Progress Software Reports Fourth Quarter Results; Operating Income and EPS Show Double Digit Increases; Revenue at an All-Time High.

Business Editors/High-Tech Writers

BEDFORD, Mass.--(BUSINESS WIRE)--Dec. 17, 2003

Progress Software Corporation (Nasdaq: PRGS), a supplier of leading technology to develop, deploy, integrate and manage business applications, today announced results for its fourth quarter ended November 30, 2003. Revenue for the quarter was $82.0 million, up 14 percent (6 percent at constant currency) from $72.1 million in the fourth quarter of 2002. Software license revenue was $29.9 million, up 19 percent (11 percent at constant currency) from $25.1 million in the same quarter last year. Operating income increased 33 percent to $12.3 million, up from $9.2 million in the same quarter last year. Net income was $8.8 million, up 28 percent from $6.9 million in the same quarter last year. Diluted earnings per share of 23 cents represented an increase of 21 percent over the 19 cents achieved in the fourth quarter of 2002.

For the twelve months ended November 30, 2003, revenue increased 13 percent to $309 million from $273 million in 2002. Operating income increased 30 percent to $36.8 million from $28.2 million in 2002. Net income increased 32 percent to $27.1 million from $20.6 million in 2002 and diluted earnings per share increased 33 percent to 72 cents from 54 cents in 2002.

The company's cash and short-term investments at the end of the quarter totaled $219 million. During the fourth quarter, the company purchased approximately 19,000 shares of its stock at a cost of $0.4 million. The company's existing repurchase authorization, under which 9.9 million shares remain available for repurchase, expires on September 30, 2004.

On December 5, 2003, Progress Software Corporation (PSC) announced the intent to acquire substantially all the assets and certain subsidiaries of DataDirect Technologies Limited, a privately-held company specializing in standards-based data access components for software developers. The purchase price, net of cash and subject to certain balance sheet adjustments at closing, is approximately $88 million in cash. The new business is expected to be immediately cash flow positive, dilutive to earnings in the first year, and accretive thereafter. Excluding amortization of purchased intangibles and one-time acquisition-related charges, the acquisition is expected to be immediately accretive. The acquisition is expected to close within 30 days, subject to the usual regulatory approvals. DataDirect will become an independent operating company of PSC.

"We are pleased to record our tenth straight quarter of year-over-year revenue growth and eighth straight quarter of net income growth. We anticipate that DataDirect will add another profitable market leader that is complementary to our existing lines of business, and reinforces our technology leadership, which is the backbone of our success," said Joseph W. Alsop, co-founder and chief executive officer of PSC. "Our new operating companies, including Sonic Software, PeerDirect, ObjectStore and, shortly, DataDirect continue to focus on emerging markets and high growth initiatives, while the Progress(R) OpenEdge(TM) platform from the Progress Company continues to grow and remains the technology of choice for application development and deployment among our 2,000 Application Partners and their customers."

New Customers and Partners

Highlights include recent adoption of PSC technology, and solutions based on PSC technology, by new customers and Application Partners including:

A&M Services B.V., Agri Information Partners, Barra, Inc., Boulder City Hospital, Inc., Bronovo, Caaspre Technologies Mexico, Classic Video Pty Limited, Chicago Board of Trade, City of Seattle, Comune di Pisa, DCSF Management, DemandTec Inc., Flowsoft, S.A. de C.V., Fidelis Software, Inc., Fractal Technologies Pty Ltd, Gotlands Energiverk AB, Healthsouth Corporation, LC Maitre Industies, Loire SAS, Manhattan Associates, Inc., MTD, NetSourcing, Omniplast, Inc., Scadif, Stad Dilsen-Stokken, Termoz Waeles, The Sco Group, U.S. Cotton and Worldwide Retail Exchange.

Other Recent Highlights

The Progress Company announced that Cunard Line's Queen Mary 2, the largest ocean liner ever built, will use Progress-based Discovery Travel Systems' (DTS) Ship Partner(TM) software to manage the following: embarkation/disembarkation information capture and dissemination in accordance with federal regulations; a cashless billing environment with interfaces to a variety of point-of-sale systems, including bars, gift shops, an Internet cafe, arcades and minibars; integration with business-critical functions such as crew and vessel safety and door locking mechanisms; and shipboard amenity systems, such as telephone, interactive TV and credit card approval systems.

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PeerDirect Corporation today announced PeerDirect(TM) Mobilized Enterprise, a product that provides independent software vendors (ISVs) and enterprise IT departments with the technology needed to add "mobility" attributes to their existing and new enterprise applications. PeerDirect Mobilized Enterprise is the newest product in the PeerDirect Distributed Enterprise 2.0 suite and leverages patented technology for application distribution and data synchronization.

http://phx.corporate-ir.net/phoenix.zhtml?c=86919&p=IROL-NRText&t= Regular&id=476394&

Sonic Software, the leader in standards-based integration, today announced that the Sonic Business Integration Suite(TM), built on the world's first enterprise service bus (ESB), is powering an automated corporate payment processing service as part of a joint RosettaNet-SWIFT corporate-to-bank (C2B) XML international payment services pilot project. The project provides an important milestone for multi-industry standards working in harmony with each other, and a significant step in streamlining billing and corporate payment processing.

http://www.sonicsoftware.com/news_events/press/pressitem/pressrele ase_179596/index.ssp?

Leading independent truck parts supplier, TruckPro, selected an award-winning Progress-based application from Progress Partner IWS. The IRMS Warehouse Management System was selected to provide real time warehouse operations, increase efficiencies and expand TruckPro's customer service.

http://www.progress.com/company_info/news_views/pressrelease_17827 2/pritem.ssp?

