Case 4:05-cv-02146-SBA Document 57 Filed 07/10/2006 Page 1 of 4

1 DOUGLAS J. CLARK, State Bar No. 171499 ([email protected]) IGNACIO E. SALCEDA, State Bar No. 164017 ([email protected]) 2 KYLE A. WOMBOLT, State Bar No. 224603 ([email protected]) REGINALD S. THOMPSON, State Bar No. 237887 ([email protected]) 3 WILSON SONSINI GOODRICH & ROSATI Professional Corporation 4 650 Page Mill Road Palo Alto, CA 94304-1050 5 Telephone: (650) 493-9300 Facsimile: (650) 565-5100 6 Attorneys for Defendants 7 TIBCO SOFTWARE INC., VIVEK Y. RANADIVÉ, CHRISTOPHER 8 G. O’MEARA, SYDNEY CAREY and RAJESH U. MASHRUWALA 9

10 UNITED STATES DISTRICT COURT 11 NORTHERN DISTRICT OF CALIFORNIA 12 OAKLAND DIVISION 13

14 In re TIBCO SOFTWARE, INC. SECURITIES ) Master File No. C 05-02146 SBA LITIGATION ) 15 ) CLASS ACTION ______) 16 ) DECLARATION OF REGINALD S. This Document Relates To: ) THOMPSON IN SUPPORT OF 17 ) DEFENDANTS’ MOTION TO All Actions ) DISMISS SECOND CONSOLIDATED 18 ) AMENDED COMPLAINT ) 19 ) Date: September 19, 2006 ) Time: 1:00 p.m. 20 ) Place: Courtroom 3 ) Judge: Hon. Saundra B. Armstrong 21 )

22 23 24 25 26 27 28 DECL. OF THOMPSON ISO DEFS’ MOTION TO C:\NrPortbl\PALIB1\RL2\2912124_1.DOC DISMISS SECOND CONSOLIDATED AM. COMPLAINT NO. C 05-02146 SBA

Case 4:05-cv-02146-SBA Document 57 Filed 07/10/2006 Page 2 of 4

1 I, Reginald S. Thompson, declare as follows: 2 I am an attorney associated with the law firm of Wilson Sonsini Goodrich & Rosati, 3 Professional Corporation, attorneys for defendants TIBCO Software Inc. (“TIBCO”), Vivek Y. 4 Ranadivé, Christopher G. O’Meara, Sydney Carey and Rajesh U. Mashruwala (collectively 5 “Defendants”). I am admitted to practice before the courts of the State of California and before 6 this Court. I submit this declaration in support of Defendants’ Motion to Dismiss Second 7 Consolidated Amended Complaint and Defendants’ Request for Judicial Notice, filed 8 concurrently herewith. I have personal knowledge of the facts set forth in this declaration and 9 can testify competently to those facts. 10 PUBLIC FILINGS WITH THE SECURITIES & EXCHANGE COMMISSION (“SEC”). 11 1. A true and correct copy of excerpts from TIBCO’s Form 10-K for 2005, filed 12 with the SEC on February 10, 2006, is attached hereto as Exhibit A. 13 2. A true and correct copy of the order in In re Applied Signal Technology, Inc. Sec. 14 Litig., No. C-05-1027 (N.D. Cal. Feb. 8, 2006), is attached hereto as Exhibit B. 15 3. A true and correct copy of a Form 8-K and attached press release, filed by TIBCO 16 with the SEC on March 24, 2005, is attached hereto as Exhibit C. 17 4. A true and correct copy of a Form 8-K and attached press release, filed by TIBCO 18 with the SEC on October 17, 2005, is attached hereto as Exhibit D. 19 5. A true and correct copy of a Form 8-K and attached press release, filed by TIBCO 20 with the SEC on April 23, 2004, is attached hereto as Exhibit E. 21 6. A true and correct copy of a Form 8-K and attached press release, filed by TIBCO 22 with the SEC on June 17, 2004, is attached hereto as Exhibit F. 23 7. A true and correct copy of excerpts from TIBCO’s Form 10-Q for the quarter 24 ended May 30, 2004, filed with the SEC on July 7, 2004, is attached hereto as Exhibit G. 25 8. A true and correct copy of a Form 8-K and attached press release, filed by TIBCO 26 with the SEC on September 21, 2004, is attached hereto as Exhibit H. 27 9. A true and correct copy of excerpts from TIBCO’s Form 10-Q for the quarter 28 ended August 29, 2004, filed with the SEC on October 13, 2004, is attached hereto as Exhibit I. DECL. OF THOMPSON ISO DEFS’ MOTION TO -1- C:\NrPortbl\PALIB1\RL2\2912124_1.DOC DISMISS SECOND CONSOLIDATED AM. COMPLAINT NO. C 05-02146 SBA Case 4:05-cv-02146-SBA Document 57 Filed 07/10/2006 Page 3 of 4

1 10. A true and correct copy of a Form 8-K and attached press release, filed by TIBCO 2 with the SEC on December 22, 2004, is attached hereto as Exhibit J. 3 11. A true and correct copy of excerpts from TIBCO’s Form 10-K for 2004, filed 4 with the SEC on February 14, 2005, is attached hereto as Exhibit K. 5 12. A true and correct copy of the transcript of TIBCO’s quarterly earnings 6 conference call regarding its results for the quarter and fiscal year ended November 30, 2004 is 7 attached hereto as Exhibit L. 8 13. A true and correct copy of a Form 8-K and attached press release, filed by TIBCO 9 with the SEC on March 1, 2005, is attached hereto as Exhibit M. 10 14. A true and correct copy of the transcript of TIBCO’s quarterly earnings 11 conference call regarding its preliminary results for the quarter ended February 27, 2005 is 12 attached hereto as Exhibit N. 13 15. A true and correct copy of excerpts from an article by Daniel A. Bens et al. 14 entitled “Employee Stock Options, EPS Dilution, and Stock Repurchases,” Journal of 15 Accounting & Economics, Vol. 36, No. 1-3, pp. 51-90, December 2003, is attached hereto as 16 Exhibit O. 17 I declare under penalty of perjury that the foregoing is true and correct. Executed in Palo 18 Alto, California on July 10, 2006. 19 /s/ Reginald S. Thompson 20 Reginald S. Thompson 21 22 23 24 25 26 27 28 DECL. OF THOMPSON ISO DEFS’ MOTION TO -2- C:\NrPortbl\PALIB1\RL2\2912124_1.DOC DISMISS SECOND CONSOLIDATED AM. COMPLAINT NO. C 05-02146 SBA Case 4:05-cv-02146-SBA Document 57 Filed 07/10/2006 Page 4 of 4

1 I, Ignacio E. Salceda, am the ECF User whose identification and password are being used 2 to file this Declaration of Reginald S. Thompson in Support of Defendants’ Motion To Dismiss 3 Second Consolidated Amended Complaint. In compliance with General Order 45.X.B, I hereby 4 attest that Reginald S. Thompson has concurred in this filing. 5 6 Dated: July 10, 2006 WILSON SONSINI GOODRICH & ROSATI Professional Corporation 7

8 By: /s/ Ignacio E. Salceda 9 Ignacio E. Salceda

10 Attorneys for Defendants TIBCO SOFTWARE INC., VIVEK Y. 11 RANADIVÉ, CHRISTOPHER G. O’MEARA, SYDNEY CAREY and RAJESH U. 12 MASHRUWALA 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DECL. OF THOMPSON ISO DEFS’ MOTION TO -3- C:\NrPortbl\PALIB1\RL2\2912124_1.DOC DISMISS SECOND CONSOLIDATED AM. COMPLAINT NO. C 05-02146 SBA EXHIBIT A

Table of Contents

PART I

ITEM 1. BUSINESS 3

PART I

ITEM 1 . BUSINES S ITEM 1A. RISK FACTOR S ITEM 2. PROPERTIE S ITEM 3. LEGAL PROCEEDING S

PART I I

ITEM 5. MARKET FOR REGIS TRANT S COMMON EQUITY. RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF E ITEM 6. SELECTED FINANCIAL DATA ITEM 7. MANAGEMENT S DISC USSION AND ANALYSIS OF FINANCIAL CONDITIO N AND RESULTS OF OP ERATIONS ITEM 7A . QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RIS K ITEM 8. FINANCIAL STATEM ENTS AND SUPPLEMENTARY DATA ITEM 9A . CONTROLS AND PROCEDURE S

PART II I

ITEM 10 . DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ITEM 11 . EXECUTIVE COMPENSATIO N ITEM 12 . SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AN D MANAGEMENT ITEM 13. CERTAIN RELATION SHIPS AND RELATED TRANSACTION S ITEM 14. PRINCIPAL ACCOUN TING FEES AND SERVICE S

PART IV

ITEM 15 . EXHIBITS AND FINA NCIAL STATEMENT SCHEDULE S SIGNATURES EXHIBIT INDEX EX-3.2 (By-laws)

EX-10 .19 (Material contracts )

EX-21 .1 (Subsidiaries of the re 'sl tg rant)

EX-23 .1 (Consents of experts and counsel)

EX-31 .1 EX-31 .2

EX-32 .1 Table of Contents

SECURITIES AND EXCHANGE COMMISSIO N Washington, D.C . 2054 9

FORM 10- K (Mark One)

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

For the fiscal year ended November 30, 2005

❑ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 193 4

For the transition period from to Commission File Number : 000-26579

TIBCO SOFTWARE INC. (Exact name of registrant as specified in its charter)

Delaware 77-0449727 (State or other jurisdiction of (I.R .S . Employer incorporation or organization ) Identification No.)

3303 Hillview Avenue, Palo Alto, CA 94304 (Address of principal executive offices) (Zip Code) (650) 846-1000 (Registrant 's telephone number , including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act : Common Stock, $0.001 par value per share (Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act . Yes ® No ❑ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act . Yes ❑ No 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 I5 No ❑ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K .

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer . See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one) : Large accelerated filer ® Accelerated filer 0 Non-accelerated filer ❑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) . Yes ❑ N o The aggregate market value of the voting stock held by non-affiliates of the registrant (based upon the closing sale price of such shares on the Nasdaq National Market on May 29, 2005) was approximately $1,078,725,456 . Shares of common stock held by each executive officer and director and by each entity that owns 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates . This determination of affiliate status is not necessarily a conclusive determination for other purposes . As of February 1, 2006, there were 21 1,136,985 shares of the registrant's common stock outstanding .

DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Proxy Statement for the 2006 Annual Meeting of Stockholders to be held on April 6, 2006 are incorporated by reference into Part III of this Annual Report on Form I O-K to the extent stated herein . Table of Contents TIBCO SOFTWARE INC . FORM 10-K For the Fiscal Year Ended November 30, 2005

TABLE OF CONTENTS

Page

PART I

ITEM I . BUSINESS 3

ITEM IA . RISK FACTORS 8

ITEM 2 . PROPERTIES 17

ITEM 3 . 1.._EGAL PROCEEDINGS 1 7 ]'ART 1 1 ITEM 5 . MARKET FOR REGISTRANT'S COMMON EQUITY . RELATED STOCKHOLDER MATTERS AND ISSUER PI RCHASES OF EQUITY SECURITIES 18

ITEM 6 . SELECTED FINANCIAL DATA 20

ITEM 7 . MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL . CONDITION AND RESIUI'T'SOF OPEItATIONS 21 ITEM 7A . OI?ANTITATIVE AND OUALITATIVE Dl C1 .OSl1R 'S AHOI IT MARKET RISK 41

ITEM 8 . FINANCIAL. STATEMENTS AND SUPPLEMENTARY DATA 41 ITEM 9A . CONTROLS AND PROCEDURES 42 PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 43 ITEM 11 . EXECUTIVE COMPENSATION 44

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS VID MANAGEMENT 44 ITEM 13 . CERTAIN RELATIONSHIPS AND RELATED TRANSA( 7IONS 45

ITEM 14 . PRINCIPAL ACOI INTING FEES AND SERVICES 45 PART I V

ITEM 15 . EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 45

SIGNATURES II_1 2 Table of Contents Forward Looking Statement s This report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities . Words such as "projects," "believes," Exchange Act of 1934 . Forward-looking statements relate to expectations concerning matters that are not historical facts "anticipates," "plans," "expects," "intends" and similar words and expressions are intended to identify forward-looking statements . These forward-looking statements include, but are not limited to, statements related to our expected business, results of operations, future financial position, our ability to increase our revenues, the mix of our revenues between license, service and maintenance revenues, our financing plans and capital requirements, our costs of revenue, our expenses, our potential tax benefit or liabilities, the effect of recent accounting pronouncements, our investments, debt service and principal repayment obligations, cash flows and our ability to finance operations from cash flows and similar matters and include statements based on current expectations, estimates, forecasts and projections about the economies and markets in which we operate and our beliefs and assumptions regarding these economies and markets .

These forward-looking statements are based on current expectations and involve known and unknown risks and uncertainties that may cause our actual results, operating performance or achievements to be materially different from those expressed or implied by the forward-looking statements . We believe that the expectations reflected in the forward-looking statements are reasonable but we cannot assure you that those expectations will prove to be correct . Factors that could cause or contribute to such differences include but are not limited to our ability to address new markets and complex technologies by delivering successful, new products on a timely basis, the impact of competitive products and pricing, the success of our strategic relationships, charges for restructuring and option expenses and other costs and other risk factors detailed in this Annual Report on Form 10-K for the fiscal year ended November 30, 2005 and other periodic filings with the Securities and Exchange Commission . All forward-looking statements are expressly qualified in their entirety by these factors and all related cautionary statements . We do not undertake any obligation to update any forward-looking statements .

Trademarks TIBCO, TIBCO Software, the Information Bus and TIBCO BusinessFactor are the trademarks or registered trademarks of TIBCO Software Inc. in the United S tates and other count ries . This report also refers to the trademarks of other companies . PART 1

ITEM 1 . BUSINESS Overview Our suite of business integration, process management and business optimization software solutions makes us a leading enabler of real-time business . We use the term "real-time business" to mean doing business in such a way that organizations can use current information to execute their critical business processes and make smarter decisions . We provide software that enables interoperability between applications and information sources, coordinates processes that span systems and people, and helps companies sense and respond to events and opportunities more quickly and with more certainty and control .

Our software can make corporate assets such as applications and databases more effective and valuable by tying them together with a common framework and coordinating the interactions between them . Our products can lower IT costs by enabling companies to more quickly and easily create, manage and modify these interactions and can snake companies more efficient by automating routine processes to allow their employees to focus their efforts on managing exceptional problems and opportunities . Our products can also give managers and executives the information they need to identify and understand both the strengths and weaknesses of their business and external factors that shape their business, along with the ability to quickly reallocate their assets or adapt their operations to fix a problem or capitalize on an opportunity . Table of Content s Our products are currently licensed by companies worldwide in diverse industries such as financial services, telecommunications, retail, healthcare, manufacturing, energy, transportation, logistics, government and insurance . We sell our products through a direct sales force and through alliances with leading software vendors and systems integrators . To meet our goal of becoming the world's leading provider of business integration and process management software, we are providing our customers with a comprehensive suite of products and services, promoting the widespread adoption of our technology, leveraging our vertical market expertise and pursuing strategic acquisitions to expand and strengthen our offerings . We believe we are the market leader among independent integration software companies . See "-Competition . " We are the successor to a portion of the business of Teknekron Software Systems, Inc . ("Teknekron") . Teknekron was founded in 1985 and was acquired by Reuters Group PLC ("Reuters"), a global information company, in 1994 . In November 1996, we were incorporated in Delaware and in January 1997, we were established as an entity separate from Teknekron .

TIBCO Product s We offer a wide range of products that can be sold individually to solve specific technical challenges, but the emphasis of our product development and sales efforts is to create products that interoperate seamlessly and that can be sold together as a suite to enable businesses to be more cost-effective, agile and efficient . These products can help organizations achieve success in three areas : Service-Oriented Architecture ("SOA"), Business Process Management ("BPM") and Business Optimization .

• SOA : Our software enables organizations to migrate their IT infrastructure to SOA by turning information and functions into discrete and reusable components that can be invoked from across the business and aggregated with other such services to create "composite applications ." This helps companies streamline the integration and orchestration of assets across technological, organizational, and geographical boundaries . Our products give companies the flexibility to do these things using the standards or technologies that best meet their needs in specific situations (such as HTTP, e-mail, J2EE, EDI, Messaging, Net or Web Services) without replacing existing technologies or committing to any one technology across their enterprise. Our SOA offerings encompass our traditional messaging and integration products .

• BPM : Our software enables the automati on and coordination of the assets and tasks that make up business processes . This softw are can coordinate the human and electronic resources inside a business and their network of customers and par tne rs . Our products not only automate rou tine tasks and exception handling, but orchestrate long-lived acti vities and transactions that cut across organizational and geographical boundaries . Our softwa re enables organiza tions to provide a higher level of customer satisfacti on, retain custome rs, maximize partnerships with other businesses, and out-execute their compe ti tors .

• Business Optimization : Our software automatically routes information to appropriate recipients, lets users access up-to-date information whenever they need it, and provides users with the ability to analyze and act on information . This helps line-level employees perform their jobs, helps managers identify and analyze problems and opportunities, and gives customers the ability to get accurate and consistent information directly or through salespeople, service personnel or customer care representatives .

Services Professional Services Our professional services offerings include a wide range of consulting services such as systems plan ning and design, installation and systems integrati on for the rapid deployment of TIBCO products . We offer our professional services with the initial deployment of our products as well as on an ongoing basis to address the Table of Content s which could effectively block our ability to sell our products in the United States or abroad . Such a judgment could seriously harm our business . If it appears necessary or desirable, we may seek licenses to intellectual property if we believe that our technology potentially infringes on such intellectual property. We may not, however, be able to obtain such licenses on commercially reasonable terms or at all, and the terms of any offered licenses might not be acceptable to us . The failure to obtain necessary licenses or other rights could seriously harm our business .

Employees As of November 30, 2005, we employed 1,505 persons, including 437 in sales and marketing, 422 in research and development, 191 in finance and administration and 455 in professional services and technical support . Of our 1,505 employees, 380 were located in Europe and Africa, 245 in the Pacific Rim is intense in the and 880 in the Americas . Our success is highly dependent on our ability to attract and retain qualified employees . Competition for employees software industry . To date, we believe we have been successful in our efforts to recruit qualified employees, but there is no assurance that we will continue to be as successful in the future .

Available Informatio n We are subject to the informational requirements of the Securities Exchange Act of 1934 . Therefore, we file periodic reports, proxy statements and other information with the Securities and Exchange Commission ("SEC") . Such reports, proxy statements and other information may be obtained by visiting the Public Reference Room of the SEC at 450 Fifth Street, NW, Washington, DC 20549 or by calling the SEC at 1-800-SEC-0330 . In addition, the SEC maintains an Internet site (http://www .sec .gov) that contains reports, proxy statements and other information required that issuers file electronically .

Our principal internet address is www .tibco.com . We make available free of charge on www .tibco .com our annual reports on Form 10-K, our quarterly reports on Form IO-Q, our current reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC . Information contained or referenced on our website is not incorporated by reference in and does not form a part of this Annual Report on Form 10-K .

ITEM 1A. RISK FACTORS The following risk, factors could materially and adversely affect our future operating results and could cause actual events to differ materially from those predicted in the forward-looking statements we make about our business.

Our future revenue is unpredictable and we expect our quarterly operating results to fl uctuate , which may cause our stock price to decline. Period-to-period comparisons of our operating results may not be a good indication of our future performance . Moreover, our operating results in some quarters have not in the past, and may not in the future, meet the expectations of stock market analysts and investors . This has in the past and may in the future cause our stock price to decline. As a result of the evolving nature of the markets in which we compete and the size of our customer agreements, we have difficulty accurately forecasting our revenue in any given period . In addition to the factors discussed elsewhere in this section, a number of factors may cause our revenue to fall short of our expectations, or those of stock market analysts and investors, or cause fluctuations in our operating results, including:

• the announcement or introduction of new or enhanced products or services by our competitors ;

• the relatively long sales cycles for many of our products ;

• the tendency of some of our customers to wait until the end of a fiscal quarter or our fiscal year in the hope of obtaining more favorable terms ; Table of Content s

ITEM 6 . SELECTED FINANCIAL DATA The selected consolidated financial data below have been derived from our audited financial statements . The following table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our Consolidated Financial Statements and notes thereto included elsewhere in this annual report on Form 10-K. The historical results presented below are not indicative of any fu' ture results .

Year Ended November 30,

2005 2004 2003 2002 2001

(in thousands, except per share amounts) Statement of Operations : Revenue $ 445,910 $ 387,220 $264,210 $273,393 $322,09 1 Cost of revenue 124,193 93,197 63,485 65,672 71,012

Gross profit 321,717 294, 023 200,725 207,721 251,079 Operating expenses 263.643 223,273 198,249 294,403 305,83 0

Income (loss) from operations 58,074 70,750 2,476 (86,682) (54,751 ) Interest and other income, net 11,718 5,736 16,212- 16,264 31,040 Interest expense (2,711) (2,771) (1,205) - -

Income (loss) before income taxes 67,081 73,715 17 ,483 (70,418) (23,711 ) Provision for (benefit from) income taxes (5,474) 28,795 6,043 24, 162 (10,469 )

Net income (loss) $ 72,555 $ 44,920 $ 11,440 $(94,580) $(13,242 )

Total stock based compensation included in cost of revenue and operating expenses $ 129 $ 243 S 1,063 $ 4,050 $ 26,965

Net income (loss) per share-Basic $ 0.34 $ 0.22 $ 0 .05 $ (0.46) $ (0.07 )

Net income (loss) per share-Diluted $ 0.32 $ 0.20 $ 0 .05 $ (0.46) $ (0.07 )

Shares used to compute net income (loss) per share-Basic 213,263 207,506 211,555 205,821 195,00 1

Shares used to compute net income (loss) per share-Dilute d 223,977 220,927 221,519 205,821 195,00 1

As of November 30,

2005 2004 2003 2002 200 1

(In thousands) Balance Sheet Data: Cash, cash equivalents and short-term investments $ 477,638 $ 473,535 $604,669 $637,853 $677,340 Working capital 458,685 439,090 549,719 563, 732 638,803 Total assets 1,122,424 1,082,811 943 , 259 894, 588 892,127 Long-term debt 50,143 51 ,851 53,477 - - Stockholders' equity 873 .619 820,482 762,794 744,727 771,279.

20 Table of Contents Total Revenue

Year Ended November 30, % Chang e

Year 2004 Year 2003 2005 2004 2003 to 2005 to 2004

(in thousands, except percentages ) Total revenue $445,910 $387,220 $264,210 15% 47%

Total revenue increased 15% for fiscal year 2005 compared to fiscal year 2004, primarily due to a 40% increase in service and maintenance revenue, offset by a 5% decrease in license revenue . Geographically, our total revenue increased by $35 .0 million or 18% in the United States, $16 .2 million or 11% in Europe and $5 .5 million or 13% in the Pacific Rim in fiscal year 2005 . See Note 13 to the Consolidated Financial Statements for further detail on total revenue by region .

Since June 2004, our consolidated results of operations have included incremental revenue (and costs) related to the former Staffware operations . Consequently, such incremental revenue has been included in our results for the second half of fiscal year 2004 and fiscal year 2005 . Pro forma results as if we had acquired Staffware at the beginning of fiscal year 2003 are provided in Note 3 to our Consolidated Financial Statement . Due to the structure of our multi-product Enterprise License Agreements, which often combine TIBCO and Staffware products, we are not able to separately report the portion of revenue attributable solely to the Staffware components .

Total revenue increased 47% for fiscal ye ar 2004 compared to fiscal year 2003, primarily due to incremental revenue from Staffware during fiscal year 2004, our direct sales to customers in the financial services market beginning in October 2003 (pursuant to our agreement with Reuters) and a general increase in information technology spending by our customers .

Revenue from Reuters was $23 .0 million, $28.3 million and $30 .7 million representing 5%, 7% and 12% of our total revenue in fiscal years 2005, 2004 and 2003, respectively . Until March 2005, our revenue from Reuters consisted primarily of fees under our license agreement, which includes minimum guaranteed fees of $5.0 million per quarter, reduced by an amount equal to 10% of the license and maintenance revenues from our sales to financial services companies (and, until October 2004, also reduced by 40% of our maintenance revenue from customers who were transitioned to us by Reuters) .

License Revenue and Costs

Year Ended November 30, % Change

Year 20 04 Year 2003 2005 2004 2003 to 2005 to 2004

(so thousands, except percentages ) License revenue $203,888 $214,086 $140,509 (5)% 52% As a percentage of total revenue 46% 55% 53 % Cost of license revenue $ 12,694 $ 11,586 $ 8,835 10% 31 % As a percentage of total revenue 3% 3% 3% As a percentage of license revenue 6% 5% 6%

We license a wide range of products to customers in various industries and geographic regions . Cost of license revenue mainly consisted of royalties and amortization of developed technology acquired through corporate acquisitions .

License revenue decreased by $10.2 million or 5% for fiscal year 2005 compared to fiscal year 2004, primarily due to a decrease in revenue from the telecommunications, consumer packaged goods and manufacturing sectors, partially offset by an increase in license revenue from the financial services market. License revenue increased 52% for fiscal year 2004 compared to fiscal year 2003, primarily due to increased re venue fro m the financial services , consumer packaged goods, telecommunications and manufacturing sectors, and also due to additional revenue generated from the Staffware acquisition. 29 EXHIBIT B 1

2 IN THE UNITED STATES DISTRICT COURT 3 FOR THE NORTHERN DISTRICT OF CALIFORNI A 4

5 In re APPLIED SIGNAL TECHNOLOGY, Master File No. C 05-1027 SBA 6 INC. SECURITIES LITIGATION CLASS ACTION 7 ORDER 8 [Docket Nos. 25, 35, 36] 9 This Document Relates To: All Actions . 10

11

U w 12

U 13 o This matter comes before the Court on the Motion to Dismiss Plaintiffs Consolidated Amended 14 A ~ . 35] filed by Defendants W Q Class Action Complaint (the "Consolidated Amended Complaint") [DocketNo ,4a 0 15 C% t 0 Applied Signal Technology, Inc ., Gary Yancey, and James Doyle (collectively "Defendants") and Z 16 Plaintiffs Motion for Class Certification [Docket No . 25] . Having read and considered the papers W 17 b presented by the parties, the Court finds this matter appropriate for disposition without a hearing. The 18 Court hereby GRANTS Defendants' Motion to Dismiss [Docket No. 35] and DISMISSES Plaintiffs 19 Consolidated Amended Class Action Complaint WITH PREJUDICE . Accordingly, the Court DENIES 20 Plaintiffs Motion for Class Certification [Docket No . 25] AS MOOT. 21 BACKGROUND 22 A. Background Regarding the Parties 23 1 . Applied Signal Technology, Inc. 24 Defendant Applied Signal Technology, Inc . ("Applied Signal" or the "Company") is a California 25 corporation and a publicly traded company with over 11 million shares of stock outstanding . CAC' at 26 ¶ 15. The Company's financial year is not concurrent with the calendar year . Instead, it ends on the las t 27

28 'The Consolidated Amended Complaint is referred to herein as "CAC." 1 day of October of each calendar year and commences on the first day of November for that calendar

2 year. See Harris-Sutton Decl. at Ex. H (FY04 Form 10-K).2

3 Applied Signal 's corporate headquarters are located in Sunnyvale, California. CAC at 117, 23-

4 24; Harris-Sutton Decl . at Ex. H. The Company also maintains engineering offices in Annapolis

5 Junction, Maryland; Salt Lake City, Utah ; Herndon, Virginia; and Hillsboro, Oregon. Harris-Sutton

6 Decl. at Ex . H. As of January 24, 2004, the Company had 425 employees . CAC at IN 27, 38(a). This

7 number increased to 450 in February 2004, and to 480 employees in May 2004 . Id. As of December

8 17, 2004, the Company had a total of 498 employees . Harris-Sutton Decl . at Ex. H. Of these 498

9 employees, 290 employees worked within the Company's engineering organizations . Id.

10 Applied Signal is in the business of supplying various United States government agencies with t 11 customized communications signal processing systems, which it designs, develops, and installs . CAC

U o 12 at ¶ 27. Since 1984, the United States government and various governmental agencies have accounted

U 13 for almost all of the Company's revenues . Id. Although the government agencies are the Company's 0 rA e As 14 primary customer, purchases occur in two ways : (1) contracts directly with the government, and (2) y O E 15 subcontracts to prime contractors . See Hams-Sutton Decl . at Ex. H. Within the Company's primary

16 customer agencies, the Company has contracts with approximately twenty different offices, each with P 0 17 separate budgets and contracting authority . Id. 'c 18 In the past two fiscal years, just under three quarters of the Company's contracts were "cos t

1 9 reimbursement " contracts, including contracts for the design, installation, and/or servicing ofcustomized

20 products. CAC at ¶ 25 . Under these contracts, the Company is reimbursed for direct and indirect costs

21 and paid a negotiated profit. Id. However, the Company is not entitled to payment until after its

22 employees provide the services delineated in the con tract. Id. Further, mostof the Company 's contracts

23 contain a provision that allows the Company's customers to force Applied Signal to stop work on all or 24

25 2For example, for fiscal year 2004, the first quarter consisted of the months of November 2003, December 2003, and January 2004 ; the second quarter consisted ofthe months of February 2004, March 26 2004, and April 2004 ; the third quarter consisted of the months of May 2004, June 2004, and July 2004 ; and the fourth quarter consisted of the months of August 2004, September 2004, and October 2004 . 27

28 2 any part of a contract at any time through what is referred to as a "stop -work order" ("SWO"). Id.

2 The federal regulations governing stop-work orders further describe the applicable process a s

3 II thus:

4 (a) The Contracting Officer may, at any time, by written order to the Contractor, require the Contractor to stop all, or any part, of the work 5 called for by this contract for a period of [up to]' 90 days after the order is delivered to the Contractor, and for any further period to which the 6 parties may agree . The order shall be specifically identified as a stop-work order issued under this clause . Upon receipt of the order, the 7 Contractor shall immediately comply with its terms and take all reasonable steps to minimize the incurrence of costs allocable to the 8 work covered by the order during. the period of work stoppage. Within a period of 90 days after a stop-work order is delivered to the 9 Contractor, or within any extension of that period to which the parties shall have agreed, the Contracting Officer shall either - 10 (1) Cancel the stop-work order; or 11 0 (2) Terminate the work covered by the order as provided in E 12 the Default, or the Termination for Convenience of the Government, clause of this contract. u 13 0 (b) If a stop-work order issued under this clause is canceled or the period .5 . :n 14 of the order or any extension thereof expires, the Contractor shall resume work. The Contracting Officer shall make an equitable 15 adjustment in the delivery schedule or contract price, or both, and the z contract shall be modified, in writing, accordingly, if - u 16 Vas (1) The stop-work order results in an increase in the time 17 required for, or in the Contractor's cost properly allocable to, the performance of any part of this 18 contract; and

19 (2) The Contractor asserts its right to the adjustment within 30 days after the end of the period of work stoppage; 20 provided, that, if the Contracting Officer decides the facts justify the action, the Contracting Officer may 21 receive and act upon a proposal submitted at any time before final payment under this contract. 22 (c) If a stop-work order is not canceled and the work covered by the order 23 is terminated for the convenience of the Government, the Contracting Officer shall allow reasonable costs resulting from the stop-work order 24 in arriving at the termination settlement. 25

26 'Revisions to the regulations provide that the 90-day period maybe reduced to less th an 90 days. 27 See 48 C.F.R. 52 .242-15 . 28 3 (d) If a stop-work order is not canceled and the work covered by the order is terminated for default, the Contracting officer shall allow, by 2 equitable adjustment or otherwise, reasonable costs resulting from the stop-work order . 3 41 48 C.F.R. 52 .242-15 . Thus, when a SWO is issued, it is possible, but not necessarily definite, that future

revenues may be affected . Id. ; CAC at 126 .

6 As such, the Company does not recognize revenue on its cost-reimbursement contracts unti l

7 costs - including labor, materials, and other direct costs and estimated direct costs - are incurred . CAC

8 at ¶ 26 . The Company refers to future revenues relating to uncompleted portions of existing contracts

9 as its "backlog." Id. The Company's backlog is discussed in Company press releases, conference calls,

10 and formal Securities Exchange Commission ("SEC") filings . Id. However, in each of the Company's i 11 public filings, with respect to future revenues, and other contingent events, the investing public is

U 12 expressly warned that any statements regarding future events are "not guarantees of future performance 13 and are subject to certain risks ." See Harris-Sutton Decl . at Ex. A (FY03 Form 10-K). For example, rA H 14 the Form 10-K for Fiscal Year 2003 states the following :

15 This Annual Report on Form 10-K contains forward -looking statements made pursuant to the provisions of Section 21E of the Securities Exchange Act of Z co 16 1934. These forward-looking statements are based on management's current as expectations and beliefs, including estimates and projections about our 17 industry. Forward-looking statements may be identified by the use of terms such as "anticipates," "expects," "intends," "plans," "seeks," "estimates," 18 "believes," and similar expressions, although some forward-looking statements are expressed differently . Statements concerning financial position, business 19 strategy and plans or objectives for future operations are forward-looking statements. These statements are not guarantees of future performance and 20 are subject to certain risks , uncertainties, and assumptions that are difficult to predict and may cause actual results to differ materially from 21 management 's current expectations . Such risks and uncertainties include those set forth herein under "Summary of Business Considerations and Certain 22 Factors that May Affect Future Operating Results and/or Stock Price" and "Management's Discussion and Analysis of Financial Condition and Results 23 of Operations." The forward-looking statements in this report speak only as of the time they are made and do not necessarily reflect management's outlook at 24 any other point in time. We undertake no obligation to update publicly any forward-looking statements , whether as a result of new information , future 25 events, or for any other reason. However, readers should carefully review the risk factors set forth in other reports or documents we file from time 26 to time with the Securities and Exchange Commission (SEC) after the date of the Annual Report. These SEC filings, as well as our latest annual report, can 27

28 4 be obtained through our website at www .appsig.com. In addition, hard copies can be obtained free of charge through our investor relations department . 2

3 Id. (emphasis added) .

4 Further, the Company provides the following explanation regarding its backlog to the investing

5 public:

6 Our backlog . . . consists of anticipated revenues from the uncompleted portions of existing contracts[ .] . . . Anticipated revenues included in backlog 7 may be realized over a multi-year period . We include a contract in backlog when the contract is signed by us and by our customer . We believe the backlog 8 figures are firm, subject only to the cancellation and modification provisions contained in our contracts . (See Item 7: "Management's Discussion and 9 Analysis of Financial Condition and Results of Operations-Backlog .") Because of possible future changes in delivery schedules and cancellations of 10 orders, backlog at any particular date is not necessar ily representative of actual-sales to be expected for any succeeding period, and actual sales for 11 the year may not meet or exceed the backlog represented . We may experience significant contract cancellations that were previously booked o ., 12 and included in backlog . .' U 13 0 Id. (emphasis added) . U 14 A~ 2. The Individual Defendants E 15 At all times relevant to this action, defendant Gary Yancey ("Yancey") was the Chairman, PC 16 President, and Chief Executive Officer ("CEO") of Applied Signal . CAC at ¶ 8 . As the CEO, Yancey 17 signed and certified all SEC quarterly and annual reports . Id. Additionally, he owned shares of the 18 Company's stock ; although, during the period between January 3, 2005 and January 18, 2005, he sold 19 over forty percent of his holdings. Id. Also during this period of time, defendant James Doyle 20 ("Doyle") was the Company's Chief Financial Officer ("CFO") and Vice President of Finance . Id. at 21 ¶ 9. As the CFO, Doyle participated in quarterly earnings report conference calls for the quarters ending 22 in July and October 2004 and January and April 2005 . Id. Doyle also signed and certified all SEC 23 quarterly and annual reports . Id. 24 3. Plaintiffs 25 Lead Plaintiff Frank Whiting ("Plaintiff'), is a common stock purchaser who purchased share s 26 of Applied Signal during the relevant time period, August 24, 2004 and February 22, 2005 (the "Clas s 27

28 5 Period"). CAC at 116, 14. The other members of the proposed class are persons or entities - other than

2 the Company, its officers, directors, employees, affiliates, legal representatives, heirs, predecessors,

3 successors and assigns, and any entity in which the Company has a controlling interest or of which the

4 Company is a parent or subsidiary - who purchased Applied Signal common stock during the Class

5 Period. Id. at 114.

6 B. Background Regarding the Confidential Witnesse s

The allegations contained in the Consolidated Amended Complaint are based, in part, on certain

information obtained from the following Confidential Witnesses :

(a) Confidential Witness No. 1 . Confidential Witness No . 1 ("CW V) was employed as a software engineer during the beginning of the Class Period up until November, 2004 . 10 Id. at ¶ 22(a). He worked in Applied Signal's Annapolis Junction, Maryland Office . Id. His duties included system and process design,. implementation, testing, life cycle 11 documentation, design and code review, team tasking, and scheduling . Id. Ca 0 12 (b) Confidential Witness No. 2. Confidential Witness No. 2 ("CW2") was employed as a m software engineer in Applied Signal's Maryland office until some months before the U 13 beginning of the Class Period . Id. at ¶ 22(b). 0 E 14 (c) Confidential Witness No. 3. Confidential Witness No. 3 ("CW3") was employed as a M 0 software engineer at Applied Signal's Utah office from well before the Class Period until E 15 January 2005 . Id at ¶ 22(c) . CW3's duties included the design and implementation of software. z 16 sd 0 (d) Confidential Witness No. 4. Confidential Witness No. 4 ("CW4") was employed as a 17 technical editor at Applied Signal's Sunnyvale office from before the beginning of the C Class Period until November 2004 . Id at ¶ 22(d). He was responsible for editing and 18 proofreading technical manuals, proposals, presentations, brochures, newsletters, and other technical and marketing material . Id. He was also responsible for creating 19 processes and flowcharts for the Finance Department in accordance with Sarbanes-Oxley requirements. Id. 20

21 C. The Factual Allegation s

22 This action is premised on Plaintiffs theory that Applied Signal and two of its individua l

23 officers, Yancey and Doyle, (collectively, "Defendants"), knowingly issued a series of false and

24 misleading statements regarding Applied Signal in order to artificially inflate Applied Signal's stock

25 price throughout the Class Period. In particular, the Consolidated Amended Complaint is premised on

26 certain representations Defendants made regarding the Company's "backlog" and certain SWOs that 27

28 were purportedly received by the Company during the relevant period .' The Consolidated Amended

2 Complaint is also premised on certain statements made by the Company concerning the hiring of

3 personnel . The pertinent facts are set forth below.

4 1. The Third Quarter of Fiscal Year 200 4

5 Applied Signal's third quarter for fiscal year 2004 ("FY04") commenced on May 1, 2004 .

6 During that quarter, at some point in June 2004, Applied Signal received a stop-work order ("SWO1 "),

7 which instructed the Company to stop work on a portion of the Company's largest single contract. CAC

8 at ¶ 29(a). In accordance with the instructions provided by the customer, the Company prepared a

9 proposal that detailed the tasks that were stopped and estimated the reduction in contract costs . Id.

10 Also in June 2004 or possibly in May 2004, according to CW1, the Wireless Communications i 1 1 System Division of Applied Signal received another stop-work order ("SWO2") on a project for the

U o 12 United States military that was referred to as "Cowbird." Id. at 130. CW 1 knew about SWO2 because

U 13 it required employees at the Company's Maryland facility, where he worked, to stop performing services o 14 for the government agency related to the contract . Id. at ¶¶ 22(a), 30(b) . According to CW2, who 15 worked at Applied Signal up until a few months before August 2004, the contract implicated by SWO2

II 16 Id. at ¶¶ 22(b), 30(b). was worth about $8 million . fi 17 On August 24, 2004, Applied Signal issued a press release and hosted a conference call ("August

1 8 1 Conference Call") to discuss financial results for the third quarter of FY04 . CAC at ¶ 28 . Yancey and

19 Doyle represented the Company during the August Conference Call. Id. In the course of that call,

20 Doyle reported that the Company's backlog was approximately $111 million .' Id.

21 Additionally, in the August 24, 2004 press release ("August 2004 Press Release"), Yancey was 22 quoted as saying that he was "pleased" that Applied Signal had "met the challenge" of meeting

23 "aggressive hiring requirements ." Id. at ¶ 39. During the August Conference Call, he also stated that 24

25 4Specifically, the following four SWOs are relevant to the inst ant discussion: (1) a June 2004 SWO ("SWO1"), (2) a May or June 2004 SWO ("SWO2"), ( 3) an August or September 2004 SWO 26 ("SWO3"), and (4) a December 2004 SWO ("SWO4") . CAC at IN 29, 30, 35 .

27 'Defendants did not discuss SWO1 or SWO2 during the call. CAC at ¶ 29 .

28 7 1 the Company had "been able to stay up with a fairly aggressive growth requirement, and in particular,

2 hiring of staff and staff that we can get cleared . . . ." Id at ¶ 39. In response to an inquiry from an

3 analyst regarding the amount of engineers that had been added during the third quarter, Doyle stated that

4 they had hired about 100 people "year-to-date" and approximately 30 people during the third quarter.

5 Id. Yancey then stated that the number for the quarter might be lower - possibly as low as twenty - but

6 that analysts could "go ahead and use 30 . . . and kind of assume we've been close to linear in our

7 increase." Id.

8 On September 9, 2004, Defendants filed a Form 10-Q ("Third QuarterForm 10-Q") with th e

9 SEC, which reported the $ 111 million backlog amount that was disclosed during the August 2004

10 1 Conference Call. Id. at ¶ 29(a). The Third Quarter Form 10-Q also reported that the Company had hi 1 1 received SWO1 and that, pursuant to SWO 1, the Company was instructed to stop work on a portion of

V w 12 its largest single contract . Id. Additionally, the report stated that "new orders and backlog [were] 13 'i. U expected to be reduced by approximately $11 to $13 million " after the completion of negotiations 0 14 relating to SW01 and that the Company "anticipate[d] the completion of these negotiations du ring the

15 first or second quarter of fiscal 2005.i6 Id. CE Z z 16 2. The Fourth Quarter of Fiscal Year 2004 and Disclosures Concerning the Third as o Quarter of Fiscal Year 2004 17 According to CW3, who was employed as a software engineer at Applied Signal's Utah office 18 at the time, the Company also received another stop-work order ("SWO3") in August or September 19 2004. Id. at ¶¶ 22(c), 35(b) . SWO3 was purportedly related to a contract with one of the Company's 20 largest customers that was worth more than $20 million . Id. at ¶¶ 35(b) . CW3 was aware of SWO3 21 because he had been working on the project, which was known as "Excelsior." Id. at ¶ 35(b). SWO3 22 affected the Multichannel Systems Division ("MSD") at the Utah facility, as well as the MSD group in 23 the Company's Sunnyvale, California facility . Id. At the Sunnyvale facility, approximately 50 to 75 24 workers were involved in the project. Id. CW4, who was employed as a technical editor at Applie d 25

26 'The Third Quarter Form 10-Q did not mention SWO2. CAC at ¶ 30. In fact, to date, SWO2 has 27 not been mentioned in any Company public filings. Id. at ¶ 32. 28 8 1 Signal's Sunnyvale office during August and September 2004, was aware of SW03 . Id. at ¶¶ 22(d),

2 35(b). According to CW3, after the Company received SW03, work on "Excelsior" stopped for

3 approximately one week. Id at ¶ 43. The MSD project then resumed working on the project for the

4 remainder of the calendar year. Id. The project was abandoned in January 2005, leaving the Sunnyval e 5 office a "ghost town." Id.

