal Software , Inc. (PRSF.PK), the premier provider of billing and Revenue Management solutions for the global communications and media markets, today announced that it will restate its financial results for its first, second and third quarters for fiscal 2005 . The company also provided an update regarding its third qua rter of fiscal 2006 . Portal will hold an investor call on Wednesday , November 30 to discuss today's news.

Restatement and SEC Filing Updat e The company reports that significant progress has been made in the year-end audit of Portal's fiscal 2005 financial results . In connection with the work completed to date on the company's fiscal year-end 2005 audit, management has identified adjustments that will be made to previously disclosed financial results . These adjustments will result in the restatement of previously filed results for the first, second and third quarters of fiscal year 2005 . The company will also revise the preliminary results reported for its fourth quarter of fiscal year 2005 through the second quarter of fiscal 2006 .

The adjustments that give rise to the restatements and adjustments to the previously reported preliminary unaudited financials fall into four categories : 1 . The accounting for revenue on certain complex multi-element contracts . The largest of the changes results from the company's application of certain paragraphs of SOP 97-2 on one large multi-element contract where Vendor Specific Objective Evidence (VSOE) of fair value for consulting services was not present; 2. The accounting for deferred costs on certain long term projects . The company had incorrectly deferred costs on certain large fixed price services contracts ; 3. The accounting for certain international withholding and payroll taxes . The company had over accrued for certain international withholding taxes and had not accrued properly for international payroll taxes in international countries where the company had small operations . This adjustment relates to a material weakness previously disclosed in the company's press release dated June 30, 2005 ; and 4. The impact of a number of individually insignificant adjustments.

Based on the expected adjustments, revenue for the first through third quarters of fiscal 2005 will be decreased by approximately $100,000 in the aggregate compared with the amounts reported on the company's Form IOQs for the respective quarters. These adjustments relate to material weaknesses previously disclosed . Individual quarterly revenue is expected to change as follows :

Revenue

Quarter Increase/(Decrease )

Q1FY2005 $ (900,000) Q2FY2005 $ 400,000 Q3FY2005 $ 400,000

Q1-Q3 FY2005 Total $ (100,000)

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Portal Software to Restate Previously Filed Fiscal 2005 Quarterly Results and Provides Update on Business

Based in part on interpretations of recent relevant accounting pronouncements, the company has revised its application of revenue accounting on certain multiple element contracts which principally impacted the third and fourth quarter of fiscal 2005 and subsequent quarters . Compared with previously disclosed preliminary unaudited financial results, revenue for the fourth quarter of fiscal 2005 is expected to be reduced by $6 .2 million . Approximately 90 percent of the $6 .2 million revenue adjustment relates to changes in the application of certain paragraphs of SOP 97-2 on one large customer contract where VSOE for consulting services was not present . Adjustments to the previously disclosed preliminary unaudited revenue for the first and second quarters of fiscal 2006 are being calculated and will be reported at a later date . The net reduction in fiscal 2005 revenue as a result of the aforementioned adjustments are expected to be recognized in future periods . As a result of these changes, deferred revenue is expected to increase by $6 .2 million as the company exited fiscal year 2005 .

The net loss for the first through third quarters of fiscal 2005 will be increased by an aggregate of $1 .5 million compared with the amounts reported on the company's Form 1 OQs for the respective quarters. These adjustments include the impact of the foreign tax withholding and foreign payroll tax accruals of $0 .5 million. Also included is the impact of the change in accounting for deferred costs on certain long term contracts. The individual quarterly net loss is expected to change as follows: (Increase)/Decrease in Net Loss .

Revenue & International Other Cost of Quarter Deferred Cost Taxes Revenue Total

QlFY2005 $(1,500,000) $ (800,000) $ (800,000) $(3,100,000) Q2FY2005 $ 2,500,000 $ 500,000 $ 100,000 $ 3,100,000 Q3FY2005 $(1,400,000) $.(200,000) $ 100,000 $(1,500,000)

Q1-Q3 FY2005 Total $ (400,000) $ (500,000) $ (600,000) $(1,500,000)

Compared with previously disclosed preliminary unaudited financial results for the fourth quarter of fiscal 2005, the net loss is expected to be increased by $5 .0 million. Adjustments to the previously disclosed preliminary unaudited net loss for the first and second quarters of fiscal 2006 are being calculated and will be reported at a later date .

"Portal is continuing to make significant progress in this complex and ongoing audit and, as a result, the company has decided to restate certain portions of our previously released financial information ." said Dave Labuda, Portal's chief executive officer . "Portal remains committed to concluding this process as quickly as possible in order to file our Form 10- K for fiscal 2005 ."

Portal Press Releas e

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Portal Software to Restate Previously Filed Fiscal 2005 Quarterly Results and Provides Update on Business

Third Quarter Fiscal 2006 Bookings and Cash Results • Third quarter 2006 bookings were $20 .8 million compared to bookings of $32 .3 million for the same period last year and $29 million for the second quarter of fiscal 2006 . Cash and investments at October 28, 2005 were $44.6 million (including restricted cash of $13 .2 million) . Total cash usage during the third quarter of fiscal 2006 was $9 .7 million compared to $12 .4 million for the third quarter of fiscal 2005. Material Weaknesses in Internal Controls As previously disclosed in Portal's Form 10-Q for the quarter ended October 29, 2004 and in its press releases dated June 30, 2005 and August 31, 2005, at the end of the company's fiscal year ended January 28, 2005 and as of the date of this press release, Portal has identified multiple material weaknesses in its internal controls over financial reporting (the company's "internal controls"). Portal has performed a significant portion of its internal control assessment process and has conducted incremental procedures where necessary to verify. the accuracy of its financials. The company expects that its external auditors will not provide an opinion on the effectiveness of the company's internal controls or on management's opinion regarding the internal controls, as required by Section 404 of the Sarbanes-Oxley Act of 2002 as part of the filing of its Form 10-K due to the fact that the company does not anticipate being able to complete its assessment prior to filing its Form 10-K . Rather, the company is focused on completing the year-end audit, filing its Form 10K, and remediating material weaknesses .

Investors should refer to the company's Form 10-Q for the fiscal quarter ended October 29,-2004, which was filed with the Securities and Exchange Commission on April 25, 2005, its previous 8-K filings, and to its press releases dated June 30, 2005 and August 31, 2005, for further detail as to the nature of these material weaknesses and control deficiencies .

As disclosed previously, as a result of the extended financial close process as well as the assessment of its internal controls as required by Section 404 of the Sarbanes-Oxley Act of 2002, Portal is currently delinquent in filing its Form 10-K for the fiscal year ended January 28, 2005 and in filing its Forms 10-Q for the fiscal quarters ended April 29, 2005 and July 29, 2005. Although the company and its auditors continue to work diligently through the audit, no final . date has been provided at this time for the completion and filing of the Form 10-K, nor the filing of Forms 10-Q for the first three quarters of fiscal year 2006.

.Investor Call Information Portal will hold an investor call at 4:30 pm EST on Wednesday, November 30 . To access the Portal investor call, please dial one of the following numbers at 4 :20 p.m. Eastern-(1 :20 p.m. Pacific) : 1-800-706-3415 (inside the U .S.) or +1-706-634-1314 (outside of the U.S.). The conference ID is 2943691 . The teleconference can also be accessed via the web by visiting Portal's investor relations website at http://investor.portal.com. Additionally, an archive of the call will be available until for seven days, commencing two hour following the live call on November 30, 2005 at Portal's investor relations web site at http ://investor.portal.com. A tele-replay of the call will also be available for one year by dialing 1-800-642-1687 (inside the U .S.) or 1-706-645-9291 (outside the U.S .). The pass code for the tele-replay is 2943691 .

Portal Press Release

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Portal Software to Restate Previously Filed Fiscal 2005 Quarterly Results and Provides Update on Business

About Portal Software, Inc. Portal Software is the premier provider of billing and Revenue Management solutions for the global communications and media markets . The company delivers the only platform for the end-to-end management of customer revenue across offerings, channels, and -geographies. Portal's solutions enable companies to dramatically accelerate the launch of innovative, profit-rich services while significantly reducing the costs associated with legacy billing systems . Portal is the Revenue Management partner of choice to the world's leading service providers including: Vodafone, AOL Time Warner, Deutsche Telekom, TELUS, NTT, China Telecom, Reuters, Telstra, China Mobile, Telenor Mobil, and France Telecom.

Forward Looking Statements - Statements in this release concerning Portal Software, Inc .'s bookings and cash are preliminary, unaudited financial - information for the third quarter fiscal year 2006 . These statements, as well as statements regarding the adjustments - management expects to make in previously filed SEC reports for the first three quarters of fiscal year 2005, and to the preliminary financial results for the fourth quarter of fiscal 2005 and the first two quarters of fiscal year 2006, as well as statements regarding the completion of the audit of our fiscal year 2005 financial statements and completion of Sarbanes Oxley Section 404 requirements, as well as the remediation of our material weaknesses, are forward looking statements that involve a number of uncertainties and risks. Factors that could cause actual events or results to differ materially include the following : Portal's auditors have not completed their audit of our fiscal 2005 results, nor commenced their review of the first three quarters of fiscal 2006 results disclosed here and in previous releases . Consequently, our Audit Committee has not had an opportunity to complete its review of the preliminary financial results contained herein. During the course of completing these respective reviews and audit, we may determine we need to further revise materially the preliminary results reported herein, further adjust results reported for the first three quarters of fiscal year 2005 or further restate the results reported for - previous periods . The material weaknesses in our internal controls significantly increase the risk that the preliminary financial results reported herein, including results reported as specific numbers or within ranges, as well as our previously issued financial results, may need to change . For instance, we may discover errors in determining these results or additional information that has a material impact upon them . In addition, customers are engaging in greater due diligence .before making commitments and, as a result, some orders have been delayed and we may not reach our expected level of sales required to . become operating cash flow positive in the fourth quarter of fiscal 2006 . -

Portal Press Releas e

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Portal. Software to Restate Previously Filed Fiscal 2005 Quarterly Results and Provides Update on Business in detail in our Annual Report on Form 10-K for the fiscal year ended January 30, 2004, our subsequent quarterly reports on Form I O-Q, and our current reports filed on Form 8-K . All statements made in this press release are made only as of the date set forth at the beginning of this release . Portal undertakes no obligation to update the information in this release in the event facts or circumstances subsequently change after the date of this press release . Copyright 1996-2005. PORTAL, the PORTAL LOGO, INFRANET, INFRANET CABLE, INFRANET DNA, INFRANET IPT, INFRANET WIRELESS, INFRANET WIRELINE, INTERCONNECT, INTEGRATE, RETURN ON INNOVATION, TELCOONE, REAL TIME- NO LIMITS, CONTENT CONNECTOR and BILLINGAGILITY are trademarks or registered trademarks in the United States and in other countries, all owned by Portal So ftware, Inc . or its subsidiaries.

Contacts: Investor Relations 408-572-2345, investor [email protected]

Amy Cozamanis, Financial Relations Board 310-854-831 4 [email protected] Media: Kevin Payne, Portal 408-572-3614, [email protected]

Josh Aroner, Zeno Group 415-369-8107, josh.aroner@zenogroup .com

Portal Press Release

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8-K/A 1 d8ka.htm FORM 8-K AMENDMENT SECURITIES AND EXCHANGE COMMISSIO N Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) : November 21, 2005

PORTAL SOFTWARE, INC . (Exact name of Registrant as specified in its charter)

Delaware 000-25829 77-0369737 (State or other jurisdiction of (Commission File Number) (I .R.S. Employer incorporation or organization ) Identification Number)

10200 South De Anza Boulevard Cupertino, CA 95014 (Address, including zip code, of principal executive offices) (408) 572-200 0 (Registrant's telephone number, including area code )

❑ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230 .425)

❑ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

❑ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240 .14d-2(b))

❑ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240 .13e-4(c))

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Explanatory Note: The Registrant is filing this Amendment to our Current Report on Form 8-K, filed with the Commission on November 28, 2005, to amend and restate our previous disclosures with respect to the matters set forth in Item 4 .02.

Item 2.02 Results of Operations and Financial Condition On November 28, 2005, Portal Software, Inc . (the "Registrant") announced that it will restate its previously issued financial statements for the first, second and third quarters of fiscal 2005 and provided preliminary estimates of the principal effects of such restatements . These previously issued preliminary estimates of the principal effects of such restatements have been updated in Item 4 .02 below to reflect subsequent changes in those estimates . The Registrant also released preliminary bookings and cash information for its third quarter ended October 28, 2005 . A copy of the press release issued by the Registrant concerning the foregoing information is furnished herewith as Exhibit 99 .1 .

Item 4 .02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. (a) On November 21, 2005, the Registrant and the Audit Committee of the Registrant's Board of Directors (the "Audit Committee"), in consultation with Ernst & Young LLP ("Ernst & Young"), the Registrant's independent auditors, concluded that the Registrant's financial statements for the first, second and third quarters of fiscal 2005 should no longer be relied upon because of certain material errors in such financial statements, which errors were deemed by the Registrant as likely to be material in the aggregate .

The adjustments that give rise to the restatements and adjustments to the previously reported preliminary unaudited financials fall into four categories : 1 . The accounting for revenue on certain complex multi-element contracts . The largest of the changes results from the Registrant's application of certain paragraphs of SOP 97-2 on one large multi-element contract where Vendor Specific Objective Evidence (VSOE) of fair value for consulting services was not present ; 2. The accounting for deferred costs on certain long term projects. The Registrant had incorrectly deferred costs on certain large fixed price services contracts ; 3. The accounting for certain international withholding and payroll taxes . The Registrant had over accrued for certain international withholding taxes and had not accrued properly for international payroll taxes in international countries where the company had small operations . This adjustment relates to a material weakness previously disclosed in the Registrant's press release dated June 30, 2005 ; and 4. The impact of a number of individually insignificant adjustments.

The Registrant intends to restate its financial statements for the periods referenced above. The Audit Committee has discussed the matters disclosed in this Item 4 .02(a) with Ernst &Young .

Ernst & Young concurred with the Registrant's conclusion of the nature of the items contributing to the restatement . The Registrant and Ernst & Young have not yet completed their respective procedures and audit, respectively, with respect to the Registrant's financial statements for fiscal 2005, including, but not limited to, procedures relating to the Registrant's estimated adjustments disclosed in the November 28, 2005 press release, the Form 8-K and this Form 8-K/A, each of which is incorporated herein, as amended.

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On November 28, 2005, the Registrant issued a press release relating to these matters, a copy of which was furnished as Exhibit 99.1 . Since November 28, 2005, and as a result of the Registrant's continuing procedures, the Registrant's estimate of the financial impact of certain of the restatement items has changed, including amounts pertaining to the previously identified large, multi-element contract entered into in fiscal . 2005 .

As of December 15, 2005, individual quarterly revenue is expected to change from originally reported revenue as follows :

Quarter Increase/(Decrease)

Ql FY2005 $ (200,000) Q2 FY2005 $ 100,000 Q3 FY2005 $ (600,000) .

Ql-Q3 FY2005 Total $ (700,000)

As of December 15, 2005, the individual quarterly net loss is expected to change from originally reported net loss as follows : (Increase)/Decrease in Net Loss : Revenue & International Other Cos t Quarter Deferred Cost Taxes of Revenue Total

QI FY2005 $(1,500,000) $ (900,000) $(200,000) $(2,600,000) Q2 FY2005 $ 1,800,000 $ 100,000 $ 200,000 $ 2,100,000 Q3 FY2005 $(1,000,000) $ (400,000) $(100,000) $(1,300,000)

Q1-Q3 FY2005 Total $ 700,000 $ (1,200,000) $(100,000) $(1,800,000) Additional Information On December 13, 2005, the Registrant received a letter from the Securities and Exchange Commission's Division of Corporate Finance inquiring about the impact of these adjustments on the Registrant's prior period financial results . The. Registrant has responded to the Commission as follows : Portal respectfully submits that, in its evaluation of the issues identified with respect to the fiscal .2005 quarterly . financial statements summarized in the four restatement categories referenced in its Form 8-K, Portal assessed which issues were applicable to periods prior to fiscal 2005 . In particular, with respect to the revenue restatement item, Portal respectfully notes that the largest of the adjustments relates to a large, multi-element contract entered into in fiscal 2005 where vendor specific objective evidence (VSOE) of fair value for consulting services was not present . Portal

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disclosed in its February 3, 2005 press release that, during the close of its third quarter of fiscal 2005 , it had concluded that it could no longer determine VSOE of fair value for consulting services. The error relating to the adjustment for this large contract would not have impacted its fiscal 2004 fin ancial statements because the contract at issue was executed during FY 2005. Moreover, Portal maintained VSOE of fair value for its consulting services in fiscal 2004.

The majority of the remaining revenue adjustments relate to certain contracts , which Portal initially accounted for as time and materials services contracts , rather than as fixed price services contracts, owing to a misinterpretation of the applicable con tracts. Portal has determined that the accounting for these con tracts, which relate to the material weaknesses previously disclosed in its press release dated June 30, 2005 , as well as its Form 10-Q for the third qua rter of fiscal 2005 filed on April 25, 2005, did not impact its year-end 2004 financial statements in a material amount . Portal is currently evaluating whether these contracts or any other contracts with similar issues could have impacted its quarterly financial statements i n fiscal 2004.

With respect to the restatement item relating to foreign payroll and withholding tax accruals, Portal has determined that these errors did not mate rially impact its year-end or quarterly financial statements in fiscal 2004 . Portal is still in the processa process of determining whether any of the individually insignificant adjustments impacted its fiscal 2004 financial statements in material amount. Based on the above and as of this writing, Portal does not believe that any of the restatement items, individually or in the aggregate, impacted its year-end fiscal 2004 financial statements in a mate rial amount. Portal is still in the process of reviewing its fiscal 2004 quarterly financial statements to determine whether any of these items impacted these financial ✓ statements in a material amount. As disclosed in Portal's November 28, 2005 press release, its original Form 8-K and the Form 8-K/A filed contemporaneously herewith, the estimates provided with respect to its restatement are preliminary . Portal is still in the .. process of completing its procedures with respect to its fiscal year 2005 financial statements and will continue to evaluate all adjustments identified, individually and in the aggregate, including whether those adjustments materially impact previously filed financial statements. Should, in the course of completing its procedures, Portal conclude that any of its previously issued financial statements should not be relied upon, Portal will promptly notify the Staff and issue the appropriate disclosures as required under Form 8-K requirements .

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of fiscal year 2006, as well as statements regarding the completion of the audit of our fiscal year 2005 financial statements, are forward looking statements that involve a number of uncertainties and risks . Factors that could.cause actual events or results to differ materially include the following: Portal's auditors have not completed their audit of our fiscal 2005 results, nor commenced their review of the first three quarters of fiscal 2006 results disclosed here and in previous releases . Consequently, our Audit Committee has not had an opportunity to complete its review of the preliminary financial results contained herein . During the course of completing these respective reviews and audit, we may determine we need to further revise materially the preliminary results reported herein, further adjust results reported for the first three quarters of fiscal year 2005 or further restate the results reported for previous periods. The material weaknesses in our internal controls significantly increase the risk that the preliminary financial results reported herein, including results reported as specific numbers or.within ranges, as well as our previously issued financial results, may need to change. For instance, we may discover errors in determining . these results or additional information that has a material impact upon them . In addition, customers are engaging in greater due diligence before making commitments and, as a result, some orders have been delayed and we may not reach our expected level of sales required to become operating cash flow. positive in the fourth quarter of fiscal 2006 .

Significant consequences could result from one or more of these general or specific events occurring, particularly if they result in a material impact to our financial results . We would likely be further delayed in filing our Form 10-K for fiscal year 2005 and our Forms 10-Q for the first three quarters of fiscal year 2006 . In addition, we may. incur additional costs, experience delays or the loss of new and existing business, as well as management distraction, private litigation, regulatory inquiries or enforcement action, and employee attrition . These consequences, if they materialize, would have a material adverse impact on our business and operations. Other factors which could cause actual results to differ from those discussed in this press release are described in detail in-our Annual Report on Form 10-K for the fiscal year ended January 30, 2004, our subsequent quarterly reports on Form 10-Q, and our current reports filed on Form 8-K . All statements made in this press release are made only as of the date set forth at the beginning of this release. Portal undertakes no obligation to update the information in this release in the event facts or circumstances subsequently change after the date of this press release .

Item 9.01 Financial Statements and Exhibits . (c) Exhibits

*99.1 Press release, dated November 28, 2005, entitled "Portal Software to Restate Previously Filed Fiscal 2005 Quarterly Results and Provide Update on Business ."

* Previously filed.

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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized . PORTAL SOFTWARE, INC .

Dated: December 23, 2005 By : /s/ Larry Bercovich

Larry Bercovich SVP, General Counsel & Secretary

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EXHIBIT INDEX

Exhibit Number Descriptio n

99.1 Press release, dated November 28, 2005, entitled "Portal Software to Restate Previously Filed Fiscal 2005 Quarterly Results and Provide Update on Business."

* Previously filed .

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EX-99.1 2 dex991 .htm PRESS RELEASE Exhibit 99 .1

I .. M L. Press .Releas e

10200 South De Anza Boulevard, Cupertino, California 95014 USA www .portal .com Tel: +1408 .572.2000 Portal Software to Restate Previously Filed Fiscal 2005 Quarterly Results and Provide Update on Business Investor Conference Call Scheduled for Wednesday, November 30 CUPERTINO, Calif.- November 28, 2005 - Portal Software, Inc . (PRSF.PK), the premier provider of billing and Revenue Management solutions for the global communications and media markets, today announced that it will restate its financial results for its first, second and third quarters for fiscal 2005 . The company also provided an update regarding its third quarter of fiscal 2006 . Portal will hold an investor call on Wednesday, November 30 to discuss today's news.

The adjustments that give rise to the restatements and adjustments to the previously reported preliminary unaudited financials fall into four categories : 1. The accounting for revenue on certain complex multi-element contracts . The largest of the changes results from the company's application of certain paragraphs of SOP 97-2 on one large multi-element contract where Vendor Specific Objective Evidence (VSOE) of fair value for consulting services was not present ; 2. The accounting for deferred costs on certain long term projects. The company had incorrectly deferred costs on certain large fixed price services contracts ; 3 . The accounting for certain international withholding and payroll taxes . The company had over accrued for certain international withholding taxes and had not accrued properly for international payroll taxes in international countries where the company had small operations . This adjustment relates to a material weakness previously disclosed in the company's press release dated June 30, 2005 ; and 4. The impact of a number of individually insignificant adjustments. Based on the expected adjustments, revenue for the first through third quarters of fiscal 2005 will be decreased by approximately $100,000 in the aggregate compared with the amounts reported on the company's Form IOQs for the respective quarters . These adjustments relate to material weaknesses previously disclosed . Individual quarterly revenue is expected to change as follows:

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Portal Software to Restate Previously Filed Fiscal 2005 Quarterly Results and Provides Update on Business

Revenue

Quarte r Increase /(Decrease)

Q1FY2005 $ (900,000) Q2FY2005 $ 400,000 Q3FY2005 $ 400,000

Ql-Q3 FY2005 Total $ (100,000 )

Based in part on interpretations of recent relevant accounting pronouncements, the company has revised its application of revenue . accounting on certain multiple element contracts which principally impacted the third and fourth quarter of fiscal 2005 and subsequent quarters . Compared with previously disclosed preliminary unaudited financial results, revenue for the fourth quarter of fiscal 2005 is expected to be reduced by $6 .2 million . Approximately 90 percent of the $6.2 million revenue adjustment relates to changes in the application of certain paragraphs of SOP 97-2 on one large customer contract where VSOE for consulting services was not present . Adjustments to the previously disclosed preliminary unaudited revenue for the first and second quarters of fiscal 2006 are being calculated and will be reported at a later date . The net reduction in fiscal 2005 revenue as a result of the aforementioned adjustments are expected to be recognized in future periods .

