Good day and welcome to the Progress Software Corporations' First Quarter Earnings Conference Call. At this time, I would like to turn the conference over to Bud Robertson. Please go ahead, sir.

Good morning. This is Bud Robertson, Senior Vice President of Finance and Administration and Chief Financial Officer of Progress Software Corporation. Joining me today are Joe Alsop, Co-Founder and CEO, Rick Reidy, Chief Operating Officer, and members of the senior management team. We have prepared a slide presentation to view during this call. The slide presentation can be found on the Investor Relations section of the Progress website by clicking on the Live Webcast icon. The matters we will be discussing today, other than historical financial information, consist of forward-looking statements that involve certain risks and uncertainties. Statements indicating that we expect, estimate, believe, are planning or plan to are forward-looking, as are other statements concerning future financial results, product offerings or other events that have not yet occurred. There are several important risk factors which could cause actual results or events to differ materially from those anticipated by the forward-looking statements contained in our discussion today. Information on these risk factors is included in our Securities and Exchange Commission reports. We reserve the right to change our budget, product focus, product release dates, plans and financial projections from time to time as circumstances warrant. We shall have no obligation to update or modify the information contained in our discussion in the future when such changes occur. With respect to any non-GAAP financial measures discussed in this call, we have provided on our website a presentation of the most directly comparable GAAP financial measure and a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure. You can access this information, which is included in our earnings release, at www.progress.com. We reported this morning the following results for our first fiscal quarter of 2009, which are reflected in the first few slides of the online presentation.…

(Operator Instructions). And our first question comes from Brent Williams with Benchmark Company.

Good morning, guys. Kind of go through a couple of things within product divisions, so first on Enterprise Infrastructure, could you give some quantitative color on the contribution for the IONA-based products on the license stream in EID. In other words, is that hanging in there flat down, just want to try to peel that apart a little bit for comparability?

On the license?

On the license or total revenue.

Yeah, I will do total revenue. If you look at the total revenue, Brent, excluding Orbix, Artix and FUSE, which is the IONA products in Q1, the total revenue was up by around 20%. And if you adjust, the currency was up by more than 25%.

Great, and that's very impressive in the current environment. Any changes in sort of the large deal flow there?

No.

Not really.

Great. And then no Progress Software conference call now last couple years will be complete without my asking for more color on Apama kind of interested in things like how well they are doing broadening outside of financial services, anything on deal sizes, etcetera?

Brent, hi this is Rick.

Hi, Rick.

Pharma had a good quarter continues to do very well. Interestingly it did have a particular good quarter outside of our capital markets which is our traditional strength. Although still the lion share of the business come from capital market. We are looking at other verticals transportation, logistic, telecommunications at the moment for pushing that product into new areas. Overall, its pipeline is strong it's looking good.

Great, and then bouncing over to the DataDirect division, can we talk about two things, one is how the Shadow type product lines are doing, and second I notice you redefine the segments to include objects store, data extents, etcetera. Can we get an idea of how the comparable performance of the DataDirect and Shadow were doing just so can you just sort of normalize that?

Let me take the first part of that and Rick can answer the second part. As far as the business what you call I think the old DataDirect business Brent?

Right.

If you look at the Q1 and that one, it was as always is historically a slow quarter. It was down slightly, it was up adjusted for currency as most of our products were. So, it grew slightly adjusted for currency but because the currency was down slightly.

Okay, and then the other question about Shadow within that group.

Yes, this is Rick again, the Shadow business was very good in Q1 and the OEM business was very strong. The corporate what we call Connect business that has below plan, but as Bud said, DataDirect typically has much better second half. So, it sort of a normal quarter for them.

Great. And then lastly moving into the core business, what was the international breakdown for OpenEdge not company overall but OpenEdge in general just trying to see if I get a little bit more granular assessment of FX impact on OpenEdge?

I don't have a breakout in front of me Brent, but I think two-thirds of the OpenEdge business is outside of North America.