6 On September 13, 2004, following the issuance of the Third Quarter Form 10-Q, a securitie s e 7 I analyst covering Applied Signal's stock informed investors that he was changing the rating of th 8 Company's stock from "buy" to "neutral." Id. at 13 1 . The price of Applied Signal's stock dropped from

9 $37 .64, when the market opened, to $31 .78 at the close of market on September 15, 2004 . Id.

10 3. The First Quarter of Fiscal Year 2005 and Disclosures Regarding Fiscal Year 2004

Li 11 According to CW3, the software engineer who worked in the Company's Utah office during thi s . at ¶¶ 22(c), 35(c) . U 12 time, the Company also received a stop-work order in December 2004 ("SWO4") . Id 40- 13 other large contracts with Applied Signal in . oU SW04 involved a government agency that had cancelled 14 the past. Id. at ¶ 35(c) .

y Q 15 On December 21, 2004, Applied Signal issued a press release (the December 2004 Press

Z 16 Release") and hosted a conference call ("December 2004 Conference Call") to discuss financial results POW o 17 for the fourth quarter of FY04 . CAC at ¶ 33 . Yancey and Doyle represented the Company during the r;D 18 December Conference Call and reported that the backlog for the fourth quarter was $143 million . Id.

19 The December 2004 Press Release reported that the Company earned 21 cents per share during the

20 fourth quarter of FY04, which was below the analysts ' consensus estimate of 29 cents per share . Id. at

21 ¶ 42. Defendants did not mention SW02, SW03 or SW04 during the call or in the press release. Id.

22 at ¶ 35(a)-(c).

23 Additionally, Doyle reported, during the December 2004 Conference Call, that the Company had

24 added a "net" of 20 employees during the fourth quarter of FY04 . Id. at ¶ 40(a). Doyle then stated that

25 the Company had "about" 500 employees . Id. at ¶ 40(a). According to the Form 10-K for FY04, the

26 exact number was 498 employees . Id. 27

28 9 The December 2004 Press Release also disclosed that revenue had only increased by 3% since

2 the previous quarter. Id. During the December Conference Call, an analyst, Jay Meier ("Meier"), asked

3 whether anything unusual had occurred during the fourth quarter since the Company had not

4 experienced its usual increase in revenues . Id. at ¶ 42 . Doyle and Yancey responded that Meier was

5 reading too much into the numbers and that nothing unusual had occurred . Id. After the December

6 2004 Conference Call, the price of the Company's stock declined from $37 .22 on December 21, 2004

7 to $35.74 at the market's close on December 22, 2004 . Id.

8 Beginning on January 3, 2005, and continuing through January 18, 2005, during an open trading

9 window, Yancey sold 141,400 shares of Company stock, which represented 43% of his total stoc k

10 I holdings, at prices ranging from $31 .40 to $34 per share. Id. at ¶ 48.

11 On January 14, 2005, Defendants filed a its Form 10-K for FY04 . CAC at ¶ 34. The Form 10-K

E 1 2 indicated that the backlog at the end of FY04 was $143 million but that the $143 million could be 13 reduced by $ 11 million to $13 million in future quarters once negotiations relating to SWO 1 concluded. o 14 See Harris-Sutton Decl . at Ex. H. v, u 15 On February 22, 2005, the Company issued a press release (the "February 2005 Press Release") ea ~ Z 16 and hosted a conference call (the "February 2005 Conference Call") concerningthe Company 's financial a~ wo 17 results for the first quarter of•FY05, which ended on January 31, 2005. CAC at ¶ 44. During the

18 February 2005 Conference Call, the Company reported that revenue declined almost 25% from the

19 preceding quarter, with net income and ea rnings per share declining as well . Id. To explain these

20 financial results, Yancey stated :

21 [W]e are a bit behind on execution on our contracts . Part of this is for a bit of healthy reason . We've seen higher-than-anticipated proposal activity in the first 22 quarter, which has diverted some of our labor resources to proposal activity . The other phenomena that we're experiencing is, as we become more an 23 integrating contractor on some of our programs, as we've stated before we are evolving to, we find that invoicing from our subcontractors can have some 24 impact on the revenue. And we saw that some of the invoicing was lagging behind a bit compared to the work that they were putting in . So we feel that we 25 will be back on our track of our projected revenue as we build up our own staff and as the invoicing comes about. 26

27

28 10 See Applied Signal Form 8-K, dated February 22, 2005 at Ex. 99.2.'

2 The Company's stock price subsequently dropped from $27 .52 per share on February 22, 200 5

3 to $23.24 at the close of the market on February 23, 2005. Id. at ¶ 45.

4 D. Procedural Histor y

5 On March 11, 2005, plaintiff Brent Berson ("Berson") filed a complaint in this district on

6 behalf of himself and on behalf of all persons who purchased the securities of Applied Signal

7 between May 25, 2004 and February 22, 2005 (the "Berson complaint"). In the Berson complaint,

81 Berson alleged, inter alia, that Applied Signal and certain of its officers and directors violated

9 Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule I Ob-5

10 promulgated thereunder, and .Section 20(a) of the Exchange Act, by issuing materially false and i 11 misleading statements. 12 Berson complaint was May 25, 2004 through February 22 , U 'E The proposed class period for the

•L U 13 2005 and the complaint was premised on the following allegedly false and misleading statements : (1) i+ o 14 the Company's May 25, 2004 press release concerning the Company's operating results for the second Q Q 15 quarter of FY04; (2) the Company's second quarter FY04 Form 10-Q; (3) the Company's August 24,

z 16 2004 press release concerning the Company's operating results for the third quarter of FY04 ; (4) the PC -B 17 Company's third quarter FY04 Form 10-Q ; (5) the Company's December 12, 2004 press release

18 concerning the Company's operating results for the fourth quarter of FY04 and year-end results for

19 FY04; and (6) the Company's FY04 Form 10-K. In the complaint, Berson alleged that the statements

20 were materially false and misleading because Defendants failed to disclose or indicate the following :

21 (1) that the Company lacked the staffing necessary to execute on current projects while bidding for new

22 business ; and (2) that the Company "struggled to maintain adequate levels of backlog ." The Berson

23 complaint further alleged that the aforementioned false and misleading statements were proven fals e 24

25 7Although this SEC filing was not provided to the Court by the parties, since the Consolidated 26 Amended Complaint necessarily relies on it, the Court has taken judicial notice of it pursuant to Federal Rule of Evidence 201 . See Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994); Steckman v. Hart 27 Brewing, Inc. 143 F.3d 1293, 1295 (9th Cir . 1998). 28 11 1 when the Company announced its operating results for the first quarter of FY05 on February 22, 2005 .

2 On April 19, 2005, plaintiff Shalomah Sameyah ("Sameyah") filed a complaint in this distric t

3 on behalf of himself and on behalf of all persons who purchased the securities of Applied Signal

4 between May 25, 2004 and February 22, 2005 (the "Sameyah complaint") . With the exception of the

5 name of the plaintiff, the Sameyah complaint - which was drafted by the same counsel representing

6 Berson - was identical to the Berson complaint.

7 On May 10, 2005, this Court ordered that the Berson case and the Sameyah case be deemed

8 related.

9 On May 10, 2005, plaintiff Frank Whiting filed a Motion for Appointment of Lead Plaintiff an d 10 Approval of Lead Plaintiffs Selection of Counsel ("Motion for Appointment of Lead Plaintiff') . 11 On July 1, 2005, Defendants submitted a Statement of Non-Opposition to the Motion for 12 V ~_o Appointment of Lead Plaintiff. Defendants also requested that the Berson case and Sameyah case be 13 consolidated by order of this Court pursuant to Federal Rule of Civil Procedure 42(a).

Ay' Q'S 14 On July 13, 2005, the Court consolidated the Berson and Sameyah cases. Also on that date, the 15 Court granted the Motion for Appointment of Lead Plaintiff . Accordingly, Frank Whiting wa s Z 16 appointed to serve as Lead Plaintiff. Plaintiffs choice of counsel was also approved . b L as - 17 On August 12, 2005, the instant Consolidated Amended Complaint was filed. In the

18 Consolidated Amended Complaint, Plaintiff asserts that defendants Applied Signal, Yancey, and Doyle

19 ("Defendants") made untrue statements of material fact and/or omitted statements of material fact in

20 violation of Section 10(b) of the Exchange Act and Rule IOb-5 . Plaintiff also contends that Yancey and

21 Doyle directly or indirectly influenced and controlled the alleged fraudulent conduct of Applied Signal,

22 and, therefore, are also liable under Section 20(a) of the Exchange Act. Unlike the prior Berson and

23 Sameyah complaints, the proposed class period for the Consolidated Amended Complaint is August 24,

24 2004 through February 22, 2005 . The Consolidated Amended Complaint also differs from the prior

25 complaints in that it now alleges that Defendants' statements regarding the Company's backlog were

26 materially false and misleading because they failed to mention certain stop-work orders purportedl y 27

28 12 1 issued during May 2004 through December 2004 .

2 LEGAL STANDARD

3 A. Federal Rule of Civil Procedure 12(b)(6)

4 Under Federal Rule of Civil Procedure 12(b)(6), a motion to dismiss should be gr anted if it

5 appears beyond a doubt that the plaintiff "can prove no set of facts in support of his claim which would

6 entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). For purposes of such a motion, the

7 complaint is construed in a light most favorable to the plaintiff and all properly pleaded factual

8 allegations are taken as true . Jenkins v. McKeithen, 395 U.S. 411, 421 (1969) ; Everest and Jennings,

9 Inc. v. American Motorists Ins . Co., 23 F.3d 226, 228 (9th Cir. 1994). All reasonable inferences are to

10 be drawn in favor of the plaintiff. In re Silicon Graphics Inc . Sec. Litig., 183 F.3d 970, 983 (9th Cir .

I 11 1999) . The court does not accept as true unreasonable inferences or conclusory legal allegations cast

U o 12 in the form of factual allegations . Western Mining Council v. Watt, 643 F .2d 618, 624 (9th Cir . 1981);

U 13 see Miranda v. Clark County, Nev., 279 F.3d 1102, 1106 (9th Cir. 2002). 0 rA .s 14 Although the court is generally confined to consideration of the allegations in the pleadings , y Q r~+ v 15 when the complaint incorporates documents or alleges the contents of documents, and no party z z 16 questions the authenticity of such documents, a court may also consider such documents when a~ s 17 evaluating the merits of a Rule 12(b)(6) motion . See In re Stac Electronics Sec. Lit., 89 F.3d 1399, 1405 c 18 (9th Cir. 1996).

19 When the complaint is dismissed for failure to state a claim, "leave to amend should be granted

20 unless the court determines that the allegation of other facts consistent with the challenged pleading

21 could not possibly cure the deficiency ." Schreiber Distrib . Co. v. Serv-Well Furniture Co ., 806 F.2d

22 1393, 1401 (9th Cir. 1986). The Court should consider factors such as "the presence or absence of undue

23 delay, bad faith, dilatory motive, repeated failure to cure deficiencies by previous amendments, undue

24 prejudice to the opposing party and futility of the proposed amendment ." Moore v. Kayport Package

25 Express, 885 F.2d 531, 538 (9th Cir . 1989). Ofthese factors, prejudice to the opposing party is the most

26 important . See Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir . 1990) (citing Zenith Radio 27

28 13 Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330-31 (1971)). Leave to amend is properly denied

2 "where the amendment would be futile." DeSoto v. Yellow Freight Sys ., 957 F.2d 655, 685 (9th Cir.

1992).

4 B. Federal Rule of Civil Procedure 9(b)

5 Federal Rule of Civil Procedure 9(b) provides as follows :

6 In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity . Malice, intent, 7 knowledge, and other condition of mind of a person may be averred generally. 8 Fed. R. Civ. P. 9(b). 9 "[The Ninth Circuit] has interpreted Rule 9(b) to require that 'allegations of fraud are specifi c 10 enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud L 11 o A charged so that they can defend against the charge and not just deny that they have done anything U o 12 wrong."' Neubronner v. Milken, 6 F.3d 666,671 (9th Cir. 1993) (quoting Semegen v . Weidner, 780 F .2d 13 ~+e wo U 727, 731 (9th Cir. 1985)). "The pleader must state the time, place, and specific content of the false A ~ 14 H Q representations as well as the identities of the parties to the misrepresentation ." Schreiber Distributing u 15 4.0 Co. v. Serv- Well Furniture Co ., 806 F.2d 1393, 1401 (9th Cir. 1986) (citing Semegen, 780 F.2d at 731). z 16 „y L C. Pleading Requirements in Securities Fraud Action s 17 Section 10(b) of the Exchange Act makes it unlawful "for any person . . . to use or employ, in 18 connection with the purchase or sale of any security . . . any manipulative or deceptive device or 19 contrivance in contravention of such rules and regulations as the Commission may prescribe[ 20 .)" 1 5 U.S.C. § 78j(b). 21 Rule I Ob-5, promulgated under the authority of Section 10(b), in turn, provides that "[i]t shal 22 l be unlawful for any person . . . (a) To employ any device, scheme, or artifice to defraud, (b) To make 23 any untrue statement of a material fact or to omit to state a material fact necessary in order to make th 24 e

25 statements made, in light of the circumstances under which they were made, not misleading, or (c) To 26 engage in any act, practice, or course of business which operates or would operate as a fraud or decei t upon any person, in connection with the purchase or sale of any security 27 ." 17 C.F.R. § 240.1 Ob-5. Thus, 28 14 l 11 the basic elements of a Rule I Ob-5 claim are: (1) a material misrepresentation or omission of fact, (2)

2 11 scienter, (3) a connection with the purchase or sale of a security, (4) transaction and loss causation, and

3 I (5) economic loss. In re Daou Systems, Inc . 411 F.3d 1006, 1014 (9th Cir. 2005) .

4 In order to survive a motion to dismiss, a Section 10(b) claim must satisfy three pleading

5 standards. First, it must meet the general requirements established by Federal Rule of Civil Procedure

6 8(a) that complaints give a short and plain statement of the claim. Second, it must conform with the

7 particularity requirements of Rule 9(b) . Neubronner v. Milken, 6 F.3d 666,671 (9th Cir. 1993) (quoting

8 Semegen, 780 F.2d at 731). Third, it must satisfy the requirements of the Private Securities Litigation

9 Reform Act ("PSLRA") .

10 The PSLRA employs heightened pleading standards for claims brought under Section 10(b) and ,

11 similar to Rule 9(b), requires pleading with particularity for two elements in a Section 10(b) claim: (1)

U o 12 falsity and (2) scienter . See Gompper v. VISX, Inc ., 298 F.3d 893, 895 (9th Cir. 2002) ( citing Ronconi

U 13 v. Larkin, 253 F .3d 423, 429 (9th Cir. 2001)). "If a plaintiff fails to plead either the alleged misleading .- o 14 statements or scienter with particularity, the court must dismiss the complaint ." Carol Gamble Trust 86 15 v. E-Rex, Inc., 84 Fed.Appx . 975, 977 (9th Cir. 2004). ii 16 Thus, under both the PSLRA and Rule 9(b), a plaintiff must specify each statement alleged to a~ o 17 have been misleading and the specific reason or reasons why such statement is misleading. See 15

18 U.S .C. § 78u-4(b)(1) ; Fed . R. Civ. P. 9(b) . This is accomplished by identifying either (1) inconsistent

19 contemporaneous statements; or (2) inconsistent contemporaneous information (such as an internal

20 document) that was made by or available to the defendants. In re Splash Technology Holdings, Inc . Sec. 21 Litig., 2000 WL 1727377, * 13 (N .D. Cal. 1997); see also Nursing Home Pension Fund, Local 144 v. 22 Oracle Corp., 380 F.3d 1226,1230 (9th Cir. 2004). "A plaintiff may satisfy [Rule 9(b)] through reliance

23 upon a presumption that the allegedly false and misleading 'group published information' complained 24 of is the collective action of officers and directors ." In re GlenFed, Inc . Sec. Litig., 60 F.3d 591, 593 (9th 25 Cir. 1995). In cases where the falsities are conveyed in "group-published information," for example, 26 in press releases and annual reports, "it is reasonable to presume that these are the collective actions of 27

28 15 the officers." Id. In such a case, a plaintiff satisfies Rule 9(b) "by pleading the misrepresentations with

2 particularity and where possible the roles of the individual defendants in the misrepresentations ." Id.;

3 see also In re Cornerstone Propane Partners, L.P. Sec. Litig., 2005 U.S. Dist. LEXIS 21469 (N .D. Cal.

4 2005).

5 The "recent trend among the Ninth Circuit district courts is that plaintiffs must state with

6 particularity facts indicating that an individual defendant was directly involved in the preparation of

7 allegedly misleading statements published by an organization." Cornerstone, 2005 U.S. Dist. LEXIS

8 at *21 ; see also In re ESS Tech ., Inc. Sec. Litig., 2004 U.S. Dist. LEXIS 27203 (N.D. Cal. 2004). 9 However, "where the pleading gives some basis for ascribing knowledge, participation or authorship,

10 and/or control of the published information to an individual defendant". the doctrine may be applied. 11 Cornerstone, 2005 U.S.Dist. LEXIS at *22 . 0 U 12 When dealing with allegations based on information and belief, and not plaintiffs personal w U 13 knowledge, the PSLRA imposes further pleading requirements . "Allegations are deemed to be held on r.+ 0 V A 1 4 information and belief, and thus subject to the particularity requirements, unless plaintiffs have personal y E 15 knowledge of the facts ." Cornerstone, 2005 U.S.Dist. LEXIS at *8 (citing In re Vantive Corp . Sec. 0 z 16 Litig., 283 F .3d 1079, 1085 n.3 (9th Cir. 2002)). Any allegation that is made on information and belief, b 0 a~ 0 17 must "state with particularity all facts on which that belief is formed ." 15 U c .S.C. § 78u-4(b)(1). "Naming 18 sources is unnecessary so long as the sources are described with sufficient particularity to support the

19 probability that a person in the position occupied by the source would possess the information alleged

20 and the complaint contains adequate corroborating details ." Daou, 411 F.3d at 1015 (citing Nursing 21 Home, 380 F.3d at 1233) . Therefore, to sufficiently plead falsity, a plaintiff must : (1) identify each 22 alleged misstatement, and in the case of group published information, ascribe some authorship or control 23 over the documents to the individual defendants ; (2) state the reasons why the statement is misleading ; 24 and (3) in the case of confidential source information, supply an adequate factual basis to support the 25 source's basis of knowledge with regard to the information provided . See 15 U.S.C. § 78u-4(b)(l) . 26 With respect to scienter, the PSLRA also requires that the plaintiff"state with particularity fact s 27 28 16 1 giving rise to a strong inference that the defendant[s] acted with the required state of mind " for each

2 alleged act or omission . 15 U.S .C. § 78u-4(b)(2). "Deliberate recklessness" is the required state of mind

3 and will satisfy scienter if it "reflects some degree of intentional or conscious misconduct ." Nursing

4 Home, 380 F.3d at 1230 (citing Silicon Graphics, 183 F.3d at 977 ). A complaint will not survive if it

5 just relies on generic allegations . See Silicon Graphics, 183 F.3d at 974, 985 . To assess whether a

6 plaintiff has sufficiently pled scienter, a court must consider "whether the total of plaintiffs allegations,

7 even though individually lacking, are sufficient to create a strong inference that defendants acted with

8 deliberate or conscious recklessness ." Nursing Home, 380 F. 3d at 1230 . Additionally, a court must

9 consider "all reasonable inferences, whether or not favorable to the plaintiff ." Id. (citing Gompper, 298 10 F.3d at 897).

11 ANALYSIS

U o 12 I. Defendants' Request for Judicial Notice 13 As a preliminary matter, the Court notes that Defendants have requested that the Court take rA~. o 14 A Z judicial notice of the following documents, each of which is attached to the accompanying Declaration E .~ s 15 of Tiffany Harris-Sutton ("Harris-Sutton Declaration") : 4.0 zo 16 (1) Applied Signal's Form 10-K for FY03, filed on January 27, 2004 ; U. 17 (2) Applied Signal's Form 10-Q for the second quarter of FY04, filed June 9, 2004 ; C 18 (3) Applied Signal's Form 10-Q for the third quarter of FY04, filed on September 9, 2004 ; 19 (4) Applied Signal's Form 10-K for FY04, filed on January 14, 2005 ;

20 (5) Applied Signal's Form 8-K, filed on August 26, 2004 ;

21 (6) Applied Signal's Form 8-K, filed on December 23, 2004 ; 22 (7) A chart listing the closing stock prices of Applied Signal during the Class Period; 23 (10) A copy of 48 C .F.R. 52.242-15 . 24 Pursuant to Federal Rule of Evidence Rule 201, documents that are alleged in a complaint and 25 are essential to plaintiffs allegations may be judicially noticed. See Branch v. Tunnel!, 14 F.3d 449, 454 26 (9th Cir. 1994); Steckman v. Hart Brewing, Inc . 143 F.3d 1293, 1295 (9th Cir . 1998). A court may also 27

28 17 1 take judicial notice of "well-publicized stock prices " on a motion to dismiss . Ganino v. Citizens Utilities

2 Co., 228 F.3d 154, 167 n.8 (2nd Cir . 2000). Additionally , a court may take judicial notice of regulations

3 issued by federal agencies. Citizens for a Better Env't-Cal. v. Union Oil Co ., 861 F. Supp. 889, 897

4 (N.D. Cal. 1994) (citing Mark v. South Bay Beer Distributors, Inc., 798 F.2d 1279, 1282 (9th Cir.

5 1986)).

6 Since Plaintiff does not oppose the taking of judicial notice of any of these documents, and sinc e

7 judicial notice is proper, the Court hereby GRANTS Defendants' Request for Judicial Notice [Docket

8 No. 36] .

9 II. Defendants' Motion to Dismiss 10 In Defendants' Motion to Dismiss, Defendants argue that Plaintiffs Consolidated Amende d

i 11 Complaint must be dismissed because : (1) the PSLRA' s safe harbor provision precludes liability for any o 12 of the purportedly false or misleading statements related to the Company's backlog ; and (2) Plaintiff has U w U 13 not stated, and cannot state, a cause of action under Section 10(b) of the Exchange Act or Rule I Ob-5 *w o r 14 for any ofthe allegedly false or misleading statements because the elements of falsity, scienter, and loss M 15 causation are not suppo rted by Plaintiffs allegations . Since Defendants assert that no liabili ty can be Z 16 y L established under Section 10(b) and Rule IOb-5, Defendants also argue that the Section 20(a) claim U- 17 against Yancey and Doyle must be dismissed.

18 A. The Safe Harbor Provision

19 The first issue that must be addressed is whether the allegedly false and misleading statements

20 concerning the Company's backlog are rendered non-actionable because they are forward-looking

21 statements falling within the PSLRA's safe harbor provision . The PSLRA carves out a safe harbor from

22 liability for forward-looking statements that prove false if the statement "is identified as a

23 forward-looking statement and is accompanied by meaningful cautionary statements identifying

24 important factors that could cause actual results to differ materially from those in the forward-looking

25 statement." 15 U.S .C. § 78u-5(c)(1)(A)(i) ; Harris v. Ivax Corp., 182 F.3d 799,803 (11th Cir . 1999) . The

26 purpose behind this safe harbor is to encourage the disclosure of forward-looking information . See H.R. 27 28 18 1 Conf. Rep. No. 104-369, 104th Cong. 1st Sess., at 53 (1995). Whether a statement qualifies for the safe

2 harbor is an appropriate inquiry on a motion to dismiss . So long as the safe harbor requirements are

3 met, liability cannot exist as a matter of law, regardless of the mind of the person making the statement .

4 Employers Teamsters Local Nos. 175 and 505 Pension Trust Fund v . Clorox, 353 F.3d 1125, 1133 (9th

5 Cir. 2004) .

6 Forward-looking statements include statements containing a projection of revenues, income, o r

7 earnings per share, management's plans or objectives for future operations, or a prediction of future

8 economic performance. 15 U.S.C. § 78u-5(i)(1)(A)-(C) . In addition, any statement of "the assumptions

9 underlying or relating to" these sorts of statements fall within the meaning of a forward-looking

10 statement. 15 U.S.C. § 78u-5(i)(1)(D) . A present-tense statement can qualify as a forward-looking

11 statement as long as the truth or falsity of the statement cannot be discerned until some point in time

UI 12 after the statement is made. See Harris, 182 F.3d at 805 . Statements concerning historical or current

U 1 3 facts are not forward-looking . See Gross v. Medaphis Corp., 977 F. Supp. 1463, 1473 (N.D. Ga.1997); o U u 1 4 In re Valujet, Inc. Sec. Litig., 984 F.Supp. 1472, 1479 (N.D. Ga. 1997).

H Q 1 5 With respect to statements regarding backlog, only four purportedly false and misleading ea ~ z 1 6 statements are identified : (1) that the backlog as of the third quarter of FY04 was "[a]pproximately 11 W o 17 million," made during the August 2004 Conference Call ; (2) that the backlog at the end of the fourth c 18 quarter was, about $143 million, made during the December 2004 Conference Call ; (3) that the backlog

19 at the end of the fourth quarter was $143 million, set forth in the December 2004 Press Release ; and (4)

20 that the backlog at fiscal year-end was $143 million, set forth in the FY04 Form 10-K .

21 The Court finds that each of these statements is a forward-looking statement that w as 22 I accompanied by the appropriate cautionary language. Specifically, for both the August 2004 23 Conference Call and the December 2004 Conference Call, Doyle stated the following :

24 I'll review our financial performance, but let me begin with the obligatory safe harbor statement . Our presentation today may contain forward-looking 25 statements which reflect the Company's current judgment on future events . Because these statements deal with future events, they are subject to risks and 26 uncertainties that could cause the actual results to differ materially . In addition 27 to the factors that may be discussed in this call, important factors which could

28 19 cause actual results to differ materially are contained in the Company's recent 10-Qs and 10-K. 2 See Harris-Sutton Decl. at Ex. C (August 24, 2004 Form 8-K) ; see also id. at Ex. F (December 21, 2004

Form 8-K) ( stating same). 4 The Company's Form 10-Q filing, issued with respect to the previous qua rter, provided the

following additional cautionary language: 6 Forward-looking statements may be identified by the use of terms such as "anticipates," "expects," "intends," "plans," "seeks," "estimates," "believes," and similar expressions, although some forward-looking statements are 8 expressed differently . Statements concerning financial position, business strategy, and plans or objectives for future operations are forward-looking 9 statements . These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to 10 predict and may cause actual results to differ materially from management's current expectations . Such risks and uncertainties include those set forth in this 11 document under "Summary of Business Considerations and Certain Factors that ." The forward-looking 0 May Affect Future Operating Results and/or Stock Price 12 statements in this report speak only as of the time they are made and do not necessarily reflect management's outlook at any other point in time . We 1 13 L undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or for any other reason . A 14 However, readers should carefully review the risk factors set forth in other y reports or documents we file from time to time with the Securities and 15 Exchange Commission (SEC) . cis z 16 See Harris-Sutton Decl. at Ex. B.8 b as 17 In the section entitled "Summary of Business Considerations and Certain Factors that Ma y C rD 18 Affect Future Operating Results and/or Stock Price," the Company also noted that Applied Signa l 19 "depend[s] on revenues from a few significant contracts, and any loss, cancellation, reduction, or delay

20 in these contracts could harm our business ." Id.

21 Additionally, the Form 10-Q for the third quarter of FY04, which was filed on September 9 , 22 2004, specifically stated:

23 Stop-work orders could negatively impact our operating results andfinancial condition. Almost all of our contracts contain stop-work clauses that permit 24 the other contracting party, at any time, by written order, to stop work on all or any part of the work called for by the contract for a period of ninety days. 25 Within the ninety-day period, the other contracting party may cancel th e 26

27 8This same language was set forth in the FY04 Form 10-K . See id. at Ex. H.

28 20 stop-work order and resume work or terminate all or part of the work covered by the stop-work order. During June 2004, we received a stop-work order 2 instructing us to stop work on a portion of our largest single contract. In accordance with the instructions received from the other contracting party, we 3 prepared a proposal that detailed the tasks that were stopped and estimated the reduction in contract costs . If all the stopped tasks are terminated, the result 4 could be a significant reduction in orders and backlog in the period in which it occurs. There can be no assurance that stop-work orders will not be received 5 in future periods .

6 See Harris-Sutton Decl. at Ex. E (emphasis in original).

7 Further, the December 2004 Press Release included the following language:

8 Except for historical information contained herein, matters discussed in this news release may contain forward-looking statements that involve risks and 9 uncertainties that could cause actual results to differ materially. Forward-looking statements discussed in this release include statements as to 10 the Company's continued growth throughout the year and into the foreseeable future; the future spending by the U .S . Government on intelligence gathering ; i 11 the Company's ability to hire qualified personnel and such personnel's ability to obtain security clearances ; the Company's plans for the future, including the U 12 steps it may take and the programs it will emphasize; the Company's beliefs concerning marketplace opportunities for its products and services ; and beliefs u v 13 concerning contractual opportunities for orders. The risks and uncertainties 0 associated with these statements include whether orders will be issued by H U 14 procurers, including the U. S. Government; the timing of any orders placed by procurers; whether the Company will be successful in obtaining contracts for 15 s these orders if they are forthcoming ; whether any contracts obtained by the a Company will be profitable and whether any such contracts might be z 16 terminated prior to completion; whether the Company will be able to hire t s additional qualified staff as needed; the ability to successfully enter new 17 marketplaces; the Company's ability to maintain profitability; and other risks detailed from time to time in the Company's SEC reports including its latest I 18 Form 10-K filed for the fiscal year ended October 31, 2003 . The Company assumes no obligation to update the information provided in this news release . 19

20 11 See id. at Ex. F (December 21, 2004 Form 8-K).

21 Plaintiff does not dispute that these cautionary statements were made, but attempts to dismiss

22 the language as mere "boilerplate" language, devoid of any meaning . In the context of this litigation,

23 however, Plaintiffs argument is unavailing. Indeed, in addition to all of the disclosures set forth above,

24 the Company consistently described the contingent nature of the Company's backlog figures in all of

25 its public filings. For example, the following statement was set forth in the FY03 Form 10-K and thus 26 preceded all of the aforementioned cautionary language: 27

28 21 Our backlog : . . consists of anticipated revenues from the uncompleted portions of existing contracts[ .] . . . Anticipated revenues included in backlog 2 may be realized over a multi-year period . We include a contract in backlog when the contract is signed by us and by our customer . We believe the backlog figures are firm, subject only to the cancellation and modification provisions contained in our contracts. (See Item 7: "Management's Discussion and 4 Analysis ofFinancial Condition and Results of Operations-Backlog .") Because of possible future changes in delivery schedules and cancellations of orders, backlog at any particular date is not necessarily representative of actual sales to be expected for any succeeding period, and actual sales for 6 the year may not meet or exceed the backlog represented . We may experience significant contract cancellations that were previously booked 7 and included in backlog.

8 See Harris-Sutton Decl. at Ex. A (FY03 Form 10-K) (emphasis added). Given the complete and

9 thorough nature of the Company's disclosures regarding the unique structure of its business model, and

10 the attendant risks, Plaintiffs bare and unsuppo rted conclusion that the Company's cautionary statements i 11 "lacked meaning" is completely disingenuous . 12 Plaintiffs alternative argument that the allegedly false and misleading statements do not qualify w cc U 13 for safe harbor protection because the statements were not, in fact, forward-looking is equally without 0 .S 14 merit. Indeed, for the Court to accept Plaintiffs argument, it would have to completely ignore the fact 0 E 15 that Plaintiffs Consolidated Amended Complaint expressly identifies the allegedly false and misleading

Z 16 statements as statements concerning the Company's backlog . See, e.g., CAC at ¶ 29 ("The amounts b 17 reported as 'backlog' by the Defendants on August 24, 2004 . . . were materially false and misleading

18 because the Defendants failed to disclose that the Company had received a 'stop-work order' in June

19 2004") and ¶ 35 ("The amounts reported as 'backlog' by the Defendants on December 21, 2004, and

20 January 14, 2005, . . . were materially false and misleading") . The Court would also have to ignore the

21 fact that Plaintiff admits, in the Consolidated Amended Complaint, that it was widely understood that

22 the term "backlog" relates tofuture revenues . See, e.g., CAC at ¶ 26 . Thus, according to Plaintiffs own

23 allegations, which are based on Plaintiffs own information and belief, the Company's backlog is, by

24 definition, merely a "projection of revenue" or a "prediction of future economic performance," thus

25 falling squarely within the safe harbor . See 15 U.S.C. § 78u-5(i)(1)(A)-(C) . Id. at ¶ 26.

26 Further, contrary to Plaintiffs current assertion, the fact that the Company used the word "firm" 27

28 22 to describe its backlog figures in the FY03 Form 10-K is not sufficient to equate the Company's

2 "backlog" with "historical data," such as the Company's actual, recognized quarterly revenue .' Indeed,

3 even the passage in the FY03 Form 10-K that Plaintiff relies on makes clear that "backlog at any

4 particular date is not necessarily representative of actual sales to be expected for any succeeding period,

5 and actual sales for the year may not meet or exceed the backlog represented ." See Harris-Sutton Decl .

6 at Ex. A. Additionally, the Company's quarterly filings continuously reiterated the fact that the

7 "backlog" consisted of the uncompleted portions of existing contracts.

8 Finally, Plaintiffs argument that the safe harbor is inapplicable because the Company did not

9 adequately inform investors with regard to certain events in the "past" - i.e. "that the government had

1 0 already issued'stop-work orders,"' - is unpersuasive because it is premised on Plaintiffs own failure to

11 understand the inherently contingent nature of a stop-work order. Indeed, Plaintiffs entire securities

Uo 12 fraud theory relating to backlog is based on Plaintiffs belief that "the receipt of a 'stop-work order' 13 means that any previously reported 'backlog' amounts attributable to revenue within the scope of the

U 14 ." See CAC at ¶ 26 . However, this statement is not supported by A b 'stop-work' order are no longer valid a~ E 15 the applicable regulations or the Company's actual manner of accounting for its backlog. See 48 C.F.R.

z 16 52.242-15 (describing how the receipt of a stop-work begins the negotiation process and how a stop- G~ O 17 work order is subject to cancellation at any time during this negotiation period) ; see also Harris-Sutton

18 Decl. at Ex. E (Third Quarter FY04 Form 10-Q) (stating that the Company's backlog would not be

1 9 reduced until the negotiations relating to SWOT were completed and the Company was able to ascertain

20 whether parts of the applicable contract would actually be terminated) . Even under the lenient pleading

21 standard afforded to a plaintiff on a 12(b)(6) motion, this Court "need not accept as true allegations that

22 contradict facts which may be judicially noticed ." Mullis v. United States Bankruptcy Ct., 828 F.2d

23 1385, 1388 (9th Cir .1987), cert. denied, 486 U.S. 1040 (1988) . Accordingly, Defendants have 24

25 'This is a distinction with a significant difference in the context of a publicly traded company . See, e.g., Release No . SAB - 101, 1999 WL 1100908 (SEC bulletin providing guidance with respect to 26 revenue recognition). Ironically, had the Company actually characterized its potential revenue as "real" revenue in the manner that Plaintiff suggests is appropriate, the ramifications under the applicable SEC 27 rules and regulations would have likely been catastrophic .

28 23 1 persuasively shown that the safe harbor precludes liability for all of the allegedly false and misleading

2 I statements relating to the Company's backlog . Therefore, Plaintiffs claims pertaining to the backlog

3 are hereby DISMISSED WITH PREJUDICE .

4 B. Plaintiffs Failure to State a Claim under Section 10(b) of the Exchange Act or Rule 10b-5 5 Additionally, Defendants have also shown that Plaintiff has not stated a claim under Sectio n 6 10(b) the Exchange Act or Rule IOb-5 with respect to both: (1) the allegedly false and misleading 7 statements pertaining to the Company's backlog; and (2) the allegedly false and misleading statements 8 pertaining to the Company's hiring of personnel . The sufficiency of Plaintiffs claims regarding the 9 Company's backlog will be discussed first . 10 1. Statements Regarding the Company's Backlo g 11 a. The False and/or Misleading Element 12 v ') As noted in the previous discussion of the safe harbor provision , supra, Plaintiffs Consolidated •~ U 13 rAI" o H Amended Complaint is premised on the following four allegedly false and/or misleading statements 14' A~ concerning the Company's backlog : (1) the August 2004 Conference Call; (2) the December 2004 E 15 0 Conference Call; (3) the December 2004 Press Release ; and (4) the FY04 Form 10-K . Plaintiff alleges z 16 that the statement concerning the Company's backlog made during the August 2004 Conference Call 'Wa La. 17 was materially false and/or misleading because Defendants failed to disclose that, prior to the time the 18 call took place, the Company had received two stop-work orders, SWO1 and SWO2 . Plaintiff alleges 19 that statements concerning the Company's backlog made during the December 2004 Conference Call, 20 the December 2004 Press Release, and the FY04 Form 10-K were materially false and/or misleading 21 because Defendants failed to disclose that, at the time the statements were made, the Company had 22 received SWO2, SWO3, and SWO4 . 23 As an initial matter, the Court notes that Plaintiff has not alleged any facts sufficient to show tha t 24 any of the statements concerning the Company's backlog were actually false when made 25 . Indeed, the theory set forth in Plaintiffs Consolidated Amended Complaint is that : (1) the statement made in Augus 26 t 2004 regarding the $111 million backlog was false because the $111 million backlog figure did no t 27

28 24 W

1 account for SWO1 and SWO2 ; (2) the statements made in December 2004 and January 2005 regarding

2 the $143 million backlog was false because the $143 million backlog figure did not account for SWO2 ,

3 SWO3, or SWO4. However, the Company's public statements make clear that anticipated revenues are

4 not "debooked" from the total backlog figure until the contract affected by the stop -work order is

5 actually terminated. See Harris-Sutton Decl. at Ex. E (Third Quarter FY04 Form 10-Q) (confirming that

6 the backlog for the third quarter of FY04 was $111 million, but indicating that it might be reduced in

7 FY05 ifthe "stopped tasks are [actually] terminated .").

8 For example, during the December 2004 Conference Call, an analyst specifically asked whether

9 the $143 million included any potential "debookings," and Yancey replied as follows :

10 Q: And does the - one more question for you, or two more questions, please. Does the $143 million include - is that net of any potential debooking? i 11 A: That includes the $12 million that has not been debooked . U o 12 Q: So it's not net of any potential debooking? Includes? U 13 o A: That's right. A 'E 14

H ~ See Harris-Sutton Decl . at Ex. F (December 2004 Form 8-K) (emphasis added) . E 15 Again, on February 22, 2005, Yancey responded to the following questions regarding backlog : z 16 6 Q: Okay. During the last quarter, you had a nice - Q4 of 2004 was a big bookings quarter 17 and also backlog came in pretty robust . Can you give us an idea of where your backlog is right now ? 18 A: Sure, at the end of the first quarter, Jay, it's a li ttle over $ 124 million. 19 Q: And that is not net of any potential debooking , correct? 20 A: Well, that' s correct . 21 A: Yes. We had to - we had to figure out how many negatives was in there, but you're 22 correct. You're correct.

23 A: So it still includes the $12 million - the 1 I to 13 million in that range - $12 million of anticipated debooking. 24 See SEC Form 8-K, filed on February 22, 2005, at Ex . 99.2 (transcript of February 22, 2005 Conferenc e 25 I Call). 26

27 28 25 ll Thus, with respect to SWO2, SWO3, and SWO4,1° Plaintiff would have to prove both: ( 1) that

2 the stop-work orders actually resulted in a termination of all or a portion of the relevant contracts ; and

3 (2) that the effect of the termination was immediately calculable in the third or fourth quarters of FY04

4 or the first quarter of FY05 . Even construed in the light most favorable to Plaintiff, Plaintiffs

5 Consolidated Amended Complaint does not contain any allegations sufficient to meet these

6 requirements.

7 Additionally, in order for Plaintiff to prove that Defendants ' statements were misleading, Plaintiff

8 would have to show that the Company had a duty to disclose SWOI prior to September 9, 2004 ; that

9 the Company had a duty to disclose SWO2 during the August 2004 Conference Call or thereafter ; and

10 that the Company had a duty to disclose SWO3 and SWO4 as of the time of the December 2004

i 11 Conference Call or thereafter. See Gallagher v. Abbott Labs ., Inc., 269 F.3d 806, 809 (7th Cir. 2001) o , 12 ("Much of plaintiffs' argument reads as if firms have an absolute duty to disclose all information

•~ U 13 material to stock prices as soon as news comes into their possession . Yet that is not the way the o 14 A Q securities laws work . We do not have a system of continuous disclosure . Instead firms are entitled to ash 15 keep silent (about good news as well as bad news) unless positive law creates a duty to disclose ."). As

16 Defendants point out, however, Plaintiff has not affirmatively alleged such duty, and it clear to the

17 Court, based on the applicable facts and the law that has been presented, that no such duty existed . For 18 example, as to the pertinent facts, the allegations in the Consolidated Amended Complaint are

19 ambiguous, at best, as to the : (1) dates the stop-work orders were issued ; (2) the dates the stop-work

20 orders were to expire ; (3) whether the stop-work orders affected all or part of the relevant contracts ; (4)

21 whether the stop-work orders were subject to any extensions ; (5) whether the stop-work orders actually

22 resulted in any contract terminations; and {6) the amount of future revenues affected by the contract

23 terminations, if such terminations occurred . 24

25 "Plaintiffs argument that the August 2004 Conference Call statement was false is foreclosed 26 by the fact that Plaintiff admits that the statement that backlog was "approximately $111 million" was, in fact, correct . See CAC at ¶ 29(a) ("The Third Quarter Form 10-Q reported the same 'backlog' number 27 that the Defendants had announced in the August Conference Call ."). 28 26 I Further, in his opposition, Plaintiff does not identify a single statute or regulation that requires

2 a company to disclose either the possibility that contracts with customers may be terminated or the

3 actual termination of the customer contract . Indeed, as Defendants aptly note, although the SEC

4 considered proposing such a regulation, it ultimately decided against it . See SEC, Final Rule :

5 Additional Form 8-K Disclosure Requirements and Acceleration of Filing Date, Release Nos . 33-8400,

6 34-49424 (Mar. 16, 2004) (declining to adopt Proposed Item 1 .03, "Termination or Reduction of a

7 Business Relationship with a Customer ."). Where, as here, a plaintiffs complaint is devoid of the

8 pertinent details and fails to otherwise affirmatively plead the basis for the duty of disclosure, the Court

9 must dismiss the claim . See, e.g., In re Digital Island Sec. Litig., 357 F.3d 322, 329 n. 10 (3rd Cir.

10 2004) .

11 b. Scienter

12 Plaintiffs Consolidated Amended Complaint also fails to sufficiently establish scienter . Under w u U 13 the PSLRA, Plaintiff must allege particular facts giving rise to a strong inference of scienter . 15 U.S .C. o 14 sec 78u-4(b)(2). With respect to SWO1, the Consolidated Amended Complaint does not plead any facts A ~o v 15 showing that the decision to disclose the stop-work order on September 9th, rather than August 24th, 0 c u 16 was the product of fraud or even the product of recklessness . In fact, the Consolidated Amended

~ w 17 Complaint does not say anything at all with regard to Doyle or Yancey's state of mind as of August 24,

18 2004, other than the conclusory assertion that Doyle and Yancey "did not deny" in the Form 10-Q that

19 they "knew about [SWO1] at the time that it was first issued by the government contractor ." See CAC

20 at ¶ 29(b). Not only is this insufficient, but the fact that Defendants disclosed the SWO1 in the 21 Company's Form 10-Q only two weeks later cuts heavily against an inference of scienter. See, e.g., In

22 re Segue Software, Inc. Sec. Litig., 106 F. Supp. 2d 161, 170 (D. Mass . 2000). The inference of scienter

23 is further negated by the fact that neither Yancey nor Doyle sold any stock during this two-week period .

