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Progress Software Corp. Reports Operating Results (10-Q)

October 12, 2010 | About:
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10qk

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Progress Software Corp. (PRGS) filed Quarterly Report for the period ended 2010-08-31.

Progress Software Corp. has a market cap of $1.5 billion; its shares were traded at around $34.65 with a P/E ratio of 17.5 and P/S ratio of 3. Progress Software Corp. had an annual average earning growth of 9.4% over the past 10 years. GuruFocus rated Progress Software Corp. the business predictability rank of 1-star.PRGS is in the portfolios of Private Capital of Private Capital Management, John Buckingham of Al Frank Asset Management, Inc., George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

On a segment basis, revenue from our Application Development Platforms product line decreased 3% from $79.8 million in the third quarter of fiscal 2009 to $77.2 million in the third quarter of fiscal 2010. Revenue from our Enterprise Business Solutions product line increased 77% from $19.8 million in the third quarter of fiscal 2009 to $35.1 million in the third quarter of fiscal 2010. Revenue for the Enterprise Business Solutions product line in the third quarter of fiscal 2010 included $6.4 million of revenue from the product line acquired in the Savvion transaction earlier in fiscal 2010. Organic growth for the Enterprise Business Solutions product line, absent the acquisition, was 45% in the third quarter of fiscal 2010. Revenue from our Enterprise Data Solutions product line decreased 18% from $20.1 million in the third quarter of fiscal 2009 to $16.5 million in the third quarter of fiscal 2010.

Revenue from our Application Development Platforms product line increased 2% from $238.8 million in the first nine months of fiscal 2009 to $243.7 million in the first nine months of fiscal 2010. Revenue from our Enterprise Business Solutions product line increased 48% from $59.1 million in the first nine months of fiscal 2009 to $87.7 million in the first nine months of fiscal 2010. Revenue for the Enterprise Business Solutions product line in the first nine months of fiscal 2010 included $13.3 million of revenue from the Savvion product line. Organic growth for the Enterprise Business Solutions product line,

Operating income from our Application Development Platforms business unit increased 12% from $43.5 million in the third quarter of fiscal 2009 to $48.7 million in the third quarter of fiscal 2010. The operating loss from our Enterprise Business Solutions business unit decreased 73% from $(16.4) million in the third quarter of fiscal 2009 to $(4.4) million in the third quarter of fiscal 2010. The operating loss from our Enterprise Data Solutions business unit increased from $(2.2) million in the third quarter of fiscal 2009 to $(4.6) million in the third quarter of fiscal 2010.

On a segment basis, operating income from our Application Development Platforms business unit increased 28% from $118.5 million in the first nine months of fiscal 2009 to $151.5 million in the first nine months of fiscal 2010. The operating loss from our Enterprise Business Solutions business unit decreased from $(43.0) million in the first nine months of fiscal 2009 to $(31.0) million in the first nine months of fiscal 2010. The operating loss from our Enterprise Data Solutions business unit increased from $(3.5) million in the first nine months of fiscal 2009 to $(12.2) million in the first nine months of fiscal 2010. The increase in operating income in our Application Development Platforms group was due to the impact of the restructuring and re-allocation of resources, primarily sales and marketing, to the other two business units. See further discussion of segment reporting in footnote 12 of the condensed consolidated financial statements included in this report.

Other Income (Expense). Other income, primarily consisting of interest income and foreign currency gains and losses, increased from an expense of $0.2 million in the third quarter of fiscal 2009 to an expense of $1.7 million in the third quarter of fiscal 2010. Other income increased from $0.6 million in the first nine months of fiscal 2009 to income of $5.0 million in the first nine months of fiscal 2010. The increase was primarily due to an increase of $4.0 million in the value of our foreign currency average rate option contracts, which do not qualify for hedge accounting treatment and are marked-to-market each period, and an insurance settlement gain related to a pre-acquisition matter.

liquidity. The remaining contractual maturities of these securities range from 6 to 37 years. The underlying collateral of the ARS consist of municipal bonds, which are insured by monoline insurance companies, and student loans, which are supported by the federal government as part of the Federal Family Education Loan Program (FFELP) and by the monoline insurance companies. Beginning in February 2008, auctions for these securities began to fail, and the interest rates for these ARS reset to the maximum rate per the applicable investment offering document. At November 30, 2009, our ARS investments classified as long-term investments totaled $47.4 million at par value. During the first nine months of fiscal 2010, noncurrent ARS totaling $1.2 million were redeemed at par by the issuers, resulting in a net reduction of the par value of our ARS investments classified as long-term investments to $46.2 million. These ARS are classified as available-for-sale securities. During the first nine months of fiscal 2010, a total of $17.7 million of ARS classified as trading securities were repurchased at par by UBS, the investment firm that brokered the original purchases of these ARS.

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