Okay.

So, it has a much larger impact, currency impact as you can imagine.

Right. Okay. And then in terms of looking, you had commented in Q4 that you have seen deals start to get pushed out from the end customers. Do you think that the change in the sales cycle or whatever change begin in that point. Do you think that the sales cycle timeframes are now stabilizing or do you see that as continuing to get a drag out a little bit further? Is there any qualitative sort of way of thinking about that?

Brent this is Dave. I wish there was one magic number of formula that we could predict here, but clearly with the economic situation deals do get stretched out, sometimes its a case by case, sometimes its size of company situation. But what it clearly points to is that more and more people in the approval are in the approval cycle. And therefore, deals tend to get put on hold, though get delayed. But there is no necessary (inaudible).

Okay, great. That's it for me. Thanks.

Thank you. And your next question comes from Richard Davis with Needham & Company. Richard Davis - Needham & Company: With regard to enterprise infrastructure, their functionality gaps that you believe you should fill or that you would like to fill in terms of additional features and functions that you would like to add to that suite of tools and things?

Alright, we are all sort of remote, so we don't know who is going to take that question, so I'll take it. This is Rick. The gaps in what I guess we might have traditionally called that (inaudible) portfolio, there are some that we do partnership with, so that we don't actually sell ourselves, but overall we do have a fairly complete offering, so there is no direct plan at the moment to fill those gaps. Richard Davis - Needham & Company: Okay. Have you generated any revenue synergies? It sounds like IONA actually did well, but if you generated revenue synergies, remember when you had it, because you now have Artix and Sonic together. Talk about are you jointly selling that, is it advantageous to do so? I know they are different products, but they are way dissimilar, so kind of talk about what the opportunities are there to make that business even better?

Yes, the intention is absolutely to work. And although the products are Enterprise Service Buses, they have very different orientations, and I won't get sort of into this technical detail. Artix is stronger at one aspect, Sonic, the other. But the ultimate objective is to combine those in one complete offering. And for the time being, we focused the Artix version out of that a particular segment of the ESB and Sonic at another. Richard Davis - Needham & Company: Got it. And then the last question for Bud. The expectation has changed on the revenues, so almost fearlessly taking notes and things. Is it entirely due to currency, or is there implicit in there, some actual expectation of kind of currency adjusted reduced revenue expectation that kind of came up with different things?

From the prior guidance we gave, the current economic conditions are probably causing around a 5% drop in revenue and they remain in decrease due to the further strengthening of the currencies. Richard Davis - Needham & Company: Got it, okay. Well if they keep printing money maybe the currency wont pay in this as much of issue in itself. Okay, well, thank you very much.

Yes.

And ladies and gentlemen, at this time I would like to open our question-and-answer session to all participants on the phone line. (Operator Instructions). And our next question will come from Jean Orr with Nutmeg Securities.

Good morning, thank you. I was just curious about the pace of business during the quarter and if you saw [any case]?

I missed that last part, Jean, could you repeat that please?

I wondered if you saw any changes in the pace of business during the quarter.

Jean this is Dave. What we were seeing is that the buyers are cautious and moving slower but the buyers are there and the buyers are interested and they are trying to move their businesses forward. So, we are engaged in a lot of activity and the fundamental challenge is getting it through the pipe and that just takes a longer time and lot of times we dealt in a smaller deal than we typically see, but the business activity continues to be strong and particular with newer technologies.

So, the economic conditions didn’t really make a difference in terms of what you saw during the quarter?

No, how they effect the economic result is that deals will take longer and deals will be smaller, but the deal activity remains goods. So that then results typically in smaller deals and deals that we close further out.

Okay.

Jean, this is Joe. If you are asking was there a sort of difference between December to January and January to February, I think the answer I would give you is no, month-by- month was sluggish. And I am not sure that's the question you were asking.