24 With respect to SWO2, SWO3, and SWO4, the Consolidated Amended Complaint also fails t o

25 set forth any allegations sufficient to show that Yancey or Doyle even knew of the stop-work orders,

26 much less that Yancey and Doyle deliberately attempted to deceive stockholders by providing false or 27

28 27 misleading information pertaining to the Company's backlog. To the contrary, as noted previously,

Yancey and Doyle candidly disclosed during the relevant period that potential debookings affecting

future revenue were not excluded from the Company's backlog . See Harris-Sutton Decl . at Ex. F

(December 2004 Form 8-K) . The Company also repeatedly warned shareholders in its public filings

that the Company's backlog was not necessarily representative of actual future sales or revenue .

Further, with respect to Doyle, there is no allegation that he sold any stock during the Clas s

7 Period. As to Yancey, it has not been sufficiently shown that his stock sales - which occurred during

8 January 2005 - were "dramatically out of line with prior trading practices" or that they took place during

9 a time specifically "calculated to maximize the personal benefit from undisclosed inside information ."

10 See Ronconi v. Larkin, 253 F.3d 423, 435 (9th Cir. 2001). To the contrary, the allegations in the t 11 Consolidated Amended Complaint plainly state that Yancey - like most of the other shareholders - sold D 12 stock after the Company announced fourth quarter operating results for FY04 that did not meet the v U.' •C U 13 analysts' expectations. See CAC at ¶ 42 ("Only once in the preceding six months had more than 1 4Wit C-0 h A 's 14 million shares of Applied Signal stock traded in a day; at no other time did volume exceed 600,000 W Q E 15 shares in a day ."). The only allegation in the Consolidated Amended Complaint that even suggests an z0 16 inference that the stock sales were suspicious is Plaintiffs bare assertion that "Yancey had complete o` 17 knowledge of the'stop-work orders' and their expected impact on the Company's revenues and earnings

18 for the quarter ." See CAC at ¶ 49 . However, this assertion is completely undermined by the fact that

19 Plaintiffs Consolidated Amended Complaint does not actually allege any facts showing that the stop-

20 work orders had any impact on the Company's recognized revenue or earnings for the first quarter of

21 FY05. See CAC at ¶¶ 44-47.

221 c. Loss Causation

23 Finally, Defendants correctly argue that the Consolidated Amended Complaint does not provid e

24 an adequate basis for the required element of loss causation for SWO2, SWO3, or SWO4." Indeed, the 25 26 "Defendants concede in their Motion that loss causation relating to SWO 1 is adequately plead . 27

28 28 W

internal inconsistencies of the Consolidated Amended Complaint actually defeat a finding of loss

causation . For example, as noted above, although Plaintiffs securities fraud theory is premised on his contention that the Company's misleading statements regarding backlog resulted in substantial financial

loss to the shareholders, Plaintiff actually states, in his Consolidated Amended Complaint, that the price

per share of the Company's stock declined in December 2004 because the Company announced that : (1)

the earnings would only be 21 cents per share for the fourth quarter of FY04, as opposed to the analysts'

consensus estimate of 29 cents per share ; and (2) the Company's revenue had only increased by 3% .

See CAC at ¶ 42 . Plaintiff also states that the price per share of the Company's stock declined in

February 2005 because the Company reported that "revenue declined almost 25 percent from the

preceding quarter, with net income and earnings per share declining as well ." See CAC at ¶ 44 .

11 Although Plaintiff vigorously contends, in his Opposition brief, that the stop-work orders were o , U 12 the actual cause of the losses in revenue, the Consolidated Amended Complaint does not actually state 13 this. Indeed, the Consolidated Amended Complaint does not set forth any facts establishing a causal o r A E_ 14 connection between the contracts purportedly affected by the stop-work orders and the actual revenue H A 4U E YV 15 for the fourth quarter of FY04 or the first quarter of FY05 . Plaintiffs argument that it is "facially 10 1 6 •o absurd" to assume anything other than that SWO2, SWO3, and SWO4 directly impacted revenue in the o 17 fourth quarter of FY04 and the first quarter of FY05 is undermined considerably by the relevant

18 government regulations concerning stop-work orders, which expressly provide that stop-work orders

19 are contingent for a ninety-day period and are otherwise subject to negotiations, revisions, and

20 extensions. Plaintiffs argument is further undermined by the fact that contracts are included in the

21 "backlog" precisely because the revenue is not recognizable until the relevant portion of the contract

22 is completed and the fact that it is undisputed that anticipated revenues included in the backlog are

23 typically realized over a multi-year period .

24 2. Statements Concerning Hirin g 25 Next, with respect to Plaintiffs allegations concerning the Company's purportedly false and 26 I misleading statements regarding the hiring of personnel, Defendants have effectively shown that 27 28 29 Plaintiffs Consolidated Amended Complaint fails to state a claim under Section 10(b) or Rule IOb-5 .

Over the course of the entire Class Period, only three statements concerning hiring are challenged in the

Consolidated Amended Complaint : (1) two statement made during the August 2004 Conference Call ;

and (2) a statement made in the August 2004 Press Release. "

Plaintiff first challenges the fact that Yancey stated, during the August 2004 Conference Call,

that he was "pleased that we've been able to stay up with a fairly aggressive growth requirement and,

in particular, hiring of staff and staff that we can get cleared and hiring cleared staff and we believe that

we're keeping our program performance on par with adequate performance to where we will continue

to be looked upon as an asset to the defense community by the U .S. government." See Harris-Sutton

10 Decl. at Ex. C.

11 The second August 2004 Conference Call statement challenged by Plaintiff is as follows: C U 12 Q: Okay. Thank you. Secondly, how many engineers did you add during the quarter? U 13 0 y A (Doyle): We've had total hiring of about 100 people year-to-date . Let's 14 see, I don't know Gary, what, about 30 through the quarter? A E 15 A (Yancey): es I would have actually guessed maybe 20 . It slowed a bit into z the summer, although perhaps not . The simple answer would 16 be to go ahead and use 30, Steve, b and kind of assume we've been close to linear in our increase . w 17 See Harris-Sutton Decl . at Ex. C. A 18 As to the August 2004 Press Release, Plaintiff alleges that the following statement was false and 19 misleading: 20 Regarding the third quarter operating results, Mr 21 . Gary Yancey, President and Chief Executive Officer of the Company, commented, "The greatly increased 22 level of orders compared to fiscal 2003 has challenged us to meet aggressive hiring requirements and to control capital expenditures . I am pleased that we 23 have met these challenges and have been able to meet our contractual commitments . This has resulted in our increase in revenue compared to fiscal 2003." 24

25

26 '2The Consolidated Amended Complaint makes mention of other statements of similar nature made by Defendants, but these statements 27 fall outside of the relevant Class Period . See CAC at ¶ 38 .

281 30 1 II See id. 2 a. The False and/or Misleading Elemen t

3 Plaintiff alleges that the aforementioned statements were materially false and misleading becaus e

4 "[i]f Applied Signal had, in fact, added 100 employees 'year-to-date' as of August, 2004, as reported by

5 Defendant Doyle during the August Conference Call, the Company would have had 525 employees"

6 at the time of the December 2004 Conference Call and "should have had approximately 545 employees

7 at the end of the year ." See CAC at 40(b) . As an initial matter, given that Plaintiffs entire argument

8 is based on the fact that the Company had 498 employees in December instead of Plaintiffs speculation

9 that it should have had 525 or 545 employees, Plaintiffs claim borders on frivolous . See, e.g., Central

1 0 Laborers Pension Fund v. Merix Corp., 2005 WL 2244072, * 4 (D. Or. 2005) ("Plaintiff cannot meet

4.0 11 the heightened pleading standards applicable to fraud claims by simply characterizing Defendants'

U 1 2 statements, embedding in those characterizations assumptions not found in the statements themselves, 13 Lr w and then explaining why Plaintiffs own assumptions are false .").

14 Further, with respect to the element of falsity, Plaintiffs securities fraud "theory" is hopelessly a? 15 flawed. First, as Defendants point out, the statement made by Doyle in the August 2004 Conference

1 6 Call makes clear that Doyle is not referring to a "net" gain of 100 employees . Thus, a theory that PO L 1 7 attempts to prove falsity by comparing Doyle's statement with the totalnumber of employees within the

1 8 Company in December 2004 is inherently defective . Indeed, there are no allegations in the Consolidated

19 Amended Complaint showing that the Company did not, in fact, hire the indicated number of

20 employees. As such, Plaintiff has not adequately plead that the statements made by Doyle or Yancey

21 were false . Second, and more importantly, Plaintiff utterly fails to show how Doyle and Yancey's

22 statements were misleading . Indeed, it does not appear that Plaintiff could show this, as Doyle's and

23 Yancey's answers regarding hiring are replete with qualifiers such as "I don't know," "maybe," and "I 24 would have guessed ."

25 b. Scienter 26 The fact that Doyle and Yancey expressly stated in the August 2004 Conference Call that they 27

28 31 1 were not expressing a firm opinion with regard to the exact number of employee hires, and were only

2 guessing, also negates a finding that Doyle or Yancey acted out of deliberate recklessness or with an

3 intent to defraud shareholders . The inference of scienter is further negated by the fact that Doyle and

4 Yancey did not experience any personal gain as a result of the allegedly false or misleading statements .

5 Indeed, even Plaintiff admits that Yancey did not sell any Company stock until after the December 2004

6 disclosure which clarified the exact number of Company employees .

7 c. Loss Causation 8 Additionally, the Consolidated Amended Complaint does not establish a causal connection

9 between the August 2004 statements regarding hiring and the December 2004 decline in stock price .

10 To the contrary, as set forth previously, Plaintiff alleges , instead, that the stock price fell in December i 11 because the Comp any announced that it was not meeting the analysts' consensus estimate and because o ., U o 12 the Company' s revenue only increased by 3%. See CAC at ¶ 42. Plaintiffs contention that the Feb ruary

U 13 L o 2005 decline in stock price is also attributable to the Comp any's August 2004 statements is foreclosed

~ U A •s 14 by the fact that Plaintiff admits that the investing public was apprised of the true number of employee s

E 15 in December 2004 . z rn 16 In sum, Plaintiff has failed to state claim under Section 10(b) of the Exchange Act and Rule I Ob- 0~ `o 17 5 promulgated thereunder. Accordingly, these causes of action are hereby DISMISSED.

18 C. Liability Under § 20(a) of the Exchange Ac t

19 With respect to Plaintiffs second cause of action, to establish "control person" liability under

20 Section 20(a) of the Exchange Act, Plaintiff must show that a primary violation of Section 10(b) or Rule

21 IOb-5 was committed and that each individual defendant "directly or indirectly" controlled the violator.

22 See Paracor Finance, Inc. v. General Electric Capital, 96 F.3d 1151, 1161 (9th Cir . 1996). Since

23 Plaintiff has not stated a viable Section 10(b) or Rule IOb-5 claim, Plaintiffs claim under Section 20(a) 24 of the Exchange Act necessarily fails . Accordingly, the entire Consolidated Amended Complaint i s 25 DISMISSED .

26 1 III. Dismissal with Prejudice 27

28 32 Further, given the deficiencies in Plaintiffs Consolidated Amended Complaint identified herein ,

2 the Court has concluded that it is appropriate to DISMISS the Consolidated Amended Complaint WITH

3 PREJUDICE . In making this determination, the Court finds it important to point out that this case

4 departs from the usual circumstances where dismissal with leave to amend is appropriate because the

5 plaintiff has merely failed to allege, with sufficient particularity; facts supporting a viable legal theory

6 of securities fraud . In this case, by way of contrast, the Consolidated Amended Complaint is defective

7 because Plaintiffs theory of fraud, itself, is legally flawed and is premised on either a fundamental

8 misunderstanding of Applied Signal's business model, at best, or a blatant misrepresentation of the

9 pertinent facts . Since Plaintiff could only amend his Consolidated Amended Complaint to allege

10 additional facts that are consistent with the facts that have already been plead, the Court finds that t 11 granting Plaintiff leave to amend in order to augment the Consolidated Amended Complaint with

Uo 12 additional facts would be futile. Further, since Plaintiff has already changed his theory of fraud twice," 13 granting further leave to amend would be highly prejudicial to Defendants . The typically liberal ws~ o0 14 standard of allowing leave to amend should not be employed to require Defendants to defend against

15 an amorphous, "moving target" securities fraud case that is not well thought-out or well supported.

16 Further, the Court fi nds that dismissal without leave to amend is also appropriate given the a~ o 1 7 length of time that has passed since the initial complaint was filed. Indeed, the initial complaint was r7 18 filed on March 11, 2005 and the Consolidated Amended Complaint was filed five months later, on

19 August 12 , 2005 . Plaintiff has been on notice with regard to the defects of his Consolidated Amended

20 Complaint since September 14, 2005, when Defendants filed the instant Motion to Dismiss .

21 Accordingly , dismissal with prejudice is warranted on this basis as well . See Lipton v. Pathogenesis

22 Corp., 284 F.3d 1027, 1038-39 (9th Cir. 2002) (affirming district court's dismissal with prejudice after

23 finding that : ( 1) more than six months had elapsed between the filing of the o riginal lawsuit and the 24 filing ofthe consolidated amended complaint, and (2) three additional months had passed between the 25

26 "As noted in the discussion of the procedural history of this case, the complaints initially filed set forth a different class period and were not expressly premised on the statements concerning the 27 Company's stop-work orders and backlog . 28 33 1 time the defendants filed their motion to dismiss and the district court's ruling) ." 2 CONCLUSION

3 For all of the reasons set forth above, IT IS HEREBY ORDERED THAT Defendants' Motion

4 to Dismiss [Docket No. 35] is GRANTED. The Court hereby DISMISSES the Consolidated Amended

5 Complaint WITH PREJUDICE .

6 IT IS FURTHER ORDERED THAT Defendant's Request for Judicial Notice [Docket No . 36] 7 is GRANTED. 8 IT IS FURTHER ORDERED THAT Plaintiffs Motion for Class Certification [Docket No. 25] 9 is DENIED AS MOOT. 10 IT IS SO ORDERED .

11

12 Dated: 2/6/06 SAAye!6& DRA BROWN.6Q!!n ~A TRONG United States District Judg e 13 o h u 14 Ao E 15 et z 16 as o 17

18

19 20

21

22

23

24

25

26 "Further, the Court cannot overlook the fact that Applied Signal is currently in its 2006 fiscal year, and yet Plaintiffs Opposition does not even suggest that Plaintiff is aware of any additional facts 27 or events that have occurred during this passage of time that would lend further support to his case . 28 34 EXHIBIT C ~TI 1 icO - . kWIFZARD

FORM 8- K TIBCO SOFTWARE INC - TIBX Filed : March 24, 2005 (period : March 24, 2005)

Report of unscheduled material events or corporate changes . Item 2 .02. Results of Operations and Financial Conditio n

Item 9.01. Financial Statements and Exhibits

SIGNATURES EXHIBIT INDE X EX-99 .1 (Exhibits not specifically designated by another number and by investm ent companies) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 2054 9

FORM 8-K

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

Date of Report (Date of earliest event reported) March 24, 2005

TIBCO Software Inc. (Exact name of registra nt as specified in its charter)

Delaware 000-26579 77-0449727 (State or other Jurisdiction (Commission File Number) (IRS Employe r of incorporation) Identification No. )

3303 Hillview Avenu e Palo Alto, California 94304-1213 (Address of principal executive o ffices, including zip code)

(650)846-1000 (Registrant 's telephone number, Including area code)

Not Applicable (Former name or former address, if changed since last report)

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 :

❑ Written communications pursuant to Rule 425 under the Secu rities Act (17 CFR 230.425 )

❑ Soliciting mate rial pursuant to Rule 14a-12 under the Exchange Act(] 7CFR 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)) Item 2.02. Results of Operations and Financial Conditio n On March 24, 2005, TIBCO Software Inc. (the "Regis trant") issued a press release announcing its financial results for its first fiscal qua rter ended February 27, 2005, the text of which is furnished herewith as Exhibit 99.1 .

The information in this Current Report is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that Section . The information in this Current Report shall not be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 . Financial Statements and Exhibits (c) Exhibits .

Exhibit No. Description

99 .1 Press Release of TIBCO Software Inc . dated March 24 .2005 . SIGNATURE S

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 .

TIBCO Software Inc.

By: /s/ Christopher G . O'Meara

Christopher G . O'Meara Executive Vice President, Finance and Chief Financial Office r

Date : M arch 24, 2005 EXHIBIT INDE X

Exhibit No . Description

99 .1 Press Release of T1BCO Software Inc . dated March 24, 2005 . Exhibit 99. 1

FOR IMMEDIATE RELEASE mTIBC , The Power of Now*

Press Contact : Investor Relations Contact: Heather Sieberg Michael Magaro TIBCO Software Inc . TIBCO Software Inc . (650)846-8463 (650)846-5747 hsieberg @tibco.com mmagaro@tibco .com

TIBCO SOFTWARE REPORTS FIRST QUARTER FINANCIAL RESULTS

PALO ALTO, Calif., March 24, 2005 - TIBCO Software Inc . (Nasdaq:TIBX), a leading enabler of real-time business and the world's largest independent business integration software company, today announced results for its first fiscal quarter ended February 27, 2005 . Total revenues for the first quarter were $104.1 million . License revenues for the first quarter were $51 .0 million. Net income for the quarter calculated in accordance with accounting principles generally accepted in the United States was $10 .4 million or $.04 per share on a fully diluted basis .

TIBCO had non-GAAP net income for the first fiscal quarter of $12 .7 million . TIBCO's non-GAAP net income per share on a fully diluted basis was $ .05 for the quarter . Non-GAAP results exclude stock-based compensation charges and amortization of acquired intangibles, and assume a non-GAAP effective tax rate of 38% .

"Even though it was a challenging qua rter, we continue to demonstrate solid profitability and year-over-year revenue growth of 40%," said Vivek RanadivE, Chairman and CEO of TIBCO Softw are. Highlights for TIBCO's First Fiscal Quarter of 2005 During Q1, TIBCO added 97 new customers and made significant sales to both new and existing customers, including Merck & Co ., Reuters Limited, Ariba Inc ., CIBA Vision, Bonneville Power Administration, Modesto Irrigation District and Soci&d G6nbrale .

Conference Call Detail s TIBCO Software has scheduled a conference call for 5 : 00 p .m. EDT today to discuss its fiscal first quarter results . The conference call will be hosted by CCBN and may be accessed over the Internet at www .tibco .com . To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software . For those who cannot listen to the live broadcast of the call, a replay will be available through TIBCO Software Inc .'s website at www .tibco .com shortly after the live call ends .

About TIBCO Softwar e TIBCO Software Inc . (NASDAQ :TIBX) is the leading independent business integration software company in the world, demonstrated by market share and analyst reports . In addition, TIBCO is a leading enabler of Real-Time Business, helping companies become more cost-effective, more agile and more efficient . TIBCO has delivered the value of Real-Time Business, what TIBCO calls The Power of Now®, to over 2,000 customers around the world and in a wide variety of industries . For more information on TIBCO's proven enterprise backbone, business integration, business process management, and business optimization solutions, TIBCO can be reached at + 1650-846- 1000 or on the Web at www .tibco .com. TIBCO is headquartered in Palo Alto, CA .

TIBCO, the TIBCO logo, The Power of Now and TIBCO Software are trademarks or registered trademarks of TIBCO Software Inc . in the United States and/or other countries . All other product and company names and marks mentioned in this document are the property of their respective owners and are mentioned for identification purposes only .

Use of Non-GAAP Financial Informatio n TIBCO provides non-GAAP operating income and net income per share data as additional measures of its operating results . TIBCO believes that financial measures of income provide useful information to management and investors regarding certain additional financial and business trends relating to the company's financial condition and results of operations . For example, the non-GAAP results are an indication of TIBCO's baseline performance before gains, losses or other charges that are considered by management to be outside the company's core business operational results . In addition, these non-GAAP results are among the primary indicators management uses as a basis for planning for and forecasting of future periods . These measures are not in accordance with, or an alternative for, accounting principles generally accepted in the United States and may be different from non-GAAP measures used by other companies .

i eeal Notice Reeardine Forward-Lookine Statements This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the federal securities laws, including, without limitation, statements regarding TIBCO's ability to continue to demonstrate profitability and year-over-year growth . Actual results could differ materially from such forward-looking statements if demand for TIBCO's products and services or economic conditions affecting the market for TIBCO's products and services fluctuate or if TIBCO is unable to successfully compete with existing or new competitors . Additional information regarding potential risks is provided in TIBCO's filings with the SEC, including its most recent Annual Report on Form 10-K for the year ended November 30, 2004 . TIBCO assumes no obligation to update the forward-looking statements included in this release . TIBCO Software Inc . Non-GAAP Statements of Operation s Impact of Non-GAAP Adjustments on Reported Net Income (unaudited) (in thousands, except per share data)

Three Months ended February 27,2005

Non-GAAP GAAP Adjustments ttl As Adjusted

Revenue $104,146 $ - $ 104,146 Cost of revenue 27,571 (1,638) 25,93 3

Gross profit 76,575 1,638 78,213 Operating expenses : Research and development 16,187 16,187 Sales and marketing 34,121 34,12 1 General and administrative 9,800 9,800 Stock-based compensation 88 (88) - Restructuring charges Amortization of intangible s 1,883 (1,883) -

Total operating expenses 62,079 (1,971) 60,108 Income from operations 14,496 3,609 18,105 Interest and other income, net 2,455 - 2,45 5

Income before income taxes 16,951 3,609 20,560 2 1 Provision for income taxes' 6,563 1 ,250 7,81 3

Net income $ 10,388 $ 2,359 $ 12,747

Net income per share - Basi c $ 0.05 $ 0.06

Shares used to compute net income per share - Basic 214,751 214,75 1

Net income per share - Diluted $ 0.04 $ 0 .05

Shares used to compute net income per share - Basic 233,675 233,675

h The following table summarizes the adjustments for the respective pe riods presented :

Three Months ended February 27,2003

Net income, GAAP $ 10,388 Stock-based compensation 93 Amortization of intangibles(Z, 3,516 Provision for income taxes (1,250 )

Net income , non-GAAP $ 12,747

(2) The estimated non-GAAP effective tax rate for 2005 of 38% has been used to adjust the provision for income ta xes for non-GAAP purposes . TIBCO Software Inc. Consolidated Statements of Operations (unaudited) (in thousands, except per share data)

Three Months ended

February 27, November 30, February 29, 2005 2004 2004

Revenue: License revenue : Non-related parti es $ 36,650 $ 66,336 $ 36,459 Related pa rt ies 14,370 4,214 4,31 1

Total license revenue 51,020 70,550 40,770

Service and maintenance revenue : Non-related parties 49,138 50,599 29,342 Related patties 2,780 2,996 3,519 Billed expense s 1,208 1,514 770

Total service and maintenance re venu e 53,126 55,109 33,63 1

Total revenue 104,146 125,659 74,401 Cost of revenue : Other cost of revenue non-related parties 27,474 30,696 16,399 Other cost of revenue related parties 92 - - Stock-based compensation 5 5 14

Total cost of revenue 27,571 30,701 16,413

Gross Profi t 76,575 94,958 57,988

Operating expenses : Research and development 16,187 17,950 13,09 4 Sales and marketing 34,121 36,904 26,600 General and administrative 3) 9,800 9,765 4,803 Stock- based compensation 88 99 64 Restructuring charges - 2,186 - Amortization of acquired intangibles 1,883 2,053 499

Total operating expense s 62,079 68,957 45,060

Income from operations 14,496 26,001 12,92 8

Interest income 2,784 2,311 2,11 3 Interest expense s (682) (693) (697 ) Other income (expenses), ne t 353 (1,087) 199

Income before income taxes 1651 26,532 14,543 Provision for income taxes 6,563 8,308 6,01 5

Net income $ 10,388 $ 18,224 $ 8.52 8

Net income per share - Basic $ 0.05 $ 0.09 $ 0.04

Shares used to compute net income per share - Basic 214,751 212,432 209,18 8

Net income per share - Diluted $ 0.04 $ 0.08 $ 0.04

Shares used to compute net income per share - Dilute d 233,675 227,628 222,452

0) Stock-based compensation in operating expenses :

Research and development $ 3 $ 4 $ 25 Sales and marketing 85 95 36 General and administrative - - 3

$ 88 $ 99 $ 64 TIBCO Software Inc Consolidated Balance Sheet s (unaudited) (in thousands)

February 27, November 30, 2005 2004

ASSETS Current assets : Cash and cash equivalents $ 134,124 $ 180,849 Short-term investments 368,850 292 .686 Accounts receivable, net 82,501 109,002 Accounts receivable from related parties 14,705 2,886 Other current assets 16,657 16,984

Total current assets 616,837 602,407

Property and equipment, net 117,295 118,05 8 Other assets 32,204 32,389 Goodwill 265,234 265,13 7 Acquired intangibles, net 61,304 64,820

Total asset s $1,092,874 $ 1,082,81 1

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities : Accounts payable $ 8,119 $ 7,058 Accrued liabilities 63,346 84,429 Accrued excess facilities costs 9,220 9,489 Deferred revenue 70,643 60,633 Current portion of long-term debt 1,732 1,708

Total current liabilities 153,060 163,31 7

Accrued excess facilities costs, less current portion 28,050 29,878 long-term deferred income tax 18,275 18,991 Long-term debt 49,702 50,143

Total liabilities 249,087 262,32 9

Stockholders' equity : Con-anon stock 216 21 4 Additional paid-in capita l 947,024 933,22 3 Unearned stock-based compensation (139) (149) Accumulated other comprehensive income /(loss) (194) 702 Accumulated deficit (103,120 ) (113,508 )

Total stockholders' equity 843,787 820,482

To tal liabilities and stockholders' equi ty $1,092,874 S 1,082,811 TIBCO Software Inc. Consolidated Statements of Cash Flows (unaudited) (in thousands)

Three Months ende d

February 27, Februa ry 29 , 2005 2004

Cash flows from operating activities: Net income $ 10,388 $ 8,52 8 Adjustments to reconcile net income to net cash provided by operating activities : Depreciation and amortization of property and equipmen t 3,554 3,264 Amortization of acquired intangibles 3,516 1,691 Stock-based compensatio n 93 7 8 Realized (gain) loss on . investments, net 20 (443) Change in deferred income tax (1,313) - Acquisition related tax benefits - 4,315 Tax benefits from employee stock option plans 4,335 - Changes in assets and liabilities : Accounts receivable 26,481 (328) Due from related parties, net (11,819) (654) Other asset s 630 31 5 Accounts payable 1,064 (210 ) Accrued liabilities and excess facilities costs (22,803) (348) Deferred revenue 10,016 .3,337

Net cash provided by operating activitie s 24,162 19,545

Cash flows from Investing activities : Purchases of short-term investments (103,896) (222,010) Sales and maturities of short-term investments 26,857 315,448 Purchases of other property and equipment, net (2,769) (1,066) Purchases of private equity investments - (29) Restricted cash and short-term investments pledged as security - (748)

Net cash provided by (used for) investing activitie s (79,808) 91,595

Cash flows from financing activities :. Proceeds from exercise of stock options 8,187 4,38 5 Proceeds from employee stock purchase program 2,969 2,42 3 Payment for purchase of retired share s (1,769) (115,000) Principal payments on long term deb t (417) (399)

Net cash provided by (used for) financing activities 8,970 (108,591 )

Effectof exchange rate changes on cash (49) 363 Net change in cash and cash equivalents (46,725) 2,91 2 Cash and cash equivalents at beginning of period 180,849 83,27 8

Cash and cash equivalents at end of period $ 134,124 $ 86,190

Created by IOKWizard www .1OKWizard .com EXHIBIT D 10kW I ZAR D

FORM 8-K TIBCO SOFTWARE INC - TIBX Filed : October 17, 2005 (period : October 11, 2005) Report of unscheduled material events or corporate changes . Item 5.02 Depart ure of Directors or Principal Officers : Election of Directors : Appointment of admi item 9.01. Financial Statements and Exhibits

SIGNATURES EXHIBIT INDEX EX-99.1 (Exhibits not specifically designated by another number and by investment companies) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549

FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

October 11, 2005

TIBCO Software Inc. (Exact name or registrant as specified in its charter)

Delaware 000-26579 77-0449727 (State or other jurisdiction of (Commission File Number) (IRS Employer incorpora ti on) Identification No.)

3303 Hillview Avenue Palo Alto, California 943Q4-1213 (Address of principal executive offices, including zip code)

(650)846-1000 (Registrant ' s telephone number, including area code )

Not Applicable (Former name or former address, If changed since last report )

Check the appropriate box below if the Form g-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

❑ Wri tten communications purs uant to Rule 425 under the Securiti es Act (17 CFR 230.425)

❑ Solici ting mate rial pu rsuant to Rule 14a- 12 under the Exchange Act (17 CFR 240 .14a-12)

❑ Pre-commencement communicati ons pu rsuant to Rule 14d- 2(b) under the Exchange Act (17 CFR 240 .14d-2(b))

❑ Pre-commencement communica ti ons purs uant to Rule 13e-4(c) under the Exchange Act (17 CFR 240 .13e-4(c)) Item 5 .02 Departure of Directors or Principal Officers ; Election of Directors; Appointment of Principal Officers (b) On October 11, 2005, Christopher G . O'Meara resigned as Executive Vice President and Chief Financial Officer, effective as of that date .

(c) On October 11, 2005, the Company appointed Murray D . Rode the Company's Chief Financial Officer, in addition to his current role of Executive Vice President, Strategic Operations, effective as of October 12, 2005 .

Mr. Rode , age 41 , joined TIBCO in 1995 and has most recently served as Executive Vice President , Strategic Opera tions, responsible for general operations coordinati on, overall expense management, corporate strategy and budget planning, and mergers and acquisi tions . Prior to joining TIBCO, Mr. Rode was a management consultant with a major international consul ti ng firm . Mr. Rode holds a B .A. from the University of Alberta, Canada.

A copy of the Company's press release announcing these events is hereby famished as Exhibit 99 . 1

Item 9.01 . Financial Statements and Exhibits

(c) Exhibits .

Exhibit No . Description

99 .1 Press Release of TIBCO Software Inc . dated October 17, 2005 SIGNATURE S

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 .

TIBCO Software Inc.

By: /S/ WIWAM R. HUGHES William R. Hughes Executive Vice President, General Counsel and Secretary

Date: October 17, 2005 EXHIBIT INDEX

Exhibit No. Description

99 .1 Press Release of TIBCO Software Inc . dated October 17, 2005 Exhibit 99.1

TIRCO Executive Vice Pr esident and Chief Financial Officer , Christopher G . O'Meara, Steps Down; Murray D. Rode becomes Chief Financial Officer PALO ALTO, Calif., October 17, 2005 - TIBCO Software Inc. ( Nasdaq :TIBX), a leading business integration and process management software company that enables real-time business , today announced that after eight years with TIBCO . Christopher G . O'Meara is stepping down as executive vice president and chief financial officer.

"Duri ng Chri s' s tenure, TIBCO was one of the fi rst technology companies to comply with section 404 of the Sarbanes -Oxley Act of 2002 and has been known to always act with the highest degree of financial integ rity," said Vivek Ranadive , TIBCO 's chairman, on behalf of the board. "Chris O'Meara has serv ed TIBCO well and we greatly appreciate his professionalism and diligent serv ices to the company ."

Murray D. Rode , who currently serv es as TIBCO' s executive vice president , strategic opera ti ons, will assume the post of chief financial officer, effec ti ve immediately , while continuing with his current duties .

Mr. Ranadive added , "Murray is a seasoned executive who currently plays a key role in the management of the company and the development of its vision and strategy . He has a proven track record and an in-depth understanding of our business and its operations , and will bring a strong opera ti onal focus to the CFO role ."

Mr. Ranadive continued , "I expect this to be a smooth transition and we will conti nue TIBCO 's practice of prudent financial management. Our business remains sound , our outlook for Q4 remains unchanged at this time and we have a very strong accounting and finance team. This change will allow even tighter linkages between our financial goals and our overall strategy and its implementation ."

Mr. Rode has been with TIBCO (and its predecessor company) for over 10 years. Prior to his newly expanded role, he served as executive vice president, strategic operations, responsible for general operations coordination, overall expense management, corporate strategy, budget planning, and mergers and acquisitions . Prior to joining TIBCO, Mr . Rode was a management consultant with a major international consulting firm . Mr. Rode holds a B .A . degree from the University of Alberta, Canada. About TIBCO Software TIBCO Software Inc. (NASDAQ :TIBX) is a leading business integrati on and process management softw ar e company that enables real-time business . Real-Time Business is about helping companies become more cost-effective:, more agile and more efficient . TIBCO has delivered the value of Real-Time Business , what TIBCO calls The Power of Now®, to over 2,000 customers around the world and in a wide variety of industri es. For more information on TIBCO' s proven enterp rise backbone, business integra ti on , business process management, and business op timization solu tions, TIBCO can be reached at +1 650-846-1000 or on the Web at www .tibco.com. TIBCO is headquartered in Palo Alto, CA . TIBCO, the TIBCO logo, The Power of Now and TIBCO Software are tradem ar ks or registered trademarks of TIBCO Software Inc. in the United States and/or other countries .

Legal Notice Regarding Forward-Looking Statement s This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the federal securities laws, including, without limitation, statements by our CEO regarding the outlook for our business, the results of the fourth quarter of our 2005 fiscal year, and our ability to effect a smooth transition of the CFO role to Mr. Rode . Actual results could differ materially from such forward-looking statements for a number of reasons, including reduced demand for integration products and services or economic conditions affecting the market for integration products and services generally, or if TIBCO is unable to compete successfully with new or existing competitors . Additional information regarding potential risks is provided in TIBCO's filings with the SEC, including its most recent Annual Report on Form 10-K for the year ended November 30, 2004 and Quarterly Report on Form I0-Q for the quarter ended August 28, 2005 . TIBCO assumes no obligation to update the forward-looking statements included in this release .

Created by tOKWizard www .IOKWizard.com EXHIBIT E uenn 5 . Other Event s

Item Financial Statements and Exhibits

SIGNATURE EXHIBIT INDE X EX-99 .1 (Exhibits not soecifically designated by another number and by investment coffin panies) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington , D.C. 20549

FORM 8-K

CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 April 22, 2004 Date of Report (date of earliest event reported )

TIBCO Software Inc. (Exact name of Registrant as speci fied in its charter )

Delaware 000 -26579 77-0449727 (State or other jurisd ic tion (Commission File Number) (LAS. Employer of incorporation or organization) Identification Num be r )

330311illview Avenu e Palo Alto, California 94304-1213 (Address of principal executive offices)

(650) 846-1000 (Registrant's telephone number, fmiuding area code )

Not Applicabl e (Former name or former address, if changed since last report.) Item 5 . Other Events On April 22, 2004, TIBCO Software Inc. (the "Registrant") issued a joint press release announcing that its Board of Directors has agreed with the Board of Directors of Staffware plc ("Staffware") the terms of a recommended cash and share offer for the entire issued and to be issued share capital of Staffware to be made by Banc of America Securities Limited on behalf of the Registrant outside the United States and by the Registrant within the United states (the "Offer") . The text of the joint press release is furnished herewith as Exhibit 99 .1 and is incorporated herein by reference .

The Offer will be subject to the applicable requirements of the United States Securities and Exchange Commission and the Securities Exchange Act of 1934, as amended, as well as the requirements of the City Code on Takeovers and Mergers (the "Code"), the Panel on Takeovers and Mergers (the "Panel"), the London Stock Exchange and of the UK Listing Authority .

The Panel wishes to draw the attention of member firms of Nasdaq to certain UK dealing disclosure requirements following this announcement, which commences an Offer Period in accordance with the Code. The Code is published and administered by the Panel . An Offer Period is deemed to commence at the time when an announcement is made of a proposed or possible offer, with or without terms and will end on the date on which the Offer becomes or is declared unconditional as to acceptances or lapses or is otherwise withdrawn . Staffware has equity securities traded on the London Stock Exchange . The Registrant has equity securities traded on Nasdaq.

The disclosure requirements referred to above are set out in more detail in Rule 8 of the Code . Under the provisions of Rule 8 .3, any person who, alone or acting together with any person(s) pursuant to an agreement or understanding (whether formal or informal) to acquire or control securities of Staffware and/or the Registrant, or who, as a result of any transaction becomes the owner or controller, directly or indirectly of one percent or more of any class of relevant securities of Staffware and/or the Registrant is required to disclose every dealing in any relevant securities of that company during the Offer Period . Relevant securities include Staffware's shares, the Registrant's shares, instruments convertible into, options in respect of, and derivatives referenced to, either Staffware's Shares or the Registrant's shares .

Under the provisions of Rule 8 . I of the Code, any such dealings by Staffware, the Registrant or by any of their respective "associates" (within the meaning of the Code) must also be disclosed .

Disclosure should be made in the appropriate form by no later than 12 noon London time on the London business day following the date of the dealing transaction . These disclosures should be sent to a Regulatory Information Service in the UK and to the Panel (fax number : +44 (0)20 7256 9386) .

If you are in any doubt as to the application of the Rules to you , please contact an independent financial adviser duly authori zed under the UK Financial Services and Markets Act 2000, consult the Panel ' s website at www .thetakeoveroanel .org .uk or contact the Pan el (telephone number: +44 (0)20 7638 0129, fax number. +44 (0)20 7256 9386).

Item 7 . Financial Statements and Exhibits

(c) Exhibits .

99.1 Press release of TIBCO Software Inc . dated April 22, 2004 . SIGNATURE

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 .

TIBCO SOFTWARE INC .

Date : April 22, 2004 By: /s/ Christopher G. O'Meara

Name: Christopher G . O'Meara Title : Executive Vice President, Finance & Chief Financial Officer EXHIBIT INDEX

Exhibit Number Description

99 .1 Press release of TIBCO Software Inc . dated April 22, 2004 . , Canada or Japan Not for release , distribution or publication , in whole or in part , in, into or from Australia FOR IMMEDIATE RELEASE 22 April 2004

on its behalf outside the United States) for Recommended Cash and Share Offer by TIBCO Software Inc. and by Banc of America Securities Limited ( Staffware pl c

The boards of TIBCO Software Inc . ("TIBCO") and Staffware plc ("Staffware" or the "Company") announce that they have agreed the terms of a recommended cash and share offer for the entire issued and to be issued share capi tal of Staffw are to be made by Banc of America Secu ri ties (the "Offer") . Limited (" Banc of Ameri ca Securi ties ") on behalf of TIBCO outside the United States and by TIBCO in the United States

The acquisi ti on of Staffware by TIBCO will :

- broaden TIBCO' s solutions for automating and integrating business processes ; together , TIBCO' s leading real- ti me business integration platform an d Staffware's business process management (" BPM") technology have the potential to provide an unparalleled solution to today's marketplace ;

- create a larger softw are technology leader that addresses the needs of both information technology ("IT') and business users through the complementa ry mix of TIBCO' s business integration technology and Staffware' s BPM solutions ;

- deepen TIBCO's industry expertise in the finance, insurance, telecom and government sectors with the addition of Staffware's capabilities in these areas ; an d

- increase TIBCO's distribution capabilities through the cross-selling of products into new geographies and an expanded customer and partner base .

TIBCO' s post transacti on focus is to ensure that the customer base of both TIBCO and Staffware are successful with their existing investments and will continue to be successful with future projects . Development and support for S taffware ' s iProcess product and TIBCO' s Business Works Workflow product will continue forward with no disruption .

The Offer values each Staffware Share at 840 pence and compri ses 504 pence in cash and 0 .6902 of a New TIBCO Share worth 336 pence based on an exchange rate of US$1 .7932 : f l .00 and a price per TIBCO Share of US$8 .73, being the average Closing Price for each TIBCO Share for the five dealing days ended 20 April 2004 .

Staffware Shareholders will also retain the right to receive the final dividend of five pence per Staffware Share announced on 16 March 2004 . e Shareholders who validly accept the Offer may request to va ry the proportions in TIBCO will offer a mix and match election under which Staffw ar which they receive New TIBCO Shares and cash in respect of their Staffw are Shares .

£ 122 .8 million an d represents a premium of approximately : The Offer values the entire issued share capi tal of Staffware at approximately

, the last dealing day immediately p rior to the 41 per cent . to the Closing Price of 597 .5 pence per Staffware Share on 21 April 2004 date of this announcement;

40 per cent. to the average Closing Price of 598 pence per Staffware Share over the last 30 dealing days immediately p rior to the date of this announcement ; an d

54 per cent. to the Enterprise Value of £65 .5 million as based on the Closing Price of 597 .5 pence per Staffware Share on 21 April 2004, the last dealing day immediately prior to the date of this announcement.

Based on an exchange rate of US$1 .7720 : £ 1 .00 and a TIBCO share p rice of US$8.49, be ing respectively the prevailing exchange rate and the closing p rice of a TIBCO Share on 21 April 2004 (the last dealing day prior to the announcement of the Offer), the Offer values each S taffware Share at 835 pence, which represents a premium of app roximately 40 per cent. to the Closing Price of 597.5 pence per Staffw are Share on 21 Ap ri l 2004.

TIBCO has received irrevocable undertakings from the Directors of Staffw are to accept the Offer in respect of their en tire legal holdings of Staffware Shares representing approximately 9.1 per cent . of the existing issued share capital of S taffware .

The Directors of Staffware who have been so advised by their financial advisers, Dresdner Kleinwort Wasserstein, consider the terms of the Offer to be fair and reasonable . In providing advice to the Directors of Staffware, Dresdner Kleinwort Wasserstein has taken into account the Directors of Staffware's commercial assessments . Accordingly, the Staffware Directors intend unanimously to recommend that Staffware Shareholders accept the Offer.

Commenting on the Offer, Vivek Ranadive, Chairman and CEO of TIBCO, said : "We believe business processes are rapidly becoming the most valuable corporate asset . This combination brings two best-in-class technologies together to more completely deliver value to customers investing in BPM solutions. The combination with Staffware will provide TIBCO with immediate additional reach into new and emerging markets including retail banking, insurance, public sector and telecommunications, as well as increased geographic presence within Europe and Asia Pacific . We believe that the combined companies can accelerate market momentum relative to market peers, and set a new standard for what is needed .to effectively compete in the BPM market ."

John O'Connell, Chairman and CEO of Staffware, said: "The combination of Staffwarc and TIBCO brings together two recognised technology leaders with highly complementary skills and product offerings . By combining Staffware's acknowledged position as one of the leaders in business process management software and TIBCO's award-winning, standards-based platform for real-time business, we believe that the combined organisation will be able to provide its customers and partners with a powerful combination of products, services and people . Having actively considered a number of alte rnative strategies for Sta ffware, in particular , to achieve sufficient scale in the US market, we believe that TIBCO' s Offer provides attractive value for Staffware ' s shareholders without the potential costs and ri sks associated with the significant investment that would otherwise be required in our North American business . "

This summa ry should be read in conjunction with the full text of the attached announcement . Appendix I contains the conditions and certa in further terms of the Offer, Appendix 11 sets out the sources and bases of calculation and Appendix Ill contains definitions of certain terms used in this announcement .

Enquiries : TIBCO Software Inc. Media: Robin Stoecker Tel : +1 650 846 5044 Investors : Michael Magaro Tel : +1 650 846 5428

Staffware plc John O'Connell - Chairman and CEO Tel : +44 (0)1628 786 800 Tim Perks - CFO Tel : +44 (0)1628 786 83 0

Banc of America Securities - financial adviser to TIBC O Paul Mullins Tel : +44 (0)20 7174 534 3 Drago Rajkovic Tel : +1 (415) 913 3429

Dresdner Kleinwort Wasserstein - fi nancial adviser an d broker to Staffware Robert Petch Tel : +44 (0)20 7623 800 0 Michael Covington Tel: +44 (0)20 7623 800 0 PR (Staffware) - Citigate Dewe Rogerson Toby Mountford Tel : +44 (0)20 7638 9571 Mob: +44 (0)7710 356611 Sara Batchelor Tel : +44 (0)20 7638 957 1 Mob : +44 (0)7866 470890

TIBCO has scheduled a conference call for 9:00am EST today to discuss the Offer . Interested parties may access the conference call over the internet through CCBNat www .rompanyboardroom.com . To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software . For those who cannot listen to a live broadcast of the call, a replay will be available through TIBCO's website at www .tibco.com shortly after the live call ends.