As a result of these changes, deferred revenue is expected to increase by $6 .2 million as the company exited fiscal year 200 5

The net loss for the first through third quarters of fiscal 2005 will be increased by an aggregate of $1 .5 million compared with the amounts reported on the company 's Form IOQs for the respective quarters. These adjustments include the impact of the foreign tax withholding and foreign payroll tax accruals of $0 .5 million. Also included is the impact of the change in accounting for deferred costs on certain long term contracts . The individual quarterly net loss is expected to change as follows:

(Increase)/Decreasein Net Loss

Revenue & International Other Cost Quarter Deferred Cost Taxes of Revenue Total .

QIFY2005 $(1,500,000) $(800,000) $(800,000) $(3,100,000) Q2FY2005 $ 2,500,000 $ 500,000 $ 100,000 $ 3,100,000 Q3FY2005 $( 1,400,000) $ (200,000 ) $ 100,000. $(l,500,000) .

Q1-Q3 FY2005 Total $ (400,000) $ (500,000) $(600,000) $(1,500,000) Compared with previously disclosed preliminary unaudited financial results for the fourth quarter of fiscal 2005, the net loss is expected to be increased by $5.0 million. Adjustments to the previously disclosed preliminary unaudited net loss for the first and second quarters of fiscal 2006 are being calculated and will be reported at a later date .

"Portal is continuing to make signific ant progress in this complex and ongoing audit and, as a result , the comp any has decided to restate certain portions of our previously released fin ancial information ." said Dave Labuda, Portal 's chief executive officer. "Portal remains committed to concluding this process as quickly as possible in order to file our Form 10-K for fiscal 2005."

Portal Press Release December 22, 200 5

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Portal Software to Restate Previously Filed Fiscal 2005 Quarterly Results and Provides Update on Business

Portal has performed a significant portion of its internal control assessment process and has conducted incremental procedures where necessary to verify the accuracy of its financials . The company expects that its external auditors will not provide an opinion on the effectiveness of the company's internal controls or on management's opinion regarding the internal controls, as required by Section 404 of the. Sarbanes-Oxley Act of 2002 as part of the filing of its Form 10-K due to the fact that the company does not anticipate being able to complete its assessment prior to filing its Form 10-K . Rather, the company is focused on completing the year-end audit, filing its Form I OK, and remediating material weaknesses .

Investors should refer to the company's Form 10-Q for the fiscal quarter ended October 29, 2004, which was filed with the Securities and Exchange Commission on April 25, 2005, its previous 8-K filings, and to its press releases dated June 30, 2005 and August 31, 2005, for further detail as to the nature of these material weaknesses and control deficiencies . As disclosed previously, as a result of the extended financial close process as well as the assessment of its internal controls as required by Section 404 of the Sarbanes-Oxley Act of 2002, Portal is currently delinquent in filing its form 10-K for the fiscal year ended January 28, 2005 and in filing its Forms 10-Q for the fiscal quarters ended April 29, 2005 and July 29, 2005. Although the company and its auditors continue to work diligently through the audit, no final date has been provided at this time for the completion and filing of the Form 10-K, nor the filing of Forms 10-Q for the first three quarters of fiscal year 2006.

Investor Call Information Portal will hold an investor call at 4 :30pm EST on Wednesday, November 30. To access the Portal investor call, please dial one of the following numbers at 4 :20 p.m. Eastern (1 :20 p .m. Pacific) : 1-800-706-3415 (inside the U.S.) or +1-706-6344314 (outside of the U.S.). The conference ID is 2943691 . The teleconference can also be accessed via the web by visiting Portal's investor relations website at http://investor.portal .com.

Portal Press Release December 22, 2005

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Portal Software to Restate Previously Filed Fiscal 2005 Quarterly Results and Provides Update on Busines s

Additionally, an archive of the call will be available for seven days, commencing two hours following the live call on November 30, 2005, at Portal's investor relations web site at http ://investor.portal .com. A tele-replay of the call will also be available for one year by dialing 1-800-642-1687 (inside the U.S.) or 1-706-645-9291 (outside the U .S .). The pass code for the tele-replay is 2943691 .

About Portal Software, Inc . Portal Software is the premier, provider of billing and Revenue Management solutions for the global communications and media markets. The company delivers the only platform for the end-to-end management of customer revenue across offerings, channels, and geographies . Portal's solutions enable companies to dramatically accelerate the launch of innovative, profit-rich services while significantly reducing the costs associated with legacy billing systems . Portal is the Revenue Management partner of choice to the world's leading service providers including : Vodafone, AOL Time Warner, Deutsche Telekom, TELUS, NTT, China Telecom, Reuters, Telstra, China Mobile, Telenor Mobil, and France Telecom .

Forward Looking Statement s Statements in this release concerning Portal Software, Inc .'s bookings and cash are preliminary, unaudited financial information for the third quarter fiscal year 2006 . These statements, as well as statements regarding the adjustments management expects to make in previously filed SEC reports for the first three quarters of fiscal year 2005, and to the preliminary financial results for the fourth quarter of fiscal 2005 and the first two quarters of fiscal year 2006, as well as statements regarding the completion of the audit of our fiscal year 2005 financial statements and completion of Sarbanes Oxley Section 404 requirements, as well as the remediation of our material weaknesses, are forward looking statements that . involve a number of uncertainties and risks. Factors that could cause actual events or results to differ materially include the following: Portal's auditors have not completed their audit of our fiscal 2005 results, nor commenced their review of the first three quarters of fiscal 2006 results disclosed here and in previous releases . Consequently, our Audit Committee has not had an opportunity to complete its review of the preliminary financial results contained herein . During the course of completing these respective reviews and audit, we may determine we need to further revise materially the preliminary results reported herein, further adjust results reported for the first three quarters of fiscal year 2005 or further restate the results reported for previous periods. The material weaknesses, in our internal controls significantly increase the risk that the preliminary financial results reported herein, including results reported as specific numbers or within ranges, as well as our previously issued financial results, may need to change . For instance, we may discover errors in determining these results or additional information that has a material impact upon them . In addition, customers are engaging in greater due diligence before making commitments and, as a result, some orders have been delayed and we may not reach our expected level of sales required to become operating cash flow positive in the fourth quarter of fiscal 2006 .

Portal Press Release December 22, 2005

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Portal Software to Restate Previously Filed Fiscal 2005 Quarterly Results and Provides Update on Business materialize, would have a material adverse impact on our business and operations. Other factors which could cause actual results to differ from those discussed in this press release are described in detail in our Annual Repo rt on Form 10-K for .the fiscal year ended January 30, 2004, our subsequent quarterly reports on Form I0=Q, and our current reports filed on Form 8- K. All statements made in this press release are made only as of the date set forth at the beginning of this release, Portal undertakes no obligation to update the information in this release in the event facts or circumstances subsequently ch ange after the date of this press release . Copyright 1996-2005 . PORTAL, the PORTAL LOGO, INFRANET, INFRANET CABLE, INFRANET DNA, INFRANET IPT, INFRANET WIRELESS, INFRANET WIRELINE, INTERCONNECT, INTEGRATE, RETURN ON INNOVATION, TELCOONE, REAL TIME- NO LIMITS, CONTENT CONNECTOR and BILLINGAGILITY are trademarks or registered trademarks in the United States and in other countries, all owned by Portal Software, Inc. or its subsidiaries .,

Contacts : Investor Relation s 408-572-2345, investor relationsna .portal.com

Amy Cozamanis , Financial Relaticons Board 310-854-831 4 [email protected]

Media : Kevin Payne, Portal 408-572-3614, [email protected]

Josh Aroner, Zeno Group 415-369-8107, josh [email protected]

Portal Press Release December 22, 2005

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8-K/A I d8ka .htm AMENDMENT NO . 2 TO FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 8-K/A (Amendment No . 2)

CURRENT REPORT Pursuant to Section .13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) : November 21, 200 5

PORTAL SOFTWARE, INC . (Exact name of Registrant as specified in its charter)

Delaware 000-25829 77-0369737 (State or other jurisdiction of (Commission File Number) (I.R .S. Employer incorporation or organization) Identification Number ) 10200 South De Anza Boulevard Cupertino, CA 9501 4 (Address, including zip code , of principal executive offices) (408) 572-2000 (Registrant ' s telephone number, including area code )

❑ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230 .425)

❑ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240 .14a-12)

❑ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240 .14d-2(b))

❑ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240 .13e-4(c))

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Explanatory Note: On November 28, 2005, the Registrant filed a Current Report on Form 8-K (the "Form 8-K") .

This Form 8-K was subsequently amended by filing a Form 8-K/A on December 23, 2005.

Item 4 .02 of the Form 8-K/A includes a table entitled "(Increase)/Decrease in Net Loss :" that contains three typographical errors.

The following is the table included in the Form 8 -K/A filed on December 23, 2005 :

Uncrease)/Decrease in Net Loss :

Revenue & International Other Cost Quarter Deferred Cost Taxes of Revenue Total

Q1 FY2005 $(1,500,000 ) $ (900,000) $(200,000) $(2,600,000) Q2 FY2005 $ 1,800,000 $ 100,000 $ 200,000 $ 2,100,000 Q3 FY2005 $( 1,000,000) $ (400,000) $(100,000 ) $(1,300,000)

Q1-Q3 FY2005 Total $ 700,000 $( 1,200,000) $(100,000) $(1,800,000)

The three typographical errors are the following : 1. In the "Deferred Cost" column, the Ql-Q3 FY 2005 Total should be $ (700,000). 2. In the "Revenue and Other Cost of Revenue" column , the Q3 FY 2005 amount should be $100,000 ; and 3 . In the "Revenue and Other Cost of Revenue " column, the Q1 -Q3 FY.2005 Total should be $100,000 . The following is a corrected table :

(Increase)/Decrease in Net Loss:

Revenue & International Other Cost Quarter Deferred Cost Taxes of Revenue Tota l

Q1 FY2005 $(1,500,000) -$ (900,000) $(200,000) $(2,600,000) Q2 FY2005 $ 1,800,000 $ 100,000 $ 200,000 $ 2,100,00 0 Q3 FY2005 $(1,000,000) $ (400,000) $ 100,000 $(1,300,000)

Q1-Q3 FY2005 Total $ (700,000) $(1,200,000) $ 100,000 ' $(1,800,000) Pursuant to applicable rules of the Securities and Exchange Commission, Registrant hereby restates the Form 8-K/A with the table corrected as indicated above.

There are no other changes made to the Form 8-K/A filed on December.23, 2005 .

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The following is Registrant's restated 8-K/A with the corrected table : Item 2.02 Results of Operations and Financial Condition On November 28, 2005, Portal Software, Inc . (the "Registrant") announced that it will restate its previously issued financial statements for the first, second and third quarters of fiscal 2005 and provided preliminary estimates of the principal effects of such restatements. These previously issued preliminary estimates of the principal effects of such restatements have been updated in Item 4 .02 below to reflect subsequent changes in those estimates. The Registrant also released preliminary bookings and cash information for its third quarter ended October 28, 2005 . A copy of the press release issued by the Registrant concerning the foregoing information is furnished herewith as Exhibit 99 .1 .

Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. (a) On November 21, 2005, the Registrant and the Audit . Committee of the Registrant's Board of Directors (the "Audit Committee"), in consultation with Ernst & Young LLP ("Ernst & Young"), the Registrant's independent auditors, concluded that the Registrant's financial statements for the first, second and third quarters of fiscal 2005 should no longer be relied upon because of certain material errors in such financial statements, which errors were deemed by the Registrant as likely to be material in the aggregate .

The adjustments that give rise to the restatements and adjustments to the previously reported preliminary unaudited financials fall into four categories : . 1 . The accounting for revenue on certain complex multi-element contracts . The largest of the changes results from the Registrant's application of certain paragraphs of SOP 97-2 on one large multi-element contract where Vendor Specific Objective Evidence (VSOE) of fair value for consulting services was not present ; 2. The accounting for deferred costs on certain long term projects . The Registrant had incorrectly deferred costs on certain large fixed price services contracts ; - 3. The accounting for certain international withholding and payroll taxes. The Registrant had over accrued for certain international withholding taxes and had not accrued properly for international payroll taxes in international countries. where the company had small operations. This adjustment relates to a material weakness previously disclosed in the Registrant's press release dated June 30, 2005 ; and 4. The impact of a number of individually insignificant adjustments .

The Registrant intends to restate its fm ancial.statements for the pe riods referenced above . The Audit Committee has discussed the matters disclosed in this Item 4.02(a) with Ernst &Young.

On November 28, 2005, the Registrant issued a press release relating to these matters, a copy of which was furnished as Exhibit 99.1. Since November 28, 2005, and as a result of the Registrant's continuing procedures, the Registrant's estimate of the financial impact of certain of the restatement items has changed, including amounts pertaining to the previously identified large, multi-element contract entered into in fiscal 2005 .

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As ofDecember 15, 2005, individual quarterly revenue is expected to change from originally reported revenue as follows:.

Quarter Increase/(Decrease)

Q1 FY2005 $ (200,000) Q2 FY2005 $ 100,000 Q3 FY2005 $ (600,000)

Q1-Q3 FY2005 Total $ (700,000)

As of December 15, 2005, the individual quarterly net loss is expected to change from originally reported net loss as follows:

(Increase)[Decrease in Net Loss•

Revenue & International Other Cost o f Quarter Deferred Cost Taxes Revenue Total

Q1 FY2005 $(1,500,000) $ (900,000) $ (200,000) $(2,600,000) Q2. FY2005 $.1,800,000 $ 100,000 $ 200,000 $ 2,100,000 Q3 FY2005 $(1,000,000) $ (400,000) $ 100,000 $(1,300,000)

Q1-Q3 FY2005 Total $ (700,000) $(1,200,000) $ 100,000 $(1,800,000)

Additional Information On December 13, 2005, the Registrant received a letter from the Securities and Exchange Commission's Division of Corporate Finance inquiring about the impact of these adjustments on the Registrant's prior period financial results . The Registrant has responded to the Commission as follows : Portal respectfully submits that, in its evaluation of the issues identified with respect to the fiscal 2005 quarterly financial statements summarized in the four restatement categories referenced in its Form 8-K, Portal assessed which issues were applicable to periods prior to fiscal 2005 .

In particular, with respect to the revenue restatement item, Portal respectfully notes that the largest of the adjustments relates to a large, multi-element contract entered into in fiscal 2005 where vendor specific objective evidence (VSOE) of fair value for consulting services was not present . Portal disclosed in its February 3, 2005 press release that, during the close of its third quarter of fiscal 2005, it had concluded that it could no longer determine VSOE of fair value for consulting services . The error relating . to the adjustment for this large contract would not have impacted its fiscal 2004 financial statements because the contract at issue was executed during FY 2005 . Moreover, Portal maintained VSOE of fair value for its consulting services in fiscal 2004 .

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accounting for these contracts, which relate to the material weaknesses previously disclosed in its press release dated June 30, 2005, as well as its Form 10-Q for the third quarter of fiscal 2005 filed on April 25, 2005, did not impact its year-end 2004 financial statements in a material amount . Portal is currently evaluating whether these contracts or any other contracts with similar issues could have impacted its quarterly financial statements in fiscal 2004 .

The majority of the cost restatement items related to errors in calculating deferred costs on large, fixed price consulting services contracts, which errors resulted from the use of an incorrect methodology resulting in the deferral of costs to normalized margins on services contracts, inappropriate capitalization of costs on loss contracts, and inaccurate cost rates . Portal determined that these errors, which also relate to previously disclosed material weaknesses involving an insufficient number of qualified and experienced financial and accounting personnel, did not impact its year-end 2004 financial statements in a material amount. Portal is currently evaluating whether these errors could have materially impacted its quarterly financial statements in fiscal 2004 . With respect to the restatement item relating to foreign payroll and withholding tax accruals, Portal has determined that these errors did not materially impact its year-end or quarterly financial statements in fiscal 2004 . Portal is still in the process of determining whether any of the individually insignificant adjustments impacted its fiscal 2004 financial statements in a material amount.

Based on the above and as of this writing, Portal does not believe that any of the restatement items, individually or in the aggregate, impacted its year-end fiscal 2004 financial statements in a material amount. Portal is still in the process of reviewing its fiscal 2004 quarterly financial statements to determine whether any of these items impacted these financial statements in a material amount. As disclosed in Portal's November 28, 2005 press release, its original Form 8-K and the Form 8-K/A filed contemporaneously herewith, the estimates provided with respect to its restatement are preliminary . Portal is still in the process of completing its procedures with respect to its fiscal year 2005 financial statements and will continue to evaluate all adjustments identified, individually and in the aggregate, including whether those adjustments materially impact previously filed financial statements. Should, in the course of completing its procedures, Portal conclude that any of its previously issued financial statements should not be relied upon, Portal will promptly notify the Staff and issue the appropriate disclosures as required under Form 8-K requirements .

Forward Looking Statements Our revised estimates constitute forward-looking statements and actual results could vary for the reasons described herein . In addition, the Registrant repeats its . disclosures in Exhibit 99 .1 as follows: Statements in this release concerning the adjustments Portal expects to make in previously filed SEC reports for the first three quarters of fiscal year 2005, and to the preliminary financial results for the fourth quarter of fiscal 2005 and the first two quarters of fiscal year 2006, as well as statements regarding the completion of the audit of our fiscal year 2005 financial statements, are forward looking statements that involve a number of uncertainties and risks . Factors that could cause actual events or results to differ materially include the following : Portal's auditors have not completed their audit of our fiscal 2005 results, nor commenced their review of the first three quarters of fiscal 2006 results disclosed here and in previous releases . Consequently, our Audit Committee has not had an opportunity to complete its review of the preliminary financial results contained herein . During th e

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course of completing these respective reviews and audit, we may determine we need to further revise materially the preliminary results reported herein, further adjust results reported for the first three quarters of fiscal year 2005 or further restate the results reported for previous periods. The material weaknesses in our internal controls significantly increase the risk that the preliminary financial results reported herein, including results reported as specific numbers or within ranges, as well as our previously issued financial results, may need to change . For instance, we may discover errors in determining these results or additional information that has a material impact upon them. In addition, customers are engaging in greater due diligence before making commitments and, as a result, some orders have been delayed and we may not reach our expected level.of sales required to become operating cash flow positive in the fourth quarter of fiscal 2006 .

Significant consequences could result from one or more of these general or specific events occurring, particularly if they result in. a material impact to our financial results. We would likely be further delayed in filing our Form 10-K for fiscal year 2005 and our Forms 10-Q for the first three quarters of fiscal year 2006. In addition, we may incur additional costs, experience delays or the loss of new and existing business, as well as management distraction, private litigation, regulatory inquiries or enforcement action, and employee attrition. These consequences, if they materialize, would have a material adverse impact on our business and operations . Other factors which could cause actual results to differ from those discussed in this press release are described in detail in our Annual Report on Form 10-K for the fiscal year ended January 30, 2004, our subsequent quarterly reports on Form 10-Q, and our current reports filed on Form 8-K. All statements made in this press release`are made only as of the date set forth at the beginning of this release . Portal undertakes no obligation to update the information in this release in the event facts or circumstances subsequently change after the date of this press release ..

Item 9.01 Financial Statements and Exhibits. (d) Exhibit s *99.1 Press release, dated November 28, 2005, entitled "Portal Software to Restate Previously Filed Fiscal 2005 Quarterly Results and Provide Update on Business ."

* Previously filed .

httD ://www.sec.gov/Archives/edgar/data/I 080306/000119312505251025/d8ka.htm 1/2/2006 Ainendment No . 2 to Form 8-K Page 7 of 8

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to b e signed on its behalf by the undersigned hereunto duly . authorized.

PORTAL SOFTWARE, INC .

Dated: December 30, 2005 By : Is/ Larry Bercovich

Larry Bercovich SVP, General Counsel & Secretary

http ;//www.sec.gov/Archives/edgar/data/1080306/000119312505251025/d8ka .htm .1/2/2006 Aihendment No . 2 to Form 8-K Page 8 of 8

EXHIBIT INDEX

Exhibit Number Description

*99.1 Press release , dated November 28, 2005, entitled "Portal Software to Restate Previously Filed Fiscal 2005 Quarterly Results and Provide Update on Business."