Yes, it is. I am just hoping for something that shows signs of life or some improvement. Also just curious why the tax rate is higher than we had talked about earlier?

What do you mean between the GAAP and non-GAAP, the non-GAAP is 34.5. And then difference was as I stated on the call that difference between the GAAP and the non-GAAP stock-based is equated to achieve a stock-based comp and then the amortization of acquired intangibles. So, it was 38 to 39 for GAAP, 34 to 35 for non-GAAP.

Thank you.

Hi, good morning. Thanks for taking my question. I was wondering if you could dig into a little bit in terms of how the application partners are doing. The interest in any commentary you have regarding linearity of those results, visibility of those results. And in addition maybe complexion as well, how are things holding up for the different types of out partners etcetera, if there is any general comments you have there?

Yes, this is Dave. Regarding application partners business, what we are seeing is softness with the application partners. It varies but by industry and some cases by geography, but the primary softness is in the manufacturing, financial and construction industries where they are having a tougher goal of it. So that's really the difference. Within the manufacturing the one bit of focus on the automotive they are having the toughest time.

Okay. And any thoughts on kind of how that linearity came in and visibility of that business here?

You mean our ability to project that?

Yes.

Well I mean that’s part of our daily job, is to work very closely with the partners and keep our finger on exactly what their business is doing and understand their markets and what’s going on in their markets. And obviously we factored that back into our overall forecast for the company.

Okay. Sounds like you feel fairly confident in your forecast here for the next quarter then.

Yes.

Okay. Can I ask you about the merger of you have two CEP competitors merged do you want to talk a little bit what do you think is going on in terms of the dynamics of that business, of that markets I should say?

Yeah this is Rick, I assume you are talking about the well this is two small companies, two small CEP companies that combined.

Right

At least what they have publicly claimed is, the combined two have 80 customers, which is still much smaller than Apama. I just think it is the classic consolidation effort that happens when smaller companies start loosing market share. That's really what it all about.

Okay. And lastly, just want to understand little bit, thanks for helping us with the number without IONA. And on IONA per se was it all around, ahead of your expectations, anything that you would like to see improvement on in IONA, may be a little color there would be helpful?

It is Bud, IONA performed, as we have expected it was slightly down, like everything else was down but it's basic we expect for the, first, last two quarters have been just above what we thought it would be and we are projecting that same run rate basically for the next couple of quarters through the end of the year.

Okay terrific. Thanks Bud, thanks everyone.

Thank you and moving on to our next question which comes from Eugene Fox with Cardinal Capital Management.

Gentlemen could you all talk about DataXtend SI?

DataXtend SI.

Yes.

This is Rick again, it actually had a very good quarter particularly in the product revenue side and has a great pipeline. It closed a couple of significant deals, I'm not sure I can name. So it had a strong quarter looking good.

Prospects for the balance of the year still look good?

Yes

Okay. Bud can you talk about your thought on sort of cash flow generation for the year and use of cash?

Well we are projecting cash flow for the year to be in the range of probably $80 million to $100 million which is where we have expected it to be. Yeah cash flow will be, the cash generation will be used for you know both you know acquisition opportunities as well as for share buybacks. Right now we are building as you know we are building some cash up. And we expect to as we go forward use that cash as we always have number one priority has always been technology and products that allow us to continue to grow the business. And then we also obviously for stock buybacks and that’s consistently what we have done and that’s what we still plan on doing.

Okay, thanks gentlemen.

Thank you very much (Operator Instructions) It looks like we have another question from Brent Williams with Benchmark Company.

IONA stuff on any sort of trends on the Orbix the core business, it was in a state of decline for a while. But then I think right before the acquisition it kind of slowed the rate of decline if I recall correctly might be even down step a little bit since people were starting to chop funding for, those projects where they were trying to replace it. So could we look at the core businesses holding up better than maybe a year ago or kind of just continuing to flow downwards just any sort of thought on that?