The Stafivare Directors accept responsibility for the information contained in this announcement relating to Staff ware's current and historical position and the Staffware Directors. To the best of the knowledge and belief of the Directors of Stafware (who have taken all reasonable care to ensure that such is the case ), the information contained in this announcement for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import ofsuch information . The TIBCO Offer Committee accept responsibility for all other information co ntained in this announcement. To the best of the knowledge and belief of the T/BCO Offer Committee ( who have taken all reasonable care to ensure that such is the case), the informa tion contained in this announcementfor which they accept responsibility is in accordance with the)tuts and does not omit anything likely to affect the import of such information. Banc ofAmerica Securities, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for TIBCO as financial adviser (within the meaning of the Rules of the Financial Services Authority) and for no one else in connection with the Offer and will not be responsible to anyone other than TIBCO for providing the protections afforded to cl ients of Banc ofAmerica Securities or for giving advice in relation to the Offer. Dresdner Kleinwort Wasserstein limited which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting for Stqffware and for no one else in connection with the Offer and is not acting for any person other than Staffware and will not be responsible to any person other than Staff ware for providing advice in connection with the Offer and the other matters described herein The Offer will not be made, directly or indirectly, in or into Australia, Canada or Japan and will not be capable of acceptance from within Australia, Canada or Japan. Accordingly, copies of this announcement and all other documents relating to the Offer are not being, and must not be, mailed or otherwise forwarded distributed or sent in, into or from Australia, Canada or Japan. Persons receiving such documents (including, without limitation, nominees, trustees and custodians) should observe these restrictions and must not mail or otherwise forward, distribute or send such documents in, into or from Australia, Canada or Japan. Doing so may invalidate any related purported acceptance of the Offer. This release contains forward-looking statements within the meaning of the "safe harbour" provisions of the United States secu rities laws. All statements other than statements of hisrarical fact are statements that could be deemed forward-looking statements-including, without limitation, stateme nt s regarding (i) the ability of the acquisition to broaden TIBCO's solutions for automating and integrating business processes, (u) the ability of the combined offering of the TIBCO platform and the Staff ware's technology to provide an unparalleled solution to today's marketplace, (iii) the ability of the acqu isition to create a larger software technology leader, (iv) the ability ofT1BCO to deepen its industry expertise in finance, insurance, telecom and government . sectors as a result of the acquisition. (v) the ability of the acquisition to increase TIBCO's distribution capabilities solutions, (vi) the continued development and .suppo rtfor Stafware's iProcess product and TIBCO's Business Works Workflow products, (vii) the optimisation of Stagware's iPro cess product to run with key TIBCO products, (viii) TIBCO's plan to continue to market, develop and maintain existing BPM and business integration products, (ix) TIBCO's plan to deliver a fully interoperable, unified suite in mid to late 200$ and (x) TIBCO's plan to provide an upgrade or migration path to current Staffware customers and the actual results could differ materially from what is envisaged by such forward-looking statements if TIBCO is unable to successfully integrate the Stq ffwnre's business after the acquisition, ifTIBCO is unable to successfully develop, market and sell the Staff ware business p rocess management and workflow solutions or if the market for business integration .solutions does develop and g row as is now expected In addition, the acquisition may not occur or may not occur in the time currently contemplated if the shareholders of Staffware do not accept the offer for their shares to TIBCO on the terms offered by TIBCO . TIBCO assumes no obligation to update the forward-looking statements included in this release. TIBCO will prepare the Offer Document to be distributed to Stafware Shareholders. TIBCO urges Stafware Shareholders to read the Offer Document when it becomes available because it will contain important information relating to the Offer. The Offer will be open to Stgfware Shareholders resident in the United States. The Offer as extended into the United States will be made by TIBCO and not by Banc ofAmerica Securities . The Offer will be made for the securities o1 a non-US company. The Offer will be made in accordance with the requirements of the Code and will be subject to disclosure and procedural requirements that are different from those under United States law . This announcement does not constitute an offer to sell or the solicitation of an offer to purchase or subscribe for any securities whether under the laws of the United States or under the laws of any suite of the United States or elsewhere. Not for release, distribution or publication, in whole or in part , in, into or from Australia, Canada or Japan FOR IMMEDIATE RELEASE 22 April 2004

Recommended Cash and Share Offer by TIBCO Software Inc. and by Banc of America Securities Limited (on its behalf outside the United States) for Staftwarc plc

1 Introducti o n The boards of TIBCO Software Inc. ("TIBCO") and Staffware plc ("Staffware" or the "Company") announce that they have agreed the terms of a recommended cash and share offer for the entire issued and to be issued share capital of Staffware to be made by Banc of America Securities Limited ("Banc of Ame rica Securities") on behalf of TIBCO outside the United States and by TIBCO in the United States .

The Offer values each Staffware Share at 840 pence and comprises 504 pence in cash and 0.6902 of a New TIBCO Share . This is based on an exchange rate of US$1 .7932 : £1 .00 and a price per TIBCO Share of US$8 .73 being the average Closing Price for each TIBCO Share for the five dealing days ended 20 April 2004 . Staffware Shareholders will also retain the right to receive the final dividend of five pence per share announced on 16 March 2004. Banc of America Securities is acting as financial adviser to TIBCO in relation to the Offer. Dresdner Kleinwort Wasserstein is acting as financial adviser and broker to Staffware .

2 The Offer The Offer will be made by Banc of America Securities on behalf of TIBCO outside the United States, and by TIBCO in the United States, to acquire the entire issued and to be issued share capital of Staffware on the terms and subject to the conditions set out below and in Appendix I of this announcement and to be set out in the Offer Document and accompanying Form of Acceptance. The Offer will be made on the following basis :

for each Staffware Share 504 pence in cash and 0.6902 of a New TIBCO Share

The Offer values the entire issued share capital of Staffware at approximately £ 122 .8 million and represents a premium of approximately :

41 per cent . to the Closing Price of 597 .5 pence per Staffware Share on 21 April 2004 , the last dealing day immediately prior to the date of this announcement ;

40 per cent . to the average Closing Price of 598 pence per Staffware Share over the last 30 dealing days immediately prior to the date of this announcement ; an d

54 per cent to the Enterprise Value of £65 . 5 million , as based on the Closing Price of 597 .5 pence per Staffware Share on 21 April 2004, the last dealing day immediately prior to the date of this announcement .

Based on an exchange rate of US$1 .7720 : £1 .00 and a TIBCO share price of US$8.49, being respectively the prevailing exchange rate and the closing price of a TIBCO Share on 21 April 2004 (the last dealing day prior to the announcement of the Offer), the Offer values each Staffware share at 835 pence, which represents a premium of approximately 40 per cent. to the Closing Price of 597 .5 pence per Staffware Share on 21 April 2004 . TIBCO expects that the number of New TIBCO Shares that will be issued on full acceptance of the Offer with respect to the issued and to be issued share capital . of the issued common stock of TIBCO as enlarged as a result of the of Staffware will not be more than 11 .1 million (representing approximately 5 .3 per cent Offer) . The New TIBCO Shares issued to Staffware Shareholders who accept the Offer will be credited as fully paid and non-assessable, will be freely transferable and tradeable, will rank pari passu in all respects with existing TIBCO Shares and will entitle the holder to all dividends and other distributions declared, made or paid after the date hereof. Appropriate adjustments to the number of New TIBCO Shares paid in the Offer will be made if TIBCO effects a stock split, stock dividend or reverse stock split or other capital reorganisation. The New TIBCO Shares are expected to be authorised for listing, subject to official notice of issuance, on Nasdaq . It is not expected that application will be made for New TIBCO Shares to be admitted to dealings on any other stock exchange . The Offer will extend, subject to the terms and conditions to be set out in the Offer Document and Form of Acceptance, to all Staffware Shares unconditionally allotted or issued on the date on which the Offer is made and to any further Staffware Shares unconditionally allotted or issued while the Offer remains open for acceptance (or prior to such earlier date as TIBCO may, subject to the Code, decide) .

The Staffware Shares will be acquired by TIBCO pursuant to the Offer fully paid and free from all liens, charges, equitable interests, encumbrances and other third party rights and interests of any nature whatsoever and together with all rights now or hereafter attaching thereto, including the right to receive all dividends and other distributions (if any) declared, made or paid hereafter save for the recommended final dividend of five pence per Staffware Share announced on 16 March 2004 . Fractions of New TIBCO Shares will not be allotted or issued to Staffware Shareholders but will be aggregated and sold in the market and the net proceeds of sale distributed on a pro rata basis to the Staffware Shareholders who are entitled to them . Such payment will be made in pounds sterling, the proceeds having been converted from US Dollars at a prevailing exchange rate selected by TIBCO at the time of payment . However, individual payments of less than £5 .00 will not be paid to Staffware Shareholders but will be retained for the benefit of the enlarged TIBCO Group .

3 Dealing facility TIBCO proposes to use reasonable endeavours to procure that a low cost dealing facili ty is put in place in relati on to the New TIBCO Sh ares to enable S taffware Shareholders , at the time of their acceptance of the Offer, to elect to sell any New TIBCO Shares issued to them in connection with the Offer pursuant to an elec ti on in the Form of Acceptance . Further information will be pro vided in the Offer Document .

4 Mix and match election Staffware Shareholders who validly accept the Offer will, subject to scale back if either the cash or New TIBCO Shares components of the Offer are over subscribed, be able to request under the mix and match election set out in the Form of Acceptance to vary the proportions in which they receive New TIBCO Shares and cash in respect of their Staffware Shares . The maximum amount of cash to be paid under the Offer and the maximum number of New TIBCO Shares to be issued under the Offer will not be varied as a . Therefore, result of the mix and match election . Accordingly, Staffware Shareholders' mix and match elections may necessarily be subject to being scaled back Staffware Shareholders who make mix and match elections will not know the exact number of New TIBCO Shares or the amount of cash they will receive until settlement of the consideration under the Offer . Although the Offer will remain open for at least 14 calendar days after the later of date on which the Offer becomes or is declared unconditional in all respects or the date it would otherwise have expired, the mix and match election will remain open until, but not beyond, 3 :00 p.m. London time, 10 :00 a.m . New York City time on the date falling five calendar days after the Offer becomes or is declared unconditional in all respects . Mix and match elections must be made at the same time as the acceptances of the Offer to which they relate, on the relevant Form of Acceptance . Staffware Shareholders who do not make a mix and match election or who do not accept the Offer until after the fifth calendar day after the Offer becomes or is declared unconditional in all respects will receive the basi c entitlement of 504 pence in cash and 0.6902 of a New TIBCO Share for every Staffware Share held .

Insofar as a Staffware Shareholder is entitled to receive'additional cash under the mix and match election, it will be payable in an amount per one New TIBCO Share equal to £4 .87 for each such New TIBCO Share (and proportionately for each part thereof) to which the shareholder would otherwise have been entitled under the basic terms of the Offer if the shareholder had not elected to receive additional cash . This is based on an exchange rate of US$1 .7932 : £1 .00 and a price per TIBCO Share of US$8 .73, being the average Closing Price for each TIBCO Share over the five dealing days ended 20 April 2004 . A mix and match election made by a Staffware Shareholder may not be changed after the time that it is first made on the relevant Form of Acceptance . However, acceptances, including the associated mix and match election, may be withdrawn in accordance with the procedures that will be set out in the Offer Document .

The mix and match election will be conditional upon the Offer becoming or being declared unconditional in all respects .

Full details of the New TIBCO Shares will be contained in the Offer Document to be sent to Staffware Shareholders .

5 Undertakings to accept the Offer and lock-i n TIBCO has received irrevocable undertakings from the Directors of Staffware to accept the Offer in respect of their entire legal holdings comprising 1,330,269 Staffware Shares in aggregate, representing approximately 9 .1 per cent . of Staffware's existing issued share capital . Such undertakings cease to be binding only if the Offer lapses or is withdrawn . In addition, John O'Connell, Chairman of Staffware, has agreed with TIBCO that he would not (save in certain limited circumstances) dispose of or transfer 75 per cent . of the New TIBCO Shares he will receive pursuant to the Offer until at least the first anniversary date of when the Offer becomes or is declared wholly unconditional .

6 Recommendation The Directors of Staffware, who have been so advised by Dresdner Kleinwort Wasserstein, consider the terms of the Offer to be fair and reasonable . In providing advice to the Directors of Staffware, Dresdner Kleinwort Wasserstein has taken into account the Directors of Staffware's commercial assessments . Accordingly, the Staffware Directors intend unanimously to recommend that Staffware Shareholders accept the Offer . 7 Background to and reasons for the Offer The acquisition of Staffware by TIBCO will :

• broaden TIBCO's solutions for automating and integrating business processes; together, TIBCO 's leading real-time business integration platform and Staffware's business process management ("BPM") technology have the potential to provide an unparalleled solution to today's marketplace ;

• create a larger software technology leader that addresses the needs of both information technology ("IT") and business users through the complementary mix of TIBCO' s business integra ti on technology and Staffware ' s BPM solutions ;

• deepen TIBCO's industry expertise in the finance , insurance , telecom and government sectors with the addi tion of Staffware's capabilities in these areas ; and

• increase TIBCO' s distribution capabili ties through the cross-selling of products into new geographies and an expanded customer and partner base .

TIBCO believes the combination should deliver significant strategic benefits to customers and provide opportunities to reduce expenses over time .

The combined company will be committed to customer success and will continue to market, develop and maintain BPM and business integration products . Longer term, the vision will be to deliver a fully interoperable, unified suite in mid to late 2005 . For any future integrated product, TIBCO is also committed to providing an upgrade or migration path to customers currently on maintenance and applicable licences .

TIBCO's post transaction focus is to ensure that the customer base of both TIBCO and Staffware are successful with their existing investments and will continue to be successful with future projects . Development and support for Staffware's iProcess product and TIBCO's BusinessWorks Workflow product will continue forward with no disruption . Staffware's iProcess product will be optimised to run with key TIBCO's products, including EAI, BAM and Portal . 8 Compulsory acquisition and delisting If TIBCO receives acceptances under the Offer in respect of, and/or otherwise acquires, 90 per cent. or more of the Staffware Shares to which the Offer relates, TIBCO intends to apply the provisions of Sections 428 to 430F ( inclusive) of the Companies Act to acquire compulsorily the remaining Staffware Shares to which the Offer relates .

If the Offer becomes or is declared unconditional in all respects , TIBCO intends to procure the making of an applicati on by Staffwarc to the UK Listing Authority for the cancellation of the listing of Staffware Shares on the Official List and to the London Stock Exchange for the cancellation of trading of Staffware Shares on its market for listed securities . It is an ti cipated that cancellation of listing and trading will take effect no earlier than 20 business days after the Offer becomes or is declared unconditional in all respects . Delis ting an d cancella ti on would significantly reduce the liquidity and marketability of any Staffware Shares in respect of which the Offer has not been accepted. It is also proposed that if the Offer becomes or is declared unconditional in all respects and after the Staffware Shares are delisted, Staffware would be re-registered as a private company under the relevant provisions of the Act.

9 Inducement fe e As an inducement to TIBCO to make the Offer, Staffware has agreed to pay TIBCO a fee of E1,348,687 in the event that:

(a) save where the average Closing Price per TIBCO Shares is less than US$5 .13 for five consecutive dealing days and where the average of the S tandard and Poor's Information Technology Index for such five days has not dropped by more than 20 per cent . from the average of such index for the preceding five consecutive US business days, the board of Staffware or any of the Directors of Staffware fail to recommend the Offer in the Offer Document or withdraw or materially modify its or his recommendation, and the Offer subsequently lapses or is withdrawn ; o r

(b) there is the announcement of, the making of, or entering into of any agreement in respect of (i) any offer (as defined in the Code) for, or scheme of arrangement of, Staffwarc or any proposal which will result in a change of control (as defined in the Code) of Staffware ; or (ii) any sale, merger, business combination, demerger or liquidation (or similar transaction or arrangement) in respect of the whole or a material part of the operations of Staffware Group; or (iii) any proposal involving a takeover or acquisition by any member of the Staffware Group (by public offer, scheme of arrangement or otherwise) of another company or business (each an independent competing offer) ; in each case by, or with, any person or persons who are not acting in concert (as defined in the Code) with TIBCO, and thereafter the Offer lapses or is withdrawn and any such independent competing offer becomes wholly unconditional or otherwise completes in accordance with its terms .

10 Information on TIBCO TIBCO is one of the world' s leading independent business integra ti on software companies , demonstrated by market share and analyst reports . In additi on, TIBCO is a leading enabler of Real-Time Business , helping companies become more cost-effec ti ve, more agile and more efficient . TIBCO has delivered the value of Real -Time Business, which TIBCO calls The Power of Now, to over 2,000 customers around the world and in a wide variety of industries.

TIBCO Shares are listed on Nasdaq under the symbol TIBX . TIBCO has a current market capitalisation of approximately US$1 .7 billion based on the Closing Price of US$8 .49 for each TIBCO Share on 21 April 2004, the last dealing day immediately prior to the date of this announcement. In the year ended 30 November 2003, TIBCO reported profit before tax of US$17 .5 million and revenues of US$264 .2 million . As at 30 November 2003, TIBCO had total cash and cash equivalents of US$604 .7 million . TIBCO has not historically paid a dividend .

11 Information on Staffwar e Staffware is a leading global specialist BPM solutions provider . Approximately 700 customer organisations are actively using its software within the banking, insurance, telecommunications, utilities, general commercial, manufacturing and government sectors . Staffware is headquartered in the UK, has offices in 17 countries and currently employs approximately 370 people . Staffware released its first product in the mid-1980s and commenced trading under the name of Staffware in December 1993 . In the last ten years Staffware has developed from being a provider of workflow software addressing low to mid-volume departmental requirements into a leading specialist BPM solutions provider, handling integration with other technologies and software . BPM automates and streamlines the many processes that are essential to the running of an organisation . These business processes include people-to-people, people-to-application and application-to-application interactions, in other words both human and straight through, automatic, processes . BPM maintains an overview of the many actions that are core to the operation of an organization and establishes a framework for their timely execution and management . Staffware's flagship BPM product, the iProcess Engine, is the key component of the Staffware iProcess Suite, which provides the technology for businesses to custom build, automate, refine and control their processes . The Staffware iProcess Suite can deliver efficiency improvements to an organisation, including increased productivity, reduced costs, greater control and enhanced customer services .

On 16 March 2004, Staffware announced record results for the year ended 31 December 2003 during which sales revenue increased by 9 per cent. to £42.7 million and EBITDA by 20 per cent. to £4.8 million . Cash balances were increased by £2 .8 million during the year to £21 .8 million as at 31 December 2003. In the fourth quarter, sales were £13 .4 million, representing a 5 per cent. increase on the fourth quarter of 2002. These results were achieved at a time when trading conditions for IT companies have continued to be challenging . The Directors of Staffware consider that trading has been satisfactory since that date . 12 Management and employees TIBCO attaches great importance to the skills and experience of the existing management and employees of Staffware and believes that opportunities for them will be enhanced in the event that the Offer becomes or is declared unconditional in all respects .

TIBCO has given assurances to the Staffware Board that the existing employment rights, including pension rights, of all the employees of Staffware will be fully safeguarded .

13 Share option schemes The Offer will extend to all Staffware Shares unconditionally allotted or issued or acquired pursuant to the exercise of options under the Staffware Share Option Schemes prior to the date on which the Offer closes (or such earlier time as TIBCO may, subject to the provisions of the Code or with the consent of the Panel, decide) .

As soon as practicable after the Offer becomes or is declared uncondi ti onal in all respects , TIBCO will make proposals , consistent with the Offer, to holders of unexercised options granted under the S ta ffware Share Option Schemes .

14 Financing TIBCO intends to fund the cash component of the Offer from its exis ti ng cash resources . 15 Disclosure of interests in Staffwar e Save for the 1,330,269 Staffware Shares in respect of which TIBCO has received irrevocable undertakings to accept the Offer, neither TIBCO nor any of the directors of TIBCO nor any other TIBCO subsidiary, nor, so far as TIBCO is aware , any person acting in concert with TIBCO for the purposes of the Offer, owns, controls or holds any Staffware Shares or any secu riti es convertible or exchangeable into, or rights to subscribe for, purchase or holds any options to purchase any Staffware Shares or has entered into any de rivati ve referenced to S taffware Shares which remains outst an ding . In view of the requirement for confidentiality, TIBCO has not made any enquiries in this respect of certain parties who may be deemed by the Panel to be acting in concert with it for the purposes of the Offer .

16 Genera l The Offer will be made on the terms and subject to the conditions set out herein and in Appendix 1, and to be set out in the Offer Document and the accompanying Form of Acceptance. These will be dispatched to Staffware Shareholders (other than those with addresses in Australia, Canada or Japan), and for information only, to holders of options granted under the Staffware Share Option Schemes, in due course . The Offer and acceptances thereof will be governed by English law. The Offer will be subject to the applicable requirements of the Code, the Panel, the London Stock Exchange, the UK Listing Authority, the SEC and the Exchange Act.

Details of the sources and bases of certain information set out in this announcement are included in Appendix If . Certain terms used in this announcement are defined in Appendix Ill .

This announcement does not constitute, or form any part of, any offer for, or solicitation of any offer for securities . Any acceptance or other response to the Offer should be made only on the basis of the information contained in the Offer Document and accompanying Form of Acceptance. The Panel wishes to draw the attention of member firms of Nasdaq to certain UK dealing disclosure requirements following this announcement, which commences an Offer Period in accordance with the Code . The Code is published and administered by the Panel . An Offer Period is deemed to commence at the time when an announcement is made of a proposed or possible offer, with or without terms and will end on the date on which the Offer becomes or is declared unconditional as to acceptances or lapses or is otherwise withdrawn . Staffwarc has equity securities traded on the London Stock Exchange . TIBCO has equity securities traded on Nasdaq .

The disclosure requirements referred to above are set out in more detail in Rule 8 of the Code . Under the provisions of Rule 8.3, any person who, alone or acting together with any person(s) pursuant to an agreement or understanding (whether formal or informal) to acquire or control securities of Staffware and/or TIBCO, or who, as a result of any transaction becomes the owner or controller, directly or indirectly of one per cent . or more of any class of relevant securities of Staffware and/or TIBCO is required to disclose every dealing in any relevant securities of that company during the Offer Period . Relevant securities include Staffware Shares, TIBCO Shares, instruments convertible into, options in respect or any derivatives referenced to either Staffware Shares or TIBCO Shares . Under the provisions of Rule 8 .1 of the Code, any such dealings by Staffware, TIBCO or by any of their respective "associates" (within the meaning of the Code) must also be disclosed .

Disclosure should be made in the appropriate form by no later than 12 noon London time on the business day following the date of the dealing transaction . These disclosures should be sent to a Regulatory Information Service in the UK and to the Panel (fax number: +44 (0)20 7256 9386) . If you are in doubt as to the application of Rule 8 to you, please contact an independent financial adviser duly authorised under the Financial Services and Markets Act 2000, consult the Panel's website at www.takeovemancl .orp .uk or contact the Panel (telephone number : +44 (0)20 7638 0129, fax number : +44 (0)20 7256 9386). As at the last practicable date prior to this announcement :

(i) being 20 April 2004, there were 14,613,381 Staffware Shares (ISIN GB0008408758 ) in issue ;

(ii) being 20 April 2004, there were 198,827,594 TIBCO Shares (ISIN US88632Q1031) listed on Nasdaq under the symbol TIBX in issu e

Enquiries : TIBCO Software Inc. Media : Robin Stoecker Tel : +1650 846 5044 Investors: Michael Magaro Tel : +1 650 846 5428 Staffware plc John O'Connell - Chairman and CEO Tel : +44 (0)1628 786 800 Tim Perks - CFO Tel : +44 (0)1628 786 83 0 Banc of America Securities - financial adviser to TIBCO Paul Mullins Tel : +44 (0)20 7174 534 3 Drago Rajkovic Tel : +l (415) 913 3429 Dresdner Kleinwort Wasserstein - financial adviser and broker to StalTwar e Robert Petch Tel: +44 (0)20 7623 800 0 Michael Covington PR (Staffware) - Citigate Dewe Rogerso n Toby Mountford Tel : +44 (0)20 7638 957 1 Mob: +44 (0)7710 356 61 1 Sara Batchelor Tel : +44 (0)20 7638 957 1 Mob: +44 (0)7866 470890

TIBCO has scheduled a conference call for 9 :00am EST today to discuss the Offer. Interested parties may access the conference call over the internet through CCBN at www.companyboardroom.com. To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software . For those who cannot listen to a live broadcast of the call, a replay will be available through T1BCO's website at www.tibco .com shortly after the live call ends.

The Stafwure Directors accept responsibility for the information contained in this announcement relating to Staffware's current and histo rical position and the Stafjware Directors of the knowledge and belief of the Directors of Staffware (who have . To the best taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information. The TIBCO Offer Committee accept responsibility for all other information contained in this announcement. To the best of the knowledge and belief of the TIBCO Offer Committee taken all reasonable care to ensure that such is the case), (who have the information contained in this announcement for which they accept responsibility is in accordance with the faits and does not omit anything likely to affect the import of such information. Banc of America Securities, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively forTIBCO as financial adviser (within the meaning of the Rules of the Financial Services Autho rity) and for no one else in connection with the Offer and will not be responsible to anyone other than TIBCO for providing the protections afforded to clients of Banr of America Securities orfor giving advice in relation to the Offer.

12 Dresdner Kleinwort Wasserstein Limited which is authorised and regulated in the United Kingdom by the Financial Services Authority. is acting for Stafware and for no one else in connection with the Offer and is not acting for any person other than Sraffware and will not be responsible to any person other than Stgfware for providing advice in connection with the Offer and the other matters described herein The Offer will not be made, directly or indirectly, in or into Ausrralia, Canada or Japan and will not be capable of acceptance from within Australia. Canada or Japan Accordingly, copies of this announcement and all other documents relating to the Offer are not being, and must nor be, mailed or otherwise forwarded, distributed or sent in, into or from Australia, Canada or Japan. Persons receiving such documents (incl uding, without limitation, nominees, trustees and custodians) should observe these restrictions and must not mail or otherwise forward, distribute or send such documents in, into or from Australia, Canada or Japan. Doing so may invalidate any related purported acceptance of the Offer. This release containsforward-looking statements within the meaning of the "safe harbour" provisions of the United States securities laws. A ll statements other than statements of historical fact are statements that could be deemedforward-looking statements-including, without limitation, statements regarding (i) the ability of the acquisition to broaden T/BCO's solutionsfor automating and integrating business processes, (ii) the ability of the combined offering of the TIBCO's platform and the Staff ware's technology to provide an unparalleled solution to today's marketplace, (iii) the ability of the acquisition to create a larger software technology leader, (iv) the ability of T)BCO to deepen its industry expertise in finance, insurance, telecom and governmentsectors as a result of the acquisition, (v) the ability of the acquisition to increase TIBCO's distribution capabilities solutions, (vi) the continued development and support far Stafsvare's iProcess product and TIBCO's Business Works Wonblow productq (vii) the optimization of Sta fware's iProcess product to run with key T/BCO products, (viii) TIBCO plan to continue to market, develop and maintain existing BPM and business integration products, (ix) T!BCO's plan to deliver a fully interoperoble, untied suite in mid to late 2005 and (x) TIBCO's plan to provide an upgrade or migration path to current Staff ware's customers and the actual results could differ materially frons what is envisaged by such forward-looking statements if TIBCO is unable to successfully integrate the Staff ware's business after the acquisition, if TIBCO is unable to successfully develop, market and sell the Stafware's process management and workflow s'olutians or if the market for business integration .solutions does develop and grow as is now expected In addition, the acquisition may not occur or may not occur in the time currently contemplated if the shareholders of Stajfware do not accept the offer for their shares to TIBCO on the terms offered by TIBCO. TIBCO assumes no obligation to update the forward-looking statements included in this release. TIBCO will prepare the Offer Document to be distributed to Staff ware Shareholders. 778CO urge Sta(fware Shareholders to read the Offer Document when it becomes available because it will contain important information relating to the Offer. The availability of the Offer to persons not resident in the United Kingdom or the United States may be affected by the laws of the relevant jurisdictions . Such persons should inform themselves of, and observe, any applicable requirements. The Offer will be open to the US shareholders of Staff ware . The Offer in the United States will be made directly by TIBCO and not by Banc of America Securities . The Offer will be made for the securities of a non- US company. The Offer will be mule in accordance with the requirements of the Code and will be subject to disclosure and procedural requirements that are different from those under United Stores law. This announcement does not constitute an offer to sell or the solicitation of an offer to purchase or subscribe far any securities whether under the laws of the United States or under the laws of any state of the United States or elsewhere.

13 Embargoed until 0700 a .m. 22 April 2004

APPENDIX I Conditions and certain further terms of the Offer

1 Conditions of the Offer The Offer will be subject to the following condi tions:

(a) valid acceptances of the Offer being received (and not, where permitted, withdrawn) by no later than 3 :00 p.m. (London time) on the First Closing Date (or such later time(s) and/or date(s) as TIBCO may, with the consent of the Panel or subject to the rules of the Code,decide) in respect of not less than 90 per cent. (or such lesser percentage as TIBCO may decide) in nominal value of Staffware Shares to which the Offer relates, provided that this condition (a) will not be satisfied unless TIBCO and/or its wholly-owned subsidiaries shall have acquired or agreed to acquire, whether pursuant to the Offer or otherwise, Staffware Shares carrying, in aggregate, more than 50 per cent . of the voting rights then normally exercisable at a general meeting of Staffware, including for this purpose, to the extent (if any) required by the Panel, any such voting rights attaching to any Staffware Shares that are unconditionally allotted or issued before the Offer becomes or is declared unconditional as to acceptances whether pursuant to the exercise of any outstanding conversion or subscription rights or otherwise, and for this purpose:

(i) Staffware Shares which have been unconditionally allotted but not issued shall be deemed to carry the voting rights which they will carry upon issue; and

(ii) the expression "Staffware Shares to which the Offer relates" shall be construed in accordance with sections 428 to 430F inclusive of the Companies Act;

(b) the New TIBCO Shares being approved for listing , subject to official no ti ce of issuance, on Nasdaq;

(c) no government, government department or governmental, quasi-governmental, supranational, municipal, statutory, regulatory, administrative or investigative body, authority (including any national anti-trust, competition or merger control authorities or similar authorities) or any court, trade agency, association, institution or professional or environmental body or (without prejudice to the generality of the foregoing) any other person or body whatsoever in any jurisdiction (each a "Relevant Authority") having decided to take, institute, implement or threaten any action, proceedings, suit, investigation, reference or enquiry, or made, proposed or enacted any statute, regulation or order and there not continuing to be outstanding any statute, legislation, regulation, decision or order thereof, which would or might reasonably be expected to in any such case in a manner or to the extent which is material and adverse in the context of the wider TIBCO Group or the wider Staffware Group, as appropriate, taken as a whole :

(i) make the Offer or its implementation or the Acquisition void, unenforceable, prohibited and/or illegal under the laws of any relevant jurisdiction or directly or indirectly restrain, restrict, prohibit, delay or otherwise interfere with the implementation thereof, or impose additional adverse conditions or obligations with respect thereto, or otherwise challenge or interfere with the Offer or its implementation or the Acquisition ;

(ii) require the divestiture by any member of the wider TJBCO Group or the wider Staffware Group of all or any part of their respective businesses, assets or property or impose any limitation on the ability of any member of the wider TIBCO Group or the wider Staffware Group to conduct any of their respective businesses or to own or dispose of any of their respective assets or property or any part thereof ; (iii) impose any limitation on, or result in a delay in, the ability of any member of the wider TIBCO Group or the wider Staffware Group to acquire or to hold or to exercise effectively, directly or indirectly, all or any rights of ownership of shares or loans or securities convertible into shares in any member of the wider Staffware Group or the wider TIBCO Group or to exercise management control over any member of the wider TIBCO Group or the wider Staffware Group;

(iv) require any member of the wider TIBCO Group or the wider Staffware Group to acquire or offer to acquire any shares or other securities (or their equivalent) in any member of the wider Staffware Group owned by any third party (other than in implementation of the Offer or pursuant to Rule 9 of the Code) or to sell or offer to sell any shares or other securities (or their equivalent) or any interest in any assets owned by any member of the wider TIBCO Group or the wider Staffware Group ;

(v) impose any limitation on the ability of any member of the wider TIBCO Group or the wider Staffware Group to integrate or co-ordinate its business, or any part of it, with all or any part of the business of any other member of the wider TIBCO Group or the wider Staffware Group ;

(vi) result in any member of the wider TIBCO Group or the wider S taffw are Group ceasing to be able to car y on business under any name under which it presently does so or ceasing to be able to use in its business any name, trademark or other intellectual prope rty ri ght which it at present uses in each case on the same basis and terms as at present apply ; or

(vii) otherwise materially and adversely affect the business, financial or trading position, profits or prospects of any member of the wider Staffware Group or of any member of the wider TIBCO Group .

(d) all filings, applications and/or notifications deemed necessary having been made, and all necessary waiting and other time periods (including extensions thereof) under any applicable legislation or regulation of any relevant jurisdiction having expired, lapsed or been terminated, and all statutory or regulatory obligations in any relevant jurisdiction having been complied with, in each case in respect of the Offer or the Acquisition ;

(e) all authori sations, permissions and approvals deemed necessary or approp riate in any relevant juri sdiction for, or in respect of, the Offer or the Acquisition or to carry on the business of any member of the wider Staffware Group ("Authorisa tions") having been obtained , in terms reasonably sati sfactory to TIBCO, from all appro priate Relevant Authorities and from any persons or bodies with whom any member of the wider Staffware Group has entered into contractual arrangements ( that are mate rial in the context of the wider Staffware Group taken as a whole ), and any conditions or obligations attached to any such Authori sations being in terms reasonably satisfactory to TIBCO, and all such Authori sations remaining in full force and effect and there being no notice of an intenti on to revoke, suspend, restrict, modify or not to renew any of the same and all ne ce ssary statutory and regulatory obligations in any ju risdiction having been complied with ; (() Except as Disclosed, there being no provision of any arrangement, agreement, licence, permit, lease, franchise or other instrument to which any member of the wider Staffware Group is a party or by or to which any such member or any of its assets is or may be bound, entitled or subject and which, in consequence of the Offer or the Acquisition that would or might reasonably be expected to result in, to an extent which is material and adverse in the context of the wider Staffware Group taken as a whole:

(i) any monies borrowed by, or other indebtedness (actual or contingent) of, or any grant made or available to, any such member being or becoming repayable or capable of being declared repayable immediately or prior to their or its stated maturity or repayment dates or the ability of any such member to borrow monies or to incur any indebtedness being withdrawn or inhibited or becoming capable of being withdrawn or inhibited;

(ii) any such arrangement, agreement, licence, permit, lease, franchise or other instrument or the rights, liabilities, obligations or interests of any such member thereunder being terminated or adversely modified or affected or any unduly onerous obligation or liability arising or any action being taken or arising thereunder;

(iii) the creation of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any such member or any such mortgage, charge or other security interest becoming enforceable ;

(iv) the rights, liabilities, obligations or interests of any such member under any such arrangement, agreement, licence, permit, lease, franchise or other instrument or the interests or business of any such member in or with any other firm or body or person (or any agreement or arrangement relating to such interests or business) being terminated or adversely modified or affected;

(v) any assets or interest of any such member being or falling to be disposed of or charged or any right arising under which any such asset or interest could be required to be disposed of or charged in each case otherwise than in the ordinary course of business ;

(vi) any such member ceasing to be able to carry on business under any name under which it presently does so or ceasing to be able to use in its business any name, trademark or other intellectual property right which it at present uses , in each case on the same basis and terms as at present apply;

(vii) the financial or trading position or prospects of any such member being prejudiced or adversely affected ; or

(viii) the creation of any actual or contingent liabilities by any such member other than in the ordinary course of business ;

and no event having occurred that, under any provision of any arrangement, agreement, licence, permit, lease, franchise or other instrument to which any member of the wider Staffware Group is a party or by or to which any such member or any of its assets may be bound, entitled or subject could result in any of the events or circumstances as are referred to in sub-paragraphs (i) to (viii) of this condition (t) ;

(g) except as Disclosed, no member of the wider Staffware Group having since 3 1 December 2003 :

(i) issued or agreed to issue, or authorised or proposed the issue of, additional shares of any class, or securities convertible into or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares or convertible securities (save for options granted, and for any Staffware Shares allotted upon exercise of options granted, under Staffware Share Schemes or between Staffware and wholly-owned members of Staffware Group before the date of this announcement);

16 (ii) recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus in respect of shares, dividend or other distribution, whether payable in cash or otherwise, other than to other wholly-owned members of Staffware Group ;

(iii) save for intra-Staffware Group transactions, other than in the ordinary course of business, acquired or disposed of or transferred, mortgaged or charged or created any security interest over any asset or any right, title or interest in any asset (including shares and trade investments) which in any such case is material in the context of the wider Staffware Group taken as a whole or merged with or demerged any body corporate or authorised or proposed or announced any intention to propose any merger, demerger, acquisition, disposal, transfer, mortgage, charge or security interest (in any such case other than in the ordinary course of business) ;

(iv) issued, authorised or proposed or announced an intention to propose the issue of any debentures or, otherwise than in the ordinary course of business, become subject to any contingent liability or incurred or increased any indebtedness or contingent liability of an aggregate amount that is material in the context of the wider Staffware Group taken as a whole ;

(v) purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or made any other change to any part of its share capital that is material in the context of the Offer;

(vi) entered into or varied or become bound by any contract, commitment, arrangement or transaction (whether in respect of capital expenditure or otherwise) other than in the ordinary course of business that (A) is of a long-term, unduly onerous or unusual nature or magnitude, or (B) results or could reasonably be expected to result in a restriction of the scope of business currently carried on by any member of the wider TIBCO Group or the wider Staffware Group or (C) involves or would involve an obligation of such a nature or magnitude, in each case that is material in the context of the wider Staffware Group taken as a whole ;

(vii) waived or compromised or settled any claim that is materi al in the context of the wider Staffware Group taken as a whole ;

(viii) save for intra-Staffware Group transactions, implemented or authorised, effected or announced its intention to implement or enter into any reconstruction, amalgamation, scheme or similar arrangement (otherwise than in the ordinary course of business) ;

(ix) save for solvent voluntary liquidations, taken any corporate action or had any order made or legal proceedings instituted or threatened against it or petition (not of a frivolous or vexatious nature) presented for its winding-up (voluntary or otherwise), dissolution or reorganisation or for the appointment of any receiver, administrator, administrative receiver, trustee or similar officer of all or any of its assets and revenues or any analogous proceedings or similar event having occurred in any jurisdiction or any analogous person having been appointed in any jurisdiction and which is material and adverse in the context of the wider Staffware Group taken as a whole ; (x) entered into or made an offer (which remains open for acceptance) to enter into, or materially changed the terms of, any agreement, contract, commitment or arrangement with any of the directors or senior executives of Staffware or, to an extent that is material in the context of the wider Staffwarc Group taken as a whole of any member of the wider Staffware Group ;

(xi) made, committed to make, authorised or announced an intention to propose any change in its loan capital ;

(xii) been unable, or having admitted in writing that it is unable, to pay its debts or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business and which is material in the context of the wider Staffware Group taken as a whole ;

(xiii) made any alteration to its memorandum or articles of association, or other incorporation documents; o r

(xiv) entered into any arrangement, contract, agreement or commitment or passed any resolution or made any offer (which remains open for acceptance) or proposal so as to give rise to any obligation to engage in any of the transactions, matters or events referred to in this condition (g) ;

(h) since 31 December 2003, except as Disclosed:

(i) there having been no adverse change or deterioration in the business, financial or trading position or prospects of any member of the wider Staffware Group which in any such case is mate ri al in the context of the wider Staffware Group, taken as a whole;

(ii) no litigation, arbitration proceedings, prosecution or other legal proceedings having been instituted, announced or threatened by or against or remaining outstanding against any member of the wider Staffware Group or which may otherwise adversely affect any such member which, in any such case, is material in the context of the wider Staffware Group, taken as a whole ;

(iii) there having been no enquiry or investigation by or complaint or reference to any Relevant Authority in respect of any member of the wider Staffware Group and no such enquiry, investigation, complaint or reference having been threatened, announced or instituted or remaining outstanding which in any such case would materially and adversely affect the wider Staffware Group, ta ken as a whole ; and

(iv) no contingent or other liability having arisen or become apparent or increased which is material in the context of the wider Staffware Group taken as a whole ;

(i) TIBCO not having discovered that any financial or business information concerning any mem ber of the wider Staffware Group Disclosed is misleading, contains a misrepresentation of fact, or omits to state a fact necessa ry to make that information not misleading to an extent that is material and advers e in the context of the wider Staffware Group taken as a whole , and which has not, prior to 22 April 2004, be en corrected by further information Disclosed ; (j) TIBCO not having discovered that :

(i) except as Disclosed, any past or present member of the wider Staffware Group has not complied with any applicable legislation or regulations of any applicable jurisdiction with regard to the use, treatment, handling, storage, transport, disposal, discharge, spillage, leak or emission of any waste or hazardous substance or any substance reasonably likely to impair the environment or harm human health or otherwise relating to environmental matters or there has otherwise been any such use, treatment, handling, storage, transport, disposal, discharge, spillage, leak or emission which has occurred would be likely to give rise to any liability (whether actual or contingent) or cost on the part of any member of the wider Staffware Group ;

(ii) there is or is likely to be any liability (whether contingent or otherwise) on the part of any member of the wider Staffware Group to make good, repair, reinstate or clean up any property now or previously owned, occupied or made use of or controlled by any past or present member of the wider Staffware Group, or in which any such member may now have or previously have had or be deemed to have or have had an interest, under any environmental legislation, regulations, notices, circulars or orders or other lawful requirements of any Relevant Authority ; or

(iii) circumstances exist whereby a person or class of persons would be likely to have any claim or claims in respect of any product or process of manufacture or materials used therein now or previously manufactured, sold or carried out by any past or present member of the wider Staffware Group ,

in each case to an extent which is material in the context of the wider Staffware Group, taken as a whole .

For the purposes of these conditions, "the wider Staffware Group" means Staffware and its subsidiary undertakings, associated undertakings and any other undertakings in which Staffware and/or such undertakings (aggregating their interests) have a substantial interest; "the wider TIBCO Group" means TIBCO and its subsidiary undertakings, associated undertakings and any other undertakings in which TIBCO and/or such undertakings (aggregating their interests) have a substantial interest and, for these purposes, "substantial interest" means a direct or indirect interest in 20 per cent . or more of the equity or voting capital of undertakings ; and "Disclosed" shall mean disclosed in any of the documents, papers or information made available to TIBCO, any member of the wider TIBCO Group or any TIBCO financial or legal adviser in the dataroom located at the offices of Skadden, Arps, Slate, Meagher & Flom (UK) LLP on 5 to 20 April 2004 or disclosed in replies to inquiries relating to such documents, papers and information or otherwise disclosed in writing to TIBCO or its advisers ; or (ii) disclosed by being publicly announced through a Regulatory Information Service prior to 22 April 2004 .