* Previously filed.

httv://www.sec.gov/Archives/edgar/data/1080306/000119312505251 .025/d8ka.htm 1/2/2006 EXHIBIT 2 Portal Software, Inc. Daily Common Stock Price and Volume 1/2/03 - 1/1310 6 Source: Bloomberg

Date Volume High Low Close 1/2/2003 122,771 $4.400 $3.950 $4.350 1/3/2003 67,401 $4.500 $4.200 $4 .300 1/6/2003 115,071 $4.450 $4.150 $4.400 1/7/2003 71,990 $4.500 $4.200 $4 .200 1/8/2003 102,214 $4.350 $4.000 $4.150 1/9/2003 110,409 $4.450 $4.150 $4.250 1/10/2003 112,684 $4.255 $4.000 $4150 1/13/2003 147,964 $4.350 $3.850 $4.000 1/14/2003 125,775 $4.050 $3.850 $3.950 1/15/2003 376,584 $4.050 $3.500 $3.700 1/16/2003 92,513 $4.150 $3.650 $3.700 1/17/2003 70,928 $3.750 $3.500 $3.550 1 /21 /2003 98,744 $3.550 $3.300 $3.350 1/22/2003 218,474 $3.850 $3 .400 $3.800 1/23/2003 274,587 $4.450 $3 .800 $4.400 1/24/2003 194,963 $4.400 $3.850 $3.850 1/27/2003 231,245 $4.100 $3.550 $4.000 1/28/2003 102,559 $4 .300 $3.950 $4.250 1/29/20Q3 130,556 $4.350 $4.000 $4.250 1/30/2003 118,167 $4.350 $4.150 $4.200 1/31/2003 89,999 $4.350 $4.000 $4.300 2/3/2003 132,205 $4.350 $4.200 $4.250 2/4/2003 56,485 $4.300 $3.950 $4.100 2/5/2003 60,991 $4.200 $3.850 $3.900 2/6/2003 61,278 $4.050 $3..700 $3.750 2/7/2003 96,208 $4.000 $3.550 $3.600 2/10/2003 55,727 $3.900 $3.600 $3.850 2/11/2003 70,722 $4.100 $3.650 $3.950 2/12/2003 98,035 $4.000 $3.450 $3.650 2/13/2003 66,260 $3.800 $3.450 $3.750 2/14/2003 35,182 $3.900 $3.600 $3.750 2/18/2003 73,520 $4.100 $3.800 $4.050 2/19/2003 85,827 $4.300 $4.000 $4.200 2/20/2003 176,621 $4.400 $4.200 $4.400 2/21/2003 269,927 $4.700 $4.300 $4.350 2/24/2003 84,813 $4.350 $3.900 $4.000 2/25/2003 64,776 $4.000 $3.750 $3.950 2/26/2003 33,954 $4.000 $3.800 $3.900 2/27/2003 74,786 $4.000 $3.750 $3.900 2/28/2003 45,989 $3 .950 $3.750 $3.800 3/3/2003 100,124 $3.900 $3.500 $3.650 3/4/2003 34,861 $3.750 $3.650 $3.650 3/5/2003 31,791 $3.750 $3.600 $3.650 3/6/2003 38,978 $3.650 $3.550 $3.550 3/7/2003 50,581 $3 .650 $3.550 $3.550 3/10/2003 62,215 $3 .650 $3.450 $3.500 3/11/2003 43,205 $3 .650 $3.450 $3.500 3/12/2003 53,504 $3 .550 $3.400 $3.450 3/13/2003 76,746 $3 .750 $3.400 $3.750 3/14/2003 36,190 $3 .800 $3.500 $3.650 3/17/2003 69,046 $3 .850 $3.500 $3.700 3/18/2003 55,551 $3 .850 $3.550 $3.800 3/19/2003 53,200 $3 .750 $3.550 $3.650 3/20/2003 63,980 $3 .700 $3.400 $3.650 3/21/2003 70,788 $3 .850 $3.500 $3.650 3/24/2003 50,959 $3 .700 $3.500 $3.500 3/25/2003 34,858 $3 .850 $3.550 $3.700 3/26/2003 46,845 $3 .850 $3.600 $3.600 3/27/2003 62,660 $3 .750 $3.500 $3 .600 3/28/2003 25,455 $3 .650 $3:500 $3.600 3/31/2003 135,103 $3.700 $3.500 $3.650 4/1/2003 44,883 $3 .800 $3 .650 $3 .800 4/2/2003 109,707 $4 .000 $3.800 $3.950 4/3/2003 97,779 $4.150 $3.950 $4.050 4/4/2003 83,520 $4 .200 $3.950 $3.950 4/7/2003 71,520 $4 .200 $3.850 $3.900 4/8/2003 125,484 $3 .950 $3.550 $3.650 4/9/2003 122,985 $3 .750 $3.300 $3.550 4/10/2003 102,499 $3 .650 $3.350 $3.400 4/11/2003 28,192 $3 .500 $3.400 $3.500 4/14/2003 70,278 $3 .650. $3.500 $3.600 4/15/2003 48,031 $3 .650 $3.500 $3.650 4/16/2003 82,763 $3 .850 $3.650 $3.800 4/17/2003 413,990 $4 .700 $3.750 $4.700 4/21/2003 482,583 $6 .200 $4.550 $5.850 4/22/2003 451,333 $6 .000 $4.800 $5.000 4/23/2003 260,357 $5 .350 $4.750 $5.350 4/24/2003 73,260 $5 .400 $5.000 $5.100 4/25/2003 132,300 $5 .300 $5.000 $5.100 4/28/2003 233,105 $5 .250 $5.000 $5.150 4/29/2003 322,343 $5 .950 $5.250 $5.900 4/30/2003 528,107 $6 .900 $5.600. $6.250 5/1/2003 460,670 $7 .200 $6.000 $6.500 5/2/2003 558,690 $7 .650 $7.000 $7.000 5/5/2003 586,885 $7 .450 $6.750 $6.950 5/6/2003 299,078 $7 .400 $7.000 $7.100 5/7/2003 387,675 $7 .600 $7.100 $7.500 5/8/2003 184,720 $7 .600 $7.250 $7.350 5/9/2003 210,400 $7 .850 $7.150 $7.250 5/12/2003 630,211 $8 .450 $7.350 $8.250 5/13/2003 311,036 $8 .600 $7.800 $8.450 5/14/2003 556,231 $9 .500 $8.950 $9.200 5/15/2003 1,028,764 $10 .750 $9.200 $10.550 5/16/2003 844,327 $11 .400 $9.550 $10.000 5/19/2003 648,287 $10 .600 $9.850 $10.350 5/20/2003 612,058 $11 .100 $10.000 $10.850 5/21/2003 1,028,835 $8.900 $7.550 $8.450 5/22/2003 230,982 $8.500 $8.200 $8.450 5/23/2003 821,553 $8.450 $7.200 $8.100 5/27/2003 681,684 $10.100 $7.600 $10.000 5/28/2003 573,185 $10.850 $9.650 $9.950 5/29/2003 293,541 $10.050 $9.200 $9.350 5/30/2003 260,936 $9.600 $9.000 $9.450 6/2/2003 313,684 $9.850 $8:950 $8 .950 6/3/2003 189,301 $9.150 $8.550 $9.050 6/4/2003 177,388 $9.590 $8.700 $9.050 6/5/2003 223787 $9.250 $8.700 $9.200 6/6/2003 386,890 $10.050 $9.100 $9.100 6/9/2003 123,643 $9.050 $8.750 $8.750 6/10/2003 89, 195 $9.100 $8.750 $8.950 6/11/2003 93,085 $9.000 $8.650 $8.900 6/12/2003 116,308 $8.900 $8.600 $8.750 6/13/2003 334,229 $8.850 $8.000 $8.850 6/16/2003 236,276 $9.000 $8.450 $8.800 6/17/2003 180,668 $9.050 $8.500 $9.050 6/18/2003 332,188 $9.750 $8.750 $9.700 6/19/2003 169,115 $9.750 $8.950 $9.250 6/20/2003 309,806 $9.850 $9.000 $9.350 6/23/2003 266,164 $9.650 $8.250 $8.500 6/24/2003 1,711,155 $10.500 $9.600 $9.885 6/25/2003 491,862 $10.150 $9.050 $9.250 6/26/2003 414,550 $9.500 $8.700 $8.800 6/27/2003 377,263 $9.200 $8.500 $8.550 6/30/2003 654,421 $10.075 $8.500 $9.450 7/1/2003 260,946 $9 .500 $8.750 $8.900 7/2/2003 172,322 $9.400 $8.900 $9.200 7/3/2003 88,244 $9 .200 $8.800 $8.850 7/7/2003 220,693 $9 .200 $8.900 $9.200 7/8/2003 848,455 $10.750 $9.100 $10.700 7/9/2003 582,827 $11 .050 $10.150 $10.950 7/10/2003 1,211,163 $12.600 $10.250 $11 .850 .7/11/2003 560,218 $12.500 $11 .000 $12.100 7/14/2003 631,258 $12.825 $11 .700 $12 .750 7/15/2003 1,433,888 $14.450 $13 .000 $14.350 7/16/2003 985,282 $15.250 $14 .000 $15.150 7/17/2003 519,909 $14.850 $13 .950 $14.000 7/18/2003 401,290 $14.500 $13.700 $14.200 7/21/2003 371,574 $14.540 $12.750 $13 .100 7/22/2003 159,703 $13.550 $13.150 $13.500 7/23/2003 411,600 $14.000 $12.800 $13.950 7/24/2003 441,588 $14.950 $13.250 $14 .450 7/25/2003 214,100 $14.900 $14.350 $14.700 7/28/2003 454,824 $15.850 $13.550 $15.850 7/29/2003 555,679 $16.300 $15.350 $15.850 7/30/2003 442,619 $16.650 $15.800 $16.400 7/31/2003 290,921 $16.950 $15.900 $16.100 8/1/2003 315,932 $16.600 $14.900 $15.900 8/4/2003 356,388 $15.750 $14.400 $14.900 8/5/2003 361,530 $14.850 $13.550 $13.950 8/6/2003 492,855 $13.750 $12.300 $12.950 8/7/2003 374,049 $12.950 $11 .750 $11 .800 8/8/2003 262,312 $13.450 $11 .500 $13.050 81-11/2003 249,000 $14.500 $13.050 $14.350 8/12/2003 235,045 $15.100 $14.300 $14.800 8/13/2003 363,436 $15.550 $14.300 $14.650 8/14/2003 146,918 $15.240 $14.605 $15.150 8/15/2003 137,706 $15.250 $14.750 $15.150 8/18/2003 215,516 $15.350 $14.650 $14.900 8/19/2003 401,654 . $14.900 $14 .000 $14.750 8/20/2003 493,151 $14.000 $12 .950 $13.850 8/21/2003 184,220 $14.350 $13.750 $14.100 8/22/2003 481,475 $14.100 $12.750 $13.050 -8/25/2003 320,946 $13.050 $12.250 $12.400 8/26/2003 683,592 $13.750 $12.000 $13.700 8/27/2003 235,168 $14.250 $13.450 $14.100 8/28/2003 159,436 $14.250 $13.500 $13.950 8/29/2003 115,052 $14 .250 $13.500 $14.050 9/2/2003 273,155 $14.800 $13.250 $14.750 9/3/2003 332,946 $15.450 $14.505 $15.050 9/4/2003 181,573 $15.000 $14.100 $14.450 9/5/2003 614,693 $14.350 $12.650 $13.350 9/8/2003 377,266 $13.600 $12.750 $13.250 9/9/2003 249,293 $13.700 $12.950 $13.700 9/10/2003 159,120 $13.750 $13.000 $13.000 9/11/2003 94,330 $13.450 $12.950 $13,450 9/12/2003 2,471,378 $15.300 $13.200 $14.900 9/15/2003 833,814 $16.200 $15.000 $15.750 9/16/2003 1,886,571 $18.650 $16.050 $16.600 9/17/2003 487,804 $17.700 $16.800 $17.100 9/18/2003 393,235 $17.300 $16.600 $16.950 9/19/2003 315,206 $16.900 $16.200 $16.700 9/22/2003 357,905 $16.600 $15.300 $16.500 9/23/2003 416,071 $16.600 $15.800 $15.800 9/24/2003 541,710 $16.240 $14.500 $14.550 9/25/2003 551,641 $15.750 $14.250 $14.250 9/26/2003 805,164 $15.000 $13.800 $14.550 9/29/2003 330,593 $15.540 $14.000 $15.540 9/30/2003 479,972 $15.280 $14.250 $14.590 10/1/2003 941,593 $14.840 $12.780 $13.940 10/2/2003 381,491 $14.000 $13.470 $13.600 10/3/2003 493,668 $14.860 $13.810 $14.480 10/6/2003 353,468 $15.500 $14.320 $15.320 10/7/2003 164,681 $15.280 $14.940 $15.050 10/8/2003 248,705 $15.210 $14.170 $14.200 10/9/2003 511,320- $15.020 $14.110 $14.940 10/10/2003 359,364 $14.980 $14.250 $14.630 10/13/2003 378,156 $15.630 $14.460 $15.540 10/14/2003 1,424,835 $17.980 $15.130 $17.760 10/15/2003 981,239 $18.400 $17.410 $17.930 10/16/2003 358,850 $18.080 $17.260 $17.560 10/17/2003 329,572 $17.590 $16.880 $17.240 10/20/2003 190,841 $17.500 $17.100 $17.31 0 10/21/2003 141,533 $17.550 $17.130 $17.400 10/22/2003 269,640 $17.400 $16.120 $16.120 10/23/2003 259,635 $15.960 $15.170 $15.230 10/24/2003 278,432 $15.230 $14.500 $14.600 10/27/2003 194,300 $15.800 $14.500 $15.530 10/28/2003 297,412 $17.190 $15510 $17.150 10/29/2003 258,630 $17.400 $16.460 $16 .500 10/30/2003 371,904 $17.310 -$16.390 $16.600 10/3112003 365,604 $16.680 $15.760 $16.000 11/3/2003 354,447 $16.490 $15.930 $16.240 11/4/2003 652,449 $16.250 $15.010 $15.230 11/5/2003 373,077 $15.490 $14.930 $14.960 11/6/2003 155,826 $15.810 $14.950 $15.800 11/7/2003 428,804 $16.280 $15.650 $16.250 11/10/2003 333,338 $16.290 $15.040 $15.100 11/11/2003 293,866 $15.180 $14.760 $15.145 11/12/2003 170,721 $15.740 $14.950 $15.61 0 11/13/2003 978,894 $15.650 $15.250 $15.260 11/14/2003 13,297,813 $8.940 $8.310 $8.400 11/17/2003 2,511,161 $8.710 $8.450 $8.480 11/18/2003 1,471,218 $8.600 $8.000 $8.000 11/19/2003 1,237,887 $8.330 $7.940 $8.320 11/20/2003 794,044 $8.270 $8.040 $8.180 11/21/2003 2,064,305 $8.130 $7.209 $7.250 11/24/2003 1,018,476 $7.400 $7.210 $7.328 11/25/2003 1,475,746 $7.360 $7.010 $7.180 11/26/2003 527,958 $7:300 $7.050 $7.200 11/28/2003 541,473 $7.600 $7.200 $7.460 12/1/2003 579,665 $7.640 $7.350 $7.41 0 12/2/2003 555,601 $7.460 $7.260 $7.31 0 12/3/2003 858,860 $7.350 $7.060 $7.060 12/4/2003 1,143,970 $7.050 $6.360 $6.490 12/5/2003 756,729 $6.500 $6.280 $6.350 12/8/2003 529,729 $6.450 $6.250 $6.320 12/9/2003 756,233 $6.400 $6.010 $6.020 12/10/2003 1,340,554 $6.170 $5.290 $5.570 12/11/2003 717,701 $6.200 $5.480 $6.01 0 12/12/2003 360,770 $6.210 $5.800 $6.060 12/15/2003 941,235 $6.680 $6.100 $6.170 12/16/2003 766,845 $6.480 $5.800 $6.11 0 12/17/2003 259,525 $6.220 $5.900 $5.920 12/18/2003 621,618 $6.440 $5.900 $6.370 12/19/2003 396,479 $6.550 $6.160 $6.21 0 12/22/2003 656,666 $6.410 $6.000 $6.340 12/23/2003 896,376 $6.880 $6.320 $6.81 0 12/24/2003 243190 $6.910 $6.600 $6.600 12/26/2003 201,288 $6.660 $6.510 $6.580 12/29/2003 383,416 $6.700 $6.500 $6.590 12/30/2003 551,701 $6.800 $6.510 $6.670 12/31/2003 523,581 $6.874 $6.610 $6.730 1/2/2004 367,016 $6.870 $6 .500 $6.580 1/5/2004 510,375 $6.860 $6.660 $6.790 1/6/2004 686,111 $6.980 $6.670 $6.780 1/7/2004 473,963 $6.950 $6.700 $6.929 1/8/2004 916,860 $7.440 $6.980 $7.300 119/2004 760,655 $7.440 $6.900 $6.980 1/12/2004 384,203 $7.100 $6.900 $7.030 1/13/2004 503,188 $7.170 $6.810 $7.130 1/14/2004 605,817 $7.380 $7.020 $7.160 1/15/2004 403,611 $7.360 $7.020 $7.330 1/16/2004 301,795 $7.470 $7.300 $7.31 0 1/20/2004 595,303 $7.680 $7.180 $7.670 1/21/2004 409,728 $7.700 $7.350 $7.660 1/22/2004 556,314 $7.880 $7.550 $7.560 1/23/2004 570,616 $7.780 $7.530 $7.740 1/26/2004 284,037 $7.920 $7.650 $7.750 1/27/2004 611,335 $8.000 $7.700 $7.950 1/28/2004 549, 105 $8.050 $7.450 $7.550 1/29/2004 486,175 $7.710 $7.210 $7.380 1/30/2004 187,267 $7.540 $7.220 $7.360 2/2/2004 483,946 $7.580 $7.060 $7.130 2/3/2004 220,890 $7.270 $7.090 $7.11 0 2/4/2004 . 463,336 $7.000 $6.800 $6.820 2/5/2004 .371,234 $7.120 $6.900 $6 .990 2/6/2004 312,600 $7.240 $7.060 $7.170 2/9/2004 736,823 $7.556 $7.200 $7.500 2/10/2004 176,351 $7.570 $7.350 $7.41 0 2/11/2004 178,341 $7.560 $7.350 $7.450 2/12/2004 324,860 $7.500 $7.080 $7.300 2/13/2004 216,111 $7.450 $7.120 $7.260 2/17/2004 253,499 $7.390 $7.150 $7.390 2/18/2004 268,772 $7.560 $7.300 $7.550 2/19/2004 220,813 $7.640 $7.150 $7.190 2/20/2004 339,013 $7.470 $7.150 $7.300 2/23/2004 271,385 $7.480 $7.000 $7.01 0 2/24/2004 1,248,684 $7.430 $7.020 $7.400 2/25/2004 1,150,280 $7.880 $7.510 $7.750 2/26/2004 1,528,693 $8.480 $7.640 $8.430 2/27/2004 757,849 $8.500 $8.030 $8.200 3/1/2004 361,798 $8.330 $8.110 $8.241 3/2/2004 370,872 $8.310 $8.030 $8.200 3/3/2004 559,516 $8.220 $7.880 $8.040 3/4/2004 388,910 $8.080 $7.910 $8.040 3/5/2004 436,076 $8.410 $7.880 $8.250 3/8/2004 305,091 $8.380 $7.750 $7.810 3/9/2004 383,717 $7.970 $7.500 $7.550 3/10/2004 411,986 $7.900 $7.250 $7.250 3/11/2004 535,924 $7.610 $7.020 $7.230 3/12/2004 223,691 $7.550 $7.210 $7.510 3/15/2004 447,912 $7.420 $6.920 $6.930 3/16/2004 451,914 $7.120 $6.610 $6.840 3/17/2004 302,834 $7.070 $6.700 $6.960 3/18/2004 412,476 $7. 050 $6.790 $6 .960 3/19/2004 212,153 $7. 070 $6.730 $6.730 3/22/2004 517,332 $6. 730 $6.090 $6.140 3/23/2004 223 ,956 $6.470 $6.200 $6.400 3/24/2004 193,136 $6. 510 $6.360 $6.370 3/25/2004 244,962 $6. 790 $6.410 $6 .770 3/26/2004 149,774 $6.840 $6.670 $6.800 3/29/2004 249 ,176 $6.990 $6.790 $6.880 3/30/2004 155,524 $6.990 $6.760 $6.940 3/31/2004 249 ,773 $7.000 $6.680 $6.740 4/1/2004 129,008 $6.950 $6.690 $6.920 4/2/2004 253,871 $7.240 $6.970 $7.230 4/5/2004 341,961 $7.390 $7.060 $7.060 4/6/2004 248,438 $7.090 $6. 770 $6.900 4/7/2004 375,863 $6.880 $6.520 $6.800 4/8/2004 328,950 $6.920 $6. 750 $6.81 0 4/12/2004 193,174 $6.920 .$6.660 $6.720 4/13/2004 235,228 $6.800 $6.490 $6.500 4/14/2004 798,317 $7.240 $6.900 $6.960 4/15/2004 703,030 $7.030 $6.500 $6.810' 4/16/2004 396,981 $6.850 $6.550 $6.570 4/19/2004 215,560 $6.820 $6.550 $6.730 4/20/2004 249,821 $6.780 $6.450 $6.450 4/21/2004 239,207 $6.580 $6.320 $6.450 4/22/2004 229,861 $6.630 $6.340 $6.630 4/23/2004 194,769 $6.630 $6.460 $6.570 4/26/2004 246,408 $6.620 $6.390 $6.500 4/27/2004 390,762 $6.730 $6.320 $6.490 4/28/2004 1 48,720 $6.520 $6.240 $6.270 4/29/2004 207,560 $6.430 $5.990 $6.010 4/30/2004 405,855 $6. 100 $5.350 $5.430 5/3/2004 367,265 $5.470 $5.120 $5.180 5/4/2004 592,107 $5.220 $4.780 $5.000 5/5/2004 1,061,851 $5.080 $4 .400 $4.580 5/6/2004 1,027, 892 $4.730 $4 .390 $4.600 5/7/2004 742,711 $4.950 $4.600 $4.890 5/10/2004 860,044 $4.900 $4.460 $4.650 5/11/2004 630,781 $4.960 $4.560 $4.830 5/12/2004 534,471 $4.850 $4.540 $4.680 5/13/2004 204,213 $4.920 $4.510 $4.750 5/14/2004 108,531 $4.730 $4.550 $4.650 5/17/2004 182,902 $4.660 $4.460 $4.520 5/18/2004 118,585 $4.650 $4.500 $4.560 5/19/2004 175,255 $4. 910 $4.530 $4.550 5/20/2004 359,496 $4.960 $4:500 $4.939 5/21/2004 345,299 $5.280 $4.900 $5.150 5/24/2004 574,527 $5.470 $5.050 $5.360 5/25/2004 315,391 .$5.470 $5. 