The Progress Company announced that Supply Chain Systems Magazine has selected Progress customer Transitions Optical, the world's leading supplier of plastic photochromic eyeglass lenses, as a "2003 Supply Chain Innovator." Using an ERP package based on the Progress(R) OpenEdge(TM) platform, Transitions Optical was able to dramatically reduce inventory and lead time by at least 50 percent.

http://www.progress.com/company_info/news_views/pressrelease_17696 0/pritem.ssp?

The Progress Company announced that the Kirchner Corporation, a mid-market manufacturer of concept and diamond jewelry, has utilized the Progress OpenEdge platform for its new wireless order processing application.

http://www.progress.com/company_info/news_views/pressrelease_15151 8/pritem.ssp?

PSC's conference call to discuss its fourth quarter results will be Webcast live today at 9:00 a.m. Eastern via CCBN on the company's Web site, located at www.progress.com/investors. The call will also be Webcast live via Yahoo (www.yahoo.com), Motley Fool (www.fool.com), Streetevents (www.streetevents.com), TD Waterhouse (www.tdwaterhouse.com) and Fidelity.com (www.fidelity.com). An archived version of the conference call will be available for replay.

About Progress Software Corporation

Progress Software Corporation (PSC) (Nasdaq: PRGS) supplies industry-leading technologies for all aspects of the development, deployment, integration and management of business applications. PSC, headquartered in Bedford, MA, operates through the Progress Company, Sonic Software Corporation, and PeerDirect Corporation. PSC can be reached at www.progress.com or [phone].

Safe Harbor Statement

Except for the historical information and discussions contained herein, statements contained in this release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including but not limited to the following: the receipt and shipment of new orders, the timely release of enhancements to the company's products, the growth rates of certain market segments, the positioning of the company's products in those market segments, market acceptance of the application service provider distribution model, variations in the demand for customer service and technical support, pricing pressures and the competitive environment in the software industry, business and consumer use of the Internet, and the company's ability to penetrate international markets and manage its international operations. The company undertakes no obligation to update information contained in this release. For further information regarding risks and uncertainties associated with the company's business, please refer to the company's filings with the Securities and Exchange Commission. Progress OpenEdge is a trademark of Progress Software Corporation in the U.S. and other countries. Sonic Business Integration Suite is a trademark Sonic Software Corporation in the U.S. PeerDirect is a trademark or registered trademark of PeerDirect Corporation in the U.S. and Canada. Any other trademarks or service marks contained herein are the property of their respective owners.

Progress Software Corporation
Condensed Consolidated Statements of Income

                                            Three Months Ended
                                     November 30, November 30, Percent
(In thousands except per share data)        2003         2002   Change

Revenue:
     Software licenses                   $29,947      $25,126     19 %
     Maintenance and services             52,046       46,977     11 %
         Total revenue                    81,993       72,103     14 %
Costs and expenses:
     Cost of software licenses             2,315        2,778
     Cost of maintenance and services     13,604       14,160
     Sales and marketing                  33,846       27,487
     Product development                  11,944       10,373
     General and administrative            8,022        8,088
     In-process research and
      development                              -            -
         Total costs and expenses         69,731       62,886     11 %
Income from operations                    12,262        9,217     33 %
Other income, net                            334          609
Income before provision for income
 taxes                                    12,596        9,826     28 %
Provision for income taxes                 3,779        2,948
Net income                                $8,817       $6,878     28 %
Earnings per share:
     Basic                                 $0.25        $0.20     25 %
     Diluted                               $0.23        $0.19     21 %
Weighted average shares outstanding:
     Basic                                35,010       34,248      2 %
     Diluted                              38,629       35,759      8 %


                                            Twelve Months Ended
                                     November 30, November 30, Percent
(In thousands except per share data)        2003         2002   Change

Revenue:
     Software licenses                  $109,666      $93,468     17 %
     Maintenance and services            199,394      179,655     11 %
         Total revenue                   309,060      273,123     13 %
Costs and expenses:
     Cost of software licenses             9,173       10,751
     Cost of maintenance and services     52,599       56,934
     Sales and marketing                 125,934      105,068
     Product development                  50,243       42,113
     General and administrative           34,159       30,033
     In-process research and
      development                            200            -
         Total costs and expenses        272,308      244,899     11 %
Income from operations                    36,752       28,224     30 %
Other income, net                          1,925        1,186
Income before provision for income
 taxes                                    38,677       29,410     32 %
Provision for income taxes                11,603        8,823
Net income                               $27,074      $20,587     32 %
Earnings per share:
     Basic                                 $0.79        $0.58     36 %
     Diluted                               $0.72        $0.54     33 %
Weighted average shares outstanding:
     Basic                                34,217       35,419     (3)%
     Diluted                              37,554       38,132     (2)%


Condensed Consolidated Balance Sheets

                                     November 30, November 30,
(In thousands)                              2003         2002

Assets
Cash and short-term investments         $219,131     $177,193
Accounts receivable, net                  52,065       48,676
Other current assets                      22,534       18,959
    Total current assets                 293,730      244,828
Property and equipment, net               35,572       34,045
Other assets                              38,468       11,293
         Total                          $367,770     $290,166

Liabilities and shareholders' equity
Accounts payable and other current
 liabilities                             $63,115      $50,799
Deferred revenue                          82,614       66,404
     Total current liabilities           145,729      117,203
Shareholders' equity:
     Common stock and additional
      paid-in capital                     53,102       27,743
     Retained earnings                   168,939      145,220
         Total shareholders' equity      222,041      172,963
         Total                          $367,770     $290,166