TIBCO reserves the right to waive, in whole or in part , all or any of the conditions other than condition (a). if TIBCO is required by the Panel to make an offer for Staffware Shares under the provisions of Rule 9 of the Code, TIBCO may make such alterations to the above conditions, including condition (a), as are necessary to comply with the provisions of that Rule . The Offer will lapse unless all of the conditions set out above (other than condition (a)) are sa ti sfied or (if capable of waiver) waived or, where appropriate, determined by TIBCO in its reasonable opinion to be or to remain satisfied , by midnight on the later of 21 days after the First Closing Date and the date which is 21 days after the date on which the Offer becomes or is declared uncondi ti onal as to acceptances, or such later date as TIBCO may , with the consent of the Panel, decide . TIBCO shall be under no obligation to waive or treat as satisfied any of conditions ( b) to (j) inclusive by a date earlier than the latest date specified above for the satisfaction thereof, notwithstanding that any such condition or the other conditions of the Offer may at such earlier date have been waived or sa ti sfied and that there are at such earlier date no circumstances indica ting that any such conditions may not be capable of sati sfaction .

The Offer will lapse ( unless otherwise agreed by the Panel) if, before 3 :00 p .m. on the later of the First Closing Date or the date on which the Offer becomes or is declared unconditional as to acceptances , the Secreta ry of State for Trade and Industry announces a reference of the Offer or the Acquisition to the Compe ti tion Commission .

If the Offer lapses, the Offer will cease to be capable of further acceptance and TIBCO and accepting Staffware Shareholders shall then cease to be bound by Forms of Acceptance submitted at or before the time when the Offer so lapses .

2 Certain further terms of the Offe r Staffware Shares will be acquired by TIBCO under the Offer fully paid and free from all liens, equities, charges, encumbrances and other interests together with all rights now or hereafter attaching thereto, including the right to receive and retain all dividends, interest and other distributions (if any) declared, made or payable after the date of this announcement save for the recommended final dividend of 5 pence per Staffware Share announced on 16 March 2004 .

The Offer will be on the terms and will be subject, inter alia, to the conditions set out in this announcement and such other terms as may be set out in the Offer Document or as may be required to comply with the provisions of the Code, the Listing Rules of the UK Listing Authority and applicable requirement of US securities laws and the applicable rules of Nasdaq . The Offer and any acceptances and elections thereunder will be governed by English law .

The making of the Offer in, or to Staffware Shareholders resident in, or citizens or nationals of, jurisdictions outside the UK or the United States, or to persons who are custodians, nominees or trustees for citizens or nationals or residents of jurisdictions outside the UK or the United ("overseas persons") may be prohibited or affected by the laws of the relevant overseas jurisdiction . Such overseas persons should inform themselves about and observe any applicable legal requirement . It is the responsibility of any such overseas persons wishing to accept the Offer to satisfy himself/herself as to full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required, the compliance with other necessary formalities and the payment of any issue, transfer or other taxes or duties due in that jurisdiction . Any such overseas person will be responsible for any such issue, transfer or other taxes or duties by whosoever payable and TIBCO and Banc of America Securities (and any person acting of behalf of either of them) shall be fully indemnified and be held harmless by such overseas person for any such issue, transfer or other taxes or duties or other requisite payments as TIBCO or Banc of America Securities may be required to pay . ,

20 APPENDIX II Sources of information and bases of calculatio n

(i) The value placed by the Offer on the entire issued sh ar e capital of Staffware is based on :

14,613,381 Staffware Sh ares in issue on 20 April 2004;

The price per TIBCO Share of US$8.73 which is calculated as the average Closing Price over the last five dealing days ending 20 April 2004 ; and

An exchange rate of US$1 .7932 : £ 1 .00, which is calculated as the average of noon buying rate in New York City for cable transfers in pounds Sterling as certified for customs purposes by the Federal Reserve Bank of New York for the five dealing days ending 20 April 2004 .

(ii) The entire issued common stock of TIBCO is 198,827,594 .

(iii) The financial information relating to TIBCO is extracted from its 10-K filing with the SEC for the year ended 30 November 2003 .

(iv) The financial information relating to Staffware is extracted from the Annual Report and Accounts of Staffware for the year ended 31 December 2003 and the unaudited management accounts for the year ended 31 December 2003 . APPENDIX III Definitions

The following definitions apply throughout this announcement, unless the context otherwise requires :

"Acquisition" shall mean the proposed acquisition of Staffware pursuant to the Offe r

"Banc of America Securities" Banc of America Securities Limited, financial adviser to TIBC O

"business day" any day, other than a Saturday or Sunday or a public holiday in the UK , consisting of the time period from 12 :01 a .m . until and including 12 :0 0 midnight (London time )

"Closing Price" the closing middle market quotation of a Staffware Share as derived from th e Daily Official List published by the London Stock Exchange for that day o r the last reported sale price of a TIBCO Share as reported in Nasdaq for tha t day, as the case may be

"Code" The City Code on Takeovers and Mergers

"Companies Act" or "Act" the Companies Act 1985, as amende d

"Dresdner Kleinwort Wasserstein" Dresdner Kleinwort Wasserstein Limited, financial adviser and broker t o Staffware

"EBITDA" profit before interest, taxation, depreciation , amo rtisation of goodwill an d exceptional item s

"Enterprise Value" Staffware m arket capitalisation, calculated as the issued share capital on 20 April 2004 multiplied by the Closing Price, less Staffware' s net cash posi ti o n as at 31 December 2003 (£21 .8 million)

"Exchange Act" the US Securities Exchange Act of 1934, as amended, and the rules and regulation promulgated there under

"First Closing Date" 21 days following posting of the Offer Document

"Form of Acceptance" the form of acceptance, authority and election relating to the Offer which wil l accompany the Offer Document for use by Staffware Shareholders in connection with the Offer

"FSA" Financial Services Authority

"ISIN" International Securities Identification Numbe r

22 London Stock Exchange plc "London Stock Exchange"

Association of Securities Dealers Automated Quotation System "Nasdaq " The National

Shares to be issued by TIBCO as consideration under the "New TIBCO Shares" the new TI BCO Offer

the recommended cash and share offer (to be made by Banc of America "Offer" Securities for and on behalf of TIBCO outside the United States and by TIBCO in the United States) to acquire the Staffware Shares on the terms an d subject to the conditions to be set out in the Offer Document including, where the context so requires , any subsequent revision , variation, extension or renewal of, or election available under , such offer

"Offer Document" the document to be addressed to Staffware Shareholders containing and setting out the terms and conditions of the Offe r

"Offer Period " the period commencing on the date of this announcement and ending on whichever of the following dates shall be the latest: (i) the First Closing Date ; (ii) the date on which the Offer lapses ; and (iii) the date on which the Offer becomes or is declared unconditional as to acceptance s

"Official List" the Official List of the UK Listing Authority

"Panel" The Panel on Takeovers and Mergers

"£", "Sterling", "pence" or "p the lawful currency of the United Kingdom

"Regulatory Information Service " any regulatory information service listed in schedule 12 of the Listing Rules of the UK Listing Authority

"SEC" The Securities and Exchange Commission in the US

"Staffware" or "Company" Staffware plc (company no . 1382592 )

"Staffware Directors" or "Board of Staffware" or "Staffware Board" the board of directors of Staffware

"Staffware Shareholders" holders of Staffware Share s 23 "Staffware Shares" the existing unconditionally allotted or issued and fully paid ordinary shares of 10 pence each in the capital of Staffware (other than any shares which may be Treasury Shares) and any further such shares which are unconditionally allotted (including pursuant to the exercise of outstanding options granted under the Staffware Share Option Schemes) or issued prior to the time at which the Offer ceases to be open for acceptance or, subject to the provisions of the Code, such earlier time and/or date as TIBCO may decid e

"Staffware Share Option Schemes" the 1997 Executive Share Option Scheme, the 1998 Unapproved Share Option Scheme, the 1998 Inland Revenue Approved Share Option Scheme, the 2000 Unapproved Share Option Scheme, the 2002 Approved Share Option Scheme, the 2002 Unapproved Share Option Scheme, the 2002 Savings-Related Share Option Scheme, the Enterprise Management Incentive Options and the 2003 Employee Stock Purchase Pla n

"subsidiary", "subsidiary undertaking", " associated undertaking" and shall be construed in accordance with the Companies Act (but for this "undertaking" purpose ignoring paragraph 20(1)(b) of Schedule 4A to the Companies Act)

"TIBCO " TIBCO Software Inc .

"TIBCO Offer Committee" the officers and directors of TIBCO who were appointed by the Board of Directors of TIBCO to serve on the Offer Committee consisting of Vivek Ranadive, Christopher O'Meara, Raj Mashruwala and William Hughes

"T1BCO Directors" or "TIBCO Board" or "Board of TIBCO" the board of directors of TIBCO

"TIBCO Group" TIBCO and its subsidiary undertakings

"TIBCO Shares" shares of common stock of par value $0.001 each in the capital of TIBCO

"Treasury Shares" the ordinary shares of 10 pence in the capital of Staffware (if any) which are, for the time being, held by Staffwarc as treasury sh ares (within the meaning of Section 162A of the Companies Act )

"UK" or "United Kingdom " the United Kingdom of Great Britain and Northern Ireland

"UK Listing Authority " the FSA acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000

"United S tates", "US" or "USA" The United States of America, its territories and possessions, any state of the United States of America and the District of Columbia

"US Dollar", "US$" or "$" or "cents" or "c" the lawful currency of the United States 24 "US Person " a US person as defined in Regulation S under the US Securities Act

"US Securities Act" the US Securities Act of 1933, as amended and the rules and regulations promulgated thereunder

25

Created by IOKWizard www .IOKWizitrd .com EXHIBIT F

Item 7. Financial Statements and Exhibits

Iteill 12 . Results of Operations and Financial Condition

SIGNATURE EXHIBIT INDE X EX-99.1 (Exhibits not specifically designated by another number and by investment companies) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 8-K

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

June 17,2004 Date of Report (date of earliest event reported)

TIBCO Software Inc. (Exact name of Registrant as specified in its charter )

Delaware 000-26579 77-0449727 (State or other jurisdiction of (Commission File Number) (I.R.S. Employer incorpor a tion or organization) Identification Number)

3303 Hillview Avenue Palo Alto, California 94304-1213 (Address of principal executive offices)

(650)846-1000 (Registrant's telephone number, including area code)

Not Applicable (Former name or former addre ss, if changed since last report .) Item 7. Financial Statements and Exhibits

(c) Exhibits .

99 .1 Press release of TIBCO Software Inc . dated June 17, 2004.

Item 12 . Results of Operations and Financial Condition The information in this Current Report is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), or otherwise subject to the liabilities of that Section . The information in this Current Report shall not be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing .

On June 17, 2004, TIBCO Software Inc . issued a press release announcing its financial results for its second fiscal quarter ended May 30, 2004, the text of which is furnished herewith as Exhibit 99 .1 . SIGNATURE

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 .

TIBCO SOFTWARE INC .

Date : June 17, 2004 By : /s/ Christopher G . O'Meara

Name : Christopher G . O'Meara Title: Executive Vice President, Finance & Chief Financial Officer EXHIBIT INDE X

Exbibit Number Description

99.1 Press release of TIBCO Software Inc. dated June 17, 2004 . Exhibit 99.1 PJTIBCO The Power of Now `

Press Contact : Investor Relations Contact: Robin Stoecker Michael Magaro TIBCO Software Inc . TIBCO Software Inc . (650)846-5044 (650) 846-5747 [email protected] mmagaro@tibco .com

TIBCO SOFTWARE REPORTS SECOND QUARTER FINANCIAL RESULTS

PALO ALTO, Calif., June 17, 2004 - TIBCO Software Inc. (Nasdaq:TIBX), a leading enabler of real-time business and the world's largest independent business integration software company, today announced results for its second fiscal quarter ended May 30, 2004 . Total .revenues for the second quarter were $81 .2 million. License revenues for the second quarter were $45 .3 million . Net income for the quarter calculated in accordance with accounting principles generally accepted in the United States was $9 .6 million or $.05 per share on a fully diluted basis .

TIBCO had non-GAAP net income for the second fiscal quarter of $11 .0 million . TIBCO's non-GAAP net income per share on a fully diluted basis was $ .05 for the quarter. Non-GAAP results exclude stock-based compensation charges and amortization of acquired intangibles, and assume a non-GAAP effective tax rate of 38% . "Increasingly, companies are turning to TIBCO to help derive value out of their existing assets, gain operational efficiencies and improve customer loyalty," said Vivek Ranadiv6, Chairman and CEO of TIBCO Software . "Our second quarter performance was punctuated by solid growth and we will continue to grow our business both organically and inorganically ."

Highlights for TIBCO's Second Fiscal Quarter 200 4 During Q2, we added 73 new customers, including companies such as HE . Butt Grocery Company, New York Power Authority, PepsiCo, Reserve Bank of New Zealand and Wachovia Securities, among others . In addition, we increased our business through successfully expanding the footprint of our solutions with such leading companies as Societe Gdndrale, H&R Block, Smart & Final and Wynn Resorts, just to name a few .

Second Quarter Highlights :

• Integration continues to be a primary focus area for companies as they try to leverage massive investments in CRM, ERP, and other systems, and try to orchestrate these assets . As new and existing customers find innoviljve ways to utilize TIBCO technology to solve business problems, TIBCO is pioneering the next stage of real-time business - Predictive Business . Whereas real-time business is about responding faster than competitors, springing into action to address customer needs, and capturing opportunities ahead of the competition, Predictive Business is about avoiding problems altogether, anticipating customer needs and growth opportunities, and proactively addressing them .

• As a result of re-entering the Financial Services sector with direct sales into financial services organizations, TIBCO has added 15 new financial services industry customers to our client base. In Q2, we added several new companies including Bank of America, BNP Paribas, Morgan Stanley, ISE, BPU Group and Allstate, just to name a few. These new customers come from various sectors of financial services such as retail banking, trading infrastructure, corporate and investment banking and exchanges .

• On April 22nd, we announced our offer to acquire Staffware PLC and on June 7th, we declared the transac ti on to be wholly unconditional and Staffware became part of TIBCO. The acquisition of Staffware by TIBCO will broaden TIBCO' s solutions for automating and integrating business processes . Together, TIBCO' s leading real-time business integration platform and Staffware' s business process management technology have the potential to provide an unparalleled solution to today's marketplace .

Conference Call Details TIBCO Software has scheduled a conference call for 5 :00 p .m . EST today to discuss its fiscal second quarter results. The conference call will be hosted by CCBN and may be accessed over the Internet at www .tibco.com. To listen to the live call, please go to the Web site at least 15 minutes early to register, download and install any necessary audio software . For those who cannot listen to the live broadcast of the call, a replay will be available through TIBCO Software Inc .'s website at www .tibco.com shortly after the live call ends . About TIBCO Software Inc . TIBCO Software Inc . (NASDAQ :TIBX) is the leading independent business integration software company in the world, demonstrated by market share and analyst reports. In addition, TIBCO is a leading enabler of Real-Time Business, helping companies become more cost-effective, more agile and more efficient . TIBCO has delivered the value of Real-Time Business, what TIBCO calls The Power of Now®, to over 2,000 customers around the world and in a wide variety of industries . For more information on TIBCO's proven business integration, business optimization, and enterprise backbone solutions, TIBCO can be reached at +1 650-846-1000 or on the Web at www .tibco .com . TIBCO is headquartered in Palo Alto, CA . it##

TIBCO, the TIBCO logo, The Power of Now and TIBCO Software are trademarks or registered trademarks of TIBCO Software Inc . in the United States and/or other countries. All other product and company names and marks mentioned in this document are the property of their respective owners and are mentioned for identification purposes only .

###

Use of Non-GAAP Financial Information TIBCO provides non-GAAP net income and non-GAAP net income per share data as additional information for its operating results . TIBCO believes that presentation of non-GAAP net income and non-GAAP net income per share data provides useful information to management and investors regarding certain additional financial and business trends relating to the company's financial condition and results of operations . For example, the non-GAAP results are an indication of TIBCO's baseline performance before gains, losses or other charges that are considered by management to be outside the company's core business operational results. In addition, these adjusted non-GAAP results are among the primary indicators management uses as a basis for planning and forecasting of future periods . These measures are not in accordance with, or an alternative for, accounting principles generally accepted in the United States and may be different from non-GAAP measures used by other companies.

t .eaal Notice Reeardine Forward-Lookin Statements This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the federal securities laws . All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, without limitation, statements regarding TIBCO's commitment to continued growth, the continued focus of companies on integration and the ability of TIBCO to provide unparalleled solutions as a result of the acquisition of Staffware . Actual results could differ materially from such forward-looking statements if demand for TIBCO's products and services or economic conditions affecting the market for TIBCO's products and services fluctuate, if TIBCO is unable to successfully compete with existing or new competitors, if TIBCO cannot successfully execute its growth plans or if TIBCO is unable to successfully integrate Staffware and its products . Additional information concerning factors that could cause actual results to differ materially from those contained in the forward- looking statements set forth herein, including TIBCO's history of losses, the unpredictabili ty of future revenue, TIBCO' s lack of long-term customer contracts , rapid technological and market changes, risks associated with infrastructure softw are and the volatility of TIBCO's stock prices are discussed more fully in TIBCO 's filings with the Secu ri ties and Exchange Commission ("SEC"), including but not limited to its most recent Annual Repo rt on Form 10 - K filed with the SEC on February 5, 2004, and reports filed after the Form 10-K . Copies of filings made with the SEC are available through the SEC's electronic data gather analysis and retr ieval system (EDGAR) at www . sec .gov . TIBCO assumes no obligation to update the forw ard - looking statements included in this release. TIBCO Software Inc . Non-GAAP Statements of Operation s Impact of Non-GAAP Adjustments on Reported Net Income (unaudited, in thousands , except per share data )

Three Months Ended Six Months Ended May 30, 2004 May 30, 2004

GAAP Adjustments* Non-GAAP As Reported Adjustments* As Adjusted

Revenue $ 81,249 $ - $ 81,249 $ 155,650 $ - $ 155,650 Cost of revenue 18,419 (1,201) 17,218 34,832 (2,406) 32,426

Gross profit 62,830 1,201 64,031 120,818 2,406 123,224

Operating expenses: Research and development 13,839 (7) 13,832 26,958 (32) 26,92 6 Sales and marketing 26,891 (20) 26,871 53,527 (56) 53,47 1 General and administrative 5,736 (9) 5,727 10,542 (12) 10,53 0 Amortization of intangibles 483 (483) - 982 (982) -

Total operating expenses 46,949 (519) 46,430 92,009 (1,082) 90,927 Income from operations 15,881 1,720 17,601 28,809 3,488 32,297

Interest and other income, net 158 - 158 1,773 - 1,773

Income before taxes 16,039 1,720 17,759 30,582 3,488 34,070 Provision for income taxes (1) 6,441 307 6,748 12,456 491 12,947

Net income $ 9,598 $ 1,413 $ 11,011 $ 18,126 $ 2,997 $ 21,123

Net income per share - basic $ 0 .05 $ 0 .06 $ 0.09 $ 0 .1 0

Basic shares outstanding 198,816 198 ,816 204,002 204,002

Net income per share - diluted $ 0 .05 $ 0.05 $ 0.08 $ 0.1 0

Diluted shares outstanding 212,658 212,658 217,555 217,555

• The following table summarizes the adjustments for the respective periods presented :

Three Months Ended Six Months Ende d May 30 , 2004 May 30, 2004

Net income, GAAP $ 9,598 $ 18,12 6 Stock -based compensation 45 12 3 Amortization ofIntangibles 1,675 3,365 Provision for income taxes (1) (307) (491 )

Net income, non-GAAP $ 11,011 $ 21,123

(1) The projected pro forma effective tax rate for 2004 of 38% has been used to adjust the provision for income taxes for non-GAAP purposes . TIBCO Software Inc. Balance Sheets (unaudited, in thousands )

May 30, February 29, November 30, 24)04 2004 2003

ASSETS Current assets : 86,190 $ 83,27 8 Cash and cash equivalents $ 101,254 $ 521,39 1 Short-term investments 278,165 429,757 70,528 53,987 53,659 Accounts receivable, net 4,454 Accounts receivable from related parties 2,598 3,470 Cash restricted for acquisition 150,000 - Other current assets 16,863 15,249 15,54 9

588 ,653 678,33 1 Total current assets 619,408 116,926 119,124 Property and equipment, net 115,567 Other assets 35,725 35,525 34,923 Goodwill 98,691 98,691 103,00 6 Acquired intangibles, net 4,510 6,184 7,87 5

Total assets $ 873,901 $ 845,979 $ 943,25 9

LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities : Accounts payabl e $ 3,968 $ 3,482 $ 3,692 Amounts due related parties 1 3 1,64 1 Accrued liabilities 47,280 37,884 36,219 Accrued excess facilities costs 38,509 40,471 42,522 Deferred revenu e 49,458 46,251 42,914 Current portion of long term note payabl e 1,666 1,645 1,624

Total current liabilities 140,882 129,736 128,61 2

Long-term note payable 51,009 51,433 51,853

Stockholders' equity : Common stock 199 198 21 3 Additional paid-in capita l 822,554 812,876 921,03 8 Unearned stock-based compensation (174) (196) (254) Accumulated other comprehensive income (267) 1,832 225 Accumulated defici t (140,302 ) (149,900) (158,428)

Total stockholders' equity 682,010 664,810 762.794

Total liabilities and stockholders' equity $ 873, 901 $ 845,979 $ 943,259 TIBCO Software Inc. Statements of Operations (unaudited, in thousands, except per share data)

Three Months Ended Three Months Ended Six Months Ended February 29, Three Months Ended Six Months Ended May 30, 2003 May 30, 2003 2004 May 30, 2004 May 30,200 4

License Revenue : Non-related parties $ 27,977 $ 52,762 $ 36,459 $ 41,261 $ 77,720 Related patties 2,823 13,013 4,311 4,057 8,,36 8

Total license revenue 30,800 65,775 40,770 45,318 86,088

Service and maintenance revenue : Non-related parties 26,303 51,211 29,342 31,644 60,986 Related parties 3,826 7,049 3,519 3,317 6,836 Billed expenses 539 1,086 770 970 1,740

Total service and maintenance revenue 30,668 59,346 33,631 35,931 69,562

Total revenue 61,468 125,121 74,401 81,249 155,650 Cost of revenue : Stock-basedcompensation 65 119 14 9 23 Other cost of revenue non-related parties 14,489 28,913 16,399 18,410 34,80 9 Other cost of revenue related parties 199 602 - - -

Gross Profit 46,715 95,487 57,988 62,830 120,818

Operating expenses : Research and developmen t Stock-based compensation 148 375 25 7 32 Other research and development 17,119 34,395 13,094 13,832 26,926 Sales and marketing Stock-based compensation 100 137 36 20 56 Other sales and marketing 29,099 55,948 26,600 26,871 53,47 1 General and administrative Stock-based compensation 18 57 3 9 1 2 Other general and administrative 5,728 10,753 4,803 5,727 10,530 Restructuring charges - 1,100 - - - Amortization of acquired intangibles 499 998 499 483 98 2

Total operating expenses 52,711 103,763 45,060 46,949 92,009

Income (loss) from operations (5,996) (8,276) 12,928 15,881 28,809 Interest and other income, net 4,092 8,733 1,172 721 1,893 Realized gain (loss) on investments 900 1,362 443 (563) (120)

Net income (loss) before income taxes (1,004) 1,819 14,543 16,039 30,58 2 Provision for (benefit from) income taxes (444) 718 6,015 6,441 12,456

Net income (loss) $ (560) $ 1,101 $ 8,528 $ 9,598 $ 18,126

Net income per share - basic $ (0.00) $ 0 .01 $ 0.04 $ 0.05 $ 0.0 9

Shares used to compute net income per share - basic 211,213 210,718 209,188' 198,816 204,002

Net income per share - diluted $ (0.00) $ 0.01 $ 0.04 $ 0.05 $ 0.08

Shares used to compute net income per share - diluted 211,213 218,646 222,452 212,658 217,555 TIBCO Software Inc. Statements of Cash Flows (unaudited, in thousands)

Six Months Ende d

May 30, May 30, 2003 2004

Cash flows from operating activities : Net income $ 1,101 $ 18,126 Adjustments to reconcile net income to net cash provided by operating activities : Depreciation and amortization 7,249 6,300 Amortization of acquired intangibles 3,382 3,365 Amortization of stock-based compensation 688 117 Realized gain (loss) on investments, net (1,362) 119 Acquisition and stock option related tax benefits 9,13 1

Changes In assets and liabilities : Accounts receivable 11,196 (16,869) Due from related parties, net (3,368) 216 Other assets (1,484) (1,440 ) Accounts payable (894) 276 Accrued liabilities and excess facilities (9,447) 7,126 Deferred revenue (1,858) 6,544

Net cash provided by operating activities 5,203 33,01 1

Cash flows from investing activities : Purchases of short-term investment s (441,098) (390,339) Sales and maturities of short-term investments 492,61 4 632,637 Purchases of property and equipment, net (974) (2,743) Cash and short-term investments pledged as security (150,748) Purchases of private equity investments n?t i

Net cash provided by investing activities 50,542 88 ;686

Cash flows from financing activities: Proceeds from exercise of stock options 59 6 9,236 Proceeds from employee stock purchase program 2,78 3 2,423 Payment for repurchase and retirement of common shares (115,000) Principal payments on long term debt (802)

Net cash provided by (used for) financing activities 3,379 (104,143 )

Effect of exchange rate changes on cash (7) 422 Net change in cash and cash equivalents 59,117 17,976 Cash and cash equivalents at beginning of period 57,229 $3,27 8

Cash and cash equivalents at end of period $ 116,346 S 101,254

Created by lOKWizard www .lOKWizard.corn EXHIBIT G

PART I

FINANCIAL INFORMATIO N ITEM 1. FINANCIAL STATEMENT S ITEM 2. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ITEM 4. CONTROLS AND PROCEDURES

OTHER INFORMATIO N ITEM 4. SUBMISSION OF MATTERS TO A VOTE ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K SIGNATURES EX-10 . 1 (Material contracts)

EX-31 . 1

EX_32• 1

EX-32 .2 Table of Contents

UNITED STATE S SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-Q

(Mark One )

Cx] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 193 4

For the quarterly period ended May 30, 2004 OR

0 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 193 4

For the transition period from to

Commission File Number: 000-26579

TIBCO SOFTWARE INC . (Exact name of registrant as specified In Its charter)

Delaware 77-0449727 (State or other jurisdiction of (I .R.S . Employer incorporation or organiza tion) Identification No.)

3303 Hillview Avenue Palo Alto, California 94304-1213 (Address or principal executi ve offices) (zip code)

Registrant 's telephone number, including are a code: (650) 846-1000

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 © No ❑

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

The number of shares outstanding of the registrant's Common Stock, $ 0 .001 par value, as of June 25, 2004 was 209,882,607. Table of Contents INDEX

Page No. Item

Item 1 Financial Statetttent_. 7 . 2003 3 Condensed Consolidated Balance Sheets as of May 31 . 2004 and November 30 (Unaudited) d May 3 1 2(N)4 and May I . 2003 ( tti t Consolidated Statements of Operation for the three months and six-months ende ( Unaudited) 4 Condensed Consolidated Statements of Cash flows for the six-months ended May 11 .2004 and May 31 .2003 ([ Inaudited) 5 Noio to Condensed Consolidated Financial Statements (Unaudited) 6

Item 2 Ma ttte n nt's Discussion and Analysis of Financial Condition and Results of Operations 17 36 Item 3 Ouantitative and Qualitative Disclosures about Market Risk 3 6 Item 4 Controls and Procedures PART II - OTHER INFORMATION 38 Item 4 Submission of Matters to a Vote of Security Holders 38 Item 6 Exhibits and Rerxirts on Fonn 8- K Sionalures 39

2 Table of Contents TIBCO SOFTWARE INC . Condensed Consolidated Statements of Operations (in thousands, except per share data)

Three Months Ended Six Months Ended May 31 , May 31 ,

2004 2003 2004 2003

(Unaudited) (Unaudited ) License revenue: Non-related parties $ 41,261 $ 27,97 7 $ 77,720 S 52,762 Related parties 4,057 2,823 8,368 13,013

Total license revenue 45,318 30,800 86,088 65,77 5

Service and maintenance revenue : Non-related parties 31,644 26,303 60, 986 51,21 1 Related parties . 3,317 3,826 6,836 7,049 Reimbursable expenses 970 539 1,740 1,08 6

Total service and maintenance revenue 35,931 30,668 69 ,562 59,346

Total revenue 81,249 61 ,468 155, 650 125,12 1 Cost of revenue : Stock based compensation 9 65 23 11 9 Other cost of revenue non-related parties 18,410 14,489 34,809 28,913 Other cost of revenue related parties - 199 - 602

Gross profit 62,830 46.715 120,818 95,487

Operating expenses : Research and development : Stock- based compensation 7 148 32 37 5 Other research and development 13,832 17,119 26,926 34,395 Sales and marketing : Stock-based compensation 20 100 56 13 7 Other sales and marketi ng 26,871 29,099 53,471 55,948 General and administrative : Stock- based compensation 9 18 12 57 Other general and administrative 5,727 5,728 10,530 10,753 Restructuring charge s - - 1,100 Amortization of acquired intangible s 483 499 982 998

Total operating expenses 46,949 52,711 92,009 103,763

Income (loss) from operations 15,881 (5,996) 28,809 ( 8,276) Interest and other income (expense), net 849 4,992 3, 161 10,095 Interest expense (691)- - (1,388) -

Income (loss) before income taxes 16,039 (1,004) 30,582 1,81 9 Provision for (benefit from) income taxes 6,441 (444) 12,456 71 8

Net income (loss ) $ 9,598 $ (560) $ 18,126 $ 1,10 1

Net income (loss) per share : Basic $ 0.05 $ (0.00) $ 0.09 $ 0 .0 1

Weighted average common shares outstanding 198,816 211,213 204,002 210,71 8

Net income (loss) per share : Diluted $ 0.05 $ (0.00) $ 0.08 $ 0.0 1

Weighted average common shares outstanding 212,658 211 .213 217,555 218,646

See accompanying notes to condensed consolidated financial statements .

4 Table of Contents Restructuring-related lease obligations are as follows ( in thousands) :

Remaining 2004 2005 2006 2007 2008 Thereafter Tota l

Gross lease obligations $ 4,371 $ 8,586 $7,260 $7,368 $7,589 $ 16,549 $51,723 Sublease income (1,473) (2,033) (909) (920) (949) (1,556) (7,840)

Net lease obligations $ 2,898 $ 6,553 $4,351 $6,448 $6,640 $ 14,993 $43,88 3

As of May 31, 2004, future minimum lease payments under restructured non-cancelable operating leases include $35 .2 million provided for as accrued restructuring costs and $3 .3 million for acquisition integration liabilities . These amounts are included in Accrued Excess Facilities Costs on our Condensed Consolidated Balance Sheets .

In April 2004, in order to cover the cash component of our agreement to acquire Staffware, we placed $150 .0 million into a restricted cash account. The acquisition became unconditional and we acquired approximately 85% of the outstanding Staffware stock on June 7, 2004 .

In February 2004, we entered into a $0.7 million bank guarantee in connection with Value Added Tax refunds for one of our European subsidiaries . The cash restricted in connection with this guarantee is included in Other Assets on our Condensed Consolidated Balance Sheets .

In connection with the mortgage note payable, we have a $20.0 million revolving line of credit that matures on June 23, 2005 . As of February 29, 2004, no amounts were drawn on this line of credit. We are required to maintain a minimum unrestricted cash, cash equivalent, and short-term investment balance of $150.0 million as well as other non-financial covenants defined in the agreement. We were in compliance with all covenants at May 31, 2004.

As of May 31, 2004, we had a $13 .0 million irrevocable standby letter of credit in connection with the mortgage note payable . This letter of credit automatically renews for successive one-year periods, until the mortgage note payable has been satisfied in full . The letter of credit is collateralized by the revolving line of credit described above .

As of May 31, 2004, we had a $5.0 million irrevocable standby letter of credit outstanding in connection with a facility lease . The letter of credit automatically renews annually for the duration of the lease term, which expires in December 2010. The investments pledged for security of the letter of credit are presented as restricted cash and included in Other Assets on the Condensed Consolidated Balance Sheets .

As of May 31, 2004, we had a $0. 9 million irrevocable standby letter of credit outstanding in connec ti on with a facility surrender agreement. The letter of credit automa ti cally renews an nually for the dura ti on of the letter of credit requirement of the surrender agreement, which expi re s in June 2006 . The investments pledged for security of the letter of credit are presented as restricted cash and included in Other Assets on the Condensed Consolidated Balance Sheets .

Our software license agreements typically provide for indemnifica ti on of customers for intellectual propert y infri ngement claims . To date, no such claims have been filed against us . We also warrant to customers that software products operate substan tially in accordance with specifications . Histo ri cally, minimal costs have been incurred related to product warran ti es, and as such no accruals for warranty costs have been made . In addi tion , we indemnify our officers and directors under the terms of indemnity agreements entered into with them , as well as pursuant to our certificate of incorpora ti on , bylaws , and applicable provisions of Delaware law, To date, we have not incurred any costs re lated to these indemnification arrangements . FACTORS THAT MAY AFFECT OPERATING RESULTS The following risk factors could materially and adversely affect our futu re operating results and could cause actual events to differ materially from those predicted in the forward- looking statements we make about our business .

Any failure to successfully integrate Staffware ' s business operations could adversely affect our financial results. We intend to complete our acquisition of Staffw are in the third quarter of fiscal 2004. We intend to integrate certain of our operations with those of Staffware to reduce the expenses of the combined comp any . If we are unable to integrate our operations with Staffware's opera ti ons in a ti mely manner, we may be unable to achieve the anticipated synergies . The challenges of integra ti ng Staffware include , among other things:

• inconsistencies in standards, controls, procedures and policies, and compensation structures between TIBCO and Staffware ;

• potential unknown liabilities associated with the acquired business and technology;

28 Table of Contents

• demonstrating to our customers that the acquisition will not result in adverse changes in product offerings, customer service standards or business focus;

• coordinating and consolidating ongoing and future research and development efforts;

• unanticipated delays in or expenses related to the integration of operations ;

• retaining and integrating key employees, as necessa ry, including members of Staffware' s sales force;

• conducting adequate training of employees and modifying operating control s tand ards in areas specific to U .S . corporati ons such as U.S . GAAP and requirements under the Sarb anes-Oxley Act of 2002 and the rules and regula ti ons promulgated thereunder;

• costs and delays in implementing common systems and procedures , including financial accounting systems and customer information systems ;

• consolidating corporate and administrative infrastructure, particularly in light of Staffware's decentralized interna ti onal corporate structure;

• identifying and eliminating redundant and underperforming operations and assets ;

• using capi tal assets efficiently to develop the business of the combined company ;

• minimizing the diversion of management's attention from ongoing business concerns;

• fluctuations in currency exchange rates ;

• possible tax costs or inefficiencies associated with integrating the operations of the combined company ; and

• international rules and regulations that may limit or complicate restructuring plans.

We have incurred and expect to incur significant costs associated with the acquisition of Staffware , which could have an adverse effect on our shares . We have incurred and expect to incur significant costs associated with the acquisition and integration of Staffware . These costs may be substantial and include adviser's fees, reorganizati on or closure of faciliti es, severance and employee retention and other employee related costs , costs for lease terminations, meetings, training , re-branding , integration of information technology systems an d other integration costs. We believe the combined enti ty may incur charges to operations, which are not currently reasonably estimable, in the quarters which follow , to reflect costs associated with integrating the two companies . We expect to incur charges to earn ings for amortiza ti on of intangibles , consis ti ng pri marily of purchased technology , acquired in the acquisition . Our financial results, including earnings per share, could be adversely affected by a number of financial adjustments required by U .S . GAAP due to these or any additional charges in the future to reflect additional costs associated with the acquisition. Each of these charges would negatively impact earn ings, which could have an adverse effect on the pri ce of TlBCO shares .

Our future revenue is unpredictable and we expect our quarterly operating results to fluctuate, which may cause our stock price to decline . Period-to-period comparisons of our operating results may not be a good indication of our future performance . Moreover, our operating results in some quarters have not in the past, and may not in the future, meet the expectations of stock market analysts and investors . This has in the past and may in the future cause our stock price to decline . As a result of our limited operating history and the evolving nature of the markets in which we compete, we have difficulty accurately forecasting our revenue in any given period . In addition to the factors discussed elsewhere in this section, a number of factors may cause our revenue to fall short of our expectations or cause fluctuations in our operating results, including :

• the announcement or introduction of new or enhanced products or services by our competitors ;

• the relatively long sales cycles for many of our products ;

29 EXHIBIT H item 2,02, Results of Operations and Financial Condition

1 0m 7.01. Regulation FD Disclosure .

Item 9 .01. Financial Statements and Exhibits

SIGNATURES EXHIBIT INDEX EX-99.1 (Exhibits not specifically designated by another number and by investment companies) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549

FORM 8-K

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

Date of Report (Date of earliest event reported) September 21, 2004

TIBCO Software Inc. (Exact name of registrant as specified in its charter )

Delaware 000-26579 77-0449727 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No. )

3303 Hillview Avenue Palo Alto, California 94304-1213 (Address of principal executive offi ces, including zip code)

(650)846-1000 (Registrant's telephone number , including area code)

Not Applicable (Former name or former address, if changed since last report)

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 :

❑ Written communications pursuant to Rule 425 under the Securiti es Act (17 CFR 230.425)

❑ Soliciting material pursuant to Rule 14a - I2 under the Exchange Act(] 7CFR 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 I3e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2 .02. Results of Operations and Financial Condition On September 21, 2004, TIBCO Software Inc . (the "Registrant") issued a press release announcing its financial results for its third fiscal quarter ended August 29, 2004, the text of which is furnished herewith as Exhibit 99.1 .

Item 7 .01 . Regulation FD Disclosure . The Registrant's September 21, 2004 press release also announced that the Registrant's board of directors has authorized the repurchase of up to $50 million worth of its stock in the open market or through privately negotiated transactions . The text of such press release is furnished herewith as Exhibit 99 .1 .

Item 9.01. Financial Statements and Exhibits

(c) Exhibits .

Exhibit No . Description

99 .1 Press Release of TIBCO Software Inc . dated September 21, 2004 .

The information in this Current Report is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that Section . The information in this Current Report shall not be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing . SIGNATURES

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

TIBCO Software Inc .

By: /s/ Christopher G. O'Meara

Christopher G . O'Meara Executive Vice President, Finance and Chief Financial Officer

Date: September 21, 2004 EXHIBIT INDEX

Exhibit No. Description

99 .1 Press Release of TIBCO Software Inc . dated September 21, 2004. Exhibit 99. 1 FOR IMMEDIATE RELEASE STIBCCr The Power of Now'

Press Contact: Investor Relations Contact : Robin Stoecker Michael Magaro TIBCO Software Inc. TIBCO Software Inc. (650)846-5044 (650)846-574 7 rstoecker@tibco .com mmagaro@tibco .co m

TIBCO SOFTWARE REPORTS THIRD QUARTER FINANCIAL RESULTS ; ANNOUNCES STOCK REPURCHASE PROGRA M

PALO ALTO, Calif., September 21, 2004 - TIBCO Software Inc. (Nasdaq :TIBX), a leading enabler of real-time business and the world's largest independent business integration software company, today announced results for its third fiscal quarter ended August 29, 2004 . Total revenues for the third quarter were $105 .9 million . License revenues for the third quarter were $57 .4 million . Net income for the quarter calculated in accordance with accounting principles generally accepted in the United States was $8 .6 million or $.04 per share on a fully diluted basis .

TIBCO had non-GAAP net income for the third fiscal quarter of $ 14.5 million . TIBCO's non-GAAP net income per sh are on a fully diluted basis was $.07 for the quarter. Non-GAAP results exclude stock-based compensation charges , amortization of acquired intangibles and expensing of acquired in-process research and development , and assume a non-GAAP effective tax rate of 38% .

"Increasingly, companies are turning to TIBCO to obtain value from their existing assets, gain operational efficiencies and improve customer loyalty," said Vivek Ranadivd, Chairman and CEO of T[BCO Software . "Our third quarter performance reflects these trends and the commitment and contributions of both the TIBCO and Staffware organizations ."

Highlights for TIBCO's Third Fiscal Quarter 2004 During Q3, TIBCO added 82 new customers and made significant sales to both new and existing customers, including Aozora Information Systems Co ., Raytheon Company, Beckman Coulter, Inc., Yamaha Corporation of America, Qualcomm Incorporated, KPN Telecom and TNT Logistics . Stock Repurchase Progra m TIBCO's Board of Directors has approved a two-year stock repurchase program pursuant to which TIBCO may repurchase up to $50 million of its outs tanding common stock from time to time on the open market or through privately negotiated transactions . The timing and amount of any repurchases will depend upon market conditions and other corporate considerations . As of August 29, 2004, TIBCO had approximately 209 million shares of common stock outsta nding.

Conference Call Details TIBCO Software has scheduled a conference call for 5 :00 p .m. EDT today to discuss its fiscal third quarter results . The conference call will be hosted by CCBN and may be accessed over the Internet at www .tibco.com. To listen to the live call, please go to the Web site at least 15 minutes early to register, download and install any necessary audio software . For those who cannot listen to the live broadcast of the call, a replay will be available through TIBCO Software Inc .'s website at www .tibco .com shortly after the live call ends . About TIBCO Software TIBCO Software Inc . (NASDAQ: TIBX) is the leading independent business integrati on software company in the world , demonstrated by market share and analyst reports . In addition , TIBCO is a leading enabler of Real-Time Business , helping companies become more cost-effecti ve, more agile and more efficient . TIBCO has delivered the value of Real -Time Business , what TIBCO calls The Power of Now ®, to over 2,000 customers around the world and in a wide variety of industries . For more information on TIBCO' s proven enterprise backbone , business integration, business process management, and business optimiza ti on solu ti ons, TIBCO can be reached at + 1 650-846 - 1000 or on the Web at www . tibco .com. TIBCO is headquartered in Palo Alto, CA.

TIBCO, the TIBCO logo. The Power of Now and TIBCO Software are .trademarks or registered trademarks of TIBCO Softw are Inc . in the United States and/or other countries . All other product and company names and marks mentioned in this document are the proper ty of their respecti ve owners and are menti oned for identificati on purposes only.