190 $5.300 5/26/2004 1,523,661 $4.810 $4.409 $4.500 5/27/2004 669,843 $4.600 $4.450 $4.600 5/28/2004 367,081 $4.660 $4.490 $4.580 6/1/2004 424, 169 $4.620 $4.400 $4.530 6/2/2004 295,924 $4.550 $4.430 $4.470 6/3/2004 192,429 $4.520 $4.400 $4.410 6/4/2004 325,578 $4.550 $4.380 $4.420 6/7/2004 244,719 $4.490 $4.370 -$4.470 6/8/2004 352,842 $4.520 $4.400 $4.500 6/9/2004 426,588 $4.620 $4.300 $4.460 6/10/2004 889,317 $4.460 $3.880 $3.900 6/14/2004 810,993 $3.900 $3.530 $3.540 6/15/2004 471,677 $3.780 $3.550 $3.740 6/16/2004 504,881 $3.940 $3.620 $3.91 0 6/17/2004 250,543 $3.940 $3.730 $3.800 6/18/2004 190,647 $3.780 $3.660 $3.730 6/21/2004 254,817 $3.800 $3.600 $3.750 6/22/2004 374,222 $3.760 $3.550 $3.720 6/23/2004 347,999 $3.730 $3.570 $3.690 6/24/2004 396,255 $3.880 $3.600 $3:780 6125/2004 493,981 $3.870 $3.670 $3.720 6/28/2004 281,045 $3.790 $3.690 $3.690 6/29/2004 227,649 $3.750 $3.660 $3 .670 6/30/2004 303,179 $3.730 $3.580 $3.630 7/1/2004 375,103 $3.730 $3.510 $3 .580 7/2/2004 517,201 $3.660 $3.490 $3.570 7/6/2004 664,022 $3.660 $3.160 $3.198 7/7/2004 607,363 $3.350 $3.150 $3.250 7/8/2004 278,186 $3.350 $3.110 $3.11 0 7/9/2004 604,277 $3.200 $2 .970 $3.090 7/12/2004 232,418 $3.130 $3.010 $3.100 7/13/2004 70,209 $3.150 $3.050 $3.058 7/14/2004 919,418 $2.950 $2.730 $2.81 9 7/15/2004 438,030 $2.870 $2 .720 $2.740 7/16/2004 312,642 $2.810 $2 .640 $2.650 7/19/2004 405,476 $2.700 $2 .510 $2.530 7/20/2004 452,382 $2.800 $2.510 $2.750 7/21/2004 174,295 $2.850 $2 .580 $2.680 7/22/2004 185,305 $2.680 $2 .560 $2.650 7/23/2004 268,269 $2.740 $2 .510 $2.530 7/26/2004 158,941 $2.710 $2.500 $2.520 7/27/2004 126,889 $2.600 $2.500 $2.560 7/28/2004 374,845 $2.680 $2.450 $2.540 7/29/2004 478,186 $2.600 $2.450 $2.550 7/30/2004 233,107 $2.610 $2.520 $2.590 8/2/2004 145,816 $2.640 $2.520 $2.550 8/3/2004 178,511 $2.670 $2.510 $2.51 0 8/4/2004 465,400 $2.550 $2.410 $2.410 8/5/2004 242,509 $2.530 $2.400 $2.410 8/6/2004 301,871 $2.450 $2.370 $2.380 8/9/2004 247,057 $2.500 . $2.140 $2.440 8/10/2004 600,898 $2.940 $2.370 $2.840 8/11/2004 580,304 $2.780. $2.650 $2.760 8/12/2004 273,283 $2.870 $2.610 $2.800 8/13/2004 182,602 $2.890 $2.740 $2.850 8/16/2004 194,284 $3.060 $2.810 $3.015 8/17/2004 157,001 $3.120 $2 .910 $3.01 0 8/18/2004 210,779 $3.150 $2 .950 $3.070 8/19/2004 150,624 $3.130 $2.970 $3.030 8/20/2004 142,033 $3.090 $2 .960 $3.090 8/23/2004 147,643 $3.190 $2.950 $2.980 8/24/2004 148,211 $3.110 $2 .960 $3.030 8/25/2004 255,487 $3.280 $2.970 $3.280 8/26/2004 242,783 $3.380 $3.190 $3.320 8/27/2004 155,408 $3.380 $3.290 $3.360 8/30/2004 136,952 $3.390 $3.280 $3.320 8/31/2004 217,416 $3.380 $3.260 $3.360 9/1/2004 276,048 $3.930 $3.330 $3.350 9/2/2004 159,673 $3 .440 $3.340 $3.420 9/3/2004 663,114 $2.920 $2.620 $2.71 0 9/7/2004 197,927 $2.920 $2.730 $2.900 9/8/2004 221,729 $3.000 $2.810 $2.900 9/9/2004 152,906 $3.030 $2.860 $2.860 9/10/2004 218,950 $3.010 $2.750 $2.830 9/13/2004 264,370 $2.960 $2.670 $2.820 9/14/2004 59,230 $2.950 $2.770 $2.900 9/15/2004 207,867 $2.990 $2.850 $2.91 0 9/16/2004 129,940 $3.050 $2.920 $2.980 9/17/2004 208,813 $3.240 $2.900 $2.920 9/20/2004 62,455 $2.980 $2.850 $2.920 9/21/2004 274,678 $3.050 $2,880 $2.940 9/22/2004 103,844 $2.990 $2.820 $2 .900 9/23/2004 152,776 $2.940 $2.810 $2.845 9/24/2004 . 370,145 $2.900 $2.790 $2 ;790 9/27/2004 183,348 $2.860 $2.700 $2 .71 0 9/28/2004 149,034 $2.790 $2.600 $2 .670 9/29/2004 144,069 $2.790 $2.640 $2 .780 9/30/2004 127,134 $2.900 $2.710 $2 .730 10/1/2004 91,266 $2.870 $2 .680 $2 .870 10/4/2004 132,193 $2.960 $2.850 $2 .930 . 10/5/2004 67,750 $2.970 $2.870 $2 .880 10/6/2004 99,595 $2.970 $2.820 $2 .900 10/7/2004 62,083 $2.930 $2.830 $2 .900 10/8/2004 120,446 $2.890 $2.770 $2 .790 10/11/2004 73,697 $2.920 $2.780 $2.840 10/12/2004 212,416 $2.830 $2.730 $2 .730 10/13/2004 140,492 $2.850 $2.710 $2.760 10/14/2004 111,940 $2.770 $2.660 $2.700 10/15/2004 362,158 $2.730 $2 .420 $2.700 10/18/2004 98,300 $2.700 $2 .610 $2.640 10/19/2004 87,633 $2.700 $2 .590 $2.61 0 10/20/2004 320,544 $2.620 $2 .460 $2.550 10/21/2004 260,693 $2.550 $2 .470 $2.530 10/22/2004 182,438 $2.590 $2 .430 $2.450 10/25/2004 159,480 $2.530 $2 .400 $2.500 10/26/2004 160,460 $2.540 $2 .380 $2.440 10/27/2004 279,308 $2.630 $2 .380 $2.530 10/28/2004 204,901 $2.620 $2 .440 $2.480 10/29/2004 110,334 $2 .510 $2.390 $2 .41 5 11/1/2004 74,445 $2.480 $2 .370 $2.450 11/2/2004 216,902 $2.490 $2 .330 $2.350 11/3/2004 128,973 $2.470 $2 .360 $2.41 0 11/4/2004 172,190 $2.480 $2 .350 $2.400 11/5/2004 161,423 $2.450 $2 .380 $2.420 11/8/2004 297,469 $2.590 $2.400 $2.560 11/9/2004 175,627 $2.740 $2.520 $2.740 11/10/2004 121,960 $2.780 $2.660 $2.700 11/11/2004 261,686 $2.880 $2.690 $2.880 11/12/2004 749,569 $3.110 $2.860 $3.11 0 11/15/2004 345,838 $3.240 $3.000 $3.21 0 11/16/2004. 150,763 $3.280 $3.140 $3.200 11/17/2004 409,387 $3.400 $3.280 $3.400 11/18/2004 410,574 $3.690 $3.410 $3.690 11/19/2004 298,171 $3 .730 $3.460 $3.500 11/22/2004 167,501 $3.600 $3.450 $3.570 11/23/2004 118,517 $3.630 $3.410 $3.550 11/24/2004 110,130 $3.640 $3.520 $3.600 11/26/2004 73,873 $3.680 $3.450 $3.540 11/29/2004 218,259 $3.630 $3.460 $3.600 11/30/2004 201,310 $3.660 $3.450 $3.450 12/1/2004 159,891 $3.600 $3.380 $3.430 12/2/2004 230,259 $3.580 $3.350 $3.350 12/3/2004 262,171 $3.570 $3.340 $3.350 12/6/2004 283,687 $3.430 $3.110 $3.260 12/7/2004 222,874 $3.440 $3.300 $3.340 12/8/2004 143,351 $3.420 $3.300 $3.340 12/9/2004 101,885 $3.420 $3.290 $3.31 0 12/10/2004 172,502 $3 .388 $3.220 $3.270 12/13/2004 387,731 $3 .350 $3.000 $3.045 12/14/2004 305,824 $3 .100 $2.920 $3.100 12/15/2004 126,665 $3.180 $3.009 $3.040 12/16/2004 175,276 $3.170 $2.950 $3.000 12/17/2004 160,719 $3.060 $2.850 $2.940 12/20/2004 188,012 $2.990 $2.810 $2.870 12/21/2004 318,301 $2.900 $2.660 $2.740 12/22/2004 420,272 $2.800 $2.500 $2.680 12/23/2004 209,989 $2.690 $2.550 $2.61 0 12/27/2004 340,443 $2.660 $2 .460 $2.490 12/28/2004 430,911 $2.650 $2 .440 $2.650 12/29/2004 258,311 $2.650 $2.500 $2.570 12/30/2004 235,402 $2.689 $2.510 $2.600 12/31/2004 238,406 $2.680 $2.590 $2.620 1/3/2005 .146,451 $2.690 $2.550 $2.550 1/4/2005 256,374 $2 .690 $2.520 $2.590 1/5/2005 130,526 $2 .600 $2.500 $2.500 1/6/2005 95,493 $2 .610 $2.460 $2.51 0 1/7/2005 541,684 $2 .600 $2.350 $2.41 0 1/10/2005 256,943 $2.420 $2.290 $2.360 1/11/2005 272,659 $2.390 $2.250 $2 .250 1/12/2005 216,438 $2.290 $2.140 $2 .190 1/13/2005 114,686 $2 .370 $2.140 $2.260 1/14/2005 81,942 $2 .390 $2.230 $2.350 1/18/2005 98,043 $2 .460 $2.300 $2.440 1/19/2005 95,283 $2 .470 $2.270 $2.320 1/20/2005 42,959 $2.380 $2.260 $2.260 1/21/2005 103,618 $2.330 $2 .180 $2.270 1/24/2005 85,500 $2.350 $2 .210 $2.309 1/25/2005 88,954 $2.380 $2 .250 $2.31 0 1/26/2005 94,399 $2.470 $2 .250 $2.470 1/27/2005 338,644 $2.820 $2 .420 $2.780 1/28/2005 146,931 $2.840 $2.560 $2.600 1/31/2005 257,157 $2.840 $2.630 $2.820 2/1/2005' 158,986 $2.900 $2.670 $2.750 2/2/2005 711, 360 $3.140 $2 .850 $3.100 2/3/2005 559,484 $3.260 $3.130 $3.140 2/4/2005 532,560 $3.080 $2.540 $2.590 2/7/2005 294,573 $2.860 $2.560 $2.690 2/8/2005 126,247 $2.750 $2.650 $2.664 2/9/2005 227,667 $2.810 $2.660 $2.740 2/10/2005 162,834 $2.880 $2.750 $2.850 2/11/2005 114,232 $2.890 $2.780 $2.860 2/14/2005 106,549 $3.000 $2.840 $2.860 2/15/2005 77,535 $2.970 $2.720 $2.850 2/16/2005 70,862 $2.910 $2.800 $2.900 2/17/2005 85,822 $2.900 $2.800 $2.800 2/18/2005 251,048 $2.830 $2.630 $2.71 0 2/22/2005 115,091 $2.770 $2.660 $2 .680 2/23/2005 174,216 $2.790 $2.670 $2 .680 2/24/2005 113,102 $2.750 $2.640 $2.740 2/25/2005 75,382 $2.780 $2.670 $2.71 0 2/28/2005 145,600 $2.760 $2.620 $2.760 3/1/2005 89,204 $2.770 $2.700 $2.71 0 3/2/2005 63,318 $2.740 $2.650 $2.660 3/3/2005 43,137 $2.760 $2.650 $2.680 3/4/2005 93,539 $2.760 $2.700 $2.760 3/7/2005 221,967 $2.760 $2.680 $2.71 0 3/8/2005 108,146 $2.740 $2.670 $2.680 3/9/2005 69,688 $2.720 $2.630 $2.679 3/10/2005 117,198 $2 .710 $2:630 $2.700 3/11/2005 104,776 $2 .700 $2.610 $2.620 3/14/2005 136,158 $2.700 $2.610 $2.700 3/15/2005 72,120 $2 .700 $2.560 $2.560 3/16/2005 151,949 $2.600 $2.480. $2.480 3/17/2005 74,467 $2.490 $2.460 $2.490 3/18/2005 186,914 $2.560 $2.400 $2.400 3/21/2005 86,232 $2.450 $2.310 $2.361 3/22/2005 105,457 $2 .430 $2.250 $2.290 3/23/2005 88,001 $2.330 $2.260 $2.300 3/24/2005 110,494 $2 .450 $2.320 $2.400 3/28/2005 45,656 $2 .480 $2.380 $2.420 3/29/2005 108,239 $2 .500 $2.390 $2.420 3/30/2005 155,275 $2 .490 $2.390 $2.440 3/31/2005 99,789 $2.440 $2.380 $2.420 4/1/2005 94,522 $2.480 $2.310 $2.320 4/4/2005 117,087 $2.360 $2.320 $2.320 4/5/2005 172,262 $2.360 $2.190 $2.220 4/6/2005 44,821 $2.290 $2.250 $2.270 4/7/2005 45,398 $2.280 $2.190 $2.200 4/8/2005 129,220 $2.220 $2.160 $2.200 4/11/2005 87,437 $2.200 $2.140 $2 .150 4/12/2005 219,095 $2.420 $2.150 $2.41 0 4/13/2005 92,657 $2.430 $2.320 $2.320 4/14/2005 84,845 $2.420 $2.270 $2.270 4/15/2005 191,588 $2.350 $2.230 $2.31 0 4/18/2005 136,954 $2.460 $2 .260 $2.390 4/19/2005 79,871 $2.490 $2 .310 $2.380 4/20/2005 89,373 $2.400 $2 .250 $2.250 4/21/2005 83,170 $2.390 $2.250 $2.380 4/22/2005 88,341 $2.390 $2.300 $2.390 4/25/2005 62,845 $2.400 $2.310 $2.380 4/26/2005 151,171 $2.490 $2.370 $2.440 4/27/2005 144,539 $2.430 $2.300 $2.370 4/28/2005 82,080 $2.380 $2.300 $2.320 4/29/2005 66,286 $2 .380 $2.280 $2.350 5/2/2005 107,784 $2 .440 $2.250 $2.440 5/3/2005 341,348 $2 .670 $2.390 $2.630 5/4/2005 153,222 $2 .620 $2.400 $2.460 5/5/2005 259,784 $2.480 $2.340 $2 .400 5/6/2005 600,422 $2.450 $2.170 $2 .260 5/9/2005 240,458 $2.350 $2.180 $2.21 0 5/10/2005 189,136 $2.210 $2.170 $2.200 5/11/2005 148,503 $2.220 $2 .170 $2.200 5/12/2005 243,255 $2.220 $2 .110 $2.21 0 5/13/2005 243,468 $2.210 $2 .100 $2.120 5/16/2005 98,741 $2.260 $2 .100 $2.21 0 5/17/2005 69,576 $2.230 $2 .130 $2.21 0 5/18/2005 149,148 $2.270 $2.140 $2.160 5/19/2005 127,902 $2.200 $2.080 $2.180 5/20/2005 125,421 . $2.190 $2.090 $2.120 5/23/2005 95,698 $2.180 $2.140 $2.170 5/24/2005 76,806 $2.180 $2.110 $2.120 5/25/2005 137,035 $2.170 $2.080 $2.090 5/26/2005 285,157 $2.090 $1 .950 $2.050 5/27/2005 203,048 $2 .130 $1 .960 $2.050 5/31/2005 321,177 $2 .100 $1 .970 $1 .970 6/1/2005 184,871 $2.100 $1 .970 $2.100 6/2/2005 156,126 $2 .140 $1 .990 $2.140 6/3/2005 92,089 $2.130 $2.060 $2.060 6/6/2005 64,942 $2.100 $2.050 $2.070 6/7/2005 114,619 $2.140 $2.070 $2.070 6/8/2005 204,603 $2.140 $2.050 $2.100 6/9/2005 258,238 $2.220 $2.100 $2.180 6/10/2005 89,396 $2.300 $2.180 $2.270 6/13/2005 62,878 $2.290 $2.170 $2 .190 6/14/2005 63,114 $2.190 $2.100 $2.170 6/15/2005 164,796 $2.290 $2.100 $2.160 6/16/2005 137,820 $2.250 $2.110 $2 .250 6/17/2005 228,579 $2.390 $2.240 $2 .300 6/20/2005 105,785 $2.350 $2.220 $2.270 6/21/2005 63,150 $2.340 $2.210 $2.220 6/22/2005 106,624 $2.320 $2.210 $2.250 6/23/2005 83,717 $2.290 $2.170 $2.200 6/24/2005 1,999,699 $2.260 $2.100 $2.150 6/27/2005 196,135 $2.200 $2.140 $2.150 6/28/2005 1,274,465 $2.000 $1 .620 $1 .750 6/29/2005 555,795 $2.020 $1 .650 $2.020 6/30/2005 831,630 $2.050 $1 .950 $2.000 7/1/2005 . 119,607 $2.030 $1 .970 $2.030 7/5/2005 223,395 $2.040 $1 .970 $2.005 7/6/2005 280,776 $2.200 $2.010 $2.11 0 7/7/2005 105,975 $2 .190 $2.110 $2.170 7/8/2005 135,485 $2.290 $2.170 $2.280 7/11/2005 552,186 $2 .530 $2.290 $2.400 7/12/2005 296,857 $2 .440 $2.220 $2.220 7/13/2005 192,944 $2.250 $2.080 $2.100 7/14/2005 309,101 $2.160 $2.090 $2.100 7/15/2005 684,437 $2.160 $1 .988 $2.000 7/18/2005 110,010 $2.240 $1 .990 $2.150 7/19/2005 64,527 $2.200 $2.130 $2.170 7/20/2005 37,400 $2.180 $2.160 $2 .180 7/21/2005 136,393 $2.300 $2.170 $2.260 7/22/2005 40,340 $2.300 $2.200 $2.220 7/25/2005 54,781 $2.260 $2.200 $2.200 7/26/2005 66,585 $2.220 $2.150 $2.220 7/27/2005 104,946 $2.220 $2.170 $2.190 7/28/2005 151,319 $2.200 $2.130 $2.150 7/29/2005 47,175 $2.180 $2.120 $2.170 8/1/2005 154,168 $2.180 $2.120 $2.160 8/2/2005 183,945 $2.300 $2.150 $2.270 8/3/2005 45,774 $2.270 $2.160 $2.270 8/4/2005 76,832 $2.330 $2.240 $2.290 8/5/2005 145,612 $2.450 $2.290 $2.400 8/8/2005 56,893 $2.400 $2.270 $2.300 8/9/2005 53,085 $2.360 $2.300 $2.340 8/10/2005 60,914 $2.340 $2.240 $2.240 8/11/2005 57,643 $2.400 $2.220 $2.320 8/12/2005 40,665 $2.270 $2.180 $2.250 8/15/2005 111,084 $2.250 $2.150 $2.230 8/16/2005 28,265 $2.230 $2.120 $2.200 8/17/2005 37,680 $2.230 $2.150 $2.170 8/18/200.5 76,808 $2.220 $2.120 $2.140 8/19/2005 92,159 $2.200 $2.080 $2.120 8/22/2005 76,221 $2:190 $2.120 $2.190 8/23/2005 37,342 $2.190 $2.120. $2.190 8/24/2005 20,897 $2.190 $2.120 $2.190 8/25/2005 91,510 $2.170 $2.050 $2.120 8/26/2005 108,383 $2.140 $2 .050 $2.100 8/29/2005 39,638 $2.150 $2 .080 $2.150 8/30/2005 18,304 $2.180 $2.115 $2.180 8/31/2005 57,932 $2.200 $2.140 $2.200 9/1/2005 345,225 $2.200 $2.050 $2.175 9/2/2005 255,983 $2.220 $2.150 $2.200 9/6/2005 176,615 $2.270 $2.200 $2.270 9/7/2005 .204,119 $2.310 $2.250 $2.295 9/8/2005 200,525 $2.410 $2.290 $2.400 9/9/2005 199,132 $2.540 $2.380 $2.520 9/12/2005 89,627 $2 .550 $2.500 $2 .520 9/13/2005 149,966 $2 .700 $2.520 $2 .670 9/14/2005 124,950 $2 .600 $2.530 $2.600 9/15/2005 16,376 $2.600 $2.550 $2.580 9/16/2005 70,962 $2.580 $2.530 $2.530 9/19/2005 70,939 $2.650 $2.530 $2.600 9/20/2005 573,459 $2.740 $2.650 $2.700 9/21/2005 311,059 $2.760 $2.690 $2.760 9/22/2005 225,623 $2.760 $2 .700 $2.750 9/23/2005 80,460 $2.760 $2 .700 $2.750 9/26/2005 52,280 $2.790 $2 .750 $2.750 9/27/2005 52,298 $2.790 $2.760 . $2.780 9/28/2005 177,003 $2.930 $2.710 $2.930 9/29/2005 63,419 $2.940 $2.790 $2:850 9/30/2005 125,854 $2.930 $2.840 $2.920 10/3/2005 187,179 $2 .980 $2.870 $2.980 10/4/2005 144,312 $3.080 $2.900 $2.940 10/5/2005 157,709 $2 .940 $2.850 $2 .930 10/6/2005 175,481 $3 .020 $2;900 $2.950 10/7/2005 124,161 $2.970 $2.870 $2.900 10/10/2005 166,974 $2.900 $2.840 $2.860 10/11/2005 60,266 $2.950 $2.860 $2.950 10/12/2005 110,432 $2.960 $2.750 $2.750 10/13/2005 30,703 $2.850 $2.750 $2.830 10/14/2005 34,092 $2.900 $2.870 $2.880 10/17/2005 46,454 $2.950 $2.860 $2.880 , 10/18/2005 24,631 $2.890 $2.850 $2.850 10/19/2005 81,372 $2.900 $2.790 $2.900 10/20/2005 12,632 $2.940 $2.850 $2.850 10/21/2005 56,170 $2.920 $2.800 $2.81 0 10/24/2005 85;575 $2.850 $2.790 $2.820 10/25/2005 65,672 $2.830 $2.790 $2.800 10/26/2005 87,960 $2.800 $2.780 $2.800 10/27/2005 55,020 $2.800 '$2.750 $2.780 10/28/2005 160,202 $2.760 $2.510 $2.550 10/31/2005 96,813 $2 .640 $2.550 $2.640 11/1/2005 130,973 $2 .670 $2.530 $2.600 11/2/2005 25890 $2.640 , $2.570 $2.600 11/3/2005 86,214 $2 .650 $2.560 $2 .580 11/4/2005 73,672 $2.650 $2.540 $2.630 11/7/2005 72,887 $2.600 $2.500 $2 .570 11/8/2005 26,779 $2.550 $2.500 $2.550 11/9/2005 19,819 $2.550 $2.510 $2.550 11/10/2005 35,043 $2.610 $2 .500 $2.590 11/11/2005 44,937 $2.650 $2.580 $2.620 11/14/2005 89,900 $2.620 $2.520 $2.550 11/15/2005 338,835 $2.570 $2.540 $2.550 11/16/2005 16,790 $2.560 $2.550 $2.550 11/17/2005 21,246 $2.550 $2.550 $2.550 11/18/2005 128,177 $2.600 $2.550 $2.600 11/21/2005 100,315 $2.800 $2.570 $2.750 11/22/2005 268,840 $2.800 $2.700 $2.750 11/23/2005 34,806 $2.750 $2.740 $2 .750 11/25/2005 39,379 $2.780 $2 .740 $2 .770 11/28/2005 44,320 $2.780 $2 .750 $2.750 11/29/2005 753,980 $2 .600 $2.250 $2.350 11/30/2005 250,895 $2.400 $2.320 $2.350 12/1/2005 150,043 $2.300 $2.230 $2.280 12/2/2005 54,000 $2.300 $2.260 $2.270 12/5/2005 103,447 $2.390 $2.270 $2.390 12/6/2005 80,611 $2.390 $2.280 $2.320 12/7/2005 49,030 $2.350 $2.260 $2.330 12/8/2005 97,150 $2.350 $2.300 $2.330 12/9/2005 190,650 $2.350 $2.310 $2 .340 12/12/2005 104,598 $2.400 $2 .280 $2 .340 12/13/2005 50,249 $2.390 $2.300 $2.340 12/14/2005 67,118 $2 .400 $2.320 $2.400 12/15/2005 61,622 $2.400 $2.370 $2.370 12/16/2005 126,198 $2.420 $2.380 $2.41 0 12/19/2005 137,407 $2.400 $2.360 $2.380 12/20/2005 135,233 $2.370 $2.330 $2.350 12/21/2005 159,640 $2.330 $2.290 $2.300 12/22/2005 200,883 $3.000 $2.250 $2.300 12/23/2005 210,490 $2.300 $2.210 $2.250 12/27/2005 79,999 $2.250 $2.200 $2 .230 12/28/2005 112,168 $2.220 $2.180 $2 .200 12/29/2005 122,739 $2.240 $2.180 $2.21 0 12/30/2005 221,168 $2 .300 $2.150 $2.300 1/3/2006 110,544 $2 .300 $2.220 $2.270 1/4/2006 94,874 $2.300 $2.240 $2.280 1/5/2006 222,548 $2.300 $2.260 $2.260 1/6/2006 130,994 $2.280 $2.250 $2.250 1/9/2006 173,505 $2.300 $2.250 $2.300 1/10/2006 100,128 $2.340 $2.280 $2.31 0 1/11/2006 237,717 $2.380 $2.310 $2.370 1/12/2006 193,684 $2.410 $2.380 $2.400 1/13/2006 50,470 $2.430 $2.390 $2.390 EXHIBIT 3 FOCUS - 42 of 140 DOCUMENTS

August 19, 2003 Tuesday

Transcript 081903az .758

LENGTH: 6755 words

HEADLINE : Q2 2004 Portal Software Earnings Conference Call - Fina l

BODY:

OPERATOR : Good day, everyone, and welcome to, the Portal Software conference call . Today's call is being recorded. At this time for opening remarks and introductions, I'd like to turn the call over to Portal Software's Chief Fi- nancial Officer, Howard Bain . Please go ahead, sir.

