Outlook Commentary

“Looking forward to the remainder of FY’10, despite FX movements we are maintaining our full-year revenue target of $1,015 million and non-GAAP EPS target of $1.00,” continued Moses. “We have lowered our currency assumption from $1.46 USD/EURO to $1.36 USD/EURO, which negatively impacts revenue by approximately $18 million for FY’10 and which makes achieving these full year targets more challenging. We are increasing our license revenue growth expectations to 35% to 40% year over year, with our maintenance and services businesses now expected to be down modestly on a year-over-year basis.”

“We are maintaining our non-GAAP operating margin target of 16%,” continued Moses, “as we intend to continue to invest in our business to leverage our technology leadership position and capitalize on our long-term growth opportunity. We expect to pay down the remaining $34 million on our revolving credit facility and repurchase an additional $15 million worth of our stock during the remainder of FY’10.” For FY’10 the GAAP operating margin target is 7.5% and the GAAP EPS target is $0.50.

The FY’10 targets assume a non-GAAP tax rate of 25%, a GAAP tax rate of 17% and 120 million diluted shares outstanding. The FY’10 non-GAAP guidance excludes approximately $49 million of stock-based compensation expense, $34 million of acquisition-related intangible asset amortization and $27 million of related income tax effects.

“For Q3 we are initiating guidance of $235 to $245 million in revenue with non-GAAP EPS of $0.14 to $0.20,” Moses added. “We are expecting approximately 30% year-over-year growth in our license revenue in Q3 and 7% year-over-year growth in total revenue.” The Q3 GAAP EPS target is $0.02 - $0.07.

The Q3 guidance assumes a non-GAAP tax rate of 23%, a GAAP tax rate of 15% and 120 million diluted shares outstanding. The Q3 non-GAAP guidance excludes approximately $12 million of stock-based compensation expense, $9 million of acquisition-related intangible asset amortization expense and $6 million of related income tax effects.

Q2 Earnings Conference Call and Webcast

Prepared remarks for the conference call have been posted to the investor relations section of our website. The prepared remarks will not be read live; the call will be primarily Q&A.