Use of Non-GAAP Financial Information TIBCO provides non-GAAP net income and net income per share da ta as additional measures of its operating results . TIBCO believes that presentation of non-GAAP net income and net income per share data provides useful information to management and investors regarding certain addi ti onal financial and business trends relating to the company's financial conditi on and results of operations . For example, the non-GAAP results are an indica ti on of TIBCO's baseline performance be fore gains, losses or other ch arges that are considered by management to be outside the company ' s core business operational results. In addition , these non -GAAP results are among the pri ma ry indicators management uses as a basis for planning for and forecas ting of future periods . These measu re s are not in accordance with, or an alternative for, accounting pri nciples generally accepted in the United States and may be different from non-GAAP measures used by other companies. t coal Notice Regarding Forward-Looking Statement s This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the federal securities laws, including, without limitation, statements regarding TIBCO's intentions to repurchase shares of its common stock under the stock repurchase program, TIBCO's customers' reliance on TIBCO for obtaining value from existing assets, gaining operational efficiencies and improving customer loyalty, TIBCO's commitment to continued growth and the contribution of Staffware to the results of the combined entities . Actual results could differ materially from such forward-looking statements if demand for TIBCO's products and services or economic conditions affecting the market for TIBCO's products and services fluctuate, if TIBCO is unable to successfully compete with existing or new competitors, if TIBCO cannot successfully execute its growth plans or if TIBCO is unable to successfully integrate Staffware and its products . In addition, TIBCO's intentions with regard to the stock repurchase program may be affected by a number of factors which include the market price of TIBCO's stock, general business and market conditions, and management's determination of alternative needs and uses of TIBCO's cash resources . Additional information regarding potential risks is provided in TIBCO's filings with the SEC, including its most recent Annual Report on Form 10-K and its Form 10-Q for the quarter ended May 30, 2004 . TIBCO assumes no obligation to update the forward-looking statements included in this release . TIBCO Software Inc. Non-GAAP Statements of Operation s Impact of Non-GAAP Adjustments on Reported Net Income (unaudited, in thousands, except per share data )

Three Months Nine Months Ended Ended August 29, 2004 August 29, 200 4

GAAP Adjustments' Noo-GAAP As Reported Adjustments' As Adjusted

Revenue $ 105,911 $ $105,91 1 $ 261,56 1 $ - $ 261,56 1 Cost of revenue 27,664 (2,283) 25,381 62,496 (4,690) 57,80 6

Gross profit 78,247 2,283 80.530 199,065 4,690 203,755

Opera ting expenses Research and development 16,189 (5) 16,184 43,146 (36) 43,110 Sales and marketing 32,960 (5) 32,955 86,489 (61) 86,428 General and adminis trative 8,740 - 8,740 19,282 (13) 19,269 Acquired in-process research and development 2,200 (2,200) - 2,200 (2,200) - Restructuri ng charges Amortization of in tangibles 2,218 (2,218) - 3,200 (3,200) -

Total operating expenses 62,307 (4,428) 57,879 154,317 (5,510) 148,807

Income from operations 15,940 6,711 22,651 44,748 10,200 54,94 8

Interest and other income, net 661 - 661 2,435 - 2,435

Income before taxes 16,601 6,711 23,312 47,183 10,200 57,383

Provision for income taxes (1 ) 8,031 828 8,859 20,487 1,319 21,806

Net income $ 8 .570 $ 5,883 $ 14,453 $ 26,696 $ 8,881 $ 35,577

Net income per share - basic $ 0.04 $ 0 .07 $ 0 .13 $ 0.17

Basic shares outstanding 209,442 209,442 205,815 205,815

Net income per share - diluted $ 0.04 $ 0 .07 $ 0.12 $ 0 .1 6

Diluted shares outstanding 221,413 221,413 218,841 218,941

* The following table summarizes the adjustments for the respective periods presented :

Three Mouths Nine Months Ended Ended August 29, 2004 August 29, 2004

Net Income, GAAP $ 8,570 $ 26,696 Stock-based compensation 16 140 Amortization of Intangibles 4,495' 7,860 Acquired In-process research and development 2,200 2,200 Provision for income taxes (1 ) (828) (1,319)

Net income, non-GAAP $ 14,4S3 $ 35,577 .

(1) The projected pro forma effective tax rate for 2004 of 38% has been used to adjust the provision for income taxes for non-GAAP purposes . TIBCO Software Inc. Balance Sheets (unaudited, in thousands)

August 29, May 30, November 30 , 2004 2004 2003

ASSETS Current assets : $ 178 ,767 $ 101,254 $ 83,27 8 and cash equivalents Cash 263 ,16 8 278,165 521,39 1 investments 84,391 70,528 53,659 Accounts receivable, net 2 ,598 4,454 Accounts receivable from related parties 570 150 ,000 Cash restricted for acquisition 16,863 15,549 Other current asset s 21,257 619,408 678,33 1 Total current assets 548,153 117,652 115,567 119,124 Property and equipment, net 34,92 Other assets 37,118 35,725 3 Goodwill 264,527 98,691 103,006 : Acquired intangibles, net 67,816 4,510 7,87 5

$ 873,901 $ 943,25 9 Total assets $1,035,266

LIABILITIES AND STOCKHOLDERS' EQUIT Y Current liabilities: Accounts payable S 6,150 $ 3,968 $ 3,692 1,64 1 Amounts due related parties - 1 Accrued liabilities 72,517 47,280 36,219 42,522 Accrued excess facilities costs 38,962 38,509 Deferred revenue 60,190 49,458 42,914 Current portion of long term note payable 1,681 1,666 1,624

Total current liabilities 179,500 140,882 128,612

Long-term liabilities: Long-term deferred income tax payable 19,484 - - Long-term note payable 50,795 51,009 51,853

Total long-term liabilities 70,279 51,009 51,85 3

Stockholders' equity : Common stock 211 199 21 3 Additional paid-in capital 918,667 822,554 921,03 8 Unearned stock-based compensation (161) (174) (254) Accumulated other comprehensive income (1,496) <267) 225 Accumulated deficit (131,734) (140,302) (158,428)

Total stockholders' equity 785,487 682,010 762,79 4

Total liabilities and stockholders' equity $1,035,266 $ 873,901 $ 943,259 TIBCO Software Inc. Statements of Operations (unaudited, in thousands, except per .share data)

ThrEMonths Three Months Nine Months Three Months Nine Months Ended Ended Ended Ended May 30, August 29, 2003 August 29, 2003 2004 August 29, 2004 August 29, 2004

License Revenue : $ 32,410 $ 85,171 $ 41,261 $ 53,697 $ 131,41 7 Non-related parties 12,119 Related parties 2,192 15,205 4,057 3,751

Total license revenue 34,602 100,376 45,318 57,448 143,536

Service and maintenance revenue: Non-related parties 26,574 77 .786 31,644 44,279 105,264 Related parties 4,189 11,239 3,317 2,860 9,696 Billed expenses 749 1,834 970 1,324 3,06 5

Total service and maintenance revenue 31,512 90,859 35,931 48,463 118,02 5

Total revenue 66,114 191,235 81,249 105,911 261 .56 1

Cost of revenue : Stock-based compensation 44 164 9 6 30 Other cost of revenue non-related parties 15,326 44,237 18,410 27,658 62,46 6 Other cost of revenue related parties 1,479 2,081 - - -

Gross Profit 49,265 144,753 62,830 78,247 199,065

Operating expenses : Research and development Stock-based compensation 77 452 7 5 36 Other research and development 14,120 48,515 13,832 16,184 43,11 0 Sales and marketing Stock-based compensation 85 223 20 5 6 1 Other sales and marketing 28,404 84,352 26,871 32,955 86,42 8 General and administrative Stock-based compensation 10 67 9 - 13 Other general and administrative 4,404 15,157 5,727 8,740 19,26 9 Acquired in-process-research and development - - - 2,200 2,200 Restructuring charges - 1,100 - - - Amortization of acquired intangibles 499 1,498 483 2,218 3,200

Total operating expenses 47,599 151,364 46,949 62,307 154,31 7

Income (loss) from operations 1,666 (6,611) 15,881 15,940 44,748 Interest and other income, net 1,391 10,118 722 721 2,61 5 Realized gain (loss) on investments 747 2,115 (563) (60) (180)

Net income (loss) before income taxes 3,804 5,622 16,040 16,601 47,183 Provision for (benefit from) income taxes 1,088 1,806 6,441 8,031 20,487

Net income (loss) $ 2,716 $ ' 3,816 $ 9,599 $ 8,570 $ 26,696

Net income per share - basic $ 0 .01 $ 0.02 $ 0.05 $ 0.04 $ 0.1 3

Shares used to compute net income per share - basic 211,827 211,088 198,816 209,442 205,81 5

Net income per share - diluted $ 0.01 $ 0 .02 $ 0 .05 $ 0 .04 $ 0.12

Shares used to compute net income per share -diluted 219,681 218,991 212,658 221,413 218,84 1

Created by IOKWizard www.IOKWizard.com EXHIBIT I

PART I

Item 1 Financial Statements :

PAR-Ti

FINANCIAL INFORMAT IT M L FINANCIAL STATEMENTS T S DISC SSIO i AND ANALYSIS OF FINANCIAL CONDITION MENU 2. MANAGEMEN en1n PFSUI_TS OF OPERATIONS . BOUT MARKET RI SK IT ,M( ANTITAT IVE AND QUALITATIVE DISCLOSURES A JIL,-v-L4-. Q TROLS AND PROCEDURE S

P-8 1

OTHER INFORMATION ITEM 6. EXHIBITS SIGNATURES EX-31 .1

.2

EX-32.1

EX-32 .2 Table of Contents

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

FORM 10-Q

(Mark One )

O QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 193 4

For the quarterly period ended August 29, 2004 OR

0 • TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 193 4

For the transition period from to

Commission File Number : 000-26579

TIBCO SOFTWARE INC . (Exact name of registrant as specified in its charter )

Delaware 77-0449727 (State or other jurisdiction of (I .R .S . Emp loyer incorporation or organization ) Identification No.)

3303 Hillview Avenu e Palo Alto, California 94304-1213- (Address of principal executive otrrees) ( zip code)

Registrant's telephone number, including area code: ( 650) 846-1000

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 ® No 0 ❑ Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule I2b-2 of the Exchange Act) . Yes © No

The number of shares outstanding of the registrant's Common Stock . 50 .001 par value, as of October 8, 2004 was 212,136,640 . Table of Content s INDEX

Item Poge No .

PART I -FINANCI .41 . INFORMATIO N

Item I Financial StatemenI :

Condensed Consolidated Hal;tnce Sheets as of Au gust 31 . 2004 and November 30 . 2(0 3 !(tnauditedt 3

Condensed Consolidated Statenwntc of C)txration s for the three months and nine [month, ended Atomust 11 . 2O(14 and Aueust 3 I . 2003 Wrtauditedr 4

Condensed Consolidated Statements of Stockholder s' Fnui iv for the nine months ended Au-um 31 . 2014 (Unaudited) 5 Condensed Co nsolidated Stntemrnts of Cash Flows for the nine months ended Aueusi 3 1 . 201)4 and An_•ust 31 . 2(X13 t l rnaudited) 6

Totes to Condcnced Consolidated Financial Statements [Unaudited) 7 Item 2 Mann c ement's Diticussion and Analy sis of Financial Condition and Results of Operations 21 Item 3 tlunntinuive and qualitative l) iceln ures about Market Risk 41

Item 4 Controls and F'roc dares 42

Item 6 Exhihil, 43

Sicnatures 44

2 Table of Contents TIBCO SOFTWARE INC. Condensed Consolidated Statements of Operations (in thousands , except per share data)

Three Months Ended nine Months Ended A ... .. , Al Au•ucI 31 .

2004 2003 2004 2003

(Unaudited ) (Unaudited ) License revenue : .410 $131 .417 S 85,17 1 Non-related parties S 53,697 S 32 12,119 15,205 Related parties 3,751 2,192

143,536 100,37 6 Total license revenue 57,448 34.602

Service and maintenance revenue : 44 26 .574 105 .264 77,78 6 Non-related parties ,27 9 2,860 4,189 9,696 11,23 9 Related parties 749 3,065 1,83 4 Reimbursable expenses 1,324 118,025 90,85 9 Total service and maintenance revenue 48,463 31 .512

105,911 66,114 261,561 191,235 Total revenue Cost of revenue : Stock based compensation 6 44 30 16 4 Other cost of revenue non-related parties 27,658 15.326 62,466 44,237 Other cost of revenue related panics - 1,479 - 2,08 1

Gross profit 78,247 49,265 199,065 144,75 3

Operating expenses: Research and development : Stock-based compensation 5 77 36 45 2 Other research and development 16,184 14,120 43 .110 48 .51 5 Sales and marketing: Stock-based compensation 5 85 61 223 Other sales and marketing 32,955 28,404 86,428 84,352 General and administrative : Stock-based compensation - 10 13 67 Other general and administrative 8,740 4.404 19 .269 15,157 Restructuring charges - - - 1,100 Acquired in-process research and development 2,200 - 2 .200 - Amortization of acquired intangibles 2.218 499 3,200 1,498

Total operating expenses 62,307 47,599 154,317 151,364

Income (loss) from operations 15,940 1,666 44,748 (6.611 ) Interest and other income (expense), net 1,351 2,641 4,513 13 .438 Interest expense (690) (503) (2,078) (1.205 )

Income before income taxes 16,601 3,804 47,183 5,622 Provision for income taxes 8 .031 1,088 20.487 1,806

Net income S 8,570 $ 2,716 $ 26.696 $ 3.81 6

Net income per share: Basic $ 0 .04 S 0.01 $ 0 .13 S 0.02

Weighted average common shares outstanding 209,442 211,827 205,815 211,088

Net income per share: Diluted $ 0.04 S 0 .01 S 0.12 S 0.02

Weighted average common shares outstanding 221,413 222 .708 218.841 218,99 1

See accompanying notes to condensed consolidated financial s tatements .

4 Table of Contents As of August 31 . 2004, we had a $13 .0 million irrevocable standby letter of credit in connection with the mortgage note payable . This letter of credit automatically renews for successive one-year periods, until the mortgage note payable has been satisfied in full . The letter of credit is collateralized by the revolving line of credit described above.

As of August 31, 2004 . we had a S5 .0 million irrevocable standby letter of credit outstanding in connection with a facility lease . The letter of credit automatically renews annually for the duration of the lease term . which expires in December 2010 . The investments pledged for security of the letter of credit are presented as restricted cash and included in Other Assets on the Condensed Consolidated Balance Sheets .

As of August 31, 2004, we had a $0 .9 million irrevocable standby letter of credit outstanding in connection with a facility surrender agreement . The letter of credit automatically renews annually for the duration of the letter of credit requirement of the surrender agreement, which expires in June 2006 . The investments pledged for security of the letter of credit are presented as restricted cash and included in Other Assets on the Condensed Consolidated Balance Sheets.

Our software license agreements typically provide for indemnification of customers for intellectual property infringement claims. To date, no such claims have been filed against us. We also warrant to customers that software products operate substantially in accordance with specifications . Historically, minimal costs have been incurred related to product warranties, and as such no accruals for warranty costs have been made . In addition . we indemnify our officers and directors under the terms of indemnity agreements entered into with them, as well as pursuant to our certificate of incorporation, bylaws, and applicable provisions of Delaware law . To date, we have not incurred any costs related to these indemnification arrangements .

FACTORS THAT MAY AFFECT OPERATING RESULT S The following risk factors could materially and adve rsely affect our future operating results and could cause actual events to di er materia lly from those predicted in the forward-looking statements we make about our business. Any failure to successfully integrate Staffware's business operations could adversely affect our financial results. We completed our acquisition of Staffware in the third quarter of fiscal 2004 . We have begun to integrate certain of our operations with those of Staffware to reduce the expenses of the combined company . If we are unable to integrate our operations with Staffware's operations in a timely manner, we may be unable to achieve the anticipated synergies . The challenges of integrating Staffware include, among other things :

• inconsistencies in standards, controls, procedures and policies, and compensation structures between TIBCO and Staffware ;

• potential unknown liabilities associated with the acquired business and technology ;

• demonstrating to our customers that the acquisition will not result in adverse changes in product offerings, customer service standards or business focus ;

• coordinating and consolidating ongoing and future research and development efforts ;

• unanticipated delays in or expenses related to the integration of operations ;

• retaining and integrating key employees, as necessary, including members of Staffware's sales force ;

• conducting adequate training of employees and modifying operating control standards in areas specific to U .S. corporations such as U .S . GAAP and requirements under the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder;

• costs and delays in implementing common systems and procedures, including financial accounting systems and customer information systems ;

• consolidating corporate and administrative infrastructure, particularly in light of Staffware's decentralized international corporate structure ;

33 Table of Content s

• identifying and eliminating redundant and underperforming operations and assets :

• using capital assets efficiently to develop the business of the combined company ;

• minimizing the diversion of management's attention from ongoing business concerns :

• fluctuations in currency exchange rates:

• possible tax costs or inefficiencies associated with integrating the operations of the combined company : and

• international rules and regulations that may limit or complicate restructuring plans .

could have an adverse effect on our share We have incurred and expect to incur significant costs associated with the acquisi ti on of Staffware, which price. We have incurred and expect to incur significant costs associated with the acquisition and integration of Staffware . These costs may be substantial and include advisers' fees, reorganization or closure of facilities, severance and employee retention and other employee related costs . costs of lease terminations . . We believe the combined entity may incur charges to meetings. training, re-branding, integration of information technology systems and other integration costs operations, which are not currently reasonably estimable, in the quarters which follow, to reflect costs associated with integrating the two companies . We expect to incur charges to earnings for amortization of intangibles acquired in the acquisition . Our financial results, including earnings per share, could be adversely affected by these or any additional charges in the future to reflect additional costs associated with the acquisition . Such charges would negatively impact earnings, which could have an adverse effect on the price of TIBCO shares . Recent legislation, especially the new requirements of Section 404 of the Sarbanes-Oxley Act of 2002, require that we undertake an evaluation of our internal controls that may identify internal control weaknesses and cause our operating expenses to increase . The Sarbanes-Oxley Act of 2002, the California Disclosure Act and newly proposed or enacted rules and regulations of the Securities and Exchange Commission and the National Association of Securities Dealers impose new duties on us and our executives, directors, attorneys and independent registered public accountants . In order to comply with the Sarbanes-Oxley Act and such new rules and regulations, we are evaluating our internal controls systems to allow management to report on, and our independent auditors to attest to, our internal controls . We are currently performing the system and process evaluation and testing (and any necessary remediation) required in an effort to comply with the management certification and auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. As a result, we expect to incur additional expenses and diversion of management's time. any of which could materially increase our operating expenses and accordingly reduce our net income or increase our net losses . While we anticipate being able to fully implement the requirements relating to internal controls and all other aspects of Section 404 in a timely fashion, we cannot be certain as to the outcome of our testing and resulting remediation actions or the impact of the same on our operations since there is no precedent available by which to measure compliance adequacy . If we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, we may be subject to investigation and/or sanctions by regulatory . Any such action could adversely authorities. such as the Securities Exchange Commission or The NASDAQ Stock Market and our reputation may be harmed affect our financial results and the market price of our common stock . In addition, our acquisition of Staffware will increase the cost and complexity of complying with Sarbanes-Oxley Section 404 and may increase the risks of achieving timely compliance .

Recently enacted and proposed regulatory changes may cause us to Incur increased costs, limit our ability to obtain director and officer liability insurance and make it more difficult for us to attract and retain qualified officers and directors . The Sarbanes-Oxley Act of 2002 and newly proposed or enacted rules of the SEC and NASDAQ may cause us to incur increased costs, as we implement and respond to new requirements . The new rules could make it more difficult for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage . The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, or as executive officers . In order to comply with the Sarbanes-Oxley Act and other new rules and regulations, we may be required to hire additional personnel and use additional outside legal, accounting and advisory services . We are presently evaluating and monitoring developments with respect to these new and proposed rules : however, we cannot currently predict or estimate the amount of the additional costs we may incur or the timing of such costs .

34 EXHIBIT J 1OkWIZAR D

FORM 8-K TIBCO SOFTWARE INC - TIBX

Filed : December 22, 2004 (period : December 22, 2004) Report of unscheduled material events or corporate changes . Item Results of Operations and Financial Conditio n

Item 9.01, Financial Statements and Exhibits

SIGNATURES EXHIBIT INDE X EX-99 .1 (Exhibits not specifically designated by another number and by investment companies) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 2054 9

FORM 8-K

CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) December 22,2M4

TIBCO Software Inc. (Exact name of registrant as specified in its charter)

Delaware 000-26579 77-0449727 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No. )

3303 Hillview Avenu e Palo Alto, California 94304-1213 (Address of principal executive offices, including zip code)

(650)846-1000 (Registrant's telephone number, including area code)

Not Applicable (Former name or former address, if changed since last report)

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:

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

❑ Solici ti ng mate rial pursuant to Rule 14a- 12 under the Exchange Act (17 CFR 240.14a-12)

❑ Pre-commencement communications pursuant to Rule 144-2(b) under the Exchange Act (17 CFR 240.144-2(b) )

❑ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240 .13e-4(c)) Item 2 .02 . Results of Operations and Financial Conditio n On December 22, 2004, TIBCO Software Inc . (the "Registrant") issued a press release announcing its financial results for its fourth fiscal quarter and year ended November 30, 2004, the text of which is furnished herewith as Exhibit 99 .1 .

Item 9.01 . Financial Statements and Exhibits (c) Exhibits .

Exhibit No. Description

99.1 Press Release of TIBCO Software Inc . dated December 22, 2004.

The information in this Current Report is be ing furnished and shall not be deemed " filed" for purposes of Section 18 of the Securi ties Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that Section . The information in this Current Report shall not be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing . SIGNATURES

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

TIBCO Software Inc .

By: /s/ Christopher G. O'Meara

Christopher G . O'Meara Executive Vice President, Finance and Chief Financial Officer

Date: December 22, 2004 EXHIBIT INDEX

Exhibit No. Description

99 .1 Press Release of TIBCO Software Inc . dated December 22, 2004. Exhibit 99.1 FOR IMMEDIATE RELEASE PITI BCO The Power of Now *

Press Contact : Investor Relations Contact :

Robin Stoecker Michael Mag aro TIBCO Software Inc . TIBCO Software Inc . (650) 846-5044 (650) 846-5747 rstoecker@tibco .com [email protected]

TIBCO SOFTWARE REPORTS RECORD FOURTH QUARTER AND ANNUAL FINANCIAL RESULTS

PALO ALTO, Calif., December 22, 2004 - TIBCO Software Inc . (Nasdaq :TIBX), a leading enabler of real-time business and the world's largest independent business integration software company, today announced results for its fourth fiscal quarter and year ended November 30, 2004. Total revenues for the fourth quarter were $125 .7 million . License revenues for the fourth quarter were $70.6 million . Fiscal year 2004 revenues were $387 .2 million . Net income for the quarter calculated in accordance with accounting principles generally accepted in the United States was $18 .2 million or $ .08 per share on a fully diluted basis .

TIBCO had non-GAAP net income for the fourth fiscal quarter of $20. 5 million and $56 .1 million for the year . TIBCO's non-GAAP net income per share on a fully diluted basis was $ .09 for the quarter and $ .25 for the year . Fourth quarter and annual non-GAAP results exclude stock-based compensation charges, amortization of acquired intangibles, impairment of equity investments , re s tructuring charges and expensing of acquired in-process research and development, and assume a non -GAAP effective tax rate of 38% .

"During 2004, we capitalized on the beginning of a secular growth opportunity in the Integration market, increasing our market share of those segments in which we offer products and on the hard work and dedication of the people who work at TIBCO," said Vivek Ranadivd, Chairman and CEO of TIBCO Software. "The growth we are experiencing is further validation that our integration platform has gone from a 'nice to have' to a 'must have' for companies operating in the ever more competitive global marketplace ."

Highlights for TIBCO's Fourth Fiscal Quarter 2004 During Q4, TIBCO added over 100 new customers and made significant sales to both new and existing customers , including Associated Newspapers Ltd ., Lockheed Martin M&DS . Beckman Coulter, Inc ., Lehman Brothers Holdings, Procter & Gamble, City of Calgary, American Century Investments, BNP Pari bas, Vodafone UK and Telecom Italia. Conference Call Detail s . The conference call will be hosted by CCBN TIBCO Software has scheduled a conference call for 5 :00 p .m. EDT today to discuss its fiscal fourth quarter results and may be accessed over the Internet at www .tibco.com . To listen to the live call, please go to the website at least 15 minutes early to register, download and .'s install any necessary audio software . For those who cannot listen to the live broadcast of the call, a replay will be available through TIBCO Software Inc website at www .tibco .com shortly after the live call ends .

About TIBCO Software . (NASDAQ :TIBX) is the leading independent business integration software company in the world, demonstrated by market share and TIBCO Software Inc . analyst reports . In addition, TIBCO is a leading enabler of Real-Time Business, helping companies become more cost-effective, more agile and more efficient TIBCO has delivered the value of Real-Time Business, what TIBCO calls The Power of Now ®, to over 2,000 customers around the world and in a wide variety of industries . For more information on TIBCO's proven enterprise backbone, business integration, business process management, and business optimization solutions, TIBCO can be reached at +1 650-846-1000 or on the Web at www.fibco .com . TIBCO is headquartered in Palo Alto, CA .

TIBCO, the TIBCO logo, The Power of Now and TIBCO Software are trademarks or registered trademarks of TIBCO Software Inc . in the United States and/or other countries . All other product and company names and marks mentioned in this document are the property of their respective owners and are mentioned for identification purposes only .

Use of Non-GAAP Financial Information TIBCO provides non-GAAP net income and net income per share data as additional measures of its operating results. TIBCO believes that presen tati on of non-GAAP net income and net income per share data provides useful informa ti on to management and investors reg arding certain additional financial and business trends relating to the company ' s financial condition and results of operations. For example, the non-GAAP results are an indicati on of TIBCO's baseline performance before gains, losses or other charges that are considered by management to be outside the company's core business opera tional results . In addition, these non-GAAP results ar e among the prima ry indicators management uses as a basis for planning for and forecas ti ng of future periods . These measures are not in accordance with, or an alternative for, accounting p ri nciples generally accepted in the United S tates and may be different from non-GAAP measures used by other companies .

Leepl Notice Regarding Forward-Looking Statements This release con tains forward- looking statements within the meaning of the "safe harbor" provisions of the federal securi ties laws, including, without limitation, sta tements regarding the growth of the Integration market , TIBCO' s increased market share and the demand for TIBCO' s integra tion platform. Actual results could differ materially from such forward- looking sta tements if demand for TIBCO' s products and se rvices or economic conditions affecting the market for TIBCO' s products and services fluctuate , if TIBCO is unable to successfully compete with exis ting or new compe ti tors or if TIBCO cannot succe ssfully execute its growth plans . Additional information regarding poten ti al ri sks is provided in TIBCO's filings with the SEC , including its most re cent Annual Report on Form 10-K and its Form 10-Q for the quarter ended August 29, 2004. TIBCO assumes no obligation to update the forward -looking s tatements included in this release. TIBCO Software Inc. Non-GAAP Statements of Operation s Impact of Non-GAAP Adjustments on Reported Net Income (unaudited, in thousands, except per share data)

Three Months ended Year ended November 30,2004 November 30,200 4

Non-GAAP Non-GAAP GAAP Adjustments * As Adjusted GAAP Adjustments* As Adjuste d

Revenue $125,660 $ - $ 125,660 $387,220 $ - $ 387,220 Cost of revenue 30,702 (2,048) 28,654 93,197 (6,737) 86,460

Gross profi t 94,958 2,048 97,006 294,023 6,737 300,760 Operating expenses : Research and development 17,954 (4) 17,950 61,100 (40) 61,060 Sales and marketing 36,997 (95) 36,902 123,486 (156) 123,330 General and administrativ e 9,766 - 9,766 29,048 (13) 29,035 Acquired in-process research and development - - - 2,200 (2,200) - Restructuring charges 2,186 (2,186) - 2,186 (2,186) - Amortization of intangibles 2,053 (2,053) - 5,253 (5,253) -

Total operating expenses 68,956 (4,338) 64,618 223,273 (9,848) 213,425

Income from operations 26,002 6,386 32,388 70,750 16,585 87,33 5 Interest and other income, net $29 112 641 2,965 112 3,07 7

Income before taxe s 26,531 6,498 33,029 73,715 16,697 90,412 Provision for income taxes (1 ) 8,307 4,244 12,551 28,795 5,562 34,357

Net income $ 18,224 $ 2,254 $ 20,478 $ 44,920 $ 11,135 $ 56,055

Net income per share - basic $ 0.09 $ 0.10 $ 0.22 $ 0 .27

Shares used to compute net income per share - Basic 212,432 212,432 207,506 207,506

Net income per share - diluted $ 0.08 $ 0.09 $ 0.20 $ 0 .25

Shares used to compute net income per share -Diluted 227,628 227,628 220,927 220,927

* The following table summarizes the adjustments for the respective periods presented :

Three Months ended November 30, Year ended 2004 November 30, 2004

Net income, GAAP $ 18,224 $ 44,920 Stock-based compensation 104 243 Amortization of intangibles 4,096 11,956 Acquired in-process resea rch and development - 2,200 Restructu ring charge 2,186 2,186 Impairment of equity investment 112 11 2 Provision for income taxes (1 ) (4,244) (5,562 ) Net income , non-GAAP $ 20,478 $ 56,055

(1) The projected pro forma effective ta x rate for 2004 of 38% has been used to adjust the provision for income taxes for non-GAAP purposes . TIBCO Software Inc . Balance Sheets (unaudited, in thousands)

November 30, November 30, 2004 2003

ASSETS Current assets : Cash and cash equivalents 180,849 $ 83,27 8 Short-term investments 292,686 521,39 1 Accounts receivable, net 109,672 53,659 Accounts receivable from related parties 2,216 4,454 Other current assets 16,984 15,549

Total current assets 602,407 678,33 1

Property and equipment, net 118,058 119,124 Other assets 32,389 34,923 Goodwill 263,393 103,006 Acquired intangibles, net 64,820 7,875

Total assets 1,081,067 $ 943,259

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable 7,058 $ 3,692 Amounts due to related parties - 1,641 Accrued liabili ties 82,685 36,21 9 Accrued excess facili ti es costs 9,489 8,608 Deferred revenue 60,633 42,91 4 Current por ti on of long-term note payable 1,708 1,624

Total curre nt liabilities 161,573 94,698

Long-term accrued ex ce ss facilities costs 29,878 33,914 Long-term deferred income tax 18,991 - Long-term note payable 50,143 51,853

Total long -term liabilities 99,012 85,767

Stockholders ' equity: Common stoc k 214 21 3 Additional paid-in capital 934,268 921,038 Unearned stock -based compensation (119) (254) Accumulated other comprehensive income (loss) (373) 225 Accumulated defici t (113,508 ) (158,428 )

Total stockholders' equity 820,482 762,794

Total liabilities and stockholders' equity 1,081,067 $ 943 .259 TIBCO Software Inc. Statements of Operations (unaudited, in thousands, except per share data )

Three Months Y r Three Months Three Months Year ea ed Ended Ended Ended Fam Ended November 30, 2003 November 30, 2003 August 29,2004 November 30, 2004 November 30, 2004

License revenue : $ 66,337 $ 197,753 Non-related parties $ 36,222 $ 121,393 $ 53,697 3,751 4,213 16,333 Related parties 3,911 19,116 70, 550 214,086 Total license revenue 40,133 140,509 57,448

Service and maintenance revenue: 155,864 s 28,246 106,031 44,279 50,600 Non-related partie 2,996 12,692 Related parties 3,858 15,098 2, 860 4,578 Billed expense s 738 2,572 1,324 1,514

55,110 '173J34 Total service and mainten an ce revenue 32,842 123,701 48,463 125,660 387,220 Total revenue 72,975 264,210 105,911 Cost of revenue : Stock-based compensatio n 37 201 6 5 34 Other cost of revenue non-related parties 16,767 61,004 27,658 30,697 93,163 Other cost of revenue related parties 199 2,280 - - -

94 ,958 294,023 Gross Profit 55,972 200,725 78,247

Operating expenses : Research and development, 4 40 Stock-based compensation 61 513 5 Other research and development 15,560 64,075 16, 184 17,950 61,060 Sales and marketing Stock-based compensation 53 276 5 95 156 Other sales and marketing 25,602 109,954 32,955 36,902 123,330 General and administrative 1 Stock-based compensation 6 73 - - 3 Other general and administrative 5,104 20,261 8,740 9 ,766 29,035 Acquired in-process-research and 2,20 0 development - 2,200 - Restructuring charges - 1,100 - 2,186 2,186 Amortization of acquired intangibles 499 1,997 2,218 2,053 5,253

223,27 Total operating expenses 46,885 198,249 62,307 68,956 3

70,75 Income from operations 9,087 2,476 15,940 26, 002 0 Interest and other income, net 1,965 12,083 721 752 3,367 (60) (223) (402 ) Realized gain (loss) on investments 809 2,924

Income before income taxes 11,861 17 ,483 16,601 26,331 73,71 5 Provision for income taxes 4,237 6,043 8,031 8,307 28,79 5

Net income $ 7,624 $ 11,440 $ 870 $ 18,224 $ 44,920

Net income per share - basi c $ 0.04 $ 0.05 $ 0.04 $ 0.09 $ 0.22

Shares used to compute net income per share - basic 212,956 211,603 209,442 212,432 207,506

Net income per share - diluted $ 0.03 $ 0.05 $ 0.04 $ 0.08 $ 0.20

Shares used to compute net-income per share - diluted 224,047 221,971 221,413 227,628 220,927

Created by IOKWizard www .IOKWizwxl .coni EXHIBIT K

Table of Contents

PART I

ITEM 1 . BUSINESS 3

PART I

ITEM 1 . BUSINESS iTEm 2. PROPERTIES ITF,N-1 3. LEGAL PROCE EDING S ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER S

PART iI

ITEM MARKET FOR R EGISTRANTS COMMON EQUITY . RELATE D STOCKHOLDER MATTERS AND ISSUER PURCHASES OF E ITEM 6. SELECTED FINANCIAL DAT A M 7. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIO N AND RESULTS OF OPERATIONS ITEM 7 A. QUANTITATIVE AND QUALITATIVE DISC LOSURES ABOUT MARKET RIS K ITEM 8 . FINANCIAL STATEMENTS AND SUPPLE MENTARY DATA ITEM 9A . CONTROLS AN D PROCEDURE S

PART II I

11 E,M1 10. DIRECTORS AN D EXECUTIVE OFFICERS OF THE REGISTRANT ITEM J . EXECUTIVE CO MPENSATION ITEM 13 . SECURITY OWNERSHIP OF CERTAIN B ENEFICIAL OWNERS AND MANAGEMENT 1 . CERTAIN RELATIONSHIPS AND RELATE D TRANSACTION S 14. PRINCIPAL ACC OUNTING FEES AND SE RVICES

PART I

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE S SIGNATURES EXHIBIT INDE X EX-10 .3 (Material contracts )

EX- 1 0 .4 (Material contracts )

EX-10 .5 (Material contracts )

EX-21 .1 (Subsidiaries of th e registrant)

EX-23 .1 (Consents of experts and counsel) EX-31 .1

EX-31 .2

EX-32 .1

EX-32 .2 Table of Contents

SECURITIES AND EXCHANGE COMMISSIO N Washington , D .C . 2054 9

FORM 10-K

(Mark One)

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

For the fiscal year ended November 30, 2004

❑ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 193 4

For the transition period from to

Commission File Number : 000-2657 9

TIBCO SOFTWARE INC . (Exact came of registrant as specified in its charter )

Delaware 77-0449727 (Stale or other jurisdiction (I.R.S. Employer of incorporation or organization) Identifi ca tion No.)

3303 Hillview Avenue, Palo Alto, CA 94304 (Address of principal executive offices) (Zip Code)

(650)846-1000 (Registr ant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act :

Non e

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value per share (Title of class)

Indicate by check mark whether the registrant ()) 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 O No 0

Indicate by check mark if disclosure of delinquent file rs pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant ' s knowledge , in definitive proxy or information statements incorporated by reference in Pa rt III of this Form 10-K or any amendment to this Form 10-K . O

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

The aggregate market value of the voting stock held by non- affiliates of the registrant ( based upon the closing sale price of such shares on the Nasdaq National Market on May 28, 2004) was approximately $1 .475,051,598 . Shares of common stock held by each executive officer and director and by each entity that owns 5% or more of the outs tanding common stock have been excluded in that such pe rsons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes . As of February 9, 2005 . there were 215,316,963 shares of the regis trant ' s common stock outstanding .

DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Proxy Statement for the 2005 Annual Meeting of Stockholders to be held on April 21, 2005 are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent s tated herein . Table of Contents TIBCO SOFTWARE INC. FORM 10-K For the Fiscal Year Ended November 30, 2004

TABLE OF CONTENTS

Page

PART I

ITEM 1 . BUSINESS 3 ITEM 2 . PROPERTIES 9

ITEM 3 . LEGAL PRO('.EED4 .N'GS 10 ITEM 4 . SUIl\1ISSIONOF MATTERSTO AVOTE OF SECIIRITYHOLDERS 10 PART I I

ITEM 5 . MARKET FOR REGISTRANT'S COMMON EOIIITY. RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF FOUITY SECURITIES 11

ITEM 6 . SELECTED FINANCIAL DATA 13 ITEM 7 . MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL. CONDITION AND RESULTS OF OPERATIONS 14

ITEM 7A . 01IANTIT':1TIVE AND QUALITATIVE DISCLOSURES AHOI IT MARKET RISK 44 ITEM 8 . FINANC'fAI . STATEMENTS AND SIJPPLEMENT.ARI' DATA 44

ITEM 9A . CONTROLS AND PROCEDURES 45 PART III ITEM 10 . DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 46

ITEM It . EXECaUTIVEC'OMPENSATICIN 47 ITEM 12 . SECURITY OWNERSHIP OFCERTAIN BENEFICIAL OWNERS AND MANAGEMENT 47 ITEM 13 . C'ERT.AINRELATIONSHIPSAND RELATEI)TRANSACTIONS 47 ITEM 14 . PRINCIPAL . ACCOUNTING FEES AND SERVICES 47 PART I V

ITEM 15 . EXHIBITS AND FINANCIAL . STATEMENT S(!IIEI)tII..ES 48 SIGNATURES II-1

2 Table of Contents

ITEM 6 . SELECTED FINANCIAL DATA The selected consolidated tinanrial data below have been derived from our audited financial statements . You should read the fol owing table in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our Consolidated Financial Statements and notes thereto included elsewhere in this annual report on Form 10-K. The historical results presented below are nor indicative of anyfuture results.

Year Ended November 30,

2004 2003 2002 2001 200 0

(in thousands, except per share amounts ) Statement of Operations : Revenue S 387 .220 $264 .210 $273,393 $322 .091 S254,08 9 Cost of revenue 93 .197 63,485 65,672 71,012 69,75 2

Gross profit 294,023 200,725 207,721 251,079 184,337 Operating expenses 223 .273 198 .249 294,403 305,830 232,266

Income (loss) from operations 70,750 2,476 (86.682) (54,751) (47,929) Interest and other income, net 5,736 16 .212 16,264 31, 040 24.866 Interest expenses (2,771) (1,205) - - -

Income (loss) before income taxes 73,715 17,483 (70,418) (23,711) (23.063) Provision for (benefit from) income taxes 28 .795 6,043 24. 162 (10,469) 1,88 8

Net income (loss) $ 44,920 S 11,440 S (94,580) $ (13,242) $ (24,951 )

Total stock based compensation included in cost of revenue an d operating expenses $ 243 $ 1,063 $ 4,050 S 26,965 $ 56,91 6

Net income (loss) per share-basic S 0.22 $ 0 .05 $ (0.46) $ - (0 .07 ) $ (0.14)

Net income (loss) per share-diluted $ 0.20 $ 0 .05 S (0.46) S (0.07) $ (0 .14)

Shares used to compute net income (loss) per share-basic 207,506 211,555 205 .821 195,001 184,17 7

Shares used to compute net income ( loss) per share-d iluted 220,927 221,519 ' 205,821 195,001 184,17 7

As of November 30,

2004 2003 2002 2001 2000

(in thousands) Balance Sheet Data : Cash and cash equivalents and short- term investments $ 473,535 $604,669 $637,853 $677,340 $582,900 Working capital 439,090 549,719 563,732 638, 803 596,303 Total assets 1,082,811 943 .259 894 .588 892,127 829,21 5 Long-term debt . less current po rtion 50 ,143 51,853 - - - Stockholders' equity 820 .482 762,794 744,727 771,279 729,535

13 Table of Contents Total Revenue

Year Ended November 30 ,

Change Change

2004 f % 2003 $ % 2002

(in thousands, except percentages) Total revenue S 387,220 $ 123,010 47% $ 264,210 $ (9,183 ) (3)% $ 273,393

To tal revenue increased 47% for fiscal year 2004 compared to fiscal year 2003 , pri mari ly due to a general increase in information technology spending . In October 2003, pursuant to our agreement with Reuters, we obtained the ri ght to market and sell our products directly to custome rs in the financial se rvices market, which also con tributed to our growth in revenue in 2004 . Furthermore, our Staffware acquisition during fiscal year 2004 generated addi ti onal revenue. Due to fact that TIBCO and Staffware products are often combined in a single license transaction , we cannot separately report revenue related to the individual software components . Geographically , our total revenue increased by $51 .0 million in the United States , $44 .1 million in Europe and $25 . 0 million in the Pacific Rim in fiscal year 2004 . See Note 12 to the Consolidated Financial Statements for further detail on to ta l revenue by region .

Total revenue decreased 3% for fiscal year 2003 compared to fiscal year 2002, largely due to the global economic slowdown during that pe riod and a resulting general reduction in information technology spending .

Revenue from Reuters was $28 .3 million, $30.7 million and $25 .3 million representing 7%, 12% and 9% of our total revenue in fiscal years 2004, 2003 and 2002, respectively. Our revenue from Reuters consisted primarily of fees under our license agreement, which includes minimum guaranteed fees of $5 .0 million per quarter, reduced by an amount equal to 10% of the license and maintenance revenues from our sales to financial serv ices companies (and, until October 2004. also reduced by 40% of our maintenance revenue from customers who were transitioned to us by Reuters). which Reuters has agreed to continue to pay through March 2005 . After March 2005, we will no longer receive such minimum guaranteed fees and will have to replace such revenue with direct sales either to financial services companies or increased sales in other sectors . Based upon our expe rience in selling directly into the financial services market since October 2003 and the recent increase in our revenues from other markets, we believe that we will be able to replace or reduce the impact of the cessa tion of the $5 .0 million per quarter in revenue from Reuters after March 2005 . Accordingly, while there can be no assurance , we do not believe that the elimination of guaranteed fees from Reuters will have a mate rial adverse impact on our business, financial condition or results of operations. If we are unable to replace the guaranteed revenue from Reute rs, our results of operations will be negatively impacted .

License Revenue

Year Ended November 30,

Change Change

2004 $ % 2003 S % 200 2

(in thousands, except percen ta ges) License revenue $214,086 $73,577 52% $140,509 S(18,605) (12)% $159,114 As percent of total revenue 55% 2% 53% (5)% 58%

License revenue increased 52% for fiscal year 2004 compared to fiscal year 2003 . This increase was primarily due to increased revenue from the financia l services . consumer packaged goods, telecommunications and manufacturing sectors, and also due to additional revenue generated from the Staffware acquisition . As mentioned above we cannot separately report incremental revenue solely attributable to the Staffware acquisition since TIBCO and Staffware products are often combined in a single sales transaction .