HOWARD BAIN, CFO, SR VP, PORTAL . SOFTWARE: Thank you, and welcome to Portal Software's earnings announcement conference call to announce results for second qua rter fiscal year 2004 for the pe riod ended August 1st, . 2003. You should have received our earnings press release via fax or e-mail. The press release is also available on our website at portal .com and over Business Wire. This conference call, including the ques tion-and-answer session, is being recorded and is also being webcast . Replays will be available on our website later today. John Little, founder and CEO, Glenn Wienkoop, COO, and I will conduct our call today. Before we move on, I'd like to remind you that several of the statements we will make during today's call, including statements regarding expected financial results for the quarter ending October 31, 2003, and other statements about future financial and operating results, including revenues and expenses, profitability and business prospects, industry and general economic trends, results of relationships with customers and partners, and products and operating plans are all forward-looking statements . Actual results of these matters could, of course,'differ materially for a variety of reasons, including those described in the press release made, earlier today and in our most recently filed Form 10-Q .-Portal undertakes no obligation to update the information in this conference call in the event facts or circumstances subsequently change.

Several pro forma or non-GAAP financial measures will be mentioned on this call . Information relating to the cor- responding GAAP measures and a reconciliation of the pro forma and GAAP items can be found in our press release and the investor relations site at www.portal.com.

I would now like to turn the call over to John Little, founder and CEO of Portal Software . John? JOHN LITTLE, CHAIRMAN, CEO, PORTAL SOFTWARE : Thanks, Howard, Let's first turn to our results for the quarter.

Our revenue for the quarter was $33 .2 million, up from $32 .1 million in the previous quarter . License revenue for the quarter was $11.3 million. Services revenue was $21 .9 million. Our net loss for the quarter was $2.5 million on a pro forma basis. We had about $57 million in cash and investments at the end of the quarter . Pro forma earnings came in at a loss of 1 cent per share . Howard will provide more details on the financial results . . We have two themes for today's call : our increasing customer results and our expanding market footprint through partner solutions . Both are significant proof points for our overall strategy and ability to execute . Our customer results continue to improve . You've seen a continued stream of news and announcements, which I won't repeat here, but I would like to highlight one very important customer, Vodafojie . As you know, we've been working with various operating companies within Vodafone for about three years . We moved into a company that was highly Page 2 Q2 2004 Portal Software Earnings Conference Call - Final FD (Fair Discl o

publicized as a key customer by one of our compe titors and methodically closed a series of deals for. voice, data, content, advanced se rvices, and total convergence . Vodafone is the world's largest wireless operating group and our continued acceptance by the group is a very effective group point for our total solution . U recent «ifi at Photo 1i36& 1`a "an, or T-Phone, isfurth i prof. ('ftno «illgive you s~ mule details-iii hip [[Nt\U1)1131 F] . We've also had a very significant quarter for expanding our market footprint through partner -based solutions. Again, we did a lot still focused on only two things . TelcoOne, the latest version of our joint solution with Siebel is now shipping . And we've announced BillingAgili ty, a joint solution with Microso ft to take Microsoft's products into the enterprise and radically drive down the co st of carrier grade billing solutions. We're very excited about .tlte potential-ofof__ both. Partnerships are a sufficiently critical part of our strategy, but I'd like to spend some time today speaking about the partner-based solutions we take to market and why they are a unique differentiator . The term "partnership" and "strategic alliance" are among the most overused phrases in technology marketing . A press release or two, a couple of logos and a website, this is the standard operating procedure for most company's partnerships . In fact, I call these "Barney Partnerships". You know, I love you, you love me,-but ultimately not very interesting . What we mean by partnership is completely different in three fundamental ways . First, we build partnerships based on the demands of our joint market and customers . Second, we build partnerships for the long term with a great deal of cooperation and commitment. And third, our joint solution is highly differentiated and not available anywhere else . Let me walk through these points one at a time and illustrate them with real-world examples . First, our partnerships are driven by our markets and customer base . SAP is a wonderful example . Our target markets and customer base increasingly desire one integrated view of their service offering, business and financial offerings and one integrated system for managing their business . Portal and SAP are leaders in our respective areas, are focusing on creating superior customer solutions, and have a very closely aligned vision for the future . Consequently, we are both putting a great deal of effort to make this vision a reality. Our goals are the same : to give our customers the tools they need to manage their business . We don't think of this as product integration . We think of this as jointly developing a management system and solutions that our customers need. This is driving our partnerships, our engineering, and our go-to-market strategy. The SAP partnership is relatively new, and I'm already very excited about the long-term potential . Second, our partnership model demands very close cooperation with our partners . Both companies. have to make a long-term strategic commitment to providing a solution for our customers . This goes far beyond marketing and includes virtually every aspect of our relationship . I'll use Siebel as an example here . We've been working with them for over two years, so they're a very good example of a mature solution partnership . We jointly developed our solutions architecture and future direction, we've jointly committed to our product strategy using the best-of-class components, we've built close relationships between our two engineering organizations, we've developed executive .relationships at all levels, we routinely conduct pipeline reviews and account planning sessions, and most importantly we jointly and successfully sell our integrated solutions worldwide .to both-our existing customer bases and to new prospects . I'd also like to point out the latest version of our solution, TelcoOne, is now shipping . Third, the partner-based solution has to provide unique value . Our customers have to reap the benefit that is not achievable any other way. I will use Microsoft as an example -for this point . The solution we are jointly developing with Microsoft can only be developed by the two companies . The work we need to do with technical direction, product archi-. tecture, and implementation ca n only be done by us . We have the only carrier-grade system with support for Microsoft technologies . We have a unique combination of.product design, technical sophistication, and corporate commitment that is not matched by any of our competitors . Further, for most of our competitors, building a Microsoft-based solution would require a radical redesign of their entire product. In contrast, we've been working with Microsoft for years . We also have a unique set of efforts to prove that the solution is ready for the most demanding application . For example, Portal, Microsoft, HP, and Intel recently conducted a highly demanding set of performance and scalability tests to prove an extraordinary level of performance . This single test cost our partners around $2 million. And finally, we have one-of-a-kind partnerships with other partners, most notably HP, to take our solution to market . The three-way relationship between Portal, Microsoft, and Hewlett Packard provides a highly differentiated solution that cannot be matched by any of our competitors . I'd like to make one final point about partnerships . They can only be formed between companies who have a very fundamental alignment between. the ways they run their business. Otherwise, the stress of maintaining the partnership . Page 3 Q2 2004 Portal Software Earnings Conference Call - Final FD (Fair Discl o

grows and grows until it either fizzles or explodes . This is a critical reason why our competitors tend to take a "go it alone" strategy. Their technical architectures are unreconcilable, their business models are mismatched, their cultural values are very different, and their fundamental world view is not open to working with anyone else . This is precisely the reason that Microsoft, Siebel, and SAP partnerships are unique to Portal . No other significant billing company is capable of the sorts of alliances we have built, and no other billing company is going to market with similar solutions . I'd like to now turn the call over to Glenn Wienkoop, COO, to address the operational results for the compan y GLENN WIENKOOP, PRESIDENT, COO, PORTAL SOFTWARE : Thank you, John. I'd like to take a few min- utes-to-diseuss-the-operating-resus-ofthe-company-this quarter,, focusing-oi customer wins,all ees, andoduc new s launched to market that broaden our footprint.

In general we continue to secure more market wins and increasing market share . But today I'd like to focus in on Vodafone. Our continuing success is that Vodafone this quarter, our case in point of increased Portal customer momentum and more importantly proof of the increased acceptance of the new building paradigm , the Infranet product platform.

Quarter to quarter you've seen us expand our presence at Vodafone , adding new operating companies . Last quarter we announced Vodafone Italy, the largest European.Vodafone operating company is a new converged company win . Vodafone Italy followed the classic roadmap to the Portal converged solution starting with data and content, then up- grading to prepaid and postpaid voice .

Subsequent to Vodafone Italy but a similar tier 1 win is Vodafone Greece . We initially demonstrated record time- to-market successes for SMS and GPMRS . Again from data and content to a converged voice win . The win at Greece adds to similar converged upgrade successes at Vodafone Sweden, Swiss Com, and in the last week but not the qua rter, at Vodafone Aus tralia and New Zealand .

The key to our continued success is our focus on fast time to new services and lowest cost --.total cost of ownership, and, of course, leveraging our installed data and content presence at places like Vodafone U .K., Spain, Portugal, France, Netherlands , Germany, Hungary, and Poland. A Jo it s indicated, this qua rter ,,e added Vodafonnv Japan 1 esttt r 1 o eratin eoni pan a-v a new win after their cxi, nsive due dtlrgence-into-our platkiat nu hinietiotialit} ~n'd tier 1 scalabilit _'t'his is highly signihcant-hot only because of the-size of thwop'erating company and position in the Japanese tnarke Lace but because they did not have prior Portal data and content solution. Adding further testimony to the Portal product platform value proposi tion and more importantly our converged capabili ties. We're very pleased by the recent successes and feel well positioned given is -J-Phone, or Vodafone Japan, Vodafone Italy, highlight our ability to handle tier 1 scale for voice, data, and content. As the majority of Vodafone wins build on the successful delive ry of more than 30 solutions to the Vodafone group of operating companies and most of all that we 've accomplished our primary objective , to add value for Vodafone with each new project by accelerating time to new revenue and reducing ongoing cost of opera tions. In.manyrespects, we are the :try and it and you will like it company," proving over and over again that our model is superior to other market al- ternatives .

While I focused on Vodafone as an example of well executed s trategy by Portal and an excellent fit to Vodafone, a forward-looking company, I thought I would take an additional moment to comment on general market traction. As evidenced by the report outlined in Billing Plus , Portal enhanced our market platform product approach is leading in market wins. While we may be one of the smaller companies in today's billing market, we have the break-out product solutions model for billing, and, according to Billing Plus, have achieved the number one market share position. This, of course, is an obvious and positive impact in terms of long-term success for the company. In addition we are seeing momentum in new markets . One of the new areas of our business development has been in the digital media marketplace , hence the recent announcement with'Sony Pictures . At Sony Pictures Digital Net- works, Portal has been selected as a key component for their digital platform . Portal will be the underlying technology for pricing, billing, and subscriber and revenue management for business units including Soap City and Screen Blast . And as-another industry, the selection,of Portal ties directly to delivering new and often premium se rvices to market. Sony joins AOL Time Warner, Reuters, [JNAUDIBLE],and other long-term Portal customers who continue to expand their offerings with our platform. In addition to digital media and gaming, Portal also secured several wins in the growing broadband market that we will be announcing in some detail this coming month . Page 4 Q2 2004 Portal Software Earnings Conference Call - Final FD (Fair Disclo

Many of the market successes have been realized through our continually expanding footprint, so let me cover the second topic, namely Portal's strategy for success in terms of expanding our overall solution and our solution footprint . Portal is aggressively committed to a continued buildout of our product-based solution and to ensure we retain our leadership position as having the most advanced, easy to use product billing solutions . To this effect, we added a second generation GSM voice manager, allowing wireless operators to rapidly configure, test and roll out new services . Ensur- ing success in speeding time to market for voice services as we have done historically with data services . Additionally, we rolled out a new converged pricing set that extends our leadership in [INAUDIBLE] based pricing while providing the industry's first single tool for all convergence services pricing models as well as post and prepayment types . Secondly and equal importance, as John has referenced, Portal continues to broaden our'end-to-end marketplace solutions offering through strategic partnerships . We derive substantial winning leverage as well as a unique open solution provider position and having productized integration with some of the largest enterp rise players in today's marketplace, a strategy that is often characterized in the industry as best in class. Our Siebel relationship is a prime example of best in class, providing the industry with a productized [INAUDIBLE] solution providing the leading customer rela tionship management system in Portal's building platform . Our alliance achieved a significant quarterly milestone wi th the first shipment of the TelcoOne product. TelcoOne provides a solution set that will be delivered to multiple operating companies, including the likes of Vodafone and Telecom Italia Mobilia . Additionally, we announced Microsoft BillingAgility, a strategic integration of Portals' winning billing and subscriber management software platform with Microsoft.net technologies . This offers the industry a dot-net connected solution for voice, data, and content se rvices, as well as a superior suppo rt for legacy and business to business integration. The relationship also extends Portal 's presence from the back office to the smart phone . We believe our alliance . with Microsoft is highly strategic and closely aligned with the future of the telecommunications industry. As such, we are the only enterprise billing company that has a Microsoft .net compliant platform and feel strongly that we are well positioned for the next.paradigm shift, as operating companies push towards lower and lower benchmarks for total cost of ownership. In closing, I will echo John's statement that . our model is working very well, we are seeing solid momentum for our product platform approach and tier 1 wireless operators as well as across multiple sectors including wire-line, media, and broadband. We are successfully growing our own solutions services capabilities around our product expertise as well as continuing to leverage strategic partnerships to increase the breadth of our end-to-end solution offering . We continue to- increase our market presence, recognition of market share, as evidenced by the Billing Plus report . In summary, we believe Portal is strongly positioned for more success moving forward . . Now I will turn things over to Howard for a detailed look at the Q2 financials . Howard? HOWARD BAIN : Thank you, Glenn. Today's discussion of Portal's second quarter financial results is based on the financial information in the press release issued earlier today and on the financial statements available in the investor relations section of our website at portal.com. Additional metrics and other company information are also posted on our IR website, and I encourage you to take a look at it there . As John mentioned, revenue for the quarter came in at 33 .2 million, up from 32 .1 million seen last quarter. This is our fourth consecutive quarter of revenue growth. License revenue was 11 .3 million, slightly down from the last quarter, which included the impact of Vodafone Omnitel, a 20% customer in Ql . Service revenues were 21 .9-million, up 18% compared to the prior quarter. Our solutions services business grew in all regions. Support revenue. also stabilized as expected . The solid growth in solution services business brought the revenue mix to 34% licenses and 66% services, in line with our long-term business model. We are consistently gaining momentum with our expanded solutions for tier 1 service-providers. These engagements are characterized by upfront license fees with multiquarter follow-on solutions work. As projects achieve milestones and go live, there are substantial additional license fees to be collected . Our expanding business model for solutions will provide license and service revenues over the many coming quarters . Our solutions model will . continue to add to our backlog as well as ramping up our solutions services . We expect to see some volatility around our revenue mix target of 65% services and 35% licenses, as the services growth rate is expected to be higher than licenses as subsequent license revenue will be recognized as milestones are achieved . This trend is also expected to provide a further increase in the predictability of our revenue, as the solutions offerings layer upon our historical license and services business . Page 5 Q2 2004 Portal Software Earnings Conference Call - Final FD (Fair Disclo

Given Portal's focus in current market conditions, international revenue totaled 25 .4 million, or 76% of total revenue compared to 78% last quarter . Intercontinental, which is made up of Asia Pacific, Central America, Latin America, and Japan, was up 4 .3 million to 8 .6 million in revenue . The nearly 100% quarter-over-quarter growth represented 26% .of total revenue versus 14% last quarter, a further indication that the Portal solution is gaining traction throughout the world. EMEA revenue, Europe, Middle East and Africa, was 16 .7 million, or 50% of total revenue, versus 64% last quarter, largely as a result of the solid growth in other international areas . Revenues in North America were 7 .9 million or 24% of the total. This was an 1 I% growth in revenue over the first quarter . While we are encouraged that the North American region might finally be showing some signs of stabilizing, we do view it as being depressed for some time yet. The top ten customers were 45 percent of total revenue in Q2 down from 57% last quarter . We continue to demon- strate our ability to land new customers as we licensed eight new customers in the quarter . Importantly, the new customers included major companies engaged in both on-line digital entertainment and cable services . Of the license revenue from existing customers, 58% came from first-time buys . 26% from licensing new product and applications, and 12% was from growth in the number of subscribers licensed . The growing momentum of new customers buying new products is a sign that customers see value in Portal's differentiated product-based solution offering. The increasing engagement around deploying our solutions are expected to drive further subscriber growth in . the future. Voice customers represented 35% of total revenue. Content and data customers continue to be a solid base for our business, accounting for 36% and 25% respectively . Proof is growing as each day passes that the Infranet solution platform quickly delivers the lowest total cost of ownership across diverse market segments . Total revenue by access segments breaks down as follows . Wireless was 58%, wire line was 33%, and cable and satellite was 9% . Now I will turn to costs and expenses . Gross margin as a percentage of total revenue was 60%, down from 64% last quarter, largely because of the higher proportion of service revenue. Services margin was 40%, up from last quarter's 37% margin. We continue to respond to the increasing demand for solution services by our. customer base with further investments in our solutions organization capabilities . Such growth necessarily entails margin risk . That being said, I'm very pleased we were able to actually increase service margins in Q2 in spite of this . We expect further improvements in services margin later in the year as we get up the ramp and gain economies of scale . Pro forma operating expenses for the quarter were 21 .7 million compared to 21 .9 million in Ql . Sales and marketing this quarter included expenses for our annual roll-out of new solutions to our global sales force and strategic partners. R & D expenses benefited from our partner engagement and the continuing movement of our solutions engineering resources to India . Net interest and other expense was 152,000, down from last quarter's net interest and other income of 123,000 . The change is a result of lower interest rates and the impact of a weaker dollar . We booked a provision for income taxes of about 600,000, as we pay withholding taxes in some foreign jurisdictions . and had taxable income in our foreign marketing subsidiaries . Our resulting pro forma net loss was $2 .5 million, or 1 cent loss per share based on a share count of 181 million shares .. This was consistent with the first call consensus loss of 1 cent. The total net loss on a GAAP, or generally accepted accounting principles, basis for the quarter was $26 .9 million or a loss. of 15 cents per share as compared to the pro forma loss of about 2 .5 million and 1 cent per share. The additional 24 .4 million loss on a GAAP basis was due to a 23 .8 million dollar charge for stock option compensation and amortized acquisition-related costs of.665,000 . The $23.8 million charge for stock option compensation relates to the repricing of employee stock options last year that are now subject to variable accounting treatment . We book a quarterly charge or credit to operations based on a formula driven primarily by the difference between our stock price from one quarter end to the next . For reference, the price on May 2nd was $1 .40 and on August 1st was $3 .18. We ended Q2 with $56.8 million in cash and investments, down 1 million from the Q1 balance of 57 .8 million . We generated 3.7 million in operating cash flow, used 3 million for restructuring costs, largely idle facilities and some severance, and used 1 .7 million for capital expenditures. Day sales outstanding, or DSO, at the end . of the quarter was 72 days, returning to our target range of 60 to 80 days . The 97 days we saw at end of Q1 was due to the large Oninitel win near the end of that quarter . Deferred revenue at the end of quarter was 24 .8 million, a decrease of 3 .3 million from. the 28 .1 million. reported at the end of Q1 . The decrease was largely due to lower deferred support . A major contributor to this has been our accep- Page 6 Q2 2004 Portal Software Earnings Conference Call - Final FD (Fair Disclo

tance of some customer requests for semiannual and quarterly billings for renewals during these difficult economic times . We ended Q2 with about 601 active employees, up from the 582 employees we had at the end of Q 1 . Essentially because we built additional consulting capabilities to, deliver solution services across all geographies . We ended the quarter with 132 sales and marking people, about flat as compared to the 134 at the end of Ql . We believe our infrastructure is now sized appropriately to our revenue expectations and that we're poised. to see bottomline gains with in- creases in revenue . Going forward, we expect to add resources to support the growing customer demand for our solutions. Overall we are quite pleased with our continuing revenue growth . Especially heartening for our long-term outlook is the continued success of our end-to-end voice and data solutions for large providers such as J-Phone and the other Vodafone operating companies, along with major content providers like Sony and AOL Broadband . Our strategy is clearly gaining traction and demonstrating that Portal is the leading solution for the world's largest service providers . Financially, we are appropriately sized to be roughly pro forma breakeven or better going forward, and we expect to maintain our cash balances around the $50 million level in the fiscal year as a result . Now, the following statements are based on our current expectations and are clearly forward-looking. They are subject to a number of uncertainties and risks, including those discussed below, and actual results may differ materially .. We undertake no obligation to update these forward-looking statements. . While Portal's business appears to be strengthening and growing, indications are that communication service providers continue to be very deliberate in their software purchasing decisions. Our concern is unchanged that our customers will continue to constrain their capital spending due to their ongoing soft market outlook for an extended period of time. Our focus is dedicated to building Portal's capabilities to ensure long-term success . While general economic conditions recently appear to be improving, uncertainty and intense market competition remain unchanged. As a result, we expect Q3 revenue to remain consistent with Q2, while continuing to expect to show total fiscal year 2004 revenue of about 10 to 12% higher than the 121 million achieved in fiscal 2003 . Third quarter gross margins are expected to be about flat with Q2 . We expect pro forma operating . expenses for Q3 to be about the same as for Q2. Given our current outlook, we continue to expect Portal to return to pro forma profitability and positive cash flow operations within the current fiscal year . Pro forma operating .expenses and net income in Q3 are expected to exclude amortization and write-off of acquisition-related costs and'stock option compensation expense. Portal is unable to provide guidance on a GAAP basis because information relating to stock option compensa tion expense is currently not quantifiable on a forward-looking basis, as it depends on various factors, including the number of stock options exercised or terminated during the period and the future market price of our common stock . I'd now like to turn the call back to John for the question-and-answer session . JOHN LITTLE : Thanks, Howard. I'd like to open the call up to questions from callers . Operator? OPERATOR: Thank you. The question-and-answer session will be conducted electronically . If you would like to ask a question today, please do so by pressing the star key followed by the digit 1 on your touchtone phone . If you are joining us today using the speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We will proceed in the order that you signal us, and we'll take as many questions as time permits . Once again, if you have question please press star 1 . And we willpause for just a moment to assemble the roster. Our first question comes from Sameer Doctor of JP Morgan . SAMEER DOCTOR, ANALYST, JP MORGAN : How are you doing, gentlemen? One quick question for you. What was the impact of currency on revenue growth and expenses rela tive to the first quarter? HOWARD BAIN : It was virtually nil . There was very little .movement in the first quarter. SAMEER DOCTOR: Okay. Thank you. OPERATOR: Our next question will come from Dwayne Vineworth with Raymond James. DWAYNE VINEWORTH, ANALYST, RAYMOND JAMES : Hi, thanks. I was wonde ring, did you have any 10% customers in the quarter? Page 7 Q2 2004 Portal Software Earnings Conference Call - Final FD (Fair Disclo