Brent this is Dave. I would classify it as stable. I mean, the customers that are using in very important and critical applications they continue to use it, so I would look at the business as compared to historical having stabilized.

Great, thanks very much for the follow-up.

We will take our next question it comes from Steven Koenig again with KeyBanc Capital Markets.

Great, thank you. I was just wondering perhaps the question for Bud can you give us any sort of detail on your plans for cost control or cost containment as we move throughout the year?

Yeah, we have already put many cost control containments in place we have done, we have had a wage freeze here. We have done looked at our T&E travel and expense budgets. We have also as we merge with IONA we reduced the headcount by over 10% from that merge that combination. So and we will continue to look for efficiencies but we continue also to hire in the key areas where we are going to grow this business. So it's a blend of both. But we have cost containment activities in place to allow us, when you think about the drop and the negative impacts from currency which is going to cost us $50 million this year potentially year-over-year as well as on revenue in another probably over $0.30 on EPS that same currency drop. And we are holding better than of 20% non-GAAP operating margin which positions us, well for the future growth opportunities we see in front of us.

Terrific then Bud any change in terms of your outlook on making the smaller businesses profitable here for the year?

No the ones we have said stated in the beginning of the year we want to make the enterprise infrastructure grew combined totally as a profitable entity that's where we are shooting and obviously other ones are. The other groups are profitable.

Okay great. Thanks a lot.

Thank you. And we will take another follow up question from Eugene Fox with Cardinal Capital Management.

Gentlemen can you run through the $5.5 million charge number, how much of it was cash and basically what did --

90% of that charge is severance related and its all cash.

Okay should we expect any more of those charges through this year Bud?

Not anticipating it right now. That's based on today's environment.

Okay. When I looked at your sort of your expense breakdown it looks like your product development costs were a little higher than they had been historically as a percent of revenues. Should we expect those to moderate or how should I think about the spending level in that particular category?

I would think that the spending level would stay the same, obviously the percentage changes based on the revenue. But we also added in R&D expenses, when we acquired IONA we acquired companies. One of the things we do acquire is the R&D group. We try to see you know reduced other areas but R&D reduce some but most of that is technology we are buying is in fact the R&D group. So you did see that jump with the IONA acquisition.

So, I really should not --

But I will expect that to continue to grow a lot in the future. We will have some strategic hires, but again it should flatten out I would believe. As far as a dollar amount percentage will depend on the revenue line obviously.

Capital spending for the year Bud?

Not the same depreciation levels and there maybe spent less because we are also looking at capital programs and we are delay in some things.

Last question given the environment and more I wish could you talk about the acquisition environment procedure?

Dave, you want to take that?

Sure. Bud did you refer to me or Rick?

Either or on the acquisition environment based on the current market?

Well, I will make a general comment and then Rick can follow up and as Rick noted we are all remote. Obviously, the M&A environment should become much more favorable to the buyer. But I do think there is a time lag between the kind of melt down that started in September, October and kind of resetting of expectations on the part of sellers as to what your businesses are worth. Obviously enterprise value of, or the market capital progress is down whatever 40%, but that does not necessarily translate in the private market, the non-public companies and even amongst the public companies is always the issue of well we think can get back to there and therefore it's tougher to do deals in as way you use the current market cap is a basis for the negotiations. So you don’t expect that may continue for a while? But Rick can perhaps talk more specifically to potential M&A or the overall environment.

I actually think that was I mean sort of the west side effect as a bunch of public valuation of course everybody knows and just this overall resetting its expectations. Since it was so quick and has not really set in yet with a lot of companies. So I think going forward that will change and the acquisition climate client for us will bear a lot of fruit.

Thank you.

Thank you very much ladies and gentlemen and there are no further questions and this ends our question-and-answer session. I would now like to turn the call back over to Mr. Robertson for any closing remarks.

Thank you, this concludes today’s conference call. Thank you all for participating.

And once again we would like to thank everyone for today's participation that does conclude our conference. Have a wonderful day.