22 Table of Contents TII3CO SOFTWARE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(Continued )

Note 15 . Unaudited Quarterly Results of operations

The following sets forth our quarterly results of operations for fiscal years 2004 and 2003 (in thousands) :

Fiscal Year 2004, Three Months Ended Fiscal Year 2001, Three Months Ende d

Nov. 30,2M Aug. 31, 2004 May 31, 2004 Feb. 28, 2004 Nov. 30, 2003 Aug . 31, 2003 May 31 .2003 Feb . 28, 2003

Revenue : License revenue : Non-related parties S 66.336 S 53 .697 $ 41,261 $ 36.459 S 36 .221 $ 32.410 $ 27.977 S 24.785 Related partie s 4.214 3 .751 4 .057 4.311 3 .911 2.192 22.823 10.190

Total license revenue 70.550 57.448 45.318 40.770 40.132 34.602 30,800 34 .975 Services and maintenance revenue: Non-related parties 50.599 44.279 31 .644 29.342 28 .246 26.574 26.303 24.908 Related panics 2 .996 2.860 3 .317 3.519 3 .860 4.189 3.926 3 .223 539 547 Billed expense s 1,514 1 .324 970 770 737 749

Total services and maintenance revenue 55,109 48.463 35 .931 33.631 32,843 31 .512 30 .668 28 .678 Total revenu e 125 .659 105.911 81 .149 74,401 72.975 66.114 61 .468 63 .653 Cost of revenue : 44 65 54 Stock-based compensatio n 5 6 9 14 38 Other cost of revenue non-related panics 30.696 27.658 18,410 16 .399 16.765 15326 14 .489 . 14,424 Other cost of revenue related parties - - - - 199 1 .479 199 403

14.753 14,88 1 Total cost of revenue 30.701 27 .664 18,419 16,413 17.002 16 .849 Gross profit 94.958 78 .247 62.830 57 .998 55.973 49 .265 46.715 48 .772

Operating expenses: Research and development 17.950 16,184 13 .832 13 .094 15 .560 14 .120 17.119 17,276 Sales and marketing 36,904 32.955 26 .871 26.600 25,602 28 .404 29.099 26.849 General and administrative 9 .765 8 .740 5 .727 4,803 5 .104 4,404 5 .728 5,02 5 172 266 303 Stock-based compensation 99 10 36 64 121 Acquired in-process resea rch and development - 2.200 ------1,10 0 Restructuri ng charge s 2 .186 ------499 499 499 Amort ization of goodwill and acquired intangibles 2,053 2.218 483 499 500

Total operating expense s 68 .957 62.307 46,949 45.060 46,887 47.599 52,711 51 .052

Income ( loss) from operations 26 .001 15.940 15,881 12.928 9.086 1 .666 (5 .996) (2,280) Interest and other income. net 1 .224 1 .351 849 2.312 3.476 2 .641 4 .992 5,103 Intere st expense (693) (690) (691) (697) (702) (503) - -

Income (loss) before income taxes 26.532 16.601 16,039 14.543 11 .860 3 .804 (1 .004) 2.823 Provision for (benefit from) income taxe s 8 .308 8.031 6,441 6 .015 4.237 1 .088 (444) 1,162

Net income ( loss ) S 18 .224 S 8 .570 S 9,598 $ 8 .528 $ 7,623 S 2 .716 S (560) $ 1 .66 1

Net income (loss) per share: B :tai e $ 0 .09 s 0 .04 $ 0 .05 $ 0.04 It 0.04 $ 0 .01 $ (0 .00) 3 0 .0 1

Shares used to compute net income ( loss) per share-basic 212,432 209 .442 198.816 209 .188 212.956 211 .827 211 .213 210,224

Net income (loss) per share : Diluted S 0 .08 $ 0.04 S 0 .05 S 0.04 S 0.03 S 0.01 S (0 .00) $ 0 .0 1

Shares used to compute net income ( loss) per share -d iluted 227.628 221,413 212.658 222 .452 224.047 222 .708 211 .2 13 221 .93 8

F-42 EXHIBIT L FINAL TRANSCRIPT

Conference Call Transcript TIBX - 04 2004 TIBCO Software Earnings Conference Cal l

Event Date/Time : Dec. 22. 2004 ! 5 :00PM ET Event Duration : 45 min

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TIBX - 04 2004 TIBCO Software Earnings Conference Cal l

CORPORATE PARTICIPANTS PRESENTATIO N Vivek Ranadiv e TIBCO Software Inc . - Chairman & CEO

Chris O'Meara Operato r TIBCO Software Inc . - EVP & CFO

Good aRemoon, ladies and gentlemen. I'm Jennifer Bray. CONFERENCE CALL PARTICIPANTS Welcome to TIBCO's fourth quarter and fiscal 2004 conference call. At this time, all participants are in a listen-only mode. Later, John DiFucci we will conduct a question-and-answer session. You can also listen Bear Stearns - Analyst to this call via the internet at www.tibco .com Today's call is being Tim Klaselt recorded and will be available for playback from TIBCO Thomas Weisel Partners - Analyst Software's website at www.tibco.com . In addition, replay will be Sarah Fria r available through Premier Conferencing for the same period by Goldman Sachs- Analyst calling 888-203-1112 from the U .S ., or 119-457 -0820 Gary Abbott intenationally. The confirmation code is 393178 . Merriman Curhan Ford - Analyst The following conference call includes forward-looking statements Ken Kiaras h which represent TIBCO Software's outlook and guidance only as Buckingham Research Group - Analyst of today, and which are subject to risks and unce rtainties. These Seihun Kon g forward- looking statements include , but are not limited to, Thinkequity Partners - Analyst forecasts of revenues, operating margins and earnings per share for Dino Dian a future periods, statements regarding the expansion of the UBS - Analyst integ ration market, the opportunity to expand sales in the investment banking insurance and retail banking markets, the Gregg Moskowit z s deal pipeline and Susquehanna Financial Group - Analyst continued expansion of TIBCO' TIBCO 's gross projections . Our actual results could differ materially from those Phillip Dionesia projected in such forward -looking statements. The factors that Friedman, Billings, Ramsey& Company -Analyst could cause actual results to differ are discussed in the factors that Sterling Auty may affect operating results section of TIBCO's most recent J.P. Morgan -A nalYst reports on Forms 10-K and l0-Q filed with the Securities and Exchange Commission. TIBCO assumes no obligation to update the forward -looking statements included in this call whether as a result of new developments or otherwise. This conference call also includes certain financial information that has not been prepared in accordance with generally accepted accounting p rinciples, as we believe such information is useful for understanding our financial condition and results of operations. For a presentation of the most directly comparable financial measures calculated in accordance with GAAP and a reconciliation of the differences between the non-GAAP and GAAP financial information , please see our website at www.tibco .com The part icipants on the call are Vivek Ranadive , TIBCO's Chairman and CEO; and Chief Financial Officer, Chris O'Meara. I'd now like to turn the call over to Vivek.

Vivek Ranadive - TJBCO Software Inc - Chairman & CEO

Thanks, Jennifer, and hello, everyone. Thank you for joining us on our Q4 conference call . On today's call I'd like to cover 3 things . First, a sumtnary, of our Q4 and fiscal 2004 results; second, factors that contributed to our success in 2004; and third, the secular growth opportunity in the integration market With respect to Q4, we reported another solid quarter with total revenues growing 19 percent sequentially and 72 percent year-over-year to 125 .7 million. Licenses grew 23 percent sequentially, and 76 percen t

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year-over-year to 70.6 million. Operating income was 32 .4 million, applications have been supplanted by business processes as the resulting in strong operating margins of 25.8 percent . Fully taxed new focal point of the enterprise . This secular shift away from non-GAAP earnings per share for the quarter were 9 cents, up over applications towards a business process infrastructure is just 100 percent year-over-year and a penny better than our original beginning . Companies are relying more and more extensively on guidance . As further evidence that our market has hit the tipping their integration backbone as a means for modelling, automating, point, we closed 87 deals over 100,000 during Q4, up from 75 in and integrating their business processes. Thereby achieving Q3 . In addition, we closed a record 16 deals over a million, up application-like functionality. from 10 deals last quarter. We also generated roughly 30 million in cash from operations . We added over 100 new customers, Let me expand further on this secular shift that is happening in the including companies such as Bear Stearns, UBS Warburg, integration market. Secular to me is a market that is never ending [indiscernible] Company, and EDS, among others . In addition, we and ever expanding. And we have some good recent examples of increased and successfully expanded our business with market secular trends - search, there's more information every day, and leaders such as Telecom Italia, Procter & Gamble, Lehman the need for search continues to go up and up . Similarly, security, Brothers, Associated Newspaper, Lockheed Martin, and Vodafone . it's another secular market. We've had a never-ending proliferation of viruses that continue to drive ongoing demand for security Once again, existing customers represented over 60 percent of total solutions. It is, therefore, no coincidence that the 2 markets that revenue . For fiscal 2004 as a whole, revenues totaled 387 .2 ClOs rank as their number I needs are security and integration, and million, up 48 percent year-over-year . License revenue was 214 we believe that integration is the next great secular market . There million, up 52 .4 percent year-over-year. Operating income in 2004 are 4 factors that are driving this. The first is, N. the number of rose almost 700 percent, from 11 .4 million to 87 .3 million. nodes . The number of nodes keeps increasing every single day . Looking back over 2004, there were a variety of reasons we were The second is. D. or the diversity of those nodes . And so nodes successful, and rd like to share with you the factors that could be applications. they could be RFID tags, they could be contributed to our success . First, as I said on last quarter's sensors, they could be wireless devices . The third factor is, C . or conference call, the integration market has gone from a nice-to- the complexity of interaction . So it might be that they have simple have to a must-have. The last decade saw massive investments in messages going back and forth, or they could be sophisticated CRM, ERP . and other systems. But as time and investment have transactions. So you take the number of nodes, the diversity of gone by, companies have come to understand that having an those nodes, and the complexity of the interaction, and you integration platform as its central nervous system is an essential superimpose on that, F. or the frequency of interaction. And as we element of competitive flexibility in today's world . Second, the move towards realtime businesses, that frequency is going up viable market participants narrowed considerably during the year. dramatically. and the market has become a 2-horse race between us and IBM . This resulted in more stable pricing dynamics and less confusion In fact, our head of engineering Toni Laffey. who was also the for customers, as evidenced by our growing ASPS and expanding Chairman of the RFID Standards Committee, recently told me that customer base . just the RFID mandates by Wal-Mart and the Department of Defense alone will cause a number doubling every 6 months in the Third, because of the renegotiation of our orde rs Reuters number of events that need to be integrated . Now we refer to this relationship . we were able to sell directly into the financial services vast and growing flow of business events as the event clock that market. This change opened up what we believe to be a significant every company must harness through integration. Managing and opportunity over the next several years, and we were able to exploiting the event clock is driving customers to buy and benefit quickly, especially the securities and investment banking implement a package integration backbone rather than trying to customers . We've only just scratched the surface in the investment solve the problem through custom development. It is this large- banking opportunity and are now just entering the largely untapped scale shift in enterprise software from applications to business- opportunity in insurance and retail banking for fiscal 2005 and process automation and application assembly that is, I believe, the beyond . And finally, we continued our track record of redefining single largest opportunity in software. And it is TIBCCO's the notion of integration by significantly expanding our solution opportunity. We are in a very good position to capitalize on the range and adjustable market to new products such as business secular growth opportunity ahead of us for the rest of this decade. events released in Q4, and through our merger with Staffware, This is what has me so very excited about TIBCO's growth we've solidified our position as the leader in business process potential. management and further increased our market footprint worldwide . We believe all of these events give us significant momentum as we In summary. I want to leave you with 4 points . First . the head into 2005 and beyond . While I predicted long before it was integration market is arguably the largest opportunity in software popul ar that enterprise applications would be replaced and over the next decade, and is now showing strong secular trends . cominoditized by a business-process-centric infrastructure, my Second, we are the leader in this market and better positioned expectation is now the majority view . Even SAP now believes, as today than any time in our history . Third, we have shown that we recently stated in their NetWeaver For Dununies book, that can grow revenues while also significantly expanding operating

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mar gins . We've been able to expand operating margins without Now I'd like to provide some forward-looking guidance . We sacrificing R&D investment and snaking sure we take care of our entered Ql at fiscal 2005 with a strong pipeline, coming off employees. In fact, I firmly believe that TIBCO not only has the another very solid quarter in Q4. We feel positive about the secular best , most productive employees in the industry, but they're also trends we are seeing across our business heading into FY 05 . With among the best compensated. And fourth, although we an the that said, we have learned over the past few years it is prudent to leader today, we are not taking anything for granted, and we plan be conservative around QI, because of the holidays in December to work even hard er to expand our leadership position in 2005 and and the budget-setting process that usually takes place during beyond . With that , I would now tu rn the call over to Chris for more January with our customers. For Ql, we expect revenues in the details on the financials. Chris? range of 116 to 120 million, which represents year-over-year growth of between 56 and 60 percent. We expect non-GAAP net income per diluted sharer to be 8 cents . For fiscal 2005 . we expect Chris O' Meara - TIBCO Software Inc - EVP & CFO revenues in the range of 515 to 525 million, resulting in 33 to 36 percent yearover-year growth . We also expect non-GAAP net . And hello, everyone . A quick recap of the Thank you, Vivek income per (telly-diluted share to be in the range of 36 to 38 cents. fourth quarter. First, we had record total revenues of 125 .7 million, And with that, Vivek and I will be happy to take your questions . up over 72 percent from the prior year and 19 percent sequential growth . License revenues were 70.6 million, up 76 percent year- over-year, and overall, about 56 percent of revenue. Geographically during the quarter, the U .S . grew 106 percent year . over-year, and represented 61 percent of revenues during the quarter. Europe grew 42 percent year-over-year, and represented 31 percent of total revenues in Q4. And finally, Asia grew 147 percent year-over-year, and resulting in approximately 8 percent of revenue in Q4.

Revenue by vertical was financial services at approximately 22 percent of revenue; telecom at 12 percent; manufacturing, II percent; energy, II percent; and consumer packaged goods at 6 percent. All-in-all the industry represented more than 5 percent of revenue . We did see solid improvement in our newly targeted verticals such as insurance and life sciences. Gross margins were 77 .2 percent . and non-GAAP operating income was 32 .4 million, resulting in strong pro forma operating margins of 25 .8 percent. On a GAAP basis, we reported net income of 18 .2 million . with operating margins of 14.5 percent. Top-10 customers represented 28 percent of revenue, and we had 16 deals over I million dollars. up from 10 deals last quarter. We have 87 deals over 100K, up from 75 deals in the third quarter. And for deals over l00K_ average deal size was just over $700,000, up slightly from last quarter . Deferred revenue rose slightly from last quarter to 60 .6 million. Growth in TIBCO's deferred revenue balance was offset by the timing of Staffware's renewal of maintenance contracts with their install base . We ended the quarter with 473 million in cash . And DSOs came in at 79 days, up from 71 days last quarter .

Before I provide forward-looking guidance, I'd like to provide an update on Sarbanes-Oxley. Given our November year-end, well be one of the first companies to assess the effectiveness of our internal controls as required by Section 404 of the Sarbanes-Oxley Act. Although we are still in the process of completing our assessment, at this point management has not identified any control deficiencies that will result in material weakness . And we continue to remain very focused on making sure we complete this obligation successfully .

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C 2005 2002 Thomson Financial. Republished wi8t permissim. No part of this publication may be reproduced or lranstritted in any form or by any means witllout the prior mitten consent Of Thomson financial . QUESTION AND ANSWE R The restructuri ng char ges related to our buildings we had leased about 4 years ago, 5 years ago at the peak of the market . We 're subletting them. And we - I've made certain assumptions regarding our ability to [indiscernible] if that doesn't renew . And Operato r we still have some vacant space there , so that reflects that adjustment to the assumptions. Thank you. Today's question -and-answer session will be conducted electronically . If you would like to signal for a question, John DiFucci - Bear Stearns - Analyst you may do so by pressing the st ar key, followed by the digit l on your touch-tone telephone. As a reminder , if you are using a speakerphone, please make sure your mute function is turned off to And should we expect that this would be the last restructuring allow your signal to reach our equipment . Once again, that is star, charge associated with that? Or is it possible - I mean, anything's I on your touch-tone phone . Well pause for a moment to assemble possible, but -- ? our roster. Once again. ladies and gentlemen. that is star. I on your touch-tone phone if you do have any questions. Our first question Chris O' Meara - TJBCOSoftware Inc. - EVP & CFO comes from John DiFucci of Bear Steams .

I think that should be the last one . It will not be sienifrcant to the John DiFucci - Bear Stearns - Analyst extent there's any a year from now or 2 years from now . We have most of the space leased. And we're working - we have some Yes, thanks . And congratulations, guys . This looks - this looks interest on the remaining stakes we have there. pretty good . Looks better than pretty good. Quickly, a couple . I guess, on some of your newer products just - on -- just want to John DiFucci -Bear Stearns-Analyst understand how they're developing . One. Staffware, how the cross- selling's doing . Is it - it's still early, but are you having any And just finally on that point , was - when will the cash hit from to cross-sell into your curre nt customer base or traction trying that happen? Did part of it happen this quarter or is that going to traditional customer base with the Staffware products? And even happen over time ? business events, which, I think, went GA lust went recently . I just was wondering what the activity around that, and rm assuming it's not much revenue at all, at least at this time . Chris O'Meara - TIBCO Software In c. - EVP & CFO

k's over the next 7 years . Vivek Ranadive - TIBCO Software Inc - Chairman & CEO

Yes, John, we fully integrated Staffwarc into - into the product John DiFucci -Bear Stearns -AnalyJ set and into our sales organization . So we actually had good success with cross-selling. It's still early, and I think we just barely Okay. Thank you, very touch . scratched the surface on that . Business events, we -- I think the product actually became available on the 17th of November. So we Vivek Ranadive - TIBCO Software Inc - Chairman B CE O had about 2 weeks. And 1 ant telling you, we are just very, very excited about this . Even in that 2-week time frame, we had 3 deals Thanks, John. in 3 different vertical markets - I in teleco, 1 in financial services ; and I in transportation. And they were - they totaled, probably, a couple of million . So we're very, very excited about both Operator opportunities - the cross-selling of Staffware, as well as business

events. And well next go to Tim Klasell of Thomas Weisel Partners

John DiFucci - Bear Stearns - Analyst Tim Klasell - Thomas Weisel Partners - Analyst

Okay. And one for Chris Chris, what were the restructuring Good afternoon, everybody, and congratulations on the great er? charges for the quart quarter. Just wanted to jump into 2 questions. One, sales force headcount going into 2005, can you walk us through what you plan Ch ris O ' Meara - TIBCO Software Inc. - EVP & CFO on doing there, as far as additions and buildouts?

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Chris O' Meara - TIBCO Software Inc. - EVP A CFO Thanks, Tim

Well, currently we're at around 125 sales reps in the field . We will stage hiring throughout the year to make sure we've got the right Operato r number of folks focused in the right verticals and geographies . You know, were still looking at exactly the overall incremental And our next question conies from Sarah Friar of Goldman Sachs. hiring. But I think we'd like to add a significant number throughout the course of the year, and get up well into the - the 160 range by Sarah Friar -Goldman Sachs -Analyst year end, maybe even higher, again . as we assess the market opportunity. Good afternoon. Let me add my cong ratulations . Of the 16 deals greater than a million, did you have any that were significant, like, Tim Klasell - Thomas Weisel Partners - Analyst greater than 5 million, like you've had in the past!

Okay. Good. And then, is the entire StatTware sales force on the Chris O'Meara - TIBCO Software Inc - EVP & CF O November plan? Are there still some on the December plan ?

we had a couple right around 5 million. And then we had very Chris O' Meara - T1BCO Software Inc. - EVP & CF O good distribution in the 2 to 3 million range. So very pleased by really the -- the distribution of the deals, both large and then a They are all on the November plan, as of now. number of -- and then that middle size.

Tim Ktasell - Thomas Weisel Partners - Analyst Vivek Ranadive - TIBCO Software Inc - Chairman & CEO

Okay . Sarah, we're just trying to please you, because, you know, you said we shouldn't have large deals. So we're just trying to please you here . Chris O' Meara - TIBCOSoftwareInc. - EVP&CFO

Sarah Friar -Goldman Sachs - Analyst So they stayed on the ori ginal plan through the end of November . We adjusted for that to normalize over the last month. And now that they have plans that con form to our fiscal year. Not at all . I'm always glad to see revenue. Of the couple that were close to 5 million, is that existing customers not buying up into things like BPM , or was that brand new customers , new to the Tim Klasell - Thomas Weisel Partners -Analyst TBCO vault?

Okay . And then, the one final question, Staffware, how did that product set in that -- the sales staff from Staffware perform relative Vivek Ranadive - TIBCO Software Inc. - Chairman & CEO to expectations this quarter? I was an existing customer . I was a new customer .

Chris O'Meara - TIBCO Software Inc - EVP & CFO Sarah Friar - Goldman Sachs - Analyst I think in line with our objectives. You know, they closed a number of opportunities. There was a good deal of cross-selling, in Okay. And then if I can just go back to margins. You did come off the sense that we did several deals that had their products an d our a phenomenally strong quarter. As we look forward, is that a run products. It was a litt le hard to attri bute the re venue. Luckily they rate we should, kind of, expect to see TIBCO to stay near? I were involved in a number of opportunities that have weak laws understand the first couple of quarters of the year you're a littl e bit (ph) . -- you're lower on the revenue line. And then, combined with that, Chris, just on the tax rate . I know your tax rate is going down . Do you expect it to go stra ight to 34 percent in Ql? Or will it be a Tim Klasell - Thomas Weisel Partners - Analyst gradual decline through the year?

Okay. Very good . All right . Congratulations, again . Chris O' Mea ra - TISCO Software Inc - EVP & CFO

Vivek Ranadive - TIBCO Software Inc - Chairman & CEO

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TIBX - 04 2004 TIBCO Software Earnings Conference Call

Okay. Sarah, reverse order. You know, our projections right now would have an average composite rate of 34 percent for the year. Vivek Ranadive - TIBCO Software Inc - Chairman A CEO as it will reflect in the first quarter, second quarter. thereafter. And then going to 30 percent in FY 06, as we get the full benefit of the Thanks, Sarah. international structuring .

Operato r Sarah F riar - Goldman Sachs - Analyst

Well go next to Gary Abbott of Merriman Curhan Ford . Okay.

Gary Abbott - man Carhan Ford -Analyst Chris O'Meara - TIBCO Software Inc - EVP .S CFO Merri

Congratulations. A couple of questions. First, Chris . I noticed the In terms of operating margins, we had a - you know . a very good share count actually jumped a little more than I would have quarter this quarter. They will drop somewhat next quarter, clearly, thought . Can you tell - and, actually, the G&A expense . So can as revenue comes down . Some expenses will come down as well . you give us some insight into those? And then I have a follow up because we had year-end incentive and bonus accruals this past question. quarter, given the overall Company's performance .

Chris O'Mea ra - TIBCO Software Inc - EVP & CFO Sarah Friar - Goldman Sachs - Analyst

Sure. Share count is really a reflection of the weighted average Sure. calculation. So the average stock price was higher throughout the quarter. And as a result, when you do the calculation for options Vivek Ranadive - TIBCO Software Inc - Chairman & CEO that are in the money, you - you can buy back fewer of those in the ca lculations. So your share count goes up somewhat . There's Yes, I think one of the things I want to say is that, you know, we also a smaller impact from having the shares related to the did these margins while making a significant ongoing investments Staffware acquisition in the whole qua rter. Because in - in Q3, in R&D and just in incentive programs. I believe we have the best they were not in for the entire quarter , a couple weeks were out . compensated people in the industry right now . And also, just the Secondly, in terms of G&A expenses, 2 elements really relating to infrastructure ofSarbanes-Oxley and beyond . the increase . I was some additional accruals from an incentive compensation standpoint, again, because of the strength of the quarter and the year. And also, a significant increase, close to Sarah Fri ar - Goldman Sachs - Analyst $800,000 in what we're spending for Sarbanes-Oxley . I mean, this is a major initiative both from the internal resource standpoint, as Okay. Great. And then maybe just finally, a quick question around well as the fees we have to pay externally to PWC. DSOs, which were up. And it Is more a question around what you saw in the qua rter . Did you see customers, maybe , wait until the Gary Abbott - Merriman Curhan Ford - Analyst end of the quarter to spend? And any indication how that's looking as you go towards the end of the year ? Okay . On the shire count . We've - just given where the stock is today, we've probably seen the bulk of the really big jumps. Would Chris O' Meara - TIBCO Software Inc - EVP & CFO it be fair to say that?

I think that customers are well-trained to wait. Fortunately, they dont all wait until the last day, but they do tend to like to wait until Chris O'Meara - TIBCO Software Inc - EVp & CF O the last month, last couple of weeks. So the DSO increase is really a reflection, more of a mathematical calculation, which is we grew Yes, I mean, as the stock price moves up, you will still see some nicely. And because we had more revenue in the last month, which growth in the weighted average share count . you really can't collect, you had DSOs step up a little bit. The specific aging remains very, very strong . Gary Abbott - Merriman Curhan Ford - Analyst

t Sarah Friar - Goldman Sachs - Analys Yes, but is it going to jump 15 million shares or something ?

Got it . Okay . Great . Well, thanks a lot .

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TIBX - 04 2004 TIBCO Software Earnings Conference Cal l

Chris O 'Meara - TIBCOSoftwareInc. - EVP& CFO Well now take a question from Ken Kiarash of Buckingham Research Group . No, no .

Ken Kiarash -Buckingham Research Group - Ana " Gary Abbott - Merriman Curhan Ford - Analyst

Hi, guys . Let me throw in my congratulations as well. Just wanted m the field Okay. Next question . Competitively, I've heard fro to ask a quick question . Chris, you mentioned about the life more talk about SAP as a competitor in this space, I'd say in the sciences and the insurance verticals having done well in this last I quarter than I've heard, probably, in my lifetime . Just sort of quarter. Can you quantify that for us a little and also give us the wondering if you're seeing more SAP out there, hearing more, or, stats for the rest of the verticals, how did they do ? sort of, what your sense is in competition with them.

Chris O'Meara - TIBCO Software Inc - EVP & CF O Vivek Ranadive - TIBCOSoftware Inc - Chairman & CEO

I think that the - both life sciences and insurance was still below 5 Well, the place I saw SAP is when I went to Sarah's conference in percent. We're starting to get some traction in both markets New York, the Goldman Sachs investor conference . So yes, I see because our products meet the requirements . Particularly with their at investor conferences, but not - it's really IBM that we see . insurance, from an integration and BPM standpoint, I think we And in some ways, you know, if you look at some of SAP's largest now have a lot offer, and we're very focused on that. So these are customers, like Pepsi, they're going with TIBCO. So, it's good for markets that we are putting focus on for 1)5 and beyond. In terms us because they're educating the market by saying how important, of the verticals, finance came in largest at about 22 percent . We and how secular a trend is, in terms of the integration market . But I had teleco corning in at approximately 12 percent . And then . know of no instance where we've actually lost a deal to SAP manufacturing and energy were both around 10 percent, with consumer products coming in at approximately 6 percent . And then Gary Abbott - Merriman Carbon Ford - Analys t the balance all under 5 percent.

Vivek, do you think SAP eventually will get this somewhat right Ken Kia rash - Buckingham Research Group - Analyst and it will be a li tt le bit like competing with IBM? You know, there will just be deals that you never see that you're just sort of Okay. And I got to the calla litt le late . I don't know if you talked shut out of because it's a SAP shop? about business events or not . Vivek, did you have any deals in the quarter ? And how is that product progressing so far? Vivek Ranadi ve - TIBCO Software Inc - Chairman & CEO Vivek Ranadive - TIBCO Sof ware Inc - Chairman J CEO We don't see that. You know, we're working with the largest SAP . And, again, the nature of integration is that people want customers Yes, no. We're very, very excited about it . We released the it to be separate. And we saw this with databases . There was a time product on the l7th of November, so we had roughly 2 weeks . And when the application companies tried to get into the database during that time we closed 3 deals in 3 different vertical markets, . And it became IBM and business, and never really succeeded and they were just over 2 million in total. Oracle. And the same thing is true here. It's us and IBM. The application guys have a different value proposition, which is being eroded, and that's why they're trying to do other things. Ken Kiarash - Buckingham Research Group - Analyst

Gary Abbott - Merriman Curhan Ford - Analyst Okay. And average selling pri ce for the product is ve ry similar to the rest of the products as well ?

Okay. Fair enough. Thank you, very much, and good quarter. Vivek Ranadive - TIBCO Software Inc. - Chairman & CEO

Vivek Ranadive - TIBCO Software Inc. - Chairman & CEO Yes. You can - you know, I said we did about 3 deals .

Thank you, Gary . Ken Kiarash - Buckingham Research Group -Analyst

Operator So, it was 3 deals for 2 million?

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TIBX - 0 4 2004 TIBCO Software Earnings Conference Call

Vivek Ranadive - TIBCO Software Inc - Chairman & CE O

Vivek Ranadive - TIBCO Software Inc - Chairman A CEO Yes.

Yes . It was over 2 . So, you know, your avenge selling price about 700K . Seihun Kong - Thinkequu; Partners -Analyst

Ken Kiarash - Buckingham Research Group - Analyst Is there potential to still sell some of the limited release, you know, customers in, let's say, QI before the actual genera l release? Or was everything, son of, limited to Q4 ? Okay. Sounds good . Thank you.

Vivek Ranadive - TIBCO Software Inc - Chairman & CEO Vivek Ranadive - TIBCO Software Inc - Chairman A CEO

Thanks. No, no . We hope - we'd be disappointed if we didn't make many more sales in Ql .

Operator Seihun Kong - Thinkequiq' Partners -Analyst

Well now go to Seihun Kong of Thinkequity Partners Okay. And you mentioned EDS. I was wondering i f you could talk about, you know, what their buying? Is this an internal-use Seihun Kong - Thinkequity Partners -Analyst product, you know, which products they were buying, and was this, you know, done on a product -specific type of ELA ? Hi . Good afternoon. Vivek, I was wondering if we could talk a little bit about the business events product line . Is this something Vivek Ranadive - TIBCO Software Inc - Chairman & CEO that you view as a product line that could, you know, essentially rival the core Rendezvous business? Or is this something that you view as strictly a plug-in-type of product into the core messaging Yes, its - it was one of our larger deal . it wasn't the largest, but it backbone ? was one of the larger ones. And what they have is a development license with limited internal-use rights. And so, again, you know, we see great opportunity because EDS has the option to go to an Vivek Ranadive - TIBCO Software Inc - Chairman & CEO enterprise option. Again, just for internal use. so that significant opportunity within EDS . but also with their customers . And this is Well, it's interesting because people are coming at it from both the first step in that direction . ends, and so I of the deals that we closed in the financial market, what got them really excited was business events. And they ended Seihun Kong - Thinkegaiq• Partners - Analyst up buying other pans of stack in conjunction with business events . And then we have other situations where they already have our infrastructure, and they already have business process Got you . And one Last question is, you know, you hinted at the management, and they want to move to being predictive, and they integration backbone as being critical to the next wave of get very, very excited about what they can do with it . This is, in appli ca tions. And . you know, you acquired Genera l interface this many ways, you know, this is kind of a killer app for the whole quarter. I was wondering if you could talk more about what are infrastructure stack . Because you have this event plug with all your grand plans for this particular market? Are you going to, you these events, and how do you make sense out of it, and what do know , dive in here a little bit deeper, or are you going to - are you do, and how do you start leveraging that? And so it's - you your solutions really going to revolve around the current know, it's very exciting for us . It takes us into areas that - of messaging and BPM software that you already have ? discussion that we - we're really not in in the past. Vivek Ranadive - TIRCO Software Inc - Chairman & CEO Seihun Kong - Thinkegaity Partners -Analyst Well, we see the whole things as being additive. And so, you know, we've always said that everyone needs a nervous system and I'm wondering, this product went into, I believe what 's called a limited release , and you 're going to have a general release, I that's the messaging backbone. And then, people need to be able to believe, in Q2. Is that correct? do business processes and work flow, and that's the second layer . And then, the third layer is, you know, how do you actually leverage the information? How do you create composit e

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TIBX - 04 2004 TIBCO Software Ea rn ings Conference Cal l

applications? And how do you make sense of the events? And so have to do this in order to hit 30 percent . I think we should be able that's where the BAM products, the GI products, and all the to hit 30 percent even if we do a mediocre job in indirect . predictive modelling products.come in . And you have the nervous system, you have the muscles, you have the brains, and it all works Dino Diana - UBS - Analyst together.

Okay. And it sounds like, from the comments, it's more of a bar Seihun Kong - Thinkequity Partners - Analyst and OEM strategy, rather than , really, the SIs at this point .

Was there anything out of General Interface this past quarter? Vivek Ranadive - TIBCO Software In c. - Chairman & CEO

Vivek Ranadive - 77 BCO Software Inc. - Chairman & CEO It's both, you know, it's both. You know, we hope to work with people like Antis in Euro pe, and we continue to work with Well, we - you know, there were a couple of deals where we Accenture and KPMG and many of the offshore people. So it's included some General Interface licenses as well . It was a small, both . but there were a couple of customers that signed on to use it .

Dino Diana - UBS-Analyst Seihun Kong - Thinheirithy Partners - Analyst Okay. And, I guess last year at this time, I think was a seeding Got you. Thanks, so much . time for the government business. I didn't really hear much said about that now. Just wondering how traction's going, and if it's been, kind o f, slow to take oft? Vivek Ranadive - TIBCO Software Inc. - Chairman & CEO

- TIBCO Software Inc - Chairman & CE Well, thank you . Vivek Ranadive O

Well, we've had some success, but I - you know, frankly, I'm not Operator very happy with the level of success we've had . I think in 2005, you know, we hope to do much better. And so we did - we did And well now go to Ditto Diana of UBS . well this quarter, we did well this year, but there were a lot of -- many areas where we could have done a lot better, and government Dino Diana - UBS-Analyst is certainly one of theta

Hi . You ended out the year with a strong operating margin . I'm Dino Diana - UBS - Analyst just looking - to get to the next leg, to get to that, you know, that 30 percent mark, how important is the indirect sales strategy for Is there something, you know, special about government that . improve you? What have you guys done recently there to, kind of makes it hard - you know, more difficult besides the whole, you traction? know, the -- their budget process - ?

& CE Vivek Ranadive - TIBCO Software Inc - Chairman O Vivek Ranadive - TIBCO Software In c. - Chairman & CEO

Well, we have events on multiple fronts. And so I is, clearly, I think it's a combination of factors, Dino. You know, I is that partners, like EDS, will fuel that type of activity for us . We also there was other lower-hanging fruit, like financial services that we have OEM activity happening . You know, we had a deal this got very focused on. The second thing is. you know, we continued quarter with EMC, where they can imbed our products in all of to seed this area . We continue to grow and hire new people in this their storage products. And, you know, so that kind of OEM and area. And, you know, we think that that will start paying off in alliance activity is going to be important to us . So we're - but I 2005 . So in 2004 we didnt have to depend on success in this area don't want to say that, you know, we're dependent on any of this in to - to grow the business . And in 2005 we hope to have more order to achieve the kinds of margins this business should be at. success . We think there's a lot of low-hanging fruit for the Company, you know, be it in indirect sales, be it in the government sector, be it in, you know, financial services, you know, be it in improving our Dino Diana - UBS-Analyst margins and services . So I don't want to say that, you know, we

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Okay. And just lastly . in terms of Staffware renewal rates . when Gregg Moskowitz -Susquehanna Financial Group -Analyst should we start to see them really kicking in . in terms of ge tting deferred revenue back? Okay. Great . And Chris, what were the di rect sales to fin an cial services ve rt ical this quarter? Chris O'Meara - TIBCOSoftwareInc. - £VPACFO

Ch ri s O 'Meara - TIBCO Software Inc - E6P A CFO I think you'll see that - they, historically , had business cycles that led to a lot of license deals closing in the June and December time Direct sales came in at a little over I I million in license revenue . frame. So I think you 'l l see a lot of renewal activity in QI -- December , January time frame . They have their underlying license revenue weighted , due to a couple of specific periods during the Gregg Moskowitz -Susquehanna Financial Group -Analyst year. Okay. Great . 'clunks, very much .

Dino Diana - UBS-Analyst V ivek Ranadive - TIBCO Software Inc - Chairman & CE O Thanks . Thank you .

Vivek Ranadive - TIBCO Software Inc - Chairman & CE O Operator Well, thanks, Dino. And we'll now take a question from David Hilal of Friedman , Billings & Company. Operato r . Ramsey

Our next question corns from Gregg Moskowitz of Susquehanna Phillip Dionesia - Friedman, Billings , Ramsey & Company - Financial Group . Analyst

Thank you . This is Phillip Dionesia for David . You had a strong Gregg Moskowitz - Susquehanna Financial Group - Analyst new customer count in the quarter. Just wan ted to find out whether you're still seeing success , mainly with messaging? Or are you Okay. Thank you, very much. And congratulations, guys . One seeing DPM, You know, luring out new customers . question I wanted to ask was just on R&D. You had a fairly healthy up tick . And, you know, although on a percentage basis I believe i t's now down to about 14 percent, or so, of revenues . You Vivek Ranadive - TIBCO Software Inc - Chairman A CEO know, Chris, and, I guess, what are your thoughts around R&D spend going forward? And, specifically, what should we expect to We're seeing across-the-board success . You know, we're seeing see there in 05 ? great success with messaging, we're seeing great success with DPM . And we're starting to see early, but great, success with some of the new products, like business events . So we're seeing success . Chris O' Meara - TIBCOSoftwareInc. - EVPACFO We continue to have pricing power. We're not - again, all the metrics show that. And were also continuing to we that carried I think we've continued to really get a lot of leverage out of through beyond Q4 into December. engineering resources. This quarter's up tick was, again, due. largely, to the incentive plans we have in place to reward folks, as Vivek has talked about. We continue to - to expand our operations Phillip Dionesis - Friedman, Billings, Ramsey & Company - in India , so we look to leverage our overall cost structure that way, Analyst as well. So I think, on a percentage basis, they're going to be in this range as they show a little bit of leverage throughout U5 . Great . And with regards to share repurchases, did you do any in the quarter?

Vivek Ranadive - TIBCO Software Inc - Chairman Ao CEO Vivek Ranadive - TIBCO Software Inc - Chairman A CEO Yes . WeYe - you know, we think we have the critical mass of R&D, and, you know, we can start leveraging it, so - Yes . We did do some, right, Chris?

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Chris O'Meara - TIBCO Software Inc - EVP & CFO Vivek Ranadive - TIBCO Software Inc - Chairman & CEO

Yes. We repurchased about half a million shares. Well, it used to be that, you know, everyone had the same problem, which is they bought all these assets and how do you make them work together? So that was a combination of BPM and Phillip Dionesia - Friedman, Billings, Ramsey & Company - messaging . But early indications from the business events area is Analyst that we have customers jumping all over that now. So, in fact, I of the 3 deals we closed, it was really business events that was the And the value? motivating factor behind that .

Chris O'Meara - T!BCO Software Inc. - EVP A CFO Sterling Auty. - J.P. Morgan - Analyst

Came in at right a round $5 million. Okay . And then at the beginning of the Q&A session, I think somebody had asked your success level in possibly b ringing the Phillip Dionesia - Friedman, Billings , Ramsey & Company - Staffware solution set to North America . Is that what 's driving Analyst some of the growth in the - in the insurance sector ? What is the opportunity to bring Staffware to North America. All right. Thanks. Vivek Ranadive - TIBCO Software Inc - Chairman & CEO Vivek Ranadive - TIBCO Software Inc - Chairman & CEO It's huge . It's huge, and we barely scratched the surface . And so, as Thank you . you mentioned insurance, you know, that's an area that's totally untapped for us right now. And huge opportunities there for us. We did thins and - with a few clients and were very successful . So Operator we've just barely scratched the surface on this . And we hope in Ql to report much greater success in new areas with the Staffware And our next question comes from Sterling Auty of1. P. Morgan . product set.

Sterling Auty - J. P. Morgan - Analyst Sterling Auty - J.P. Morgan - Analyst

Hi, thanks . Chris, can you give us a sense of the breakdown Okay. And then last question. Chris, can you give us any sense for between what percentage of revenue came from messaging versus the magnitude of the improvement in deferred revenue for TIBCO some of the other categories? in the quarter?

Chris O'Meara - TIBCO Software Inc. - EVP & CFO Chris O'Mea ra - TIBCO Software Inc - EVP & CFO

I think messaging overall, and again this is a little bit of an art For TIBCO itself, it was up a few million dollars - versus the science because of the allocation and enterprise deal, came in at about 30 percent . And then we had our - our integration Sterling Auty - J.P. Morgan - Analys t and BPM revenue came in at roughly 60 percent. And then optimization, which includes such things as portal and business events was under 10 percent . Okay.

Sterling Auty - J.P. Morgan - Analyst Chris O' Mea ra - TIBCO Software Inc - EVP & CF O

Okay. And as you look at the 100 new custome rs that you brought -- in Q4. And that was offset, again, by the fact that the nonlinear in the door, kind of following on the last question, is there a trend, path in and around the underlying Staffware revenue . or is them, kind of, one area that new customers tend to flock to? Is it integration and BPM first? Is it messaging first? Is there Sterling Auty - J.P. Morgan - Analyst something that customers start with and then, kind of, build off of?

All right . Great Thank you, guys .

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DISCLAIME R . - EVP & CFO Chris O'Meara - TIBCO Software Inc TItcsns ;n Financial reserves the right to nmkn changes to documents. content . or other intnrmation on this web site without obligation In notify any person of suc h changes. Okay . In the coatfer&)ce calls u,nxi which Event Transcripts are based, compares may make proIoolions or other kvward-Iodring Vivek Ranadive - TIBCO Software Inc. - Chairman A CEO slaiements regarding a var!ely of items . Such forward-looking statements are based upon current exyxWliors and involve risks ann uncnrtainlies . Actual resells may differ materially from those Thanks. stated in any forward-looking statement based on a number of irry rx!an! (actors and risks . which are in ore specifically identified in the companies' r x:at record SEC filings . Although the companies Operato r may indicate and believe that the assumptions to dortying the forward-IcOJktng statements are rhasonable. any of the assumpti

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FORM 8- K TIBCO SOFTWARE INC - TIBX

Filed: March 01, 2005 (period: March 01, 2005) Report of unscheduled material events or corporate changes . Item 2. 2. Results of Operations and Financial Condition

Item 9.01. Financial Statements and Exhibits

SIGNATURES EXHIBIT INDEX EX-99 .1 (Exhibits not specifically designated by another number and by investment com a~ nies) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 2054 9

FORM 8-K

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

Date of Report (Date of earliest event reported) March 1, 2005

TIBCO Software Inc. (Exact name of registrant as specified in Its c harter)

Delaware 000-26579 77-0449727 (State or other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification No.)

3303 Hillview Avenue Palo Alto, California 94304-1213 (Address of principal executive offices, including zip code)

(650)846-1000 (Registrant's telephone number , including area code)

Not Applicable (Former name or former address, it changed since last report)

Check the appropriate box below if the Form B-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions :

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

U 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)) Item 2 .02 . Results of Operations and Financial Conditio n On M arch 1, 2005, the Registrant issued a press release regarding its expected financial results for its first fiscal quarter ended February 27, 2005, the text of which is furnished herewith as Exhibit 99 .1 .

Item 9.01 . Financial Statements and Exhibits (c) Exhibits .

Exhibit No. Description

99.1 Press Release of TIBCO Software Inc. dated March 1, 2005 .

The information in this Current Report is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that Section . The information in this Current Report shall not be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing . SIGNATURE S

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

TIBCO Software Inc .

By: /s/ Christopher G . O'Meara

Christopher G . O'Meara Executive Vice President, Finance and Chief Financial Officer

Date : March 1, 2005 EXHIBIT INDEX

Exhibit No . Description

99 .1 Press Release of TIBCO Software Inc . dated March 1, 2005 . Exhibit 99. 1 •TIBCO The Power of Now' FOR IMMEDIATE RELEASE

Press Contact : Investor Relations Contact: Robin Stoecker Michael Magaro TIBCO Software Inc . TIBCO Software Inc . (650)846-5044 (650)846-5747 rstoecker@tibco .com mmagaro@tibco .co m

TIBCO SOFTWARE REPORTS PRELIMINARY FIRST QUARTER FINANCIAL RESULT S

Palo Alto, Calif., March 1, 2005 - TIBCO Software Inc . (Nasdaq :TIBX), a leading enabler of real-time business and the world ' s largest independent business integration software company, today announced prelimina ry financial results for the quarter ended February 27, 2005.

Preliminary first quarter results indicate revenue is expected to be in a range of $100 to $102 million . The Company expects its license revenues for the quarter to be approximately $47 to $49 million . These disappointing results were primarily due to lack of execution in certain geographic areas, particularly in Europe . The Company plans to address this issue by, among other things, making changes in the leadership in Europe as well as sales process and procedural changes . In addition, several transactions were delayed near the end of the quarter . "Given the strength we were seeing in our business and pipeline coming into Ql ., and as late as the first part of last week, I did not expect us to produce such disappointing results," said Vivek Ranadivt, TIBCO Chairman and CEO . "I believe the issues that led to the shortfall can be corrected and I plan to move swiftly to do just that."