HOWARD BAIN : On the basis of specific operating units that were 10% customers, we did not designate any. DWAYNE VINEWORTH : Okay. .How about 10 % oflicense, or do you break that out? HOWARD BAIN : No, as we indicated, 45% of our total revenue came from our ten largest customers during the quarter. DWAYNE VINEWORTH : Okay. Where do you expect DSOs and deferred to trend next qua rter? HOWARD BAIN : Our target for DSOs is in the 60 to 80-day range. I don't see any reason to expect us to move outside of that band. We were at 72 just the second quarter we just completed . Deferred revenue is extremely difficult to forecast and we have not and are not providing any guidance as to that number . DWAYNE VINEWORTH: (k ;Great ' i`d tltcti I ist1' %sith R irdi t n J Phe ne, did that hit the (Ifiarter just-closed, and f st what is the i niplementati* n ,tnhelstones AV now look Iike theie7 lh urks . I10W h[) H \IN : Yes, there was revenue ip the second cluarter, but we can't proo'ide -any details regarding the ar- . rangcnrerit. DWAYNE VINEWORTH : Okay. Thanks a lot . OPERATOR: Moving on, our next question will come from Michael Turits :with Prudential Securities. MICHAEL TURITS, ANALYST, PRUDENTIAL SECURITIES : Hi, guys . How are you? HOWARD BAIN : Good. MICHAEL TURITS : Did I get this right, Howard? You were at 58 million in cash this quarter but you think that stabilizes around 50 ? HOWARD BAIN: Yes, I think so . MICHAEL TURITS : So that you're down pret ty sharp drop by 8 million next quarter but then you say that this year, meaning the only. HOWARD BAIN: Michael , perhaps I misunderstood what you were asking. I don't expect to see any drop to 50. I just indicated it will be around the $50 million level . So I expect to maintain cash balances around where we are now but it's within a band of a few million dollars. MICHAEL TURITS : So you think it stays pretty much flat, maybe down a couple million next year? HOWARD BAIN : Yeah, I would say that would be a fair statement. MICHAEL TURITS : But you said you expect to be cash positive and earnings positive this fiscal year, right? HOWARD BAIN : Correct . MICHAEL TURITS : So that kind of leaves it to, it looks like we probably have negative EPS based on the fact that everything else is flat going into the third quarter, kind of leaves the fourth quarter as the .quarter which we go both cash and EPS positive. HOWARD BAIN : Yeah, I think at this point, looking at Q4, it looks pretty good. We also have the challenge on cash, of course, on the leases: MICHAEL TURITS : You had a restructuring charge of about 3 million this qua rter. What should we expect on uses of cash in the next couple of quarter, from capex to others? HOWARD BAIN: We continue to target our capital expenditure spending at around mi llion dollars a quarter and the leases have been running a little bit less, I.would say going forward less than 3. million and declining qua rter over quarter. MICHAEL TURITS : So the lease restructuring charges? HOWARD BAIN : Yeah, we are making progress against those MICHAEL TURITS : So it won't be any big bath on that, be about 3 million a quarter and that's it Page 8 Q2 2004 Portal Software Earnings Conference Call - Final FD (Fair Discl o

HOWARD BAIN : Right. And as you saw from this quarter we generated more than 3 million from operations, so hence we're pretty stable on the cash front now. MICHAEL TURITS : Now, the license fell off pretty significantly this quarter . I assume that's because you had a big payment from one customer last quarter and you didn't get this quarter . HOWARD BAIN : Correct.

MICHAEL TURITS : So, any point at which you think we should actually sta rt to see licenses actually start to pick up again?

HOWARD BAIN: Well, I think fundamentally licenses are picking up now, but with the revenue recognition we're . doing with these tier 1 customers, as I mentioned during the previous . discussion, we. see -- you know, we're going to see these license revenues coming in based on how the solutions are delivered. So they're going to come in not exactly rat- able but more on a milestone base over the next couple of years . MICHAEL TURITS : Right, and a lot of that is not deferred, it's milestone . HOWARD BAIN : Yeah, it's not deferred. MICHAEL TURITS : Any evidence of it. HOWARD BAIN : Exactly, right. So, for example, the revenues that we've seen from these deals on a license basis so far are well. in the minority of the revenues we expect to see . I mean, the majority of. the revenues are ahead of us on the licenses . MICHAEL TURITS : Okay. All right, Howard. Thanks very much. HOWARD BAIN : Sure. OPERATOR : Our next question today comes from Mary Ann Walk With Susquahana. MARY ANN WALK, ANALYST,'SUSQUAHANA : I had a couple of questions . First of all, can you verify that you said you signed some additional Vodafone affiliates ? I think you said Australia and New Zealand after the quarter closed. HOWARD BAIN: That is correct.. MARY ANN WALK: I'm just wondering how that factors into your mix guidance for Q3 because it does, sound like you're indicating that services will pick up again in the next quarter. JOHN LITTLE: That's true on both counts. What's happening here, if you think about .it, with the win with J-Phone Omnitel, with [INAUDIBLE] in Italy, and now with Vodafone Australia and New .Zealand, the demand for our solutions is just ramping up dramatically. So we've. been adding solutions engineers and consultants at a ve ry rapid rate. So that's why I think for the near term over the next couple of qua rters you're going to see our solutions services revenues outstripping our license revenues.

MARY ANN WALK : Should we assume that licenses are down sequentially again next quarter before picking up again ? JOHN LITTLE: Not at all . .MARY ANN WALK: Another question on the broadband part of the business, did you sign one broadband customer or several , and can we assume that those are among the so rt of leading , call it top-ten U.S. cable broadband providers ? JOHN LITTLE: Actually, they were cable broadband providers outside of the U. S. MARY ANN WALK: Okay.

JOHN LITTLE: Which I think is pretty significant, because we haven't seen much of anything there for a long time . MARY ANN WALK: One other question. If I assume licenses are relatively sort of flat or slightly up but take my services much higher, and hold my expenses flat, I could actually see the operating income so rt of flat to down . Is that what you were thinking about? Page 9 Q2 2004 Portal Software Earnings Conference Call - Final FD (Fair Disclo

JOHN LITTLE : We're hoping it's flat to up. That's what we're working to make happen : MARY ANN WALK: Okay. Just verifying .

JOHN LITTLE : Yeah, I mean, the challenge we have, as we've talked about in the past , Mary Ann, with the ramp in the solutions capability, is lots of pressure against margins, so we're working these things very hard to keep margins onthe upward tren d

MARY ANN WALK: I know in the past we talked about the kind of visibility you've had entering the next quarter. Could you give us a sense of that now?

JOHN LITTLE : I think it's consistent with what we've seen in the last couple of quarters to where roughly 70% of the revenue is pretty dog-gone solid . MARY ANN WALK: Great. I will let others ask questions . Thanks very much. HOWARD BAIN: I think we have time for one final question .

OPERATOR: Absolutely. And that question will come from Peter Jacobson wi th Kaufman Brothers. PETER JACOBSON, ANALYST, KAUFMAN BROTHERS: Thanks. Good afternoon, everyone . Can you comment on the average sell price for the quarter and possiblybreaking that out between licenses and service and how that's trending?

JOHN LITTLE : I think I'm going to jet Glenn answer that one. It's -- watch me pass that potato . To some degree, averages like that aren't very meaningful for what we have now. I do think in general when we're looking at an engagement with a customer, we're looking at now solutions services being even larger than the license that we might deliver to them over time. So, you know, I think at the same time , they're now looked at, these are very -- multiple year kinds of - agreements that we're seeing now as -well, so many of these things get delivered over six, eight, twelve quarters. So an average deal size of really a bit of an anomaly here . With these tier l's, we would expect that we would get eight figures of revenue from each of them on an annual basis going forward for the foreseeable future. PETER JACOBSON : And in your pipeline, can you characterize it in terms of general mix of, say, small , medium, - large deals?

GLENN WIENKOOP : Howard is pointing at me again . The pipeline continues to increase, and the deal size and the pipeline continues to move up. That's about all we do in terms of disclosing pipeline details at this point. PETER JACOBSON : Okay. Great. Thank you very much.

JOHN LITTLE : That concludes the question-and-answer session of today's call . To conclude the call in general, I'd like to repeat the key messages that, first, we're increasing our momentum and seeing significant results with our global customer base, and we mentioned a number of those today . Second, we're expanding our market footprint by aggressively developing and deploying solutions with industry-leading partners like Siebel and Microsoft . We're excited and optimistic about the long term positioning prospects Thanks for a ttending , and I will look forward to talking to you at the next call.

OPERATOR : That does conclude today's call . Thank you for your participation, and you may now disconnect from the line.

[CCBN reserves.the right to make changes to documents, content, or other information on this web site without ob- . ligation to notify any person of such changes .

In the conference calls upon which Event Transcripts are based, companies may make projections or other forward- - .looking statements regarding a variety of items . Such forward-looking statements are based upon current expectations and involve risks and uncertainties . Actual results may differ materially fromthose stated in any forward-looking state- - ment based on a number of impo rtant factors and risks, which are more specifically identified in the companies' most recent SEC filings. Although the companies may indicate and believe that the assumptions underlying the forward- - - looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore , there can be no assurance that the results contemplated in the forward-looking statements will be realized. - THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF - THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO PROVIDE AN Page 10 Q2 2004 Portal Software Earnings Conference Call - Final FD (Fair Disclo

ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS . IN NO WAY DOES CCBN ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON TH E INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT TRANSCRIPT . USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. Copyright 2003, CCBN, Inc. All Rights Reserved.]

LOAD-DATE : August 20, 2003 EXHIBIT 4 Quarterly Report on Form 10-Q Page 1 of 37 10-Q 1 dl0q .htm,-QUARTERLY REPORT ON FORM 1O- Q

SECURITIES AND EXCHANGE COMMISSIO N Washington , D.C. 20549

FORM 10-Q

(Mark One)

MR QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2003

❑ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File number 000-25829 PORTAL SOFTWARE, INC . (Exact name of registrant as specified in its charter)

Delaware 77-0369737 (State or other jurisdiction of (I .R .S . Ernployer incorporation or organization) Identification No.)

10200 South De Anza Boulevard Cupertino, California 95014 (Address of principal executive offices) (Zip code)

(408) 572-200 0 (Registrant's telephone number, including area code)

Indicate by check mark.whether the registrant : (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the-preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days . Yes .0 No 0

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act) . Yes 0 No -❑

On November 30, 2003, 41,847,323 shares of the Registrant's Common Stock, $0 .001 par value, were outstanding . .

http.://www.sec.gov/Archives/edgar/data/1080306/000119312503094214/dl0q .htm 1/24/2006 Quarterly Report on Form 10-Q Page 4 6f.3 7

PORTAL SOFTWARE, INC . CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts; unaudited) .

Three Months Ended Nine Months Ended . October3l, October31,

2003 2002 2003 2002

Revenues: License fees $ 5,687 $ 10,701 $ 30;578 $ 32,787 Services 19,672 19,459 60,075 57,247

Total revenues 25,359 30,160 90,653 90,034

Costs and expenses : Cost of license fees 19 71 128 240 . Cost of services 14,078 10,295 38,887_: 33,032 Amortization and impairment of purchased developed technology 665 2,232 1,995 3,930 Research and development 8,273 8,094 . 22,422 29,474 Sales and marketing 10,677 12,071 33,698 -40,637 General and administrative 3,926 4,372 10,354 .12,975 Stock compensation charges (1) 3,000 62 33,840 271 Restructuring costs - 30,668 . 36,721 Impairment of assets - 1,470 - 1,470

Total costs and expenses 40,638 69,335 141,324 158,750

Loss from operations (15,279) (39,175) (50,671) (68,716 ) Interest and other income, net 860 397 831 1,365

Loss before income taxes (14,419) (38,778) (49,840) (67,351) Provision for income taxes (765) (786) (2,000) (2,268)

Net loss $(15,184) $(39,564) $ (51,840) $ (69,619)

Basic and diluted net loss per share $ (0.39) $ (1 :12) $• .. (1 .40) $ (1 .98)

Shares used in computing basic and. diluted net loss per share 38,995 35,329 36,937 35,171 .

(1) Stock compensation charges relate to the following expense categories : Cost of services $ 652 $ 10 $ 7,353 $ . 43 Research and development 1,105 20 .:12,461 . 9.1 Sales and marketing 838 18 9,452 77 General and administrative 405 14 4,574 60

$ 3,000 $ 62 $33,840 $ 271

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements .

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Revenue from license fees is recognized when persuasive evidence of an arrangement exists, delivery .of the product has occurred, the fee is fixed or determinable. and collectibility is probable . . Pursuant to the requirements of Statement of Position ("SOP") 97-2 "Software Revenue. Recognition" and SOP 98-9 "Modification of SOP 97-2, Software Revenue Recognition, with Respect to Certain Transactions," Portal uses the residual method.to recognize revenue when a license agreement includes one or more elements to be delivered at a future date and vendor . specific objective evidence of the fair value ("VSOE"), of all undelivered elements exists . VSOE for undelivered elements is based on normal pricing for those elements when sold separately and, for maintenance services, is additionally measured by the renewal rate . The software is considered to have been delivered when Portal has provided the customer with the access codes that allow for immediate possession of the . software. The Company's assessment of a customer's creditworthiness is a factor in.the determination of whether or not collectibility is probable . The determination of creditworthiness requires the exercise of judgment, which affects Portal's revenue recognition . If a 'customer is deemed to not be creditworthy, all revenue under arrangements with that customer is recognized upon receipt of cash . Additionally, when Portal enters into contracts with industry-standard payment terms, it is Portal's policy to recognize such revenue when the customer is deemed to be creditworthy and collection of the receivable is probable . Revenue from, arrangements with customers who are not the ultimate users and • who have a right of return, such as some resellers, is not recognized until evidence of an arrangement with an end user has been received . Should Portal enter into a transaction with a customer to purchase the customer's products contemporaneously with the customer's purchase of software from Portal, Portal's policy is to recognize the amount of license fees paid to Portal net of the fees paid for the customer's products . Services revenues are primarily comprised of revenue from product deployment, follow-on enhancements and other consulting fees, maintenance agreements and training.: When license arrangements include services, the license fees are recognized upon delivery, provided that (1) the criteria set forth in the above paragraph have been met, (2) payment of the license fees is not dependent upon the performance of .the services, and (3) the services are not essential to the functionality of the software . When software services are not considered essential, which has been the case in the majority of the Company's license arrangements, the Company recognizes time and materials service contracts as the services are performed. Fixed price services contracts are recognized on a proportional performance basis as determined by the relationship of contract costs incurred to date and the estimated total contract costs, which-are regularly reviewed during the life of the contract, subject to meeting agreed upon milestones . In the event that a milestone has not been reached, the associated cost is deferred and revenue is not recognized until the milestone has been accepted by the customer .

To date, Portal has been able to estimate efforts required under its services contracts, including its fixed price contracts, and accordingly, has not incurred any significant losses on its fixed priced contracts . In the event that cost estimates exceed revenues in the future, Portal's policy is to accrue for the estimated losses if and when the losses become evident.

For.arrangements that do not meet the above criteria, both the license revenues and services revenues are recognized under a contract accounting method in accordance with the provisions of SOP .81-1, "Accounting for Performance of Construction Type and Certain Production Type Contracts." Portal follows the :percentage-of-completion method where reasonably dependable estimates of progress . toward completion of a contract can be made . The Company estimates the percentage-of-completion on contracts utilizing costs incurred to date as.a percentage of the total costs at project completion, subject to meeting agreed milestones . In thei event that a milestone lids not been reached, the associated cost is deferred and revenue is not recognized until the milestone has been accepted by the customer . Recognized revenues and profit are subject to revisions as the contract progresses to completion . Revisions in profit estimates are charged to income in the period in which the facts that give rise to the revision become known. To date, Portal has had no significant contracts accounted for. under SOP 81-1 .

Maintenance agreements provide technical support and include the right to unspecified upgrades on an if-and-when-available basis . Maintenance revenue is deferred and recognized on a straight-line basis as services revenue . over the life of the. related agreement, which is typically one year. Customer advances and billed amounts due from customers in excess of revenue recognized are generally recorded as, deferred revenue .

Portal periodically updates its revenue recognition policies to reflect changes in the marketplace, its business practices and experiences with its customers to ensure compliance with revenue recognition rules and good business practices . During the quarter ended July 31, 2002, Portal revised its policy to better reflect the,shift in .Portal's customer base from Internet service providers to .diversified telecommunications companies. The new policy continuesto ensure compliance with technical pronouncements associated with software revenue recognition . Previously, Portal's policy presumed: that arrangements with payment terms extending beyond 60 days did not meet the criteria for fixed and determinable fees . Under Portal's revised-policy, arrangements with payment terms extending beyond 60 days may meet the fixed . and determinable fee criteria based upon Portal's evaluation of the risk of concession, subject to review and approval by Portal's Chief Financial Officer. This change increased revenue recognized during the three and nine months ended October 31, 2003 by $1 .8 million and $3 .3- million, respectively .

7 Quarterly Report on Form i 0-Q Page 18 of 37

RESULTS OF OPERATIONS

Revenues

Three Month s Nine Months Ended October 3 1 , Ended October 31 , Percent Percen t 2003 200 2 Change 2003 2002 Change (dollars in millions; unaudited) License fees $ 5.7 $ 10.7 (47)% $ 30.6 $ 32.8 Percentage of total revenues (7)% 22% 35% 34% Services 36% 19.7 19.5 1% 60.1 57.2 Percentage of total revenue s 5% 78% 65% 66% 64%

Total revenues $ 25 .4 $ 30.2 (16)% $ 90.7 $ 90.0 1% xw~ Total revenues decreased in the three months ended October 31 , 2003 from the comparable period in 2002 . License fees decreased due to customers' deliberate purchasing decisions causing a number of transactions to not be completed during the quarter and due to the inclusion of certain provisions into licensing arrangements which resulted in-the delay of revenue recognition . As a result , license fees as percentage of revenues decre ased for the three and nine months ended October 31, 2003 when compared to the three and nine months ended October 31, 2002. Total revenues did not change signifi cantly during the nine months ended October 31, 2003 from the comparable period in 2002 . During the quarter ended July 31, 2002, Portal revised its policy on reco gnizing revenue on extended payment term a rrangements. This change increased revenue recognized during th e three and nine months ended October 31, 2003 by $1 :8 million and $3 .3 million, respectively. Affiliates majority-owned by Vodafone Group Plc (" Vodafone"), as publicly reported by Vodafone , accounted for 20 .4% and 29.2% of revenue recognized during the three and nine month s ended October 31, 2003 , respectively, and 22 .4% and 17.2% during the three and nine months ended October 31, 2002, respectively . One majority owned Vodafone affiliate, Vodafone Omnitel, accounted for 10 .7% of revenues during the nine months ended.October 31 , 2003 : No individual Vodafone affiliate or other customer accounted for more during the three mon than 10% of revenues ths ended October 31, 2003 or the three and nine months ended October 31, 2002. Geographical Revenues

Three Months Nine Months Ended October31, Ended October 31, Percent Percent 2003 2002 Change 2003 2002 Change (dollars in millions ; unaudited) North Americ a $ 6.9 $ 8 .1 (15)% $ 21 .8 $ 30 .8 (29)% Percentage of total revenues - 27% 27% 24% 34% International . Europe 13 .2 18.4 (28)% 50.6 44.8 Percentage of total revenues 13% 52% 61% 56% Intercontinenta l -50% 5.3 3.7 43% 18.3 14.4 Percentage of total revenue s 27% 21% 12% - 20% . 16% Total international 18.5 22. 1 (16)% 68.9 59.2 16% Percentage of total revenue s 73% 73%. 76% 66% Total revenues $ 25 .4 $ 30.2 (16)%u $ 90 .7 . $ 90.0 1

North American revenues, which are defined by us as revenues from the United States and Canada, decreased in the three and nine months ended October 31, 2003 compared with the three and nine months ended October 31, 2002, primarily due to constrained capital spending by communication service providers, which are the primary customers for our products and services : Revenues in Europe, which are defined by us as Europe, Middle East and Africa, decreased for the three months ended October 31, 2003 compared with the three months ended October 31, 2002 primarily due to a decrease in license revenue as a result of the factors described above . Revenues in Europe for the nine months ended October 2003 compared with the nine months ended October 31, 2002 increased as a result of our success in obtaining new business with wireless and content service providers in this region . Intercontinental revenues, which are defined by us as Asia-Pacific, Japan and Latin America (including Mexico), increased for the three and nine months ended October 2003 compared with the comparable periods ended 2002 as a result of obtaining new business with a wireless provider in Japan, and . with wireless and cable providers in Latin America . 1 6

http://www.see.gov/Archives/edgar/data/1080306/000119312503094214/dl 0q .htm 1/24/2006 Quarterly Report on Form 10-Q Page 37 of 37

SIGNATUR E

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly. authorized .