Earnings per share for the first fiscal quar ter calculated in accordance with GAAP are expected to be between 3 and 4 cents . TIBCO's non-GAAP EPS for the first fiscal quarter is expected to be between 4 and 5 cents . Non-GAAP results exclude amortization of acquired intangibles and assume a pro forma effec ti ve tax rate of 38% .

TIBCO will provide more detailed guidance on the regul arly scheduled conference call on March 24, 2005 . Conference Call Details TIBCO Software has scheduled a conference call for 5 :00 p .m . EDT today to discuss its preliminary first quarter results . The conference call will be hosted by CCBN and may be accessed over the Inte rnet at www .tibco. com . To listen to the live call, please go to the website at least 15 minutes e ar ly to register , download and insta ll any necessary audio software . For those who cannot listen to the live broadcast of the call, a replay will be available through TIBCO Software Inc .'s website at www .tibco .com shortly after the live call ends .

About TIBCO Software TIBCO Software Inc . (NASDAQ :TIBX) is the leading independent business integrati on software company in the world, demonstrated by market share and analyst reports . In addition, TIBCO is a leading enabler of Real-Time Business, helping companies become more cost-effective, more agile and more efficient . TIBCO has delivered the value of Real-Time Business, what TIBCO calls The Power of Now®, to over 2, 000 customers around the world and in a wide variety of industries . For more information on TIBCO's proven enterprise backbone, business integration, business process management, and business optimization solutions, TIBCO can be reached at +1650-846- 1000 or on the Web at www .tibco.com . TIBCO is headquartered in Palo Alto, CA .

TIBCO, the TIBCO logo, The Power of Now and TIBCO Software are trademarks or registered trademarks of TIBCO Software Inc . in the United States and/or other countries. All other product and company names and marks mentioned in this document are the property of their respective owners and are mentioned for identification purposes only .

Use of Non-GAAP Financial Informati o n TIBCO provides non-GAAP operating income and net income per share data as additional measures of its operating results . TIBCO believes that financial measures of income provide useful information to management and investors regarding certain additional financial and business trends relating to the company's financial condition and results of operations. For example, the non-GAAP results are an indication of TIBCO's baseline performance before gains, losses or other charges that are considered by management to be outside the company's core business operational results . In addition, these non-GAAP results are among the primary indicators management uses as a basis for planning for and forecasting of future periods . These measures are not in accordance with, or an alternative for, accounting principles generally accepted in the United States and may be different from non-GAAP measures used by other companies .

Legal Notice Regarding Forward-Looking Statements : This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the federal securities laws . The final results for the first quarter of 2005 may differ from the preliminary results discussed above due to factors that include, but are not limited to, risks associated with final review of the results and preparation of quarterly financial statements . TIBCO's future operating results may differ from that forecasted in the forward-looking statements due to factors that include, without limitation, fluctuations in demand for TIBCO's products and services or economic conditions affecting the market for TIBCO's products and services, TIBCO's inability to correct the reasons for the shortfall and if TIBCO cannot successfully execute its growth plans . Additional information regarding potential risks is provided in TIBCO's filings with the SEC, including its most recent Annual Report on Form 10-K for the year ended November 30, 2004. TIBCO assumes no obligation to update the forward-looking statements included in this release .

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Conference Call Transcript TIBX - TIBCO Software Reports Preliminary First Quarter Financial Results

Event Date/Time : Mar. 01 . 2005 / 2:00PM PT Event Duration: 36 min

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TiBX - TIBCO Software Reports Preliminary First Quarter Financial Results

CORPORATE PARTICIPANTS PRESENTATION

Vivek Ranadive TIBCO Software - Chairman, President, CE O

Ch ris O'Mea ra Operator TIBCO Software -CFO Good afternoon, ladies and gentlemen. I't Sheila. Welcome to C O N F E R E N C E CALL PARTICIPANTS TBCO's first-q ua rter fis cal 2005 preliminary conference call . John Difucc i At this time, all participants are in a listen -only mode . Later, we Bear Stearns & Co. - Analyst will conduct a question -and-.answer session. You can also listen to Tim Klasell this call via the Internet at www'IBCO.com. Today's call is bein g Weisel Partners= Analyst Thomas recorded and will be available for playbac of fromi f1BCO Softwa re Katheri ne Egbert Web site at www .TD3CO.com . In addition , a replay will be Jeferier & Co. - Analyst available through Premier Conferencing for the same period b y Dino Diana calling 888 -203-I 112 from the U .S . or 719-457 -0 820 UBS Warburg -Analyst intern ationally. The confirmation code is 1451747 . Kash Rangan The following conference call includes forward-looking statement s Wachovia Securities - Analyst which represent TIBCO Software's outlook and guidance only as Brent Williams of today and which are subject to risks and uncertainties . These Keybanc Capital Markets - Analyst forward -looking statements include but are not limited to TIBCO' s Sapph Friar updated estimate of revenue and earnings per share for the firs t Goldman Sachs - Analyst quarter of 2005, our ability to close the deals in the pipeline, an d -services industry , Sterling Auty the opport unity to expand sales in the financial J.P. Morgan - Analyst specifically in the retail banking and insurance markets . Our actual results could differ materially from those projected in suc h Yun Kim forward -looking statements . The factors that could cause actua l A .G. Edwards & Sons - Analyst results to differ are discussed in the factors that may affec t David Hilal operating results section of TIBCO's most recent report on Form Friedman, Billings, Ramsey & Co. - Analyst 10-K filed with the Securities and Exchange Commission . TBCO assumes no obligation to update the forward-looking statements included in this call whether as a result of new developments o r otherwise .

The participants on the call are Vivek Ranadive, TIBCO's Chairman and CEO, and CFO Chris O'Meara . I'd now like to turn the call over to Vivek. Please go ahead, sir .

Vivek Ranadive - TIBCO Software - Chairman , President, CEO

Yes, thanks, Sheila . Hello, everyone, and thank you for joining us today. We're here to discuss preliminary financial results for QI . We will defer any comments around guidance until the regular conference call scheduled for March 24 . In addition, given the late notice of this conference call, we are limited to only discussing information that was included in our preliminary financial results press release issued at 1 :05 PM Pacific Standard Time. Thanks for your understanding .

Let me begin by saying that, given the strength we were seeing in our business and pipeline coming into QI and as late as the first pan of laa week, I did not expect us to produce such disappointing results.

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data solutions. We believe this will enable us to penetrate further Before I get into what transpired in QI, let me first discuss our into the financial services market. Reuters will pay TIBCO preliminary financial results . Our preliminary Ql results show minimal annual license an d maintenance fees of I I trillion . revenues in the range of 100 to 102 million . This compares to our original QI guidance of 116 to 120 million . We expect license I understand we have some work cut out for us over the near term revenue to be between 47 and 49 trillion. Non-GAAP EPS is to prove to many of you we are capable of capturing the long-term expected to be in the range of 4 to 5 cents per share, compared to market opportunity. The good news is that we do have a solid our original guidance of g cents per share. On a GAAP basis, EPS foundation of over 2,000 customers from which to build upon . I is expected to be in the range of 3 to 4 cents per share . believe it's clear we are the leader in our space and provide solutions to our customers that are kev to their business and Although we're still in the process of fully analyzing Ql, let me fundamentals to improving their financial results. discuss with you what I do know today. First, we believe, at this point, the shortfall was primarily due to a lack of execution in That concludes my remarks for today . With that, Chris and I will certain geographic areas, most specifically Europe . In fact, every be happy to take your questions but again , please understand that region throughout Europe came in significantly under forecast . As we are limited in what we can say . a consequence, we will be nuking leadership changes in Europe as well as some sales, process and procedural changes, especially as they related to forecast management . Unfortunately, the fundamental issue was that the extent of the shortfall emerged only very late in the quarter, giving us little time to pursue other less- developed opportunities in our broader pipeline . We are addressing this issue and will talk more specifically about our action plan on our conference call on March 24 .

Secondly, we have several deals in both Eu ro pe and North America that were pushed out and did not close as planned. Fortunately, we did not lose these deals to competitors ; they're still in our pipeline, and we still expect to close them over the coming quarters.

Finally, although hard to quantify, I must also cite my personal focus on achieving 404 compliance as pan of the problem. As many CEOs would appreciate, my intense focus during the quarter on making sure we successfully achieved 404 compliance took some of my attention away from sales activities . Many people here put time and effort into ensuring we complied, and I was pleased to announce our success with this several weeks ago, but 1 let myself get too distracted by this and was not as involved as I usually am in various key deals until later in the quarter . This was entirely my mistake .

All this said, I believe the issues that led to the shortfall can be corrected and I plan to move swiftly to do just that. Although the news we are sharing with you today is not what we planned, we did see several positive things during the quart er, which included continued growth in the financial services vertical, specifically in retail banking and insurance ; positive traction without new ETL (ph) product just released very recently. In addition, we had strong OEM business in the quarter. Finally, if I use our new prelimin ary numbers for QI of between 100 and 102 million in revenue, this still results in year-over-year growth of between 34 and 37 percent.

We also strengthened our relationship with Reuters by entering into a nonexclusive distribution arrangement with them that enables Reuters to sell TIBCOs products alongside their market

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John Difucci - Bear Steams & Co. - Analyst Operato r

It sounds like Europe was the main issue but is it fair to say that Thank you . We will now begin the question-and-answer session . in-line ? (OPERATOR INSTRUCTIONS) . John Dilucci . Bear Steams. the U .S. was sort of

Vivek Ranadive - TIBCO Software - Chairman, President, John Difucci - Bear Stearn s & Co. -Analyst CEO

Yes, guys, . the way- tttl gland it anyway . most ofyQur coungv The U.S . was all right: There were trends in some areas and it was , managers in Europe were previous Staffware people. Staffware, as okay in some areas and you know, financial services was very , I understand it. was on a calendar year previously. Now they are on very strong but the issue that we had was - if Europe have been - a TBCO quarter year. ending a quarter in February versus March . had met the forecast that we sta rted with, then we would have not Everybody knows what the beginning of the year is like and how just an acceptable but even a good quarter . things start to ramp up, not really even in January but not until February. I rttean, do you think - I guess Pm trying to get a feel for how much of the miss is still there and how much of it could likely John Difucei - Bear Stearns & Co. - Analyst come into the next quarter . Obviously, you may not be able to . But I'm just kind answer that but if you could, that would be great Okay. I'm sorry, just one more quick one. On the Reuters deal of wondering - because it sounds like Europe was the issue in here , or re lationship. I was just curious a little bit how that 's going every region in Europe, and again these were run by pretty much to work . How is it different than now? Because the way I the Staffware organimtion that was used to a March quarter versus unde rstand it anyway. I mean Reuters is selling information or data a February quarter . I was wondering how much of an impact you and they need to deliver that data with technology , TIBCO-like think that had on finishing this quarter. technology, so it makes sense that even though their relationship was starting to unwind, that they were going to be sort of still Vivek Ranadive - TIBCO Software - Chairman, President, pa rtnering with you anyway . CEO Vivek Ranad i ve - TIBCO Software -Chairman, President, Yes, we think this is a blip .' We think , at this point, that we CEO understand what happened, and you are absolutely right ; we did , and quite honestly, that led to some have mingled management Yes. From our perspective, what was happening is we see just an paralysis . There was an old TIBCO and a new TIBCO, and we had incredible opportunity over the next few years in fi nancial services, ; we're going to fix that poor leade rs hip . Were going to fix that and we see it both on trading floors as well as in - on the . very quickly, and we think that we will get this back on track consumer retail bank side and in insurance companies. So the agreement that we have with Reuters - and frankly, we need to John Difucci -Bear Stearns & Co. - Analys t have more such agreements with more people - is a great agreement because it's nonexclusive. They already have many, . Many of those people already understand I guess, Vivek, you use words like 'quickly', but you mean like many feet on the street it's a great right now you think this is something that's fix this quarter? how to sell this kind of technology, so we think agreement and we're excited about it . Its been in the works for some time, so we've spent the last 9 months working on it . Vivek Ranadive - TIBCO Software - Chairman, President, CEO John Difucci -Bear Stearns d& Co. -Analyst

Yes. Yes, what you said is absolutely true, John . We had some Staffware guys in many of the countries, and then we had old I guess for - in the past, if Reuters sold -- I dont know , use round TIBCO guys and you 're right; there were differences in terms of numbers - Si million of TIBCO product - you, TIBCO, would the calendar year versus the qua rter pressures , just in terms of even get about half that . What's the - I mean, some of the formal the process we apply to contracts, you know , the U .S . GAAP arrangemen ts - (multiple speakers) ? process being much more stringent, so the re was a learning curve . You know, it just - they were paralyzed during that time . We came in at a fraction of the number that we were expected to come

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Vivek Ranadive - TIBCO Software - Chairman, President, CEO Tim Klasell - Thomas Weisel Partners- Analy t

Yes, it's similar, you know. We get about 50 percent but the Okay . Then as far as the agreement - (multiple speakers) . difference here is that it's nonexclusive, so you know, we continue to sell where we are (indiscernible) and that's a huge difference . Vivek Raaadive - TISCO Software - Chairman , President, (multiple speakers) -- what we do, it's not - it doesn't cannibalize CEO us ; it actually adds .

Just one clarification 1 want to make is that they can only sell Operator these things as in conjunction with their offerings, so they cant just go and make - (technical difficulty) - (indiscernible) on it. So at Tim Kiasell, Thomas Weisel Partners. the end of the day, that's what makes me feel confident that cannibalization isn't an issue.

Tim Klasell - Thomas Weisel Pa rtners - Analyst Tim Kiasell - Thomas Weisel Partners - Analyst Good afternoon . everybody . First, Chris. maybe you could help me on some of the numbers here . Can you give us an idea of what That helps ; that helps. On the SI I million annual payment, how DSOs and cash flows for the quarter may turn out to be? should we reflect - (technical difficulty) - in our models, Chris? Is that a -- just divide that by 4 on a quarterly basis starting next quarter, or can you give us an idea? Chris O'Meara -TIBCOSoftware -CFO

It's still very, very preliminary. I think DSOs will (inaudible) in Ch ri s O'Meara -TIBCOSoftware-CFO the last quarter in the upper - (technical difficulty) - range . Cash flow will be (inaudible) - (technical difficulty)- the numbers. We That was actually recognized -- will be recognized internally for just wanted to communicate the -(technical difficulty). this quart er.

Tim Klasell - Thomas Weisel Partners - Analyst Tim Klasell - Thomas Weisel Partners - Analyst

Okay, good . And on - dipping into the Reuters agreement, Vivek, Okay, Then jumping over to the BPM space, obviously if it was you mentioned it wont be cannibalizing your existing sales and the Staffware -managed or historically Staffware - managed granted Reuters guys did not do a lot of TIBCO business in the geography, does that give us any indication on the BPM market past, selling it as pure infrastructure. What gives you comfort that and the Staffware products overall? Can you give us an idea of maybe they may not take a nun at some of the projects that maybe how they sold in the U. S . and how you feel the robustness of that you would have already in your pipeline? market is today?

Vivek Ranadive - TIBCO Software - Chairman, President, Vivek Ranadive - TIBCO Software -Chairman, President, CEO CE O

Well, this is a very different agreement that we've had in the past . Yes. We are very, very excited about the robustness of the BPM We see them - there are many places where we just cant be and in market. We sold them extremely well in the U.S ., and I think both order for us to fully exploit debating floor (ph) opportunities, we parts ( indisce rnible) are true . In terms of Europe and sales, there would have to grow our organization not just twofold but tenfold. was paralysis, you know, we were impacted over there. We need to So, we think that the market is huge and we have a very fix that. But in terms of the products themselves , they sold in cooperative relationship with them and so - and besides even, if places where ( indiscernible ) outside ofEurope they sold very well . you look at what happened last quarter, a lot of the biggest deals in financial services actually came in for us on the retail side and the Tim Klasell - Thomas Weisel Partners - Analyst insurance side and so, you know, we - as we hire people, we need to continue to focus and develop those markets . So, we see this being an additive thing; you know, we don't see it as being Then one final question - maybe any indication of business event (inaudible) cannibalize. In fact the guidance - the 2 people that sales during the quarter? Did you see any of those? architected the relationship at the time were responsible for the financial services (inaudible).

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TIBX - TIBCO Software Reports Preliminary First Quarter Financial Results I

Vivek Ranadive -TIBCOSofrware - Chairman, President, CEO Vivek Ranadive - TIBCO Software - Chairman, President, CE O Yes, we will provide more clarity at the conference call but we saw continued momentum with (inaudible ) events . Then we also Oh, yes . Yes, you know, we are coming in at a fraction of what were really excited . You know , we bought out our ETL (ph) the forecast said. offering just in the last few days of the quarter , and I think we already made a couple of sales . Literally days a fter we announced Katheri ne Egbert - Jefferies & Co. - Analyst it, we closed a couple of deals. One of them is actually in competition with Informatica (ph), so people are excited about the Real-Timing deal that we offer . Do you think there is any component of demand in Europe being weak , or is it just simply-execu tion on your part!-- __ _ _._

Operato r Vivek Ranadive - TIBCO Software - Chairman, President, CEO Katherine Egbert, Jefferies & Company.

We believe it's execution , Katherine. I donI think Europe has been Kathe ne Egbert - Jefferies & Co. - Analyst ri particularly strong over the course of the last year, but we still managed to do okay over there. We dont think it got any worse, so Thank you . The question I have regards to your reference to we believe that the fault is ours ; it was execution. changes in sales processes and procedures. is there anything you can tell us so rt of preliminarily what you 're going to do different in Kathe rine Egbert - Jefferies & Co. - Analyst the future to help be tter reflect the Eu ropean pipeline in guidance?

Okay, that's helpful . Thank you . Vivek Ranadive - TIBCO Software - Chairman , President, CEO Operator

Yes . You know, (indiscernible) on the March 22nd conference call, but you know, we have announced that we are making some Dino Diana, UBS. of the initial changes and we are putting in processes that we use in the United States in terms of just the drill that we go through in Dino Diana - UBS Warburg - Analyst looking at deals and pipeline and forecast . So you know, weYe going to take everything that we will find in the U .S. and apply it [joined in late so sorry if you touched on this already but can you to Europe. So there's a whole range of things . We're going to just touch on Staffware 's performance in Europe had it been stand- consolidate to fewer regions. You know, we have 5, 6 regions and alone versus your remaining business? I think I just heard you say were going to take it down to 3, so there's a number of changes that it was across the board but -- (multiple speakers) . that we might make, but it's - we will talk at more length about this in a few weeks . Vivek Ranadive - TIBCO Software - Chairman , President, CEO Katheri ne Egbert -Jefjeries & Co. - Analyst

You know - (Multiple Speakers) - did integrate the businesses, Okay . How much of the weakness in Europe was organic TIBCO Dino, and so the point that we made earlier that I believe John versus Staffware would you say ? Difucci asked was -- he was aware of the fact that, in many of the regions, the management that we had was Staffware management Vivek Ranadive - TIBCO Software - Chairman, President, and you know if that had been an issue . What I said is yes, we had CEO some paralysis in our sales organization. We had some issues with leadership; you know, there was the old TIBCO and the new Well, the weakness had to do with just poor execution . TIBCO . There were changes in terms of how we felt (indiscernible) how we recognized revenue, so all of that came to a head . Katheri ne Egbert -Je,[/eries & Co. -Analyst

So we're going to fix atI of that; we are going to fix it this quarter So it was across the board - (multiple speakers)? and were going to make leadership changes, but we don't - th e

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BPM sales in the United States were actually quite good, so it 2 or 3 different alternative in terms of how Europe gets nun. We wasnt the product, it was more our sales execution. believe they are all very good options and if none of those options are viable, then we will have an interim option while we make one of them viable . So, we have -- you know. in the last 24 hours, we Dino Diana - URS Warburg - Analyst have looked at this at some length and by the time we have our conference call 2 weeks from now, all of this will be behind its and So when you look at - my understanding was that, in July or so, put to bed . that sales head in Europe changed from - to a Staffware employee, right, so he's only been on board for, what, the 1 guess whatever, 2 quarters? Is this going to the third sales change in management? Kash Rangan - Wachovia Securities -Analyst

Vivek, in retrospect, maybe it's a little bit too early to diagnose, Vivek Ranadive - TIBCO Software - Chairman, President, but could you have expe ri enced perhaps a greater than expected CEO acceleration of European business, especially the software part, in Q4 that may have actually taken away from some of that Ql . No, no, no strength? Usually with software - (technical difficulty) - (indiscernible) you seem to fi nd that salespeople want to -- Dino Diana - UBS Warburg - Analyst ( multiple speakers).

Or am I -- is that -? Vivek Ranadive - TIBCO Software - Chairman, President, CEO Chris O'Meara -TIBCOSoftware-CFO No, Kash, that is not the case. You know, we had a very strong forecast going into Ql and it was just very, very poor execution . It No, we had - the current head of Europe has been there for about wasn't that we took deals in Q4 that made it difficult to do deals in a year. We made some regional changes when we combined the QI ; that was not the case . companies in the August/September titneframe at the country level . (technical difficulty) . Kash Rangan - WachoetaSecurities - Analyst

Dino Diana - UBS Warburg -Analyst Okay, so you did have a strong forecast -- (technical difficulty) --

Okay, thanks. the market -(technical difficulty) -(multiple speakers) ?

Vivek Ranadive -TIBCOSoftware- Chairman, President, Operato r CEO

Kash Rangan, Wachovia Securities. Yes . it came in at a fraction of what our forecast was.

Kash Rangan - Wachow.a Securities - Analyst Kash Rangan - Wachovia Securities - Analyst

Thank you very much . I'm calling you from an airport, so I Finally, is it possible at all to say -- to look at -- (technical apologize for the background noise here . Vivek, it looks like you're difficulty) -- the large deals - (technical difficulty)? Did you have going to make some management changes in Europe. Are we a higher volume of smaller ASP deals? talking about reassignment of existing executives/( indiseemible) manage rs within the TIBCO organization, or are you at the point where you have to bring in new talent from the outside and the Vivek Ranadive - TIBCO Software - Chairman, President, latter is the situation? Is I quarter a realistic tirneframe to expect CEO you just to (indiscernible) by way of better European execution? No, no, no we didn't see that. It was really, you know, primarily a Vivek Ranadive - TIBCO Software - Chairman, President, geographic issue . CEO

Kash Rangan - Wachoeta Securities - Analyst Yes, Kash, what we want to do in ( indiscernible ) scenario is take on be responsible So we have homegrown talent and have that pers . Th ank you very much .

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procedures we have in the U.S ., then people are not used to that, then that can slow things down for some time. Operator

t Brent Williams, KeyBanc Capital Markets . Brent Williams - Keybanc Capital Markets -Analt'r

Okay. Then of the deals that you mentioned that slipped, were Brent Williams -Keybenc Capital Markets - Analyst there like I or 2 blockbusters or some handfuls of healthy but not blockbuster deals ? If I looked at - you made reference to a forecasting problem If [ look at that, there are a couple of variables in forecasting . One is Vivek Ranadive - TIBCO Software - Chairman, Presiden t, how well-qualified the deals are. particularly in the later stages . CEO - .Another is-whether the deals get downsized_ at signing. Another is an estimation of the kill rate. Where do you - I mean, do you have a sense of which one of these va ri ables might be sort of more of a Well, handfuls - it was the latter . It is the latter. It wasnt like factor? there was a huge big deal that we were hoping to close that didn't close . That wasn't the case .

Vivek Ranadive - TIBCO Software - Chairman, President, CEO Operator

You know, we're going to have to defer until the March 22nd call Sarah Friar, Goldman Sachs. to give you more clarity on that. I think a lot of it had to do with . You know, there were 2 armies just with inaction and paralysis Sarah Friar - Goldman Sachs -Analyst and they were both old army/new army, and it was just paralysis and so that's the primary issue we had . Vivek, just you've talked a lot about Europe . Did you see any deals (indiscernible) in the U .S.? I wonder if you could just speak a Brent Williams - Keybanc Capital Markets - Analys t little bit to the software spending environment here in the United States . Okay. Then onto - you have made a comment about something . GAAP rev. roc. Were there deals that about European versus U.S Vivek Ranadive - TIBCO Software - Chairman, President, were signed but couldn't be booked? Is that -- ( multiple speakers) ? CEO

Vivek Ranadive - TIBCOSofware- Chairman, President, Yes, we think it's good . We didn't see -- you know, every quarter, CE O there's always deals that fall in and some deals that get pushed out, but we didnt see any difference in the spending environment from No, no absolutely not, absolutely not. Understand that they were a the previous quarter . European company and what they consider to be revenue -- they a quarterly . the way that run on a yearly basis and we ar e on basis Sarah Friar - Goldman Sacks - Analyst they looked at revenue under U .S . GAAP we wouldn't consider revenue. The point I'm making is, look, there were some cultural differences, there is some training to be done, and all of that Okay. Then also deals that slipped from Europe, do you have a sense of, as they close, are they getting downsized or is it just true combined with just 2 sets of people caused paralysis. taking X out of one quarter and moving it over into the next?

Brent Williams - Keybanc Capital Markets - Analyst Vivek Ranadive - TIBCO Software- Chairman, President, CEO Okay. Lastly, of the deals that you mentioned -- ( Multiple Speakers) . Well, it's more the latter, Sarah, so it's not like - it's not that the deals run away, it's not that we lost them to a competitor. We Vivek Ranadive - TIBCO Software- Chairman, President, believe it's more of the latter. CEO

ri ar - Goldman Sachs - Analyst You know, in that context -- just to again clarify - when you put Sarah F these new things in place , you know , the kinds of processes an d

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E T18X TIBCO Software Reports Preliminary First Quarter Financial Result s

So you don't think it's -- (technical difficulty) - customers trying to push you on price, for example, to make - (multiple speakers)? Sterling Auty - J.P. Morgan - Analyst

Vivek Ranadive - TIBCO Software- Chairman, President, Okay . Then what did you say in terms of the revenue recognition CEO around that?

We did not see that, Sarah! We did not see that. Chris O'Meara -TIBCOSoftware-CFO

Sarah Friar -Goldman Sachs-Analyst That will be recorded entirely in the first qua rter , approximately 10 million in license and I million in maintenance. Okay. Then just finally, Ql is your kickoff for your sales folks (indiscernible) I think when you could club (ph) for your Sterling Auty -J.P. Morgan - Analyst salespeople . Do you have any sense of because they were out-of- pocket maybe for a week or two that maybe you lost some focus Okay, so that 's part of the 100 to 102 is this I I million from on the sales side -- (multiple speakers) ? Reute rs ?

Vivek Ranadive - TIBCOSoftware- Chairman, President, Meara -TIBCOSofrware-CFO CEO Chris O'

Correct . You know, l think those are all very good points . You know we have our kickoff for our salespeople and that ties them up ; we have clubs for the superachievers and then on top of that, you know, this Sterling Auty - J.P. Morgan - Analyst was also the first time that we had to deal with 404 . You know, so you add all that up and there were 2 sets of salespeople in Europe Okay . Then is there any commonality to die types of deals that and I think it was almost a Perfect Storm that did us in . you saw slip in the quarter in terms of. you know , product mix or ve rt ical or anything of that like ? One point I do want to make to you guys though about 404 is we're starting to see customers insist that the companies they do business Vivek Ranadive - TIBCO Software - Chairman, President, with guaranteed 404 compliance. You know we, to our knowledge, CE O I think we were like the third company for our auditors to pass 404 . So you know, I don't know how other CEOs are looking at this but from my perspective, this was a big nut to crack. No, no, sir. The only commonality is that it was in Europe .

Sarah Friar -Goldman Sachs-Analyst Sterling Auty - J.P. Morgan - Analyst

Fair enough. Okay, thanks a lot. Okay, okay. Then last questi on would be - and I think somebody asked and I apologize if I am making you repeat it , but going into the qua rter kind of pipeline coverage - you are comfortable with Operato r that right up to the end and it was just the close rate at the end?

Sterling Auty, JP Morgan. Vivek Ranadive - TIBCO Software - Chairman, President, CEO Sterling Auty -J.P.Morgan -Analyst

That is correct. Just a couple of questions - Chris, just to clarify, because I wasn't able to hear your answer from background noise, the I I million minimum payment from Reuters, is that net to you or is that a Sterling Auty - J.P.Morgan - Analyst gross amount ? Okay, all ri ght , thank you, guys.

Chris O' Meara - TJBCO Software - CFO Operato r That is net to us .

streeteyents@thomson .com 617 .603.7900 www .slreetevents.com 0 2005 2002 Thomson Financial. Repubished mth permission. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written consent of Thomson Financial. FINAL TRANSCRIPT

TIBX - TIBCD Softwa re Reports Prelim inary First Qua rt er Financial Results

Yuri Kim- A.G . Edwards. I got it. Then on the large deals, were there any deals north of 10 million or at least north of 5 million in the quarter other than this Yuri Kim - A.G. Edwards A Sons - Analyst Reuters deal?

With management changes that are expected in Europe, would it Chris O'Meara - TIBCO Software - CFO be prudent to assume that there will be some transition period before the region can ramp up to the level where it was before? Maybe the current May quarter could be a transitionary period for No. Europe? Operato r

Vivek Ranadive -TIBCOSoftware-Chairman, President, CE O Katherine Egben , lefferies & Company.

You know, we will give guidance on our call on the 22nd - 24th, Katherine Egbe rt - Jefferies &o Ca. - Analyst I'm sorry, on the 24th . But you know, we 're moving very rapidly and we think, fundamentally , we have some very, on all of this Hi . I just had a quick follow-up . I'm just wondering why this is and we think it's a great team and we very good people over there basically your third quarter of integration with Staffware . What is just need to put the right processes and the right leadership in it about the management complex that showed up in the February we do have some fantastic people in Europe . place . You know, quarter that wasn't there previously? Did it have anything to do with the end of the year ? Yun Kim - A .G. Edwards & Sons -Analyst Vivek Ranadive -TIBCOSoftware-Chairman, President, Okay, that' s all I had. Thank you . CEO

Operato r Well, you know, there were a variety of factors, Katherine, but Q1 is seasonally the tough quarter for us always, and we did have a

David Hilal, Friedman, Billings, Ramsey . number of changes that we had made that really - something during this quarter. So we had Stafware people running many of the regions. So you know basically it all came to a head this David Hilal - Friedman, Billings, Ramsey & Co. - Analyst quarter and what we saw there was complete paralysis, which -- you know before things were still a different, you know, before, Thank you, a few follow-up questions - first on the Reuters, is they were still new and we were still very involved in it ; I was that a multiyear deal ? involved, you know, I spent a lot of time in Europe and other senior members were involved, so you know, they were - this was the first quarter that we actually had the combined management Chris O ' Meara - TIBCOSoftware-CF O fully functional .

it is a I -year deal with annual renewal provisions . Katheri ne Eghert - Jefferies B Co. - Analyst

David Hilal - Friedman, Billings, Ramsey A Co. - Analyst Okay, that helps. Thanks .

Chris, is that I I million - is that a threshold, so anything they sell under 11 million for the year, you don 't get the 50 percent royalty Vivek Ranadive - TIBCO Software - Chairman, President, and everything above that you do get 50 percent ? Is that how it CEO works? Okay, I think that concludes this call . Pd like to close by thanking you all for joining us, and we will talk you again on the 24 of Chris O'Mea ra -TIBCOSoftware-CFO March regarding more detailed results for the quarter . Thank you .

It is a minimum payment, so to the extent they exceed those minimums, then we get additional payments from die m Operato r

David Hilal -Friedman,Billings, Ramsey ACo.-Analyst

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C 2005 2002 T omson Financial. Republished with permission . No part of Cus publication may be reproduced or trarlsm ilted in any bin or by arty Irleans willaut the prior written consent of Thomson Financial . TRANSCR I TIBX - TIBCO Software Reports Preliminary First Quarter Financial Results I

Thank you for joining us. We will now conclude TIBCO's Quarter One Preliminary Conference Call . You may disconnect at this tithe.

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C 2005 2002 Thomson Financial. Republished with permission. No part of this pudication maybe reproduced or transmitted in any form or by any means without the prior wr'dten consent of Thomson F . EXHIBIT 0 Copyright 2003 ELSEVIER B .V. All rights reserved. Journal of Accounting and Economics Get text with graphics 2003 (Received : February 21, 2002 ; Revised: June 27, 2003 ; Accepted: October 22,2003 )

SECTION : Vol . 36, No . 1-3 LENGTH : 11918 words HEADLINE : Employee stock options, EPS dilution, and stock repurchase s BYLINE : Daniel A . Bens; Venky Nagar ; Douglas J. D.J. Skinner and M .H. Franco M .H.F. Wong CONTACT : Email Address : dskinner£umich .edu AFFILIATION : a Graduate School of Business, University of Chicago, Chicago, IL 60637, US A b University of Michigan Business School, 701 Tappan Street, Ann Arbor, MI 48109-1234, USA

HIGHLIGHT: We investigate whether corporate executives' stock repurchase decisions are affected by their incentives to manag e diluted earning per share (EPS) . We find that executives increase the level of their firms' stock repurchases when: (1) the dilutive effect of outstanding employee stock options (ESOs) on diluted EPS increases, and (2) earnings are below the level required to achieve the desired rate of EPS growth . We also find that executives' repurchase decisions are not associated with actual ESO exercises, suggesting that they are driven by incentives to manage diluted but not basic EPS, and strengthening our earnings management interpretation .

BODY: nl Bens and Wong acknowledge financial support from the University of Chicago, Graduate School of Business, and Skinner from KPMG and the Neubauer Faculty Fellows program at the University of Chicago, Graduate School of Business . We appreciate the helpful comments of Kirsten Anderson, Bob Bowen, Eugene Fama, Adam Gileski, Clement Har, Gene Imhoff, Richard Leftwich, Thomas Lys, Shiva Rajgopal, Scott Richardson, Terry Shevlin, D . Shores, Ross Watts, Jerry Zimmerman, an anonymous referee, and workshop participants at the AAA Annual Meetin g in San Antonio, the 2002 JAE Conference and the universities of British Columbia, Chicago, Iowa, Michigan, Minnesota, Rochester, and Washington (Seattle) .

1 . Introduction

This paper investigates whether corporate executives' stock repurchase decisions are affected by their incentives to manage diluted earning per share (EPS) . We provide evidence on two main predictions . First, we investigate whether executives increase the level of their firms' repurchases to offset the dilutive effect of securities such as employee stock options (ESOs) that would otherwise reduce diluted EPS . Second, we investigate whether executives increase their firms' stock repurchases when they become aware that earnings are falling short of the level required to meet certain EPS growth targets . Numerous articles in the financial press suggest that executives repurchase shares to offset EPS dilution attributable to ESO plans, and executives acknowledge that their decisions to issue and repurchase shares are influenced by potential EPS effects .

n2 On the former point see Cohn (1999), Leonhardt (2000), McGough et al . (2000), and Morgenson (2000a, b). On the latter point see Graham and Harvey (2001), Brav et al . (2003) and Institutional Investor (2000) . The management of Hewlett Packard makes the following statement in its fiscal 2000 financial statements : "HP repurchases shares of its common stock under a systematic program to manage the dilution created by shares issued under employee stock plans "

Generally accepted accounting principles (GAAP) require firms to report basic EPS and diluted EPS. Basic EPS is calculated simply as earnings available to common shareholders divided by weighted- average common shares outstanding . This measure does not incorporate the effect of "potentially dilutive" securities such as warrants, convertible debt, and ESOs. The denominator of diluted EPS, on the other hand, uses the treasury stock method to account for the effects of potentially dilutive securities. The denominator of this ratio increases as newly granted ESOs move into the money and existing ESOs move further into the money .

n3 Both APB Opinion No. 15 (APB 15) and Statement of Financial Accounting Standards No . 128 (SFAS 128; Financial Accounting Standards Board (FASB), 1997) include an adjustment for potentially dilutive securities in the denominator of reported EPS . SFAS 128, effective for fiscal years ending after December 15, 1997, requires the presentation of "basic" and "diluted" earnings per share, while APB 15 required presentation of "primary" and "fully diluted". Only basic EPS ignores the dilutive effect of ESOs in its calculation ; the other three measures use the treasury stock method to account for the dilutive effect of ESOs . See further discussion of the treasury stock method in Section

Several studies find that diluted EPS is more highly associated with stock prices than basic EPS, suggesting that investors place more weight on diluted EPS as a measure of performance (Core et al ., 2002; Jennings et al ., 1997) . Furthermore , executives have substantial discretion to time their firms' stock repurchases , which increase diluted EPS by reducing common shares outstanding. Given this evidence and the growth in the use of potentially dilutive securities, especially ESOs, our tests focus on whether executives repurchase shares to manage the dilutive effect of ESOs on diluted EPS . As an alternative , we also examine whether actual exercises of ESOs, which affect the denominator of basic EPS, affect executives ' stock repurchase decisions . Our results indicate that executives' repurchase decisions are associated with GAAP-defined measures of the dilutive effects of ESOs but not with actual ESO exercises. This suggests that executives ' repurchase decisions are driven by incentives to manage diluted but not basic EPS.

n4 See Cook et al . (2003) for a discussion of Rule IOb-18, which gives executives a great deal of flexibility over the timing of their repurchases . Stock repurchases can reduce future earnings by reducing the level of the firm's investments and/or by increasing the firm's borrowing and so are not necessarily accretive to EPS . We address this below. Financial Executives International (www .fei.org), a prominent professional association for senior financial executives, sells software that allows executives to estimate the effect of stock repurchases on EPS .

Corporate executives manage diluted EPS for the same reasons they manage reported earnings more generally . A substantial body of empirical literature suggests that investors reward firms that report consistent earnings growth, consistently meet analysts' earnings forecasts, and avoid earnings disappointments (Barth et al ., 1999 ; Bartov et al ., 2002; Kasznik and McNichols, 2002; Myers and Skinner, 2002 ; Skinner and Sloan, 2002) . Because earnings are usually reported on a per-share basis, and now most typically on a diluted per-share basis, these results are likely to apply to management of diluted EPS . Relatively high stock prices and earnings provide several benefits for executives . First, high stock prices and earnings increase executives' wealth because compensation is often directly tied to these factors. Second, executives of firms that perform well are less likely to be fired or otherwise censored by their boards (Weisbach, 1988 ; Engel et al., 2003) . Third, a relatively high stock valuation (and favorable analysts' impressions of the firm) lowers existing shareholders' cost of raising additional capital (Fischer and Merton, 1984 ; Stein, 1996) . In view of these benefits, it is not surprising that a large body of literature finds that corporate executives manage earnings measures and trends in those measures (Burgstahler and Dichev, 1997 ; Degeorge et al ., 1999; Schrand and Walther, 2000) .

n5 Theoretical economists provide both behavioral and rational explanations for this phenomenon . Rabin (2002) argues that this phenomenon arises from investor belief in the "law of small numbers ." In contrast, Stein (1989) shows that fully rational investors in imperfect capital markets with information asymmetries end up rewarding corporate executives for earnings management . Stein concludes that his study "clearly exposes the fallacy inherent in a statement such as 'since executives can't systematically fool the market, they won't bother trying' " .

n6 Most of the empirical papers cited here measure earnings on a per-share basis, consistent with the underlying analyst forecast data .

We test our predictions using annual data for S&P 500 Industrial firms from 1996 through 1999 . We hand collect data on total ESOs outstanding for these firms as well as actual share repurchases each year . These data allow us to compute the dilutive effect of ESOs on reported EPS more accurately than previous studies, which typically rely on machine- readable data on executive stock options outstanding and proxies for stock repurchases . We find that executives' stock repurchase decisions are affected by their incentives to manage diluted EPS . First, we find that executives increase their firms' repurchases as the dilutive effect of ESOs on the denominator of diluted EPS increases. On average, firms repurchase 0 .2% of beginning shares outstanding for every 1% increase in the number of dilutive potential common shares . This result is not explained by the firm's overall use of ESOs or by actual option exercises. Second, we find that executives increase their firms' repurchases when earnings fall short of the level required to maintain the past growth rate of diluted EPS .

We control for several other explanations for share repurchases . First, we control for the proceeds generated by exercises because firms may simply return the cash received from option exercises to stockholders through repurchases . Second, ESOs increase the proportion of equity in the firm's capital structure as they are exercised . To control for the possible role of repurchases as a vehicle to re-lever the firm (Bagwell and Shoven, 1988), we include a variable that proxies for deviations from optimal leverage . Third, following previous research such as Jagannathan et al . (2000), we include firm characteristics such as size, growth, book-to-market, operating cash flows, and contemporaneous stock returns to control for factors that could affect both repurchases and ESO measures . Finally, Fenn and Liang (2000) and Kahle (2001) argue that repurchases are a function of the level of executive ESO holdings . We conduct a series of tests that divide ESOs into executive and non-executive ESOs as well as into exercisable and un-exercisable ESOs . We find that the level of executive ESOs averages only about 20% of total ESOs outstanding, which supports our view that executive ESO holdings are unlikely to be a good proxy for overall ESOs outstanding . We also find that our main results continue to hold in these tests, while confirming results from previous studies that executives' repurchase decisions are related to their ESOs holdings .

The effect of repurchases on EPS depends mechanically on the relation between the firm's (TEXT OMITTED FROM SOURCE) ratio and the opportunity cost of the cash used to undertake repurchases ; repurchases decrease EPS when the firm's (TEXT OMITTED FROM SOURCE) ratio exceeds the inverse of its opportunity cost of funds (see Section 2) . Consistent with this, we find that, on average, firms with high (TEXT OMITTED FROM SOURCE) ratios are less likely to undertake share repurchases . However, we also find that executives of high (TEXT OMITTED FROM SOURCE) firms are relatively more responsive to potential ESO dilution when making repurchase decisions . One potential explanation for this is that the economic consequences of small earnings disappointments are larger for high (TEXT OMITTED FROM SOURCE) firms (Brown, 2001 ; Skinner and Sloan, 2002) .

As far as we know, our paper is the first to directly examine the link between EPS dilution as defined by GAAP, the dilutive effects of ESOs, and stock repurchases . Other papers in this area (Dittmar, 2000 ; Weisbenner, 2000 ; Kahle, 2001 ; Bens et al., 2002) report a general cross-sectional association between the use of executive stock option plans and stock repurchases, but do not specifically examine the earnings management question . We use data on firms' overall utilization of ESOs because diluted EPS depends on total options outstanding, not just executive stock options . In addition, because diluted EPS reflects the potential dilutive effects of ESOs, we consider the effects of ESOs before actual exercise, while previous papers tend to focus on exercises .

n7 There are a number of differences between this paper and related work by Bens et al . (2002). First, that paper does not investigate the relation between stock repurchases and EPS directly . Instead, these authors focus on the "real investment" implications of ESOs and document that exercises of executive stock options are : (1) positively associated with stock repurchases, and (2) negatively associated with research and development (R&D) and capital expenditures (CAPX). As Guay (2002) points out, this is fairly indirect evidence of a link between repurchases and EPS . Notice also that Bens et al . use data on exercises of executive stock options . We directly evaluate the link between the effects of ESOs and reported EPS by using data on firms' overall levels of ESOs activity and measure the extent to which these measures actually affect the denominator of diluted EPS by considering the extent to which these ESOs are in-the- money.

Our work contributes to the literature in at least two broad respects . First, research in corporate finance examines the determinants of corporate stock repurchases (see, e .g., Vermaelen, 1981 ; Bagwell and Shoven, 1988 ; Ikenberry et al ., 1995; Stephens and Weisbach, 1998 ; Dittmar, 2000 ; Fenn and Liang, 2000). Consistent with that research, we find that executives repurchase shares to distribute excess cash flow, offset perceived undervaluation, increase leverage, and retain the value of executive stock options. We also show, however, that executives' financial reporting incentives play an important role in explaining repurchases . Second, the earnings management literature typically focuses on earnings . If important earnings benchmarks are typically denominated in EPS terms (as seems likely), it is natural to expect