December 15, 2003 PORTAL SOFTWARE, INC.

By /s/ HOWARD A. BAIN III

Howard A. Bain III Chief Financial Officer (On behalf of the Registrant and as the Principal Financial Officer)

35 302 Certification of CE O Page 1 of 1 EX-31 .1 3 dex3l 1 .htm 302 CERTIFICATION OF CEO EXHIBIT 31 .1 CERTIFICATION

I, John E . Little, Chief Executive Officer of Portal Software, Inc ., certify that :

1 . I have reviewed this quarterly report on Form 10-Q of Portal Software, Inc .;

2. Based on my knowledge, this quarterly report does not . contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report ;

3 . Based on my knowledge, :the financial statements, and other financial information included in this report, fairly present in al l - material respects the financial condition, results of operations and cash flows of the. registrant as of, and for, the periods presented in this report ;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have :

a) Designed such disclosure controls and procedures, or caused such disclose controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, . including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;. and

c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer: and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function) :

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information ; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting . December 15, 2003

httD://www.sec.iov/Archives/edf4ar/data/1080306/000119312503094214/dex3I I .htm i nSionnV 302 Certification of CFO Page 1 of 1 EX-31 .2 4 dex312 .htm 302 CERTIFICATION OF CF O EXHIBIT 31.2

CERTIFICATION

I, Howard A . Bain III, Chief Financial Officer of Portal Software, Inc ., certify that:

1 . I have reviewed this quarterly report on Form 10-Q of Portal Software, Inc .;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect: to the period covered by this report; .

3 . Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in . all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

a) Designed such disclosure controls and procedures, or caused such disclose controls and procedures to be designed under our supervision, to. ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in thecase of an annual report) that has materially Affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting ; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function) :

b) Any fraud, -whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting .

December 15, 200 3

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DEF 14A 1 d13703-defl4a.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No . )

Filed by the Registrant . 191 Filed by a Party other than the Registrant ❑

Check the appropriate box:

❑ Preliminary Proxy Statement ❑ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) Ex Definitive Proxy Statement ❑ Definitive Additional Materials ❑ Soliciting Material Pursuant to Rule 14a-1 2

PORTAL SOFTWARE, INC .

(Name of Registr ant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant )

.Payment of Filing Fee (Check the appropriate box) :

❑ No fee required.

❑ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 . M

1. Title of each class of securities to which transaction applies :

2. Aggregate number of securities to which transaction applies :

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PORTAL SOFTWARE, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS JANUARY 28, 2004

TO OUR STOCKHOLDERS:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Portal Software, Inc ., a Delaware corporation (the "Company"), will be held on Wednesday, January 28, 2004 at 10 :00 a.m. at The Hilton Garden Inn Cupertino, 10741 North Wolfe Road, Cupertino, CA 95014, for the following purposes :

1 . To elect one Class I director to serve a three-year term expiring upon the 2006 Annual Meeting of Stockholders or until his.respective successor is duly elected and qualified ;

2. To ratify the appointment of Ernst & Young LLP as independent auditors for the Company for the fiscal year ending January 30, 2004 ;

3 . To transact such other business as may properly come before the meeting or any adjournments thereof .

The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice . Only stockholders of record at the close of business on December 18, 2003 are entitled to notice of and to vote at the meeting.

All stockholders are cordially invited to attend the meeting in person . However, to assure your representation at the meeting, you are urged to mark, sign, date and return the enclosed Proxy as promptly as possible in the postage prepaid envelope provided for that purpose . Should you receive more than one proxy because your shares are registered in different names or addresses, each proxy should be signed and returned to assure that all your shares are voted . You may revoke your proxy at any time prior to the Annual Meeting . Any stockholder attending the meeting may vote in person even if he or she returned a Proxy in which case your Proxy will be revoked automatically .

By Order ofthe Board of Director s

Mitchell L. Gaynor Vice President, General Counsel, and Secretary

Cupertino, California December 24, 200 3

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IN THE ENCLOSED ENVELOPE.

PORTAL SOFTWARE, INC.

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PROXY STATEMENT

INFORMATION CONCERNING PROXY SOLICITATION AND VOTIN G

General

The enclosed Proxy is solicited on behalf of the Board of Directors (the "Board") of Portal Software, Inc. (the "Company" or "Portal"), for the Annual Meeting of Stockholders (the "Annual Meeting") to be held on Wednesday, January 28, 2004 at 10 :00 a.m. at The Hilton Garden Inn Cupertino, 10741 North Wolfe Road, Cupertino, CA 95014, or any adjournment or adjournments or postponements thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting. The Company's principal executive offices are located at 10200 South De Anza Boulevard, Cupertino, California 95014, and its telephone number at that location is (408) 572-2000 .

These Proxy materials were mailed to stockholders on or about December 24, 2003 .

Record Date; Outstanding Share s

Only stockholders of record at the close of business on December 18, 2003 (the "Record Date") are entitled to receive notice of and to vote at the meeting . The outstanding voting securities of the Company on the Record Date consisted of 41,902,243 shares of Common Stock. No shares of Preferred Stock are outstanding . A list of stockholders entitled to vote at the Annual Meeting will be available for inspection at the executive offices of the Company . The closing market price of the Company's Common Stock on Nasdaq on December 18, 2003 was $6 .37 per share .

Voting and Revocability of Proxies

If the enclosed form of proxy is properly signed and returned, the shares represented thereby will be voted at the Annual Meeting in accordance with the instructions specified thereon . If the proxy does not specify how the shares represented thereby are to be voted, the proxy will be voted FOR the election of the director proposed by the Board unless the authority to vote for the election of such director is withheld and, if no contrary instructions are given, the proxy will be voted FOR approval of Proposal 2 described in this Proxy Statement . The enclosed Proxy is revocable at any time before its use by . delivery to the Company of a written notice of revocation or a duly executed Proxy bearing a later date. If a person who has executed and returned a Proxy is present at the meeting and wishes to vote in person, he or . she may elect to do so ; and any such vote in person will automatically revoke the power of the proxy holders to vote his or her Proxy.

Voting and Solicitation

Each share of Common Stock issued and outstanding as of the Record Date shall have one vote on each of the matters presented herein. Stockholders do not have the right to cumulate votes in the election of directors . The required quorum for the transaction of business at the Annual Meeting is a majority of the votes eligible to be cast by holders of shares of Common Stock issued and outstanding on the Record Date . Shares that are voted "For", "Against" or "Withheld From" a matter are treated as being present at the meeting for purposes of establishing a quorum and are also treated as shares entitled to vote at the Annual Meeting (the "Votes Cast") with respect to such matter . Abstentions and broker non-votes (shares held of record by stock brokerage firms but not voted due to the failure of the beneficial owners of those shares to provide voting instructions) also will be' counted by the Company as present at the meeting for purposes of determining the presence of a quorum. Abstentions will be counted by the Company in determining the total number of Votes Cast with respect to a proposal (other than the election of directors) and, therefore, will have the same effect as a vote against the proposal . Broker non-votes will not be counted in determining the number of Votes Cast with respect to a proposal and, therefore, will not affect the outcome of the voting on a proposal that requires a majority of the Votes Cast .

The cost of soliciting Proxies will be borne by the Company . Proxies may be solicited by certain of the Company's directors, officers and employees , without additional compensation, in person or by.telephone,

electronic mail or facsimile. The Company may also reimburse brokerage firms and other persons representing beneficial Page 5 of 27

owners of shares for their expenses in forwarding solicitation materials to such beneficial owners.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMEN T

The following table sets forth the beneficial ownership of common stock of Portal based upon 41,847,323 shares of our common stock outstanding as of December 1, 2003 as to (a) each current director and nominee for director; (b) each executive officer named in the Summary Compensation Table which appears later in this Proxy Statement ; (c) all current directors and executive officers as a group ; and (d) each person known to us to beneficially own at that time more than 5% of the outstanding shares of Portal's common stock . Unless otherwise specified, the address of each. beneficial owner is 10200 South De Anza Boulevard, Cupertino, California 95014. All share numbers have been adjusted to reflect a 1-for-5 reverse stock split that was effected on September 26, 2003 .

Shares Approximate Beneficially Percent of. Name of Beneficial Owner Owned (1) Class Owned

John E. Little (2) 7,111,569 16.5% David S. Labuda (3) 2,224,560 5.3% Howard A. Bain Ill (4) 124,827 George J. Goldsmith(5) 3,333 J. David Martin (6) 24,33 3 Richard A. Moran(7) 3,333 Arthur C . Patterson (8 ) 907,903 2.2% Jennifer Taylor (9) 5,000 Michael A. Vescuso (10) 5,089 Robert P. Wayman (11) 21,799 Glenn R. Wienkoop (12) 86,664 Edward J. Zander (13 ) 98,890 All current executive officers and directors as a group (15 persons) (14) 10,767,992 23.6%

Less than one percent .

(1) The table is based upon information supplied by executive officers, directors and principal stockholders . Unless otherwise indicated, each of the stockholders named in the table has sole voting and investment power with respect to all securities shown as beneficially owned, subject to community property laws where applicable and to the information contained in the footnotes to the table . All share numbers have been adjusted to reflect a 1-for-5 reverse stock split that was effected on September 26, 2003 .

(2) Includes 6,610,305 shares held in trust by Mr. Little, 328,767 shares held by his wife and 172,497 shares subject to options that are currently exercisable or will become exercisable within 60 days after December 1, 2003 . Mr. Little disclaims beneficial ownership of the 328,767 shares. held by his wife

(3) Includes 156,738 shares subject to options that are currently exercisable or will become exercisable within 60 days after December 1, 2003 . Includes 1,603,548 shares held in trust by Mr . Labuda as trustee of the David S . Labuda Separate Property Trust U/D/T dated December 30, 1998 . Also includes 231,348 shares held in trust by Mr . Labuda and Cindy A . Labuda, Mr. Labuda's wife, as trustees of the Labuda Community Trust U/D/T dated December 30, 1998 . Also includes 75,154 shares of common stock held by Cindy A . Labuda, trustee of the Cindy A. Labuda Separate Property Trust U/D/T dated December 30, 1998 and 56,000 shares held in the name of the Kira Anne Labuda Trust dated 12/31/97 . Also includes 25,443 shares held in the name of the Paige Elyse Labuda Trust U/T/A dated 12/28/00 . Also includes 25,443 shares held in the name of the Chad Austin Labuda Trust U/T/A dated 12/28/00 . Also includes 25,443 shares held in the name of the Evan Pierce Labuda Trust U/T/A dated 12/28/00 . Also includes 25,443 shares held in the name of the Trevor Lee Labuda Trust U/T/A dated 12/28/00 . Mr. Labuda disclaims beneficial ownership of all of these latter 232,926 shares .

(4) Includes 114,585 shares subject to options that are currently exercisable or will become exercisablewithin 60 days after December 1, 2003 .

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(5) Includes 3,333 shares subject to options that are currently exercisable or will become exercisable within 60 days after- December 1, 2003 .

(6) Includes 4,333 shares subject to options that are currently exercisable or will become exercisable within 60 days after December 1, 2003 .

(7) Includes 3,333 shares subject to options that are currently exercisable or will become exercisable within 60 days after December 1, 2003 .

(8) Includes 69,245 shares held by Accel Internet/Strategic Technology Fund L.P., 30,770 shares held by Accel Investors '96 L.P., 10,249 shares held by Accel Keiretsu V L .P., 516,742 shares held by Accel V L .P., 137 shares held by Accel Investors '99(C) L.P., 103,542 shares held by ACP Family Partnership L .P. and 42,026 shares held by Ellmore C . Patterson Partners . Mr. Patterson is a managing member of Accel Internet/Strategic Technology Fund Associates L .L.C., (the general partner of Accel Internet/Strategic Technology Fund L.P.), Accel Keiretsu V Associates L .L.C. (the general partner of Accel Keiretsu V L .P.), and Accel V Associates L.L.C. (the general partner of Accel V L.P.). W. Patterson is the General Partner of Accel Investors '96 L .P., Accel Investors '99(C) L .P ACP Family Partnership L.P. and Ellmore C. Patterson Partners and is also a director of Portal . However, Mr. Patterson disclaims beneficial ownership of all these shares, except to the extent of his pecuniary interest therein. Also includes 125,612 shares held directly by Mr . Patterson. Also includes 7,200 shares subject to options that are currently exercisable by Mr . Patterson or will become exercisable within 60 days after December 1, 2003 . Also includes 2,380 shares held in the name of Mr . Patterson's minor children. Mr. Patterson disclaims beneficial ownership of these latter 2,380 shares except to the extent of his pecuniary interest therein.

(9) Includes 5,000 shares subject to options that are currently exercisable or will become exercisable within 60 days after December 1, 2003 .

(10) Includes 3,336 shares subject to options that are currently exercisable or will become exercisable within 60 days after December 1, 2603 .

(11) Includes 21,799 shares subject to options that are currently exercisable or will become exercisable within 60 days after December 1, 2003 .

(12) Includes 84,564 shares subject to options that are currently exercisable or will become exercisable within 60 days after December . 1, 2003.

(13) Includes 7,200 shares subject to options that are currently exercisable or will become exercisable within 60 days after December 1, 2003 .

(14) Includes 730,355 shares subject to options that are currently exercisable or will become exercisable within 60 days after December 1, 2003 .

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANC E

Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file an initial report of securities ownership on Form 3 and reports of changes in securities ownership on Form 4 or 5 with the Securities and Exchange Commission (the "SEC") . Such officers, directors and 10% stockholders are also required by SEC rules to furnish us with copies of all Section 16(a) forms that they file . Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons that no Forms 4 or 5 were required for such persons, we believe that, for the reporting period from February 1',-2002 to January 31, 2003, all required Section 16(a) filings were made on a timely basis .

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PROPOSAL l ELECTION OF DIRECTORS

Directors

We currently have eight directors divided among three classes as follows : Class I - Arthur C . Patterson and Robert P. Wayman; Class H. - Edward J. Zander, George J . Goldsmith and Richard A . Moran; and Class III - John E . Little, Jennifer Taylor and J. David Martin . In March 2003, the Board of Directors increased the authorized number of directors of the Company from seven to eight. In addition, the Board of Directors appointed George J. Goldsmith and Richard A . Moran as Class II directors to hold office until the 2004 annual meeting of the stockholders . In June 2003, the Board of Directors appointed Richard Moran to the Compensation Committee and George Goldsmith to the Governance and Nominating Committee . On December 16, 2003, the Board of Directors approved a resolution to reduce the size of the Board to seven . directors of which one director is a Class I director. In connection with his recent appointment as Chairman of the Board and Chief Executive Officer of Motorola, Inc ., Mr. Zander will be leaving the Board of Directors in 2004 .

One Class I director is to be elected at the Annual Meeting for a three-year term ending at the annual meeting of stockholders in 2006 . The Board has nominated Robert P. Wayman for election as a Class I director . Unless otherwise instructed, the proxy holders will vote the Proxies received by them for Mr . Wayman . In the event that Mr. Wayman is unable or declines to serve as a director at the time of the Annual Meeting, the Proxies will be voted for any nominee who shall be appointed by the present Board to fill the vacancy. The Company is not aware of any reason that Mr. Wayman will be unable or will decline to serve as a director. Under the Company's Bylaws, stockholders may nominate other individuals for election as directors only if the proposed nomination is set forth in a written notice to the Company's Secretary that complies with certain requirements described below under the caption . "Other Matters."

Required Vote

The nominee for director receiving the highest number of affirmative votes of the shares of the Company's Common Stock voted at the Annual Meeting shall be elected as the .Class I director . Votes withheld from any nominee will be counted for purposes of determining the presence or absence of a quorum but will have no . other effect. Assuming a quorum is present, abstentions and broker non-votes will have no effect on the election of the director .

The Board of Directors recommends that the stockholders vote "FOR" the election of Robert P . Wayman as the Class I director of the Company .

Certain information regarding the members of the Board of Directors as of December 18, 2003 is set forth below :

Current Term Name of Director or Nominee - Age Expires

John E. Little 46 2005 George J. Goldsmith' 48 2004 J. David Martin 48 2005 Richard A . Moran 53 2004 Arthur C. Patterson 59 2003 Jennifer Taylor 55 2005 Robert P . Wayman 58 2003 Edward J. Zander 56 2004

John E. Little. Mr. Little founded Portal in March 1985 based on his vision of an integrated business infrastructure for the emerging global networks. He has been Chief Executive Officer and a Director since its inception . In addition, Mr. Little served as President from inception to March 1996 and has served as President from November 1996 to February 2002 . Prior to founding Portal, Mr . Little was an independent consultant for a number of companies including Knight-Ridder Inc,, AT&T Corp., Raytheon Company, Dow Jones News Retrieval, a subsidiary of Dow Jones & Company, Inc ., Victor Company of Japan ("JVC") and Sun Microsystems, Inc .

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George J. Goldsmith . Mr. Goldsmith has served as a Director of Portal since March 2003 . Since July, 2002, he has served as the Chief Executive Officer of Tapestry Networks, a company that creates and manages leader-

to-leader programs, transforming traditional conferences, councils and advisory boards into dynamic engines for the creation of shared value. From March 2000 to April 2001, Mr . Goldsmith served as the Chief Executive Officer of TomorrowLab, a provider of multi-client professional services, which was a division of McKinsey & Company, a management consulting firm. He served as a Senior Advisor to McKinsey & Company, from October 1998 to March 2000 . Mr. Goldsmith is also the founder of, and from January 1996 to February 2000, served as Chief Executive Officer for, TomorrowLab, Inc ., a web strategy firm that worked with global organizations to create customer communities and knowledge portals . Prior to that, he was an executive at Lotus Development Corporation . Mr. Goldsmith also currently serves as a director for the Young Presidents' Organization, or YPO, International Board, a non-profit organization of over 8,500 young business executives in 75 countries that provides networking and education opportunities to its members, since July 2001 .

J. David Martin. Mr. Martin has served as a Director of Portal since November 2002 . Since September 2001, he has served as the Chief Executive Officer of the YPO . Mr. Martin has served as a Director of YPO's International Board since July of 1998 including serving as Chairman of the International Board from July of 2001 to June of 2002 . From October 1995 through September 2000, he served as the Chief Executive Officer and Director of Burnham Pacific Properties, a real estate investment trust listed .on the New York Stock Exchange . Mr. Martin founded TMG Partners, a real estate development company, in February. 1984 and served as its Chairman and Chief Executive Officer until October 1995 . Since that time he _, has continued to serve as its Chairman of the Board .

Richard A. Moran . Mr. Moran has been a Director of Portal since March 2003 . Since June 2002, he has served as a private consultant to various companies. Mr. Moran served as a Partner at Accenture LLP, a leading provider of professional consulting services, from April 1996 to June 2002, where he worked with clients in the media and entertainment, communications and technology industries . Prior to this position, Mr. Moran held management positions in several consulting firms.

Arthur C. Patterson. Mr. Patterson has served as a Director of Portal since March 1996 . He is a founder and General Partner of Accel Partners, a venture capital firm . Mr. Patterson invests in enterprise software and services companies . He also serves as a director of Actuate Software Corporation, an enterprise reporting software company as well as several private companies .

Jennifer Taylor. Ms. Taylor has served as a Director of Portal since September 2002 . Since May 2002, she has served as an executive coach and business advisor to high technology companies . Ms. Taylor served as a Partner for Heidrick & Struggles, an executive search firm from January 2001 to May 2002 . Prior to this position, she served as a consultant and business advisor to high technology companies, from April 2000 to January 2001, and from July 1989 through February 2000, Ms . Taylor served as a Partner for PricewaterhouseCoopers, LLP, a leading provider of professional consulting services.

Robert P. Wayman. Mr. Wayman has served as a Director of Portal since September 2000. He has served as Executive Vice President, Finance and Administration and Chief Financial Officer of Hewlett-Packard Company since 1992 . From .1987 to 1992, Mr. Wayman served as Senior Vice President, Finance and Administration and Chief Financial Ofcer of Hewlett-Packard Company. He also serves on the Board of Directors of CNF, Inc ., a logistics and transportation company, and Sybase, Inc., an enterprise client/server software company . Mr. Wayman is also a director of the Private Sector Council and a director of the Cultural Initiative Silicon Valley . .

Edward J. Zander. Mr. Zander has served as a Director of Portal since August 1997 . Since September, 2003, he has served as Managing Director for Silver Lake Partners, a leading private equity investment partnership focused exclusively on technology and related growth industries. In July 2002, he retired from Sun Microsystems where he had served as President since April 1999 and as Chief Operating Officer since January 1998 . From February 1995 until January 1998, Mr . Zander served as President of Sun Microsystems Computer Company, a subsidiary of Sun Microsystems, and from January 1991 to February 1995, he served as President of SunSoft, Inc ., the software subsidiary of Sun Microsystems . From October 1987 to January 1991, Mr. Zander was Vice President of Marketing at Sun Microsystems . Mr. Zander also serves on the board of directors of MultiLink Technology Corporation, a provider of semiconductor-based products, Seagate Technology LLC, a

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leading provider of hard disc drives for enterprise, personal computer and consumer electronics applications and Netezza Corporation, a provider of the first purpose-built integrated business intelligence platform enabling terra-scale queries.

Corporate Governanc e

The Board of Directors has adopted a set of Corporate Governance Principles, and the Board's Governance and Nominating Committee is responsible for overseeing these principles, reporting and making recommendations to the Board concerning corporate governance matters . The Corporate Governance Principles include, among other matters, the following :

• The Board is composed of a majority of independent directors ;

• Non-management directors are encouraged to limit the number of other boards on which they serve ;

• The Governance and Nominating Committee is responsible to report annually to the Board an assessment of the Board's performance;

• The Governance and Nominating Committee will formally review each director's continuation on the Board from time to time, but no less frequently than every three years ;

• . Committee membership will be reviewed by the Governance and Nominating Committee at least annually, and members will be subject to periodic rotation ;

• At least once annually, the non-management directors will evaluate the Chief Executive Officer's performance ;

• The non-management directors of the Board will meet in executive session at least two times each year .

Board Meetings and Committees

The Board of Directors held 7 meetings during the fiscal year ended January 31, 2003 . No incumbent director who was a director during the year ended January 31, 2003 attended fewer than 75% of the aggregate number of meetings of the Board and the committees of the Board on which he or she served .

The Board has four standing committees : the Audit Committee, the Governance and Nominating Committee, the Compensation Committee and the Stock Committee . Each of these committees has a written charter approved by the Board of Directors. The members of the committees as of December 18, 2003 are identified in the table below . Non-employee directors meet at least quarterly without the ChiefExecutive Officer being present .

Governance an d Audit Nominating Compensation Stock Director Committee Committee Committee Committe e

John E. Little (Chairman of the Board and Chief Executive Officer) ' X X George J. Goldsmith X J. David Martin X Richard A . Moran Chair Arthur C . Patterson X Jennifer Taylor X Robert P. Wayman Chair Edward J. Zander X

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The Audit Committee currently consists of directors Arthur Patterson, Jennifer Taylor and Robert Wayman . The Audit Committee held 8 meetings during the last fiscal year. The Audit Committee engages the Company's independent auditors and is responsible for approving the services performed by the Company's independent auditors and for reviewing and evaluating the Company's accounting principles, its system of internal accounting controls, the charter and projects undertaken by the Company's internal audit function and the adequacy of the Company's fmancial reports . In connection with these reviews, the Audit Committee meets with appropriate financial personnel of the Company and the organizations responsible for internal audit. The Audit Committee reviews and reassesses the adequacy of its charter on an annual basis . Each member of the Audit Committee is an "independent director" as defined in Rule 4200 of the Marketplace Rules of the National Association of Securities Dealer, Inc. and has the ability to read and understand fundamental financial statements . In addition, the Board of Directors has determined that Mr . Wayman is an "audit committee financial expert" as defined in Item 401(h) of Regulation S-K.

The Governance and Nominating Committee (formerly known as the Board Affairs Committee) currently consists of directors George Goldsmith, John Little and David Martin. The committee was formed in June 2002 . The Governance and Nominating Committee held 2 meetings during the last fiscal year . The principal functions of the Governance and Nominating Committee are to establish and review matters relating to : the responsibilities, conduct, performance, compensation, composition and operation of the Board and the directors ; committee assignments ; the recruitment and nomination of directors ; and consideration of nominees proposed by stockholders who have submitted such nomination to the Company in accordance with the procedure set forth in the Bylaws and described in this Proxy Statement in the section entitled "Other Matters" . The Governance and Nominating Committee charter also provides for regular performance reviews of the Board.

The Compensation Committee currently consists of directors Edward Zander and Richard Moran . The Compensation Committee held 6 meetings and acted by unanimous1written consent on .5 occasions during the last fiscal year. The principal functions of the Compensation Committee are to review and approve the Company's executive compensation policies and programs and to administer the Company's Stock Option and Employee Stock Purchase Plans . Each of the members of this committee .is an "independent director" as defined in Rule 4200 of the Marketplace Rules of the National Association of Securities Dealer, Inc .

The Stock Committee, currently consisting of John Little, is authorized to make grants of stock options within authorized limits to employees who are not executive officers of the Company . The Stock Committee acted by unanimous written consent on 14 occasions and held no meetings during the last fiscal year .

Director Compensation

In fiscal year 2003 non-employee directors received no cash fees in connection with their service on the Board of Directors and its committees, except that non-employee directors were reimbursed by Portal for actual travel and hotel expenses incurred in attending meetings of the Board or Committees of the Board or meetings with Portal personnel .

Newly elected or appointed non-employee directors are eligible to receive discretionary stock option grants under our 1999 Stock Incentive Plan (the "1999 Plan") in connection with their initial election or appointment to the Board. Accordingly, at the time of their appointment to the . Board, Ms. Taylor, Mr. Martin, Mr . Goldsmith and Mr . Moran each received (after reflecting the one-for-five reverse stock split effected on September 26, 2003) a stock option for 16,000 shares with an exercise price per share of $3 .30, $5 .30, $3 .65, and $3.65, respectively. Each such option has a maximum term of 10 years, subject to earlier termination upon the optionee's cessation of Board service, and will vest in 48 successive equal monthly installments upon the optionee's completion of each of his orher first 48 months of Board service . Each option will, however, immediately vest and become exercisable for all the option shares upon certain changes in control or ownership of Portal.

On the date of each Annual Stockholders Meeting, each of the continuing non-employee Board members who has served in such capacity for at least 6 months will receive an option grant, pursuant to the Automatic Option Grant Program in effect under the 1999 Plan, for 2,400 shares with an exercise price per share equal to the fair market value per share of the common stock on the grant date . Each option will have a maximum term of ten (10) years measured from the grant date, subject to the earlier termination upon the optionee's cessation of Board service. The option will be immediately exercisable for all the

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option shares as fully-vested shares . Pursuant to such Automatic Option Grant Program, Messrs . Patterson, Wayman and Zander were each granted an option to purchase 2,400 shares of common stock with an exercise price of $4 .20 per share on January 30, 2003, the date of the 2002 Annual Meeting .

The 1999 Stock Incentive Plan also contains a director fee option grant program. Should. this program be activated in the future, each non-employee Board member will have the opportunity to apply all or a portion of any annual retainer . fee . otherwise payable in cash to the acquisition of a below-market option grant . At this time, we do not anticipate paying any annual retainer fee or other cash compensation to any non-employee members of the Board of Directors .

PROPOSAL 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR S

The Audit Committee has selected Ernst & Young LLP, independent auditors, to audit the financial statements of the Company for the year ending January 30, 2004 and recommends that the stockholders ratify such selection . Ernst & Young LLP (or its predecessor) has audited the Company's annual financial statements since 1996 . Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions :

The Company has been informed by Ernst & Young LLP that neither the firm nor any of its members has any direct financial . interest or material indirect financial interest in the Company . Total fees billed by Ernst & Young LLP for audit and other professional services were $985,300 for the year ended January 31, 2003 . The components of the total fees were as follows:

Audit Fees: For the year ended January 31, 2003, the aggregate fees billed by Ernst & Young LLP for professional services rendered for (i) the audit of the Company's annual financial statements included in the Annual Report on Form 10- K, and (ii) the reviews of the Company's interim financial statements included in the Quarterly Reports on Form 10-Q were $739,900 .

Financial Information Systems Design and Implementation Fees: There were no services rendered by Ernst & Young LLP relating to financial information systems design and implementation during fiscal year 2003 .

All Other Fees: For the year ended January 31, 2003, the aggregate fees billed by Ernst & Young LLP for other professional services, other than the audit fees described above, were $245,400, of which $86,100 was related to audit-related services and $159,300 was related to non-audit services . Audit-related services generally include fees for accounting consultations, Securities and Exchange Commission ("SEC") registration statements, and statutorily required audits in certain locations outside the U.S. where the Company has operations . Non-audit services generally include tax compliance and tax consulting services.

The Audit Committee has determined that the other professional services provided by Ernst & Young LLP are compatible with maintaining the independence of Ernst & Young LLP.

Required Vote

The affirmative vote of a majority of the Votes Cast is necessary to approve this proposal . Assuming a quorum is present, abstentions will have the effect of a vote "against" this proposal, and broker non-votes will have no effect on the outcome of the vote . In the event that the stockholders fail to ratify the appointment, the Audit Committee will reconsider its selection.

The Audit Committee of the Board of Directors recommends that the stockholders vote "FOR" the ratification of the appointment of Ernst & Young LLP as the Company's independent auditors for the fiscal year ending January 30, 2004. -

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EXECUTIVE COMPENSATION

Summary Compensation

The following table provides certain summary information concerning the compensation earned for services rendered in all capacities to the Company and its subsidiaries for the fiscal years ended January 31, 2003, 2002 and 2001 by the Chief Executive Officer and each of the four other most highly . compensated executive officers of the Company whose salary and bonus for the 2003 fiscal year was in excess of $100,000 . Such individuals will be hereafter referred to as the name d executive officers . No other executive officer who would have otherwise been included in such table on the basis of salary and bonus earned for the 2003 fiscal year has resigned or terminated employment during that fiscal year . The number of shares underlying options in the table below and the exercise prices per share in the footnotes below have been adjusted to reflect a one-for-five reverse stock split that was effected on September 26, 2003 .

Annual Compensation

Other Name and Principal Fiscal Annua l Position in Fiscal Year 2002 Year Salary S)(1) Bonus ($) (2) Compensatio n

John E : Little 2003 $260,000 $ 0 - Chairman of the Board 2002 $260,000 $ 0 - and Chief Executive 2001 $260,000 $791,533 . Officer

Glenn R. Wienkoop 2003 $299,520 $ 0 - President and Chief 2002 - - - Operating Officer 2001 - -

Howard A. Bain III 2003 $250,385 $ 0 - Senior Vice President, 2002 $114,615 $ 37,500(7) - Chief Financial Officer 2001 - - -

David S. Labuda 2003 $229,762 $ 0 - Chief Technology Officer 2002 $217,462 $ 0 - 2001 $220,000 $289,904 -

Michael A Vescuso 2003 $250,096 $ . 0 $52,942(9) Senior Vice President, 2002 $116,875 $ 0 - Human Resources 2001 - -

(1) Salary includes amounts earned in the year indicated but deferred pursuant to Portal's 401(k) savings plan .

(2) Bonuses for each year include amounts earned for such year, even if paid in a subseque It year, and exclude bonuses paid during such year that were earned in a prior year .

(3) Applicable rules of the SEC require that options which are granted and repriced in the same fiscal year must be treated as two separate option grants: the first grant covering the number of shares subject to the option at the time of grant and the second grant covering the number of shares subject to the option at the time of the repricing . In addition, options granted in the 2003 fiscal year in replacement for options fora greater number of shares cancelled in the 2002 fiscal year as par t

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severance benefits equal to $374,313, less any applicable taxes . On November 18, 2002, Mr . Regan was paid $175,000 in severance benefits and a personal time off payout in an amount equal to $24,313 . On February 14, 2003, Mr . Regan was paid $175,000, the remaining portion of his agreed upon severance benefits . In addition, we agreed to pay COBRA benefits for Mr. Regan equaling $15,822 for one year following the termination of his employment, and we also extended from three months to twelve months the period following the termination of his employment in which he would be able to exercise the vested portion of his stock options that had an exercise price above the fair market value of the option shares on the date of his termination.

1 8

Certain Relationships and Related Transactions

On May 22, 2002, the Company loaned Mr . Vescuso the sum of $60,000 to be used for such purposes as he deemed appropriate . The loan is evidenced by a promissory note in the principal amount of $60,000 and bears interest at the rate of 3.5% per year. The note was to become due and payable to Portal on May 1, 2005, subject to certain acceleration events, including his termination of employment . However, the note provided that the principal balance would be accelerated and become immediately due and payable from time to time to the extent of 2/3 of any bonus or incentive compensation paid to Mr. Vescuso (net of any withholding and other deductions) during the term of the note. Mr. Vescuso's employment with the Company terminated on September 12, 2003, thereby accelerating the repayment of the note . The principal amount of the note was repaid to the Company in full in September 2003 . The accrued interest on the note in the amount of $2,698 will be deducted from the severance payments to be made to Mr . Vescuso pursuant to an agreement between Mr. Vescuso and the Company:

AUDIT COMMITTEE REPORT

Our Audit Committee is comprised of 3 directors and operates under a written charter adopted by the Audit Committee on March 17, 2000 and approved by the Board of Directors . The Audit Committee is responsible for the Company's financial reporting process. The independent auditors are responsible for performing an independent audit of the company's consolidated financial statements in accordance with auditing standards generally accepted in the United States and issuing a . report thereon. The Audit Committee's responsibility is to supervise and monitor these processes . In addition, the Audit Committee appoints the Company's independent auditors.

The Audit Committee has discussed with Ernst & Young LLP, the Company's independent auditor, the overall scope and plan for their independent audit for the fiscal year ended January 31, 2003 . The Audit Committee has reviewed and discussed the audited consolidated financial statements . with management and management represented to the Audit Commi ttee that the Company's consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States . The Audit Committee discussed with Ernst & Young LLP other matters required by Statement on Auditing Standards No. 61 Communication with Audit Committees, as amended by SAS 90 Audit Committee Communications . .

Ernst & Young LLP has provided to the Audit Committee the written disclosures and the letter required by Independence Standards Board Standard No . 1 (Independence Discussions with Audit Committees), and the Audit Committee discussed with Ernst & Young LLP the firm's independence . In addition, the Audit Committee considered whether Ernst & Young LLP's provision of non-audit services to the Company is compatible with Ernst & Young LLP's independence .

Based on the Audit Committee's discussion with management and Ernst & Young LLP and the Audit Committee's review of the representations of Management and the report of Ernst & Young LLP, .the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2003 . The foregoing report is provided by the following independent directors who constitute the Audit Committee:

Robert P . Wayman (Chairman) Arthur C . Patterson Jennifer Taylor (since December 2002)

The information contained in the Compensation Committee Report, the Audit Committee Report, Audit Committee Charter, and references to the "audit committee financial expert " and to the independence of the Audit Committee members and the

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The recent rapid expansion of telecommunications providers, traffic, and pricing structures has resulted i n the increasing complexity of interconnection agreements , data exchange, and billing needs. Interconnect charges can account for as much as 50 perce nt of a telecommunications provider's operating costs . Conversely, interconnect billing can potentially Interconnect Challenge s generate significant revenue for network facilities As telecommunications providers aim for precise contro l operators. Telecommunications providers typically of their interconnect traffic, they face several challenges : operate inflexible billing systems that produce inaccurate interconnect invoices , resulting in > Controlling ingoing and outgoing excessive interconnect costs and loss of revenue . Interconnect invoices. > Accurately monitoring interconnect costs . Because incorrect interconnect billing can significantly > Understanding the volume of interconnect growth reduce a company's profitability, a telecommunications . provider needs accurate insight into other providers' > Avoiding settlement of excessive bills .

charges as well as its own network's potential for > Assuring revenue by eliminating undercharging . interconnect revenue . To accomplish this, it requires an efficient, flexible, and accurate intercarrier billing system . Competitive Tool for Interconnect Billin g Accurate interconnect billing reconciliation is essential i n !! Infranet® Interconnect" provides a complete solution recovering overpayments and controlling future costs . for interconnect billing. This fault-tolerant, high- Infranet Interconnect supports automated interconnec t performance interconnect billing system can eliminate billing for sophisticated interconnect agreements with excessive interconnect charges and issue accurate bills . both established and new network service providers . The Infranet Interconnect supplies reliable, comprehensive system's high-performance rating engine checks , information on network usage by interconnect partners interprets, and aggregates event details in near real time . and creates a solid basis for drawing up new A flexible reporting system then creates statements fo r interconnection and service level agreement contracts . interconnect events, Including incoming, outgoing , The system 's open, modular structure is easy to upgrade transit interconnect activities . This feature enables a and able to process and report on all CDR/EDR telecommunications provider to verify its interc onnect formats using simple plug-ins. costs and maximize the value of its interconnect business . 'f J

P`..~RT/\L r Support for Complex Environments High-Performance Rating Framewor k With the number and depth of interconnect charges Infranet Interconnect supplies a high-performance growing with the number of new carriers , the complex- rating engine that delivers the following capabilities : ity of multicarrier, multiswitch , and dynamic network Comprehensive modular functionality . The modu- environments often leads to unprocessed event detail lar rating framework of Infranet Interconnect supports a records . The high-performance, reliable rating engine of rich set of CDR/EDR processing capabilities, including Infranet Interconnect rates all traffic types and call sce- enrichment, zoning, rating, discounting, and aggregation . narios through standard , table-driven configurations or a simple but powerful scripting language. Easy configuration . A basic functional configuration is done through plug-in modules, while new require- Infranet Interconnect offers interconnect billing for ments can be met through rule-based adjustments . reciprocal compensation, signaling of network usage, All modules have user-friendly graphical user interfaces . management of interconnect partners and carriers, and delivery of real-time quality-of-service assurance for key Parallel processing. Infranet Interconnect parallel customers. Intranet interconnect automates call and processing logically distributes and manages the data usage measurement, and it aggregates and delivers stream, delivering the highest possible processing speed . industry-standard billing records to accounting systems for further processing . Conclusion Infranet Interconnect is a flexible multicarrier billing Infranet Interconnect Features and Benefits system that maximizes interconnect revenue by process- Infranet Interconnect offers telecommunications ing reliable, comprehensive interconnect information . providers the following benefits: Infranet Interconnect enables telecommunications providers to maximize interconnect revenue while pre- > Single-touch CDR/EDR processing . venting unnecessary losses and incalculable expenses . > In-memory rating architecture .

> Comprehensive rating capability that supports complex tariffs and unlimited pricing and discount models .

02-0 55-0301 > Configuration flexibility that supports both ...... _ ...; traditional and new services with a single solution . PJRTJAL. > Accurate control of invoices .

Portal Software , Inc provides the platform for managing wireless , broadband, > Element-based charging• voice . Internet, and other next-generation communications and e-services .

Portal Software, Inc . > Nonstop, 24-hour operations. 10200 South De Anza Boulevard Asia Pacific Cupertino, CA 95014 Tel : +852.2585 .2200 U.S .Tol-Free Tel : 1 .888 .343 .4400 Europe, Middle East, and Africa www.portal.com Tel : +44 .1753 .708.47 5 ...... _ ...... __...... _ ...... _...__..._ . ...._ ...... _...... __. ._ ._' Copyright ® 2001 Perot Software, Inc All right, teervm. Irdrenrt. lntertvmiect, Ports1 Sotwue, Portal . and the P-1 1,g, are Trademarks of PomW suawne, teem to subsldkrla . All aLh r company. bmd, and ryoduct ,artier ,,uy he vsdnoerk, or the ir tespettha holders . HEWLETT® CISCO SYSTEMS CP~ PACKARD PORTAL. M. Real Tim e Internet Usage Billing Solution

To remain competitive, ISPs must find The HP/Cisco Internet HP Smart Internet Usage new sources of revenue beyond those Usage Platform HP's Smart Internet Usage (SIU) product generated by flat rate billing . ISPs need The HP/Cisco Internet Usage Platform is at the core of the Internet Usage Billing ways to accurately measure how their provides the ability to accurately extract Solution . The SIU is the key technology customers are using new services and accounting information from an IP envi- that enables the accurate aggregation, in network resources, and must have an ronment for use in a variety of valuable near-real time, of customers' traffic sta- effective means to bill for that usage. To business functions including billing, tistics and then correlates this data to the help ISPs meet this challenge Hewlett- marketing, and capacity planning. The critical resources and services used (e.g. Packard, the world leader in network and platform is the result of the seamless IP services, access services and systems) . systems management solutions, has integration of Cisco Systems' NetFlowTm This information is summarized in an developed the Internet Usage Billing technology and HP's Smart Internet Usage. open and extensible format called the In- Solution . ternet Data Record (IDR) . Many different Cisco NetFlo w billing, marketing, and capacity planning Based on the foundation of the HP/Cisco Cisco Systems' NetFlow technology, applications can utilize the IDR . In the Internet Usage Platform, the Internet working at the router, identifies IP packet Internet Usage Billing Solution, this in- Usage Billing Solution enables Internet flows, performs efficient statistics collec- formation is automatically fed into the Service Providers (ISPs) and telecom- tion, accelerates security filtering, and integrated Portal Infranet rating and bill- munications service providers to offer exports the statistics to downstream col- ing application. With this solution, ISPs new IP services to their enterprise cus- lectors-all while maintaining high router and telecommunications service providers tomers. Moreover, it is designed to work performance . Cisco's NetFlow provides can more accurately segment, and bill with current network and systems infra- the foundation for sophisticated network for, value-added services . structure-allowing ISPs to leverage their billing . NetFlow's fine-grained metering existing investments while generating enables ISPs to flexibly bill usage by Portal's Infranet Software new revenue . time, traffic volume, application, source Portal Software, Inc. offers the industry's and destination . NetFlow is available most scalable and adaptable customer The Internet Usage Billing Solution is today on Cisco's 7000 series routers and an integrated bundle that includes the management and billing software for ISPs . Catalyst 5000 series switches and does HP/Cisco Internet Usage Platform, Portal Portal's Infranet software was designed not require new generations of network- specifically for the Internet and offers Software's leading billing application ing equipment. Infranet®, system integration services comprehensive functionality to register, from HP's Professional Services Organi- manage, and bill customers . Infranet zation, and billing solution integration services from Cap Gemini Telecom & Media.

Network + Data orv-ces Aggregati n and Correlation Rating and Billing Portal's Infranet Software Infranet's multiple features and "real time, Benefits (continued) no limitsTM" design make it the perfect With the Smart Internet Billing Solution compliment to Cisco's and HP's tech- has been seamlessly integrated into the ISPs can now : Internet Usage Billing Solution and is nology. For the first time ISPs have an leverage current investment-generate designed to utilize data contained in the integrated solution that will transform new sources of revenue with existing IDR. With the data collected from the, usage data into revenue. network and services infrastructure ; IDR, Infranet' s rating engine gives ISPs the ability to create any type of pricing Cap Gemini Telecom & Media flexibly bill usage by time, traffic volume, application, source and destination plan for any type of service. J Billing Integration Services ; With hundreds of customer care and create differentiated, multi-tiered pricing With Infranet, the Internet Usage Billing' billing projects to its credit worldwide, structures tailored to customer needs; Solution can rate any tracked event as it Cap Gemini Telecom & Media excels in provide quality customer service with occurs, so that service representatives an the implementation of rating and billing up-to-the-minute account information ; customers have access to current account engines for the telecommunications and balances and available credit support payment in real time through . Infranet's, Internet markets. As a systems integrator rating engine suppo an electronic interface to credit card pro- rts multiple resource for this solution, Cap Gemini is uniquely cessing; balances and limits such as dollar bal anc- suited to help Internet service providers es, free hours of usage, megabytes of move away from "flat rate billing" to have customized integration with cur- e-mail stored or any other resource de- usage-based billing systems. rent billing environments. fined by the ISP . The rating of a single event can simultaneously update any or ~ Teaming with Cap Gemini Telecom & Availability all of these balances . Media enables ISPs and telecommunica- This solution is immediately available as tions service providers to leverage their Infranet's billing and payment system is a controlled release for major account investments in IT to create customer value . customers . Full release is expected in the designed for flexibility . Billing cycles Cap Gemini will work directly with ISPs June/July timeframe. can be any multiple of a month and can and telecommunications service provid- begin on any day of the month. Accounts ers to fully utilize the capabilities of the are always accurately closed at the exact Internet Usage Billing Solution and pro- end of the billing period regardless of vide customized integration with legacy how long it takes to run billing. Infranet systems. supports multiple currencies and payment in real time (through an interface to FirstUSA PaymentTech credit card processing) or by invoice .

Contact Information Hewlett-Packard Vikash Varma, Business Development Manager, Internet Infrastructure Operation . Ph: (408) 447-3866 Cisco Systems For networking solutions from Cisco Systems, please visit our Web site at www .cisco .com For sales assistance or product information in the U .S. please call (800) 553-6387 Portal Software, Inc . Ph: 408-343-4400 Fax: 408-343-440 1 Cap Gemini Telecom & Media For more information please call Kathleen Nemetz in Paris at 33 1 47 54 52 00, or Parry Snow in Denver at 1 303 796 4109, or send an email to telecominfo@capgemini .fr.

The information contained in this document is subject to change without notic e ® Hewlett-Packard Co., 1998 . All rights reserved . Reproduction, adaption, or translation without prior permission is prohibited except as allowed under the copyright laws . All trademarks and registered trademarks are the property of their respective owners . Printed in the USA 4/98 Part Number 5967-5903E